Assignment of Tax Credit Certificate (TCC); Exception to Estoppel CIR vs. Petron Corporation, GR No.

185568, march 21, 2012 Facts: Petron, a Board of Investment (BOI)-registered enterprise, was an assignee of several Tax Credit Certificates (TCCs) from various BOIregistered enterprises for the taxable years 1995-1998. Petron subsequently utilized said TCCs to pay its excise taxes for said taxable years. The TCCs had a Liability Clause which provided: Both the TRANSFEROR and the TRANSFEREE shall be jointly and severally liable for any fraudulent act or violation of the pertinent laws, rules and regulations relating to the transfer of this TAX CREDIT CERTIFICATE. Sometime in 1999, a postaudit of said TCCs was conducted by the DOF. The TCCs and the TDMs were cancelled by reason of fraud.The DOF found that said TCCs were fraudulently obtained by the transferors and subsequently the same was fraudulently transferredto Petron. Thus, On January 30, 2002, The CIR issued an assessment against Petron for deficiency excise taxes for the taxable years1995 to 1998 based on the ground that the TCCs utilized by petitioner in its payment of excise taxes have been cancelled by the DOF for having been fraudulently issued and transferred. Subsequently, petron filed a protest letter regarding said assessment. In 2002, the CIR served a Warrant of Distraint and/or Levy on petitioner to enforce payment of the tax deficiencies. Construing the Warrant of Distraint and/or Levy as the final adverse decision of the BIR on its protest of the assessment, Petron filed a petition before the CTA contending that the assignment/transfer of the TCCs to petitioner by the TCC holders was submitted to, examined andapproved by the concerned government agencies which processed the assignment in accordance with law and revenue regulations and that the assessment and collection of alleged excise tax deficiencies sought to be collected by the BIR against petitioner through the January 30, 2002 letter are already barred by prescription. The CTA Second Division ruled for the CIR. Petron appealed the decision to the CTA En banc which, in turn, reversed the CTA 2nd Division decision, based on the following on the ground that Petron was considered an innocent transferee of the subject TCCs andmay not be prejudiced by a re-assessment of excise tax liabilities that respondent has already settled, when due, with the use of theTCCs.Issue: Is Petron still liable to pay its excise taxes? Held: PETRONS NON-PARTICIPATION IN FRAUDULENT ACTSRR 5-2000 prescribes the regulations governing the manner of issuance of TCCs and the conditions for their use, revalidation andtransfer. Under the said regulation, a TCC may be used by the grantee or its assignee in the payment of its direct internal revenue taxliability. It may be transferred in favor of an assignee subject to the following conditions: 1) the TCC transfer must be with prior approvalof the Commissioner or the duly authorized representative; 2) the transfer of a TCC should be limited to one transfer only; and 3) the transferee shall strictly use the TCC for the payment of the assignees direct internal revenue tax liability and shall not b e convertible tocash. A TCC is valid only for 10 years subject to the following rules: (1) it must be utilized within five (5) years from the date of issue;and (2) it must be revalidated thereafter or be otherwise considered invalid. The processing of a TCC is entrusted to a specialized agency called the One -Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center to expedite the processing and approval of tax credits and duty drawbacks. A TCC may be assigned through a Deed of Assignment, which the assignee submits to the Center for its approval. Upon approval of the deed, the Center will issue a DOF Tax Debit Memo (DOFTDM), which will be utilized by the assignee to pay the latters tax liabilities for a specified period. Upon surrender of the TCC and the DOF-TDM, the corresponding Authority to Accept Payment of Excise Taxes (ATAPET) will be issued by the BIR Collection Program Division and will be submitted to the issuing office of the BIR for acceptance by the Assistant Commissioner of Collection Service. This act of the BIR signifies its acceptance of the TCC as payment of the assignees excise taxes. Thus, it is apparent that a TCC undergoes a stringent process of verification by various specialized government agencies before it is accepted as payment of an assignees tax liability The CIR had no allegation that there was a deviation from the process for theapproval of the TCCs, which Petron used as payment to settle its excise tax liabilities for the years 1995 to 1998.Further, any merit in the position of CIR on this issue is negated by the Joint Stipulation it entered into with Petron in the proceedingsbefore the said Division. As correctly noted by the CTA En Banc, herein parties jointly stipulated before the Second Division in CTACase No. 6423 as follows:13. That petitioner (Petron) did not participate in the procurement and issuance of the TCCs, which TCCs were transferred to Petron and later utilized by Petron in payment of its excise taxes. LASCONA VS. CIR, GR. 171251, March 5, 2012 Taxation Failure of the CIR to Decide a Protest Remedies of the Taxpayer In March 1998, the Commissioner of Internal Revenue (CIR) issued a formal assessment notice (FAN) to Lascona Land Co., Inc. (LLCI) demanding the latter to pay P753k in taxes. LLCI filed a timely protest on April 20, 1998. From said date (since no supporting document was required to be submitted), the CIR has 180 days to decide on the protest. However, the CIR promulgated its decision on March 3, 1999. LLCI received a copy of the decision on March 12, 1999. On April 12, 1999, LLCI appealed the decision to the Court of Tax Appeals (CTA). The CIR moved for the dismissal of the appeal on the ground that under a revenue regulation issued by the Bureau of Internal Revenue (RR No. 12-99), if the CIR or its representative failed to act on a protest within the 180-day period the taxpayer may appeal within 30 days from the lapse of the 180-day period to the CTA otherwise, the decision shall become final and executory; that LLCI failed to appeal within the said period hence the CTA has no jurisdiction over the case appealed by LLCI. ISSUE: Whether or not the CIR is correct. HELD: No. The revenue regulation is invalid. Under the law (Section 228 of the National Internal Revenue Code), a taxpayer has two remedies if the CIR failed to act on his protest within the 180-day period, to wit; 1) the taxpayer adversely affected by the decision may appeal to the CTA within 30 days from receipt of the decision, or 2) may appeal to the CTA within 30 days from the lapse of the one hundred eighty (180)-day period. Interpreting the above provision, the taxpayer has two options in case of inaction by the CIR. First is to appeal to the CTA within 30 days from the lapse of the 180 day period; or second, wait for the CIR to issue the decision and then appeal, if adverse, to the CTA within 30 days from the receipt of the decision by the taxpayer (because even if the CIR failed to decide on the case within the 180 day period, it can still decide on it and may even issue a favorable judgment to the taxpayer, hence it may be logical to wait and only appeal if the adverse decision is actually received).

In the case at bar, LLCI chose to wait for the CIR to decide on the case and it did not appeal within 30 days from the lapse of the 180-day period. LLCI received the adverse decision of the CIR on March 12, 1999. It appealed on April 12, 1999 which is still within the 30-day period to appeal to the CTA. The revenue regulation in question is invalid because in effect, it limited the remedy provided for by the law. Section 228 of the NIRC 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 180 day period, for the CIR to decide on the case and just appeal, within 30 days from receipt, if the CIRs ruling is adverse. It must however be noted that these two remedies are mutually exclusive.

***92. COMMISSIONER OF INTERNAL REVENUE (CIR), petitioner, vs.Pilipinas Shell Petroleum Corporation, respondent.G.R. No. 188497 April 25, 2012VILLARAMA, JR., J.:Because an excise tax is a tax on the manufacturer and not on thepurchaser, and there being no express grant under the NIRC of exemption from payment of excise tax to local manufacturers of petroleum products sold to international carriers, and absent anyprovision in the Code authorizing the refund or crediting of suchexcise taxes paid, the Court holds that Sec. 135 (a) should beconstrued as prohibiting the shifting of the burden of the excisetax to the international carriers who buys petroleum products fromthe local manufacturers. The provision merely allows theinternational carriers to purchase petroleum products without theexcise tax component as an added cost in the price fixed by themanufacturers or distributors/sellers. Consequently, the oilcompanies which sold such petroleum products to internationalcarriers are not entitled to a refund of excise taxes previously paidon the goods. Facts: 1. Respondent is engaged in the business of processing,treating and refining petroleum for the purpose of producingmarketable products and the subsequent sale thereof. Respondentfiled several formal claims with the Large Taxpayers Audit &Investigation Division II of the BIR on the following dates: a. On July 2002 for refund or tax credit in the totalamount of P28,064,925.15, representing excise taxes it allegedly paid on sales and deliveries of gas and fueloils to various international carriers during the periodOctober to December 2001. b. On October 2002, a similar claim for refund or taxcredit was filed by respondent with the BIR covering theperiod January to March 2002 in the amountof P41,614,827.99. c. On July 2003, a formal claim for refund or tax credit in the amount of P30,652,890.55 covering deliveries from April to June 2002 2. Since no action was taken by the petitioner on its claims,respondent filed petitions for review before the CTA on Septemberand December of 2003. 3. CTAs First Division ruled that respondent is entitled t o therefund of excise taxes in the reduced amountof P95,014,283.00. The CTA First Division relied on a previousruling rendered by the CTA En Banc in the case of Pilipinas ShellPetroleum Corporation v. CIR (Nov. 2006) where the CTA alsogranted respondents claim for refund on the basis of excise taxexemption for petroleum products sold to international carriers of foreign registry for their use or consumption outside thePhilippines. Petitioners MR denied. 4. On appeal, CTA En Banc upheld the ruling of the FirstDivision. Petitioners MR with CTA likewise denied. Hence, thispetition.5.Respondent claims it is entitled to a tax refund becausethose petroleum products it sold to international carriers are notsubject to excise tax, hence the excise taxes it paid uponwithdrawal of those products were erroneously or illegally collectedand should not have been paid in the first place. Since the excisetax exemption attached to the petroleum products themselves, themanufacturer or producer is under no duty to pay the excise taxthereon. Issue: whether respondent as manufacturer or producer of petroleum products is exempt from the payment of excise tax onsuch petroleum products it sold to international carriers?Held: NO. CTA decision REVERSED and SET ASIDE. The claims fortax refund or credit filed by respondent are DENIED for lack of basis. 1. Excise taxes, as the term is used in the NIRC, refer to taxesapplicable to certain specified goods or articles manufactured orproduced in the Philippines for domestic sales or consumption orfor any other disposition and to things imported into thePhilippines. These taxes are imposed in addition to the value-addedtax (VAT). As to petroleum products, Sec. 148 provides that excisetaxes attach to the following refined and manufactured mineral oilsand motor fuels as soon as they are in existence. 2.

Beginning January 1, 1999, excise taxes levied on locallymanufactured petroleum products and indigenous petroleum arerequired to be paid before their removal from the place of production. However, Sec. 135 provides: Petroleum Products Soldto International Carriers and Exempt Entities orAgencies. Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on theiruse or consumption outside the Philippines: Provided, That thepetroleum products sold to these international carriers shall bestored in a bonded storage tank and may be disposed of only inaccordance with the rules and regulations to be prescribed by theSecretary of Finance, upon recommendation of the Commissioner;x x x3.Under Chapter II Exemption or Conditional Tax-FreeRemoval of Certain Goods of Title VI, Sections 133, 137, 138, 139and 140 cover conditional tax-free removal of specified goods orarticles, whereas Sections 134 and 135 provide for taxexemptions. While the exemption found in Sec. 134 makesreference to the nature and quality of the goods manufactured(domestic denatured alcohol) without regard to the tax status of the buyer of the said goods, Sec. 135 deals with the tax treatmentof a specified article (petroleum products) in relation to its buyer orconsumer. Respondents failure to make this important distinctionapparently led it to mistakenly assume that the tax exemptionunder Sec. 135 (a) attaches to the goods themselves such thatthe excise tax should not have been paid in the first place. 4. On July 1996, petitioner Commissioner issued RevenueRegulations 8-96 (Excise Taxation of Petroleum Products) whichprovides: SEC. 4. Time and Manner of Payment of Excise Tax onPetroleum Products, NonMetallic Minerals and IndigenousPetroleum I. Petroleum Products x x x x a) On locallymanufactured petroleum products: The specific tax onpetroleum products locally manufactured or produced inthe Philippines shall be paid by the manufacturer, producer,owner or person having possession of the same , and such taxshall be paid within fifteen (15) days from date of removal from theplace of production. 5.Thus, if an airline company purchased jet fuel froman unregistered supplier who could not present proof of payment of specific tax, the company is liable to pay thespecific tax on the date of purchase. Since the excise taxmust be paid upon withdrawal from the place of production,respondent cannot anchor its claim for refund on the theorythat the excise taxes due thereon should not have beencollected or paid in the first place. 6. Sec. 229 of the NIRC allows the recovery of taxeserroneously or illegally collected. An erroneous or illegal tax isdefined as one levied without statutory authority, or uponproperty not subject to taxation or by some officer having noauthority to levy the tax, or one which is some other similar respectis illegal. 7. Respondents locally manufactured petroleum products areclearly subject to excise tax under Sec. 148.Hence, its claim fortax refund may not be predicated on Sec. 229 of the NIRC allowinga refund of erroneous or excess payment of tax. Respondentsclaim is premised on what it determined as a tax exemptionattaching to the goods themselves, which must be based on astatute granting tax exemption, or the result of legislative grace.Such a claim is to be construed strictissimi juris against thetaxpayer, meaning that the claim cannot be made to rest on vagueinference.Where the rule of strict interpretation against thetaxpayer is applicable as the claim for refund partakes of thenature of an exemption, the claimant must show that he clearlyfalls under the exempting statute.8.The exemption from excise tax payment on petroleumproducts under Sec. 135 (a) is conferred on international carrierswho purchased the same for their use or consumption outsidethe Philippines. The only condition set by law is for thesepetroleum products to be stored in a bonded storage tank and maybe disposed of only in accordance with the rules and regulations tobe prescribed by the Secretary of Finance, upon recommendationof the Commissioner. 9. [JURISPRUDENCE] In addition, the Solicitor General, arguesthat respondent cannot shift the tax burden to internationalcarriers who are allowed to purchase its petroleum productswithout having to pay the added cost of the excise tax. In PhilippineAcetylene Co., Inc. v. CIR, this Court held that petitionermanufacturer who sold its oxygen and acetylene gases to NPC, atax-exempt entity, cannot claim exemption from the payment of sales tax simply because its buyer NPC is exempt fromtaxation. The Court explained that the percentage tax on sales of merchandise imposed by the Tax Code is due from themanufacturer and not from the buyer. 10. The language of Sec. 135 indicates that the tax exemptionmentioned therein is conferred on specified buyers or consumers of the excisable articles or goods. Unlike Sec. 134 which explicitlyexempted the article or goods itself without due regard to the taxstatus of the buyer or purchaser, Sec. 135 exempts from excise taxpetroleum products which were sold to international carriers andother tax-exempt agencies and entities. 11. Considering that the excise taxes attaches to petroleumproducts as soon as they are in existence as such, there can be no outright exemption from the payment of excise tax onpetroleum products sold to international carriers. The sole basisthen of respondents claim for refund is the express grant of excisetax exemption in favor of international carriers under Sec. 135 (a)for their purchases of locally manufactured petroleumproducts. Pursuant to our ruling in Philippine Acetylene, a taxexemption being enjoyed by the buyer cannot be the basis of aclaim for tax exemption by the manufacturer or seller of the goodsfor any tax due to it as the manufacturer or seller. The excise taximposed on petroleum products under Sec. 148 is the direct liabilityof the manufacturer who cannot thus invoke the excise taxexemption granted to its buyers who are international carriers. 12. In Maceda v. Macaraig, Jr., the Court specifically mentionedexcise tax as an example of an indirect tax where the tax burdencan be shifted to the buyer. However, because of the taxexemptions privileges being enjoyed by NPC under existing laws,the tax burden may not be shifted to it by the oil companies whoshall pay for fuel oil taxes on oil they supplied to NPC. 13.

On April 1978, then President Ferdinand E. Marcos issuedPresidential Decree (P.D.) No. 1359 which amended the 1077 TaxCode provided under 2 nd par. of Sec. 134: However, petroleumproducts sold to an international carrier for its use or consumptionoutside of the Philippines shall not be subject to specific tax,provided, that the country of said carrier exempts from taxpetroleum products sold to Philippine carr iers.14.Founded on the principles of international comity andreciprocity, P.D. No. 1359 granted exemption from payment of excise tax but only to foreign international carriers who are allowedto purchase petroleum products free of specific tax provided thecountry of said carrier also grants tax exemption to Philippinecarriers. Both the earlier amendment in the 1977 Tax Code andthe present Sec. 135 of the 1997 NIRC did not exempt the oilcompanies from the payment of excise tax on petroleum productsmanufactured and sold by them to international carriers. THUS:15.Because an excise tax is a tax on the manufacturer and noton the purchaser, and there being no express grant under the NIRCof exemption from payment of excise tax to local manufacturers of petroleum products sold to international carriers, and absent anyprovision in the Code authorizing the refund or crediting of suchexcise taxes paid, the Court holds that Sec. 135 (a) should beconstrued as prohibiting the shifting of the burden of the excisetax to the international carriers who buys petroleum products fromthe local manufacturers.Said provision thus merely allows theinternational carriers to purchase petroleum products without theexcise tax component as an added cost in the price fixed by themanufacturers or distributors/sellers.Consequently, the oil companies which sold such petroleum products to internationalcarriers are not entitled to a refund of excise taxes previously paidon the goods. 16. Time and again, we have held that tax refunds are in thenature of tax exemptions which result to loss of revenue for thegovernment. Upon the person claiming an exemption from taxpayments rests the burden of justifying the exemption by wordstoo plain to be mistaken and too categorical to be misinterpreted,itis never presumed nor be allowed solely on the ground of equity.These exemptions, therefore, must not rest on vague, uncertain or indefinite inference, but should be granted only by aclear and unequivocal provision of law on the basis of language tooplain to be mistaken. Such exemptions must be strictly construedagainst the taxpayer, as taxes are the lifeblood of the government. VAT Qualification for Zero-rated sale ACCENTURE, INC. vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 190102 July 11, 2012 Facts:Petitioner Accenture, a VAT registered entity, is a corporation engaged in the business of providing management consulting,business strategies development, and selling and/or licensing of software. The monthly and quarterly VAT returns of Accenture showthat, notwithstanding its application of the input VAT credits earned from its zero-rated transactions against its output VAT liabilities, itstill had excess or unutilized input VAT credits in the amount of P37,038,269.18. Thus, Accenture filed with the Department of Finance(DoF) an administrative claim for the refund or the issuance of a Tax Credit Certificate (TCC). When the DoF did not act on the claim, Accenture filed a Petition for Review with CTA praying for the issuance of a TCC in its favour.The CIR answered that the sale by Accenture of goods and services to its clients are not zero-rated transactions and that Accenture has failed to prove that it is entitled to a refund, because its claim has not been fully substantiated or documented. Rulingthat Accentures services would qualify for zero-rating under the 1997 National Internal Revenue Code of the Philippines (Tax Code)only if the recipient of the services was doing business outside of the Philippines, the Division of the CTA ruled that since Accenturehad failed to present evidence to prove that the foreign clients to which the former rendered services did business outside thePhilippines, it was not entitled to refund.On appeal before the CTA en banc, Accenture argued that because the case pertained to the third and the fourth quarters of taxable year 2002, the applicable law was the 1997 Tax Code, and not R.A. 9337 and that prior to the amendment introduced by (R.A.)9337, there was no requirement that the services must be rendered to a person engaged in business conducted outside the Philippinesto qualify for zero-rating. Nevertheless, the CTA en banc affirmed the decision of the division. Hence this present petition for reviewbefore the SC. Issues:1.Should the recipient of the services be "doing business outside the Philippines" for the transaction to be zero-rated under Section 108(B)(2) of the 1997 Tax Code?2.Has Accenture successfully proven that its clients are entities doing business outside the Philippines?3.Is Accenture entitled to tax refund? Held:1.Recipient of services must be doing business outside the Philippines for the transactions to qualify as zero-rated. Accenture anchors its refund claim on Section 112(A) of the 1997 Tax Code, which allows the refund of unutilized input VAT earnedfrom zero-rated or effectively zero-rated sales. The provision reads:SEC. 112. Refunds or Tax Credits of Input Tax. -(A) Zero-Rated or Effectively Zero-Rated Sales. - Any VATregistered person, whose sales are zero-rated or effectively zero-rated may,within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has notbeen applied against output tax: Provided, however, That in the case of zerorated sales under Section 106(A)(2)(a)(1), (2) and (B) andSection 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance withthe rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-ratedor effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable inputtax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basisof the volume of sales. Section 108(B) referred to in the foregoing provision was first seen when Presidential Decree No. (P.D.) 199431amended Title IV of P.D. 1158 which is also known as the National Internal Revenue Code of 1977. Several Decisions have referred tothis as the 1986 Tax Code, even though it merely amended Title IV of the 1977 Tax Code.Two years thereafter, or on 1 January 1988, Executive Order No. (E.O.) 27333 further amended provisions of Title IV. E.O. 273 bytransferring the old Title IV provisions to Title VI and filling in the former title with new provisions that imposed a VAT.The VAT system introduced in E.O. 273 was restructured through Republic Act No. (R.A.) 7716. This law, which was approved on 5May 1994, widened the tax base. Section 3 thereof reads:SECTION 3. Section 102 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:"SEC. 102. Value-added tax on sale of services and use or lease of properties. x x xx x x x x x x x x"(b) Transactions subject to zero-rate. The following services performed in the Philippines by VAT-registered persons shall besubject to 0%:

ANGELES UNIVERSITY vs. CITY OF ANGELES. JULIET G. QUINSAAT G.R. No. 189999, June 27, 2012Facts: Angeles University was converted into a non-stock, non-profit education foundation under the provisions of Republic Act(R.A.) No. 6055. Petitioner filed with the Office of the City Building Official an application for a building permit for theconstruction of an 11-storey building of the Angeles University Foundation Medical Center in its main campus the saidoffice issue a Building permit fee and Locational Clearance Fee . Petitioner make a letter to respondent City Tresurer JulietG. Quinssat and City Building Official Donato Z. Dizon alleging that it is exempt from payment of the building permit andlocational clearance fee. Petitioner also reminded the respondent that they have previously issued building permitacknowledging such exemption from payment of building permit fees. The DOJ and trial court render decision in favor topetitioner for exempting in payment. But the CA reverse the decision of court in favor to respondent. Petitioner file a MRbut it was denied by CA. Issue: WON the Angeles University is exempted in Building permit fee and Locational Clearance Fee . Ruling:No. Under R.A. No. 6055, petitioner was granted exemption only from income tax derived from its educational activities andreal property used exclusively for educational purposes. Regardless of the repealing clause in the National Building Code,the CA held that petitioner is still not exempt because a building permit cannot be considered as the other charges mentioned in Sec. 8 of R.A. No. 6055 which refers to impositions in the nature of tax, import duties, assessments and othercollections for revenue purposes, following the ejusdem generisrule. The CA further stated that petitioner has not shownthat the fees collected were excessive and more than the cost of surveillance, inspection and regulation. And while petitioner may be exempt from the payment of real property tax, petitioner in this case merely alleged that the subject property is to be used actually, directly and exclusively for educational purposes, declaring merely that such premises is intended to house the sports and other facilities of the university but by reason of the occupancy of informal settlers on thearea, it cannot yet utilize the same for its intended use. Thus, the CA concluded that petitioner is not entitled to the refundof building permit and related fees, as well as real property tax it paid under protest.R.A. No. 6055 granted tax exemptions to educational institutions like petitioner which converted to non-stock, non-profiteducational foundations. Section 8 of said law provides:SECTION 8. The Foundation shall be exempt from the payment of all taxes, import duties, assessments, and other chargesimposed by the Government onall income derived from or property, real or personal, used exclusively for the educationalactivities of the Foundation.(Emphasis supplied.) A charge is broadly defined as the price of, or rate for, something, while the word fee pertains to a charge fixed by law for services of public officers or for use of a privilege under control of government. As used in the Local Government Code of 1991 (R.A. No. 7160), charges refers to pecuniary liability, as rents or fees against persons or property, while fee means a charge fixed by law or ordinance for the regulation or inspection of a business or activity.

***CIR vs. Philippine Global Communication Inc. [G.R. No. 167146 October 31, 2006]
Facts: Philippine Global (respondent) is a corporation engaged in telecommunications, filed its Annual Income Tax Return for taxable year 1990 on 15 April 1991. On 13 April 1992, the Commissioner of Internal Revenue (CIR) issued Letter of Authority No. 0002307, authorizing the appropriate Bureau of Internal Revenue (BIR) officials to examine the books of account and other accounting records of respondent, in connection with the investigation of respondents 1990 income tax liability. BIR sent a letter to respondent requesting the latter to present for examination certain records and documents, but respondent failed to present any document. Respondent received a Preliminary Assessment Notice dated 13 April 1994 for deficiency income tax inclusive of surcharge, interest, and compromise penalty, arising from deductions that were disallowed for failure to pay the withholding tax and interest expenses that were likewise disallowed. On the following day, 22 April 1994, respondent received a Formal Assessment Notice with Assessment Notice No. 000688-80-7333, dated 14 April 1994, for deficiency income tax. Phil Global filed two letters of protests, in both letters, respondent requested for the cancellation of the tax assessment. More than eight years after the assessment was presumably issued, respondent received from the CIR a Final Decision dated 8 October 2002 denying the respondents protest against Assessment Notice No. 000688-80-7333, and affirming the said assessment in toto. CTA rendered a Decision in favor of respondent on 9 June 2004. It decided that the protest letters filed by the respondent cannot constitute a request for reinvestigation, hence, they cannot toll the running of the prescriptive period to collect the assessed deficiency income tax. Thus, since more than three years had lapsed from the time Assessment Notice No. 000688-80-7333 was issued, the CIRs right to collect the same has prescribed in conformity with Section 269 of the National Internal Revenue Code of 1977. Issues: (1) Whether or not CIRs right to collect respondents alleged deficiency income tax is barred by prescription under Section 269(c) of the Tax Code of 1977 (2) Whether or not the prescription on assessment was suspended by virtue of the alleged request of reinvestigation by Phil Global Held: Petition was denied. The law prescribed a period of three years from the date the return was actually filed or from the last date prescribed by law for the filing of such return, whichever came later, within which the BIR may assess a national internal revenue tax. However, the law increased the prescriptive period to assess or to begin a court proceeding for the collection without an assessment to ten years when a false or fraudulent

return was filed with the intent of evading the tax or when no return was filed at all. In such cases, the ten-year period began to run only from the date of discovery by the BIR of the falsity, fraud or omission. If the BIR issued this assessment within the three-year period or the ten-year period, whichever was applicable, the law provided another three years after the assessment for the collection of the tax due thereon through the administrative process of distraint and/or levy or through judicial proceedings. The three-year period for collection of the assessed tax began to run on the date the assessment notice had been released, mailed or sent by the BIR. The assessment, in this case, was presumably issued on 14 April 1994 since the respondent did not dispute the CIRs claim. Therefore, the BIR had until 13 April 1997. However, as there was no Warrant of Distraint and/or Levy served on the respondents nor any judicial proceedings initiated by the BIR, the earliest attempt of the BIR to collect the tax due based on this assessment was when it filed its Answer in CTA Case No. 6568 on 9 January 2003, which was several years beyond the three-year prescriptive period. Thus, the CIR is now prescribed from collecting the assessed tax. Court has also clarified that the statute of limitations on the collection of taxes should benefit both the Government and the taxpayers further illustrated the harmful effects that the delay in the assessment and collection of taxes inflicts upon taxpayers, that is for the purpose of expediting the collection of taxes, so that the agency charged with the assessment and collection may not tarry too long or indefinitely to the prejudice of the interests of the Government, which needs taxes to run it; and for the taxpayer so that within a reasonable time after filing his return, he may know the amount of the assessment he is required to pay, whether or not such assessment is well founded and reasonable so that he may either pay the amount of the assessment or contest its validity in court. The Tax Code of 1977, as amended, provides instances when the running of the statute of limitations on the assessment and collection of national internal revenue taxes could be suspended, even in the absence of a waiver, Among the exceptions, and invoked by the CIR as a ground for this petition, is the instance when the taxpayer requests for a reinvestigation which is granted by the Commissioner. However, this exception does not apply to this case since the respondent never requested for a reinvestigation. Revenue Regulations No. 12-85, the Procedure Governing Administrative Protests of Assessment of the Bureau of Internal Revenue, issued on 27 November 1985, defines the two types of protest, the request for reconsideration and the request for reinvestigation. Section 6. Protest. - The taxpayer may protest administratively an assessment by filing a written request for reconsideration or reinvestigation specifying the following particulars: xxxx For the purpose of protest herein (a) Request for reconsideration-- refers to a plea for a re-evaluation of an assessment on the basis of existing records without need of additional evidence. It may involve both a question of fact or of law or both. (b) Request for reinvestigationrefers to a plea for re-evaluation of an assessment on the basis of newly-discovered evidence or additional evidence that a taxpayer intends to present in the investigation. It may also involve a question of fact or law or both. The main difference between these two types of protests lies in the records or evidence to be examined by internal revenue officers, whether these are existing records or newly discovered or additional evidence. A re-evaluation of existing records which results from a request for reconsideration does not toll the running of the prescription period for the collection of an assessed tax. Section 271 distinctly limits the suspension of the running of the statute of limitations to instances when reinvestigation is requested by a taxpayer and is granted by the CIR. In the present case, the separate letters of protest dated 6 May 1994 and 23 May 1994 are requests for reconsideration. The CIRs allegation that there was a request for reinvestigation is inconceivable since respondent consistently and categorically refused to submit new evidence and cooperate in any reinvestigation proceedings. The distinction between a request for reconsideration and a request for reinvestigation is significant. It bears repetition that a request for reconsideration, unlike a request for reinvestigation, cannot suspend the statute of limitations on the collection of an assessed tax. If both types of protest can effectively interrupt the running of the statute of limitations, an erroneous assessment may never prescribe. If the taxpayer fails to file a protest, then the erroneous assessment would become final and unappealable. On the other hand, if the taxpayer does file the protest on a patently erroneous assessment, the statute of limitations would automatically be suspended and the tax thereon may be collected long after it was assessed. Meanwhile the interest on the deficiencies and the surcharges continue to accumulate. And for an unrestricted number of years, the taxpayers remain uncertain and are burdened with the costs of preserving their books and records. This is the predicament that the law on the statute of limitations seeks to prevent.

***PROTECTORS SERVICES, INC., V CA ET. AL. G.R. No 118176, April 12, 2000
Facts: Petition Protectors Services, Inc., (PSI) is a contractor engaged in recruiting security guards for clients. After an audit investigation, the BIR assessed PSI deficiency percentage taxes including surcharges, penalties and interests of P503,564.39, P831,464.30 and P1,514,047.86 for

1983, 1984 and 1985, respectively. On December 7, 1987, respondent CIR sent demand letters for payment of said assessments for 1983 and 1984 on December 10, 1987, but denied receiving the notice of deficiency tax for 1985. Petitioner PSI, sent a protest letter dated January 12, 1988 regarding the 1983 and 1984 assessments, claiming that gross receipts subject to percentage tax should exclude salaries of the security guards, employers share of SSS, SIF and Medicare contributions. Without formally acting thereon, the BIR sent a follow-up letter dated July 12, 1988 for the settlement of the taxes based on its computation, plus additional documentary stamp taxes of P2,025 on PSIs capitalization for 1983 and 1984 and as deficiency expanded withholding tax of P703.41, thereby bringing the total unsettled tax to P2,851,805.16. On July 12, 1988, petition paid the P2,025 documentary stamp tax and P703.41 deficiency expanded withholding tax. The following day, PSI filed its second protest for the 1983 and 1984 assessments and included for the first time its protest against the 1985 assessment. On November 9, 1990, the BIR denied the protests stating that salaries of security guards are part of taxable gross receipts for determination of contractors tax. PSI filed a petition for review on December 5, 1990 with the CTA averring that assessments for documentary stamp and expanded withholding taxes and without basis having been paid on July 22, 1988; the period for collection of the 1985 assessment letter therefore, the period to collect the percentage taxes for the first, second and third quarter of 1984 has lapsed, the assessment letter therefore having been sent on December 10, 1987, or beyond 3 years from filing of the quarterly returns, and that the base amount was erroneous since salaries of security guards, employers share of SSS, SIF and medicare contributions should not form part of taxable gross receipts. The CTA dismissed the petition stating that: (1) the assessments were made within the 3-year prescriptive period which should be reckoned from January 20, 1985, the date of filing the final return; (2) receipt of the 1985 assessment cannot be denied as all assessments were sent in 1 envelope, as testified to by BIR personal; and (3) the protest letter having filed only on January 12, 1988, or 33 days from December 10, 1987, the request for reinvestigation was filed out of time. On review by the CA, the CTAs decision was affirmed.

Issues: Whether or not the CTA has jurisdiction to act on the petition for review filed before it. Whether or not the assessments against PSI for deficiency percentage tax for 1983 and 1984 were made within the prescriptive period. Whether or not the period for collection of taxes for taxable years 1983, 1984 and 1985 has already prescribed. Whether or not the assessments are correct.

Held: An assessment maybe administratively protested within 30 days from receipt thereof; otherwise, the assessment shall become final and unappealable. In this case, PSI received the assessments on December 10, 1987 and protested the 1983 and 1984 assessments on January 12, 1988, or 33 days thereafter. Hence, the protests were filed out of time and PSI can no longer dispute the correctness of assessment. The CTA correctly dismissed the appeal for lack of jurisdiction. Petitioners contention that the Governments right to assess and collect the 1983, 1984 and 1985 assessments had already prescribed in view of BP700, which reduced the prescriptive period for assessment and collection of internal revenue taxes to 3 yrs, lacks merit BP700 was approved on April 5, 1984. The 3-year prescriptive period for assessment and collection of revenue taxes applied to taxes paid beginning 1984. Clearly, the tax assessment made on December 10, 1987, for the par 1983 was still covered by the 5-year statutory prescriptive period. The 3-year prescriptive period for assessment of contractors tax should be computed at the time of filing of the final annual percentage tax return, when it can be finally acclaimed if the taxpayer still has an unpaid tax, and not from the tentative quarterly payments. As to the contention that for failure of the BIR to commence collection of the 1983, 1984 and 1985 deficiency taxes either by judicial action or by distraint and levy, the governments right to collect the tax has prescribed, the court ruled that the suspension of the running of the statute of limitations for tax collection for the period during which the commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and 60 days thereafter. In the instant case, PSI filed a petition before the CTA to prevent the collection of the assessed deficiency tax. When the CTA dismissed the case, petitioner elevated the case to the SC, hoping for a review in the favor. The actions taken by petitioner before the CTA and the SC suspended the running of the statute of limitation. As to the correctness of the assessment, it was held that contractors tax on gross receipts imposed on business agents including private detective watchman agencies, was a tax on the sale of services or labor, imposed on the exercise of a privilege. The term gross receipts means all amounts received by the prime or principal contractor as the total price, undiminished by the amount paid to the subcontractor under the subcontract arrangement. Hence, gross receipts could not be diminished by employers SSS, SIF and medicare contributions. Furthermore, it has been consistently ruled by the BIR that the salaries paid to security guards should form part of the gross receipts subject to tax

CIR vs. First Express Pawnshop Company, Inc. G.R. Nos. 172045-46; June 16 2009

Facts: CIR issued assessment notices against Respondent for deficiency income tax, VAT and documentary stamp tax on deposit on subscription and on pawn tickets. Respondent filed its written protest on the assessments. When CIR did not act on the protest during the 180-day period, respondent filed a petition before the CTA. Issue: Has Respondents right to dispute the assessment in the CTA prescribed? Held: NO. The assessment against Respondent has not become final and unappealable. It cannot be said that respondent failed to submit relevant supporting documents that would render the assessment final because when respondent submitted its protest, respondent attached all the documents it felt were necessary to support its claim. Further, CIR cannot insist on the submission of proof of DST payment because such document does not exist as respondent claims that it is not liable to pay, and has not paid, the DST on the deposit on subscription. The term "relevant supporting documents" are those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional documents and cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit. Since the taxpayer is deemed to have submitted all supporting documents at the time of filing of its protest, the 180day period likewise started to run on that same date. Bank of the Philippine Islands vs Commissioner of Internal Revenue Taxation Collection Prescriptive Period Reconsideration vs Reinvestigation On October 20, 1989, the Bureau of Internal Revenue (BIR) issued a formal assessment notice (FAN) against the Bank of the Philippine Islands (BPI). The FAN demanded BPI to pay P28k in taxes. In November 1989, BPI filed a protest however the protest did not specify if it was a request for reconsideration or a reinvestigation. The BIR did not reply on the protest but on October 15, 1992 (four days before the expiration of the period to collect or 1095 days [3 years]after issuance of FAN on 10/20/1989), the Commissioner of Internal Revenue (CIR) issued a warrant of distraint/levy against BPI for the satisfaction of the assessed tax. The warrant was served to BPI on October 23, 1992 (four days after period has prescribed). In September 1997, the CIR finally sent a letter to BPI advising the latter that its protest is denied. ISSUE: 1. Whether or not the filing of the protest by BPI suspended the running of the prescriptive period. 2. Whether or not the governments right to collect the assessed tax has prescribed. HELD: 1. No. The protest did not indicate whether BPI was asking for a reconsideration or a reinvestigation but since BPI did not adduce additional evidence, it should be treated as a request for reconsideration. Under the tax code, a request for reconsideration does not suspend the running of the prescriptive period. Even assuming that the protest is a request for reinvestigation, the same did not toll the running of the prescriptive period because the CIR failed to show proof that the request has been granted and that a reinvestigation has been actually conducted. In fact, BPI never heard from the BIR not until the CIR decided the protest in September 1997 5 years after the protest has been filed. 2. Yes. When it comes to collection, even though the warrant for distraint/levy was issued within the prescriptive period, it is required that the same should be served upon the taxpayer within the prescriptive period. This is because it is upon the service of the Warrant that the taxpayer is informed of the denial by the BIR of any pending protest of the said taxpayer, and the resolute intention of the BIR to collect the tax assessed. In the case at bar, BPI received the warrant 4 days after the expiration of the prescriptive period hence, the right to collect has already prescribed. G.R. No. 178788 United Airlines vs. Commissioner of Internal Revenue September 29, 2009 Facts: International airline, petitioner United Airlines, filed a claim for income tax refund. Petitioner sought to be refunded the erroneously collected income tax from in the amount of P5,028,813.23 on passenger revenue from tickets sold in the Philippines, the uplifts of which did not originate in the Philippines. The airlines ceased operation originating form the Philippines since February 21, 1998. Court of tAx appeals ruled the petitioner is not entitled to a refund because under the NIRC, income tax on GPB also includes gross revenue from carriage of cargoes from the Philippines. And upon assessment by the CTA, it was found out that petitioner deducted items from its cargo revenues which should have entitled the government to an amount of P 31.43 million, which is obviously higher than the amount the petitioner prayed to be refunded. Petitioner argued that the petitioners supposed underpayment cannot offset his claim to a refund as established by well-settled jurisprudence. Issue: Whether or not petitioner is entitled to a refund? HELd: Petitioner was correct in averring that his claim to a refund cannot be subject to offsetting or, as it claimed the offsetting to be, a legal compensation under Sec. 28(A)(3)(a)

Petitioners (similar) tax refund claim assumes that the tax return that it filed was correct. Given, however, the finding of the CTA that petitioner, although not liable under Sec. 28(A)(3)(a) of the 1997 NIRC, is liable under Sec. 28(A)(1), the correctness of the return filed by petitioner is now put in doubt. As such, we(the court) cannot grant the prayer for a refund. The court held that the petitioner is not entitled to a refund, Having underpaid the GPB tax due on its cargo revenues for 1999, the amount of the former being even much higher (P31.43 million) than the tax refund sought (P5.2 million). Relevant note: The Court have consistently ruled that there can be no off-setting *or compensation+ of taxes against the claims that the taxpayer may have against the government. A person cannot refuse to pay a tax on the ground that the government owes him an amount equal to or greater than the tax being collected. The collection of a tax cannot await the results of a lawsuit against the government.(francia vs Intermediate appellate court)

The grant of a refund is founded on the assumption that the tax return is valid, that is, the facts stated therein are true and correct. The deficiency assessment, although not yet final, created a doubt as to and constitutes a challenge against the truth and accuracy of the facts stated in said return which, by itself and without unquestionable evidence, cannot be the basis for the grant of the refund. (CIR vs CTA)

Filinvest Development Corporation vs. CIR G.R. No. 146941, Aug. 9, 2007

FACTS:

Findings of fact of the CTA is entitled the greatest respect Stare decisis et non quieta movere

Filinvest filed a claim for refund, or in the alternative, the issuance of TCC with CIR in the amount of P4,178,134.00 representing excess creditable withholding taxes for taxable years 1994, 1995, and 1996. When CIR had not resolved petitioners claim for refund and the 2-yr prescriptive period was about to lapse, the latter filed a Petition for Review with the CTA, which, however, dismissed the petition for review for insufficiency of evidence because petitioner failed to present in evidence its 1997 income tax return. CA also denied the petition for review subsequently filed on the same ground of insufficiency of evidence. ISSUE:

Whether or not petitioner is entitled to the tax refund or tax credit

PETITIONERS CONTENTION: CA erred (1) in denying the claim for tax refund on the sole ground of failure to present in evidence its Annual Income Tax Return for Corporations for 1997 despite holding that it had complied with all the requirements to sustain a claim for tax refund; (2) relying on CTA cases cited in its Decision as jurisprudential basis to support its ruling; (3) not ruling that Sec. 34, Rule 132, RoC, being a procedural rule, should be liberally construed in order that substantial justice due petitioner shall have been served; and (4) not ruling that, petitioner having proved that it paid excess taxes for taxable years 1995 and 196, has shifted the burden of evidence to respondent CIR to show the factual basis to deny petitioners claim. THEORY OF DEFENSE: In claims for tax refund, the burden of proof of refundability rests with claimant. Petitioner did not comply with the rules on formal offer of evidence. CA did not err in relying on CTA cases because the latter is an authority on matters of taxation and therefore its resolutions carry great weight. HELD: Petitioner is entitled to the tax refund or tax credit. Factual findings of the CTA, as affirmed by the CA, are entitled to the highest respect and will not be disturbed on appeal unless it is shown that the lower courts committed gross error in the appreciation of facts. The appellate court itself acknowledges that petitioner had complied with the requirements to sustain a claim for tax refund or credit. In the light of RA 1125, as amended, the law creating the CTA, provides that proceedings therein shall not be governed strictly by technical rules of evidence. Moreover, this Court has held time and again that technicalities should not be used to defeat substantive rights, especially those that have been established as a matter of fact. The CA, likewise, erred in relying on CTA decisions as jurisprudential basis for its decision. By tradition and in our system of judicial

administration this Court has the last word on what the law is, and that its decisions applying or interpreting the laws or the Constitution form part of the legal system of the country, all other courts should take their bearings from the decisions of this Court, ever mindful of what this Court said fifty-seven years ago in People vs. Vera that a becoming modesty of inferior courts demands conscious realization of the position that they occupy in the interrelation and operation of the integrated judicial system of the nation. The principle of stare decisis et non quieta movere, enjoins adherence to judicial precedents. It requires our courts to follow a rule already established in a final decision of the Supreme Court. That decision becomes a judicial precedent to be followed in subsequent cases by all courts in the land. In ruling the case, the Court adopted its own ruling in BPI-Family Savings Bank vs. Court of Appeals.

CIR v. AICHI FORGING COMPANY OF ASIA, INC. G.R. No. 184823 October 6, 2010 Del Castillo, J. Doctrine: - The CIR has 120 days, from the date of the submission of the complete documents within which to grant or deny the claim for refund/credit of input vat. In case of full or partial denial by the CIR, the taxpayers recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. - A taxpayer is entitled to a refund either by authority of a statute expressly granting such right, privilege, or incentive in his favor, or under the principle of solutio indebiti requiring the return of taxes erroneously or illegally collected. In both cases, a taxpayer must prove not only his entitlement to a refund but also his compliance with the procedural due process. - As between the Civil Code and the Administrative Code of 1987, it is the latter that must prevail being the more recent law, following the legal maxim, Lex posteriori derogat priori. - The phrase within two (2) years x x x apply for the issuance of a tax credit certificate or refund under Subsection (A) of Section 112 of the NIRC refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA. Facts: Petitioner filed a claim of refund/credit of input vat in relation to its zero-rated sales from July 1, 2002 to September 30, 2002. The CTA 2nd Division partially granted respondents claim for refund/credit. Petitioner filed a Motion for Partial Reconsideration, insisting that the administrative and the judicial claims were filed beyond the two-year period to claim a tax refund/credit provided for under Sections 112(A) and 229 of the NIRC. He reasoned that since the year 2004 was a leap year, the filing of the claim for tax refund/credit on September 30, 2004 was beyond the two-year period, which expired on September 29, 2004. He cited as basis Article 13 of the Civil Code, which provides that when the law speaks of a year, it is equivalent to 365 days. In addition, petitioner argued that the simultaneous filing of the administrative and the judicial claims contravenes Sections 112 and 229 of the NIRC. According to the petitioner, a prior filing of an administrative claim is a condition precedent before a judicial claim can be filed. The CTA denied the MPR thus the case was elevated to the CTA En Banc for review. The decision was affirmed. Thus the case was elevated to the Supreme Court. Respondent contends that the non-observance of the 120-day period given to the CIR to act on the claim for tax refund/credit in Section 112(D) is not fatal because what is important is that both claims are filed within the two-year prescriptive period. In support thereof, respondent cited Commissioner of Internal Revenue v. Victorias Milling Co., Inc. [130 Phil 12 (1968)] where it was ruled that if the CIR 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 CTA before the end of the two-year period without awaiting the decision of the CIR. Issues: 1. Whether or not the claim for refund was filed within the prescribed period 2. Whether or not the simultaneous filing of the administrative and the judicial claims contravenes Section 229 of the NIRC, which requires the prior filing of an administrative claim, and violates the doctrine of exhaustion of administrative remedies Held: 1. Yes. As ruled in the case of Commissioner of Internal Revenue v. Mirant Pagbilao Corporation (G.R. No. 172129, September 12, 2008), the two-year period should be reckoned from the close of the taxable quarter when the sales were made. In Commissioner of Internal Revenue v. Primetown Property Group, Inc (G.R. No. 162155, August 28, 2007, 531 SCRA 436), we said that as between the Civil Code, which provides that a year is equivalent to 365 days, and the Administrative Code of 1987, which states that a year is composed of 12 calendar months, it is the latter that must prevail being the more recent law, following the legal maxim, Lex posteriori derogat priori. Thus, applying this to the present case, the two-year period to file a claim for tax refund/credit for the period July 1, 2002 to September 30, 2002 expired on September 30, 2004. Hence, respondents administrative claim was timely filed. 2. Yes. We find the filing of the judicial claim with the CTA premature. Section 112(D) of the NIRC clearly provides that the CIR has 120 days, from the date of the submission of the complete documents in support of the application *for tax refund/credit+, within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayers recourse is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR to CTA within 30 days. Subsection (A) of Section 112 of the NIRC states that any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. The phrase within two (2) years x x x apply for the issuance of a tax credit certificate or refund refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA.

The case of Commissioner of Internal Revenue v. Victorias Milling, Co., Inc. is inapplicable as the tax provision involved in that case is Section 306, now Section 229 of the NIRC. Section 229 does not apply to refunds/credits of input VAT. The premature filing of respondents claim for refund/credit of input VAT before the CTA warrants a dismissal inasmuch as no jurisdiction was acquired by the CTA. G.R. No. 178090 February 8, 2010 PANASONIC COMMUNICATIONS IMAGING CORPORATION OF THEPHILIPPINES (formerly MATSUSHITA BUSINESS MACHINECORPORATION OF THE PHILIPPINES) vs. COMMISSIONER OFINTERNAL REVENUEFacts: Petitioner Panasonic Communications Imaging Corporation of thePhilippines produces and exports plain paper copiers and their subassemblies,parts, and components. It is a registered value-added tax (VAT) enterprise. From1998 to 1999, petitioner generated export sales where it paid input VATof P9,368,482.40 believing that its sales are zero-rated sales. Claiming that theinput VAT it paid remained unutilized. Panasonic filed with the Bureau of InternalRevenue (BIR) two separate applications for refund or tax credit of what it paid.When the BIR did not act on the same, Panasonic filed a petition for review withthe Court of Tax Appeals (CTA). The CTA First Division denied the petitionstating that while petitioners export sales were subject to 0% VAT under theNIRC, the same did not qualify for zero-rating because the word "zero-rated" wasnot printed on its export invoices. This omission violates the invoicingrequirements of Section 4.108-1 of Revenue Regulations (RR) 7-95. The motionfor reconsideration was denied. On appeal, the CTA en banc upheld the FirstDivisions decision. Issue: Whether or not the words "zero-rated" must appear in the sales invoice sothat a claim for refund of unutilized input VAT on zero-rated sales will be proper. Ruling: Yes.Zero-rated transactions generally refer to the export sale of goods and services.When applied to the tax base or the selling price of the goods or services sold,such zero rate results in no tax chargeable against the foreign buyer or customer.But, although the seller in such transactions charges no output tax, he can claima refund of the VAT that his suppliers charged him. The seller thus enjoysautomatic zero rating, which allows him to recover the input taxes he paidrelating to the export sales, making him internationally competitive. For theeffective zero rating of such transactions, however, the taxpayer has to be VAT-registered and must comply with invoicing requirements. Interpreting theserequirements, respondent CIR ruled that under Revenue Memorandum Circular (RMC) 42-2003, the taxpayers failure to comply with invoicing requirements willresult in the disallowance of his claim for refund.If the claim for refund is based on the existence of zero-rated sales by thetaxpayer but it fails to comply with the invoicing requirements in the issuance of sales invoices, its claim for tax credit/refund of VAT on its purchases shall bedenied considering that the invoice it is issuing to its customers does not depictits being a VAT-registered taxpayer whose sales are classified as zero-ratedsales. Nonetheless, this treatment is without prejudice to the right of the taxpayer to charge the input taxes to the appropriate expense account or asset accountsubject to depreciation, whichever is applicable. Moreover, the case shall be referred by the processing office to the concerned BIR office for verification of other tax liabilities of the taxpayer.

***FIRST DIVISION [G.R. No. 181298. January 10, 2011.]BELLE CORP vs. CIRDoctrine: Sec 69 of the old NIRC allows unutilized tax credits to be refunded as long as the claim is filed within the prescriptive period. This, however, no longer holds true under Sec 76 of the 1997 NIRC as the option to carry-over excess income tax payments to the succeeding taxable year is now irrevocable. Belle Corporation is a domestic corporation engaged in the real estate and property business. On May 30, 1997, Belle Corp filed with the BIR its ITR for the first quarter of 1997, showing an income tax due of P236,679,254.00, which it paid through PCI Bank, an Authorized Agent Bank of the BIR. On August 14, 1997, it filed with the BIR its second quarter ITR, declaring an overpayment of income taxes in the amount of P66,634,290.00. In view of the overpayment, no taxes were paid for the second and third quarters of 1997. Petitioner's ITR for the taxable year ending December 31, 1997 thereby reflected an overpayment of income taxes in the amount of P132,043,528.00. Instead of claiming the amount as a tax refund, petitioner decided to apply it as a tax credit to the succeeding taxable year by marking the tax credit option box in its 1997 ITR. For the taxable year 1998, Belle Corp.'s amended ITR showed an overpayment of P106,447,318.00. On April 12, 2000, petitioner filed with the BIR an administrative claim for refund of its unutilized excess income tax payments for the taxable year 1997 in the amount of P106,447,318.00. Notwithstanding the filing of the administrative claim for refund, Belle Corp. carried over the amount of P106,447,318.00 to the taxable year 1999 and applied a portion thereof to its 1999 Minimum Corporate Income Tax (MCIT) liability, as evidenced by its 1999 ITR. Due to the inaction of the respondent CIR, it appealed its claim for refund of unutilized excess income tax payments for the taxable year 1997 in the amount of P106,447,318.00 with the CTA via a Petition for Review, which denied the company's petition for refund. The CTA racioned that it is an elementary rule in taxation that an automatic carry over of an excess income tax payment should only be made for the succeeding year. To allow the application of excess taxes paid for two successive years would run counter to the specific provision of the law above-mentioned. Belle Corp. sought reconsideration but the same was denied prompting it to elevate the matter to the CA.The CA, applying Philippine Bank of Communications v. Commissioner of Internal Revenue, denied the petition. The CA explained that the overpayment for taxable year 1997 can no longer be carried over to taxable year 1999 because excess income payments can only be credited against the income tax liabilities of the succeeding taxable year, in this case up to 1998 only and not beyond. Neither can the overpayment be refunded as the remedies of automatic tax crediting and tax refund are alternative remedies. Belle moved for reconsideration, the CA, however, denied the same. Issue: WON Belle is entitled to a refund of its excess income tax payments for the taxable year 1997 in the amount of P106,447,318.00.

HELD: No.Under Sec 69 of the old NIRC, in case of overpayment of income taxes, a corporation may either file a claim for refund or carry-over the excess payments to the succeeding taxable year. Availment of one remedy, however, precludes the other. Although these remedies are mutually exclusive, we have in several cases allowed corporations, which have previously availed of the tax credit option, to file a claim for refund of their unutilized excess income tax payments.Thus, under Sec 69 of the old NIRC, unutilized tax credits may be refunded as long as the claim is filed within the two-year prescriptive period. Sec. 69 is now repealed and the applicable law is Sec.76 of the 1997 NIRC.Section 76.Final Adjustment Return. Every corporation liable to tax under Section 24 shall file a final adjustment return covering the total net income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable net income of that year the corporation shall either: (a)Pay the excess tax still due; or(b)Be refunded the excess amount paid, as the case may be.In case the corporation is entitled to a refund of the excess estimated quarterly income taxes paid, the refundable amount shown on its final adjustment return may be credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for tax refund or issuance of a tax credit certificate shall be allowed therefor. (Emphasis supplied) Under the new law, in case of overpayment of income taxes, the remedies are still the same; and the availment of one remedy still precludes the other. But unlike Section 69 of the old NIRC, the carry-over of excess income tax payments is no longer limited to the succeeding taxable year. Unutilized excess income tax payments may now be carried over to the succeeding taxable years until fully utilized. In addition, the option to carry-over excess income tax payments is now irrevocable. Hence, unutilized excess income tax payments may no longer be refunded. In the instant case, both the CTA and the CA applied Section 69 of the old NIRC in denying the claim for refund. We find, however, that the applicable provision should be Section 76 of the 1997 NIRC because at the time petitioner filed its 1997 final ITR, the old NIRC was no longer in force. Since Belle Corp. already carried over its 1997 excess income tax payments to the succeeding taxable year 1998, it may no longer file a claim for refund of unutilized tax credits for taxable year 1997.To repeat, under the new law, once the option to carry-over excess income tax payments to the succeeding years has been made, it becomes irrevocable. Thus, applications for refund of the unutilized excess income tax payments may no longer be allowed.WHEREFORE, the petition is hereby DENIED.

COMMISSIONER OF INTERNAL REVENUE vs. METRO STAR SUPERAMA, INC.- Pre-Assessment Notice FACT: Metro Star Superama was audited for taxable year 1999 and received a Preliminary 15-day Letter on November 15, 2001. On April 11, 2002, it received a Formal Letter of Demand dated April 3, 2002. Denying that it received a Pre-Assessment Notice and thus not accorded due process, Metro Star Superama filed a Petition with the CTA. ISSUE: Was the Petitioner accorded the required due process? HELD: NO. Since the Petitioner denied receipt of the Pre-Assessment Notice, the burden of proving the same shifts to the BIR. To raise the presumption of receipt, it must be shown that (a) the letter was properly addressed with postage prepaid and (b) that it was mailed. If receipt is denied, the BIR must then show actual receipt through presentation of the registry receipt or, if the same cannot be located, at least a certification from the Bureau of Posts. The Court likewise added that the issuance of a Pre-Assessment Notice is a mandatory requirement save only on specified instances. The old rule laid down in CIR vs. Menguito that only the FAN is mandatory no longer applies since the same was ruled upon based on the old provision. Taxation Pre-Assessment Notice Due Process Requirement In January 2001, a revenue officer was authorized to examine the books of accounts of Metro Star Superama, Inc. In April 2002, after the audit review, the revenue district officer issued a formal assessment notice against Metro Star advising the latter that it is liable to pay P292,874.16 in deficiency taxes. Metro Star assailed the issuance of the formal assessment notice as it averred that due process was not observed when it was not issued a pre-assessment notice. Nevertheless, the Commissioner of Internal Revenue authorized the issuance of a Warrant of Distraint and/or Levy against the properties of Metro Star. Metro Star then appealed to the Court of Tax Appeals (CTA Case No. 7169). The CTA ruled in favor of Metro Star. ISSUE: Whether or not due process was observed in the issuance of the formal assessment notice against Metro Star. HELD: No. It is true that there is a presumption that the tax assessment was duly issued. However, this presumption is disregarded if the taxpayer denies ever having received a tax assessment from the Bureau of Internal Revenue. In such cases, it is incumbent upon the BIR to prove by competent evidence that such notice was indeed received by the addressee-taxpayer. The onus probandi was shifted to the BIR to prove by contrary evidence that the Metro Star received the assessment in the due course of mail. In the case at bar, the CIR merely alleged that Metro Star received the pre-assessment notice in January 2002. The CIR could have simply presented the registry receipt or the certification from the postmaster that it mailed the pre-assessment notice, but failed. Neither did it offer any explanation on why it failed to comply with the requirement of service of the pre-assessment notice. The Supreme Court emphasized that the sending of a pre-assessment notice is part of the due process requirement in the issuance of a deficiency tax assessment, the absence of which renders nugatory any assessment made by the tax authorities. Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. But even so, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. mmissioner of Internal Revenue vs Kudos Metal Corporation Commissioner of Internal Revenue vs Kudos Metal Corporation Share this legal resource:000200

Taxation Prescription Waiver of the Statute of Limitations Estoppel In April 1999, Kudos Metal Corporation (KMC) filed its annual income tax return (ITR). In September 1999, the Bureau of Internal Revenue (BIR) advised KMC that it will be subjected to a tax audit. In September 2000, a subpoena duces tecum was issued against KMC but the latter failed to comply. In December 2001, about 4 months before the expiration of the government to make an assessment (April 2002), Nelia Pasco, accountant of KMC, executed a waiver of the statute of limitations (SOL) in favor of BIR. A tax audit then ensued. In February 2003, another such waiver was executed by Pasco. The audit continued. Finally, in September 2003 more than three years from the filing of KMC of its ITR, a formal assessment notice (FAN) was issued by the Commissioner of Internal Revenue (CIR) demanding KMC to pay P25 million in taxes. KMC protested the FAN on the ground that it was issued beyond the prescriptive period; that it was issued beyond the prescriptive period because there was no valid waiver of the SOL (in particular, the first waiver) because Pasco was not authorized by KMC to execute the same; that even if Pasco is authorized, the same is still void because it did not indicate the acceptance date of the BIR; that a copy of the waiver was not furnished to KMC. The CIR argued that KMC is already in estoppel because it acquiesced or it allowed the audit conducted by the BIR after the two waivers executed by Pasco. ISSUE: Whether or not KMC is in estoppels. HELD: No. Apparently, Pasco was not authorized by KMC to execute the waiver. Even if KMC allowed the subsequent tax audit after such waiver it did not bar KMC to raise the issue of prescription. This is reinforced by the fact that the waiver is infirm because of the lack of the date of acceptance as well as the fact that a copy thereof was not furnished to KMC. These two are among the requirements provided for by Section 222 of the National Internal Revenue Code (NIRC) as to a valid waiver of the SOL. The provisions in Section 222 of NIRC provides for a detailed procedure that must be strictly followed by the BIR in order that the taxpayer will have a valid waiver. The BIR cannot now hide behind the doctrine of estoppel to cover its failure to comply with the law. jurisprudence on which the assessment is based, otherwise theformal letter of demand and the notice of assessment shall be void . The formality of a control number in the assessment notice is not arequirement for its validity but rather the contents thereof which should informthe taxpayer of the declaration of deficiency tax against said taxpayer. The Formal Letter of Demand dated August 7, 2002 contains not only a detailedcomputation of LMCECs tax deficiencies but also details of the specifieddiscrepancies, explaining the legal and factual bases of the assessment. It alsoreiterated that in the absence of accounting records and other documentsnecessary for the proper determination of the companys internal revenue taxliabilities, the investigating revenue officers resorted to the " Best EvidenceObtainable " as provided in Section 6(B) of the NIRC (third party information)Economic Recovery Assistance Payment (ERAP) Program The program named as "Economic Recovery Assistance Payment (ERAP)Program" granted immunity from audit and investigation of income tax, VAT andpercentage tax returns for 1998. It expressly excluded withholding tax returns (whether for income, VAT, orpercentage tax purposes). Since such immunity from audit and investigation does not preclude thecollection of revenues generated from audit and enforcement activities ,it follows that the Bureau is likewise not barred from collecting any tax deficiencydiscovered as a result of tax fraud investigations. Tax amnesty is a general pardon to taxpayers who want to start a cleantax slate . It also gives the government a chance to collect uncollected tax from taxevaders without having to go through the tedious process of a tax case. Even assuming arguendo that the issuance of RR No. 2-99 is in the nature of tax amnesty, it bears noting that a tax amnesty, much like a tax exemption, isnever favored nor presumed in law and if granted by statute, the terms of theamnesty like that of a tax exemption must be construed strictly against thetaxpayer and liberally in favor of the taxing authority. For the same reason, the availment by LMCEC of VAP under RR No. 8-2001 as amended by RR No. 10-2001, through payment supposedly made in October29, 2001 before the said program ended on October 31, 2001, did not amountto settlement of its assessed tax deficiencies for the period 1997 to1999 , nor immunity from prosecution for filing fraudulent return andattempt to evade or defeat tax . As correctly asserted by petitioner, from the express terms of the aforesaidrevenue regulations, LMCEC is not qualified to avail of the VAP grantingtaxpayers the privilege of last priority in the audit and investigation of all internal revenue taxes for the taxable year 2000 and all prior yearsunder certain conditions , considering that

first, it was issued a PAN on February 19, 2001, and second, it was the subject of investigation as a result of verified informationfiled by a Tax Informer under Section 282 of the NIRC duly recorded in the BIR

Official Registry as Confidential Information (CI) No. 29-200053 even prior tothe issuance of the PAN. Moreover, private respondents cannot invoke LMCECs availment of VAPto foreclose any subsequent audit of its account books and otheraccounting records in view of the strong finding of underdeclarationin LMCECs payment of correct income tax liability by more than 30% LMCEC -- the alleged violation of the general rule in Section 235 of the NIRC allowingthe examination and inspection of taxpayers books of accounts and otheraccounting records only once in a taxable year likewise untenable the discovery of substantial underdeclarations of income by LMCEC fortaxable years 1997, 1998 and 1999, as well as the necessity of obtaininginformation from third parties to ascertain the correctness of the return filed orevaluation of tax compliance in collecting taxes (as a result of thedisobedience to the summons issued by the Bureau against the privaterespondents), are circumstances warranting exception from the generalrule in Section 235. Consequently, respondent Secretarys ruling that the filing of criminalcomplaint for violation of Sections 254 and 255 of the NIRC cannot prosperbecause of lack of prior determination of the existence of fraud, is bereft of factualbasis and contradicted by the evidence on record. Tax assessments by tax examiners are presumed correct and made ingood faith, and all presumptions are in favor of the correctness of a taxassessment unless proven otherwise. We have held that a taxpayers failure to file a petition for review with theCourt of Tax Appeals within the statutory period rendered the disput edassessment final, executory and demandable , thereby precluding it frominterposing the defenses of legality or validity of the assessment and prescriptionof the Governm ents right to assess. Indeed, any objection against the assessment should have been pursuedfollowing the avenue paved in Section 229 (now Section 228) of the NIRC onprotests on assessments of internal revenue taxes. Records bear out that the assessment notice and Formal Letter of Demanddated August 7, 2002 were duly served on LMCEC on October 1, 2002 . Private respondents did not file a motion for reconsideration of the saidassessment notice and formal demand ; neither did they appeal to the Courtof Tax Appeals. xxxxx assessment may be protested by filing a request forreconsideration or reinvestigation within 30 days from receipt of theassessment by the taxpayer . No such administrative protest was filed by private respondents seekingreconsideration of the August 7, 2002 assessment notice and formal letter of demand. Moreover, these objections to the assessments should have been raised, considering the ample remedies afforded the taxpayer by the Tax Code ,with the Bureau of Internal Revenue and the Court of Tax Appeals, as describedearlier, and cannot be raised now via Petition for Certiorari , under thepretext of grave abuse of discretion. The subject tax assessments having become final, executory and enforceable, thesame can no longer be contested by means of a disguised protest

. The determination of probable cause is part of the discretion granted tothe investigating prosecutor and ultimately, the Secretary of Justice . However, this Court and the CA possess the power to review findingsof prosecutors in preliminary investigations . Although policy considerations call for the widest latitude of deference to theprosecutors findings, courts should never shirk from exercising their power,when the circumstances warrant, to determine whether the prosecutorsfindings are supported by the facts, or by the law. In so doing, courts do not act as prosecutors but as organs of the judiciary, exercising their mandate under the Constitution, relevantstatutes, and remedial rules to settle cases and controversies. Clearly, the power of the Secretary of Justice to review does notpreclude this Court and the CA from intervening and exercising ourown powers of review with respect to the DOJs findings , such as in theexceptional case in which grave abuse of discretion is committed, as when aclear sufficiency or insufficiency of evidence to support a finding of probablecause is ignored.

CIR vs. REYES Taxation Contents of a Formal Assessment Notice In 1993, Maria Tancino died leaving behind an estate worth P32 million. In 1997, a tax audit was conducted on the estate. Meanwhile, the National Internal Revenue Code (NIRC) of 1997 was passed. Eventually in 1998, the estate was issued a final assessment notice (FAN) demanding the estate to pay P14.9 million in taxes inclusive of surcharge and interest; the estates liability was based on Section 229 of the [old] Tax Code. Azucena Reyes, one of the heirs, protested the FAN. The Commissioner of Internal Revenue (CIR) nevertheless issued a warrant of distraint and/or levy. Reyes again protested the warrant but in March 1999, she offered a compromise and was willing to pay P1 million in taxes. Her offer was denied. She continued to work on another compromise but was eventually denied. The case reached the Court of Tax Appeals where Reyes was also denied. In the Court of Appeals, Reyes received a favorable judgment. ISSUE: Whether or not the formal assessment notice is valid. HELD: No. The NIRC of 1997 was already in effect when the FAN was issued. Under Section 228 of the NIRC, taxpayers shall be informed in writing of the law and the facts on which the assessment is made: otherwise, the assessment shall be void. In the case at bar, the FAN merely stated the amount of liability to be shouldered by the estate and the law upon which such liability is based. However, the estate was not informed in writing of the facts on which the assessment of estate taxes had been made. The estate was merely informed of the findings of the CIR. Section 228 of the NIRC being remedial in nature can be applied retroactively even though the tax investigation was conducted prior to the laws passage. Consequently, the invalid FAN cannot be a basis of a compromise, any proceeding emanating from the invalid FAN is void including the issuance of the warrant of distraint and/or levy.

CIR V PASCOR REALTY & DEVT CORP et. al. GR No. 128315, June 29, 1999 Facts: The CIR authorized certain BIR officers to examine the books of accounts and other accounting records of Pascor Realty and Development Corp. (PRDC) for 1986, 1987 and 1988. The examination resulted in recommendation for the issuance of an assessment of P7,498,434.65 and P3,015,236.35 for 1986 and 1987, respectively. The Commissioner filed a criminal complaint for tax evasion against PRDC, its president and treasurer before the DOJ. Private respondents filed immediately an urgent request for reconsideration on reinvestigation disputing the tax assessment and tax liability. The Commissioner denied private respondents request for reconsideration/reinvestigation on the ground that no formal assessment has been issued which the latter elevated to the CTA on a petition for review. The Commissioners motion to dismiss on the ground of the CTAs lack of jurisdiction denied by CTA and ordered the Commissioner to file an answer. Instead of complying with the order of CTA, Commissioner filed a petition with the CA alleging grave abuse of discretion and lack of jurisdiction on the part of CTA for considering the affidavit/report of the revenue officers and the endorsement of said report as assessment which may be appealed to the CTA. The CA sustained the CTA decision and dismissed the petition. Issues: (1) Whether or not the criminal complaint for tax evasion can be construed as an assessment. (2) Whether or not an assessment is necessary before criminal charges for tax evasion may be instituted. Held: The filing of the criminal complaint with the DOJ cannot be construed as a formal assessment. Neither the Tax Code nor the revenue regulations governing the protest assessments provide a specific definition or form of an assessment. An assessment must be sent to and received by the taxpayer, and must demand payment of the taxes described therein within a specific period. The revenue officers affidavit merely contained a computation of respondents tax liability. It did not state a dema nd or period for payment. It was addressed to the Secretary of Justice not to the taxpayer. They joint affidavit was meant to support the criminal complaint for

tax evasion; it was not meant to be a notice of tax due and a demand to private respondents for the payment thereof. The fact that the complaint was sent to the DOJ, and not to private respondent, shows that commissioner intended to file a criminal complaint for tax evasion, not to issue an assessment. An assessment is not necessary before criminal charges can be filed. A criminal charge need not only be supported by a prima facie showing of failure to file a required return. The CIR had, in such tax evasion cases, discretion on whether to issue an assessment, or to file a criminal case against the taxpayer, or to do both.

G.R. No. 173176Date: August 26, 2008 ***JUDY ANNE L. SANTOS v. PEOPLE Petitioner: Judy Anne L. SantosRespondent: People of the Philippines, Bureau of Internal Revenue (BIR) Facts: On 19 May 2005, then BIR Commissioner Guillermo L. Parayno, Jr. wrote to the Department of Justice (DOJ) Secretary Raul M. Gonzales aletter regarding the possible filing of criminal charges against petitioner. In said letter, BIR Commissioner Parayno summarized the findings of theinvestigating BIR officers that petitioner, in her Annual Income Tax Return for taxable year 2002 filed with the BIR, declared an income of P8,033,332.70derived from her talent fees solely from ABS-CBN; initial documents gathered from the BIR offices and those given by petitioner's accountant and thirdparties, however, confirmed that petitioner received in 2002 income in the amount of at least P14,796,234.70, not only from ABS-CBN, but also fromother sources, such as movies and product endorsements; the estimated tax liability arising from petitioner's underdeclaration amounted toP1,718,925.52, including incremental penalties; the non-declaration by petitioner of an amount equivalent to at least 84.18% of the income declared inher return was considered a substantial underdeclaration of income, which constituted prima facie evidence of false or fraudulent return under Section248(B) of the NIRC, as amended; and petitioner's failure to account as part of her income the professional fees she received from sources other than ABS-CBN and her underdeclaration of the income she received from ABS-CBN amounted to manifest violations of Sections 254 and 255, as well asSection 248(B) of the NIRC, as amended.After an exchangeof affidavits and other pleadings by the parties, Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution dated 21 October 2005 findingprobable cause and recommending the filing of a criminal information against petitioner for violation of Section 255 in relation to Sections 254 and 248(B)of the NIRC, as amended. The said Resolution was approved by Chief State Prosecutor Zuno. Pursuant to the 21 October 2005 DOJ Resolution, anInformation for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended, was filed with the CTA on 3 November 2005 anddocketed as C.T.A. Crim. Case No. 0-012. However, the CTA First Division, after noting several discrepancies in the Information filed, required the StateProsecutor to clarify and explain the same, and to submit the original copies of the parties' affidavits, memoranda, and all other evidence on record.Consequently, Prosecution Attorney Torrevillas, on behalf of respondent People, submitted on 1 December 2005 a Compliance with Ex Parte Motion to Admit Attached Information Prosecution Attorney Torrevillas moved that the documents submitted be admitted as part of the record of the case and thefirst Information be substituted by the attached second Information. The second Information addressed the discrepancies noted by the CTA in the firstInformation.The CTA First Division then issued on 9 December 2005 a warrant for the arrest of petitioner. The tax court lifted and recalled the warrant of arrest on 21 December 2005 after petitioner voluntarily appeared and submittedherself to its jurisdiction and filed the required bail bond in the amount of P20,000.00. On 10 January 2006, petitioner filed with the CTA First Division aMotion to Quash the Information filed in C.T.A. Crim. Case No. 0-012 on the following grounds: (1) The facts alleged in the INFORMATION do notconstitute an offense; (2) The officer who filed the information had no authority to do so; (3) The Honorable Court of Tax Appeals has no jurisdiction over the subject matter of the case; and (4) The information is void ab initio , being violative of due process, and the equal protection of the laws.In 2006, the CTA First Division denied petitioner's Motion to Quash andaccordingly scheduled her arraignment on 2 March 2006 at 9:00 a.m. Petitioner filed a Motion for Reconsideration and/or Reinvestigation, which wasagain denied by the CTA First Division. On 1 June 2006, petitioner filed with the CTA en banc a Motion for Extension of Time to File Petition for Review,docketed as C.T.A. EB. CRIM. No. 001. She filed her Petition for Review with the CTA en banc on 16 June 2006. However, the court ruled that aresolution denying a motion to quash is not a proper subject of an appeal to the Court En Banc under Section 11 of R.A. No. 9282 because a rulingdenying a motion to quash is only an interlocutory order, as such, it cannot be made the subject of an appeal pursuant to said law and the Rules of Court. Petitioner's primary argument is that a resolution of a CTA Division denying a motion to quash is a proper subject of an appeal to the CTA en banc under Section 18 of Republic Act No. 1125, as amended, because the law does not say that only a resolution that constitutes a final disposition of a casemay be appealed to the CTA en banc . If the interpretation of the law by the CTA en banc prevails, a procedural void is created leaving the parties, suchas petitioner, without any remedy involving erroneous resolutions of a CTA Division. Issue:

WON a resolution of a CTA division denying a motion to quash is a proper subject of an appeal to the CTA En Banc of R.A. No. 9282, amending R.A.1125? Held: NO; Petition denied. Ratio: 1. General rule: The denial of a motion to quash is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari. a.According to Section 1, Rule 41 of the Revised Rules of Court, governing appeals from the Regional Trial Courts (RTCs) to the Court of Appeals,an appeal may be taken only from a judgment or final order that completely disposes of the case or of a matter therein when declared by theRules to be appealable. Said provision, thus, explicitly states that no appeal may be taken from an interlocutory order. b. Section 2, Rule 41 of the Revised Rules of Court provides that "(o)nly final judgments or orders shall be subject to appeal." Interlocutory or incidental judgments or orders do not stay the progress of an action nor are they subject of appeal "until final judgment or order is rendered for one party or the other." The test to determine whether an order or judgment is interlocutory or final is this: "Does it leave something to be done inthe trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final". A court order is final in character if it putsan end to the particular matter resolved or settles definitely the matter therein disposed of, such that no further questions can come before thecourt except the execution of the order. The term "final" judgment or order signifies a judgment or an order which disposes of the cause as to allthe parties, reserving no further questions or directions for future determination. In other words, after a final order or judgment, the court should Daniel G. Guinigundo (4A)December 11, 2011 Atty. Menardo Guevarra

APPELLATE PRACTICE AND BRIEF MAKING have nothing more to do in respect of the relative rights of the parties to the case. Conversely, "an order that does not finally dispose of the caseand does not end the Court's task of adjudicating the parties' contentions in determining their rights and liabilities as regards each other, butobviously indicates that other things remain to be done by the Court, is interlocutory." c. Rationale in Matute v. Court of Appeals : (i) an "interlocutory order or decree made in the progress of a case is always under the control of thecourt until the final decision of the suit, and may be modified or rescinded upon sufficient grounds shown at any time before final judgment. (ii) toavoid multiplicity of appeals in a single action, which must necessarily suspend the hearing and decision on the merits of the case during thependency of the appeal. If such appeal were allowed, the trial on the merits of the case would necessarily be delayed for a considerable lengthof time, and compel the adverse party to incur unnecessary expenses, for one of the parties may interpose as many appeals as incidentalquestions may be raised by him, and interlocutory orders rendered or issued by the lower court. d. There is no dispute that a court order denying a motion to quash is interlocutory.The denial of the motion to quash means that the criminal information remains pending with the court, which must proceed with the trial to determine whether the accused is guilty of the crime chargedtherein. Equally settled is the rule that an order denying a motion to quash, being interlocutory, is not immediately appealable, nor can it be thesubject of a petition for certiorari . Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. e. While the general rule proscribes the appeal of an interlocutory order, there are also recognized exceptions to the same. The general rule is notabsolute. Where special circumstances clearly demonstrate the inadequacy of an appeal, then the special civil action of certiorari or prohibitionmay exceptionally be allowed. This Court recognizes that under certain situations, recourse to extraordinary legal remedies, such as a petition for certiorari , is considered proper to question the denial of a motion to quash (or any other interlocutory order) in the interest of a "more enlightened and substantial justice";or to promote public welfare and public policy; or when the cases "have attracted nationwide attention, making it essential to proceed with dispatch in the consideration thereof";or when the order was rendered with grave abuse of discretion. Certiorari is anappropriate remedy to assail an interlocutory order (1) when the tribunal issued such order without or in excess of jurisdiction or with grave abuseof discretion; and (2) when the assailed interlocutory order is patently erroneous, and the remedy of appeal would not afford adequate andexpeditious relief.2. The CTA First Division did not commit grave abuse of discretion in denying petitioner's Motion to Quash. a.An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of judgment, which is equivalent to lack of jurisdiction. In this connection, it is only upon showing that the court acted withoutor in excess of jurisdiction or with grave abuse of discretion that an interlocutory order such as that involved in this case may be impugned. b. Recourse to a petition for certiorari

to assail an interlocutory order is now expressly recognized in the ultimate paragraph of Section 1, Rule 41 of the Revised Rules of Court on the subject of appeal.c.Petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits and other pleadings and submit evidencebefore the DOJ during the preliminary investigation of her case and before the Information was filed against her.

G.R. No. 173176 August 26, 2008 JUDY ANNE L. SANTOS, petitioner, vs. PEOPLE OF THE PHILIPPINES and BUREAU OF INTERNAL REVENUE, respondents. DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Revised Rules of Court filed by petitioner Judy Anne L. Santos (Santos) seeking the reversal and setting aside of the Resolution,2 dated 19 June 2006, of the Court of Tax Appeals (CTA) en banc in C.T.A. EB. CRIM. No. 001 which denied petitioners Motion for Extension of Time to File Petition for Review. Petitioner intended to file the Petition for Review with the CTA en banc to appeal the Resolutions dated 23 February 20063 and 11 May 20064 of the CTA First Division in C.T.A. Crim. Case No. 0-012 denying, respectively, her Motion to Quash the Information filed against her for violation of Section 255, in relation to Sections 254 and 248(B) of the National Internal Revenue Code (NIRC), as amended; and her Motion for Reconsideration. There is no controversy as to the facts that gave rise to the present Petition. On 19 May 2005, then Bureau of Internal Revenue (BIR) Commissioner Guillermo L. Parayno, Jr. wrote to the Department of Justice (DOJ) Secretary Raul M. Gonzales a letter5 regarding the possible filing of criminal charges against petitioner. BIR Commissioner Parayno began his letter with the following statement: I have the honor to refer to you for preliminary investigation and filing of an information in court if evidence so warrants, the herein attached Joint Affidavit of RODERICK C. ABAD, STIMSON P. CUREG, VILMA V. CARONAN, RHODORA L. DELOS REYES under Group Supervisor TEODORA V. PURINO, of the National Investigation Division, BIR National Office Building, BIR Road, Diliman, Quezon City, recommending the criminal prosecution of MS. JUDY ANNE LUMAGUI SANTOS for substantial underdeclaration of income, which constitutes as prima facie evidence of false or fraudulent return under Section 248(B) of the NIRC and punishable under Sections 254 and 255 of the Tax Code. In said letter, BIR Commissioner Parayno summarized the findings of the investigating BIR officers that petitioner, in her Annual Income Tax Return for taxable year 2002 filed with the BIR, declared an income of P8,033,332.70 derived from her talent fees solely from ABS-CBN; initial documents gathered from the BIR offices and those given by petitioners accountant and third parties, however, confirmed that petitioner received in 2002 income in the amount of at least P14,796,234.70, not only from ABS-CBN, but also from other sources, such as movies and product endorsements; the estimated tax liability arising from petitioners underdeclara tion amounted to P1,718,925.52, including incremental penalties; the non-declaration by petitioner of an amount equivalent to at least 84.18% of the income declared in her return was considered a substantial underdeclaration of income, which constituted prima facie evidence of false or fraudulent return under Section 248(B)6 of the NIRC, as amended; and petitioners failure to account as part of her income the professional fees she received from sources other than ABS-CBN and her underdeclaration of the income she received from ABS-CBN amounted to manifest violations of Sections 2547 and 255,8 as well as Section 248(B) of the NIRC, as amended. After an exchange of affidavits and other pleadings by the parties, Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution9 dated 21 October 2005 finding probable cause and recommending the filing of a criminal information against petitioner for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended. The said Resolution was approved by Chief State Prosecutor Jovencito R. Zuno. Pursuant to the 21 October 2005 DOJ Resolution, an Information10 for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended, was filed with the CTA on 3 November 2005 and docketed as C.T.A. Crim. Case No. 0-012. However, the CTA First Division, after noting several discrepancies in the Information filed, required the State Prosecutor to clarify and explain the same, and to submit the original copies of the parties affidavits, memoranda, and all other evidence on record.11 Consequently, Prosecution Attorney Torrevillas, on behalf of respondent People, submitted on 1 December 2005 a Compliance with Ex Parte Motion to Admit Attached Information.12 Prosecution Attorney Torrevillas moved that the documents submitted be admitted as part of the record of the case and the first Information be substituted by the attached second Information. The second Information13 addressed the discrepancies noted by the CTA in the first Information, by now reading thus: The undersigned Prosecution Attorney of the Department of Justice hereby accuses JUDY ANNE SANTOS y Lumagui of the offense of violation of Section 255, of Republic Act No. 8424, otherwise known as the "Tax Reform Act of 1997," as amended, committed as follows: "That on or about the 15th day of April, 2003, at Quezon City, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused did then and there, willfully, unlawfully, and feloniously file a false and fraudulent income tax return for taxable year 2002 by indicating therein a gross income of P8,033,332.70 when in truth and in fact her correct income for taxable year 2002 is P16,396,234.70 or a gross underdeclaration/difference of P8,362,902 resulting to an income tax deficiency of P1,395,116.24 excluding interest and penalties thereon of P1,319,500.94 or a total income tax deficiency of P2,714,617.18 to the damage and prejudice of the government of the same amount.["] In a Resolution14 dated 8 December 2005, the CTA First Division granted the Peoples Ex Parte Motion and admitted the second Information. The CTA First Division then issued on 9 December 2005 a warrant for the arrest of petitioner.15 The tax court lifted and recalled the warrant of arrest on 21 December 2005 after petitioner voluntarily appeared and submitted herself to its jurisdiction and filed the required bail bond in the amount of P20,000.00.16 On 10 January 2006, petitioner filed with the CTA First Division a Motion to Quash17 the Information filed in C.T.A. Crim. Case No. 0-012 on the following grounds: 1. The facts alleged in the INFORMATION do not constitute an offense; 2. The officer who filed the information had no authority to do so; 3. The Honorable Court of Tax Appeals has no jurisdiction over the subject matter of the case; and

4. The information is void ab initio, being violative of due process, and the equal protection of the laws. In a Resolution18 dated 23 February 2006, the CTA First Division denied petitioners Motion to Quash and accordingly scheduled her arraignment on 2 March 2006 at 9:00 a.m. Petitioner filed a Motion for Reconsideration and/or Reinvestigation,19 which was again denied by the CTA First Division in a Resolution20 dated 11 May 2006. Petitioner received a copy of the 11 May 2006 Resolution of the CTA First Division on 17 May 2006. On 1 June 2006, petitioner filed with the CTA en banc a Motion for Extension of Time to File Petition for Review, docketed as C.T.A. EB. CRIM. No. 001. She filed her Petition for Review with the CTA en banc on 16 June 2006. However, in its Resolution21 dated 19 June 2006, the CTA en banc denied petitioners Motion for Extension of Time to File Petition for Review, ratiocinating that: In the case before Us, the petitioner is asking for an extension of time to file her Petition for Review to appeal the denial of her motion to quash in C.T.A. Crim. Case No. 0-012. As stated above, a resolution denying a motion to quash is not a proper subject of an appeal to the Court En Banc under Section 11 of R.A. No. 9282 because a ruling denying a motion to quash is only an interlocutory order, as such, it cannot be made the subject of an appeal pursuant to said law and the Rules of Court. Section 1 of Rule 41 of the Rules of Court provides that "no appeal may be taken from an interlocutory order" and Section 1 (i) of Rule 50 provides for the dismissal of an appeal on the ground that "the order or judgment appealed from is not appealable". Time and again, the Supreme Court had ruled that the remedy of the accused in case of denial of a motion to quash is for the accused to enter a plea, go to trial and after an adverse decision is rendered, to appeal therefrom in the manner authorized by law. Since a denial of a Motion to Quash is not appealable, granting petitioners Motion for Extension of Tim e to File Petition for Review will only be an exercise in futility considering that the dismissal of the Petition for Review that will be filed by way of appeal is mandated both by law and jurisprudence.22 Ultimately, the CTA en banc decreed: WHEREFORE, premises considered, petitioners Motion for Extension of Time to File Petition for Review filed on June 1, 2006 is hereby DENIED for lack of merit.23 Now comes petitioner before this Court raising the sole issue of: WHETHER A RESOLUTION OF A CTA DIVISION DENYING A MOTION TO QUASH IS A PROPER SUBJECT OF AN APPEAL TO THE CTA EN BANC UNDER SECTION 11 OF REPUBLIC ACT NO. 9282, AMENDING SECTION 18 OF REPUBLIC ACT NO. 1125.24 Section 18 of Republic Act No. 1125,25 as amended by Republic Act No. 9282,26 provides: SEC. 18. Appeal to the Court of Tax Appeals En Banc. No civil proceedings involving matters arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act. 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. Petitioners primary argument is that a resolution of a CTA Division denying a motion to quash is a proper subject of an appeal to the CTA en banc under Section 18 of Republic Act No. 1125, as amended, because the law does not say that only a resolution that constitutes a final disposition of a case may be appealed to the CTA en banc. If the interpretation of the law by the CTA en banc prevails, a procedural void is created leaving the parties, such as petitioner, without any remedy involving erroneous resolutions of a CTA Division. The Court finds no merit in the petitioners assertion. The petition for review under Section 18 of Republic Act No. 1125, as amended, may be new to the CTA, but it is actually a mode of appeal long available in courts of general jurisdiction. Petitioner is invoking a very narrow and literal reading of Section 18 of Republic Act No. 1125, as amended. Indeed, the filing of a petition for review with the CTA en banc from a decision, resolution, or order of a CTA Division is a remedy newly made available in proceedings before the CTA, necessarily adopted to conform to and address the changes in the CTA. There was no need for such rule under Republic Act No. 1125, prior to its amendment, since the CTA then was composed only of one Presiding Judge and two Associate Judges.27 Any two Judges constituted a quorum and the concurrence of two Judges was necessary to promulgate any decision thereof.28 The amendments introduced by Republic Act No. 9282 to Republic Act No. 1125 elevated the rank of the CTA to a collegiate court, with the same rank as the Court of Appeals, and increased the number of its members to one Presiding Justice and five Associate Justices.29 The CTA is now allowed to sit en banc or in two Divisions with each Division consisting of three Justices. Four Justices shall constitute a quorum for sessions en banc, and the affirmative votes of four members of the Court en banc are necessary for the rendition of a decision or resolution; while two Justices shall constitute a quorum for sessions of a Division and the affirmative votes of two members of the Division shall be necessary for the rendition of a decision or resolution.30 In A.M. No. 05-11-07-CTA, the Revised CTA Rules, this Court delineated the jurisdiction of the CTA en banc31 and in Divisions.32 Section 2, Rule 4 of the Revised CTA Rules recognizes the exclusive appellate jurisdiction of the CTA en banc to review by appeal the following decisions, resolutions, or orders of the CTA Division: SEC. 2. Cases within the jurisdiction of the Court en banc. The Court en banc shall exercise exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: (1) Cases arising from administrative agencies Bureau of Internal Revenue, Bureau of Customs, Department of Finance, Department of Trade and Industry, Department of Agriculture; (2) Local tax cases decided by the Regional Trial Courts in the exercise of their original jurisdiction; and (3) Tax collection cases decided by the Regional Trial Courts in the exercise of their original jurisdiction involving final and executory assessments for taxes, fees, charges and penalties, where the principal amount of taxes and penalties claimed is less than one million pesos; xxxx

(f) Decisions, resolutions or orders on motions for reconsideration or new trial of the Court in Division in the exercise of its exclusive original jurisdiction over cases involving criminal offenses arising from violations of the National Internal Revenue Code or the Tariff and Customs Code and other laws administered by the Bureau of Internal Revenue or Bureau of Customs. (g) Decisions, resolutions or order on motions for reconsideration or new trial of the Court in Division in the exercise of its exclusive appellate jurisdiction over criminal offenses mentioned in the preceding subparagraph; x x x. Although the filing of a petition for review with the CTA en banc from a decision, resolution, or order of the CTA Division, was newly made available to the CTA, such mode of appeal has long been available in Philippine courts of general jurisdiction. Hence, the Revised CTA Rules no longer elaborated on it but merely referred to existing rules of procedure on petitions for review and appeals, to wit: RULE 7 PROCEDURE IN THE COURT OF TAX APPEALS SEC. 1. Applicability of the Rules of the Court of Appeals. The procedure in the Court en banc or in Divisions in original and in appealed cases shall be the same as those in petitions for review and appeals before the Court of Appeals pursuant to the applicable provisions of Rules 42, 43, 44 and 46 of the Rules of Court, except as otherwise provided for in these Rules. RULE 8 PROCEDURE IN CIVIL CASES xxxx SEC. 4. Where to appeal; mode of appeal. xxxx (b) An appeal from a decision or resolution of the Court in Division on a motion for reconsideration or new trial shall be taken to the Court by petition for review as provided in Rule 43 of the Rules of Court. The Court en banc shall act on the appeal. xxxx RULE 9 PROCEDURE IN CRIMINAL CASES SEC. 1. Review of cases in the Court. The review of criminal cases in the Court en banc or in Division shall be governed by the applicable provisions of Rule 124 of the Rules of Court. xxxx SEC. 9. Appeal; period to appeal. xxxx (b) An appeal to the Court en banc in criminal cases decided by the Court in Division shall be taken by filing a petition for review as provided in Rule 43 of the Rules of Court within fifteen days from receipt of a copy of the decision or resolution appealed from. The Court may, for good cause, extend the time for filing of the petition for review for an additional period not exceeding fifteen days. (Emphasis ours.) Given the foregoing, the petition for review to be filed with the CTA en banc as the mode for appealing a decision, resolution, or order of the CTA Division, under Section 18 of Republic Act No. 1125, as amended, is not a totally new remedy, unique to the CTA, with a special application or use therein. To the contrary, the CTA merely adopts the procedure for petitions for review and appeals long established and practiced in other Philippine courts. Accordingly, doctrines, principles, rules, and precedents laid down in jurisprudence by this Court as regards petitions for review and appeals in courts of general jurisdiction should likewise bind the CTA, and it cannot depart therefrom. General rule: The denial of a motion to quash is an interlocutory order which is not the proper subject of an appeal or a petition for certiorari. According to Section 1, Rule 41 of the Revised Rules of Court, governing appeals from the Regional Trial Courts (RTCs) to the Court of Appeals, an appeal may be taken only from a judgment or final order that completely disposes of the case or of a matter therein when declared by the Rules to be appealable. Said provision, thus, explicitly states that no appeal may be taken from an interlocutory order. 33 The Court distinguishes final judgments and orders from interlocutory orders in this wise: Section 2, Rule 41 of the Revised Rules of Court provides that "(o)nly final judgments or orders shall be subject to appeal." Interlocutory or incidental judgments or orders do not stay the progress of an action nor are they subject of appeal "until final judgment or order is rendered for one party or the other." The test to determine whether an order or judgment is interlocutory or final is this: "Does it leave something to be done in the trial court with respect to the merits of the case? If it does, it is interlocutory; if it does not, it is final". A court order is final in character if it puts an end to the particular matter resolved or settles definitely the matter therein disposed of, such that no further questions can come before the court except the execution of the order. The term "final" judgment or order signifies a judgment or an order which disposes of the cause as to all the parties, reserving no further questions or directions for future determination. The order or judgment may validly refer to the entire controversy or to some definite and separate branch thereof. "In the absence of a statutory definition, a final judgment, order or decree has been held to be x x x one that finally disposes of, adjudicates, or determines the rights, or some right or rights of the parties, either on the entire controversy or on some definite and separate branch thereof, and which concludes them until it is reversed or set aside." The central point to consider is, therefore, the effects of the order on the rights of the parties. A court order, on the other hand, is merely interlocutory in character if it is provisional and leaves substantial proceeding to be had in connection with its subject. The word "interlocutory" refers to "something intervening between the commencement and the end of a suit which decides some point or matter but is not a final decision of the whole controversy."34 In other words, after a final order or judgment, the court should have nothing more to do in respect of the relative rights of the parties to the case. Conversely, "an order that does not finally dispose of the case and does not end the Court's task of adjudicating the parties' contentions in determining their rights and liabilities as regards each other, but obviously indicates that other things remain to be done by the Court, is interlocutory."35 The rationale for barring the appeal of an interlocutory order was extensively discussed in Matute v. Court of Appeals,36 thus: It is settled that an "interlocutory order or decree made in the progress of a case is always under the control of the court until the final decision of the suit, and may be modified or rescinded upon sufficient grounds shown at any time before final judgment . . ." Of similar import is the ruling of this Court declaring that "it is rudimentary that such (interlocutory) orders are subject to change in the discretion of the court." Moreover, one of the inherent powers of the court is "To amend and control its process and orders so as to

make them conformable to law and justice. In the language of Chief Justice Moran, paraphrasing the ruling in Veluz vs. Justice of the Peace of Sariaya, "since judges are human, susceptible to mistakes, and are bound to administer justice in accordance with law, they are given the inherent power of amending their orders or judgments so as to make them conformable to law and justice, and they can do so before they lose their jurisdiction of the case, that is before the time to appeal has expired and no appeal has been perfected." And in the abovecited Veluz case, this Court held that "If the trial court should discover or be convinced that it had committed an error in its judgment, or had done an injustice, before the same has become final, it may, upon its own motion or upon a motion of the parties, correct such error in order to do justice between the parties. . . . It would seem to be the very height of absurdity to prohibit a trial judge from correcting an error, mistake, or injustice which is called to his attention before he has lost control of his judgment." Corollarily, it has also been held "that a judge of first instance is not legally prevented from revoking the interlocutory order of another judge in the very litigation subsequently assigned to him for judicial action." Another recognized reason of the law in permitting appeal only from a final order or judgment, and not from an interlocutory or incidental one, is to avoid multiplicity of appeals in a single action, which must necessarily suspend the hearing and decision on the merits of the case during the pendency of the appeal. If such appeal were allowed, the trial on the merits of the case would necessarily be delayed for a considerable length of time, and compel the adverse party to incur unnecessary expenses, for one of the parties may interpose as many appeals as incidental questions may be raised by him, and interlocutory orders rendered or issued by the lower court.37 There is no dispute that a court order denying a motion to quash is interlocutory. The denial of the motion to quash means that the criminal information remains pending with the court, which must proceed with the trial to determine whether the accused is guilty of the crime charged therein. Equally settled is the rule that an order denying a motion to quash, being interlocutory, is not immediately appealable,38 nor can it be the subject of a petition for certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial.39 The Court cannot agree in petitioners contention that there would exist a procedural void following the denial of her Motion to Quash by the CTA First Division in its Resolutions dated 23 February 2006 and 11 May 2006, leaving her helpless. The remedy of an accused from the denial of his or her motion to quash has already been clearly laid down as follows: An order denying a Motion to Acquit (like an order denying a motion to quash) is interlocutory and not a final order. It is, therefore, not appealable. Neither can it be the subject of a petition for certiorari. Such order of denial may only be reviewed, in the ordinary course of law, by an appeal from the judgment, after trial. As stated in Collins vs. Wolfe, and reiterated in Mill vs. Yatco, the accused, after the denial of his motion to quash, should have proceeded with the trial of the case in the court below, and if final judgment is rendered against him, he could then appeal, and, upon such appeal, present the questions which he sought to be decided by the appellate court in a petition for certiorari. In Acharon vs. Purisima, the procedure was well defined, thus: "Moreover, when the motion to quash filed by Acharon to nullify the criminal cases filed against him was denied by the Municipal Court of General Santos his remedy was not to file a petition for certiorari but to go to trial without prejudice on his part to reiterate the special defenses he had invoked in his motion and, if, after trial on the merits, an adverse decision is rendered, to appeal therefrom in the manner authorized by law. This is the procedure that he should have followed as authorized by law and precedents. Instead, he took the usual step of filing a writ of certiorari before the Court of First Instance which in our opinion is unwarranted it being contrary to the usual course of law." 40 Hence, the CTA en banc herein did not err in denying petitioners Motion for Extension of Time to File Petition for Review, when such Petition for Review is the wrong remedy to assail an interlocutory order denying her Motion to Quash. While the general rule proscribes the appeal of an interlocutory order, there are also recognized exceptions to the same. The general rule is not absolute. Where special circumstances clearly demonstrate the inadequacy of an appeal, then the special civil action of certiorari or prohibition may exceptionally be allowed.41 This Court recognizes that under certain situations, recourse to extraordinary legal remedies, such as a petition for certiorari, is considered proper to question the denial of a motion to quash (or any other interlocutory order) in the interest of a "more enlightened and substantial justice";42 or to promote public welfare and public policy;43 or when the cases "have attracted nationwide attention, making it essential to proceed with dispatch in the consideration thereof";44 or when the order was rendered with grave abuse of discretion.45 Certiorari is an appropriate remedy to assail an interlocutory order (1) when the tribunal issued such order without or in excess of jurisdiction or with grave abuse of discretion; and (2) when the assailed interlocutory order is patently erroneous, and the remedy of appeal would not afford adequate and expeditious relief.46 Recourse to a petition for certiorari to assail an interlocutory order is now expressly recognized in the ultimate paragraph of Section 1, Rule 41 of the Revised Rules of Court on the subject of appeal, which states: In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. As to whether the CTA en banc, under its expanded jurisdiction in Republic Act No. 9282, has been granted jurisdiction over special civil actions for certiorari is not raised as an issue in the Petition at bar, thus, precluding the Court from making a definitive pronouncement thereon. However, even if such an issue is answered in the negative, it would not substantially affect the ruling of this Court herein, for a party whose motion to quash had been denied may still seek recourse, under exceptional and meritorious circumstances, via a special civil action for certiorari with this Court, refuting petitioners assertion of a procedural void. The CTA First Division did not commit grave abuse of discretion in denying petitioners Motion to Quash. Assuming that the CTA en banc, as an exception to the general rule, allowed and treated petitioners Petition for Review in C.T.A. EB. CRIM. No. 001 as a special civil action for certiorari, 47 it would still be dismissible for lack of merit. An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of judgment, which is equivalent to lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility. In this connection, it is only upon showing that the court acted without or in excess of jurisdiction or with grave abuse of discretion that an interlocutory order such as that involved in this case may be impugned. Be that as it may, it must be emphasized that this practice is applied only under certain exceptional circumstances to prevent unnecessary delay in the administration of justice and so as not to unduly burden the courts.48

Certiorari is not available to correct errors of procedure or mistakes in the judges findings and conclusions of law and fact. It is on ly in the presence of extraordinary circumstances evincing a patent disregard of justice and fair play where resort to a petition for certiorari is proper. A party must not be allowed to delay litigation by the sheer expediency of filing a petition for certiorari under Rule 65 of the Revised Rules of Court based on scant allegations of grave abuse.49 A writ of certiorari is not intended to correct every controversial interlocutory ruling: it is resorted to only to correct a grave abuse of discretion or a whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve persons from arbitrary acts acts which courts or judges have no power or authority in law to perform. It is not designed to correct erroneous findings and conclusions made by the courts.50 The Petition for Review which petitioner intended to file before the CTA en banc relied on two grounds: (1) the lack of authority of Prosecuting Attorney Torrevillas to file the Information; and (2) the filing of the said Information in violation of petitioners constitutional rights to due process and equal protection of the laws. Anent the first ground, petitioner argues that the Information was filed without the approval of the BIR Commissioner in violation of Section 220 of NIRC, as amended, which provides: SEC. 220. Form and Mode of Proceeding in Actions Arising under this Code. - Civil and criminal actions and proceedings instituted in behalf of the Government under the authority of this Code or other law enforced by the Bureau of Internal Revenue shall be brought in the name of the Government of the Philippines and shall be conducted by legal officers of the Bureau of Internal Revenue but no civil or criminal action for the recovery of taxes or the enforcement of any fine, penalty or forfeiture under this Code shall be filed in court without the approval of the Commissioner. Petitioners argument must fail in light of BIR Commissioner Paraynos letter dated 19 May 2005 to DOJ Secretary Gonzales referring "for preliminary investigation and filing of an information in court if evidence so warrants," the findings of the BIR officers recommending the criminal prosecution of petitioner. In said letter, BIR Commissioner Parayno already gave his prior approval to the filing of an information in court should the DOJ, based on the evidence submitted, find probable cause against petitioner during the preliminary investigation. Section 220 of the NIRC, as amended, simply requires that the BIR Commissioner approve the institution of civil or criminal action against a tax law violator, but it does not describe in what form such approval must be given. In this case, BIR Commissioner Paraynos letter of 19 May 2005 already states his express approval of the filing of an information against petitioner and his signature need not appear on the Resolution of the State Prosecutor or the Information itself. Still on the purported lack of authority of Prosecution Attorney Torrevillas to file the Information, petitioner asserts that it is the City Prosecutor under the Quezon City Charter, who has the authority to investigate and prosecute offenses allegedly committed within the jurisdiction of Quezon City, such as petitioners case. The Court is not persuaded. Under Republic Act No. 537, the Revised Charter of Quezon City, the City Prosecutor shall have the following duties relating to the investigation and prosecution of criminal offenses: SEC. 28. The City Attorney - His assistants - His duties. xxxx (g) He shall also have charge of the prosecution of all crimes, misdemeanors, and violations of city ordinances, in the Court of First Instance and the municipal courts of the city, and shall discharge all the duties in respect to the criminal prosecutions enjoined by law upon provincial fiscals. (h) He shall cause to be investigated all charges of crimes, misdemeanors, and violations of ordinances and have the necessary information or complaints prepared or made against the persons accused. He or any of his assistants may conduct such investigations by taking oral evidence of reputable witnesses, and for this purpose may issue subpoena, summon witnesses to appear and testify under oath before him, and the attendance or evidence of an absent or recalcitrant witness may be enforced by application to the municipal court or the Court of First Instance. No witness summoned to testify under this section shall be under obligation to give any testimony which tend to incriminate himself. Evident from the foregoing is that the City Prosecutor has the power to investigate crimes, misdemeanors, and violations of ordinances committed within the territorial jurisdiction of the city, and which can be prosecuted before the trial courts of the said city. The charge against petitioner, however, is already within the exclusive original jurisdiction of the CTA,51 as the Information states that her gross underdeclaration resulted in an income tax deficiency of P1,395,116.24, excluding interest and penalties. The City Prosecutor does not have the authority to appear before the CTA, which is now of the same rank as the Court of Appeals. In contrast, the DOJ is the principal law agency of the Philippine government which shall be both its legal counsel and prosecution arm.52 It has the power to investigate the commission of crimes, prosecute offenders and administer the probation and correction system.53 Under the DOJ is the Office of the State Prosecutor whose functions are described as follows: Sec. 8. Office of the Chief State Prosecutor. - The Office of the Chief State Prosecutor shall have the following functions: (1) Assist the Secretary in the performance of powers and functions of the Department relative to its role as the prosecution arm of the government; (2) Implement the provisions of laws, executive orders and rules, and carry out the policies, plans, programs and projects of the Department relative to the investigation and prosecution of criminal cases; (3) Assist the Secretary in exercising supervision and control over the National Prosecution Service as constituted under P.D. No. 1275 and/or otherwise hereinafter provided; and (4) Perform such other functions as may be provided by law or assigned by the Secretary.54 As explained by CTA First Division in its Resolution dated 11 May 2006: [T]he power or authority of the Chief State Prosecutor Jovencito Zuo, Jr. and his deputies in the Department of Justice to prosecute cases is national in scope; and the Special Prosecutors authority to sign and file informations in court proceeds from the exercise of said persons authority to conduct preliminary investigations.55 Moreover, there is nothing in the Revised Quezon City Charter which would suggest that the power of the City Prosecutor to investigate and prosecute crimes, misdemeanors, and violations of ordinances committed within the territorial jurisdiction of the city is to the exclusion of the State Prosecutors. In fact, the Office of the State Prosecutor exercises control and supervision over City Prosecutors under Executive Order No. 292, otherwise known as the Administrative Code of 1987.

As regards petitioners second ground in her intended Petition for Review with the CTA en banc, she asserts that she has been denied due process and equal protection of the laws when similar charges for violation of the NIRC, as amended, against Regina Encarnacion A. Velasquez (Velasquez) were dismissed by the DOJ in its Resolution dated 10 August 2005 in I.S. No. 2005-330 for the reason that Velasquezs tax liability was not yet fully determined when the charges were filed. The Court is unconvinced. First, a motion to quash should be based on a defect in the information which is evident on its face.56 The same cannot be said herein. The Information against petitioner appears valid on its face; and that it was filed in violation of her constitutional rights to due process and equal protection of the laws is not evident on the face thereof. As pointed out by the CTA First Division in its 11 May 2006 Resolution, the more appropriate recourse petitioner should have taken, given the dismissal of similar charges against Velasquez, was to appeal the Resolution dated 21 October 2005 of the Office of the State Prosecutor recommending the filing of an information against her with the DOJ Secretary.57 Second, petitioner cannot claim denial of due process when she was given the opportunity to file her affidavits and other pleadings and submit evidence before the DOJ during the preliminary investigation of her case and before the Information was filed against her. Due process is merely an opportunity to be heard. In addition, preliminary investigation conducted by the DOJ is merely inquisitorial. It is not a trial of the case on the merits. Its sole purpose is to determine whether a crime has been committed and whether the respondent therein is probably guilty of the crime. It is not the occasion for the full and exhaustive display of the parties evidence. Hence, if the investigating prosecutor is already satisfied that he can reasonably determine the existence of probable cause based on the parties evidence thus presented, he may terminate the proceedings and resolve the case.58 Third, petitioner cannot likewise aver that she has been denied equal protection of the laws. The equal protection clause exists to prevent undue favor or privilege. It is intended to eliminate discrimination and oppression based on inequality. Recognizing the existence of real differences among men, the equal protection clause does not demand absolute equality. It merely requires that all persons shall be treated alike, under like circumstances and conditions, both as to the privileges conferred and liabilities enforced.59 Petitioner was not able to duly establish to the satisfaction of this Court that she and Velasquez were indeed similarly situated, i.e., that they committed identical acts for which they were charged with the violation of the same provisions of the NIRC; and that they presented similar arguments and evidence in their defense - yet, they were treated differently. Furthermore, that the Prosecution Attorney dismissed what were supposedly similar charges against Velasquez did not compel Prosecution Attorney Torrevillas to rule the same way on the charges against petitioner. In People v. Dela Piedra,60 this Court explained that: The prosecution of one guilty person while others equally guilty are not prosecuted, however, is not, by itself, a denial of the equal protection of the laws. Where the official action purports to be in conformity to the statutory classification, an erroneous or mistaken performance of the statutory duty, although a violation of the statute, is not without more a denial of the equal protection of the laws. The unlawful administration by officers of a statute fair on its face, resulting in its unequal application to those who are entitled to be treated alike, is not a denial of equal protection unless there is shown to be present in it an element of intentional or purposeful discrimination. This may appear on the face of the action taken with respect to a particular class or person, or it may only be shown by extrinsic evidence showing a discriminatory design over another not to be inferred from the action itself. But a discriminatory purpose is not presumed, there must be a showing of "clear and intentional discrimination." Appellant has failed to show that, in charging appellant in court, that there was a "clear and intentional discrimination" on the part of the prosecuting officials. The discretion of who to prosecute depends on the prosecutions sound assessment whether the evidence before it can justify a reasonable belief that a person has committed an offense. The presumption is that the prosecuting officers regularly performed their duties, and this presumption can be overcome only by proof to the contrary, not by mere speculation. Indeed, appellant has not presented any evidence to overcome this presumption. The mere allegation that appellant, a Cebuana, was charged with the commission of a crime, while a Zamboanguea, the guilty party in appellants eyes, was not, is insufficient to support a conclusion that the prosecution officers denied appellant equal protection of the laws. There is also common sense practicality in sustaining appellants prosecution. While all persons accused of crime are to be treated on a basis of equality before the law, it does not follow that they are to be protected in the commission of crime. It would be unconscionable, for instance, to excuse a defendant guilty of murder because others have murdered with impunity. The remedy for unequal enforcement of the law in such instances does not lie in the exoneration of the guilty at the expense of society x x x. Protection of the law will be extended to all persons equally in the pursuit of their lawful occupations, but no person has the right to demand protection of the law in the commission of a crime. Likewise, [i]f the failure of prosecutors to enforce the criminal laws as to some persons should be converted into a defense for others charged with crime, the result would be that the trial of the district attorney for nonfeasance would become an issue in the trial of many persons charged with heinous crimes and the enforcement of law would suffer a complete breakdown. (Emphasis ours.) In the case at bar, no evidence of a clear and intentional discrimination against petitioner was shown, whether by Prosecution Attorney Torrevillas in recommending the filing of Information against petitioner or by the CTA First Division in denying petitioners Motion to Quash. The only basis for petitioners claim of denial of equal protection of the laws was the dismissal of the charges against Velasquez while those against her were not. And lastly, the Resolutions of the CTA First Division dated 23 February 2006 and 11 May 2006 directly addressed the arguments raised by petitioner in her Motion to Quash and Motion for Reconsideration, respectively, and explained the reasons for the denial of both Motions. There is nothing to sustain a finding that these Resolutions were rendered capriciously, whimsically, or arbitrarily, as to constitute grave abuse of discretion amounting to lack or excess of jurisdiction. In sum, the CTA en banc did not err in denying petitioners Motion for Extension of Time to File Petition for Review. Petitioner cannot file a Petition for Review with the CTA en banc to appeal the Resolution of the CTA First Division denying her Motion to Quash. The Resolution is interlocutory and, thus, unappealable. Even if her Petition for Review is to be treated as a petition for certiorari, it is dismissible for lack of merit. WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. Costs against petitioner.

***CIR vs. PHILIPPINE GLOBAL Taxation Tax Collection Prescriptive Period Reconsideration vs Reinvestigation In April 1991, Philippine Global Communication, Inc. (PGCI) filed its annual income tax return (ITR) for the taxable year 1990. A tax audit was subsequently conducted by the Bureau of Internal Revenue (BIR) and eventually a final assessment notice (FAN) was timely issued in April 1994. The FAN demanded PGCI to pay P118 million in deficiency taxes inclusive of surcharge and interest. PGCI was able to file a protest within the reglementary period. PGCI however refused to produce additional evidence. In October 2002, eight years after the FAN was issued, the Commissioner of Internal Revenue (CIR) issued a final decision denying the protest filed by PGCI. PGCI then filed a petition for review with the Court of Tax Appeals (CTA). The CIR filed its answer in January 2003. The CTA ruled that the CIR can no longer collect because it is already barred by prescription. The CIR argued that the prescriptive period has been extended because PGCI asked for a reinvestigation. ISSUE: Whether or not the CIR is barred by prescription. HELD: Yes. Under the law, the CIR has 3 years from the issuance of the FAN to make its collection. The FAN was issued in April 1994 and so the CIR has until April 1997 to make a collection. Within that period, the CIR never issued a warrant of distraint/levy. Its earliest collection effort was only when it filed an answer to the appeal filed by PGCI. CIRs answer was filed in January 2003 which was way beyond the three year prescriptive period to collect the assessed taxes. The CIR cannot invoke that the protest filed by PGCI is in effect a request for reinvestigation. Under the law, a request for reinvestigation shall toll the running of the prescriptive period to collect. However in the case at bar, the protest filed by PGCI is not a request for reinvestigation but rather it was a request for reconsideration. And in such case, it did not suspend the prescriptive period. The protest is a request for reconsideration because PGCI did not adduce additional evidence or documents. PGCI merely sought the CIR to review the existing records on file.