#1.

General Principles of Taxation

(Commissioner of Internal Revenue vs. Air Liquide Philippines, Inc., G.R. No. 210646. July 29, 2015)

San Roque, held that BIR Ruling No. DA-489-03 was a general interpretative rule because it was a
response to a query made, not by a particular taxpayer, but by a government agency tasked with
processing tax refunds and credits. Thus, it applies to all taxpayers alike, and not only to one particular
taxpayer.

(Manila Electric Company vs. The City Assessor and City Treasurer of Lucena City G.R. No. 166102.
August 5, 2015)

It is settled that tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption
must point to a specific provision of law conferring on the taxpayer, in clear and plain terms,
exemption from a common burden. Any doubt whether a tax exemption exists is resolved against
the taxpayer. MERALCO has failed to present herein any express grant of exemption from Page

real property tax of its transformers, electric posts, transmission lines, insulators, and electric meters
that is valid and binding even under the Local Government Code.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation G.R. No. 212920.
September 16, 2015

In matters of taxation, the government cannot be estopped by the mistakes, errors or omissions of its
agents for upon it depends the ability of the government to serve the people for whose benefit taxes are
collected.

#2. DOCUMENTARY STAMP TAX/ CAPITAL GAINS TAX

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND

HIGHWAYS vs. ARLENE R. SORIANO, G.R. No. 211666, February 25, 2015, J. Peralta

Capital gains is a tax on passive income, it is the seller, not the buyer, who generally would shoulder
the tax. As a general rule, therefore, any of the parties to a transaction shall be liable for the full
amount of the documentary stamp tax due, unless they agree among themselves on who shall be
liable for the same. In this case, with respect to the capital gains tax, we find merit in petitioner’s
posture that pursuant to Sections 24(D) and 56(A)(3) of the 1997 National Internal Revenue Code
(NIRC), capital gains tax due on the sale of real property is a liability for the account of the seller. It
has been held that since capital gains is a tax on passive income, it is the seller, not the buyer, who
generally would shoulder the tax. Also, there is no agreement as to the party liable for the
documentary stamp tax due on the sale of the land to be expropriated. But while DPWH rejects any
liability for the same, this Court must take note of petitioner’s Citizen’s Charter, which functions as
a guide for the procedure to be taken by the DPWH in acquiring real property through expropriation
under RA 8974. The Citizen’s Charter, issued by DPWH itself on December 4, 2013, explicitly
provides that the documentary stamp tax, transfer tax, and registration fee due on the transfer of
the title of land in the name of the Republic shall be shouldered by the implementing agency of the
DPWH, while the capital gains tax shall be paid by the affected property owner.

Commissioner of Internal Revenue vs. La Tondena Distillers, Inc. (LTDI) [Now Ginebra San Miguel],
G.R. No. 175188. July 15, 2015

A perusal of the subject provision would clearly show it pertains only to sale transactions where real
property is conveyed to a purchaser for a consideration. The phrase “granted, assigned, transferred
or otherwise conveyed” is qualified by the word “sold” which means that documentary stamp tax
under Section 196 is imposed on the transfer of realty by way of sale and does not apply to all
conveyances of real property. Indeed, as correctly noted by the respondent, the fact that Section
196 refers to words “sold”, “purchaser” and “consideration” undoubtedly leads to the conclusion
that only sales of real property are contemplated therein.

#3. FRANCHISE TAX

Republic of the Philippines, rep. by the Commissioner of Customs vs. Philippine Airlines, Inc. (PAL)
/ Commissioner of Internal Revenue vs. Philippine Airlines, Inc. (PAL), G.R. No. 209353-54/G.R.
Nos. 211733-34. July 6, 2015

The amendment of the 1997 NIRC, in connection with Section 22 of R.A. 9337 abolished the
franchise tax on domestic airlines and subjected PAL and similar entities to corporate income tax
and value-added tax (VAT). PAL nevertheless remains exempt from taxes, duties, royalties,
registrations, licenses, and other fees and charges, provided it pays corporate income tax as granted
in its franchise agreement. Accordingly, PAL is left with no other option but to pay its basic
corporate income tax, the payment of which shall be in lieu of all other taxes, except VAT, and
subject to certain conditions provided in its charter. In this case, the CTA found that PAL had paid
basic corporate income tax for fiscal year ending 31 March 2006. Consequently, PAL may now claim
exemption from taxes, duties, charges, royalties, or fees due on all importations of its commissary
and catering supplies, provided it shows that 1) such articles or supplies or materials are imported
for use in its transport and non-transport operations and other activities incidental thereto; and 2)
they are not locally available in reasonable quantity, quality, or price.
#4. EXCISE TAX

Chevron Philippines, Inc. vs. Commissioner of Internal Revenue G.R. No. 210836. September 1,
2015

Excise tax on petroleum products is essentially a tax on property, the direct liability for which
pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by
the statutory taxpayer on petroleum products sold to any of the entities or agencies named in
Section 135 of the National Internal Revenue Code (NIRC) exempt from excise tax is deemed illegal
or erroneous, and should be credited or refunded to the payor pursuant to Section 204 of the NIRC.
This is because the exemption granted under Section 135 of the NIRC must be construed in favor of
the property itself, that is, the petroleum products.

#5. FINAL WITHHOLDING TAX

BANCODEORO,etal.vs.REPUBLICOFTHEPHILIPPINES,etal.,G.R.No.198756,January13,2015,J.Leonen

Shouldtherehavebeenasimultaneoussaleto20ormorelenders/investors,thePovertyEradicationandAl
leviationCertificatesorthePEACeBondsaredeemeddepositsubstituteswithinthemeaningofSec.22(Y)o
fthe1997NIRCandRCBCCapitalwouldhavebeenobligedtopaythe20%FWTontheinterestordiscountfro
mthePEACeBonds.Further,theobligationtowithholdthe20%finaltaxonthecorrespondinginterestfrom
thePEACeBondswouldlikewiseberequiredofanylender/investorhadthelatterturnedaroundandsolds
aidPEACeBonds,whetherinwholeorpart,simultaneouslyto20ormorelendersorinvestors.
TheCourtnotes,however,thatunderSection24ofthe1997NIRC,interestincomereceivedbyindividualsfr
omlongtermdepositsorinvestmentswithaholdingperiodofnotlessthanfive(5)yearsisexemptfromthefi
naltax.
Thus,shouldthePEACeBondsbefoundtobewithinthecoverageofdepositsubstitutes,theproperprocedurewa
sfortheBureauofTreasurytopaythefacevalueofthePEACeBondstothebondholdersandfortheBIRtocollectth
eunpaidFWTdirectlyfromRCBCCapital,oranylenderorinvestorifsuchbethecase,asthewithholdingagents.

#6. VALUE ADDED TAX

ROHM APOLLO SEMICONDUCTOR PHILIPPINES vs. COMMISSIONER OF INTERNAL REVENUE, G.R.

No. 168950, January 14, 2015, CJ Sereno

Section 112(C) of the 1997 Tax Code states the time requirements for filing a judicial claim for the
refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days,
which serves as a waiting period to give time for the CIR to act on the administrative claim for a
refund or credit; and the period of 30 days, which refers to the period for filing a judicial claim with
the CTA. It is the 30-day period that is at issue in this case.
NORTHERN MINDANAO POWER CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R.
No. 185115, February 18, 2015, CJ. Sereno

This Court has consistently held as fatal the failure to print the word “zero-rated” on the VAT
invoices or official receipts in claims for a refund or credit of input VAT on zero-rated sales, even if
the claims were made prior to the effectivity of R.A. 9337. As to the sufficiency of a Northern
Mindanao’s company invoice to prove the sales of services to NPC, the Court finds that this claim is
without sufficient legal basis. A VAT invoice is the seller’s best proof of the sale of goods or services
to the buyer, while a VAT receipt is the buyer’s best evidence of the payment of goods or services
received from the seller. The requirement of imprinting the word “zero-rated” proceeds from the
rule-making authority granted to the Secretary of Finance by the NIRC for the efficient enforcement
of the same Tax Code and its amendments. A VAT-registered person whose sales are zero-rated or
effectively zero-rated, Section 112(A) specifically provides for a two-year prescriptive period after
the close of the taxable quarter when the sales were made within which such taxpayer may apply
for the issuance of a tax credit certificate or refund of creditable input tax.

CARGILL PHILIPPINES, INC vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 203774, March
11, 2015, J. Perlas- Bernabe

Cargill filed two claims for refund. However, the court ruled that the rule must therefore be that
during the period December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October 6,
2010 (when the Aichi case was promulgated),taxpayers-claimants need not observe the 120-day
period before it could file a judicial claim for refund of excess input VAT before the CTA. Before and
after the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the observance of
the 120-day period is mandatory and jurisdictional to the filing of such claim.

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs. COMMISSIONER OF INTERNAL REVENUE,

G.R. No. 183531, March 25, 2015, J. Reyes

The failure to indicate the words “zero-rated” on the invoices and receipts issued by a taxpayer
would result in the denial of the claim for refund or tax credit. The Court has consistently ruled on
the denial of a claim for refund or tax credit whenever the word “zero-rated” has been omitted on
the invoices or sale receipts of the taxpayer-claimant. Furthermore, the CTA is a highly specialized
court dedicated exclusively to the study and consideration of revenue-related problems, in which it
has necessarily developed an expertise. Hence, its factual findings, when supported by substantial
evidence, will not be disturbed on appeal.
#7. LOCAL TAXATION

LUCENA D. DEMAALA vs. COMMISSION ON AUDIT, REPRESENTED BY ITS CHAIRPERSON

COMMISSIONER MA. GRACIA M. PULIDO TAN, G.R. No. 199752, February 17, 2015, J. Leonen

Setting the rate of the additional levy for the special education fund at less than 1% is within the
taxing power of local government units. It is consistent with the guiding constitutional principle of
local autonomy. It was well within the power of the Sangguniang Panlalawigan of Palawan to enact
an ordinance providing for additional levy on real property tax for the special education fund at the
rate of 0.5% rather than at 1%.

Mactan Cebu International Airport Authority (MCIAA) Vs. City of Lapu-Lapu, et al., G.R. No.
181756, June 15, 2015

In this case the Supreme Court applied to MCIAA the findings and conclusions of the Court in the
2006 MIAA case, ruling: MIAA is a government instrumentality vested with corporate powers and
performing essential public services pursuant to Section 2(10) of the Introductory Provisions of the
Administrative Code. As a government instrumentality, MIAA is not subject to any kind of tax by
local governments under Section 133(o) of the Local Government Code. The exception to the
exemption in Section 234(a) does not apply to MIAA because MIAA is not a taxable entity under the
Local Government Code. Such exception applies only if the beneficial use of real property owned by
the Republic is given to a taxable entity.

Film Development Council of the Philippines vs. Colon Heritage Realty Corporation, Operator of
Oriente, Operator of Oriente Group Theaters, represented by Isidro A. Canizares/Film
Development Council of the Philippines Vs. City of Cebu and SM Prime Holdings, Inc., G.R. No.
203754/G.R. No. 204418., June 16, 2015

In the case at bar, through the application and enforcement of Sec. 14 of R.A. 9167 which earmarks
the income on amusement taxes imposed by LGUs in favor of FDCP and the producers of graded
films, the income from the amusement taxes levied by the covered LGUs did not and will under no
circumstance accrue to them, not even partially, despite being the taxing authority therefor.
Congress therefore, clearly overstepped its plenary legislative power, the amendment being
violative of the fundamental law’s guarantee on local autonomy as echoed in Sec. 130(d) of the LGC
which provide that revenue collected pursuant to the said code shall inure to the benefit of the
local government.
Jose J. Ferrer, Jr. vs. City Mayor Herbert Bautista, City Council of Quezon City, City Treasurer of
Quezon City and City Assessor of Quezon City, G.R. No. 210551. June 30, 2015

The collections made accrue to its socialized housing programs and projects. The (socialized
housing) tax is not a pure exercise of taxing power or merely to raise revenue; it is levied with a
regulatory purpose. The levy is primarily in the exercise of the police power for the general welfare
of the entire city. As with the State, LGUs may be considered as having properly exercised their
police power only if there is a lawful subject and a lawful method or, to be precise, if the following
requisites are met: (1) the interests of the public generally, as distinguished from those of a
particular class, require its exercise and (2) the means employed are reasonably necessary for the
accomplishment of the purpose and not unduly oppressive upon individuals.

Jose J. Ferrer, Jr. vs. City Mayor Herbert Bautista, City Council of Quezon City, City Treasurer of
Quezon City and City Assessor of Quezon City, G.R. No. 210551. June 30, 2015

The garbage fee is not valid imposition being violative of the equal protection as the rates charged
under the ordinance is unjust and equitable. A resident of a condominium unit or socialized housing
pay twice the amount of a resident of a lot similar in size There is no substantial distinction between
an occupant of a lot and an occupant of a condominium unit, socialized housing project or
apartment as the garbage output produced by these types of occupants is uniform and does not
vary to a large degree. A similar schedule of fee would have been just and equitable. The
classification is not germane to the purpose of promoting shared responsibility. There is
discrimination between occupant of a lot and occupant of a condo unit or socialized housing
project.

Batangas City, Maria Teresa Geron, In her capacity as City Treasurer of Batangas City, et al. vs.
Pilipinas Shell Petroleum Corporation, G.R. No. 187631. July 8, 2015

Indisputably, the power of LGUs to impose business taxes derives from Section 143 of the LGC.
However, the same is subject to the explicit statutory impediment provided for under Section
133(h) of the same Code which prohibits LGUs from imposing “taxes, fees or charges on petroleum
products.” It can, therefore, be deduced that although petroleum products are subject to excise tax,
the same is specifically excluded from the broad power granted to LGUs under Section 143(h) of the
LGC to impose business taxes.
#8. REAL PROPERTY TAX

Manila Electric Company vs. The City Assessor and City Treasurer of Lucena City G.R. No. 166102.
August 5, 2015

The Court highlights that under Section 199(o) of the Local Government Code, machinery, to be
deemed real property subject to real property tax, need no longer be annexed to the land or
building as these “may or may not be attached, permanently or temporarily to the real property,”
and in fact, such machinery may even be “mobile.” The same provision though requires that to be
machinery subject to real property tax, the physical facilities for production, installations, and
appurtenant service facilities, those which are mobile, self-powered or self-propelled, or not
permanently attached to the real property (a) must be actually, directly, and exclusively used to
meet the needs of the particular industry, business, or activity; and (2) by their very nature and
purpose, are designed for, or necessary for manufacturing, mining, logging, commercial, industrial,
or agricultural purposes.

#9. TARIFF AND CUSTOMS CODE

M/V "Don Martin" Voy 047 and Cargoes of 6500 Sacks of Imported Rice, et al. vs. Hon. Secretary of
Finance, Bureau of Customs, and The District Collector of Cagayan De Oro City, G.R. No. 160206. July
15, 2015

The penalty of forfeiture could be imposed on any vessel engaged in smuggling, provided that the
following conditions were present, to wit: (1) The vessel is "used unlawfully in the importation or
exportation of articles into or from" the Philippines; (2) The articles are imported to or exported from
"any Philippine port or place, except a port of entry"; or (3) If the vessel has a capacity of less than 30
tons and is "used in the importation of articles into any Philippine port or place other than a port of the
Sulu Sea, where importation in such vessel may be authorized by the Commissioner, with the approval
of the department head." With the absence of the first and second conditions, the M/V Don Martin
must be released.

Bureau of Customs vs. The Honorable Agnes VST Devanadera, et al. G.R. No. 193253. September 8,
2015

In unlawful importation, also known as outright smuggling, goods and articles of commerce are
brought into the country without the required importation documents, or are disposed of in the
local market without having been cleared by the BOC or other authorized government agencies, to
evade the payment of correct taxes, duties and other charges. Such goods and articles do not
undergo the processing and clearing procedures at the BOC, and are not declared through
submission of import documents, such as the import entry and internal revenue declaration.
In various fraudulent practices against customs revenue, also known as technical smuggling, on the
other hand, the goods and articles are brought into the country through fraudulent, falsified or
erroneous declarations, to substantially reduce, if not totally avoid, the payment of correct taxes, duties
and other charges. Such goods and articles pass through the BOC, but the processing and clearing
procedures are attended by fraudulent acts in order to evade the payment of correct taxes, duties, and
other charges. Often committed by means of misclassification of the nature, quality or value of goods
and articles, undervaluation in terms of their price, quality or weight, and misdeclaration of their kind,
such form of smuggling is made possible through the involvement of the importers, the brokers and
even some customs officials and personnel.

Republic of the Philippines, represented by the Bureau of Customs Vs. Pilipinas Shell Petroleum
Corporation, G.R. No. 209324. December 9, 2015

With the cancellation of the TCCs, the tax liabilities of PSPC under the original assessments were
considered unpaid, hence BOC’s demand letters and the action for collection in the RTC. To repeat,
these assessed customs duties and taxes were previously assessed and paid by the taxpayer, only that
the TCCs turned out to be spurious and hence worthless certificates that did not extinguish PSPC’s tax
liabilities.

ING Bank N.V. vs. Commissioner of Internal Revenue, G.R. No. 167679. July 22, 2015

Unlike the power to compromise or abate a taxpayer’s liability under Section 204 of the 1997
National Internal Revenue Code that is within the discretion of respondent Commissioner of
Internal Revenue, its authority under Republic Act No. 9480 is limited to determining whether (a)
the taxpayer is qualified to avail oneself of the tax amnesty; (b) all the requirements for availment
under the law were complied with; and (c) the correct amount of amnesty tax was paid within the
period prescribed by law. There is nothing in Republic Act No. 9480 which can be construed as
authority for respondent Commissioner of Internal Revenue to introduce exceptions and/or
conditions to the coverage of the law nor to disregard its provisions and substitute his own personal
judgment.

#10. ASSESSMENT

Manila Electric Company vs. The City Assessor and City Treasurer of Lucena City G.R. No. 166102.
August 5, 2015

Nevertheless, the appraisal and assessment of the transformers, electric posts, transmission
lines, insulators, and electric meters of MERALCO as machinery under Tax Declaration Nos.
019-6500 and 019-7394 were not in accordance with the Local Government Code and in
violation of the right to due process of MERALCO and, therefore, null and void.
It appears that the City Assessor of Lucena simply lumped together all the transformers,
electric posts, transmission lines, insulators, and electric meters of MERALCO located in Lucena
City under Tax Declaration Nos. 019-6500 and 019-7394, contrary to the specificity demanded
under Sections 224 and 225 of the Local Government Code for appraisal and assessment of
machinery. It is apparent from these two provisions that every machinery must be individually
appraised and assessed depending on its acquisition cost, remaining economic life, estimated
economic life, replacement or reproduction cost, and depreciation. The City Assessor and the
City Treasurer of Lucena did not even provide the most basic information such as the number
of transformers, electric posts, insulators, and electric meters or the length of the transmission
lines appraised and assessed under Tax Declaration Nos. 019-6500 and 019-7394. There is
utter lack of factual basis for the assessment of the transformers, electric posts, transmission
lines, insulators, and electric meters of MERALCO.

It is true that tax assessments by tax examiners are presumed correct and made in good faith, with
the taxpayer having the burden of proving otherwise. In this case, MERALCO was able to overcome
the presumption.

#11. PRESCRIPTIVE PERIOD OF ASSESSMENT

CHINA BANKING CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 172509,
February 04, 2015, C.J. Sereno

The assessment of the tax is deemed made and the three-year period for collection of the assessed
tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to
the taxpayer. Thus, failure of the BIR to file a warrant of distraint or serve a levy on taxpayer's
properties nor file collection case within the three-year period is fatal. Also, the attempt of the BIR
to collect the tax through its Answer with a demand for the taxpayer to pay the assessed DST in the
CTA is not deemed compliance with the Tax Code.

Commissioner of Internal Revenue vs. Next Mobile, Inc., G.R. No. 212825. December 7, 2015

The general rule is that when a waiver does not comply with the requisites for its validity specified
under RMO No. 20-90 and RDAO 01-05, it is invalid and ineffective to extend the prescriptive period
to assess taxes. However, due to its peculiar circumstances, we shall treat this case as an exception
to this rule and find the Waivers valid for the reasons discussed below. First, the parties in this case
are in pari delicto or “in equal fault.” As between the parties, it would be more equitable if
petitioner’s lapses were allowed to pass and consequently uphold the Waivers in order to support
this principle and public policy. Second, the Court has repeatedly pronounced that parties must
come to court with clean hands. Following the foregoing principle, respondent should not be
allowed to benefit from the flaws in its own Waivers and successfully insist on their invalidity in
order to evade its responsibility to pay taxes. Finally, the Court cannot tolerate this highly suspicious
situation. In this case, the taxpayer, on the one hand, after voluntarily executing waivers, insisted
on their invalidity by raising the very same defects it caused.
Commissioner of Internal Revenue vs. GJM Philippines Manufacturing, Inc., G.R. No. 202695.
February 29, 2016

The Court has held that when an assessment is made within the prescriptive period, as in the case
at bar, receipt by the taxpayer may or may not be within said period. But it must be clarified that
the rule does not dispense with the requirement that the taxpayer should actually receive the
assessment notice, even beyond the prescriptive period. If the taxpayer denies having received an
assessment from the BIR, it then becomes incumbent upon the latter to prove by competent
evidence that such notice was indeed received by the addressee. Here, the onus probandi has
shifted to the BIR to show by contrary evidence that GJM indeed received the assessment in the
clue course of mail. It has been settled that while a mailed letter is deemed received by the
addressee in the course of mail, this is merely a disputable presumption subject to controversion,
the direct denial of which shifts the burden to the sender to prove that the mailed letter was, in
fact, received by the addressee. To prove the fact of mailing, it is essential to present the registry
receipt issued by the Bureau of Posts or the Registry return card which would have been signed by
the taxpayer or its authorized representative.

#12. ASSESSMENT PROCESS

COMMISSIONER OF INTERNAL REVENUE VS, TRADERS ROYAL BANK, G.R. No. 167134. March 18,
2015, J. LEONARDO-DE CASTRO

In this case the issue was whether or not the Trust Indenture Agreements entered into by Traders
Royal Bank and its clients constituted deposits or trusts. If it was a deposit then it will be subject to
documentary stamp tax. The Supreme Court held that the only way to determine the relationship
between the parties is to examine the terms and conditions provided under the actual indenture
agreement. However TRB failed to produce the actual agreement. In contrast, the BIR examiners
conducted a thorough audit and investigation of the books of account of TRB. The audit and
investigation resulted in the issuance of Assessment Notices against TRB for DST tax liabilities for
1996 and 1997, which were duly received by TRB. The tax assessments by tax examiners are
presumed correct and made in good faith. The taxpayer has the duty to prove otherwise. Therefore
the agreements were considered as deposits subject to DST.

#13. TAX REFUND

REPUBLICOFTHEPHILIPPINES,REPRESENTED
BYTHECOMMISSIONEROFINTERNALREVENUEvs.TEAM(PHILS.) ENERGYCORPORATION
(FORMERLYMIRANTPHILSENERGYCORPORATION),G.R.No.188016,January14,2015,J.Bersamin

Therequirementsforentitlementofacorporatetaxpayerforarefundortheissuanceoftaxcreditcertificateinvol
vingexcesswithholdingtaxesareasfollows:1)Thattheclaimforrefundwasfiledwithinthetwo-
yearreglementaryperiodpursuanttoSec.229oftheNIRC;2)WhenitisshownontheITRthattheincomepayment
receivedisbeingdeclaredpartofthetaxpayer’sgrossincome;and3)Whenthefactofwithholdingisestablishedb
yacopyofthewithholdingtaxstatement,dulyissuedbythepayortothepayee,showingtheamountpaidandinco
metaxwithheldfromthatamount.

Relevanttotheinstantcaseisrequirementsnumbers2and3,whichweredulyprovedbyTPEC,asfoundbyt
hecourtsaquo.
Withregardtothesecondrequirement,itisfundamentalthatthefindingsoffactbytheCTAinDivisionarenottob
edisturbedwithoutanyshowingofgraveabuseofdiscretionconsideringthatthemembersoftheDivisionareint
hebestpositiontoanalyzethedocumentspresentedbytheparties.Consequently,theCourtadoptsthefindings
oftheCTAinDivision,whichtheCTAEnBancconcurred

WINEBRENNER & IÑIGO INSURANCE BROKERS, INC. vs. COMMISSIONER OF INTERNAL REVENUE,
G.R. No. 206526, January 28, 2015, J. Mendoza

Those who claim for refund must not only prove its entitlement to the excess credits, but likewise
must prove that no carry-over has been made in cases where refund is sought. However, proving
that no carry-over has been made does not absolutely require the presentation of the quarterly
ITRs. With Winebrenner & Inigo Insurance Brokers, Inc. having complied with the requirements for
refund, and without the CIR showing contrary evidence other than its bare assertion of the absence
of the quarterly ITRs, copies of which are easily verifiable by its very own records, the burden of
proof of establishing the propriety of the claim for refund has been sufficiently discharged. Hence,
the grant of refund is proper.

Fortune Tobacco Corporation vs. Commissioner of Internal Revenue, G.R. No. 192024. July 1, 2015

For a claim for refund to be granted, the manner in proving it must be in accordance with the
prescribed rules of evidence. It would have been erroneous had the CTA En Banc relied on
petitioner's own Excise Tax Refund Computation Summary or the unsatisfactory explanation of its
lone witness to justify its claim for tax refund. As it has been said, time and again, that claims for tax
refunds are in the nature of tax exemptions which result in loss of revenue for the government.
Upon the person claiming an exemption from tax payments rests the burden of justifying the
exemption by words too plain to be mistaken and too categorical to be misinterpreted; it is never
presumed nor be allowed solely on the ground of equity. In addition, one who claims that he is
entitled to a tax refund must not only claim that the transaction subject of tax is clearly and
unequivocally not subject to tax -the amount of the claim must still be proven in the normal course,
in accordance with the prescribed rules on evidence.

Hedcor, Inc. vs. Commissioner of Internal Revenue, G.R. No. 207575. July 15, 2015

The burden of proving entitlement to a tax refund is on the taxpayer. It is logical to assume that in
order to discharge this burden, the law intends the filing of an application for a refund to
necessarily include the filing of complete supporting documents to prove entitlement for the
refund. Otherwise, the mere filing of an application without any supporting document would be as
good as filing a mere scrap of paper. Besides, the taxpayer was already given two (2) years to
determine its refundable taxes and complete the documents necessary to prove its claim. The
alleged completion of supporting documents after the filing of an application for an administrative
claim − and worse, after the filing of a judicial claim − is tantamount to legal maneuvering.

Commissioner of Internal Revenue vs. Toledo Power Company G.R. Nos. 195175 & 199645.
August 10, 2015

Pursuant to Section 112 of the National Internal Revenue Code (NIRC) of 1997 the requisites for
claiming unutilized/excess input VAT, except transitional input VAT, are as follows: 1)The taxpayer-
claimant is VAT registered; 2)The taxpayer-claimant is engaged in zero-rated or effectively zero-
rated sales; 3)There are creditable input taxes due or paid attributable to the zero-rated or
effectively zero-rated sales; 4)This input tax has not been applied against the output tax; and 5)The
application and the claim for a refund have been filed within the prescribed period.

Commissioner of Internal Revenue vs. Toledo Power Company G.R. Nos. 195175 & 199645.
August 10, 2015

In both C.T.A. Case Nos. 7233 and 7294, the administrative claim for the refund of unutilized
input VAT attributable to the zero-rated or effectively zero-rated sales was timely filed on 23
December 2004, which was within two years from the close of the first and the second quarters
of 2003 when the sales were made. Similarly, this case also falls within the exception period by
virtue of BIR Ruling No. DA-489-03 as recognized in San Roque.
In C.T.A. Case No. 7233, TPC filed its judicial claim on 22 April 2005. In theory, the CTA does not
have jurisdiction over the Petition, since it was filed on the last day of the 120-day period for the
CIR, or without waiting for the expiration of the aforesaid period. However, BIR Ruling No. DA-489-
03 allows this premature filing. TPC may claim the benefits of that ruling in its Petition in C.T.A. Case
No. 7233 for the refund of the unutilized input VAT attributable to zero-rated or effectively zero-
rated sales for the first quarter of 2003.

Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 180402.
February 10, 2016

We therefore hold that respondent, as the statutory taxpayer who is directly liable to pay the excise
tax on its petroleum products, is entitled to a refund or credit of the excise taxes it paid for
petroleum products sold to international carriers, the latter having been granted exemption from
the payment of said excise tax under Sec.135(a) of the NIRC.
#14. Prescriptive Period for Recovery of Tax

PANAY POWER CORPORATION (Formerly Avon River Power Holdings Corp.) vs. COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 203351, January 21, 2015, J. Perlas-Bernabe

In Reconciling the pronouncements in the Aichi and San Roque cases, the rule must therefore be
that during the period December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October
6, 2010 (when the Aichi case was promulgated), taxpayers-claimants need not observe the 120-day
period before it could file a judicial claim for refund of excess input VAT before the CTA. Before and
after the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the observance of
the 120-day period is mandatory and jurisdictional to the filing of such claim.

PHILIPPINE NATIONAL BANK vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No. 206019, March
18, 2015, J. Velasco Jr.

Gotesco’s relentless refusal to transfer registered ownership of the Ever Ortigas Commercial
Complex to PNB constitutes proof enough that Gotesco will not do any act inconsistent with its
claim of ownership over the foreclosed asset, including claiming the creditable tax imposed on the
foreclosure sale as tax credit and utilizing such amount to offset its tax liabilities. To do such would
run roughshod over Gotesco’s firm stance that PNB’s foreclosure on the mortgage was invalid and
that it remained the owner of the subject property. While perhaps it may be necessary to prove
that the taxpayer did not use the claimed creditable withholding tax to pay for his/its tax liabilities,
there is no basis in law or jurisprudence to say that BIR Form No. 2307 is the only evidence that may
be adduced to prove such non-use.

SILICON PHILIPPINES, INC. (FORMERLY INTEL PHILIPPINESMANUFACTURING, INC.) vs. COMMISSIONER

OF INTERNAL REVENUE, G.R. No. 173241, March 25, 2015, J. Leonardo-De Castro

For failure of Silicon to comply with the provisions of Section 112(C) of the NIRC, its judicial claims for
tax refund or credit should have been dismissed by the CTA for lack of jurisdiction. The Court stresses
that the 120/30-day prescriptive periods are mandatory and jurisdictional, and are not mere technical
requirements.

Hedcor, Inc. vs. Commissioner of Internal Revenue, G.R. No. 207575. July 15, 2015

Pursuant to Section 112(C) of the NIRC, respondent had 120 days from the date of submission of
complete documents in support of the application within which to decide on the administrative
claim. Thereafter, the taxpayer affected by the CIR’s decision or inaction may appeal to the CTA
within 30 days from the receipt of the decision or from the expiration of the 120-day period.
Compliance with both periods is jurisdictional, considering that the 30-day period to appeal to the
CTA is dependent on the 120-day period. The period of 120 days is a prerequisite for the
commencement of the 30-day period to appeal. Strict compliance with the 120+30 day period is
necessary for a claim for a refund or credit of input VAT to prosper. An exception to that mandatory
period was, however, recognized in San Roque during the period between 10 December 2003,
when BIR Ruling No. DA-489-03 was issued, and 6 October 2010, when the Court promulgated Aichi
declaring the 120+30 day period mandatory and jurisdictional, thus reversing BIR Ruling No. DA-
489-03.

Commissioner of Internal Revenue vs. Toledo Power Company G.R. Nos. 195175 & 199645.
August 10, 2015

In this case, since the filing of the administrative claim was done within the period where BIR Ruling
No. DA-489-03 was recognized valid, TPC is not compelled to observe the 120-day waiting period.
Nevertheless, it should have filed the Petition within 30 days after the expiration of the 120-day
period. San Roque recognized BIR Ruling No. DA-489-03 which allowed the premature filing of a
judicial claim as an exception to the mandatory observance of the 120-day period. By virtue of the
doctrines laid down in San Roque, TPC should have filed its judicial claim from 23 December 2004
until 22 May 2005; however, it filed its Petition to the CTA only on 24 April 2006. TPC lost its right to
claim a refund or credit of its alleged excess input VAT attributable to zero-rated or effectively zero-
rated sales for taxable year 2004 by virtue of its own failure to observe the prescriptive periods.

Ce Luzon Geothermal Power Company, Inc. vs. Commissioner of Internal Revenue G.R. No.
200841-42. August 26, 2015

The records show that CE Luzon’s administrative and judicial claims were filed on November 30,
2006 and January 3, 2007, respectively, or during the period of effectivity of BIR Ruling No. DA-489-
03 and, thus, fell within the window period stated in San Roque, i.e., when taxpayer-claimants need
not wait for the expiration of the 120-day period before seeking judicial relief. Verily, the CTA En
Banc erred when it outrightly dismissed CE Luzon’s petition on the ground of prematurity.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation G.R. No. 212920.
September 16, 2015

The Court has observed that based on the records, Nippon's administrative claim for the first
taxable quarter of 2002 which closed on March 31, 2002 was already time-barred for being filed on
April 22, 2004, or beyond the two (2)-year prescriptive period pursuant to Section 112(A) of the
National Internal Revenue Code of 1997. Although prescription was not raised as an issue, it is well-
settled that if the pleadings or the evidence on record show that the claim is barred by prescription,
the Court may motu proprio order its dismissal on said ground.

Pilipinas Total Gas, Inc. vs. Commissioner of Internal Revenue, G.R. No. 207112. December 8, 2015

The rule is that from the date an administrative claim for excess unutilized VAT is filed, a taxpayer
has thirty (30) days within which to submit the documentary requirements sufficient to support his
claim, unless given further extension by the CIR. Then, upon filing by the taxpayer of his complete
documents to support his application, or expiration of the period given, the CIR has 120 days within
which to decide the claim for tax credit or refund. Should the taxpayer, on the date of his filing,
manifest that he no longer wishes to submit any other addition documents to complete his
administrative claim, the 120 day period allowed to the CIR begins to run from the date of filing.

Commissioner of Internal Revenue Vs. Toledo Power Company/Toledo Power Company vs.
Commissioner of Internal Revenue, G.R. No. 196415. December 2, 2015

Pursuant to Section 112 (A)(4)2 and (D)(4)3 of the NIRC, a taxpayer has two (2) years from the close
of the taxable quarter when the zero-rated sales were made within which to file with the CIR an
administrative claim for refund or credit of unutilized input VAT attributable to such sales. The CIR,
on the other hand, has 120 days from receipt of the complete documents within which to act on the
administrative claim. Upon receipt of the decision, a taxpayer has 30 days within which to appeal
the decision to the CTA. However, if the 120-day period expires without any decision from the CIR,
the taxpayer may appeal the inaction to the CTA within 30 days from the expiration of the 120-day
period.

Commisioner of Internal Revenue vs. Mirant Pagbilao Corporation, G.R. No. 180434. January 20,
2016

With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial
claim for refund or credit of input VAT without waiting for the Commissioner to decide until the
expiration of the 120-day period. Clearly, MPC's failure to observe the mandatory 120-day period
under the law was fatal to its immediate filing of a judicial claim before the CTA. It rendered the
filing of the CTA petition premature, and barred the tax court from acquiring jurisdiction over the
same. Thus, the dismissal of the petition is in order.

Silicon Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 182737. March 2, 2016

Upon the filing of an administrative claim, respondent is given a period of 120 days within which to
(1) grant a refund or issue the tax credit certificate for creditable input taxes; or (2) make a full or
partial denial of the claim for a tax refund or tax credit. Failure on the part of respondent to act on
the application within the 120-day period shall be deemed a denial. Note that the 120-day period
begins to run from the date of submission of complete documents supporting the administrative
claim. If there is no evidence showing that the taxpayer was required to submit -or actually
submitted -additional documents after the filing of the administrative claim, it is presumed that the
complete documents accompanied the claim when it was filed. Whether respondent rules in favor
of or against the taxpayer -or does not act at all on the administrative claim -within the period of
120 days from the submission of complete documents, the taxpayer may resort to a judicial claim
before the CT A. Section.
#15. ADMINISTRATIVE REMEDIES

CBK POWER COMPANY LIMITED vs. COMMISSIONER INTERNAL REVENUE, G.R. Nos.
193383-84, January 14, 2015, J. Perlas-Bernabe
CBK Power raised the lone issue of whether or not an ITAD ruling is required before it can avail of
the preferential tax rate. On the other hand, the Commissioner claimed that CBK Power failed to
exhaust administrative remedies when it filed its petitions before the CTA First Division, and that
said petitions were not filed within the two-year prescriptive period for initiating judicial claims for
refund. The Court categorically held that the BIR should not impose additional requirements that
would negate the availment of the reliefs provided for under international agreements, especially
since said tax treaties do not provide for any prerequisite at all for the availment of the benefits
under said agreements. Nowhere and in no wise does the law imply that the Collector of Internal
Revenue must act upon the claim, or that the taxpayer shall not go to court before he is notified of
the Collector’s action.

#16. JUDICIAL REMEDIES

NIPPON EXPRESS (PHILIPPINES) CORP. vs. COMMISSIONER OF INTERNAL REVENUE, G.R. No.
185666, February 04, 2015, J. Perez

The CIR has 120 days from the date of submission of complete documents in support of the
administrative claim within which to decide whether to grant a refund or issue a tax credit
certificate. In case of failure on the part of the CIR to act on the application within the 120-day
period prescribed by law, the taxpayer has only has 30 days after the expiration of the 120-day
period to appeal the unacted claim with the CTA. Since petitioner’s judicial claim was filed before
the CTA only way beyond the mandatory 120+30 days to seek judicial recourse, such non-
compliance with the mandatory period of 30 days is fatal to its refund claim on the ground of
prescription. Consequently, the CTA has no jurisdiction over its judicial appeal considering that its
Petition for Review was filed out of time. Consequently, the claim for refund must be denied.

CE Casecnan Water and Energy Company Inc. vs. The Province of Nueva Ecija, et al., G.R. No.
196278. June 17, 2015

In praying to restrain the collection of RPT, petitioner also implicitly questions the propriety of the
assessment of such RPT. This is because in ruling as to whether to restrain the collection, the RTC
must first necessarily rule on the propriety of the assessment. A certiorari petition questioning an
interlocutory order issued in a local tax case falls under the jurisdiction of the CTA.
Mitsubishi Motors Philippines Corporation vs. Bureau of Customs, G.R. No. 209830, June 17, 2015

Section 7 of R.A. No. 1125 as amended by RA 9as well as Section 3, Rule 4 of the Revised Rules of
the Court of Tax Appeals explicitly provide that the CTA has exclusive appellate jurisdiction over tax
collection cases decided by the RTC.

Clark Investors and Locators Association, Inc. vs. Secretary of Finance and Commissioner of
Internal Revenue, G.R. No. 200670. July 6, 2015

Conformably with our ruling in BPI Leasing Corporation that the application of Section 244 of the
NIRC is an exercise of quasi-legislative or rule-making powers of the Secretary of Finance, and since
RR 2-2012 was issued by the Secretary of Finance based on Section 244 of the NIRC, such
administrative issuance is therefore quasi-legislative in nature which is outside the scope of a
petition for certiorari.

Commissioner of Internal Revenue vs. Court of Tax Appeals (Second Division) and Petron
Corporation, G.R. No. 207843. July 15, 2015

Petron admitted to not having filed a protest of the assessment before the customs collector and
elevating a possible adverse ruling therein to the COC, reasoning that such a procedure would be
costly and impractical, and would unjustly delay the resolution of the issues which, being purely
legal in nature anyway, were also beyond the authority of the customs collector to resolve with
finality. This admission is at once decisive of the issue of the CTA's jurisdiction over the petition.
There being no protest ruling by the customs collector that was appealed to the COC, the filing of
the petition before the CTA was premature as there was nothing yet to review.

Commissioner of Internal Revenue vs. Court of Tax Appeals and CBK Power Company Limited,
G.R. Nos. 203054-55. July 29, 2015

It is within the CTA's sound judicial discretion to give party-litigants every opportunity to properly
present their conflicting claims on the merits of the controversy without resorting to
technicalities.15 It should always be predicated on the consideration that more than the mere
convenience of the courts or of the parties of the case, the ends of justice and fairness would be
served thereby. Courts should be liberal in setting aside orders of default, for default judgments are
frowned upon, and unless it clearly appears that the reopening of the case is intended for delay, it is
best that trial courts give both parties every chance to fight their case fairly and in the open,
without resort to technicality.

Ce Luzon Geothermal Power Company, Inc. vs. Commissioner of Internal Revenue G.R. No.
200841-42. August 26, 2015

CE Luzon claims that the CIR filed a “second” motion for reconsideration of the CTA Division’s
January 19, 2010 Amended Decision. Considering that a second motion for reconsideration is a
prohibited pleading and, thus, did not toll the period to file an appeal, CE Luzon maintained
that the June 24, 2009 Decision had long become final and executory.
Under Section 3, Rule 14 of the Revised Rules of the Court of Tax Appeals, an amended decision is
issued when there is any action modifying or reversing a decision of the CTA En Banc or in Division.
Pursuant to these parameters, it is clear that the CIR’s motions for partial reconsideration – i.e., (a)
motion for partial reconsideration of the June 24, 2009 Decision; and (b) motion for partial
reconsideration of the January 19, 2010 Amended Decision – assailed separate and distinct
decisions that were rendered by the CTA Division. Notably, its amended decision modified and
increased CE Luzon’s entitlement to a refund or tax credit certificate in the amount of -
17,277,938.47. Essentially, it was therefore a different decision and, hence, the proper subject of a
motion for reconsideration anew on the part of the CIR. Thus, CE Luzon’s procedural objection must
fail.

Bureau of Customs vs. The Honorable Agnes VST Devanadera, et al. G.R. No. 193253. September
8, 2015

Court and such lower courts as may be established by law, to determine whether or not there has
been a grave abuse of discretion on the part of any branch or instrumentality of the Government, in
relation to Section 5(5), Article VIII thereof, vesting upon it the power to promulgate rules
concerning practice and procedure in all courts, the Court thus declares that the CA's original
jurisdiction over a petition for certiorari assailing the DOJ resolution in a preliminary investigation
involving tax and tariff offenses was necessarily transferred to the CTA pursuant to Section 7 of R.A.
No. 9282, and that such petition shall be governed by Rule 65 of the Rules of Court, as amended.
Accordingly, it is the CTA, not the CA, which has jurisdiction over the petition for certiorari assailing
the DOJ resolution of dismissal of the BOC's complaint-affidavit against private respondents for
violation of the TCCP.

Commissioner of Internal Revenue vs. Nippon Express (Phils.) Corporation G.R. No. 212920.
September 16, 2015

While it is true that the CTA Division has the prerogative to grant a motion to withdraw under
the authority of the foregoing legal provisions, the attendant circumstances in this case should
have incited it to act otherwise.
The primary reason, however, that militates against the granting of the motion to withdraw is the
fact that the CTA Division, in its August 10, 2011 Decision, had already determined that Nippon was
only entitled to refund the reduced amount of P2,614,296.84 since it failed to prove that the
recipients of its services were non-residents "doing business outside the Philippines"; hence,
Nippon's purported sales therefrom could not qualify as zero-rated sales, necessitating the
reduction in the amount of refund claimed. Markedly different from this is the BIR' s determination
that Nippon should receive P21,675,128.91 as per the July 27, 2011 Tax Credit Certificate, which is,
in all, P19,060,832.07 larger than the amount found due by the CTA Division. Therefore, as aptly
pointed out by Associate Justice Teresita J. Leonardo-De Castro during the deliberations on this
case, the massive discrepancy alone between the administrative and judicial determinations of the
amount to be refunded to Nippon should have already raised a red flag to the CTA Division. Clearly,
the interest of the government, and, more significantly, the public, will be greatly prejudiced by the
erroneous grant of refund -at a substantial amount at that -in favor of Nippon. Hence, under these
circumstances, the CTA Division should not have granted the motion to withdraw.

Philippine Amusement and Gaming Corporation vs. Bureau of Internal Revenue, et al., G.R. No.
208731. January 27, 2016

Concededly, there is no clear statement under R.A. No. 1125, the amendatory R.A. No. 9282, let
alone in the Constitution, that the CTA has original jurisdiction over a petition for certiorari. By
virtue of Section 1, Article VIII of the 1987 Constitution, vesting judicial power in the Supreme
A petition before the CTA may only be made after a whole or partial denial of the protest by the CIR
or the CIR's authorized representative. When PAGCOR filed its petition before the CTA on 11 March
2009, there was still no denial of PAGCOR's protest by either the RD or the CIR. PAGCOR has clearly
failed to comply with the requisites in disputing an assessment as provided by Section 228 and
Section 3.1.5.