CIR

VS UNITED SALVAGE TOWAGE reinvestigation alone does not suspend the period. The request should first
G.R. No. 197515 be granted, in order to effect suspension.
Author: Cabuso
The Court pointed out that while the request for reinvestigation was made
Topic: Prescriptive Periods – In General on March 14, 1997, the same was only acted upon by the BIR on January 22,
Doctrine: “Course of business” is what is usually done in the management of 2001 which is beyond the three (3) year statute of limitations from the
trade or business which connotes regularity. issuance of the FAN on January 9, 1996. Further, the Court stressed that the
Preliminary Collection Letter was only issued on February 21, 2002 which is
Facts: clearly five (5) long years had already lapsed before collection was pursued
by the BIR.
Respondent was assessed by BIR liable for deficiency income tax,
withholding tax, value-added tax (VAT) and documentary stamp tax (DST) Moreover, the Court rejected the BIR’s argument that the taxpayer’s act of
for taxable years 1992,1994, 1997 and 1998. Petitioner, issued demand elevating its protest to the Court of Tax Appeals has fortified the continuing
letters with attached assessment notices for withholding tax on interruption of the BIR’s prescriptive period to collect. The Court found the
compensation (WTC) and expanded withholding tax (EWT) for taxable years argument flawed at best because the taxpayer was merely exercising its
1992, 1994 and 1998. The final assessment notice (FAN) was issued by the right to resort to the proper Court and does not in any way deter the BIR’s
BIR on January 9, 1996 and the taxpayer requested for a reinvestigation on right to collect taxes from the taxpayer under existing laws.
March 14, 1997. However, the BIR granted such request only on January 22,
2001 or after five (5) years from the date of the issuance of the FAN. The Court also elucidated that the statute of limitations on the collection of
Further, the BIR issued Preliminary Collection Letter only on February 21, taxes was enacted to benefit and protect the taxpayers. Just as the
2002. On 2003, Respondent appealed alleging that the Notices of government is interested in the stability of its collections, the taxpayers are
Assessment are bereft of any facts, law, rules and regulations or also entitled to an assurance that they will not be subjected to further
jurisprudence; thus, the assessments are void and the right of the investigation for tax purposes after the expiration of a reasonable period of
government to assess and collect deficiency taxes from it has prescribed on time.
account of the failure to issue a valid notice of assessment within the
applicable period.

The BIR argued that its right to collect the tax assessment has not yet
prescribed. The five (5)-year prescriptive period to collect was interrupted BIR, ASST. COMM. ALFREDO V. MISAJON, GROUP SUPERVISOR ROLANDO
when the taxpayer filed its request for reinvestigation. Thus, the period for M. BALBIDO vs. LEPANTO CERAMICS, INC.
tax collection should have begun to run from the date of the reconsidered G.R. No. 224764, April 24, 2017
or modified assessment. Author: Dayao, Abby

Issue: WON BIR’s right to collect has already prescribed? Topic: Tax Lien
Doctrine: The creditors of a corporation under rehabilitation must ventilate
Ruling:
their claims before the rehabilitation court, and any “attempts to seek legal
Yes. The Court emphasized the rule that the Commissioner of the BIR must or other resource against the distressed corporation shall be sufficient to
first grant the request for reinvestigation as a requirement for the support a finding of indirect contempt of court.”
suspension of the statute of limitations. The act of requesting a
Facts: Issues: Whether or not the RTC Br. 35 correctly found Misajon, et al. to
have defied the Commencement Order and, accordingly, cited them for
• Respondent Lepanto Ceramics, Inc. (LCI) filed a petition for
indirect contempt? YES.
corporate rehabilitation pursuant to Republic Act No. (RA) 10142,
otherwise known as the Financial Rehabilitation and Insolvency Act Ruling + Ratio:
(FRIA) of 2010 due to the financial difficulties it has been
experiencing dating back to the Asian financial crisis. It had entered • As used in RA 10142, the term: Rehabilitation shall refer to the
into a state of insolvency considering its inability to pay its restoration of the debtor to a condition of successful operation and
obligations as they become due and that its total liabilities solvency, if it is shown that its continuance of operation is
amounting to P4,213,682,715.00 far exceed its total assets worth economically feasible and its creditors can recover by way of the
P1,112,723,941.00. LCI admitted its tax liabilities to the national present value of payments projected in the plan, more if the debtor
government in the amount of at least P6,355,368.00.6 continues as a going concern than if it is immediately liquidated. The
• On January 13, 2012, the Rehabilitation Court issued a inherent purpose of rehabilitation is to find ways and means to
Commencement Order, which: (a) declared LCI to be under minimize the expenses of the distressed corporation during the
corporate rehabilitation; (b) suspended all actions or proceedings, in rehabilitation period by providing the best possible framework for
court or otherwise, for the enforcement of claims against LCI; (c) the corporation to gradually regain or achieve a sustainable
prohibited LCI from making any payment of its liabilities outstanding operating form.
as of even date, except as may be provided under RA 10142; and (d) • Section 16 of RA 10142 provides, that upon the issuance of a
directed the BIR to file and serve on LCI its comment or opposition Commencement Order, which includes a Stay or Suspension Order,
to the petition, or its claims against LCI. all actions or proceedings, in court, for the enforcement of claim
• Commencement Order was published in a newspaper of general against the distressed company shall be suspended. Claim shall refer
circulation and the same, together with the petition for corporate to all claims or demands of whatever nature or character against
rehabilitation, were personally served upon LCI’s creditors, including the debtor or its property, whether for money or otherwise,
the BIR. liquidated or unliquidated, fixed or contingent, matured or
• Despite the foregoing, Misajon, et al. of the BIR’s Large Taxpayers unmatured, disputed or undisputed, including, but not limited to:
Service, sent LCI a notice of informal conference dated May 27, (1) all claims of the government, whether national or local,
2013, informing the latter of its deficiency internal tax liabilities for including taxes, tariffs and customs duties; and (2) claims against
the Fiscal Year ending June 30, 2010. directors and officers of the debtor arising from acts done in the
• In response, LCI’s court-appointed receiver, Roberto L. Mendoza, discharge of their functions falling within the scope of their
sent BIR a letter-reply, reminding the latter of the pendency of LCI’s authority: Provided, That, this inclusion does not prohibit the
corporate rehabilitation proceedings, as well as the issuance of a creditors or third parties from filing cases against the directors and
Commencement Order in connection therewith. officers acting in their personal capacities.
• Undaunted, the BIR sent LCI a Formal Letter of Demand dated May • Creditors of the distressed corporation, however, are not without
9, 2014, requiring LCI to pay deficiency taxes in the amount of remedy as they may still submit their claims to the rehabilitation
P567,519,348.39.12 This prompted LCI to file a petition for indirect court for proper consideration so that they may participate in the
contempt dated August 13, 2014 against petitioners. proceedings before the rehabilitation court, and any attempts to
• RTC Branch 35 found Misajon guilty of indirect contempt. seek legal or other resource against the distressed corporation shall
be sufficient to support a finding of indirect contempt of court.
• In the case at bar, it is undisputed that LCI filed a petition for
corporate rehabilitation. The Rehabilitation Court then issued a
 Commencement Order which (a) declared LCI to be under corporate final withholding tax, expanded withholding tax, and fringe benefits tax
rehabilitation; (b) suspended all actions or proceedings, in court or issued against it by the CIR.
otherwise, for the enforcement of claims against LCI; (c) prohibited • CIR issued against Asiatrust new Assessment Notices for deficiency taxes
LCI from making any payment of its outstanding liabilities as of even in the amount lower than the previous notice.
date, except as may be provided under RA 10142; and (d) directed • Asiatrust partially paid said deficiency tax assessments
the BIR to file and serve on LCI its comment or opposition to the • During the trial, Asiatrust manifested that it availed of the Tax
petition, or its claims against LCL. It is likewise undisputed that the Abatement Program for its deficiency final withholding tax — trust
BIR personally and by publication was notified of the rehabilitation assessments for fiscal years ending June 30, 1996 and 1998. Asiatrust
proceedings involving LCI and the issuance of the Commencement also claimed it availed of the provisions of Tax Amnesty Law of 2007.
Order. Despite the foregoing, the BIR, through Misajon, et al., still • CTA- Division- partially granted:
opted to send LCI: (a) a notice of informal, and (b) a Formal Letter of o CTA Division declared void the tax assessments for fiscal year ending
Demand, notwithstanding the written reminder coming from LCI’s June 30, 1996 for having been issued beyond the three-year
court-appointed receiver of the pendency of rehabilitation prescriptive period.
proceedings concerning LCI and the issuance of a commencement o However, due to the failure of Asiatrust to present documentary
order. and testimonial evidence to prove its availment of the Tax
Abatement Program and the Tax Amnesty Law, the CTA Division
affirmed the deficiency DST — Special Savings Account (SSA)

assessments for the fiscal years ending June 30, 1997 and 1998 and
CIR vs. ASIATRUST the deficiency DST — Interbank Call Loans (IBCL) and deficiency final
G.R. Nos. 201680-81 (2017) withholding tax — trust assessments for fiscal year ending June 30,
Author: Fenis 1998
• Asiatrust filed an MR – attaching photocopies of its Application for
Petitioner: CIR Abatement Program, BIR Payment Form, BIR Tax Payment Deposit Slip,
Respondent: ASIATRUST DEVELOPMENT BANK, INC., Improved Voluntary Assessment Program Application Forms, Tax
Amnesty Return, Tax Amnesty Payment Form, Notice of Availment of
Topic: Abatement Tax Amnesty and SALN as of June 30, 2005.
DOCTRINE : • CIR filed a Motion for Partial Reconsideration of the assessments.
Application for tax abatement will be deemed approved only upon the • CTA Division issued a Resolution denying the motion of the CIR while
issuance of a termination letter, and only then will the deficiency tax partially granting the motion of Asiatrust. The CTA Division refused to
assessment be considered closed and terminated. consider Asiatrust’s availment of the Tax Abatement Program due to its
failure to submit a termination letter from the BIR.
FACTS : • CIR appealed via Petition for Review – CTA en banc: dismissed
• Asiatrust received from the CIR three Formal Letters of Demand (FLD) • Asiatrust filed a Manifestation informing the CTA Division that the BIR
with Assessment Notices for deficiency internal revenue taxes for fiscal issued a Certification certifying that Asiatrust paid at DBP in connection
years ending June 30, 1996, 1997, and 1998. with the One- Time Administrative Abatement under Revenue
• Asiatrust timely protested the assessment notices Regulations
• Due to the inaction of the CIR on the protest, Asiatrust filed before the • CTA Division reiterated its ruling that in the absence of a termination
CTA a Petition for Review praying for the cancellation of the tax letter from the BIR, it cannot consider Asiatrust’s availment of the Tax
assessments for deficiency income tax, documentary stamp tax (DST), Abatement Program.
• Asiatrust moved for partial reconsideration insisting that the
Certification issued by the BIR is sufficient proof of its availment of the
Tax Abatement Program considering that the CIR, despite Asiatrust’s
request, has not yet issued a termination letter. – Denied by both CTA COMMISSIONER OF INTERNAL REVENUE, PETITIONER. V CEBU HOLDINGS,
division and en banc INC., RESPONDENT
GR 189792, June 20, 2018
ISSUE: Whether a BIR Certification is sufficient proof for availment of the Author: Madamba
Tax Abatement Program? – NO
Doctrine: Requisites for claiming a refund of excess creditable withholding
RULING + RATIO: No taxes are (1) The claim for refund was filed within thr two -year prescriptive
- An application for tax abatement is considered approved only upon the
period; (2) the fact of withholding is established by a copy of a statement
issuance of a termination letter.
duly issued by the payor (withholding agent) to the payee, showing the
- Section 204(B) of the 1997 NIRC empowers the CIR to abate or cancel a
amount of tax withheld therefrom; (3) the income upon which the taxes
tax liability.
were withheld was included in the income tax return of the recipient as part
- Section 4 of RR No. 15-06 provides that the last step in the tax
of the gross income.
abatement process is the issuance of the termination letter.

- The presentation of the termination letter is essential as it proves that
FACTS:
the taxpayer’s application for tax abatement has been approved. Thus,
without a termination letter, a tax assessment cannot be considered Respondent is a registered real estate developer. For the year ending
closed and terminated. December 2002 it filed with the BIR an income tax return which indicate
that they have an overpayment of P18,992,005 also they have stated that
- In this case, Asiatrust failed to present a termination letter from the BIR. they are opting to be issued a tax credit certificate for the said
Instead, it presented a Certification issued by the BIR to prove that it overpayment.
availed of the Tax Abatement Program and paid the basic tax. It also
Subsequently, the respondent filed an amended ITR for taxable year 2002
attached copies of its BIR Tax Payment Deposit Slips and a letter issued
and likewise indicated that it is opting to be issued with a tax credit
by RDO Nacar. These documents, however, do not prove that Asiatrust’s
certificate for the alleged overpayment.
application for tax abatement has been approved. If at all, these
documents only prove Asiatrust’s payment of basic taxes, which is not a On March 4, 2005, respondent filed with the BIR a written claim for a tax
ground to consider its deficiency tax assessment closed and terminated. credit certificate amounting to P18,992,005, however, petitioner failed to
- Asiatrust’s application for tax abatement will be deemed approved act upon the claim this prompted the respondent to file for a petition for
only upon the issuance of a termination letter, and only then will the review with the CTA first division.
deficiency tax assessment be considered closed and terminated.
An ICPA filed a consolidated report which upon which the CTA first division
However, in case Asiatrust’s application for tax abatement is denied,
any payment made by it would be applied to its outstanding tax liability. based its decision. It agreed with the CWTs filed out of period such should
be less P3857. Also, as found by the CTA first division the total creditable
For this reason, Asiatrust’s allegation of double taxation must also fail.
withholding tax of the respondent should only be P15,877,961.02 offsetting
the respondent’s tax liability of P13,956,659 respondent’s refundable tax

credits would only be 2,083,873.07.
CTA FIRST DIVISION RULING: Third, when respondent filed its amended 2002 return it included the taxes
that were withheld however the CTA first division and CTA EN BANC found
RESPONDENT’s claim was granted ordered the CIR to issue a tax credit cert
some discrepancy and held out that the total amount of CWT was only
amounting to P2,083,878.07
P15,877,961.02 instead of P18,992,055
Petitioner filed for motion for partial reconsideration
Having complied with the requisites, respondent is entitled to the refund.
CTA EN BANC RULING:

Affirmed.

Hence , this petition for review.
CIR v. TEAM (2014)
G.R. No. 179260, April 2, 2014
Author: Marayan
ISSUE: Whether respondent is entitled to a tax credit certificate(refund of
excess CWT) in the amount of P2,083,878.07, representing respondent’s Petitioner: Commissioner of Internal Revenue
excess creditable taxes for taxable year 2002 Respondents: Team [Philippines] Operations Corporation


Topic: Requirements of Creditable Withholding Tax
RULING: Yes, respondent is entitled to refund of excess CWT. Doctrine:
Requirements to be entitled to a refund or tax credit:
As a rule requisites for claiming a refund of excess creditable withholding (1) The claim is filed with the Commissioner of Internal Revenue within the
taxes are (1) The claim for refund was filed within the two -year prescriptive two-year period from the date of payment of the tax;
period; (2) the fact of withholding is established by a copy of a statement (2) It is shown on the return of the recipient that the income payment
duly issued by the payor (withholding agent) to the payee, showing the received was declared as part of the gross income; and
amount of tax withheld therefrom; (3) the income upon which the taxes (3) The fact of withholding is established by a copy of a statement duly
were withheld was included in the income tax return of the recipient as part issued by the payor to the payee showing the amount paid and the amount
of the gross income. of the tax withheld therefrom.

In this case the respondent complied with all the requisites. Facts:
This is a Petition for Review on Certiorari by petitioner Commissioner of
First, respondent filed within the 2 yr prescriptive period. Respondent filed Internal Revenue (CIR) seeking to reverse and set aside the Decision and
its claim for refund with the BIR on March 4 2005 and the petition for Resolution of the Court of Tax Appeals (CTA) En Banc in which affirmed in
review before the CTA on April 15, 2005, which both fell within the two year toto the Decision and Resolution of the First Division of the CTA (CTA in
prescriptive period counting from the date it filed its ITR which is April Division) granting Team (Philippines) Operations Corporation’s (Team) claim
15,2003 for refund in the amount of P69, 562,412.00 representing unutilized tax
credits for taxable period ending 31 December 2001.
Second, as proof of the taxes withheld, respondent submitted the certificate
authorizing registration, withholding tax remittance returns, and certificate Respondent Team on 15 April 2012 filed its 2001 income tax return with the
of creditable taxes withheld at source, upon which the ICPA based his Bureau of Internal Revenue (BIR), reporting an overpayment in the amount
report. of Php69,562,412.00 arising from unutilized credit taxes withheld. Team
marked the appropriate boxes manifesting its intent to have the said Irrevocability Rule
overpayment refunded. Team also filed on 27 March2 003 with BIR a letter
“Once the option to carry-over and apply the excess quarterly income tax
requesting for the refund or issuance of a tax credit certificate in connection
herewith. against income tax due for the taxable quarters of the succeeding taxable
years has been made, such option shall be considered irrevocable for that

CIR on its petition relies solely on the ground that CTA gravely erred on a taxable period and no application for cash refund or issuance of a tax credit
certificate shall be allowed therefor.”
question of law in affirming the CTA in Division’s ruling despite not being
supported by the evidence on record.

Issue: Whether or not the respondent entitled to a refund. COMMISSIONER OF INTERNAL REVENUE V PNB
GR No. 180290, 09/29/14
Held: YES. Author: Masangcay
Here, it is undisputed that the claim for refund was filed within the two-year
prescriptive period prescribed under Section 229 of the NIRC of 1997, as Petitioner: Commissioner of Internal Revenue
amended. Respondent: Philippine National Bank

Respondent filed its income tax return for taxable year 2001 on 15 April Topic: Donor’s Tax; Transfers which may be constituted as donation;
2002. Counting from said date, it indeed had until 14 April 2004 within sale/exchange/transfer with inadequate consideration
which to file its claim for refund or issuance of tax credit certificate in its DOCTRINE:
favor both administratively and judicially. Thus, petitioner’s administrative The certificate of creditable tax withheld at source is the competent proof
claim and petition for review filed on 19 to establish the fact that taxes are withheld. It is not necessary for the
March 2003 and 27 March 2003, respectively, fell within the person who executed and prepared the certificate of creditable tax withheld
abovementioned prescriptive period. at source to be presented and to testify personally to prove the authenticity
of the certificates.
Likewise, respondent was able to present various certificates of creditable
tax withheld at source from its payors, MPC and MSC, for taxable year 2001, FACTS :
showing creditable withholding taxes in the aggregate amount of - On April 18, 2001 respondent filed its tentative income tax return
P70,805,771.42 (although the refund claim was only P69,562,412.00).[21] for taxable year 2000 which it subsequently amended on July 25,
Moreover, as determined by the CTA in Division, respondent declared the 2000
income related to the claimed creditable withholding taxes of - In its second amended return, the respondent has an overpayment
P69,562,412.00 on its return. consisted of that carried over as tax credit from the last taxable year
in which it opted to be refunded.
Lastly, in compliance with Section 76 of the NIRC of 1997, as amended, - Thus, PNB filed a claim for refund or the issuance of a tax credit
respondent opted to be refunded of its unutilized tax credit (as evidenced certificate in the amount for the taxable year 2000 with the BIR.
by the “x” mark in the appropriate box of its 2001 income tax return), and - Due to BIR’s inaction, PNB filed its judicial claim in CTA which
the same was not carried over in its 2002 income tax return; therefore, the rendered its decision in favor of PNB.
entire amount of P69,562,412.00 may be a proper subject of a claim for - CTA ruled that the fact of withholding and the amount of taxes
refund/tax credit certificate.[ withheld from the income payments received by respondent were
sufficiently established by the creditable withholding tax
Other Notes: certificates, and there was no need to present the testimonies of
 the various payors or withholding agents who issued the certificates - . . . proof of actual remittance by the respondent is not needed in
and made the entries therein. It also held that respondent need not order to prove withholding and remittance of taxes to petitioner.
prove actual remittance of the withheld taxes to the Bureau of Section 2.58.3 (B) of Revenue Regulation No. 2-98 clearly provides
Internal Revenue because the functions of withholding and that proof of remittance is the responsibility of the withholding
remittance of income taxes are vested in the payors who are agent and not of the taxpayer-refund claimant. It should be borne in
considered the agents of petitioner.
mind by the petitioner that payors of withholding taxes are by

themselves constituted as withholding agents of the BIR. The taxes
PETITIONER’S CONTENTION
Petitioner questions the validity of respondent’s certificates of they withhold are held in trust for the government. In the event that
creditable tax withheld at source (withholding tax certificates) and the withholding agents commit fraud against the government by not
contends that even if the original certificates were offered in remitting the taxes so withheld, such act should not prejudice
herein respondent who has been duly withheld taxes by the
evidence, respondent failed to present the various withholding
agents to: (1) identify and testify on their contents; and (2) prove withholding agents acting under government authority. Moreover,
pursuant to Section 57 and 58 ofthe NIRC of 1997, as amended, the
the subsequent remittance of the withheld taxes to the Bureau of
Internal Revenue. withholding of income tax and the remittance thereof to the BIR is
the responsibility of the payor and not the payee. Therefore,
ISSUE: Whether there is a need for the PNB to present the testimonies of its respondent . . . has no control over the remittance of the taxes
various withholding agent to satisfy the claim for refund. -NO withheld from its income by the withholding agent or payor who is
the agent of the petitioner. The Certificates of Creditable Tax
RULING + RATIO: NO Withheld at Source issued by the withholding agents ofthe
- The court ruled that the withholding tax certificates are sufficient government are prima facie proof of actual payment by herein
evidence to satisfy the claim of the respondent for refund. The respondent-payee to the government itself through said agents.
certificate of creditable tax withheld at source is the competent
proof to establish the fact that taxes are withheld. It is not
necessary for the person who executed and prepared the certificate WINEBRENNER & INIGO INSURANCE BROKERS, INC. vs. CIR
of creditable tax withheld at source to be presented and to testify G.R. No. 206526, January 28, 2015
personally to prove the authenticity of the certificates. Author: Montellano
- Moreover, as correctly held by the Court of Tax Appeals En Banc,
the figures appearing in the withholding tax certificates can be
taken at face value since these documents were executed under the Doctrine: Proving that no carry-over has been made does not absolutely
penalties of perjury, pursuant to Section 267 of the 1997 National require the presentation of the quarterly Income Tax Returns (ITRs)
Internal Revenue Code, as amended.
Facts:
- Thus, upon presentation of a withholding tax certificate complete in
its relevant details and with a written statement that it was made Petitioner filed its Annual Income Tax Return for CY 2003.
under the penalties of perjury, the burden of evidence then shifts to
the Commissioner of Internal Revenue to prove that (1) the About two years thereafter, petitioner applied for the administrative tax
certificate is not complete; (2) it is false; or (3) it was not issued credit/refund claiming entitlement to the refund of its excess or unutilized
regularly. CWT for CY 2003, by filing BIR Form No. 1914 with the Revenue District
Office No. 50 of the Bureau of Internal Revenue (BIR).
There being no action taken on the said claim, a petition for review was filed 3) Establish the fact of withholding by a copy of a statement duly
by petitioner before the CTA. CTA Division partially granted petitioner’s issued by the payor to the payee showing the amount paid and the
claim for refund of excess and unutilized CWT for CY 2003 in the reduced amount of tax withheld.
amount of P2,737,903.34.
There is no question that those who claim must not only prove its
Petitioner filed a Motion for Partial Reconsideration with Leave to Submit entitlement to the excess credits, but likewise must prove that no carry-over
Supplemental Evidence. It prayed that an amended decision be issued has been made in cases where refund is sought.
granting the entirety of its claim for refund, or in the alternative, that it be
Proving that no carry-over has been made does not absolutely require the
allowed to submit and offer relevant documents as supplemental evidence.
presentation of the quarterly ITRs.
Respondent Commissioner of Internal Revenue (CIR) also moved for
What Section 76 requires, just like in all civil cases, is to prove the prima
reconsideration, praying for the denial of the entire amount of refund
facie entitlement to a claim, including the fact of not having carried over the
because petitioner failed to present the quarterly Income Tax Returns (ITRs)
excess credits to the subsequent quarters or taxable year. It does not say
for CY 2004. To the CIR, the presentation of the 2004 quarterly ITRs was
that to prove such a fact, succeeding quarterly ITRs are absolutely needed.
indispensable in proving petitioner’s entitlement to the claimed amount
because it would prove that no carry-over of unutilized and excess CWT for This simply underscores the rule that any document, other than quarterly
the four (4) quarters of CY 2003 to the succeeding four (4) quarters of CY ITRs may be used to establish that indeed the non-carry over clause has
2004 was made. In the absence of said ITRs, no refund could be granted. been complied with, provided that such is competent, relevant and part of
the records. The Court is thus not prepared to make a pronouncement as to
CTA En Banc affirmed the Amended Decision of the CTA Division. It stated
the indispensability of the quarterly ITRs in a claim for refund for no court
that before a cash refund or an issuance of tax credit certificate for
can limit a party to the means of proving a fact for as long as they are
unutilized excess tax credits could be granted, it was essential for petitioner
consistent with the rules of evidence and fair play. The means of
to establish and prove, by presenting the quarterly ITRs of the succeeding
ascertainment of a fact is best left to the party that alleges the same. The
years, that the excess CWT was not carried over to the succeeding taxable
Court’s power is limited only to the appreciation of that means pursuant to
quarters considering that the option to carry over in the succeeding taxable
the prevailing rules of evidence. To stress, what the NIRC merely requires is
quarters could not be modified in the final adjustment returns (FAR).
to sufficiently prove the existence of the non-carry over of excess CWT in a
ISSUE: Whether the submission and presentation of the quarterly ITRs of claim for refund.
the succeeding quarters of a taxable year is indispensable in a claim for

refund.

HELD: No. The Court finds for the petitioner. CIR V. TEAM (PHILIPPINES) ENERGY CORPORATION
GR No. 188016, January 14, 2015
A taxpayer who seeks a refund of excess and unutilized CWT must: Author: Plan

1) File the claim with the CIR within the two-year period from the Petitioner: RP as represented by the Commissioner of Internal Revenue
date of payment of the tax; Respondent: Team (Phils.) Energy Corporation (formerly Mirant (Phils.)
Energy Corporation)
2) Show on the return that the income received was declared as

part of the gross income; and
Topic: Refund: Requirements for refund of creditable withholding tax
DOCTRINE: The requirements for entitlement of a corporate taxpayer for a
refund or the issuance of tax credit certificate involving excess withholding RULING + RATIO: YES
taxes are as follows: - In this case, the respondent opted to be refunded or to be issued a
1. That the claim for refund was filed within the two-year tax credit certificate, not to carry over the excess withholding tax for
reglementary period pursuant to Section 22918 of the NIRC; taxable year 2002 to the following taxable year.
2. When it is shown on the ITR that the income payment received is - The requirements for entitlement of a corporate taxpayer for a
being declared part of the taxpayer’s gross income; and refund or the issuance of tax credit certificate involving excess
3. When the fact of withholding is established by a copy of the withholding taxes are as follows:
withholding tax statement, duly issued by the payor to the payee, 1. That the claim for refund was filed within the two-year
showing the amount paid and income tax withheld from that reglementary period pursuant to Section 22918 of the NIRC;
amount. 2. When it is shown on the ITR that the income payment
received is being declared part of the taxpayer’s gross
FACTS : income; and
- Respondent Mirant (Phils.) Energy Corporation, a domestic 3. When the fact of withholding is established by a copy of
corporation, is engaged in the business of developing, managing, the withholding tax statement, duly issued by the payor to
etc. gas turbines and other power generating plants and related the payee, showing the amount paid and income tax
facilities for conversion into electricity and other fuel provided by withheld from that amount.
and under contract with the Government, GOCC or any entity
engaged in the development, supply or distribution of energy. - First requirement: no contest. It was filed on time.
- Second requirement: The testimonies of the accountants
- The respondent filed its annual ITR for 2002 and 2003 on April 15, commissioned by the Court proved that the total amount of
2003 and April 15, 2004, respectively, reflecting overpaid income Creditable Withholding Tax per respondent's Annual ITRs for 2002
taxes or excess creditable withholding taxes in the amounts of and 2003 agrees with the total amount of Creditable Withholding
₱6,232,003.00 and ₱10,134,410.00 for taxable years 2002 and 2003, Tax presented on respondent’s Schedule of Creditable Withholding
respectively. It indicated in the ITRs its option for the refund of the Tax Certificates for 2002 and 2003. Moreover, the total amount of
tax overpayments for 2002 and 2003. gross sales/revenue reported in the Annual ITRs for 2002 and 2003
- On March 22, 2005, the respondent filed an administrative claim for is equal to the amounts recorded in the General Ledger Listing of
refund or issuance of tax credit certificate with the BIR in the total the Creditable Withholding Tax on the Transfer of Real Property and
amount of ₱16,366,413.00, representing the overpaid income tax or Sale of Electricity, 2002 Reconciliation of Revenue per ITR and per
the excess creditable withholding tax of the respondent for calendar General Ledger.
years 2002 and 2003. - Third requirement: The respondent proved that it had met the
- Due to the inaction of the BIR and in order to toll the running of the requirement by presenting the 10 certificates of creditable taxes
two-year prescriptive period for claiming a refund under Section withheld at source. The petitioner did not challenge the
229 of the NIRC, the respondent filed a petition for review in the respondent’s compliance with the requirement.
CTA on April 14, 2005.
- CTA granted the petition and ordered the BIR to refund or to issue a NOTE:
Tax credit certificate - Discussion on Refund vs Carry-over was omitted. Just in case, read
this:
ISSUE: Whether the respondent is entitled for refund of excess withholding
tax. – YES
 Once the option to carry over and apply the excess quarterly income - PNB also withheld and remitted to the BIR withholding taxes
tax against income tax due for the taxable years of the succeeding equivalent to six percent (6%) of the bid price of 1,240,000,469.82
taxable years has been made, such option shall be considered or 74,400,028.49.
irrevocable for that taxable period and no application for cash - On the claim that what it paid the BIR was not entirely due, PNB
refund or issuance of a tax credit certificate shall be allowed filed an administrative claim for the refund of excess withholding
therefor. The two options are alternative and not cumulative in taxes with the BIR.
nature, that is, the choice of one precludes the other. The logic - In its claim for refund, PNB explained that it inadvertently applied
behind the rule is to ease tax administration, particularly the self- the six percent (6%) creditable withholding tax rate on the sale of
assessment and collection aspects. real property classified as ordinary asset, when it should have
- Respondent opted for a refund, not to carry over, as it marked “x” applied the five percent (5%) creditable withholding tax rate on the
on the box “to be refunded” on its ITR for 2002 and 2003. sale of ordinary asset, as provided in Section 2.57.2(J)(B) of Revenue
Regulation (RR) No. 2-98 as amended by RR No. 6-01, considering
that Gotesco is primarily engaged in the real estate business. The
PNB v. CIR applicable creditable withholding tax rate of five percent (5%) of the
G.R. No. 206019 (2015) bid price is equivalent to the amount of Php 62,000,023.49.
Author: Villanueva Therefore, PNB claimed that it erroneously withheld and remitted
to the BIR excess taxes of Php12,400,004.71.
Petitioner: Philippine National Bank - PNB filed a Motion for Reconsideration (MR), attaching therewith,
Respondent: Commissioner of Internal Revenue among others, Gotesco’s 2003 ITR and the latter’s Schedule of
Prepaid Tax, which the First Division admitted as part of the records.
Topic: Requirements for refund of creditable withholding tax - CTA Division and CTA En Banc denied the claim for refund by PNB
DOCTRINE: There is no basis in law or jurisprudence to say that BIR Form for failure to sufficiently prove that GOTESCO did not utilize the
No. 2307 is the only evidence that may be adduced to prove such non-use. creditable taxes withheld, petitioner should have likewise
presented BIR Forms No. 2307 issued to GOTESCO in relation to
FACTS : the creditable taxes withheld reported in its 2003 tax returns
- GOTESCO a Filipino Corporation engaged in real estate business
entered into syndicated loan agreement with PNB. ISSUE: (1) WON PNB is entitled to the refund of creditable withholding
- GOTESCO mortagaged a six-hectare expanse known as Ever Origas taxes erroneously paid to the BIR. – YES
Commercial Complex to secure its loan. (2) WON BIR Form No. 2307 is required to present. - NO
- GOTESCO defaulted on its loan obligation.
- PNB foreclosed the mortgaged property. RULING + RATIO:
- There is a civil case filed in Court by Gotesco against PNB for the
annulment of the foreclosure proceedings, specific performance - Although PNB was not able to submit Gotesco’s BIR Form No. 2307,
and damages with prayer for temporary restraining order (TRO) the Court is persuaded and so declares that PNB submitted
and/or preliminary injunction. evidence sufficiently showing Gotesco’s non-utilization of the taxes
- As it prepared for the consolidation of its ownership over the withheld subject of the refund.
foreclosed property, PNB paid the BIR 18,615,000 as documentary - In claims for excess and unutilized creditable withholding tax, the
stamp tax (DST). submission of BIR Forms 2307 is to prove the fact of withholding of
the excess creditable withholding tax being claimed for refund. This
is clear in the provision of Section 58.3, RR 2-98, as amended, and in
 various rulings of the Court. In the words of Section 2.58.3, RR 2-98, present Gotesco’s BIR Form No. 2307, as insisted by the First
"That the fact of withholding is established by a copy of a statement Division, because the information contained in the said form may be
duly issued by the payor (withholding agent) to the payee showing very well gathered from other documents already presented by
the amount paid and the amount of tax withheld therefrom." PNB. Thus, the presentation of BIR Form No. 2307 would be in the
- Hence, the probative value of BIR Form 2307, which is basically a final analysis a superfluity, of little or no value.
statement showing the amount paid for the subject transaction and - While perhaps it may be necessary to prove that the taxpayer did
the amount of tax withheld therefrom, is to establish only the fact not use the claimed creditable withholding tax to pay for his/its tax
of withholding of the claimed creditable withholding tax. There is liabilities, there is no basis in law or jurisprudence to say that BIR
nothing in BIR Form No. 2307 which would establish either Form No. 2307 is the only evidence that may be adduced to prove
utilization or non-utilization, as the case may be, of the creditable such non-use.
withholding tax.
- In this case, PNB was able to establish, through the evidence it
presented, that Gotesco did not in fact use the claimed creditable
withholding taxes to settle its tax liabilities, to reiterate: (1) COMMISSIONER OF INTERNAL REVENUE V. GOODYEAR PHILIPPINES
Gotesco’s 2003 Audited Financial Statements, which still included GR No. 216130, August 3, 2015
the mortgaged property in the asset account "Properties and Author: Plan
Equipment," proving that Gotesco did not recognize the foreclosure
sale and therefore, the payment by PNB of the creditable Petitioner: Commissioner of Internal Revenue
withholding taxes corresponding to the same; (2) Gotesco’s 2003 Respondent: Goodyear Philippines Inc.
ITRs, which the CTA Special First Division required to show that the
excess creditable withholding tax claimed for refund was not used Topic: Refund: Prescriptive period for recovery of tax erroneously or illegally
by Gotesco, along with the 2003 Schedule of Prepaid Tax which collected; Sec. 229 NIRC
itemized in detail the withholding taxes claimed by Gotesco for the DOCTRINE: No suit or proceeding shall be maintained in any court for the
year 2003 amounting to 6,014,433.00; (3) the testimony of recovery of any national internal revenue tax hereafter alleged to have been
Gotesco’s former accountant, proving that the amount subject of erroneously collected until a claim for refund or credit has been duly filed
PNB’s claim for refund was not included among the creditable with the Commissioner. However it does not mean that the taxpayer must
withholding taxes stated in Gotesco’s 2003 ITR; and (4) the await the final resolution of its administrative claim for refund.
Withholding Tax Remittance Returns (BIR Form 1606) proving that
the amount of 74,400,028.49 was withheld and paid by PNB in the FACTS :
year 2003. - Respondent is a domestic corporation and registered with the BIR as
- It must be noted that PNB had already presented the Withholding a large taxpayer. In 2003, the authorized capital stock of respondent
Tax Remittance Returns (BIR Form No. 1606) relevant to the was increased from P400M divided into 4M shares with a par value
transaction. The said forms show that the amount of 74,400,028.49 of P100.00 each, to P1,731,863,000.00 divided into 4M common
was withheld and paid by PNB in the year 2003. It contains, among shares and 13,318,630 preferred shares with a par value of P100.00
other data, the name of the payor and the payee, the description of each. Consequently, all the preferred shares were solely and
the property subject of the transaction, and the determination of exclusively subscribed by Goodyear Tire and Rubber Company
the taxable base, and the tax rate applied. These are the very same (GTRC), which was a foreign company organized and existing under
key information that would be gathered from BIR Form No. 2307. the laws of the State of Ohio (US) and is unregistered in the
- All in all, the evidence presented by petitioner sufficiently proved its Philippines.
entitlement to the claimed refund. There is no need for PNB to
 - In 2008, respondent authorized the redemption of GTRC's 3,729,216 expiration of two (2) years from the date of payment of the tax or
preferred shares on October 15, 2008 at the redemption price of penalty regardless of any supervening cause that may arise after
P470,653,914.00, representing the aggregate par value and accrued - The primary purpose of filing an administrative claim was to serve
and unpaid dividends. as a notice of warning to the CIR that court action would follow
- On October 15, 2008, respondent filed an application for relief from unless the tax or penalty alleged to have been collected erroneously
double taxation before the International Tax Affairs Division of the or illegally is refunded. To clarify, Section 229 of the Tax Code
BIR to confirm that the redemption was not subject to Philippine however does not mean that the taxpayer must await the final
income tax, pursuant to the Republic of the Philippines (RP) - US Tax resolution of its administrative claim for refund, since doing so
Treaty. This notwithstanding, respondent still took the conservative would be tantamount to the taxpayer's forfeiture of its right to seek
approach, and thus, withheld and remitted the sum of judicial recourse should the two-year prescriptive period expire
P14,659,847.10 to the BIR on November 3, 2008, representing without the appropriate judicial claim being filed.
fifteen percent (15%) FWT, computed based on the difference of - Notably, Sec. 229 only required that an administrative claim should
the redemption price and aggregate par value of the shares. first be filed. It bears stressing that respondent could not be faulted
- On October 21, 2010, respondent filed an administrative claim for for resorting to court action, considering that the prescriptive
refund or issuance of TCC, representing 15% FWT in the sum of period stated therein was about to expire. Had respondent awaited
P14,659,847.10 before the BIR. Thereafter, or on November 3, the action of petitioner knowing fully well that the prescriptive
2010, it filed a judicial claim, by way of petition for review, before period was about to lapse, it would have resultantly forfeited its
the CTA. right to seek a judicial review of its claim, thereby suffering
- Petitioner maintained that respondent's claim must be denied, irreparable damage.
considering that: (a) it failed to exhaust administrative remedies by
prematurely filing its petition before the CTA; and (b) it failed to Other Issue:
submit complete supporting documents before the BIR. CTA granted - Discussion on the transferred shares omitted – Income Tax issue.
the petition for refund or issuance of TCC. Just in case: Amount redeemed by GTRC from the redemption of
shares is not subject to 15% FWT on dividends in accordance with
ISSUE: Whether the petition for refund should be dismissed for non- Sec. 28 (B) (5) (b) NIRC.
exhaustion of administrative remedies. – NO - If the distribution is in the nature of a recurring return on stock, it is
an ordinary dividend (subject to FWT). However, if the corporation
RULING + RATIO: YES is really winding up its business or recapitalizing and narrowing its
- SEC. 229. Recovery of Tax Erroneously or Illegally Collected. – No activities, the distribution may properly be treated as in complete or
suit or proceeding shall be maintained in any court for the partial liquidation and as payment by the corporation to the
recovery of any national internal revenue tax hereafter alleged to stockholder for his stock (not subject to FWT).
have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, or of any
sum alleged to have been excessively or in any manner wrongfully
collected, until a claim for refund or credit has been duly filed with
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MANILA ELECTRIC
the Commissioner; but such suit or proceeding may be maintained,
COMPANY (MERALCO), respondent.
whether or not such tax, penalty, or sum has been paid under
G.R. No. 181459, June 9, 2014
protest or duress.
Author: Montellano
In any case, no such suit or proceeding shall be filed after the

Doctrine: The prescriptive period provided is mandatory regardless of any BIR issued Ruling No. DA-342- 2003 declaring that the interest payments
supervening cause that may arise after payment. It should be pointed out made to NORD/LB Singapore Branch are exempt from the ten percent (10%)
further that while the prescriptive period of two (2) years commences to final withholding tax, since it is a financing institution owned and controlled
run from the time that the refund is ascertained, the propriety thereof is by the foreign government of Germany.
determined by law (in this case, from the date of payment of tax), and not
upon the discovery by the taxpayer of the erroneous or excessive payment Relying on the BIR Ruling, respondent MERALCO filed with petitioner a claim
of taxes. The issuance by the BIR of the Ruling declaring the tax-exempt for tax refund or issuance of tax credit certificate in the aggregate amount
status of NORD/LB, if at all, is merely confirmatory in nature. of P264,120,181.44, representing the erroneously paid or overpaid final
withholding tax on interest payments made to NORD/LB Singapore Branch.
Though the Tax Code recognizes the right of taxpayers to request the return
of such excess/erroneous payments from the government, they must do so Petitioner denied MERALCO’s claim for tax refund on the basis that the
within a prescribed period. same had already prescribed under Section 204 of the Tax Code, which gives
a taxpayer/claimant a period of two (2) years from the date of payment of
FACTS: tax to file a claim for refund before the BIR.
Manila Electric Company (MERALCO) obtained a loan from Norddeutsche
Landesbank Girozentrale (NORD/LB) Singapore Branch in the amount of ISSUE: Whether or not respondent MERALCO is entitled to a tax
USD120,000,000.00 with ING Barings South East Asia Limited (ING Barings) refund/credit relative to its payment of final withholding taxes on interest
as the Arranger. Meralco executed another loan agreement with NORD/LB payments made to NORD/LB from January 1999 to September 2003.
Singapore Branch for a loan facility in the amount of USD100,000,000.00
with Citicorp International Limited as Agent. HELD: No.
The right has already prescribed under Section 229 of the Tax Code, to wit:
In the loan agreements, the income received by NORD/LB, by way of Section 229. Recovery of Tax Erroneously or Illegally Collected.—
respondent MERALCO’s interest payments, shall be paid in full without No suit or proceeding shall be maintained in any court for the
deductions, as respondent MERALCO shall bear the obligation of recovery of any national internal revenue tax hereafter alleged to
paying/remitting to the BIR the corresponding ten percent (10%) final have been erroneously or illegally assessed or collected, or of any
withholding tax. penalty claimed to have been collected without authority, of any
sum alleged to have been excessively or in any manner wrongfully
So respondent MERALCO paid/remitted to the Bureau of Internal Revenue collected without authority, or of any sum alleged to have been
(BIR) the said withholding tax on its interest payments to NORD/LB excessively or in any manner wrongfully collected, until a claim for
Singapore Branch, covering the period from January 1999 to September refund or credit has been duly filed with the Commissioner; but
2003 in the aggregate sum of P264,120,181.44.6 such suit or proceeding may be maintained, whether or not such
However, respondent MERALCO discovered that NORD/LB Singapore Branch tax, penalty, or sum has been paid under protest or duress.
is a foreign government-owned financing institution of Germany.
In any case, no such suit or proceeding shall be filed after the
Thus, respondent MERALCO filed a request for a BIR Ruling with petitioner expiration of two (2) years from the date of payment of the tax or
Commissioner of Internal Revenue (CIR) with regard to the tax exempt penalty regardless of any supervening cause that may arise after
status of NORD/LB Singapore Branch, in accordance with Section 32(B)(7)(a) payment: Provided, however, That the Commissioner may, even
of the 1997 National Internal Revenue Code (Tax Code), as amended. without a written claim therefor, refund or credit any tax, where on
the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid
 Topic: Donor’s Tax; Transfers which may be constituted as donation;
The prescriptive period provided is mandatory regardless of any sale/exchange/transfer with inadequate consideration
supervening cause that may arise after payment. It should be pointed out DOCTRINE: As may be gleaned from the foregoing provisions, a claimant for
further that while the prescriptive period of two (2) years commences to refund must first file an administrative claim for refund before the CIR, prior
run from the time that the refund is ascertained, the propriety thereof is to filing a judicial claim before the CTA. Notably, both the administrative and
determined by law (in this case, from the date of payment of tax), and not judicial claims for refund should be filed within the two (2)-year prescriptive
upon the discovery by the taxpayer of the erroneous or excessive payment period indicated therein, and that the claimant is allowed to file the latter
of taxes. The issuance by the BIR of the even without waiting for the resolution of the former in order to prevent
Ruling declaring the tax-exempt status of NORD/LB, if at all, is merely the forfeiture of its claim through prescription. In this regard, case law
confirmatory in nature. states that "the primary purpose of filing an administrative claim [is] to
serve as a notice of warning to the CIR that court action would follow unless
“A taxpayer must prove not only his entitlement to a refund, but also his the tax or penalty alleged to have been collected erroneously or illegally is
compliance with the procedural due process as nonobservance of the refunded. To clarify, Section 229 of the Tax Code - then Section 306 of the
prescriptive periods within which to file the administrative and the judicial old Tax Code - however does not mean that the taxpayer must await the
claims would result in the denial of his claim.” final resolution of its administrative claim for refund, since doing so would
be tantamount to the taxpayer's forfeiture of its right to seek judicial
In the case at bar, respondent MERALCO had ample opportunity to verify on recourse should the two (2)-year prescriptive period expire without the
the tax-exempt status of NORD/LB for purposes of claiming tax refund. Even appropriate judicial claim being filed.
assuming that respondent MERALCO could not have emphatically known
the status of NORD/LB, its supposition of the same was already confirmed FACTS :
by the BIR Ruling which was issued on October 7, 2003. Nevertheless, it only - Solidbank (now Metrobank) extended a foreign currency
filed its claim for tax refund on July 13, 2004, or ten (10) months from the denominated loan with Luzon Hydro Corporation (LHC) in which the
issuance of the aforesaid Ruling. latter agreed to shoulder all the corresponding internal revenue
taxes required by law.
Respondent MERALCO’s claim for refund in the amount of Two Hundred - Upon payment of said loans, LHC withheld and paid BIR 10% final
Twenty- Four Million Seven Hundred Sixty Thousand Nine Hundred Twenty- tax on the interest portion of the aforesaid payments, on the same
Six Pesos and Sixty-Five Centavos (P224,760,926.65) representing months that the payments were made
erroneously paid and remitted final income taxes for the period January - Metrobank, averred that it mistakenly remitted the amount of taxes
1999 to July 2002 should be denied on the ground of prescription. withheld and paid by LHC and included such on their Monthly
Remittance Returns of Final Income Taxes withheld for months of
March 2001 and October 2001

- Thus, petitioner filed a claim for refund on December 27, 2002. Due
METROBANK V CIR to CIR’s inaction, it filed a judicial claim before the CTA on
GR No. 182582, 04/17/17 September 10, 2003
Author: MASANGCAY - CTA denied the claim for filing beyond the prescriptive period.
Hence, this petition
Petitioner: Commisioner of Internal Revenue
Respondent: Philippine National Bank
ISSUE: Whether or not the claim was filed beyond the prescriptive period
 its corresponding judicial claim was only filed on September 10,
RULING + RATIO: YES 2003. Therefore, Metrobank's claim for refund had clearly
prescribed.
- (C) Credit or refund taxes erroneously or illegally received or - Therefore, the claim was filed beyond the prescriptive period.
penalties imposed without authority, refund the value of internal
revenue stamps when they are returned in good condition by the
purchaser, and, in his discretion, redeem or change unused stamps
that have been rendered unfit for use and refund their value upon PBC v. CIR (2016)
proof of destruction.1âwphi1No credit or refund of taxes or G.R. No. 194065, June 20, 2016
penalties shall be allowed unless the taxpayer files in writing with Author: Marayan
the Commissioner a claim for credit or refund within two (2) years
Petitioner: Commissioner of Internal Revenue
after the payment of the tax or penalty: Provided, however, That a
Respondents: Team [Philippines] Operations Corporation
return filed showing an overpayment shall be considered as a

written claim for credit or refund. Topic: Prescriptive Period for recovery of Tax Erroneously or Illegally
- As may be gleaned from the foregoing provisions, a claimant for Collected – Reckoning Point
refund must first file an administrative claim for refund before the Doctrine: The rule is that the date of payment is when the tax liability falls
CIR, prior to filing a judicial claim before the CTA. Notably, both the due. However, jurisprudence has made exceptions for reckoning the period
administrative and judicial claims for refund should be filed within of prescription from the actual date of payment of tax by instead reckoning
the two (2)-year prescriptive period indicated therein, and that the that date from the filing of the final adjusted returns, i.e., income tax and
claimant is allowed to file the latter even without waiting for the other withholding taxes. These exceptions are nevertheless grounded on
resolution of the former in order to prevent the forfeiture of its the same rationale that payment of the tax is deemed made when it falls
claim through prescription. In this regard, case law states that "the due.
primary purpose of filing an administrative claim [is] to serve as a
Facts:
notice of warning to the CIR that court action would follow unless
Pursuant to Revenue Regulations (RR) No. 7-92, the Bureau of Internal
the tax or penalty alleged to have been collected erroneously or
Revenue (BIR) issued Certificate No. 08-0434 on 31 July 2001 authorizing
illegally is refunded. To clarify, Section 229 of the Tax Code - then
petitioner to operate and use the Online Electronic Documentary Stamp
Section 306 of the old Tax Code - however does not mean that the Metering Machine (DS metering machine) with Serial No. SN363 1711.
taxpayer must await the final resolution of its administrative claim
for refund, since doing so would be tantamount to the taxpayer's Petitioner purchased documentary stamps from the BIR and loaded them to
forfeiture of its right to seek judicial recourse should the two (2)- its DS metering machine. During the period 23 March 2004 to 23 December
year prescriptive period expire without the appropriate judicial 2004, petitioner executed several repurchase agreements with the Bangko
claim being filed Sentral ng Pilipinas (BSP). The documentary stamps were imprinted on the
- In the case at bar, it is undisputed that Metrobank's final Confirmation Letters corresponding to those repurchase agreements
withholding tax liability in March 2001 was remitted to the BIR through petitioner’s DS metering machine.
on April 25, 2001. As such, it only had until April 25, 2003 to file its
Petitioner claimed that the repurchase agreements were not subject to the
administrative and judicial claims for refund. However, while
documentary stamp tax (DST). Thus, on 12 May 2006, it filed with the BIR an
Metrobank's administrative claim was filed on December 27, 2002,
administrative claim for the issuance of tax credit certificates for the alleged
erroneous payment of the DST in the total amount of P11,063,866.67. Other Notes:
Alleging the inaction of the BIR on the administrative claim of petitioner, the
latter filed a Petition for Review with the CTA on 18 May 2006. Petitioner A DST is a tax on documents, instruments, loan agreements, and papers
reiterated its claim for the refund or issuance of its tax credit certificate for evidencing the acceptance, assignment, sale or transfer of an obligation,
the amount of P11,063,866.67 representing the erroneously paid DST for right or property incident thereto. The DST is actually an excise tax, because
several repurchase agreements it had executed with the BSP. it is imposed on the transaction rather than on the document.

The CTA ruled that although the DST on the repurchase agreements were
paid, the petitioner had substantiated only P10,633,881.20. Out of that PHILIPPINE AIRLINES vs. COMMISSIONER OF INTERNAL REVENUE
amount, P3,072,521.60 was barred by prescription, and only the claim for G.R. No. 206079-80 & 206309, January 17, 2018
the remaining P7,561,359.60 fell within the two-year prescriptive period. Author: Madamba
The CTA Division reckoned the counting of the two-year period from the
date of the Confirmation Letters of the repurchase agreements. Considering Petitioner/s : PHILIPPINE AIRLINES, INC (PAL)
that petitioner filed its administrative claim on 12 May 2006 and the judicial Respondent/s : COMMISSIONER OF INTERNAL REVENUE
claim on 18 May 2006, the DST paid on the repurchase agreements earlier
than 18 May 2004 was disallowed due to prescription. Topic: Remedy if claim for refund denied
DOCTRINE: While the Commissioner has the right to hear a refund claim
Issue: first, if he or she fails to act on it, it will be treated as a denial of the refund,
Whether the date of imprinting the documentary stamps on the document and the Court of Tax Appeals is the only entity that may review this ruling.
or the date of purchase of documentary stamps for loading and reloading on
the DS metering machine should be deemed as payment of the DST Parties are expected to litigate and prove every aspect of their case anew
contemplated under Section 200(D) of the NIRC for the purpose of counting and formally offer all their evidence. No value is given to documentary
the two-year prescriptive period for filing a claim for a refund or tax credit. evidence submitted in the Bureau of Internal Revenue unless it is formally
offered in the Court of Tax Appeals. Thus, the review of the Court of Tax
Held: NO. Appeals is not limited to whether or not the Commissioner committed gross
The payment of the DST and the filing of the DST Declaration Return upon abuse of discretion, fraud, or error of law, as contended by the
loading/reloading of the DS metering machine must not be considered as Commissioner. As evidence is considered and evaluated again, the scope of
the “date of payment” when the prescriptive period to file a claim for a the Court of Tax Appeals' review covers factual findings.
refund/credit must commence. For DS metering machine users, the
payment of the DST upon loading/reloading is merely an advance payment When a particular income is subject to a final withholding tax, it means that
for future application. The liability for the payment of the DST falls due a withholding agent will withhold the tax due from the income earned to
only upon the occurrence of a taxable transaction. remit it to the Bureau of Internal Revenue. Thus, the liability for remitting
the tax is on the withholding agent.
Therefore, it is only then that payment may be considered for the purpose
of filing a claim for a refund or tax credit. Since actual payment was already FACTS :
made upon loading/reloading of the DS metering machine and the filing of • In 2002, PAL made US dollar and Philippine peso deposits and
the DST Declaration Return, the date of imprinting the documentary placements in Chinabank, JPMorgan, PBCom, and Standard
stamp on the taxable document must be considered as the date of
payment contemplated under Section 229 of the NIRC.
 Chartered. PAL earned interest income from these deposits and the Taxes Withheld issued to it by these Agent Banks. It contends that these
Agent Banks deducted final withholding taxes. Certificates are prima facie evidence of actual remittance, and if they are
• From Chinabank, PAL claimed that it earned interest income net of uncontroverted, as in this case, they are sufficient proof of remittance. PAL
withholding tax in the amount of US$480,688.76 in its US dollar further claims that it need not establish the remittance of income taxes to
time deposit for the year 2002 as evidenced by a Certification which the Bureau of Internal Revenue because this function is vested with the
stated that withholding taxes were deducted from PAL's interest Agent Banks as the payors and withholding agents of the Commissioner.
income in the amount of US$38,974.75. These taxes were remitted
to the Bureau of Internal Revenue. RULING OF THE LOWER COURTS:
• From JPMorgan, PAL alleged that it earned interest income in its CTA– Partially granted PAL's Petition and ordered the Commissioner to
peso deposit in the amount of P6,188,232.17. JPMorgan deducted refund PAL Pl,237,646.43, representing the final income tax withheld and
withholding tax totalling Pl,237,646.43. From PBCom, PAL remitted by JPMorgan. It denied the remaining claim for refund of
maintained that it earned interest income from its various dollar PSl0,223.16 and US$65,877.07 representing the final income tax withheld by
placements for the year 2002, with the final taxes withheld totaling Chinabank, PBCom, and Standard Chartered – it ruled that PAL failed to
to US$ 20,443.19. adequately substantiate its claim because it did not prove that the Agent
• PAL's peso deposit account with PBCom also allegedly earned Banks, with the exception of JPMorgan, remitted the withheld amounts to
interest income for the year 2002, with the final taxes withheld Php the Bureau of Internal
510,223.13. Revenue. PAL only presented documents which showed the total amount of
• From Standard Chartered, PAL stated that it earned interest income final taxes withheld for all branches of the banks.
in its dollar time deposit account amounting to US$86,107.55. The
amount of US$6,458 was deducted and allegedly remitted to the ISSUE:
Bureau of Internal Revenue as final withholding tax. 1. Whether or not evidence not presented in the administrative claim for
• Claiming that it was exempt from final withholding taxes under its refund in the Bureau of Internal Revenue can be presented in the Court of
franchise, PAL filed with the Commissioner a written request for a Tax Appeals.
tax refund of the withheld amounts of Pl,747,869.59 and 2. Whether or not Philippine Airlines, Inc. was able to prove remittance of
US$65,877.07. its final taxes withheld to the Bureau of Internal Revenue.
• The Commissioner failed to act on the request. Thus, PAL elevated 3. Whether or not proof of remittance is necessary for Philippine Airlines,
the case to the Court of Tax Appeals in Division Inc. to claim a refund under its charter, Presidential Decree No. 1590.

RULING + RATIO:
BIR’s CONTENTION: Commissioner contended that PAL's claim was subject 1. YES - Court of Tax Appeals is not limited by the evidence presented in the
to administrative routinary investigation or examination by the Bureau of administrative claim in the Bureau of Internal Revenue. The claimant may
Internal Revenue. She also alleged that PAL's claim was not properly present new and additional evidence to the Court of Tax Appeals to support
documented, and that it must show that it complied with the prescriptive its case for tax refund. The power of the Court of Tax Appeals to exercise its
period for filing refunds under the National Internal Revenue Code. It appellate jurisdiction does not preclude it from considering evidence that
likewise asserted that claims for refund are of the same nature as a tax was not presented in the administrative claim in the Bureau of Internal
exemption, and thus, are strictly construed against the claimant. Revenue.

PAL’s CONTENTION: PAL argues that it adequately established the
withholding and remittance of final taxes through the Certificates of Final
In this case, the Commissioner failed to act on PAL's administrative claim. If it deducted and withheld. They confirm that the remittance of the tax is not
she had acted on the refund claim, she could have directed PAL to submit the responsibility of the payee, but that of the payor, the withholding agent.
the necessary documents to prove its case.
In this case, PAL is the income earner and the payee of the final withholding
Furthermore, considering that the refund claim will be litigated anew in the tax, and the Agent Banks are the withholding agents who are the payors
Court of Tax Appeals, the latter may consider all pieces of evidence formally responsible for the deduction and remittance of the tax.
offered by PAL, whether or not they were submitted in the administrative
level. The failure of the Agent Banks to remit the amounts does not affect and
should not prejudice PAL. In case of failure of remittance of taxes, the
2. NO – The Supreme Court upheld the ruling of Both the Court of Tax Bureau of Internal Revenue's cause of action is against the Agent Banks.
Appeals Special First Division and En Banc wherein they ruled that PAL failed Thus, PAL is not obliged to remit, let alone prove the remittance of, the
to sufficiently prove that Chinabank, PBCom, and Standard Chartered had taxes withheld.
remitted the withheld taxes. It found that the presented documents only
showed the total amount of final taxes withheld for all branches of these Moreover, to claim a refund, the Court rules that PAL needs only to prove
Agent Banks. It did not show that the amounts remitted by these Agent that taxes were withheld.
Banks pertained to the taxes withheld from PAL’s interest income. Taxes withheld by the withholding agent are deemed to be the full and final
payment of the income tax due from the income earner or payee.
3. NO – Remittance need not be proven. PAL needs only to prove that taxes
were withheld from its interest income. Certificates of Final Taxes Withheld issued by the Agent Banks are sufficient
evidence to establish the withholding of the tax
First, PAL is undisputedly exempt from paying the income tax on interest
earned as provided under its franchise. Considering that these Certificates were presented, the burden of proof
shifts to the Commissioner, who needs to establish that they were
Second, PAL is likewise entitled to a refund because it is not responsible for incomplete, false, or issued irregularly to which the Commissioner failed to
the remittance of tax to the Bureau of Internal Revenue. The taxes on provide.
interest income from bank deposits are in the nature of a withholding tax.
Thus, the party liable for remitting the amounts withheld is the withholding Thus, these Certificates are sufficient evidence to establish the withholding
agent of the Bureau of Internal Revenue. of the taxes. The taxes withheld from PAL are considered its full and final
payment of taxes. Necessarily, when taxes were withheld and deducted
The withholding agent is the payor liable for the tax, and any deficiency in from its income, PAL is deemed to have paid them. Considering that PAL is
its amount shall be collected from it. Should the Bureau of Internal Revenue exempted from paying the withholding tax, it is rightfully entitled to a
find that the taxes were not properly remitted, its action is against the refund.
withholding agent, and not against the taxpayer.
The Court notes that the case of Commissioner of Internal Revenue v.
The withholding agent must file the annual information return and furnish Philippine National Bank, as to the process, is applicable in this case
the payee written statements of the payments it made and of the amounts wherein, it ruled that the proof of remittance is not necessary to claim a tax
refund applies to final withholding taxes. The same principles used to
rationalize the ruling apply to final withholding taxes: (i) the payor-
withholding agent is responsible for the withholding and remitting of the
income taxes; (ii) the payee-refund claimant has no control over the
remittance of the taxes withheld from its income; (iii) the Certificates of
Final Tax Withheld at Source issued by the withholding agents of the
government are prima facie proof of actual payment by payee-refund
claimant to the government itself and are declared.