Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 187485 February 12, 2013
COMMISSIONER OF INTERNAL REVENUE, Petitioner,
vs.
SAN ROQUE POWER CORPORATION, Respondent.
DECISION
Taxation; Tax Refund; Tax Credit; Waiting Period; It is
indisputable that compliance with the 120-day waiting period is
mandatory and jurisdictional. The waiting period, originally fixed
at 60 days only, was part of the provisions of the first Value-Added
Tax (VAT) law, Executive Order No. 273, which took effect on 1
January 1988. The waiting period was extended to 120 days
effective 1 January 1998 under RA 8424 or the Tax Reform Act
of 1997.—Clearly, San Roque failed to comply with the 120-day
waiting period, the time expressly given by law to the
Commissioner to decide whether to grant or deny San Roque’s
application for tax refund or credit. It is indisputable that
compliance with the 120-day waiting period is mandatory and
jurisdictional. The waiting period, originally fixed at 60 days only,
was part of the provisions of the first VAT law, Executive Order
No. 273, which took effect on 1 January 1988. The waiting period
was extended to 120 days effective 1 January 1998 under RA
8424 or the Tax Reform Act of 1997. Thus, the waiting period has
been in our statute books for more than fifteen (15) years before
San Roque filed its judicial claim. Failure to comply with the 120-
day waiting period violates a mandatory provision of law. It
violates the doctrine of exhaustion of administrative remedies and
renders the petition premature and thus without a cause of action,
with the effect that the CTA does not acquire jurisdiction over the
taxpayer’s petition. Philippine jurisprudence is replete with cases
upholding and reiterating these doctrinal principles.
Same; Court of Tax Appeals; Jurisdiction; The charter of the
Court of Tax Appeals expressly provides that its jurisdiction is to
review on appeal decisions of the Commissioner of Internal
Revenue in cases involving refunds of internal revenue taxes.—
The charter of the CTA expressly provides that its jurisdiction is
to review on appeal “decisions of the Commissioner of Internal
Revenue in cases involving x x x refunds of internal revenue
taxes.” When a taxpayer prematurely files a judicial claim for tax
refund or credit with the CTA without waiting for the decision of
the Commissioner, there is no “decision” of the Commissioner to
review and thus the CTA as a court of special jurisdiction has no
jurisdiction over the appeal. The charter of the CTA also
expressly provides that if the Commissioner fails to decide within
“a specific period” required by law, such “inaction shall be
deemed a denial” of the application for tax refund or credit. It is
the Commissioner’s decision, or inaction “deemed a denial,” that
the taxpayer can take to the CTA for review. Without a decision
or an “inaction x x x deemed a denial” of the Commissioner, the
CTA has no jurisdiction over a petition for review.
Civil Law; Human Relations; It is hornbook doctrine that a person
committing a void act contrary to a mandatory provision of law
cannot claim or acquire any right from his void act. A right cannot
spring in favor of a person from his own void or illegal act.―It is
hornbook doctrine that a person committing a void act contrary to
a mandatory provision of law cannot claim or acquire any right
from his void act. A right cannot spring in favor of a person from
his own void or illegal act. This doctrine is repeated in Article 2254
of the Civil Code, which states, “No vested or acquired right can
arise from acts or omissions which are against the law or which
infringe upon the rights of others.” For violating a mandatory
provision of law in filing its petition with the CTA, San Roque
cannot claim any right arising from such void petition. Thus, San
Roque’s petition with the CTA is a mere scrap of paper.

Taxation; Tax Refund; Tax Credit; The Supreme Court should not
establish the precedent that non-compliance with mandatory and
jurisdictional conditions can be excused if the claim is otherwise
meritorious, particularly in claims for tax refunds or credit.—This
Court cannot disregard mandatory and jurisdictional conditions
mandated by law simply because the Commissioner chose not to
contest the numerical correctness of the claim for tax refund or
credit of the taxpayer. Non-compliance with mandatory periods,
non-observance of prescriptive periods, and non-adherence to
exhaustion of administrative remedies bar a taxpayer’s claim for
tax refund or credit, whether or not the Commissioner questions
the numerical correctness of the claim of the taxpayer. This Court
should not establish the precedent that non-compliance with
mandatory and jurisdictional conditions can be excused if the
claim is otherwise meritorious, particularly in claims for tax
refunds or credit. Such precedent will render meaningless
compliance with mandatory and jurisdictional requirements, for
then every tax refund case will have to be decided on the
numerical correctness of the amounts claimed, regardless of non-
compliance with mandatory and jurisdictional conditions.
Same; Appeals; The taxpayer may, if he wishes, appeal the
decision of the Commissioner to the Court of Tax Appeals within
30 days from receipt of the Commissioner’s decision, or if the
Commissioner does not act on the taxpayer’s claim within the
120-day period, the taxpayer may appeal to the Court of Tax
Appeals within 30 days from the expiration of the 120-day
period.—Section 112(C) also expressly grants the taxpayer a 30-
day period to appeal to the CTA the decision or inaction of the
Commissioner, thus: x x x the taxpayer affected may, within thirty
(30) days from the receipt of the decision denying the claim or
after the expiration of the 120-day period, appeal the decision or
the unacted claim with the Court of Tax Appeals. This law is clear,
plain, and unequivocal. Following the well-settled verba legis
doctrine, this law should be applied exactly as worded since it is
clear, plain, and unequivocal. As this law states, the taxpayer
may, if he wishes, appeal the decision of the Commissioner to the
CTA within 30 days from receipt of the Commissioner’s decision,
or if the Commissioner does not act on the taxpayer’s claim within
the 120-day period, the taxpayer may appeal to the CTA within
30 days from the expiration of the 120-day period.
Same; Tax Refund; Tax Credit; The taxpayer may, within two (2)
years after the close of the taxable quarter when the sales were
made, apply for the issuance of a tax credit certificate or refund
of the creditable input tax due or paid to such sales.—Section
112(A) clearly, plainly, and unequivocally provides that the
taxpayer “may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a
tax credit certificate or refund of the creditable input tax due or
paid to such sales.” In short, the law states that the taxpayer may
apply with the Commissioner for a refund or credit “within two (2)
years,” which means at anytime within two years. Thus, the
application for refund or credit may be filed by the taxpayer with
the Commissioner on the last day of the two-year prescriptive
period and it will still strictly comply with the law. The two-year
prescriptive period is a grace period in favor of the taxpayer and
he can avail of the full period before his right to apply for a tax
refund or credit is barred by prescription.
Same; Same; Same; The two-year prescriptive period in Section
112(A) refers to the period within which the taxpayer can file an
administrative claim for tax refund or credit. Stated otherwise, the
two-year prescriptive period does not refer to the filing of the
judicial claim with the Court of Tax Appeals but to the filing of the
administrative claim with the Commissioner.—Section 112(C)
provides that the Commissioner shall decide the application for
refund or credit “within one hundred twenty (120) days from the
date of submission of complete documents in support of the
application filed in accordance with Subsection (A).” The
reference in Section 112(C) of the submission of documents “in
support of the application filed in accordance with Subsection A”
means that the application in Section 112(A) is the administrative
claim that the Commissioner must decide within the 120-day
period. In short, the two-year prescriptive period in Section 112(A)
refers to the period within which the taxpayer can file an
administrative claim for tax refund or credit. Stated otherwise, the
two-year prescriptive period does not refer to the filing of the
judicial claim with the CTA but to the filing of the administrative
claim with the Commissioner. As held in Aichi, the “phrase ‘within
two years x x x apply for the issuance of a tax credit or refund’
refers to applications for refund/credit with the CIR and not to
appeals made to the CTA.”
Same; Same; Same; If the 30-day period, or any part of it, is
required to fall within the two-year prescriptive period (equivalent
to 730 days), then the taxpayer must file his administrative claim
for refund or credit within the first 610 days of the two-year
prescriptive period.—If the 30-day period, or any part of it, is
required to fall within the two-year prescriptive period (equivalent
to 730 days), then the taxpayer must file his administrative claim
for refund or credit within the first 610 days of the two-year
prescriptive period. Otherwise, the filing of the administrative
claim beyond the first 610 days will result in the appeal to the CTA
being filed beyond the two-year prescriptive period. Thus, if the
taxpayer files his administrative claim on the 611th day, the
Commissioner, with his 120-day period, will have until the 731st
day to decide the claim. If the Commissioner decides only on the
731st day, or does not decide at all, the taxpayer can no longer
file his judicial claim with the CTA because the two-year
prescriptive period (equivalent to 730 days) has lapsed. The 30-
day period granted by law to the taxpayer to file an appeal before
the CTA becomes utterly useless, even if the taxpayer complied
with the law by filing his administrative claim within the two-year
prescriptive period.
Same; Tax Refund; Tax Credit; It is clear that what can be
refunded or credited is a tax that is “erroneously, illegally,
excessively or in any manner wrongfully collected.”—From the
plain text of Section 229, it is clear that what can be refunded or
credited is a tax that is “erroneously, x x x illegally, x x x
excessively or in any manner wrongfully collected.” In short, there
must be a wrongful payment because what is paid, or part of it, is
not legally due. As the Court held in Mirant, Section 229 should
“apply only to instances of erroneous payment or illegal collection
of internal revenue taxes.” Erroneous or wrongful payment
includes excessive payment because they all refer to payment of
taxes not legally due. Under the VAT System, there is no claim or
issue that the “excess” input VAT is “excessively or in any manner
wrongfully collected.” In fact, if the “excess” input VAT is an
“excessively” collected tax under Section 229, then the taxpayer
claiming to apply such “excessively” collected input VAT to offset
his output VAT may have no legal basis to make such offsetting.
The person legally liable to pay the input VAT can claim a refund
or credit for such “excessively” collected tax, and thus there will
no longer be any “excess” input VAT. This will upend the present
VAT System as we know it.
Same; Same; Same; A claim for tax refund or credit, like a claim
for tax exemption, is construed strictly against the taxpayer.―A
claim for tax refund or credit, like a claim for tax exemption, is
construed strictly against the taxpayer. One of the conditions for
a judicial claim of refund or credit under the VAT System is
compliance with the 120+30 day mandatory and jurisdictional
periods. Thus, strict compliance with the 120+30 day periods is
necessary for such a claim to prosper, whether before, during, or
after the effectivity of the Atlas doctrine, except for the period from
the issuance of BIR Ruling No. DA-489-03 on 10 December 2003
to 6 October 2010 when the Aichi doctrine was adopted, which
again reinstated the 120+30 day periods as mandatory and
jurisdictional.
Same; A reversal of a Bureau of Internal Revenue (BIR)
regulation or ruling cannot adversely prejudice a taxpayer who in
good faith relied on the BIR regulation or ruling prior to its
reversal.—Since the Commissioner has exclusive and original
jurisdiction to interpret tax laws, taxpayers acting in good faith
should not be made to suffer for adhering to general interpretative
rules of the Commissioner interpreting tax laws, should such
interpretation later turn out to be erroneous and be reversed by
the Commissioner or this Court. Indeed, Section 246 of the Tax
Code expressly provides that a reversal of a BIR regulation or
ruling cannot adversely prejudice a taxpayer who in good faith
relied on the BIR regulation or ruling prior to its reversal.
Same; Statutory Construction; Taxpayers should not be
prejudiced by an erroneous interpretation by the Commissioner,
particularly on a difficult question of law.—Taxpayers should not
be prejudiced by an erroneous interpretation by the
Commissioner, particularly on a difficult question of law. The
abandonment of the Atlas doctrine by Mirant and Aichi is proof
that the reckoning of the prescriptive periods for input VAT tax
refund or credit is a difficult question of law. The abandonment of
the Atlas doctrine did not result in Atlas, or other taxpayers
similarly situated, being made to return the tax refund or credit
they received or could have received under Atlas prior to its
abandonment. This Court is applying Mirant and Aichi
prospectively. Absent fraud, bad faith or misrepresentation, the
reversal by this Court of a general interpretative rule issued by
the Commissioner, like the reversal of a specific BIR ruling under
Section 246, should also apply prospectively.
Same; Judgments; Court of Tax Appeals decisions do not
constitute precedents, and do not bind the Supreme Court or the
public.—There is also the claim that there are numerous CTA
decisions allegedly supporting the argument that the filing dates
of the administrative and judicial claims are inconsequential, as
long as they are within the two-year prescriptive period. Suffice it
to state that CTA decisions do not constitute precedents, and do
not bind this Court or the public. That is why CTA decisions are
appealable to this Court, which may affirm, reverse or modify the
CTA decisions as the facts and the law may warrant. Only
decisions of this Court constitute binding precedents, forming part
of the Philippine legal system.
Same; Tax Refund; Tax Credit; Under the novel amendment
introduced by RA 7716, mere inaction by the Commissioner
during the 60-day period is deemed a denial of the claim. Thus,
Section 4.106-2(c) states that “if no action on the claim for tax
refund/credit has been taken by the Commissioner after the sixty
(60) day period,” the taxpayer “may” already file the judicial claim
even long before the lapse of the two-year prescriptive period.—
Same; Taxes are the lifeblood of the nation.—Taxes are the
lifeblood of the nation. The Philippines has been struggling to
improve its tax efficiency collection for the longest time with
minimal success. Consequently, the Philippines has suffered the
economic adversities arising from poor tax collections, forcing the
government to continue borrowing to fund the budget deficits.
This Court cannot turn a blind eye to this economic malaise by
being unduly liberal to taxpayers who do not comply with statutory
requirements for tax refunds or credits. The tax refund claims in
the present cases are not a pittance. Many other companies
stand to gain if this Court were to rule otherwise. The dissenting
opinions will turn on its head the well-settled doctrine that tax
refunds are strictly construed against the taxpayer.
TO PIC: DOCTRINE OF EQUITABLE RECOUPMENT
Collector v. UST (1958)
MONTEMAYOR, J.
THE COURT HELD THAT THE CTA ERRED IN
APPLYING THE DOCTRINE OF EQUITABLE RECOUPMENT
IN ITS DECISION. Such doctrine is not binding in this country,
and the Court refused to introduce the same in this jurisdiction by
virtue of this decision. Its acceptance and adoption should be left
to the sound discretion of the Legislature. Thus, the CIR may still
collect the amount of P2,451.04 as percentage tax and surcharge
against UST.
The doctrine of equitable recoupment means that when
a refund of a tax illegally or erroneously collected or
overpaid by a taxpayer is barred by the statute of limitations
and a tax is being presently assessed against said taxpayer,
SAID PRESENT TAX MAY BE RECOUPED OR SET-OFF
AGAINST THE TAX, the refund of which has been barred. The
same thing would have been true where the Government has
failed to collect a tax within the period of limitation and said
collection is already barred, and the taxpayer has to its credit
a tax illegally or erroneously collected or overpaid, whose
refund is not yet barred, the Government need not make
refund of all the tax illegally or erroneously collected, BUT IT
MAY SET OFF AGAINST ITTHE TAX WHOSE COLLECTION
IS BARRED BY THE STATURE OF LIMITATIONS.
EFFECT: mitigates the effect of prescription and the
statute of limitations
Notes from reviewer: Common law doctrine to the effect
that a claim for refund barred by prescription may be allowed to
offset unsettled tax liabilities should be pertinent only to taxes
arising from the same transaction on which an overpayment is
made and underpayment is due. It finds no application where
the taxes involved are totally unrelated. (Invocation of equity
rather than law)
FACTS
1. During the period from January 1, 1948-June 30, 1950,
UST paid on its gross receipts derived from its printing
and binding jobs for the public and the different
departments of the University, the aggregate amount of
Php13,590.03, representing the 2% tax on its gross
receipts during the period in question
2. On October 17,1950, UST requested in writing from the
respondent the refund of the sum of Php 8,293.31, on
account of the following:
a. The amount of Php 359,972.45 paid by the other
departments to the UST Press was for the
purposes of accounting onlyand does not legally
constitute gross receipts subject to the percentage
tax
b. The printing and binding of the annuals
THOMASIAN and VERITAS fall under the
exception provided for in Section 191 in relation to
Section 183(a) of the Tax Code
3. COLLECTOR OF INTERNAL REVENUE: UST’s claim for
refund in the sum of Php 8,293.31 (representing business
printer’s percentage tax pursuant to Section 191 of the
Tax Code, in relation to Section 183(a)) is denied; also,
the amount of Php 2,452.04, representing deficiency
percentage tax and surcharge on the undeclared receipts
derived from the printing and binding of the subject
annuals, is hereby assessed and demanded from UST;
also, petitioner is ordered to pay Php 100 as compromise
penalty
4. Court of tax appeals: Modified the decision of the CIR
a. UST’s claim for refund to the extent of Php 5,
842.27 is DENIED, the same being BARRED BY
PRESCRIPTION
b. The deficiency tax assessment of Php 2, 451.04
for percentage taxes and surcharges is
RECOGNIZED, but the amount is DEEMED PAID,
 BY WAY OF RECOUPMENT, to the extent of the
amount of Php 2, 451.04 which UST erroneously
paid for the period from January 1948 to Jun 1950
i. Respondent is thus ordered to desist from
further collecting said deficiency
assessment
SUPREME COURT
1. W/N THE CTA ERRED IN APPLYING THE DOCTRINE
OF EQUITABLE RECOUPMENT IN THE CASE?
a. YES.
b. With this doctrine available and enforceable to
both parties,
i. The tax collector would be tempted to
delay and neglect the collection of taxes
within the period set by the law
confident that when it finally wakes up
from its lethargy, it could still recover
the tax it failed to collect by having it set
off or recouped from any tax which it
may have illegally collected from the
same taxpayer
1. And this is not without its resulting
danger, because a collector, to play
safe and have a fund available for
said set-off and recoupment of a tax
which he had failed and neglected to
collect, may be tempted to make
illegal assessments and collections,
and the taxpayer would be helpless
because however illegal and
unauthorized the assessment may
be, the Collector can always enforce
the same by levy and distraint, and
the only remedy of the taxpayer
would be to file a formal demand for
refund, followed by a court suit to
enforce the demand.
ii. As regards the taxpayer, he may also be
tempted to delay and neglect the filing of
the corresponding suit for refund of a tax
illegally or erroneously collected, trusting
that he can always recover or be credited
with the same or part thereof by refusing to
pay a valid tax assessed against him and
compelling the Government to set-off the
same against a tax payment he could no
longer recover.
c. Contrary to the CTA’s contention that the
application of the doctrine in this jurisdiction is
sanctioned by Sections 306 and 309 of the
Internal Revenue Code, the Court found that:
i. The aforementioned sections do not contain
any right of a taxpayer to a set off or credit,
where because of the expiration of the
period of prescription, his right to a refund is
already barred
ii. It is true that under Section 309, the
Collector “may credit or refund taxes
erroneously or illegally received,” but the
word may clearly implies discretion.
1. He may or he may not exercise the
authority granted him by the law to
make the refund or credit
2. Under the circumstances, he may
not be compelled or ordered by the
courts, as the Tax Court is
compelling him and ordering him to
do so, especially when the Collector
 himself not only refuses to make the may find itself financially
refund or set off, but also denies the embarrassed, because it had
authority of the Tax Court to order it. already spent the money

d. The Tax Court, in applying such doctrine,
reasoned that the same serves as a cushion to the
harsh and iniquitous effects of the statute of
limitations, because it would be oppressive to
leave the taxpayer without any remedy to set off
taxes erroneously collected, which are barred by
prescription.
i. SUPREME COURT:
1. Prescription may be rigorous and at
times may be a little harsh, but
certainly there could be no
oppression, much less iniquity
WHERE THE SAME LAW IS
APPLIED EQUALLY TO THE
GOVERNMENT AND THE
TAXPAYER
3. The same thing would be true for a
taxpayer, when the Government fails
to collect the tax within the statute of
limitations, the taxpayer would feel
free, and in all probability would
dispose of the amount...
a. And when the Government
finally wakes up and demands
the tax by way of recoupment,
the taxpayer might be unable
to meet the demand without
detriment to its business

2. Also, when a tax is illegally or

erroneously collected, or an
overpayment is made by a taxpayer,
and the latter fails to ask for the
refund thereof within the time
prescribed by law, which under the
tax law is also two years, then the
Government would feel free to
appropriate the same for its
purposes…

a. And when the taxpayer years

afterward remembers and
decides to ask for the refund,
by way of equitable
recoupment, the Government
 THIRD DIVISION
[G.R. No. 125704. August 28, 1998]
PHILEX MINING
CORPORATION, petitioner, vs. COMMISSIONER OF
INTERNAL REVENUE, COURT OF APPEALS, and THE
COURT OF TAX APPEALS, respondents.
DECISION
Taxation; Obligations; Compensation; Words and Phrases;
Taxes cannot be subject to compensation for the simple reason
that the government and the taxpayer are not creditors and
debtors of each other; Debts are due to the Government in its
corporate capacity, while taxes are due to the Government in its
sovereign capacity.—In several instances prior to the instant
case, we have already made the pronouncement that taxes
cannot be subject to compensation for the simple reason that the
government and the taxpayer are not creditors and debtors of
each other. There is a material distinction between a tax and debt.
Debts are due to the Government in its corporate capacity, while
taxes are due to the Government in its sovereign capacity. We
find no cogent reason to deviate from the aforementioned
distinction. Prescinding from this premise, in Francia v.
Intermediate Appellate Court, we categorically held that taxes
cannot be subject to set-off or compensation, thus: “We have
consistently ruled that there can be no off-setting of taxes against
the claims that the taxpayer may have against the government. A
person cannot refuse to pay a tax on the ground that the
government owes him an amount equal to or greater than the tax
being collected. The collection of a tax cannot await the results of
a lawsuit against the government.”
Same; Same; Same; The holding in Commissioner of Internal
Revenue v. Itogon-Suyoc Mines, Inc., 28 SCRA 867 (1969), that
a pending refund may be set off against an existing tax liability
even though the refund has not yet been approved by the
Commissioner, has no longer any support in statutory law.—
Further, Philex’s reliance on our holding in Commissioner of
Internal Revenue v. ItogonSuyoc Mines, Inc., wherein we ruled
that a pending refund may be set off against an existing tax
liability even though the refund has not yet been approved by the
Commissioner, is no longer without any support in statutory law.
It is important to note that the premise of our ruling in the
aforementioned case was anchored on Section 51(d) of the
National Revenue Code of 1939. However, when the National
Internal Revenue Code of 1977 was enacted, the same provision
upon which the Itogon-Suyoc pronouncement was based was
omitted. Accordingly, the doctrine enunciated in Itogon-Suyoc
cannot be invoked by Philex.
Same; Taxes are the lifeblood of the government and so should
be collected without unnecessary hindrance.—Despite the
foregoing rulings clearly adverse to Philex’s position, it asserts
that the imposition of surcharge and interest for the non-payment
of the excise taxes within the time prescribed was unjustified.
Philex posits the theory that it had no obligation to pay the excise
tax liabilities within the prescribed period since, after all, it still has
pending claims for VAT input credit/refund with BIR. We fail to
see the logic of Philex’s claim for this is an outright disregard of
the basic principle in tax law that taxes are the lifeblood of the
government and so should be collected without unnecessary
hindrance. Evidently, to countenance Philex’s whimsical reason
would render ineffective our tax collection system. Too simplistic,
it finds no support in law or in jurisprudence.
Same; A distinguishing feature of a tax is that it is compulsory
rather than a matter of bargain.—To be sure, we cannot allow
Philex to refuse the payment of its tax liabilities on the ground that
it has a pending tax claim for refund or credit against the
government which has not yet been granted. It must be noted that
a distinguishing feature of a tax is that it is compulsory rather than
a matter of bargain. Hence, a tax does not depend upon the
consent of the taxpayer. If any taxpayer can defer the payment of
taxes by raising the defense that it still has a pending claim for
refund or credit, this would adversely affect the government
revenue system. A taxpayer cannot refuse to pay his taxes when
they fall due simply because he has a claim against the
government or that the collection of the tax is contingent on the
result of the lawsuit it filed against the government. Moreover,
Philex’s theory that would automatically apply its VAT input
credit/refund against its tax liabilities can easily give rise to
confusion and abuse, depriving the government of authority over
the manner by which taxpayers credit and offset their tax
liabilities.
Same; Surcharges; The payment of the surcharge is mandatory
and the Bureau of Internal Revenue is not vested with any
authority to waive the collection thereof.—Corollarily, the fact that
Philex has pending claims for VAT input claim/refund with the
government is immaterial for the imposition of charges and
penalties prescribed under Sections 248 and 249 of the Tax Code
of 1977. The payment of the surcharge is mandatory and the BIR
is not vested with any authority to waive the collection thereof.
The same cannot be condoned for flimsy reasons, similar to the
one advanced by Philex in justifying its non-payment of its tax
liabilities.
Same; Tax Refunds and Credit; Speedy Disposition of Cases;
Once the claimant has submitted all the required documents, it is
the function of the Bureau of Internal Revenue to assess these
documents with purposeful dispatch—since taxpayers owe
honesty to government, it is but just that government render fair
service to the taxpayers; Fair dealing and nothing less, is
expected by the taxpayer from the Bureau of Internal Revenue in
the latter’s discharge of its function.—Philex asserts that the BIR
violated Section 106(e) of the National Internal Revenue Code of
1977, which requires the refund of input taxes within 60 days,
when it took five years for the latter to grant its tax claim for VAT
input credit/refund. In this regard, we agree with Philex. While
there is no dispute that a claimant has the burden of proof to
establish the factual basis of his or her claim for tax credit or
refund, however, once the claimant has submitted all the required
documents, it is the function of the BIR to assess these
documents with purposeful dispatch. After all, since taxpayers
owe honesty to government it is but just that government render
fair service to the taxpayers. In the instant case, the VAT input
taxes were paid between 1989 to 1991 but the refund of these
erroneously paid taxes was only granted in 1996. Obviously, had
the BIR been more diligent and judicious with their duty, it could
have granted the refund earlier. We need not remind the BIR that
simple justice requires the speedy refund of wrongly-held taxes.
Fair dealing and nothing less, is expected by the taxpayer from
the BIR in the latter’s discharge of its function.
Same; Same; Same; Estoppel; It is a settled rule that in the
performance of governmental function, the State is not bound by
the neglect of its agents and officers, and nowhere is this more
true than in the field of taxation.—Despite our concern with the
lethargic manner by which the BIR handled Philex’s tax claim, it
is a settled rule that in the performance of governmental function,
the State is not bound by the neglect of its agents and officers.
Nowhere is this more true than in the field of taxation. Again, while
we understand Philex’s predicament, it must be stressed that the
same is not a valid reason for the non-payment of its tax liabilities.
Same; Same; Same; Public Officers; The taxpayer is not devoid
of remedy against public servants or employees, especially BIR
examiners who, in investigating tax claims are seen to drag their
feet needlessly.—To be sure, this is not to state that the taxpayer
is devoid of remedy against public servants or employees,
especially BIR examiners who, in investigating tax claims are
seen to drag their feet needlessly. First, if the BIR takes time in
acting upon the taxpayer’s claim for refund, the latter can seek
judicial remedy before the Court of Tax Appeals in the manner
prescribed by law. Second, if the inaction can be characterized
as willful neglect of duty, then recourse under the Civil Code and
the Tax Code can also be availed of.

Same; Same; Same; Same; Judicial Notice; Insolence and delay

have no place in government service; The Court takes judicial
notice of the taxpayer’s generally negative perception towards the
Bureau of Internal Revenue.—Simply put, both provisions abhor
official inaction, willful neglect and unreasonable delay in the
performance of official duties. In no uncertain terms must we
stress that every public employee or servant must strive to render
service to the people with utmost diligence and efficiency.
Insolence and delay have no place in government service. The
BIR, being the government collecting arm, must and should do no
less. It simply cannot be apathetic and laggard in rendering
service to the taxpayer if it wishes to remain true to its mission of
hastening the country’s development. We take judicial notice of
the taxpayer’s generally negative perception towards the BIR;
hence, it is up to the latter to prove its detractors wrong. Philex
Mining Corporation vs. Commissioner of Internal Revenue, 294
SCRA 687, G.R. No. 125704 August 28, 1998
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-24756 October 31, 1968
CITY OF BAGUIO, plaintiff-appellee,
vs.
FORTUNATO DE LEON, defendant-appellant.
The City Attorney for plaintiff-appellee.
Fortunato de Leon for and in his own behalf as defendant-
appellant.
Statutory construction; Ordinance passed pursuant to Republic
Act 329 conferring upon the City of Baguio the power to tax is
valid.—On July 15, 1948, Republic Act No. 329 was enacted
amending the city charter of Baguio and adding to its power to
license the power to tax and regulate all business, trades and
occupations therein. The ordinance under consideration,
therefore, cannot be considered ultra vires.
Courts; Jurisdiction of city courts; When city court has jurisdiction
to decide on the constitutionality of an ordinance.—Where the
principal issue is collection for a sum of money and the city court
has already acquired jurisdiction over the suit, the mere fact that
the issue of constitutionality is raised does not suffice to oust the
City Court of its jurisdiction. Since the City Court is possessed of
judicial power and it is likewise axiomatic that the judicial power
embraces the ascertainment of the facts and the application of
the law, the Constitution as the highest law superseding any
statute or ordinance in conflict therewith, it cannot be said that a
City Court is bereft of competence to proceed on the matter.
Taxation; Double taxation; When not violative of due process.—
The argument against double taxation may not be invoked where
one tax is imposed by the state and the other is imposed by the
city, it being widely recognized that there is nothing inherently
obnoxious in the requirement that license fees or taxes be
exacted with respect to the same occupation, calling or activity by
both the state and the political subdivisions thereof. Where
Congress has clearly expressed its intention, the statute must be
sustained even though double taxation results.
Same; Rule on equality and uniformity in taxation.—Equality and
uniformity in taxation means that all taxable articles or kind or
property of the same class shall be taxed at the same rate. A tax
is considered uniform when it operates with the same force and
effect in every place where the subject may be found. Where the
statute or ordinance in question applies equally to all persons,
firms and corporations placed in similar situation there is no
infringement of the rule on equality. Inequalities which result from
a singling out of one particular class for taxation or exemption
infringe no constitutional limitation.
Public officers; The act of the City Treasurer is the act of the
mayor unless repudiated.—In much the same way that an act of
a department head of the national government, performed within
the limits of his authority, is presumptively the act of the President
unless reprobated or disapproved, similarly the act of the City
Treasurer may be assumed to carry the seal of approval of the
City Mayor unless repudiated or set aside.
 THIRD DIVISION adverse decision or ruling of the RTC to the CTA, the taxpayer
must file a Petition for Review with the CTA within 30 days from
receipt of said adverse decision or ruling of the RTC. It is also
THE CITY G.R. No. 181845 true that the same provisions are silent as to whether such 30-
OF MANILA,LIBERTY M. TOLEDO, day period can be extended or not. However, Section 11 of
in her capacity as THE Republic Act No. 9282 does state that the Petition for Review
TREASURER OF MANILA and Present: shall be filed with the CTA following the procedure analogous to
JOSEPH SANTIAGO, in his Rule 42 of the Revised Rules of Civil Procedure. Section 1, Rule
capacity as the CHIEF OF THE YNARES-SANTIAGO,42 J.,of the Revised Rules of Civil Procedure provides that the
LICENSE DIVISION OF CITY Chairperson, Petition for Review of an adverse judgment or final order of the
OF MANILA, CHICO-NAZARIO, RTC must be filed with the Court of Appeals within: (1) the original
Petitioners, VELASCO, JR., 15-day period from receipt of the judgment or final order to be
NACHURA, and appealed; (2) an extended period of 15 days from the lapse of the
PERALTA, JJ. original period; and (3) only for the most compelling reasons,
- versus - another extended period not to exceed 15 days from the lapse of
the first extended period. Following by analogy Section 1, Rule
Promulgated: 42 of the Revised Rules of Civil Procedure, the 30-day original
COCA-COLA BOTTLERS period for filing a Petition for Review with the CTA under Section
PHILIPPINES, INC., August 4, 2009 11 of Republic Act No. 9282, as implemented by Section 3(a),
Respondent. Rule 8 of the Revised Rules of the CTA, may be extended for a
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - period of 15 days. No further extension shall be allowed
- - - - -x thereafter, except only for the most compelling reasons, in which
case the extended period shall not exceed 15 days.

DECISION
Taxation; Appeals; Pleadings and Practice; To appeal an
adverse decision or ruling of the Regional Trial Court (RTC) to
the Court of Tax Appeals (CTA), the taxpayer must file a Petition
for Review with the CTA within 30 days from receipt of said
adverse decision or ruling of the RTC; Following by analogy
Section 1, Rule 42 of the Revised Rules of Civil Procedure, the
30-day original period for filing a Petition for Review with the
Court of Tax Appeals (CTA) under Section 11 of Republic Act No.
9282, as implemented by Section 3(a), Rule 8 of the Revised
Rules of the CTA, may be extended for a period of 15 days.—It
is crystal clear from the afore-quoted provisions that to appeal an
Same; Same; Same; Although the Revised Rules of the Court of
Tax Appeals (CTA) do not provide for the consequence of such
non-compliance with Section 4, Rule 5 and Section 2, Rule 6 of
the Revised Rules of the CTA, Section 3, Rule 42 of the Rules of
Court may be applied suppletorily, as allowed by Section 1, Rule
7 of the Revised Rules of the CTA.—As found by the CTA First
Division and affirmed by the CTA en banc, the Petition for Review
filed by petitioners via registered mail on 30 May 2007 consisted
only of one copy and all the attachments thereto, including the
Decision dated 14 July 2006; and that the assailed Orders dated
16 November 2006 and 4 April 2007 of the RTC in Civil Case No.
03-107088 were mere machine copies. Evidently, petitioners did
not comply at all with the requirements set forth under Section 4,
Rule 5; or with Section 2, Rule 6 of the Revised Rules of the CTA.
Although the Revised Rules of the CTA do not provide for the
consequence of such non-compliance, Section 3, Rule 42 of the
Rules of Court may be applied suppletorily, as allowed by Section
1, Rule 7 of the Revised Rules of the CTA. Section 3, Rule 42 of
the Rules of Court reads: SEC. 3. Effect of failure to comply with
requirements.—The failure of the petitioner to comply with any of
the foregoing requirements regarding the payment of the docket
and other lawful fees, the deposit for costs, proof of service of the
petition, and the contents of and the documents which should
accompany the petition shall be sufficient ground for the dismissal
thereof.
Same; Since by virtue of Coca-Cola Bottlers Philippines, Inc. v.
City of Manila, 493 SCRA 279 (2006), City of Manila Tax
Ordinance No. 7988 and Tax Ordinance No. 8011 are null and
void and without any legal effect.—Contrary to the assertions of
petitioners, the Coca-Cola case is indeed applicable to the instant
case. The pivotal issue raised therein was whether Tax
Ordinance No. 7988 and Tax Ordinance No. 8011 were null and
void, which this Court resolved in the affirmative. Tax Ordinance
No. 7988 was declared by the Secretary of the Department of
Justice (DOJ) as null and void and without legal effect due to the
failure of herein petitioner City of Manila to satisfy the requirement
under the law that said ordinance be published for three
consecutive days. Petitioner City of Manila never appealed said
declaration of the DOJ Secretary; thus, it attained finality after the
lapse of the period for appeal of the same. The passage of Tax
Ordinance No. 8011, amending Tax Ordinance No. 7988, did not
cure the defects of the latter, which, in any way, did not legally
exist. By virtue of the Coca-Cola case, Tax Ordinance No. 7988
and Tax Ordinance No. 8011 are null and void and without any
legal effect. Therefore, respondent cannot be taxed and
assessed under the amendatory laws—Tax Ordinance No. 7988
and Tax Ordinance No. 8011.
Same; Double Taxation; Words and Phrases; Double taxation
means taxing the same property twice when it should be taxed
only once, that is, “taxing the same person twice by the same
jurisdiction for the same thing”; Otherwise described as “direct
duplicate taxation,” the two taxes must be imposed on the same
subject matter, for the same purpose, by the same taxing
authority, within the same jurisdiction, during the same taxing
period, and the taxes must be of the same kind or character.—
Petitioners obstinately ignore the exempting proviso in Section 21
of Tax Ordinance No. 7794, to their own detriment. Said
exempting proviso was precisely included in said section so as to
avoid double taxation. Double taxation means taxing the same
property twice when it should be taxed only once; that is, “taxing
the same person twice by the same jurisdiction for the same
thing.” It is obnoxious when the taxpayer is taxed twice, when it
should be but once. Otherwise described as “direct duplicate
taxation,” the two taxes must be imposed on the same subject
matter, for the same purpose, by the same taxing authority, within
the same jurisdiction, during the same taxing period; and the
taxes must be of the same kind or character. Using the
aforementioned test, the Court finds that there is indeed double
taxation if respondent is subjected to the taxes under both
Sections 14 and 21 of Tax Ordinance No. 7794, since these are
being imposed: (1) on the same subject matter—the privilege of
doing business in the City of Manila; (2) for the same purpose—
to make persons conducting business within the City of Manila
contribute to city revenues; (3) by the same taxing authority—
petitioner City of Manila; (4) within the same taxing jurisdiction—
within the territorial jurisdiction of the City of Manila; (5) for the
same taxing periods—per calendar year; and (6) of the same kind
or character—a local business tax imposed on gross sales or
receipts of the business.
Same; Same; Municipal Corporations; Local Government Units;
It is apparent from a perusal of Section 143 of the Local
Government Code—the very source of the power of
municipalities and cities to impose a local business tax—that
when a municipality or city has already imposed a business tax
on manufacturers, etc. of liquors, distilled spirits, wines, and any
other article of commerce, pursuant to Section 143(a) of the Local
Government Code (LGC), said municipality or city may no longer
subject the same manufacturers, etc. to a business tax under
Section 143(h) of the same Code.—The distinction petitioners
attempt to make between the taxes under Sections 14 and 21 of
Tax Ordinance No. 7794 is specious. The Court revisits Section
143 of the LGC, the very source of the power of municipalities
and cities to impose a local business tax, and to which any local
business tax imposed by petitioner City of Manila must conform.
It is apparent from a perusal thereof that when a municipality or
city has already imposed a business tax on manufacturers, etc.
of liquors, distilled spirits, wines, and any other article of
commerce, pursuant to Section 143(a) of the LGC, said
municipality or city may no longer subject the same
manufacturers, etc. to a business tax under Section 143(h) of the
same Code. Section 143(h) may be imposed only on businesses
that are subject to excise tax, VAT, or percentage tax under the
NIRC, and that are “not otherwise specified in preceding
paragraphs.” In the same way, businesses such as respondent’s,
already subject to a local business tax under Section 14 of Tax
Ordinance No. 7794 [which is based on Section 143(a) of the
LGC], can no longer be made liable for local business tax under
Section 21 of the same Tax Ordinance [which is based on Section
143(h) of the LGC].