SECOND DIVISION

[ G.R. No. 215383, March 08, 2017 ]

HON. KIM S. JACINTO-HENARES, IN HER OFFICIAL CAPACITY AS
COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE,
PETITIONER, VS. ST. PAUL COLLEGE OF MAKATI, RESPONDENT.
Facts:
On 22 July 2013, petitioner Kim S. Jacinto-Henares, acting in her capacity
as then Commissioner of Internal Revenue (CIR), issued RMO No. 20-
2013, "Prescribing the Policies and Guidelines in the Issuance of Tax
Exemption Rulings to Qualified Non-Stock, Non-Profit Corporations and
Associations under Section 30 of the National Internal Revenue Code of
1997, as Amended."
On 29 November 2013, respondent St. Paul College of Makati (SPCM), a
non-stock, non-profit educational institution organized and existing under
Philippine laws, filed a Civil Action to Declare Unconstitutional the [Bureau
of Internal Revenue] RMO No. 20-2013 with Prayer for Issuance of
Temporary Restraining Order and Writ of Preliminary Injunction before the
RTC.
SPCM alleged that "RMO No. 20-2013 imposes as a prerequisite to the
enjoyment by non-stock, non-profit educational institutions of the privilege
of tax exemption under Sec. 4(3) of Article XIV of the Constitution both a
registration and approval requirement, i.e., that they submit an application
for tax exemption to the BIR subject to approval by CIR in the form of a Tax
Exemption Ruling (TER) which is valid for a period of [three] years and
subject to renewal.” According to SPCM, RMO No. 20-2013 adds a
prerequisite to the requirement under Department of Finance Order No.
137-87,[6] and makes failure to file an annual information return a ground for
a non-stock, non profit educational institution to "automatically lose its
income tax-exempt status."
The RTC ruled in favor of SPCM and declared RMO No. 20-2013
unconstitutional for being violative of Article XIV, Section 4, paragraph 3. It
held that "by imposing the x x x [prerequisites alleged by SPCM,] and if not
complied with by non-stock, non-profit educational institutions, [RMO No.
20-2013 serves] as diminution of the constitutional privilege, which even
Congress cannot diminish by legislation, and thus more so by the [CIR]
who merely exercise[s] quasi-legislative function."
Th CIR filed a motion for reconsideration but RTC denied it for lack of merit.
Thus, the case went to the Supreme Court.

Issue:
Whether the Trial Court correctly concluded that RMO [NO.] 20-2013
imposes a prerequisite before a non-stock, non-profit educational institution
may avail of the tax exemption under Section 4 (30 Article XIV of the
Constitution.

Ruling:
No. The Supreme Court take judicial notice that on 25 July 2016, the
present CIR Caesar R. Dulay issued RMO No. 44-2016, which provides
that: In line with the Bureau's commitment to put in proper context the
nature and tax status of non-profit, non-stock educational institutions,
this Order is being issued to exclude non-stock, non-profit
educational institutions from the coverage of Revenue Memorandum
Order No. 20-2013, as amended.

SECTION 1. Nature of Tax Exemption. --- The tax exemption of non-

stock, non-profit educational institutions is directly conferred by
paragraph 3, Section 4, Article XIV of the 1987 Constitution, the
pertinent portion of which reads:

"All revenues and assets of non-stock, non-profit educational

institutions used actually, directly and exclusively for educational
purposes shall be exempt from taxes and duties."

This constitutional exemption is reiterated in Section 30 (H) of the 1997 Tax

Code, as amended, which provides as follows:

"Sec. 30. Exempt from Tax on Corporations. - The following organizations

shall not be taxed under this Title in respect to income received by them as
such:
x x x            x x x        x x x

(H) A non-stock and non-profit educational institution; x x x."

It is clear and unmistakable from the aforequoted constitutional

provision that non-stock, non-profit educational institutions are
constitutionally exempt from tax on all revenues derived in pursuance
of its purpose as an educational institution and used actually, directly
and exclusively for educational purposes. This constitutional
exemption gives the non-stock, non-profit educational institutions a
distinct character. And for the constitutional exemption to be enjoyed,
jurisprudence and tax rulings affirm the doctrinal rule that there are
only two requisites: (1) The school must be non-stock and non-profit;
and (2) The income is actually, directly and exclusively used for
educational purposes. There are no other conditions and limitations.

In this light, the constitutional conferral of tax exemption upon non-

stock and non-profit educational institutions should not be
implemented or interpreted in such a manner that will defeat or
diminish the intent and language of the Constitution.

However, With the issuance of RMO No. 44-2016, a supervening event has
transpired that rendered this petition moot and academic, and subject to
denial. RMO No. 44-2016 clarified that non-stock, non-
profit educational institutions are excluded from the coverage of RMO No.
20-2013. Consequently, the RTC Decision no longer stands, and there is
no longer any practical value in resolving the issues raised in this petition.
 FIRST DIVISION

G.R. No. 216130, August 03, 2016

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. GOODYEAR

PHILIPPINES, INC., Respondent.

Respondent is a domestic corporation duly organized and existing

under the laws of the Philippines, and registered with the Bureau of
Internal Revenue (BIR) as a large taxpayer.
Consequently, all the preferred shares were solely and exclusively
subscribed by Goodyear Tire and Rubber Company (GTRC), which
was a foreign company organized and existing under the laws of the
State of Ohio, United States of America (US) and is unregistered in the
Philippines.
On 15 October 2008, respondent filed an application for relief from
double taxation before the International Tax Affairs division of the BIR
to confirm that the redemption of respondent’s preferred shares
owned by an American company was not subject to Philippine income
tax. On November 3, 2008, nonetheless, respondent still withheld and
remitted fifteen percent (15%) final withholding tax (FWT).
On 21 October 2010, respondent filed an administrative claim for refund or
issuance of tax credit certificate (TCC) before the BIR. On 03 November
2010, it filed a judicial claim by way of petitioner for review before the CTA.
Petitioner maintained that respondent's claim must be denied, considering
that: (a) it failed to exhaust administrative remedies by prematurely filing its
petition before the CTA; and (b) it failed to submit complete supporting
documents before the BIR.
The CTA Division ruled that it was appropriate for respondent to dispense
with the administrative remedy before the BIR, considering that court action
should be instituted within two (2) years after the payment of the tax
regardless of the pendency of the administrative claim; otherwise, the
taxpayer would be barred from recovering the same.
The CTA En Banc affirmed the findings of the CTA Division. Echoing the
ruling of the CTA Division, the CTA En Banc found that respondent was
compelled to seek judicial recourse after thirteen (13) days from filing its
administrative claim so as not to forfeit its right to appeal to the CTA.
Issue:
Whether or not the judicial claim of respondent should be dismissed for
non-exhaustion of administrative remedies.
Ruling:
No.
Section 229 of the Tax Code states that judicial claims for refund must be
filed within two (2) years from the date of payment of the tax or penalty,
providing further that the same may not be maintained until a claim for
refund or credit has been duly filed with the Commissioner of Internal
Revenue (CIR).
Verily, the primary purpose of filing an administrative claim was to serve as
a notice of warning to the CIR that court action would follow unless the tax
or penalty alleged to have been collected erroneously or illegally is
refunded. Section 229 of the Tax Code – [then Section 306 of the old Tax
Code] does not mean that the taxpayer must await the 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 recourse should the two (2)-
year prescriptive period expire without the appropriate judicial claim being
filed.
Section 229 of the Tax Code, only requires that an administrative claim
should first be filed. The respondent could not be faulted for resorting to
court action, considering that the prescriptive period stated therein was
about to expire. Had respondent awaited the action of petitioner knowing
fully well that the prescriptive period was about to lapse, it would have
resultantly forfeited its right to seek a judicial review of its claim, thereby
suffering irreparable damage.
Thus, respondent correctly and timely sought judicial redress,
notwithstanding that its administrative and judicial claims were filed only 13
days apart.
 June 28, 2017

G.R. No. 176703

MUNICIPALITY OF CAINTA, Petitioner
vs.
CITY OF PASIG AND UNIWIDE SALES WAREHOUSE CLUB, INC.,
Respondents

x-----------------------x

G.R. No. 176721

UNIWIDE SALES WAREHOUSE CLUB, INC., Petitioner,

vs.
CITY OF PASIG and MUNICIPALITY OF CAINTA, Respondents.

SUMMARY OF RULING: Considering that the TCTs show that the subject
properties are located in Pasig, Pasig is deemed the LGU entitled to collect
local business taxes and realty taxes, as well as relevant fees and charges
until an amendment, if any, to the location stated therein is ordered by the
land registration court after proper proceedings.
FACTS: Petitioner Uniwide conducted and operated business on parcels of
land covered by Transfer Certificate of Title (TCT) Nos. 72983, 74003, and
PT-74468 (subject properties). The location of the parcels of land is
indicated as being in Pasig.
In 1989, Uniwide applied for and was issued a building permit by Pasig for
its building. Uniwide also secured the requisite Mayor's Permit for its
business from Pasig and consequently paid thereto its business and realty
taxes, fees, and other charges from 1989 to 1996.
However, beginning 1997, Uniwide did not file any application for renewal
of its Mayor's Permit in Pasig nor paid the local taxes thereto. Instead, it
paid local taxes to Cainta after the latter gave it notice, supported by
documentary proof of its claims, that the subject properties were within
Cainta's territorial jurisdiction.
Pasig filed a case for collection of local business taxes, fees, and other
legal charges due for fiscal year 1997 against Uniwide with the RTC-Pasig.
Uniwide, in turn, filed a third-party complaint against Cainta for
reimbursement of the taxes, fees, and other charges it had paid to the latter
in the event that Uniwide was adjudged liable for payment of taxes to
Pasig.
On 6 May 1999, Uniwide sold the subject properties to Robinsons Land
Corporation.
Prior to the institution of said tax collection case, Cainta had filed a petition
for the settlement of its boundary dispute with Pasig in RTC-Antipolo.
In the course of the trial of the tax collection case, Cainta filed a Motion to
Dismiss or Suspend Proceedings on the ground of litis pendentia on 6
November 2001, in view of the pending petition for settlement of the land
boundary dispute with Pasig. RTC-Pasig denied the motion, as well as its
motion for reconsideration.
Thereafter, Cainta filed a petition for certiorari with the CA with prayer for
TRO. No TRO was issued. CA dismissed Cainta's petition.
RTC-Pasig ruled in favor of Pasig. It upheld the indefeasibility of the
Torrens title held by Uniwide over the subject properties, whose TCTs
indicate that the parcels of land described therein are located within the
territorial limits of Pasig. The RTC-Pasig ruled that the location indicated in
the TCTs is conclusive for purposes of the action for tax collection, and that
any other evidence of location would constitute a collateral attack on a
Torrens title proscribed by law. It thus held that Pasig has the right to
collect, administer, and appraise business taxes, real estate taxes, and
other fees and charges from 1997 up to the present.
As to Uniwide against Cainta, RTC-Pasig ruled for Uniwide. Directed
Cainta to return these amounts to Uniwide pursuant to the principle against
unjust enrichment, plus attorney's fees and costs.
CA affirmed the ruling of the RTC-Pasig with modification as to the award
of attorney's fees.
Issues:
1. For purposes of local taxes, whether the location of property should be
determined by that indicated in the TCT despite documents showing
otherwise.
2. Whether Pasig should recover the taxes due directly from Cainta, not
from Uniwide.
Ruling:
1. Yes. For purposes of complying with local tax liabilities, the taxpayer is
entitled to rely on the location stated in the certificate of title.
Under the Local Government Code (LGC), local business taxes are
payable for every separate or distinct establishment or place where
business subject to the tax is conducted, which must be paid by the person
conducting the same. For real property taxes, Presidential Decree (PD) 464
or the Real Property Tax Code, as affirmed by Sections 201 and 247 of the
LGC, provides that collection is vested in the locality where the property is
situated. The location stated in the certificate of title should be followed until
amended through proper judicial proceedings. The IRR of the LGC
provides that in case of a boundary dispute, the status of the affected area
prior to the dispute shall be maintained and continued for all purposes .
It is undisputed that the subject properties are covered by TCTs which
show on their faces that they are situated in Pasig; 19 that Uniwide's
business establishment is situated within the subject properties; that the
stated location has remained unchanged since their issuance; that prior
payments of the subject taxes, fees, and charges have been made by
Uniwide to Pasig;20 and that there is no court order directing the
amendment of the subject TCTs with regard to the location stated
therein.21 This gives Pasig the apparent right to levy and collect realty
taxes on the subject properties and business taxes on the businesses
conducted therein.
2. Yes.
Uniwide must pay the applicable taxes and fees to Pasig for the subject
years; and Cainta must reimburse to Uniwide the taxes that the latter paid
for said period.
There is also no merit to Uniwide's contention that Pasig should directly
recover from Cainta the tax payments under consideration, as a matter of
expediting and inexpensively settling the tax liabilities.
Section 146 of the LGC expressly provides that the tax on a business must
be paid by the person conducting the same.
It is undisputed that Uniwide is the person conducting the business under
consideration. Thus, it is the person against whom Pasig may properly
pursue for payment of local business taxes.
Cainta, on the other hand, is obligated to return the taxes erroneously paid
to it by Uniwide pursuant to the principle against unjust enrichment.The
principle of unjust enrichment has two conditions. First, a person must have
been benefited without a real or valid basis or justification. Second, the
benefit was derived at another person's expense or damage.
As previously discussed, prior to final adjudication by the RTC Antipolo on
the boundary dispute case and necessary amendment to the TCTs, Cainta
has no apparent right to collect the taxes on the subject properties. Thus,
when Uniwide paid taxes to it, Cainta was benefited without real or valid
basis, which benefit was derived at the expense of both Uniwide and Pasig.
MITSUBISHI CORPORATION - MANILA BRANCH, Petitioner vs
COMMISSIONER OF INTERNAL REVENUE, Respondent. (G.R. No.
175772; June 5, 2017)

On June 11, 1987, the governments of Japan and the Philippines executed
an Exchange of Notes, whereby the former agreed to extend a loan
amounting to Forty Billion Four Hundred Million Japanese Yen
(¥40,400,000,000) to the latter through the then Overseas Economic
Cooperation Fund (OECF, now Japan Bank for International Cooperation)
for the implementation of the Calaca II Coal-Fired Thermal Power Plant
Project (Project). In Paragraph 5 (2) of the Exchange of Notes, the PHIL
GOV, by itself or through its executing agency, undertook to assume all
taxes imposed by the Philippines on Japanese contractors engaged in the
Project.

Consequently, the OECF and the PHIL GOV entered into Loan No. PH-P76
for said amount. Due to need for more funds for the Project, they later on
executed Loan No. PH-P141 for 5.5 billion yen.

Meanwhile, the National Power Corporation (NPC), as the executing

government agency, entered into a contract (Contract) with Mitsubishi
Corporation (MC; i.e., head office in Japan) for the engineering, supply,
construction, installation, testing, and commissioning of a steam generator,
auxiliaries, and associated civil works for the Project. The Contract's foreign
currency portion was funded by the OECF loans. In line with the Exchange
of Notes, Article VIII (B) (1) of the Contract indicated NPC's undertaking to
pay any and all forms of taxes that are directly imposable under the
Contract.

MC completed the project on December 2, 1995, but it was only accepted

by NPC on January 31, 1998 through a Certificate of Completion and Final
Acceptance.

6 months later, MC MC filed with the BIR its ITR for the fiscal year that
ended on March 31, 1998. It included in its tax due the amount of 44.28
million pesos representing income from the OECF-funded portion of the
Project. On the same day, petitioner also filed its Monthly Remittance
Return of Income Taxes Withheld and remitted ₱8,324,100.00 as branch
profit remittance tax (BPRT) to its head office in Japan out of its income for
the fiscal year that ended on March 31, 1998.

On June 30, 2000, MC filed with the CIR an administrative claim for refund
of 52.6 million pesos, representing the erroneously paid amounts of
₱44,28M as income tax and ₱8,32M as BPRT. To suspend the running of
the 2-year period to file a judicial claim for refund, MC filed on July 13, 2000
a petition for review before the CTA. MC anchored its claim for refund on
BIR Ruling No. DA-407-98 dated September 7, 1998, 21 which says that
the PHIL GOV assumed all taxes. Hence, there is no tax exemption to
speak of. So, there is no violation of the constitutional mandate against the
grants of tax exemption without the concurrence of the majority of the
members of Congress.

MC won in the CTA Div. However, the CTA EB reversed the CTA Div's
decision saying that MC is not entitled to a refund of the taxes it paid to the
CIR for three reasons. First, there is no law exempting MC. There is no
"error" in the payment; hence, there can be no tax refund. Second, the
Exchange of Notes is invalid as a treaty because it grants tax exemption
without the concurrence of Congress. Third and finally, RMC No. 42-99
mandates that the remedy of MC is not refund but a claim against NPC.

MC motioned for reconsideration. Denied. 

ISSUE: Is MC entitled to tax refund despite the fact that there is no tax
exemption granted by law and despite the further fact that the
Exchange of Notes may be interpreted as granting tax exemption,
thereby making it unconstitutional to such extent?

Yes, MC is entitled to tax refund.

Sections 204 (C) of the NIRC grants the CIR the authority to credit or
refund taxes which are erroneously collected by the government.

In this case, it is fairly apparent that the subject taxes in the amount of
₱52,612,812.00 was erroneously collected from petitioner, considering that
the obligation to pay the same had already been assumed by the Philippine
Government by virtue of its Exchange of Notes with the Japanese
Government. Case law explains that an exchange of notes is considered as
an executive agreement, which is binding on the State even without Senate
concurrence.

To "assume" means "[t]o take on, become bound as another is bound, or

put oneself in place of another as to an obligation or liability." This means
that the obligation or liability remains, although the same is merely passed
on to a different person. In this light, the concept of an assumption is
therefore different from an exemption, the latter being the "[f]reedom from a
duty, liability or other requirement" or "[a] privilege given to a judgment
debtor by law, allowing the debtor to retain [a] certain property without
liability." Thus, contrary to the CTA En Bane's opinion, the constitutional
provisions on tax exemptions would not apply.

Moreover, the CIR has already recognized the tax assumption under the
Exchance of Notes through RMC No. 42-99.

ISSUE: If MC is entitled to refund, should it claim from the BIR or from

NPC?

MC should claim refund from BIR.

Sections 204 and 229 of the NIRC provide that claims for refund of
erroneously collected taxes must be filed with the CIR. Even if RMC No.
42-99 has interpreted the Contract so that it directs MC to claim the refund
from NPC, this cannot prevail over provisions of tax laws.

SUMMARY: MC correctly filed its claim for tax refund under Sections 204
and 229 of the NIRC to recover the erroneously paid taxes amounting to
₱44,288,712.00 as income tax and ₱8,324,100.00 as BPRT from the BIR.
To reiterate, MC's entitlement to the refund is based on the tax assumption
provision in the Exchange of Notes. Given that this is a case of tax
assumption and not an exemption, the BIR is, therefore, not without
recourse; it can properly collect the subject taxes from the NPC as the
proper party that assumed petitioner's tax liability.
Held:

Yes, the petitioner is entitled to a refund. The CIR subsequently affirmed

petitioner's non-liability for taxes and entitlement to tax refunds by issuing
Revenue Memorandum Order (RMO) No. 24-200547 addressed to
specified BIR offices. The RMO provides: Pursuant to the provisions of
RMC No. 32-99 as amended by RMC No. 42-99, Japanese contractors and
nationals engaged in OECF funded projects in the Philippines shall not be
required to shoulder the fiscal levies or taxes associated with the project.
Therefore, the concerned Japanese contractors are entitled to claim for the
refund of all taxes paid and shouldered by them relative to the conduct of
the Project. Also, considering that petitioner paid the subject taxes in the
aggregate amount of P 52,612,812.00, which it was not required to pay, the
BIR erroneously collected such amount.

On another issue, yes, the Bureau of Internal Revenue should be the

authorized government agency where the tax refund be claimed. The
Supreme Court held that in Sections 204 (C) of the NIRC grants the CIR
the authority to credit or refund taxes which are erroneously collected by
the government. The authority of the CIR to refund erroneously collected
taxes is likewise reflected in Section 229 of the NIRC.

In this case, it is fairly apparent that the subject taxes in the amount of P
52,612,812.00 was erroneously collected from petitioner, considering that
the obligation to pay the same had already been assumed by the Philippine
Government by virtue of its Exchange of Notes with the Japanese
Government. Case law explains that an exchange of notes is considered as
an executive agreement, which is binding on the State even without Senate
concurrence.

Hence, the petition is GRANTED. The Decision dated May 24, 2006 and
the Resolution dated December 4, 2006 of the Court of Tax Appeals (CTA)
En Banc are REVERSED and SET ASIDE. The Decision dated December
17, 2003 of the CTA is REINSTATED.
MEDICARD PHILIPPINES, INC VS. CIR (GR NO. 222743) APRIL 5, 2017

FACTS
MEDICARD is a health maintenance organization (HMO) that provides
prepaid health and medical insurance coverage to its clients.
Individuals enrolled in its health care programs pay an annual membership
fee and are entitled to various preventive, diagnostic and curative medical
services provided by duly licensed physicians, specialists, and other
professional technical staff participating in the group practice health
delivery system at a hospital or clinic owned, operated or accredited by it.

MEDICARD filed it first, second, and third quarterly VAT Returns

through Electronic Filing and Payment System (EFPS) on April 20,
July 25, and October 25, 2006, respectively, and its fourth quarterly
VAT Return on January 25, 2007.
Upon finding some discrepancies between MEDICARD’s Income Tax
Returns (ITR) and VAT Returns, the CIR issued a Letter Notice (LN)
dated September 20, 2007. Subsequently, the CIR also issued a
Preliminary Assessment Notice (PAN) against MEDICARD for
deficiency VAT. MEDICARD received CIR’s FAN dated December 10,
2007 for allegedly deficiency VAT for taxable year 2006 including
penalties.

MEDICARD filed a protest arguing, among others, that that the services it
render is not limited merely to arranging for the provision of medical and/or
hospitalization services but include actual and direct rendition of medical
and laboratory services. On June 19, 2009, MEDICARD received CIR’s
Final Decision denying its protest. The petitioner MEDICARD proceeded to
file a petition for review before the CTA.
The CTA Division held that the determination of deficiency VAT is not
limited to the issuance of Letter of Authority (LOA) alone and that in lieu of
an LOA, an LN was issued to MEDICARD informing it if the discrepancies
between its ITRs and VAT Returns and this procedure is authorized under
Revenue Memorandum Order (RMO) No. 30-2003 and 42-2003. Also, the
amounts that MEDICARD earmarked and eventually paid to doctors,
hospitals and clinics cannot be excluded from the computation of its gross
receipts because the act of earmarking or allocation is by itself an act of
ownership and management over the funds by MEDICARD which is
beyond the contemplation of RR No. 4-2007. Furthermore, MEDICARD’s
earnings from its clinics and laboratory facilities cannot be excluded from its
gross receipts because the operation of these clinics and laboratory is
merely an incident to MEDICARD’s line of business as an HMO.

MEDICARD filed a Motion for Reconsideration but it was denied. Petitioner

elevated the matter to the CTA en banc.

CTA en banc partially granted the petition only insofar as 10% VAT rate for
January 2006 is concerned but sustained the findings of the CTA Division.

ISSUES:

Is the absence of the Letter of Authority fatal?

Should the amounts that MEDICARD earmarked and eventually paid to the
medical service providers still form part of its gross receipts for VAT
purposes?
RULING
1. Yes.
The absence of the LOA violated MEDICARD’s right to due process. An
LOA is the authority given to the appropriate revenue officer assigned to
perform assessment functions. Under the NLRC, unless authorized by the
CIR himself or by his duly authorized representative, through an LOA, an
examination of the taxpayer cannot ordinarily be undertaken. An LOA is
premised on the fact that the examination of a taxpayer who has already
filed his tax returns is a power that statutorily belongs only to the CIR
himself or his duly authorized representatives. In this case, there is no
dispute that no LOA was issued prior to the issuance of a PAN and
FAN against MEDICARD. Therefore, no LOA was also served on
MEDICARD.

The LN cannot replace the LOA required under the law even if the
same was issued by the CIR himself. Under RR No. 12-2002, LN is
issued to a person found to have underreported sales/receipts per data
generated under the RELIEF system. Upon receipt of the LN, a taxpayer
may avail of the BIR’s Voluntary Assessment and Abatement Program. If a
taxpayer fails or refuses to avail of the said program, the BIR may avail of
administrative and criminal remedies, particularly closure, criminal action,
or audit and investigation. Since the law specifically requires an LOA
and RMO No. 32-2005 requires the conversion of the previously
issued LN to an LOA, the absence thereof cannot be simply swept
under the rug, as the CIR would have it. In fact, Revenue
Memorandum Circular No. 40-2003 considers an LN as a notice of
audit or investigation only for the purpose of disqualifying the
taxpayer from amending his returns. The revenue officers not having
authority to examine MEDICARD in the first place, the assessment
issued by the CIR is inescapably void.

2. No.
The VAT is a tax on the value added by the performance of the service by
the taxpayer. It is, thus, this service and the value charged thereof by the
taxpayer that is taxable under the NLRC.
It is clear from the foregoing allegations that despite assailing the supposedly illegal confiscation of his property in
order to satisfy his tax liabilities, Alcantara was really challenging the assessment and collection of taxes made
against him for being in violation of his right to due process. As such, the complaint concerned the validity of the
assessment and eventual collection of the taxes by the BIR. The declaration of nullity of the sale and reconveyance
was founded on the validity of the assessment and eventual collection by the BIR. That the main relief sought by his
complaint was "to declare the assessments conducted by the BIR on the Income Tax Returns of [Alcantara] for 1982
and 1983 as null and void ab initio" as well as to declare all notices and deeds in relation to collection of the
assessed taxed liabilities as null and void11 bolsters this conclusion.

Accordingly, the CA correctly determined that the RTC had no jurisdiction to resolve the issues raised in Alcantara's
complaint.

The remedies available to a taxpayer like Alcantara were laid down by law. Section 229 of Presidential Decree (P.D.)
No. 1158,12 the law in effect at the time of the disputed assessment, stated that prior resort to the administrative
remedies was necessary; otherwise, the assessment would attain finality, viz.:

Sec. 229. Protesting of assessment. - When the Commissioner of Internal Revenue or his duly authorized
representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings. Within a
period to be prescribed by implementing regulations, the taxpayer shall be required to respond to said notice. If the
taxpayer fails to respond, the Commissioner shall issue an assessment based on his findings.

Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation in such
form and manner as may be prescribed by implementing regulation within thirty (30) days from receipt of the
assessment; otherwise, the assessment shall become final and unappealable.

If the protest is denied in whole or in part, the individual, association or corporation adversely affected by the decision
on the protest may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision;
otherwise, the decision shall become final, executory and demandable. [Emphasis Supplied]

Section 230 of P.D. No. 1158 allowed Alcantara to file his claim for refund for the erroneously or illegally paid
taxes.1âwphi1 In this regard, such claim for refund was also a prerequisite before any resort to the courts could be
made to recover the erroneously or illegally paid taxes, to wit:

Sec. 230. Recovery of tax erroneously or illegally collected. - No suit or proceeding shall be maintained in any court
for the recovery of any national internal revenue tax hereafter alleged to 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
excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the
Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been
paid under protest or duress.

In any case, no such suit or proceeding shall be begun after the expiration of two years from the date. of payment of
the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the
Commissioner may, even 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.

Forfeiture of refund. - A refund check or warrant issued in accordance with the pertinent provisions of this Code which
shall remain unclaimed or uncashed within five (5) years from the date the said warrant or check was mailed or
delivered shall be forfeited in favor of the government and the amount thereof shall revert to the General Fund. [Bold
emphasis supplied]
Yet, Alcantara immediately invoked the authority of the courts to protect his rights instead of first going to the
Commissioner of Internal Revenue for redress of his concerns about the assessment and collection of taxes. His
judicial recourse thus suffered from fatal prematurity because his doing so rendered the assessment final.1âwphi1

Alcantara argues that the resort to administrative remedies was futile for him because he could not have sought
reconsideration or filed a claim for refund during the period required of him by the Tax Code due to his being then out
of the country.

Such argument did not excuse Alcantara from complying with the specific provisions of law on his remedies. Even
assuming to be true that he had not received the assessment, there was greater reason for him to have first resorted
to the Commissioner of Internal Revenue for the reconsideration of the assessment before it attained finality. Section
229 of P.D. No. 1158 declared the finality of the assessment upon the lapse of 30 days from receipt of it.

Alcantara contends that the CA erred in ruling that the proper appellate court to bring his appeal to was the CTA; that
following Section 7 of Republic Act No. 1125, as amended by Republic Act No. 9282, the CTA had no jurisdiction to
declare the certificate of titles null and void; and that the CA was instead the proper appellate court to review the
adverse decision of the RTC in his case.

The contention lacks persuasive force.

The complaint was brought to assail the assessment and collection made by the Commissioner of Internal Revenue.
Based on Republic Act No.1125, prior to its amendment by Republic Act No. 9282, the CTA had exclusive appellate
jurisdiction over the appeal of the decisions of the Commissioner of Internal Revenue, to wit:

Section 7. Jurisdiction.  - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal,
as herein provided.

(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the
National Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;

xxxx

Accordingly, the CA correctly dismissed Alcantara's appeal on the ground of lack of jurisdiction to entertain the same.
The erroneous appeal deserved no fate but dismissal. Section 2, Rule 50 of the Rules of Court expressly states: "An
appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be
dismissed outright." In Balaba v. People,13 the Court affirmed the CA's dismissal of the appeal because the appeal
had been erroneously taken to the CA instead of to the Sandigan bay an.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on
November 4, 2009 by the Court of Appeals; and ORDERS the petitioner to pay the cost of the suit.

SO ORDERED.