1.

CIR vs WYETH SUACO LABORATORIES, INC 202 SCRA 125

Facts: On December 19, 1974, Wyeth Suaco received notice ofassessment from the BIR for its failure toremit withholding tax at source
for the 4th quarter of 1973 on accrued royalties, remuneration fortechnical services paid abroad and cash dividends, including the
deduction of non-deductible rawmaterials from its reports. The company, thru its tax consultant, SVG & co., sent BIR two letters dated
January 17, 1975 and February 8, 1975 protesting theassessment and requesting their cancellationor withdrawal on the ground that
said assessments lacked factual or legal basis. Also, there were lettersfrom the company to the BIR to such effect. On September 12,
1975, the CIR offered to compromise butonly resulted to a slight reduction of the tax as per the acting Commissioner’s decision on
December 10,1979. On January 18, 1980, Wyeth Suaco filed petition for review with the CTA, praying that CIR beenjoined from
enforcing the assessments by reason of prescription and that assessments be declarednull and void for lack of legal and factual basis.
The CTA decided against the CIR holding that while theassessments for the deficiency taxes were made within the five-year period of
limitation, the right of CIRto collect the same has already prescribed, in accordance with Sec. 319(c) of the NIRC.
Issue: Whether or not the right of CIR to collect has already prescribed
Ruling: No. CTA is wrong. The letters of Wyeth Suaco interrupted the running of the five-year perspectiveperiod to collect the
deficiency taxes. Settled is the rule that the prescriptive period provided by law tomake a collection by distraint or levy or by a
proceeding in court is interrupted once a taxpayer requestsfor reinvestigation or reconsideration of the assessment. Wyeth Suaco
admitted that it was seekingreconsideration of the tax assessments as shown in a letter of its president and General Manager.Further,
although the protest letters prepared by SGV & Co. did not categorically state or use the wordsreinvestigationand reconsideration, the
same are to be treated as letters of reinvestigation andreconsideration.
As to Wyeth Suaco’s argument that withholding tax at source should only be remitted to the BIR oncethe incomes subject to
withholdingtax at source have actually been paid, the SC cited the lifeblooddoctrine, the express provision of the law which requires the
filing of monthly return and payment of taxes withheld at source within 10 days after the end of each month. Further, the company uses
accrualmethod of accounting and therefore the effect of transactions and other events on assetsand liabilities are recognized and
reported in the time periods to which they relate rather than onlywhen cash is received or paid.

2.CIR vs. CA, Atlas Consolidated

242 SCRA 289

GR No. 104151 March 10, 1995
"Assessments are prima facie presumed correct and made in good faith. So that, in the absence of proof of any irregularities in the
performance of official duties, an assessment will not be disturbed."
FACTS: The Commissioner of Internal Revenue served two notices and demand for payment of the respective deficiency ad valorem
and buiness taxes for taxable years 1975 and 1976 against the respondent Atlas Consolidated Mining and Development Corporation
(ACMDC). The latter protested both assessments but the same were denied, hence it filed two separate petitions for review in the Court
of Tax Appeals. The CTA rendered a consolidated decision holding, inter alia, that ACMDC was not liable for deficiency ad valorem
taxes on copper and silver for 1975 and 1976 thereby effectively sustaining the theory of ACMDC that in computing the ad valorem tax
on copper mineral, the refining and smelting charges should be deducted, in addition to freight and insurance charges.
However, the tax court held ACMDC liable for the amount consisting of 25% surcharge for late payment of the ad valorem tax and late
filing of notice of removal of silver, gold and pyrite extracted during certain periods, and for alleged deficiency manufacturer's sales tax
and such contractor's tax for leasing out of its personal properties. ACDMC elevated the matter to the Supreme Court claiming that the
leasing out was a mere isolated transaction, hence should not be subjected to contractor's tax.
ISSUE: Is the claim of the private respondent, with respect to the contractor's tax, impressed with merit?
HELD: No. It is being held that ACMDC was not a manufacturer subject to the percentage tax imposed by Section 186 of the tax code.
However such conclusion cannot be made with respect to the contractor's tax being imposed on ACMDC. It cannot validly claim that
the leasing out of its personal properties was merely an isolated transaction. Its book of accounts shows that several distinct payments
were made for the use of its personal properties such as its plane, motor boat and dump truck. The series of transactions engaged in by
ACMDC for the lease of its aforesaid properties could also be deduced from the fact that during the period there were profits earned
and reported therefor. The allegation of ACMDC that it did not realize any profit from the leasing out of its said personal properties,
since its income therefrom covered only the costs of operation such as salaries and fuel, is not supported by any documentary or
substantial evidence.
Assessments are prima facie presumed correct and made in good faith. Contrary to the theory of ACMDC, it is the taxpayer and not the
BIR who has the duty of proving otherwise. It is an elementary rule that in the absence of proof of any irregularities in the performance
of official duties, an assessment will not be disturbed. All presumptions are in favor of tax assessments. Verily, failure to present proof
of error in assessments will justify judicial affirmance of said assessment.

3. Lascona Land Co vs Commissioner of Internal Revenue

FACTS: On March 27, 1998, the CIR issued a formal assessment notice (FAN) to Lascona Land Co., Inc. demanding the company to
pay P753,266.56 income taxes. Lascona filed a protest on April 20, 1998. CIR promulgated its decision on March 3, 1999. Lascona
received a copy of the decision on March 12, 1999. On April 12, 1999, Lascona appealed the decision to the Court of Tax Appeals. The
CIR moved for the dismissal of the appeal on the ground that under a revenue regulation issued by the Bureau of Internal Revenue (RR
No. 12-99), if the CIR or its representative failed to act on a protest within the 180-day period the taxpayer may appeal within 30 days
from the lapse of the 180-day period to the CTA otherwise, the decision shall become final and executor and that Lascona having failed
to appeal within the said period, CTA has no jurisdiction over the case

ISSUE: Whether or not the contention of the CIR is correct.

HELD: No. The SC ruled that the revenue regulation to which the CIR anchored its contention is invalid. Section 228 of the National
Internal Revenue Code provides that a taxpayer has two remedies if the CIR failed to act on his protest within the 180-day period, to
wit;

1) the taxpayer adversely affected by the decision may appeal to the CTA within 30 days from receipt of the decision, or

2) may appeal to the CTA within 30 days from the lapse of the one hundred eighty (180)-day period.

From the above provision, the taxpayer was given two options in case CIR failed to act on their claim. First is to appeal to the CTA
within 30 days from the lapse of the 180 day period; or second, wait for the CIR to issue the decision and then appeal, if adverse, to the
CTA within 30 days from the receipt of the decision by the taxpayer

In the case at bar, Lascona waited for the CIR to decide on the case and it did not appeal within 30 days from the lapse of the 180-day
period. Lascona received the adverse decision of the CIR on March 12, 1999. It appealed on April 12, 1999 which is still within the 30-
day period to appeal to the CTA.
The revenue regulation in question is invalid because in effect, it limited the remedy provided for by the law. Section 228 of the NIRC
prevails over the said revenue regulation. The said revenue regulation cannot validly take away the option of the taxpayer to continue
waiting, even after the lapse of the 180 day period, for the CIR to decide on the case and just appeal, within 30 days from receipt, if the
CIR’s ruling is adverse.

4. CIR VS UNION SHIPPING

FACTS: In a letter dated December 27, 1974 petitioner assessed against Yee Fong Hong, Ltd. and/or herein private respondent Union
Shipping Corporation for deficiency income taxes due for the years 1971 and 1972. Private respondent protested the assessment.

Petitioner, without ruling on the protest, issued a Warrant of Distraint and Levy. In a letter, private respondent reiterated its request for
reinvestigation. Petitioner, again, without acting on the request for reinvestigation and reconsideration of the Warrant of Distraint and
Levy, filed a collection suit against private respondent.

In 1979, private respondent filed with respondent court a Petition for Review. The CTA ruled in favor of private respondent. Hence, this
is a petition for review on certiorari

ISSUE: Whether or not the issuance of a warrant of distraint and levy is proof of the finality of an assessment and is tantamount to an
outright denial of a motion for reconsideration of an assessment.

HELD: The Supreme Court had already laid down the dictum that the Commissioner should always indicate to the taxpayer in clear and
unequivocal language what constitutes his final determination of the disputed assessment.

There appears to be no dispute that petitioner did not rule on private respondent's motion for reconsideration but contrary to the above
ruling of this Court, left private respondent in the dark as to which action of the Commissioner is the decision appealable to the Court of
Tax Appeals. Had he categorically stated that he denies private respondent's motion for reconsideration and that his action constitutes
his final determination on the disputed assessment, private respondent without needless difficulty would have been able to determine
when his right to appeal accrues and the resulting confusion would have been avoided.

5. COMMISSIONER OF INTERNAL REVENUE, Petitioner, -versus- Isabela Cultural Corporation, Respondent G.R. No.
135210, July 11,

If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the said
decision, or from the lapse of the one hundred eighty (180)-day period; otherwise the decision shall become final, executory and
demandable.”
In this case, the said period of 180 days had already lapsed when Isabela filed its request for reconsideration on March 23, 1990,
without any action on the part of the CIR.

FACTS: In an investigation conducted in the 1986 books of account of Isabela, it preliminarily incurred a tax deficiency of
P9,985,392.15, inclusive of increments. Upon protest by Isabela’s counsel, the said preliminary assessment was reduced to the amount
of P325,869.44.
On February 23, 1990, Isabela received from CIR an assessment letter demanding payment of the amounts of P333,196.86 and
P4,897.79 as deficiency income tax and expanded withholding tax inclusive of surcharge and interest, respectively, for the taxable
period from January 1, 1986 to December 31, 1986. Isabela then filed a letter to CIR asking for reconsideration on the subject
assessment. It even attached certain documents supporting its protest.
On February 9, 1995, Isabela received from CIR a Final Notice Before Seizure. In said letter, CIR demanded payment of the subject
assessment within ten (10) days from receipt thereof. Otherwise, failure on its part would constrain CIR to collect the subject
assessment through summary remedies. Isabela considered said final notice of seizure as [petitioner’s] final decision. Hence, the
instant petition for review filed with this Court on March 9, 1995.
The CTA having rendered judgment dismissing the petition, Isabela filed the instant petition anchored on the argument that CIR’s
issuance of the Final Notice Before Seizure constitutes its decision on Isabela’s request for reinvestigation, which Isabela may appeal
to the CTA. CA reversed CTA’s decision.
CIR asserts that the Final Notice was a mere reiteration of the delinquent taxpayer’s obligation to pay the taxes due. It was supposedly
a mere demand that should not have been mistaken for a decision on a protested assessment. Such decision, the commissioner
contends, must unequivocably indicate that it is the resolution of the taxpayer’s request for reconsideration and must likewise state the
reason therefor.
On the part of Isabela, Final Notice Before Seizure should be considered as a denial of its request for reconsideration of the disputed
assessment. The Notice should be deemed as petitioner’s last act, since failure to comply with it would lead to the distraint and levy of
respondent’s properties, as indicated therein.

ISSUE: Whether or not the Final Notice Before Seizure dated February 9, 1995 signed by Acting Chief Revenue Collection Officer
Milagros Acevedo against ICC constitutes the final decision of the CIR appealable to the CTA.

RULING:
NO. In the normal course, the revenue district officer sends the taxpayer a notice of delinquent taxes, indicating the period covered, the
amount due including interest, and the reason for the delinquency. If the taxpayer disagrees with or wishes to protest the assessment,
it sends a letter to the BIR indicating its protest, stating the reasons therefore, and submitting such proof as may be necessary. That
letter is considered as the taxpayer’s request for reconsideration of the delinquent assessment. After the request is filed and received
by the BIR, the assessment becomes a disputed assessment on which it must render a decision. That decision is appealable to the
Court of Tax Appeals for review.
Prior to the decision on a disputed assessment, there may still be exchanges between the commissioner of internal revenue (CIR) and
the taxpayer. The former may ask clarificatory questions or require the latter to submit additional evidence. However, the CIR’s
position regarding the disputed assessment must be indicated in the final decision. It is this decision that is properly appealable to the
CTA for review.
In the light of the above facts, the Final Notice Before Seizure cannot but be considered as the commissioner’s decision disposing of
the request for reconsideration filed by respondent, who received no other response to its request. Not only was the Notice the only
response received; its content and tenor supported the theory that it was the CIR’s final act regarding the request for reconsideration.
The very title expressly indicated that it was a final notice prior to seizure of property. The letter itself clearly stated that respondent was
being given “this LAST OPPORTUNITY” to pay; otherwise, its properties would be subjected to distraint and levy.
Furthermore, Section 228 of the National Internal Revenue Code states that a delinquent taxpayer may nevertheless directly appeal a
disputed assessment, if its request for reconsideration remains unacted upon 180 days after submission thereof.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the
taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from
receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60)
days from filing of the protest, all relevant supporting documents shall have become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the
taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within (30) days from receipt of the said
decision, or from the lapse of the one hundred eighty (180)-day period; otherwise the decision shall become final, executory and
demandable.”
In this case, the said period of 180 days had already lapsed when Isabela filed its request for reconsideration on March 23, 1990,
without any action on the part of the CIR.
In the instant case, the second notice received by Isabela verily indicated its nature – that it was final. Unequivocably, therefore, it was
tantamount to a rejection of the request for reconsideration.

6. PROTECTOR’S SERVICES VS CA

Facts: Petition Protector’s Services, Inc., (PSI) is a contractor engaged in recruiting security guards for clients. After an audit
investigation, the BIR assessed PSI deficiency percentage taxes including surcharges, penalties and interests of P503,564.39,
P831,464.30 and P1,514,047.86 for 1983, 1984 and 1985, respectively. On December 7, 1987, respondent CIR sent demand letters for
payment of said assessments for 1983 and 1984 on December 10, 1987, but denied receiving the notice of deficiency tax for 1985.

Petitioner PSI, sent a protest letter dated January 12, 1988 regarding the 1983 and 1984 assessments, claiming that gross receipts
subject to percentage tax should exclude salaries of the security guards, employer’s share of SSS, SIF and Medicare contributions.
Without formally acting thereon, the BIR sent a follow-up letter dated July 12, 1988 for the settlement of the taxes based on its
computation, plus additional documentary stamp taxes of P2,025 on PSI’s capitalization for 1983 and 1984 and as deficiency expanded
withholding tax of P703.41, thereby bringing the total unsettled tax to P2,851,805.16.

On July 12, 1988, petition paid the P2,025 documentary stamp tax and P703.41 deficiency expanded withholding tax. The following
day, PSI filed its second protest for the 1983 and 1984 assessments and included for the first time its protest against the 1985
assessment. On November 9, 1990, the BIR denied the protests stating that salaries of security guards are part of taxable gross
receipts for determination of contractor’s tax.

PSI filed a petition for review on December 5, 1990 with the CTA averring that assessments for documentary stamp and expanded
withholding taxes and without basis having been paid on July 22, 1988; the period for collection of the 1985 assessment letter
therefore, the period to collect the percentage taxes for the first, second and third quarter of 1984 has lapsed, the assessment letter
therefore having been sent on December 10, 1987, or beyond 3 years from filing of the quarterly returns, and that the base amount was
erroneous since salaries of security guards, employer’s share of SSS, SIF and medicare contributions should not form part of taxable
gross receipts.

The CTA dismissed the petition stating that: (1) the assessments were made within the 3-year prescriptive period which should be
reckoned from January 20, 1985, the date of filing the final return; (2) receipt of the 1985 assessment cannot be denied as all
assessments were sent in 1 envelope, as testified to by BIR personal; and (3) the protest letter having filed only on January 12, 1988,
or 33 days from December 10, 1987, the request for reinvestigation was filed out of time. On review by the CA, the CTA’s decision was
affirmed.

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

Held: An assessment maybe administratively protested within 30 days from receipt thereof; otherwise, the assessment shall become
final and unappealable. In this case, PSI received the assessments on December 10, 1987 and protested the 1983 and 1984
assessments on January 12, 1988, or 33 days thereafter. Hence, the protests were filed out of time and PSI can no longer dispute the
correctness of assessment. The CTA correctly dismissed the appeal for lack of jurisdiction.

Petitioner’s contention that the Government’s right to assess and collect the 1983, 1984 and 1985 assessments had already
prescribed in view of BP700, which reduced the prescriptive period for assessment and collection of internal revenue taxes to 3 yrs,
lacks merit BP700 was approved on April 5, 1984. The 3-year prescriptive period for assessment and collection of revenue taxes
applied to taxes paid beginning 1984. Clearly, the tax assessment made on December 10, 1987, for the par 1983 was still covered by
the 5-year statutory prescriptive period.

The 3-year prescriptive period for assessment of contractor’s tax should be computed at the time of filing of the final annual percentage
tax return, when it can be finally acclaimed if the taxpayer still has an unpaid tax, and not from the tentative quarterly payments.

As to the contention that for failure of the BIR to commence collection of the 1983, 1984 and 1985 deficiency taxes either by judicial
action or by distraint and levy, the government’s right to collect the tax has prescribed, the court ruled that “the suspension of the
running of the statute of limitations for tax collection for the period during which the commissioner is prohibited from making the
assessment or beginning distraint or levy or a proceeding in court and 60 days thereafter.” In the instant case, PSI filed a petition before
the CTA to prevent the collection of the assessed deficiency tax. When the CTA dismissed the case, petitioner elevated the case to the
SC, hoping for a review in the favor. The actions taken by petitioner before the CTA and the SC suspended the running of the statute of
limitation.

As to the correctness of the assessment, it was held that contractor’s tax on gross receipts imposed on business agents including
private detective watchman agencies, was a tax on the sale of services or labor, imposed on the exercise of a privilege. The term
“gross receipts” means all amounts received by the prime or principal contractor as the total price, undiminished by the amount paid to
the subcontractor under the subcontract arrangement. Hence, gross receipts could not be diminished by employer’s SSS, SIF and
medicare contributions. Furthermore, it has been consistently ruled by the BIR that the salaries paid to security guards should form part
of the gross receipts subject to tax.
 7. Citibank vs CA 280 SCRA 459

Facts: Citibank N.A. Philippine Branch (CITIBANK) is a foreign corporation doing business in the Philippines. In 1979 and 1980, its
tenants withheld and paid to the Bureau of Internal Revenue the taxes on rents due to Citibank, pursuant to Section 1(c) of the
Expanded Withholding Tax Regulations. On April 15, 1980, Citibank field its corporate income tax returns for the year and ended
December 31, 1979 showing a net loss of P74,854,916.00 and its tax credits totaled P6,257,780.00, even without including the
amounts withheld on rental income under the Expanded Withholding Tax System, the same not having been utilized or applied for the
reason that the year’s operation resulted in a loss. The taxes thus withheld by the tenants from rentals paid to Citibank in 1979 were not
included as tax credits although a rental income amounting to P7,796,811.00 was included in its income declared for the year ended
December 31, 1979.
For the year ended December 31, 1980, Citibank’s corporate income tax returns, filed on April 15, 1981, showed a net loss
P77,071,790.00 for income tax purposes. Its available tax credit at the end of 1980 amounting to P11,532,855.00 was not utilized or
applied. The said available tax credits did not include the amounts withheld by Citibank’s tenants from rental payment sin 1980 but the
rental payments for that year were declared as part of its gross income included in its annual income tax returns. On October 31, 1981,
Citibank submitted its claim for refund of the aforesaid amounts of P270,160.56 and P298,829.29, respectively or a total of
P568,989.85; and on October 12, 1981 filed a petition for review with the Court of Tax Appeals concerning subject claim for tax refund.
On August 30, 1981, the CTA adjudged Citibank’s entitlement to the tax refund sought for, representing the 5% tax withheld and paid
on Citibank’s rental income for 1979 and 1980. The Court of Tax Appeals, rejected Respondent CIR’s argument that the claim was not
seasonably filed. Not satisfied the Commissioner appealed to the Court of Appeals, CA ruled that Citibank N.A. Philippine branch,
entitled to a tax refund/credit in the amount of P569,989.85, representing the 5% withheld tax in Citibank’s rental income for the years
1979 and 1980 is REVERSED. Motion for Reconsideration of the petitioner bank was denied. Hence, this petition.

Issue:
Whether or not income taxes remitted partially on a periodic or quarterly basis should be credited or refunded to the taxpayer on the
basis of the taxpayer’s final adjusted returns

Ruling:
Yes. In several cases, we have already ruled that income taxes remitted partially on a periodic or quarterly basis should be credited or
refunded to the taxpayer on the basis of the taxpayer’s final adjusted returns, not on such periodic or quarterly basis. When applied to
taxpayers filing income tax returns on a quarterly basis, the date of payment mentioned in Sec. 230 must be deemed to be qualified by
Sec. 68 and 69 of the present. Tax Code. It may be observed that although quarterly taxes due are required to be paid within 60 days
from the close of each quarter, the fact that the amount shall be deducted from the tax due for the succeeding quarter shows that until a
final adjustment return shall have been filed, the taxes paid in the preceding quarters are merely partial taxes due from a corporation.
Neither amount can serve as the final figure to quantify what is due the government nor what should be refunded to be corporation.
This interpretation may be gleaned from the last paragraph of Sec. 69 of the Tax Code which provides that the refundable amount, in
case a refund is due a corporation, is that amount which is shown on its final adjustment return and not on its quarterly returns.

8. FAR EAST BANK AND TRUST COMPANY as Trustee of Various Retirement Funds, Petitioner, vs.
COMMISSIONER OF INTERNAL REVENUE and THE COURT OF APPEALS, Respondents.

DECISION

TINGA, J.:

The present petition evokes some degree of natural sympathy for the petitioner, as it seeks the refund of taxes wrongfully paid on the
income earned by several retirement funds of private employees held by petitioner in their behalf. The steps undertaken by petitioner to
seek the refund were woefully error-laden, yet their claims still received due solicitation from this Court. But in the end, the errors
committed are just too multiple as well as consequential, and the claim for refund not sufficiently proven. Impulses may suggest that we
reverse and grant, but logic and the law dictate that the Court affirm the assailed rulings of the Court of Appeals and the Court of Tax
Appeals.

Before us is a Petition for Review on Certiorari filed by petitioner Far East Bank & Trust Company, assailing the Resolutions of the
Court of Appeals Fifth Division dated 12 January 1999 and 3 June 1999.1 The Resolution of 12 January 1999 dismissed outright, on
procedural grounds, a petition for review filed by petitioner questioning a Decision of the Court of Tax Appeals dated 11 September
1998.2

While the petition before us primarily seeks the review of the procedural grounds on which the petition before the Court of Appeals was
denied, it stems from a claim for refund lodged by petitioner against the Commissioner of Internal Revenue (CIR) on taxes on interest
income withheld and paid to the CIR for the four (4) quarters of 1993, arising from investments derived from money market placements,
bank deposits, deposit substitute instruments and government securities made by petitioner as the trustee of various retirement funds.

Petitioner is the trustee of various retirement plans established by several companies for its employees. As trustee of the retirement
plans, petitioner was authorized to hold, manage, invest and reinvest the assets of these plans.3 Petitioner utilized such authority to
invest these retirement funds in various money market placements, bank deposits, deposit substitute instruments and government
securities. These investments necessarily earned interest income. Petitioner’s claim for refund centers on the tax withheld by the
various withholding agents, and paid to the CIR for the four (4) quarters of 1993, on the aforementioned interest income. It is alleged
that the total final withholding tax on interest income paid for that year amounted to P6,049,971.83.1avvphil.net4

On four dates, 12 May 1993, 16 August 1993, 31 January 1994, and 29 April 1994, petitioner filed its written claim for refund with the
Bureau of Internal Revenue (BIR) for the first, second, third and fourth quarters of 1993, respectively. Petitioner cited this Court’s
"precedent setting" decision in Commissioner of Internal Revenue v. Court of Appeals,5 promulgated on 23 March 1992, said case
holding that employees’ trusts are exempted by specific mandate of law from income taxation. Nonetheless, the claims for refund were
denied.

By this time, petitioner already had a pending petition before the Court of Tax Appeals (CTA), docketed as CTA Case No. 4848, and
apparently involving the same legal issue but a previous taxable period. Hoping to comply with the two (2)-year period within which to
file an action for refund under Section 230 of the then Tax Code, petitioner filed a Motion to Admit Supplemental Petition6 in CTA Case
No. 4848 on 28 April 1995, seeking to include in that case the tax refund claimed for the year 1993. However, the CTA denied the
admission of the Supplemental Petition in a Resolution dated 25 August 1995.7 The CTA reasoned then that CTA Case No. 4848 had
already been pending for more than two and a half (2 ½) years, and the admission of the supplemental petition, with a substantial
enlargement of petitioner’s original claim for refund, would further delay the proceedings, causing as it would, an effective change in the
cause of action. Nonetheless, the CTA advised that petitioner could instead file a separate petition for review for the refund of the
withholding taxes paid in 1993.8

Petitioner decided to follow the CTA’s advice, and on 9 October 1995, it filed another petition for review with the CTA, docketed as CTA
Case No. 5292, concerning its claim for refund for the year 1993. The CIR posed various defenses, among them, that the claim for
refund had already prescribed.9 Trial ensued.

On 11 September 1998, the CTA promulgated its decision in CTA Case No. 5292, denying the claim for refund for the year 1993. While
the CTA noted that the income from employees’ trust funds were exempt from income taxes, the claims for refund had already
prescribed insofar as they covered the first, second and third quarters of 1993, as well as from the period of 1 October to 8 October
1993. The CTA so ruled considering that the petition before it was filed only on 9 October 1995, and thus, only those claims that arose
after 9 October 1993 could be considered in light of the two (2)-year prescriptive period for the filing of a judicial claim for refund from
the date of payment of the tax, as provided in Section 230 of the Tax Code.10

As to the claim for refund covering the period 9 October 1993 up to 31 December 1993, the CTA likewise ruled that such could not be
granted, the evidence being insufficient to establish the fact "that the money or assets of the funds were indeed used or placed in
money market placements, bank deposits, other deposit substitute instruments and government securities, more particularly treasury
bills." The CTA noted that petitioner merely submitted as its evidence copies of the following documents: the list of the various funds;
the schedule of taxes withheld on a quarterly basis in 1993; the written claims for refund; the BIR Rulings on the various Retirement
Plans; the trust agreements of the various retirement plans; and certifications of the Accounting Department of petitioner, Citibank, and
the Bangko Sentral ng Pilipinas as to the taxes that they respectively withheld.11

The CTA faulted petitioner for failing to submit such necessary documentary proof of transactions, such as confirmation receipts and
purchase orders that would ordinarily show the fact of purchase of treasury bills or money market placements by the various funds,
together with their individual bank account numbers. These various documents which petitioner failed to submit were characterized as
"the best evidence on the participation of the funds, and without them, there is no way for this Court to verify the actual involvement of
the funds in the alleged investment in treasury bills and money market placements."12 The CTA also held as insufficient for such
purposes the certifications issued by Citibank, BSP, and petitioner’s own Accounting Department, considering that the aggregate
amount of the final withholding taxes to which they attest totalled more than P40,000,000.00, in comparison to the present claims of
only around P6,000,000.00. The CTA thus concluded that such certifications included non-tax exempt or otherwise taxable
transactions, the sums of which were conglomerated with the amount that may have actually been refundable.

Petitioner filed a Motion for Reconsideration and/or New Trial, which the CTA denied in a Resolution dated 4 December 1998.13
Petitioner then filed a Petition for Review under Rule 43 with the Court of Appeals. However, this petition was denied outright by the
appellate court in its Resolution dated 12 January 1999. The Court of Appeals held that petitioner had failed to observe the
requirement, under Section 2, Rule 42 of the 1997 Rules of Civil Procedure that the petition should be accompanied by other material
portions of the record as would support the allegations of the petition. The Court of Appeals particularly mentioned the following
documents omitted by the petitioner in its petition: the Supplemental Petition, the CTA Resolution denying the admission of the
Supplemental Petition, the new Petition filed with the CTA, and the Motion for Reconsideration and/or New Trial.14

Petitioner moved for reconsideration of the adverse decision of the Court of Appeals, attaching to its motion the required certified copies
of the cited documents. Nonetheless, the Court of Appeals denied the motion for reconsideration through a Resolution dated 3 June
1999, holding that the belated compliance did not cure the defect of the petition. Moreover, the Court of Appeals also noted that it had
taken a "closer look at the petition" and on that basis concluded that the CTA Decision contained no reversible error.15

Hence, the present petition, which we deny.

Petitioner argues that it was error on the part of the Court of Appeals to have dismissed its petition "on a mere technicality."16 Yet the
dismissal engaged in by the Court of Appeals on procedural grounds is wholly sanctioned by the relevant provisions of the Rules of
Court. Section 6 of Rule 43, 1997 Rules of Civil Procedure, then governing the procedure of appeals from decisions of the CTA to the
Court of Appeals,17 explicitly provides that the petition for review be accompanied by "certified true copies of such material portions of
the record referred to [in the petition] and other supporting papers". Under Section 7, Rule 43, the failure to attach such documents
which should accompany the petition is sufficient ground for the dismissal of the petition.

It should be remembered that it is only when the petition has been given due course, after a prima facie finding that the CTA had
committed errors of fact or law that would warrant reversal18, that the case record would be transmitted from the court of origin to the
Court of Appeals.19 Clearly, upon the filing of the petition, the appellate court would have no documentary basis to discern whether the
required prima facie standard has been met except the petition itself and the documents that accompany it. While the submissions in
the petition may refer to other documents in the record, or may even quote at length from those documents, the Court of Appeals would
have no way to ascertain the veracity of the submissions unless the certified true copies of these documents are attached to the petition
itself.

Thus, the requirement that certified true copies of such portions of the record referred to in the petition be attached is not a mere
technicality that can be overlooked with ease, but an essential requisite for the determination of prima facie basis for giving due course
to the petition. Thus, it does not constitute error in law when the Court of Appeals dismissed the petition on such ground. Moreover,
while the court a quo is capacitated to give cognizance to the belated compliance attempted by petitioner, acquiescence to such
belated compliance is a matter of sound discretion on the part of the lower court, and one not ordinarily disturbed by the Court.

Even assuming that the procedural errors may be overlooked, we still agree with the Court of Appeals in holding in the Resolution of 3
June 1999 that the CTA committed no reversible error in its assailed decision.

We hold, as the CTA did, that the exemption from income tax of income from employees’ trusts still stands. The Court had first
recognized such exemption in the aforementioned CIR v. Court of Appeals20 case, arising as it did from the enactment of Republic Act
No. 4917 which granted exemption from income tax to employees’ trusts.21 The same exemption was provided in Republic Act No.
8424, the Tax Reform Act of 1997, and may now be found under Section 60(B) of the present National Internal Revenue Code.
Admittedly, such interest income of the petitioner for 1993 was not subject to income tax.

Still, petitioner did pay the income tax it was not liable for when it withheld such tax on interest income for the year 1993. Such taxes
were erroneously assessed or collected, and thus, Section 230 of the National Internal Revenue Code then in effect comes into full
application. The provision reads:

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. (emphasis supplied)

The CTA noted that since the petition for review was only filed on 9 October 1995, petitioner could no longer claim the refund of such
tax withheld for the period of January to 8 October 1995, the two (2)-year prescriptive period having elapsed. Petitioner submits that the
two (2)-year prescriptive period should be reckoned from the date of its filing of the Supplemental Petition on 28 April 1995, not from the
filing of its new petition for review after the Supplemental Petition was denied.22 Even granting that this should be the case, such
argument would still preclude the refund of taxes wrongfully paid from January to 27 April 1993, the two (2)-year prescriptive period for
those taxes paid then having already become operative.

Yet could the two (2)-year prescriptive period for the refund of erroneously paid taxes be deemed tolled by the filing of the
Supplemental Petition? Petitioner argues that Section 230 of the then Tax Code does not specify the form in which the judicial claim
should be made. That may be so, but it does not follow that the two (2)-year period may be suspended by the filing of just any judicial
claim with any court. For example, the prescriptive period to claim for the refund of corporate income tax paid by a Makati-based
corporation cannot be suspended by the filing of a complaint with the Municipal Circuit Trial Court of Sorsogon. At the very least, such
judicial claim should be filed with a court which would properly have jurisdiction over the action for the refund.

In this case, there is no doubt that the CTA has jurisdiction over actions seeking the refund of income taxes erroneously paid. But it
should be borne in mind that petitioner initially sought to bring its claim for refund for the taxes paid in 1993 through a supplemental
petition in another case pending before the CTA, and not through an original action. The admission of supplemental pleadings,
including supplemental complaints, does not arise as a matter of right on the petitioner, but remains in the sound discretion of the court,
which is well within its right to deny the admission of the pleading. Section 6, Rule 10 of the 1997 Rules of Civil Procedure, governing
supplemental pleadings, is clear that the court only "may" admit the supplemental pleading, and is thus not obliged to do so.

It is only upon the admission by the court of the supplemental complaint that it may be deem to augment the original complaint. Until
such time, the court acquires no jurisdiction over such new claims as may be raised in the supplemental complaint. Assuming that the
CTA erred in refusing to admit the Supplemental Petition, such action is now beyond the review of this Court, the order denying the
same having long lapsed into finality, and it appearing that petitioner did not attempt to elevate such denial for judicial review with the
proper appellate court.

We thus cannot treat the Supplemental Petition as having any judicial effect. It cannot even be deemed as having been filed, the CTA
refusing to admit the same. Moreover, the CTA could not have acquired jurisdiction over the causes of action stated in the
Supplemental Petition by virtue of the same pleading owing to that court’s non-admission of that complaint. The CTA acquired
jurisdiction over the claim for refund for taxes paid by petitioner in 1993 only upon the filing of the new Petition for Review on 9 October
1995.

Yet, let us assume again, this time, that the filing of the Supplemental Petition could have tolled the two (2)-year prescriptive period
insofar as the 1993 taxes paid after 28 April 1993 were concerned. There may even be cause to entertain this assumption, considering
that this two (2)-year prescriptive period is not jurisdictional and may be suspended under exceptional circumstances.23 Yet a closer
look at the case does not indicate the presence of such exceptional circumstances, but instead affirm that the petition is still bereft of
merit.

The CTA evinced palpable discomfort over the sufficiency of the evidence presented by petitioner to establish its claim for refund. It
noted as follows:

As regards the third issue, this Court is convinced that the evidence of the petitioner for the remaining portion of the claim for the fourth
quarter of 1993 is insufficient to establish the fact that the money or assets of the funds were indeed used or placed in money market
placements, bank deposits, other deposit substitute instruments and government securities, more particularly treasury bills.

To prove its case, petitioner merely submitted copies of the following documents, namely:

Exhibit

1. List of the various funds A

2. Schedule of taxes withheld on B

a quarterly basis in 1993

3. Written claims for refund C-C4

D-D4

E-E4

F-F4

4. BIR Rulings on the various G-Y

Retirement Plans at bar

5. Trust agreements of the Z-RR

various Retirement Plans

6. Certifications of the Accounting SS-UU49,

Department of petitioner, Citibank, inclusive and Bangko Sentral ng Pilipinas on the taxes they respectively withheld

It is to be noted from the above listed exhibits that documentary proof of transactions, such as confirmation receipts and purchase
orders which would ordinarily show the fact of purchase of treasury bills or money market placements by the various funds, together
with their individual bank account numbers, were not submitted in evidence by the petitioner. They represent the best evidence on the
participation of the funds and without them, there is no way for this Court to verify the actual involvement of the funds in the alleged
investment in the treasury bills and money market placements.24

Clarifications are in order. The cited passage may seem to implicitly assume that only such income earned by the employees’ trusts
from money market placements, bank deposits, other deposit substitute instruments and government securities are exempted from
income taxation. This is contrary to the provisions in Republic Act No. 4917, which then stood as the governing provision on income tax
exemption of employees’ trusts:

SECTION 1. Any provision of law to the contrary notwithstanding, the retirement benefits received by official and employees of private
firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer shall be exempt
from all taxes and shall not be liable to attachment, levy or seizure by or under any legal or equitable process whatsoever except to pay
a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action; xxx

The tax exemption enjoyed by employees’ trusts was absolute, irrespective of the nature of the tax. There was no need for the
petitioner to particularly show that the tax withheld was derived from interest income from money market placements, bank deposits,
other deposit substitute instruments and government securities, since the source of the interest income does not have any effect on the
exemption enjoyed by employees’ trusts.

What has to be established though, as a matter of evidence, is that the amount sought to be refunded to petitioner actually corresponds
to the tax withheld on the interest income earned from the exempt employees’ trusts. The need to be determinate on this point
especially militates, considering that petitioner, in the ordinary course of its banking business, earns interest income not only from its
investments of employees’ trusts, but on a whole range of accounts which do not enjoy the same broad exemption as employees’
trusts.

It clearly bothered the CTA that the submitted certifications from Citibank, the BSP, and petitioner’s own Accounting Department attest
only to the total amount of final withholding taxes remitted to the BIR. Evidently, the sum includes not only such taxes withheld from the
interest income of the exempt employees’ trusts, but also from other transactions between petitioner and the BSP or Citibank which are
not similarly exempt from taxation. For these certifications to hold value, there is particular need for them to segregate such taxes
withheld from the interest income of employees’ trusts, and those withheld from other income sources. Otherwise, these certifications
are ineffectual to establish the present claim for refund.

The weak evidentiary value of these certifications proved especially fatal, as no other documentary evidence was submitted to establish
that the withholding agents actually withheld interest income earned from the employees’ trusts administered by petitioner. The other
evidence submitted by petitioner merely establishes the fact that it administered various named employees trusts, the particular trust
agreements between petitioner and these trusts, its requests for refund from the BIR and their consequent denials. Petitioner did submit
a schedule of taxes withheld on a quarterly basis for the year 1993, but this document was apparently prepared by petitioner itself, and
its self-serving nature precludes from according it any authoritative value.

We agree with the CIR that petitioner should have instead submitted documentary proof of transactions, such as confirmation receipts
and purchase orders, as the best evidence on the participation of the funds from these employees trusts. The appreciation of facts
made by the CTA, which exercises particular expertise on the subject of tax, generally binds this Court.25 It may not be so, as the CIR
contends, that the proper purpose for presenting such documents is to establish that the funds were actually invested "in treasury bills
and money market placements", since the character of the investments does not detract from the fact that all income earned by the
employees’ trusts is exempt from taxation. Instead, these documents are vital insofar as they establish the extent of the investments
made by petitioner from the employees’ trusts, as distinguished from those made from other account sources, and correspondingly, the
amount of taxes withheld from the interest income derived from these employees’ trusts alone.

Petitioner argues that the testimony of its witnesses establishes that it would be next to impossible to single out the particular
transactions involving exempt employees’ trusts, in view of the manner of lumping all the data in the reporting procedures of the
withholding agents, particularly concerning treasury bills. While that may be so, a necessary consequence of the special exemption
enjoyed alone by employees’ trusts would be a necessary segregation in the accounting of such income, interest or otherwise, earned
from those trusts from that earned by the other clients of petitioner. The Court has no desire to impose unnecessarily pernickety
documentary requirements in obtaining a valid tax refund. Yet it cannot be escaped that the taxpayer needs to establish not only that
the refund is justified under the law, but also the correct amount that should be refunded. If the latter requisite cannot be ascertained
with particularity, there is cause to deny the refund, or allow it only to the extent of the sum that is actually proven as due. Tax refunds
partake the nature of tax exemptions and are thus construed strictissimi juris against the person or entity claiming the exemption.26 The
burden in proving the claim for refund necessarily falls on the taxpayer, and petitioner in this case failed to discharge the necessary
burden of proof.

One argument remains. It can be dispensed with briefly. Petitioner argues that the CTA should have granted its motion for a new trial,
which was premised on the claim that certain documents had been misplaced during the relocation of petitioner’s headquarters, and
were located only after the case was submitted for resolution.27 Section 1, Rule 37 of the 1997 Rules of Civil Procedure does allow for
a new trial on the ground that "newly discovered evidence, which [movant] could not, with reasonable diligence, have discovered and
produced at the trial, and which if presented would probably alter the result". However, as the CTA pointed out in its 4 December 1998
Resolution, the case was submitted for resolution with the CTA only in May of 1998, or more than two (2) years since the alleged
transfer of headquarters by the petitioner. The CTA also noted that during that time, petitioner "made no visible attempt to retrieve the
documents or at the very least, inform this Court of such problem".28 These observations sufficiently rebut the claim that the alleged
newly discovered evidence could not have been located with reasonable diligence.

It is tragic that the ultimate loss to be borne by the tardy claim for the refund would be not by the petitioner-bank, but the hundreds of
private employees whose retirement funds were reposed in petitioner’s trust. However, the damage was sustained due to multiple
levels of incompetence on the part of the petitioner which this Court cannot simply give sanction to. Many of the so-called procedural
hurdles could have been overlooked, even by this Court, but in the end, the claim for tax refund was simply not proven with the
particularity demanded of an action seeking to siphon off the nation’s "lifeblood."

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED
9.ENGTEK PHILS. VS. CIR-

10.G.R. No. 96322 December 20, 1991

ACCRA INVESTMENTS CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS,
respondents.

Facts:
• The petitioner corporation filed with the Bureau of Internal Revenue its annual corporate income tax return for the calendar
year ending December 31, 1981 reporting a net loss of P2,957,142.00.
• In a letter dated December 29, 1983 addressed to the respondent Commissioner of Internal Revenue (Exh. "G"), the petitioner
corporation filed a claim for refund inasmuch as it had no tax liability against which to credit the amounts withheld.
• CTA dismissed the petition for review after a finding that the two-year period within which the petitioner corporation's claim for
refund should have been filed had already prescribed pursuant to Section 292 of the National Internal Revenue Code of 1977, as
amended. It ruled that the reckoning date for purposes of counting the two-year prescriptive period within which the petitioner
corporation could file a claim for refund was December 31, 1981 when the taxes withheld at source were paid and remitted to the
Bureau of Internal Revenue by its withholding agents, not April 15, 1982, the date when the petitioner corporation filed its final
adjustment return.
• The respondent appellate court affirmed the decision of the respondent CTA opining that the two-year prescriptive period in
question commences "from the date of payment of the tax" as provided under Section 292 of the Tax Code of 1977 (now Sec. 230 of
the National Internal Revenue Code of 1986), i.e., "from the end of the tax year when a taxpayer is deemed to have paid all taxes
withheld at source", and not "from the date of the filing of the income tax return" as posited by the petitioner corporation.

Issue: whether or not the petitioner corporation is barred from recovering the amount of P82,751.91 representing overpaid taxes for the
taxable year 1981.
Held:
We find merit in the petitioner corporation's postures.
Clearly, there is the need to file a return first before a claim for refund can prosper inasmuch as the respondent Commissioner by his
own rules and regulations mandates that the corporate taxpayer opting to ask for a refund must show in its final adjustment return the
income it received from all sources and the amount of withholding taxes remitted by its withholding agents to the Bureau of Internal
Revenue. The petitioner corporation filed its final adjustment return for its 1981 taxable year on April 15, 1982. In our Resolution dated
April 10, 1989 in the case of Commissioner of Internal Revenue v. Asia Australia Express, Ltd. (G. R. No. 85956), we ruled that the two-
year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjusted final
tax return. Hence, the petitioner corporation had until April 15, 1984 within which to file its claim for refund. Considering that ACCRAIN
filed its claim for refund as early as December 29, 1983 with the respondent Commissioner who failed to take any action thereon and
considering further that the non-resolution of its claim for refund with the said Commissioner prompted ACCRAIN to reiterate its claim
before the Court of Tax Appeals through a petition for review on April 13, 1984, the respondent appellate court manifestly committed a
reversible error in affirming the holding of the tax court that ACCRAIN's claim for refund was barred by prescription.
It bears emphasis at this point that the rationale in computing the two-year prescriptive period with respect to the petitioner corporation's
claim for refund from the time it filed its final adjustment return is the fact that it was only then that ACCRAIN could ascertain whether it
made profits or incurred losses in its business operations. The "date of payment", therefore, in ACCRAIN's case was when its tax
liability, if any, fell due upon its filing of its final adjustment return on April 15, 1982.

11. Commissioner of Internal Revenue v. TMX Sales Inc G.R. No. 83736. January 15, 1992

Facts: TMX Sales Inc. filed its quarterly income tax for the 1st quarter of 1981. It declared P571,174.31 and paying an income tax of
P247,019 on May 13, 1981. However, during the subsequent quarters, TMX suffered losses. On April 15, 1982, when TMX filed its
Annual Income Tax Return for the year ended in December 31, 1981, it declared a net loss of P6,156,525. On July 9, 1982, TMX filed
with the Appellate Division of BIR for refund in the amount of P247,010 representing overpaid income tax. His claim was not acted upon
by the Commissioner of Internal Revenue. On May 14, 1984, TMX Sales filed a petition for review before the Court of Tax Appeals
against CIR, praying that the CIR be ordered to refund to TMX the amount of P247,010. The CIR averred that TMX is already barred for
claiming the refund since more than 2 years has elapsed between the payment (May 15, 1981) and the filing of the claim in court
(March 14, 1984). The Court of Tax Appeals rendered a decision granting the petition of TMX Sales and ordered CIR to refund the
amount mentioned. Hence, this appeal of CIR.

Issue: Whether or not TMX Sales Inc. is entitled to a refund considering that two years gas already elapsed since the payment of the
tax

Held: Yes. Petition denied.

Ratio: Sec. 292, par. 2 of the National Internal Revenue Code stated that “in any case, no such suit or proceeding shall be begun after
the expiration of two years from the date of the payment of the tax or penalty regardless of any supervening cause that may arise after
payment.” This should be interpreted in relation to the other provisions of the Tax Code. The most reasonable and logical application of
the law would be to compute the 2-year prescriptive period at the time of the filing of the Final Adjustment Return or the Annual Income
Tax Return, where it can finally be ascertained if the tax payer has still to pay additional income tax or if he is entitled to a refund of
overpaid income tax. Since TMX filed the suit on March 14, 1984, it is within the 2-year prescriptive period starting from April 15, 1982
when they filed their Annual Income Tax Return.

12. CIR vs. Philamlife (G.R. No. 105208 May 29, 1995)

FACTS:
• On May 30, 1983, private respondent Philamlife, For its Third Quarter of 1983, declared a net taxable income of
P2,515,671.00 and a tax due of P708,464.00. After crediting the amount of P3,899,525.00 it declared a refundable amount of
P3,158,061.00.
• For its Fourth and final quarter ending December 31, private respondent suffered a loss and thereby had no income tax
liability.
• In the return for that quarter, it declared a refund of P3,991,841.00 representing the first and second quarterly payments:
P215,742.00 as withholding taxes on rental income for 1983 and P133,084.00 representing 1982 income tax refund applied as 1983
tax credit.
• In 1984, private respondent again suffered a loss and declared no income tax liability. However, it applied as tax credit for
1984, the amount of P3,991,841.00 representing its 1982 and 1983 overpaid income taxes and the amount of P250,867.00 as
withholding tax on rental income for 1984.
• On September 26, 1984, private respondent filed a claim for its 1982 income tax refund of P133,084.00.
• On November 22, 1984, it filed a petition for review with the Court of Tax Appeals with respect to its 1982 claim for refund. On
December 16, 1985, it filed another claim for refund On January 2, 1986, private respondent filed a petition for review with the CTA,
docketed as CTA Case No. 4018 regarding its 1983 and 1984 claims for refund in the above-stated amount. Later, it amended its
petition by limiting its claim for refund to only P3,858,757.00

ISSUE: In a case such as this, where a corporate taxpayer remits/pays to the BIR tax withheld on income for the first quarter but whose
business operations actually resulted in a loss for that year, as reflected in the Corporate Final Adjustment Return subsequently filed
with the BIR, should not the running of the prescriptive period commence from the remittance/payment at the end of the first quarter of
the tax withheldinstead of from the filing of the Final Adjustment Return?

HELD:
• The issue in this case is the reckoning date of the two-year prescriptive period provided in Section 230 of the National Internal
Revenue Code (formerly Section 292) which states that: 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.
• Section 292 (now Section 230) stipulates that the two-year prescriptive period to claim refunds should be counted from date of
payment of the tax sought to be refunded. When applied to tax payers filing income tax returns on a quarterly basis, the date of
payment mentioned in Section 292 (now Section 230) must be deemed to be qualified by Sections 68 and 69 of the present Tax Code
• It may be observed that although quarterly taxes due are required to be paid within sixty days from the close of each quarter,
the fact that the amount shall be deducted from the tax due for the succeeding quarter shows that until a final adjustment return shall
have been filed, the taxes paid in the preceding quarters are merely partial taxes due from a corporation. Neither amount can serve as
the final figure to quantity what is due the government nor what should be refunded to the corporation.
• This interpretation may be gleaned from the last paragraph of Section 69 of the Tax Code which provides that the refundable
amount, in case a refund is due a corporation, is that amount which is shown on its final adjustment return and not on its quarterly
returns.
• Therefore, when private respondent paid P3,246,141.00 on May 30, 1983, it would not have been able to ascertain on that
date, that the said amount was refundable. The same applies with cogency to the payment of P396,874.00 on August 29, 1983.
• Clearly, the prescriptive period of two years should commence to run only from the time that the refund is ascertained, which
can only be determined after a final adjustment return is accomplished. In the present case, this date is April 16, 1984, and two years
from this date would be April 16, 1986. The record shows that the claim for refund was filed on December 10, 1985 and the petition for
review was brought before the CTA on January 2, 1986. Both dates are within the two-year reglementary period. Private respondent
being a corporation, Section 292 (now Section 230) cannot serve as the sole basis for determining the two-year prescriptive period for
refunds. As we have earlier said in the TMX Sales case, Sections 68, 69, and 70 on Quarterly Corporate Income Tax Payment and
Section 321 should be considered in conjunction with it.
• Moreover, even if the two-year period had already lapsed, the same is not jurisdictional and may be suspended for reasons of
equity and other special circumstances.

13. G.R. No. 117254 January 21, 1999

COMMISSIONER OF INTERNAL REVENUE, petitioner,
vs. COURT OF APPEALS, COURT OF TAX APPEALS and BANK OF THE PHILIPPINE ISLANDS as LIQUIDATOR OF
PARAMOUNT ACCEPTANCE CORPORATION, respondent.

This is a petition for review on certiorari of the decision, dated September 19, 1994, of the Court of Appeals affirming the decision of the
Court of Tax Appeals which ordered petitioner to refund P65,259.00 as overpaid income tax.

The facts are stated in the following portion of the decision of the CTA which the Court of Appeals quoted with approval:

Petitioner, Bank of the Philippine Islands (BPI for short) is a bank and trust corporation duly organized and existing under Philippine
laws. It acts as the liquidator of Paramount Acceptance Corporation after its dissolution on March 31, 1986.

On April 2, 1986, Paramount Acceptance Corporation (Paramount for brevity) filed its Corporate Annual Income Tax Return, for
calendar year ending December 31, 1985, declaring a Net Income of P3,324,802.00 (Exh. A). The income tax due thereon is
P1,153,681.00. However, Paramount paid the BIR its quarterly income tax, to wit: After deducting Paramount's total quarterly income
tax payments of P1,218,940.00 from its income tax of P1,153,681.00, the return showed a refundable amount of P65,259.00. The
appropriate box in the return was marked with a cross (x) indicating "To be refunded" he amount of P65,29,00.

n April 14, 1988, petitioner BPI, as liquidator of Paramount, through counsel filed a letter dated April 12, 1988 reiterating its claim for
refund of P65,259.00 as overpaid income tax for the calendar year 1985. The following day or on April 15, 1988. BPI filed the instant
petition with this Court in order to toll the running of the prescriptive period for filing a claim for refund of overpaid income taxes.

The question is whether the two-year period of prescription for filing a claim for refund, as provided in §230 of the National Internal
Revenue Code, is to be counted from April 2, 1986 when the corporate income tax return was actually filed or from April l5, 1986 when,
according to §70(b) of the NIRC, the final adjustment return could still be filed without incurring any penalty. The aforesaid §230 of the
NLRC1 provides that such period must be counted "from the date of payment of the tax." But, given the facts as stated above, when
was the corporate income tax paid in this case?

The Court of Tax Appeals rendered a decision decision the considering the two year period of prescription to have commenced to run
from April 15, 1986, the last day for filing the corporate income tax return, and, since the claim for refund was filed on April 14, 1988 and
the action was brought on April 15, 1988, it held that prescription had not set in. Accordingly, the CTA ordered as follows:
WHEREFORE, the respondent [petitioner herein] is hereby ordered to REFUND in favor of petitioner, the sum of P65,259.00,
representing overpaid income tax of Paramount Acceptance Corporation for the calendar year 1985.

No pronouncement as to costs.

SO ORDERED.2

On appeal, its decision was affirmed by the Court of Appeals. Said the appellate court:3

We agree with the respondent court's ruling that the date of payment of the tax as prescribed under the Tax Code is the date when the
corporate income tax return is required to be filed. . . .

The Supreme Court has laid down the rule regarding the computation of the prescriptive period that the two-year period should be
computed from the time of filing of the Adjustment Returns or Annual Income Tax Return and final payment of income tax: it is only
when the Adjustment Return covering the whole year is filed that the taxpayer would know whether a tax is still due or a refund can be
claimed based on the adjusted and audited figures (Commissioner of Internal Revenue vs. TMX Sales Inc., 205 SCRA 184). The two-
year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjusted final
tax return (Commissioner of Internal Revenue vs. Asia Australia Express Ltd., G.R. No. 85956). The "date of payment" from which to
reckon the two-year period, in the case of a corporation whose taxable year is on a calendar basis, is the 15th day of the fourth month
(April 15th) following the close of the fiscal year, and the filing of the final adjustment return on April 15th, following the close of the
preceding taxable year, is such "date of payment" (ACCRA Investments Corp. vs. Court of Appeals, 204 SCRA 957).

In this case, BPI filed its final adjustment return on April 2, 1985. No taxes were paid then because the returns showed that the
quarterly taxes already paid exceeded the income tax due by P65,259.00. As correctly put by BPI, it is only on April 15 that the previous
year's income tax becomes due and payable and the taxpayer is still free to make amendments or adjustments on its return, without
penalty, until April 15, 1986 (See Section 80, N.I.R.C.). Thus the final payment of income tax should be deemed to be on April 15, 1986,
when the previous year's income tax became due and payable and when the quarterly corporate income taxes may be considered paid.
Accordingly the administrative claim and court proceeding for tax refund were timely filed.

Petitioner disagrees with the foregoing decision of the Court of Appeals. He contends that the two-year prescriptive period should be
computed from April 2, 1984, when the final adjustment return was actually filed, because that is the time of payment of the tax, within
the meaning of §230 of the NIRC.

We agree.

The conclusions reached by the appellate court are contrary to the very rulings cited by it. In Commissioner of Internal Revenue v. TMX
Sales, Inc.,4 this Court, in rejecting the contention that the period of prescription should be counted from the date of payment of the
quarterly tax, held:

. . . [T]he filing of a quarterly income tax return required in Section 85 [now Section 68] and implemented per BIR Form 1702-Q and
payment of quarterly income tax should only be considered mere installments of the annual tax due. These quarterly tax payment which
are computed based on the cumulative figures of gross receipts and deductions in order to arrive at a net taxable income, should be
treated as advances or portions of the annual income tax due, to be adjusted at the end of the calendar or fiscal year. This is reinforced
by Section 87 [now Section 69] which provides for the filing of adjustment returns and final payment of income tax. Consequently, the
two-year prescriptive period provided in Section 292 [now Section 230 of the Tax Code] should be computed from the time of filing the
Adjustment Return or Annual Income Tax Return and final payment of income tax.

On the other hand, in ACCRA Invesments Corporation v. Court of Appeals,5 where the question was whether the two-year period of
prescription should be reckoned from the end of the taxable year (in that case December 31, 1981), we explained why the period
should be counted from the filing of the final adjustment return, thus:6

Clearly, there is the need to file a return first before a claim for refund can proper inasmuch as the respondent Commissioner by his
own rules and regulations mandates that the corporate taxpayer opting to ask for a refund must show in its final adjustment return the
income it received from all sources and the amount of withholding taxes remitted by its withholding agents to the Bureau of Internal
Revenue. The petitioner corporation filed its final adjustment return for its 1981 taxable year on April 15, 1982. In our Resolution dated
April 10, 1989 in the case of Commissioner of Internal Revenue v. Asia Australia Express, Ltd. (G.R. No. 85956), we ruled that the two-
year prescriptive period within which to claim a refund commences to run, at the earliest, on the date of the filing of the adjusted final
tax return. Hence, the petitioner corporation had until April 15, 1984 within which to file its claim for refund.

xxx xxx xxx

It bears emphasis at this point that the rationale in computing the two-year prescriptive period with respect to the petitioner corporation's
claim for refund from the time it filed is final adjustment return is the fact that it was only then that ACCRAIN could ascertain whether it
made profits or incurred losses in its business operations. The "date of payments", therefore, in ACCRAIN's case was when its tax
liability, if any, fell due upon its filing of its final adjustment return on April 15, 1982.

Finally, in Commissioner of Internal Revenue v. Philippine American Life Insurance Co.,7 we held:

Clearly, the prescriptive period of two years should commence to run only from the time that the refund is ascertained, which can only
be determined after a final adjustment return is accomplished. In the present case, this date is April 16, 1984, and two years from this
date would be April 16, 1986. The record shows that the claim for refund was filed on December 10, 1985 and the petition for review
was brought before the CTA on January 2, 1986. Both dates are within the two-year reglementary period. Private respondent being a
corporation, Section 292 [now Section 230] cannot serve as the sole basis for determining the two-year prescriptive period for refunds.
As we have earlier stated in the TMX Sales case. Sections 68, 69, and 70 on Quarterly Corporate Income Tax Payment and Sectibn
321 should be construed in conjunction with it.

Sec. 49(a) of the NIRC provides that —

§9. Payment and assessment of income tax for individuals and corporations.

(a) Payment of tax—(1) In general. — The total amount of tax imposed by this Title shall be paid by the person subject thereto at the
time the return is filed. . . .
On the other hand, §70(b) of the same Code provides that —

§70 (b) Title of filing the income return — The corporate quarterly declaration shall be filed within sisty (60) days following the close of
each of the first three quarters of the taxable year. The final adjustment return shall be filed on or before the 15th day of the 4th month
following the close of the fiscal year, as the case may be.

Thus, it can be deduced from the foregoing that, in the contest of §230, which provides for a two-year period of prescription counted
"from the date of payment of the tax" for actions for refund of corporate income tax, the two-year period should be computed from the
time of actual filing of the Adjustment Return or Annual Income Tax Return. This is so because at that point, it can already be
determined whether there has been an overpayment by the taxpayer. Moreover, under §49(a) of the NIRC, payment is made at the
time the return is filed.

In the case at bar, Paramount filed its corporate annual income tax return on April 2, 1986. However, private respondent BPI, as
liquidator of Paramount, filed a written claim for refund only on April 14, 1988 and a petition for refund only on April 15, 1988. Both claim
and action for refund were thus barred by prescription.

The foregoing conclusion makes it unnecessary for us to pass on the other issues raised in this case by petitioner.

WHEREFORE, the decision of the Court of Appeals is REVERSED and the petition for refund filed by private respondent is
DISMISSED on the ground that it is barred by prescription.1âwphi1.nêt

SO ORDERED.

14. Commissioner of Internal Revenue vs. Philippine National Bank, 474 SCRA 303, G.R. No. 161997. October 25, 2005

Facts: PNB requested the BIR to issue a tax credit certificate (TCC) on the remaining balance of the advance income tax payment it
made in 1991. It should be noted that the request was made considering that, while PNB carried over such credit balance to the
succeeding taxable years, i. e., 1992 to 1996, its negative tax position during said tax period prevented it from actually applying the
credit balance of P73,298,892.60.

Petitioner first scores the CA for concluding that “the amount of advance income tax payment voluntarily remitted to the BIR by the
respondent was not a consequence of a prior tax assessment or computation by the taxpayer based on business income” and,
therefore, it cannot “ be treated as similar to those national revenue taxes erroneously, illegally or wrongfully paid as to be automatically
covered by the two (2) year limitation under section 230 of the NIRC for the right to its recovery.” Petitioner invokes the all too-familiar
principle that the collection of taxes, being the lifeblood of the nation.

Issue: Whether PNB is entitled to a tax refund

Held: YES. It is fairly correct to say that the claim for tax credit was specifically pursued to enable the respondent bank to utilize the
same for future tax liabilities.

In the strict legal viewpoint, therefore, PNB’s claim for tax credit did not proceed from, or is a consequence of overpayment of tax
erroneously or illegally collected. It is beyond cavil that respondent PNB issued to the BIR the check for P180 Million in the concept of
tax payment in advance, thus eschewing the notion that there was error or illegality in the payment. What in effect transpired when PNB
wrote its July 28, 1997 letter was that respondent sought the application of amounts advanced to the BIR to future annual income tax
liabilities, in view of its inability to carry-over the remaining amount of such advance payment to the four (4) succeeding taxable years,
not having incurred income tax liability during that period.

The instant case ought to be distinguished from a situation where, owing to net losses suffered during a taxable year, a corporation was
also unable to apply to its income tax liability taxes which the law requires to be withheld and remitted. In the latter instance, such
creditable withholding taxes, albeit also legally collected, are in the nature of “erroneously collected taxes” which entitled the corporate
taxpayer to a refund under Section 230 of the Tax Code.

Analyzing the underlying reason behind the advance payment made by respondent PNB in 1991, the CA held that it would be improper
to treat the same as erroneous, wrongful or illegal payment of tax within the meaning of Section 230 of the Tax Code. So that even if
the respondent’s inability to carry-over the remaining amount of its advance payment to taxable years 1992 to 1996 resulted in excess
credit, it would be inequitable to impose the two (2)-year prescriptive period in Section 230 as to bar PNB’s claim for tax credit to utilize
the same for future tax liabilities.

It bears stressing that respondent PNB remitted the P180 Million in question as a measure of goodwill and patriotism, a gesture
noblesse oblige, so to speak, to help the cash-strapped national government. It would thus indeed, be unfair, as the CA correctly
observed, to leave respondent PNB to suffer losing millions of pesos advanced by it for future tax liabilities. The cut becomes all the
more painful when it is considered that PNB’s failure to apply the balance of such advance income tax payment from 1992 to 1996 was,
to repeat, due to business downturn experienced by the bank so that it incurred no tax liability for the period.

CASE SYLLABI:

Taxation; Actions; 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 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.—The core issue in this case pivots on the applicability hereto of the two (2)-year prescriptive period under in Section 230 (now
Sec. 229) of the NIRC, reading: “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 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 [(2)]
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.
Same; Same; Statutes; Words and Phrases; Section 230 of the Tax Code, as couched, particularly its statute of limitations
component, is, in context, intended to apply to suits for the recovery of internal revenue taxes or sums erroneously,
excessively, illegally or wrongfully collected. Black defines the term erroneous or illegal tax as one levied without statutory
authority.—Section 230 of the Tax Code, as couched, particularly its statute of limitations component, is, in context, intended to apply
to suits for the recovery of internal revenue taxes or sums erroneously, excessively, illegally or wrongfully collected. Black defines the
term erroneous or illegal tax as one levied without statutory authority. In the strict legal viewpoint, therefore, PNB’s claim for tax credit
did not proceed from, or is a consequence of overpayment of tax erroneously or illegally collected. It is beyond cavil that respondent
PNB issued to the BIR the check for P180 Million in the concept of tax payment in advance, thus eschewing the notion that there was
error or illegality in the payment. What in effect transpired when PNB wrote its July 28, 1997 letter was that respondent sought the
application of amounts advanced to the BIR to future annual income tax liabilities, in view of its inability to carry-over the remaining
amount of such advance payment to the four (4) succeeding taxable years, not having incurred income tax liability during that period.

Same; Same; In Commissioner of Internal Revenue vs. Philippine American Insurance Co., 244 SCRA 446 (1995), the Supreme
Court ruled that an availment of a tax credit due for reasons other than the erroneous or wrongful collection of taxes may
have a different prescriptive period.—In Commissioner vs. Phil-Am Life, the Court ruled that an availment of a tax credit due for
reasons other than the erroneous or wrongful collection of taxes may have a different prescriptive period. Absent any specific provision
in the Tax Code or special laws, that period would be ten (10) years under Article 1144 of the Civil Code. Significantly, Commissioner
vs. PhilAm is partly a reiteration of a previous holding that even if the two (2)-year prescriptive period, if applicable, had already lapsed,
the same is not jurisdictional and may be suspended for reasons of equity and other special circumstances.

Same; Same; Courts; Court of Tax Appeals; Appeals; The rule of long standing is that the Supreme Court will not set aside
lightly the conclusions reached by the Court of Tax Appeals (CTA) which, by the very nature of its functions, is dedicated
exclusively to the resolution of tax problems and has, accordingly, developed an expertise on the subject, unless there has
been an abuse or improvident exercise of authority.—The rule of long standing is that the Court will not set aside lightly the
conclusions reached by the CTA which, by the very nature of its functions, is dedicated exclusively to the resolution of tax problems and
has, accordingly, developed an expertise on the subject, unless there has been an abuse or improvident exercise of authority. It is
likewise settled that to a claimant rests the onus to establish the factual basis of his or her claim for tax credit or refund. In this case,
however, petitioner does not dispute that a portion of the P180 Million PNB remitted to the BIR in 1991 as advance payment remains
unutilized for the purpose for which it was intended in the first place. But petitioner asserts that respondent’s right to recover the same is
already time-barred. The CTA upheld the position of petitioner. The CA ruled otherwise. We find the CA’s position more in accord with
the facts on record and is consistent with applicable laws and jurisprudence.

Civil Procedure; Forum Shopping; A party ought to invoke the issue of forum shopping, assuming its presence, at the first
opportunity in his motion to dismiss or similar pleading filed in the trial court.— Petitioner presently faults the CA for not having
taken notice that PNB’s initiatory pleading before the CTA suffers from an infirmity that justifies the dismissal thereof. But it is evident
that the issue of forum shopping is being raised for the first time in this appellate proceedings. Accordingly, the Court loathes to
accommodate petitioner’s urging for the dismissal of respondent’s basic claim on the forum shopping angle. As earlier ruled by this
Court, a party ought to invoke the issue of forum shopping, assuming its presence, at the first opportunity in his motion to dismiss or
similar pleading filed in the trial court. Else, he is barred from raising the ground of forum shopping in the Court of Appeals and in this
Court. So it must be here.

15. Commissioner of Internal Revenue vs. Primetown Property Group, Inc., 531 SCRA 436, G.R. No. 162155. August 28, 2007
Corona, J.

Facts: Gilbert Yap, Vice Chair of Primetown applied on March 11, 1999 for a refund or credit of income tax which Primetown paid in
1997. He claimed that they are entitled for a refund because they suffered losses that year due to the increase of cost of labor and
materials, etc. However, despite the losses, they still paid their quarterly income tax and remitted creditable withholding tax from real
estate sales to BIR. Hence, they were claiming for a refund. On May 13, 1999, revenue officer Elizabeth Santos required Primetown to
submit additional documents to which Primetown complied with. However, its claim was not acted upon which prompted it to file a
petition for review in CTA on April 14, 2000. CTA dismissed the petition as it was filed beyonf the 2-year prescriptive period for filing a
judicial claim for tax refund according to Sec 229 of NIRC. According to CTA, the two-year period is equivalent to 730 days pursuant to
Art 13 of NCC. Since Primetown filed its final adjustment return on April 14, 1998 and that year 2000 was a leap year, the petition was
filed 731 days after Primetown filed its final adjusted return. Hence, beyond the reglementary period. Primetown appealed to CA. CA
reversed the decision of CTA. Hence, this appeal.
Issues:
(1) How should the two-year prescriptive period be computed?
(2) Whether or not the claim for tax refund was filed within the two-year period?
Held:
Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative Code of 1987 deal with the same subject
matter—the computation of legal periods. Under the Civil Code, a year is equivalent to 365 days whether it be a regular year or a leap
year. Under the Administrative Code of 1987, however, a year is composed of 12 calendar months. Needless to state, under the
Administrative Code of 1987, the number of days is irrelevant.
There obviously exists a manifest incompatibility in the manner of computing legal periods under the Civil Code and the Administrative
Code of 1987. For this reason, we hold that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the more recent
law, governs the computation of legal periods. Lex posteriori derogat priori.
We therefore hold that respondent’s petition (filed on April 14, 2000) was filed on the last day of the 24th calendar month from the day
respondent filed its final adjusted return. Hence, it was filed within the reglementary period.

CASE SYLLABI:
Taxation; Prescription; The rule is that the two-year prescriptive period is reckoned from the filing of the final adjusted return; A year is
equivalent to 365 days regardless of whether it is a regular year of a leap year.—The rule is that the two-year prescriptive period is
reckoned from the filing of the final adjusted return. But how should the two-year prescriptive period be computed? As already quoted,
Article 13 of the Civil Code provides that when the law speaks of a year, it is understood to be equivalent to 365 days. In National
Marketing Corporation v. Tecson, 29 SCRA 70 (1969), we ruled that a year is equivalent to 365 days regardless of whether it is a
regular year or a leap year.

Same; Words and Phrases; Calendar Month; A calendar month is a month designated in the calendar without regard to the number of
days it may contain.—A calendar month is “a month designated in the calendar without regard to the number of days it may contain.” It
is the “period of time running from the beginning of a certain numbered day up to, but not including, the corresponding numbered day of
the next month, and if there is not a sufficient number of days in the next month, then up to and including the last day of that month.” To
illustrate, one calendar month from December 31, 2007 will be from January 1, 2008 to January 31, 2008; one calendar month from
January 31, 2008 will be from February 1, 2008 until February 29, 2008.

Statutory Construction; Statutes; Repeals; A repealing clause like Sec. 27, Book VII of the Administrative Code of 1987 is not an
express repealing clause because it fails to identify or designate the laws to be abolished; An implied repeal must have been clearly
and unmistakably intended by the legislature.—A repealing clause like Sec. 27, Book VII of the Administrative Code of 1987 is not an
express repealing clause because it fails to identify or designate the laws to be abolished. Thus, the provision above only impliedly
repealed all laws inconsistent with the Administrative Code of 1987. Implied repeals, however, are not favored. An implied repeal must
have been clearly and unmistakably intended by the legislature. The test is whether the subsequent law encompasses entirely the
subject matter of the former law and they cannot be logically or reasonably reconciled.

Same; Same; Same; Court holds that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the more recent law,
governs the computation of legal periods.—Both Article 13 of the Civil Code and Section 31, Chapter VIII, Book I of the Administrative
Code of 1987 deal with the same subject matter—the computation of legal periods. Under the Civil Code, a year is equivalent to 365
days whether it be a regular year or a leap year. Under the Administrative Code of 1987, however, a year is composed of 12 calendar
months. Needless to state, under the Administrative Code of 1987, the number of days is irrelevant. There obviously exists a manifest
incompatibility in the manner of computing legal periods under the Civil Code and the Administrative Code of 1987. For this reason, we
hold that Section 31, Chapter VIII, Book I of the Administrative Code of 1987, being the more recent law, governs the computation of
legal periods. Lex posteriori derogat priori.

16. Bank of the Philippine Islands vs. Commissioner of Internal Revenue, 363 SCRA 840, G.R. No. 144653. August 28, 2001
Mendoza, J.

Facts: Prior to its merger with petitioner Bank of the Philippine Islands (BPI) on July 1, 1985, the Family Bank and Trust Co. (FBTC)
earned income consisting of rentals from its leased properties and interest from its treasury notes for the period January 1 to June 30,
1985. As required by the Expanded Withholding Tax Regulation, the lessees of FBTC withheld 5 percent of the rental income, in the
amount of P118,609.17, while the Central Bank, from which the treasury notes were purchased by FBTC, withheld P55,456.60 from the
interest earned thereon. Creditable withholding taxes in the total amount of P174,065.77 were remitted to respondent Commissioner of
Internal Revenue.
FBTC, however, suffered a net loss of about P64,000,000.00 during the period in question. It also had an excess credit of
P2,146,072.57 from the previous year. Thus, upon its dissolution in 1985, FBTC had a refundable amount of P2,320,138.34,
representing that year’s tax credit of P174,065.77 and the previous year’s excess credit of P2,146,072.57.
As FBTC’s successor-in-interest, petitioner BPI claimed this amount as tax refund, but respondent Commissioner of Internal Revenue
refunded only the amount of P2,146,072.57, leaving a balance of P174,065.77. Accordingly, petitioner filed a petition for review in the
Court of Tax Appeals on December 29, 1987, seeking the refund of the aforesaid amount.[2] However, in its decision rendered on July
19, 1994, the Court of Tax Appeals dismissed petitioner’s petition for review and denied its claim for refund on the ground that the claim
had already prescribed.[3] In its resolution, dated August 4, 1995, the Court of Tax Appeals denied petitioner’s motion for
reconsideration.[4]
Petitioner appealed to the Court of Appeals, but, in its decision rendered on April 14, 2000, the appeals court affirmed the decision of
the CTA.[5] The appeals court subsequently denied petitioner’s motion for reconsideration.[6] Hence this petition.

Issue: Whether petitioner’s claim is barred by prescription.

Held: After due consideration of the parties’ arguments, we are of the opinion that, in case of the dissolution of a corporation, the period
of prescription should be reckoned from the date of filing of the return required by §78 of the Tax Code. Accordingly, we hold that
petitioner’s claim for refund is barred by prescription.
First. Generally speaking, it is the Final Adjustment Return, in which amounts of the gross receipts and deductions have been audited
and adjusted, which is reflective of the results of the operations of a business enterprise. It is only when the return, covering the whole
year, is filed that the taxpayer will be able to ascertain whether a tax is still due or a refund can be claimed based on the adjusted and
audited figures.[7] Hence, this Court has ruled that, at the earliest, the two-year prescriptive period for claiming a refund commences to
run on the date of filing of the adjusted final tax return.[8]
This Court finds that the petition for review is filed out of time. FBTC, after the end of its corporate life on June 30, 1985, should have
filed its income tax return within thirty days after the cessation of its business or thirty days after the approval of the Articles of Merger.
This is bolstered by Sec. 78 of the Tax Code and under Sec. 244 of Revenue Regulation No. 2. . .[9]
As the FBTC did not file its quarterly income tax returns for the year 1985, there was no need for it to file a Final adjustment Return
because there was nothing for it to adjust or to audit. After it ceased operations on June 30, 1985, its taxable year was shortened to six
months, from January 1, 1985 to June 30, 1985. The situation of FBTC is precisely what was contemplated under §78 of the Tax Code.
It thus became necessary for FBTC to file its income tax return within 30 days after approval by the SEC of its plan or resolution of
dissolution. Indeed, it would be absurd for FBTC to wait until the fifteenth day of April, or almost 10 months after it ceased its
operations, before filing its income tax return.
Thus, §46(a) of the Tax Code applies only to instances in which the corporation remains subsisting and its business operations are
continuing. In instances in which the corporation is contemplating dissolution, §78 of the Tax Code applies. It is a rule of statutory
construction that “[w]here there is in the same statute a particular enactment and also a general one which in its most comprehensive
sense would include what is embraced in the former, the particular enactment must be operative, and the general enactment must be
taken to affect only such cases within its general language as are not within the provisions of the particular enactment.”[10]
Second. Petitioner contends that what §78 required was an information return, not an income tax return. It cites Revenue
Memorandum Circular No. 14-85, of then Acting Commissioner of Internal Revenue Ruben B. Ancheta, referring to an “information
return” in interpreting Executive Order No. 1026, which amended §78.[12]
The contention has no merit. The circular in question must be considered merely as an administrative interpretation of the law which in
no case is binding on the courts.[13] The opinion in question cannot be given any effect inasmuch as it is contrary to §244 of Revenue
Regulation No. 2, as amended, which was issued by the Minister of Finance pursuant to the authority granted to him by §78 of the Tax
Code. This provision states:
Sec. 244. Return of corporations contemplating dissolution or retiring from business.— All corporations, partnership, joint accounts and
associations, contemplating dissolution or retiring from business without formal dissolution shall, within 30 days after the approval of
such resolution authorizing their dissolution, and within the same period after their retirement from business, file their income tax returns
covering the profit earned or business done by them from the beginning of the year up to the date of such dissolution or retirement and
pay the corresponding income tax due thereon upon demand by the Commissioner of Internal Revenue. . .
This regulation prevails over the memorandum circular of the Acting Commissioner of Internal Revenue, which petitioner invokes.
Thus, as required by §244 of Revenue Regulation No. 2, any corporation contemplating dissolution must submit tax return on the
income earned by it from the beginning of the year up to the date of its dissolution or retirement and pay the corresponding tax due
upon demand by the Commissioner of Internal Revenue. Nothing in §78 of the Tax Code limited the return to be filed by the
corporation concerned to a mere information return.
It is noteworthy that §78 of the Tax Code was substantially reproduced first in §45(c), of the amendments to the same Tax Code, and
later in §52(C) of the National Internal Revenue Code of 1997. Through all the re-enactments of the law, there has been no change in
the authority granted to the Secretary (formerly Minister) of Finance to require corporations to submit such other information as he may
prescribe. Indeed, Revenue Regulation No. 2 had been in existence prior to these amendments. Had Congress intended only
information returns, it would have expressly provided so.
Third. Considering that §78 of the Tax Code, in relation to §244 of Revenue Regulation No. 2, applies to FBTC, the two-year
prescriptive period should be counted from July 30, 1985, i.e., 30 days after the approval by the SEC of its plan for dissolution. In
accordance with §292 of the Tax Code, July 30, 1985 should be considered the date of payment by FBTC of the taxes withheld on the
earned income. Consequently, the two-year period of prescription ended on July 30, 1987. As petitioner’s claim for tax refund before
the Court of Tax Appeals was filed only on December 29, 1987, it is clear that the claim is barred by prescription.

CASE SYLLABI:
Taxation; Tax Refunds; Prescription; Corporation Law; In case of the dissolution of a corporation, the period of prescription should be
reckoned from the date of filing of the return required by §78 of the Tax Code.—After due consideration of the parties’ arguments, we
are of the opinion that, in case of the dissolution of a corporation, the period of prescription should be reckoned from the date of filing of
the return required by §78 of the Tax Code. Accordingly, we hold that petitioner’s claim for refund is barred by prescription.

Same; Same; Same; At the earliest, the two-year prescriptive period for claiming a refund commences to run on the date of filing of the
adjusted final tax return.—Generally speaking, it is the Final Adjustment Return, in which amounts of the gross receipts and deductions
have been audited and adjusted, which is reflective of the results of the operations of a business enterprise. It is only when the return,
covering the whole year, is filed that the taxpayer will be able to ascertain whether a tax is still due or a refund can be claimed based on
the adjusted and audited figures. Hence, this Court has ruled that, at the earliest, the two-year prescriptive period for claiming a refund
commences to run on the date of filing of the adjusted final tax return.

Same; Same; Same; §46(a) of the Tax Code applies only to instances in which the corporation remain s subsisting and its business
operations are continuing.—As the FBTC did not file its quarterly income tax returns for the year 1985, there was no need for it to file a
Final Adjustment Return because there was nothing for it to adjust or to audit. After it ceased operations on June 30, 1985, its taxable
year was shortened to six months, from January 1, 1985 to June 30, 1985. The situation of FBTC is precisely what was contemplated
under §78 of the Tax Code. It thus became necessary for FBTC to file its income tax return within 30 days after approval by the SEC of
its plan or resolution of dissolution. Indeed, it would be absurd for FBTC to wait until the fifteenth day of April, or almost 10 months after
it ceased its operations, before filing its income tax return. Thus, §46(a) of the Tax Code applies only to instances in which the
corporation remains subsisting and its business operations are continuing. In instances in which the corporation is contemplating
dissolution, §78 of the Tax Code applies. It is a rule of statutory construction that “[w]here there is in the same statute a particular
enactment and also a general one which in its most comprehensive sense would include what is embraced in the former, the particular
enactment must be operative, and the general enactment must be taken to affect only such cases within its general language as are
not within the provisions of the particular enactment.”

Same; Same; Separation of Powers; Debatable questions are for the legislature to decide—the courts do not sit to resolve the merits of
conflicting issues.—Petitioner cites a hypothetical situation wherein the directors of a corporation would convene on June 30, 2000 to
plan the dissolution of the corporation on December 31, 2000, but would submit the plan for dissolution earlier with the SEC, which, in
turn, would approve the same on October 1, 2000. Following §78 of the Tax Code, the corporation would be required to submit its
complete return on October 31, 2000, although its actual dissolution would take place only on December 31, 2000. Suffice it to say that
such a situation may likewise be remedied by resort to §47 of the Tax Code. The corporation can ask for an extension of time to file a
complete income tax return until December 31, 2000, when it would cease operations. This would obviate any difficulty which may arise
out of the discrepancies not covered by §78 of the Tax Code. In any case, as held in Commissioner of Internal Revenue v. Santos,
“Debatable questions are for the legislature to decide. The courts do not sit to resolve the merits of conflicting issues.”

Same; Same; Same; Corporation Law; Any corporation contemplating dissolution must submit tax return on the income earned by it
from the beginning of the year up to the date of its dissolution or retirement and pay the corresponding tax due upon demand by the
Commissioner of Internal Revenue.—Thus, as required by §244 of Revenue Regulation No. 2, any corporation contemplating
dissolution must submit tax return on the income earned by it from the beginning of the year up to the date of its dissolution or
retirement and pay the corresponding tax due upon demand by the Commissioner of Internal Revenue. Nothing in §78 of the Tax Code
limited the return to be filed by the corporation concerned to a mere information return.

17. CIR vs. Procter & Gamble Philippine Manufacturing Corporation, 204 SCRA 377, G.R. No. 66838. December 2, 1991
Feliciano, J.

Facts: Procter and Gamble Philippines declared dividends payable to its parent company and sole stockholder, P&G USA. Such
dividends amounted to Php 24.1M. P&G Phil paid a 35% dividend withholding tax to the BIR which amounted to Php 8.3M It
subsequently filed a claim with the Commissioner of Internal Revenue for a refund or tax credit, claiming that pursuant to Section 24(b)
(1) of the National Internal Revenue Code, as amended by Presidential Decree No. 369, the applicable rate of withholding tax on the
dividends remitted was only 15%.

Issue: Whether or not P&G Philippines is entitled to the refund or tax credit.

Held: YES. P&G Philippines is entitled.

Sec 24 (b) (1) of the NIRC states that an ordinary 35% tax rate will be applied to dividend remittances to non-resident corporate
stockholders of a Philippine corporation. This rate goes down to 15% ONLY IF he country of domicile of the foreign stockholder
corporation “shall allow” such foreign corporation a tax credit for “taxes deemed paid in the Philippines,” applicable against the tax
payable to the domiciliary country by the foreign stockholder corporation. However, such tax credit for “taxes deemed paid in the
Philippines” MUST, as a minimum, reach an amount equivalent to 20 percentage points which represents the difference between the
regular 35% dividend tax rate and the reduced 15% tax rate. Thus, the test is if USA “shall allow” P&G USA a tax credit for ”taxes
deemed paid in the Philippines” applicable against the US taxes of P&G USA, and such tax credit must reach at least 20 percentage
points. Requirements were met.

CASE SYLLABI:

Taxation; Claim for Refund; “taxpayer,”-defined.- Since the claim for refund was filed by P&G-Phil., the question which arises is: is
P&G-Phil. a "taxpayer" under Section 309 (3) of the NIRC? The term "taxpayer" is defined in our NIRC as referring to "any person
subject to tax imposed by the Title [on Tax on Income]." 2 It thus becomes important to note that under Section 53 (c) of the NIRC, the
withholding agent who is "required to deduct and withhold any tax" is made " personally liable for such tax" and indeed is indemnified
against any claims and demands which the stockholder might wish to make in questioning the amount of payments effected by the
withholding agent in accordance with the provisions of the NIRC. The withholding agent, P&G-Phil., is directly and independently liable
3 for the correct amount of the tax that should be withheld from the dividend remittances. The withholding agent is, moreover, subject to
and liable for deficiency assessments, surcharges and penalties should the amount of the tax withheld be finally found to be less than
the amount that should have been withheld under law.

A "person liable for tax" has been held to be a "person subject to tax" and properly considered a "taxpayer." The terms liable for tax"
and "subject to tax" both connote legal obligation or duty to pay a tax. It is very difficult, indeed conceptually impossible, to consider a
person who is statutorily made "liable for tax" as not "subject to tax." By any reasonable standard, such a person should be regarded as
a party in interest, or as a person having sufficient legal interest, to bring a suit for refund of taxes he believes were illegally collected
from him.

Same; tax on non-resident foreign corporations; Tax credit- The ordinary thirty-five percent (35%) tax rate applicable to dividend
remittances to non-resident corporate stockholders of a Philippine corporation, goes down to fifteen percent (15%) if the country of
domicile of the foreign stockholder corporation "shall allow" such foreign corporation a tax credit for "taxes deemed paid in the
Philippines," applicable against the tax payable to the domiciliary country by the foreign stockholder corporation. In other words, in the
instant case, the reduced fifteen percent (15%) dividend tax rate is applicable if the USA "shall allow" to P&G-USA a tax credit for
"taxes deemed paid in the Philippines" applicable against the US taxes of P&G-USA. The NIRC specifies that such tax credit for "taxes
deemed paid in the Philippines" must, as a minimum, reach an amount equivalent to twenty (20) percentage points which represents
the difference between the regular thirty-five percent (35%) dividend tax rate and the preferred fifteen percent (15%) dividend tax rate.

It is important to note that Section 24 (b) (1), NIRC, does not require that the US must give a "deemed paid" tax credit for the dividend
tax (20 percentage points) waived by the Philippines in making applicable the preferred divided tax rate of fifteen percent (15%). In
other words, our NIRC does not require that the US tax law deem the parent-corporation to have paid the twenty (20) percentage points
of dividend tax waived by the Philippines. The NIRC only requires that the US "shall allow" P&G-USA a "deemed paid" tax credit in an
amount equivalent to the twenty (20) percentage points waived by the Philippines.

Same; Same; Same; question of when “deemed paid” tax credit should have been actually granted.—The basic legal issue is this:
which is the applicable dividend tax rate in the instance case: the reular 35% rate or the reduced (15%)? he question of whether or not
P&G-USA is in fact given by the US tax authorities a "deemed paid" tax credit in the required amount, relates to the administrative
implementation of the applicable reduced tax rate.xxx Section 24 (b) (1), NIRC, does not in fact require that the "deemed paid" tax
credit shall have actually been granted before the applicable dividend tax rate goes down from thirty-five percent (35%) to fifteen
percent (15%). As noted several times earlier, Section 24 (b) (1), NIRC, merely requires, in the case at bar, that the USA "shall allow a
credit against the
tax due from [P&G-USA for] taxes deemed to have been paid in the Philippines . . ." There is neither statutory provision nor revenue
regulation issued by the Secretary of Finance requiring the actual grant of the "deemed paid" tax credit by the US Internal Revenue
Service to P&G-USA before the preferential fifteen percent (15%) dividend rate becomes applicable. Section 24 (b) (1), NIRC, does not
create a tax exemption nor does it provide a tax credit; it is a provision which specifies when a particular (reduced) tax rate is legally
applicable.

Same; Same; Same; Philippines-United States Convention “With Respect to Taxes on Income “-t remains only to note that under the
Philippines-United States Convention "With Respect to Taxes on Income," 15 the Philippines, by a treaty commitment, reduced the
regular rate of dividend tax to a maximum of twenty percent (20%) of the gross amount of dividends paid to US parent corporations.xxx
The Tax Convention, at the same time, established a treaty obligation on the part of the United States that it "shall allow" to a US parent
corporation receiving dividends from its Philippine subsidiary "a [tax] credit for the appropriate amount of taxes paid or accrued to the
Philippines by the Philippine [subsidiary] —.16 This is, of course, precisely the "deemed paid" tax credit provided for in Section 902, US
Tax Code, discussed above. Clearly, there is here on the part of the Philippines a deliberate undertaking to reduce the regular dividend
tax rate of twenty percent (20%) is a maximum rate, there is still a differential or additional reduction of five (5) percentage points which
compliance of US law (Section 902) with the requirements of Section 24 (b) (1), NIRC, makes available in respect of dividends from a
Philippine subsidiary.

18. CIR VS CA, JANUARY 20, 1999

Facts: Sometime in the 1930’s, Don Andres Soriano, a citizen and resident of the United States, formed the corporation “A. Soriano Y
Cia”, predecessor of ANSCOR with a 1,000,000.00 capitalization divided into 10,000 common shares at a par value of P100/share.
ANSCOR is wholly owned and controlled by the family of Don Andres, who are all non-resident aliens. In 1937, Don Andres subscribed
to 4,963 shares of the 5,000 shares originally issued.

On September 12, 1945, ANSCOR’s authorized capital stock was increased to P2,500,000.00 divided into 25,000 common shares with
the same par value. Of the additional 15,000 shares, only 10,000 was issued which were all subscribed by Don Andres, after the other
stockholders waived in favor of the former their pre-emptive rights to subscribe to the new issues. This increased his subscription to
14,963 common shares. A month later, Don Andres transferred 1,250 shares each to his two sons, Jose and Andres Jr., as their initial
investments in ANSCOR. Both sons are foreigners.

By 1947, ANSCOR declared stock dividends. Other stock dividend declarations were made between 1949 and December 20, 1963.
On December 30, 1964 Don Andres died. As of that date, the records revealed that he has a total shareholdings of 185,154 shares.
50,495 of which are original issues and the balance of 134,659 shares as stock dividend declarations. Correspondingly, one-half of that
shareholdings or 92,577 shares were transferred to his wife, Doña Carmen Soriano, as her conjugal share. The offer half formed part of
his estate.

A day after Don Andres died, ANSCOR increased its capital stock to P20M and in 1966 further increased it to P30M. In the same year
(December 1966), stock dividends worth 46,290 and 46,287 shares were respectively received by the Don Andres estate and Doña
Carmen from ANSCOR. Hence, increasing their accumulated shareholdings to 138,867 and 138,864 common shares each.

On December 28, 1967, Doña Carmen requested a ruling from the United States Internal Revenue Service (IRS), inquiring if an
exchange of common with preferred shares may be considered as a tax avoidance scheme. By January 2, 1968, ANSCOR reclassified
its existing 300,000 common shares into 150,000 common and 150,000 preferred shares.

In a letter-reply dated February 1968, the IRS opined that the exchange is only a recapitalization scheme and not tax avoidance.
Consequently, on March 31, 1968 Doña Carmen exchanged her whole 138,864 common shares for 138,860 of the preferred shares.
The estate of Don Andres in turn exchanged 11,140 of its common shares for the remaining 11,140 preferred shares.

In 1973, after examining ANSCOR’s books of account and record Revenue examiners issued a report proposing that ANSCOR be
assessed for deficiency withholding tax-at-source, for the year 1968 and the 2nd quarter of 1969 based on the transaction of exchange
and redemption of stocks. BIR made the corresponding assessments. ANSCOR’s subsequent protest on the assessments was denied
in 1983 by petitioner. ANSCOR filed a petition for review with the CTA, the Tax Court reversed petitioners ruling. CA affirmed the ruling
of the CTA. Hence this position.

Issue: Whether or not a person assessed for deficiency withholding tax under Sec. 53 and 54 of the Tax Code is being held liable in its
capacity as a withholding agent.

Held: An income taxpayer covers all persons who derive taxable income. ANSCOR was assessed by petitioner for deficiency
withholding tax, as such, it is being held liable in its capacity as a withholding agent and not in its personality as taxpayer. A withholding
agent, A. Soriano Corp. in this case, cannot be deemed a taxpayer for it to avail of a tax amnesty under a Presidential decree that
condones “the collection of all internal revenue taxes including the increments or penalties on account of non-payment as well as all
civil, criminal, or administrative liabilities arising from or incident to voluntary disclosures under the NIRC of previously untaxed income
and/or wealth realized here or abroad by any taxpayer, natural or juridical.” The Court explains: “The withholding agent is not a
taxpayer, he is a mere tax collector. Under the withholding system, however, the agent-payer becomes a payee by fiction of law. His
liability is direct and independent from the taxpayer, because the income tax is still imposed and due from the latter. The agent is not
liable for the tax as no wealth flowed into him, he earned no income.”

19. G.R. Nos. 171383 & 172379 November 14, 2008

SILKAIR (SINGAPORE) PTE. LTD., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent.

The Case

G.R. No. 171383

Silkair (Singapore) Pte. Ltd. (petitioner) filed this Petition for Review1 to reverse the Court of Tax Appeals' Decision2 dated 20 October
2005 in C.T.A. Case No. 6217 as well as the Resolution dated 3 February 2006 denying the Motion for Reconsideration. In the assailed
decision, the Court of Tax Appeals En Banc denied petitioner's claim for refund or issuance of a tax credit certificate of P4,239,374.81,
representing excise taxes paid on petitioner's purchase of aviation jet fuel from Petron Corporation (Petron) for the period from 1
January 1999 to 30 June 1999.

G.R. No. 172379

Petitioner filed this Petition for Review3 to reverse the Court of Tax Appeals' Decision4 dated 5 January 2006 in C.T.A. Case No. 6308
as well as the Resolution dated 18 April 2006 denying the Motion for Reconsideration. In the assailed decision, the Court of Tax
Appeals En Banc denied petitioner's claim for refund or issuance of a tax credit certificate of P4,831,224.70, representing excise taxes
paid on petitioner's purchase of aviation jet fuel from Petron for the period from 1 July 1999 to 31 December 1999.

On 2 August 2006, this Court issued a resolution to consolidate both cases since they involve the same parties and the same issue,
whether petitioner is entitled to a refund of the excise taxes paid on its purchases of aviation jet fuel from Petron.

The Facts

Petitioner is a foreign corporation organized under the laws of Singapore with a Philippine representative office in Cebu City. It is
engaged in business as an on-line international carrier, operating the Singapore-Cebu-Singapore, Singapore-Davao-Cebu-Singapore,
and Singapore-Cebu-Davao-Singapore routes.5

From 1 January 1999 to 31 December 1999, petitioner purchased aviation jet fuel from Petron for use on petitioner's international
flights.6 Based on the Aviation Delivery Receipts and Invoices presented, P3.67 per liter as excise (specific) tax was added to the
amount paid by petitioner on its purchases of aviation jet fuel.7 Petitioner, through its sister company Singapore Airlines Ltd., paid
P4,239,374.81 from 1 January 1999 to 30 June 19998 and P4,831,224.70 from 1 July 1999 to 31 December 1999,9 as excise taxes for
its purchases of the aviation jet fuel from Petron. Petitioner, contending that it is exempt from the payment of excise taxes, filed a formal
claim for refund with the Commissioner of Internal Revenue (respondent).

Petitioner claims that it is exempt from the payment of excise tax under the 1997 National Internal Revenue Code (NIRC), specifically
Section 135, and under Article 4 of the Air Transport Agreement between the Governments of the Republic of the Philippines and the
Republic of Singapore (Air Agreement).10

Section 135 of the NIRC provides:

SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the
following are exempt from excise tax:

(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the
petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in
accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner;

(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption:
Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes
petroleum products sold to Philippine carriers, entities or agencies; and

(c) Entities which are by law exempt from direct and indirect taxes.11

Article 4 of the Air Agreement provides:

Art. 4

xxx

2. Fuel, lubricants, spare parts, regular equipment and aircraft stores introduced into, or taken on board aircraft in the territory of one
Contracting Party by, or on behalf of, a designated airline of the other Contracting Party and intended solely for use in the operation of
the agreed services shall, with the exception of charges corresponding to the services performed, be exempt from the same custom
duties, inspection fees and other duties or taxes imposed in the territory of the first Contracting Party, even when these supplies are to
be used on the parts of the journey performed over the territory of the Contracting Party in which they are introduced into or taken on
board. The materials referred to above may be required to be kept under customs supervision and control.12
Petitioner contends that in reality, it paid the excise taxes due on the transactions and Petron merely remitted the payment to the
Bureau of Internal Revenue (BIR). Petitioner argues that to adhere to the view that Petron is the legal claimant of the refund will make
petitioner's right to recover the erroneously paid taxes dependent solely on Petron's action over which petitioner has no control. If
Petron fails to act or acts belatedly, petitioner's claim will be barred, depriving petitioner of its private property.13

Petitioner also maintains that to hold that only Petron can legally claim the refund will negate the tax exemption expressly granted to
petitioner under the NIRC and the Air Agreement.14 Petitioner argues that a tax exemption is a personal privilege of the grantee, which
is petitioner in this case. Petitioner further argues that a tax exemption granted to the buyer cannot be availed of by the seller; hence, in
the present case, Petron as seller cannot legally claim the refund. On the other hand, if only the entity that paid the tax - Petron in this
case - can claim the refund, then petitioner as the grantee of the tax exemption cannot enjoy its tax exemption. In short, neither
petitioner nor Petron can claim the refund, rendering the tax exemption useless. Petitioner submits that this is contrary to the language
and intent of the NIRC and the Air Agreement.15

Petitioner also cites this Court's Resolution in Maceda v. Macaraig, Jr.,16 quoting the opinion of the Secretary of Justice which states,
thus:

The view which refuses to accord the exemption because the tax is first paid by the seller disregards realities and gives more
importance to form than substance. Equity and law always exalt substance over form.17

Petitioner believes that its tax exemption under Section 135 of the NIRC also includes its entitlement to a refund from the BIR in any
case of erroneous payment of excise tax.18

Respondent claims that as explained in Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue,19 the nature of an indirect
tax allows the tax to be passed on to the purchaser as part of the commodity's purchase price. However, an indirect tax remains a tax
on the seller. Hence, if the buyer happens to be tax exempt, the seller is nonetheless liable for the payment of the tax as the same is a
tax not on the buyer but on the seller.20

Respondent insists that in indirect taxation, the manufacturer or seller has the option to shift the burden of the tax to the purchaser. If
and when shifted, the amount added by the manufacturer or seller becomes part of the purchase price of the goods. Thus, the
purchaser does not really pay the tax but only the price of the commodity and the liability for the payment of the indirect tax remains
with the manufacturer or seller.21 Since the liability for the excise tax payment is imposed by law on Petron as the manufacturer of the
petroleum products, any claim for refund should only be made by Petron as the statutory taxpayer.22

The Ruling of the Court of Tax Appeals

G.R. No. 171383

On 20 October 2005, the Court of Tax Appeals En Banc (CTA) ruled that the excise tax imposed on the removal of petroleum products
by the oil companies is an indirect tax.23 Although the burden to pay an indirect tax can be passed on to the purchaser of the goods,
the liability to pay the indirect tax remains with the manufacturer or seller.24 When the manufacturer or seller decides to shift the burden
of the indirect tax to the purchaser, the tax becomes a part of the price; therefore, the purchaser does not really pay the tax per se but
only the price of the commodity.25

The CTA pointed out that Section 130(A)(2)26 of the NIRC provides that the liability for the payment of excise taxes is imposed upon
the manufacturer or producer of the petroleum products. Under the law, the manufacturer or producer is the taxpayer. The CTA stated
that it is only the taxpayer that may ask for a refund in case of erroneous payment of taxes. Citing Cebu Portland Cement Co. v.
Collector of Internal Revenue,27 the CTA ruled that the producer of the goods is the one entitled to claim for a refund of indirect
taxes.28 The CTA held that since the liability for the excise taxes was placed on Petron as the manufacturer of the petroleum products
and it was shown in the Excise Tax Returns29 that the excise taxes were paid by Petron, any claim for refund of the excise taxes
should only be made by Petron as the taxpayer. This is in consonance with the rule on strictissimi juris with respect to tax exemptions.
Petitioner cannot be considered the taxpayer because what was transferred to petitioner was only the burden and not the liability to pay
the excise tax on petroleum products.30

The CTA also considered the Aviation Fuel Supply Agreement between petitioner and Petron, which states:

Buyer shall pay any taxes, fees or other charges imposed by any national, local or airport authority on the delivery, sale, inspection,
storage and use of fuel, except for taxes on Seller's income and taxes on raw material. To the extent allowed, Seller shall show these
taxes, fees and other charges as separate items on the invoice for the account of the Buyer.31

However, the CTA held that even with this provision, the liability for the excise tax remained with Petron as manufacturer or producer of
the aviation jet fuel. The shifting of the burden of the excise tax to petitioner did not transform petitioner into a taxpayer. Hence, Petron
is the proper party that can claim for refund of any erroneous excise tax payments.32

G.R. No. 172379

The CTA En Banc held that excise taxes on domestic products are paid by the manufacturer or producer before removal of the
products from the place of production. The payment of an excise tax, being an indirect tax, can be shifted to the purchaser of goods but
the statutory liability for such payment is still with the seller or manufacturer.33 The CTA cited Maceda v. Macaraig, Jr.:34

It may be useful to make a distinction, for the purpose of this disposition, between a direct tax and an indirect tax. A direct tax is a tax
for which a taxpayer is directly liable on the transaction or business it is engaged in. Examples are custom duties and ad valorem taxes
paid by the oil companies to the Bureau of Customs for their importation of crude oil, and the specific and ad valorem taxes they pay to
the Bureau of Internal Revenue after converting the crude oil into petroleum products.

On the other hand, "indirect taxes are taxes primarily paid by persons who can shift the burden upon someone else." For example, the
excise tax and ad valorem taxes that the oil companies pay to the Bureau of Internal Revenue upon removal of petroleum products
from its refinery can be shifted to its buyer, like the NPC, by adding them to the "cash" and/or "selling price."35

The CTA further cited Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue36 and Contex Corporation v. Hon.
Commissioner of Internal Revenue37 and concluded that the tax sought to be refunded is an excise tax on petroleum products,
partaking of the nature of an indirect tax.38
The CTA further ruled that while it is cognizant of the exempt status of petitioner under the NIRC and the Air Agreement, it is also aware
that the right to claim for refund of taxes erroneously paid lies with the person statutorily liable to pay the tax in accordance with Section
204 of the NIRC.39 The CTA also suggested that petitioner should invoke its tax exemption to Petron before buying the petroleum
products.40 The CTA concluded that the right to claim for the refund of the excise taxes paid on the petroleum products lies with Petron
which paid and remitted the excise taxes to the BIR.

The Issue

Petitioner submits this sole issue for our consideration: whether petitioner is the proper party to claim a refund for the excise taxes
paid.41

The Ruling of the Court

The issue presented is not novel. In a similar case involving the same parties, this Court has categorically ruled that "the proper party to
question, or seek a refund of an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the
same even if he shifts the burden thereof to another."42 The Court added that "even if Petron Corporation passed on to Silkair the
burden of the tax, the additional amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a
purchaser."43

An excise tax is an indirect tax where the tax burden

can be shifted to the consumer but the tax liability remains with the
manufacturer or producer.

Section 129 of the NIRC provides that excise taxes refer to taxes imposed on specified goods manufactured or produced in the
Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise taxes are collected from
manufacturers or producers before removal of the domestic products from the place of production. Although excise taxes can be
considered as taxes on production, they are really taxes on property as they are imposed on certain specified goods.44

Section 148(g) of the NIRC provides that there shall be collected on aviation jet fuel an excise tax of P3.67 per liter of volume capacity.
Since the tax imposed is based on volume capacity, the tax is referred to as "specific tax."45 However, excise tax, whether classified as
specific or ad valorem tax, is basically an indirect tax imposed on the consumption of a specified list of goods or products. The tax is
directly levied on the manufacturer upon removal of the taxable goods from the place of production but in reality, the tax is passed on to
the end consumer as part of the selling price of the goods sold.46

In Commissioner of Internal Revenue v. Philippine Long Distance Company,47 the Court explained the difference between a direct tax
and an indirect tax:

Based on the possibility of shifting the incidence of taxation, or as to who shall bear the burden of taxation, taxes may be classified into
either direct tax or indirect tax.

In context, direct taxes are those that are exacted from the very person who, it is intended or desired, should pay them; they are
impositions for which a taxpayer is directly liable on the transaction or business he is engaged in.

On the other hand, indirect taxes are those that are demanded, in the first instance, from, or are paid by, one person in the expectation
and intention that he can shift the burden to someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the
payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is
imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in
effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the price of goods sold or services rendered. (Emphasis
supplied)

In Maceda v. Macaraig, Jr., the Court specifically mentioned excise tax as an example of an indirect tax where the tax burden can be
shifted to the buyer:

On the other hand, "indirect taxes are taxes primarily paid by persons who can shift the burden upon someone else". For example, the
excise and ad valorem taxes that the oil companies pay to the Bureau of Internal Revenue upon removal of petroleum products from its
refinery can be shifted to its buyer, like the NPC, by adding them to the cash and/or "selling price."48

When Petron removes its petroleum products from its refinery in Limay, Bataan,49 it pays the excise tax due on the petroleum products
thus removed. Petron, as manufacturer or producer, is the person liable for the payment of the excise tax as shown in the Excise Tax
Returns filed with the BIR. Stated otherwise, Petron is the taxpayer that is primarily, directly and legally liable for the payment of the
excise taxes. However, since an excise tax is an indirect tax, Petron can transfer to its customers the amount of the excise tax paid by
treating it as part of the cost of the goods and tacking it on to the selling price.

As correctly observed by the CTA, this Court held in Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue:

It may indeed be that the economic burden of the tax finally falls on the purchaser; when it does the tax becomes part of the price which
the purchaser must pay.50

Even if the consumers or purchasers ultimately pay for the tax, they are not considered the taxpayers. The fact that Petron, on whom
the excise tax is imposed, can shift the tax burden to its purchasers does not make the latter the taxpayers and the former the
withholding agent.

Petitioner, as the purchaser and end-consumer, ultimately bears the tax burden, but this does not transform petitioner's status into a
statutory taxpayer.

In the refund of indirect taxes, the statutory taxpayer

is the proper party who can claim the refund.

Section 204(c) of the NIRC provides:

Sec. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. The Commissioner may -

xxx
(c) Credit or refund taxes erroneously or illegally received or 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 proof of destruction. No credit or refund of taxes or penalties shall be allowed
unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or
penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund.
(Emphasis and underscoring supplied)

The person entitled to claim a tax refund is the statutory taxpayer. Section 22(N) of the NIRC defines a taxpayer as "any person subject
to tax." In Commissioner of Internal Revenue v. Procter and Gamble Phil. Mfg. Corp., the Court ruled that:

A "person liable for tax" has been held to be a "person subject to tax" and properly considered a "taxpayer." The terms "liable for tax"
and "subject to tax" both connote a legal obligation or duty to pay a tax.51

The excise tax is due from the manufacturers of the petroleum products and is paid upon removal of the products from their refineries.
Even before the aviation jet fuel is purchased from Petron, the excise tax is already paid by Petron. Petron, being the manufacturer, is
the "person subject to tax." In this case, Petron, which paid the excise tax upon removal of the products from its Bataan refinery, is the
"person liable for tax." Petitioner is neither a "person liable for tax" nor "a person subject to tax." There is also no legal duty on the part
of petitioner to pay the excise tax; hence, petitioner cannot be considered the taxpayer.

Even if the tax is shifted by Petron to its customers and even if the tax is billed as a separate item in the aviation delivery receipts and
invoices issued to its customers, Petron remains the taxpayer because the excise tax is imposed directly on Petron as the
manufacturer. Hence, Petron, as the statutory taxpayer, is the proper party that can claim the refund of the excise taxes paid to the BIR.

The General Terms & Conditions for Aviation Fuel Supply (Supply Contract) signed between petitioner (buyer) and Petron (seller)
provide:

11.3 If Buyer is entitled to purchase any Fuel sold pursuant to the Agreement free of any taxes, duties or charges, Buyer shall timely
deliver to Seller a valid exemption certificate for such purchase.52 (Emphasis supplied)

This provision instructs petitioner to timely submit a valid exemption certificate to Petron in order that Petron will not pass on the excise
tax to petitioner. As correctly suggested by the CTA, petitioner should invoke its tax exemption to Petron before buying the aviation jet
fuel. Petron, however, remains the statutory taxpayer on those excise taxes.

Revenue Regulations No. 3-2008 (RR 3-2008) provides that "subject to the subsequent filing of a claim for excise tax credit/refund or
product replenishment, all manufacturers of articles subject to excise tax under Title VI of the NIRC of 1997, as amended, shall pay the
excise tax that is otherwise due on every removal thereof from the place of production that is intended for exportation or sale/delivery to
international carriers or to tax-exempt entities/agencies."53 The Department of Finance and the BIR recognize the tax exemption
granted to international carriers but they consistently adhere to the view that manufacturers of articles subject to excise tax are the
statutory taxpayers that are liable to pay the tax, thus, the proper party to claim any tax refunds.

Wherefore, we DENY the petition. We AFFIRM the assailed Decisions dated 20 October 2005 and 5 January 2006 and the Resolutions
dated 3 February 2006 and 18 April 2006 of the Court of Tax Appeals in C.T.A. Case Nos. 6217 and 6308, respectively.

SO ORDERED.

20. PHILEX MINING CORP. v. CIR

GR No. 125704, August 28, 1998
294 SCRA 687

FACTS: Petitioner Philex Mining Corp. assails the decision of the Court of Appeals affirming the Court of Tax

Appeals decision ordering it to pay the amount of P110.7 M as excise tax liability for the period from the 2nd

quarter of 1991 to the 2nd quarter of 1992 plus 20% annual interest from 1994 until fully paid pursuant to

Sections 248 and 249 of the Tax Code of 1977. Philex protested the demand for payment of the tax liabilities

stating that it has pending claims for VAT input credit/refund for the taxes it paid for the years 1989 to 1991 in

the amount of P120 M plus interest. Therefore these claims for tax credit/refund should be applied against the

tax liabilities.

ISSUE: Can there be an off-setting between the tax liabilities vis-a-vis claims of tax refund of the petitioner?

HELD: No. Philex's claim 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. To be sure, Philex cannot be allowed 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.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. xxx 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.

21. Calamba Steel Center, Inc. v. CIR

G.R. No. 151857
April 28, 2005

FACTS: Petitioner is a domestic corporation engaged in manufacturing industrial and household appliances. Petitioner company filed a
amended corporate annual income tax return on June 4, 1996. It continued to report quarterly payments for the second and third
quarters of 1995. On April 10, 1997, it filed for a refund representing excess or unused creditable withholding taxes for 1995 (not the
previous year 1996). For petitioner company’s side it presented documentary and testimonial evidence while Respondent presented the
revenue officer who conducted the examination of petitioner’s claim and found petitioner liable for deficiency value added tax.

The CA denied the claim for refund stating that there was no evidence other than that presented before the CTA was adduced
to prove the excess tax payments made in 1995.

ISSUE:
Whether or not the CA gravely erred while requiring petitioner to submit its 1996 annual income tax return to support its claim for
refund, ignored the existence of the tax return extant on the record the authenticity opposed by the CIR—YES

HELD:
The truth or falsity of the contents of or entries in the 1996 final adjustment return which has not been formally offered in evidence and
examined is a question of fact. A a general rule, courts are not authorized to take judicial notice of the contents of records in other
cases tried or pending before the same judge, the rule admits of exceptions, as when reference to such records is sufficiently made
without objection from the opposing parties. Admissibility is one thing and weight is another. To admit evidence and not to believe it are
not incompatible with each other. Mere allegations by petitioner of the figures in its 1996 final adjustment return are not sufficient proof
of the amount of its refund entitlement. They do not even constitute evidence adverse to respondent.

22. Systra Philippines, Inc. vs. Commissioner of Internal Revenue, 533 SCRA 776, G.R. No. 176290. September 21, 2007
Corona, J.

Facts: This is a case where a second motion for reconsideration was filed by petitioner. Systra likewise questioned the substantive
aspect of CTA decisions. Petitioner had creditable taxes which they opted to carry over to the succeeding year 2001. In 2001 ITR, it
indicated that creditable withholding taxes will also be carried over to next year’s tax as credit. However, on August 9, 2001, petitioner
instituted a claim for refund of its unutilized creditable withholding taxes. Due to BIR’s inaction, petitioner filed a petition for review. CTA
partially granted the petition but denied claim for refund because petitioner was precluded from claiming a refund. Once it was made for
a particular taxable period, the option to carry over become irrevocable.

Issue:
Whether or not the exercise of the option to carry-over excess income tax credits bars a taxpayer from claiming the excess tax credits
for refund.

Held:
It was in the year 2000 that petitioner derived excess tax credits and exercised the irrevocable option to carry them over as tax credits
for the next taxable year. The excess credits will only be applied “against income tax due for the taxable quarters of the succeeding
taxable years.”
Section 76 of the present tax code formulates an irrevocability rule which stresses and fortifies the nature of the remedies or options as
alternative, not cumulative. It also provides that the excess tax credits “may be carried over and credited against the estimated quarterly
income tax liabilities for the taxable quarters of the succeeding taxable years until fully utilized.
Nevertheless, the amount will not be forfeited in favor of the government but will remain in the taxpayer’s account.”
A corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid has 2 options:
a. To carry over the excess credit;
b. To apply for the issuance of a tax credit certificate or to claim a cash refund.
If the option to carry over the excess credit is exercised, the same shall be irrevocable for that taxable period. In exercising its option,
the corporation must signify in its annual corporate adjustment return (by marking the option box provided in the BIR Form) its intention
either to carry over the excess credit or to claim a refund. To facilitate tax collection, these remedies are in the alternative and the
choice of one precludes the other. This is known as the irrevocability rule and is embodied in the last sentence of Sec. 76 of the Tax
Code. The phrase “such option shall be considered irrevocable for that taxable period” means that the option to carry over the excess
tax credits of a particular taxable year can no longer be revoked. The rule prevents a taxpayer from claiming twice the excess quarterly
taxes paid:
As automatic credit against taxes for the taxable quarters of the succeeding years for which no tax credit certificate has been issued
and; As a tax credit either for which a tax credit certificate will be issued or which will be claimed for cash refund.

CASE SYLLABI:
Taxation; Two options in favor of a corporation entitled to a tax credit or refund of the excess estimated quarterly income taxes paid;
Remedies are in the alternative and the choice of one precludes the other; The irrevocability rule embodied in the last sentence of
Section 76 of the Tax Code prevents a taxpayer from claiming twice the excess quarterly taxes paid.—A corporation entitled to a tax
credit or refund of the excess estimated quarterly income taxes paid has two options: (1) to carry over the excess credit or (2) to apply
for the issuance of a tax credit certificate or to claim a cash refund. If the option to carry over the excess credit is exercised, the same
shall be irrevocable for that taxable period. In exercising its option, the corporation must signify in its annual corporate adjustment return
(by marking the option box provided in the BIR form) its intention either to carry over the excess credit or to claim a refund. To facilitate
tax collection, these remedies are in the alternative and the choice of one precludes the other. This is known as the irrevocability rule
and is embodied in the last sentence of Section 76 of the Tax Code. The phrase “such option shall be considered irrevocable for that
taxable period” means that the option to carry over the excess tax credits of a particular taxable year can no longer be revoked. The
rule prevents a taxpayer from claiming twice the excess quarterly taxes paid: (1) as automatic credit against taxes for the taxable
quarters of the succeeding years for which no tax credit certificate has been issued and (2) as a tax credit either for which a tax credit
certificate will be issued or which will be claimed for cash refund.

23. Commissioner of Internal Revenue vs. Bank of the Philippine Islands, 592 SCRA 219, G.R. No. 178490. July 7, 2009
Chico-Nazario, J.
Facts: In filing its Corporate Income Tax Return for the Calendar Year 2000, BPI carried over the excess tax credits from the previous
years of 1997, 1998 and 1999. However, BPI failed to indicate in its ITR its choice of whether to carry over its excess tax credits or to
claim the refund of or issuance of a tax credit certificate. BPI filed with the Commissioner of Internal Revenue (CIR) an administrative
claim for refund. The CIR failed to act on the claim for tax refund of BPI. Hence, BPI filed a Petition for Review before the CTA, whom
denied the claim. The CTA relied on the irrevocability rule laid down in Section 76 of the National Internal Revenue Code (NIRC) of
1997, which states that once the taxpayer opts to carry over and apply its excess income tax to succeeding taxable years, its option
shall be irrevocable for that taxable period and no application for tax refund or issuance of a tax credit shall be allowed for the same.
The Court of Appeals reversed the CTA decision stating that there was no actual carrying over of the excess tax credit, given that BPI
suffered a net loss in 1999, and was not liable for any income tax for said taxable period, against which the 1998 excess tax credit
could have been applied.

The Court of Appeals further stated that even if Section 76 was to be construed strictly and literally, the irrevocability rule would still not
bar BPI from seeking a tax refund of its 1998 excess tax credit despite previously opting to carry over the same. The phrase “for that
taxable period” qualified the irrevocability of the option of BIR to carry over its 1998 excess tax credit to only the 1999 taxable period;
such that, when the 1999 taxable period expired, the irrevocability of the option of BPI to carry over its excess tax credit from 1998 also
expired.

Issue:
1. What is the period captured by the irrevocability rule?
2. Whether or not the taxpayer’s failure to mark the option chosen is fatal to whatever claim

Held:
1. The last sentence of Section 76 of the NIRC of 1997 reads: “Once the option to carry-over and apply the excess quarterly income tax
against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for tax refund or issuance of a tax credit certificate shall be allowed therefor.” The
phrase “for that taxable period” merely identifies the excess income tax, subject of the option, by referring to the taxable period when it
was acquired by the taxpayer.
In the present case, the excess income tax credit, which BPI opted to carry over, was acquired by the said bank during the taxable year
1998. The option of BPI to carry over its 1998 excess income tax credit is irrevocable; it cannot later on opt to apply for a refund of the
very same 1998 excess income tax credit.
2. No. Failure to signify one’s intention in the FAR does not mean outright barring of a valid request for a refund, should one still choose
this option later on. The reason for requiring that a choice be made in the FAR upon its filing is to ease tax administration (Philam Asset
Management, Inc. v. CIR G.R. No. 156637 and No. 162004, 14 December 2005). When circumstances show that a choice has been
made by the taxpayer to carry over the excess income tax as credit, it should be respected; but when indubitable circumstances clearly
show that another choice – a tax refund – is in order, it should be granted. Therefore, as to which option the taxpayer chose is generally
a matter of evidence.
“Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens.”
Doctrines:
1. The phrase “for that taxable period” merely identifies the excess income tax, subject of the option, by referring to the taxable period
when it was acquired by the taxpayer.
2. When circumstances show that a choice has been made by the taxpayer to carry over the excess income tax as credit, it should be
respected; but when indubitable circumstances clearly show that another choice, a tax refund, is in order, it should be granted. As to
which option the taxpayer chose is generally a matter of evidence.
“Technicalities and legalisms, however exalted, should not be misused by the government to keep money not belonging to it and
thereby enrich itself at the expense of its law-abiding citizens.”
CASE SYLLABI:
Taxation; Tax Credit; The Court stressed in BPI Family that the undisputed fact is that [BPI-Family] suffered a net loss in 1990;
accordingly, it incurred no tax liability to which the tax credit could be applied.—This Court decided to grant the claim for refund of BPI-
Family after finding that the bank had presented sufficient evidence to prove that it incurred a net loss in 1990 and, thus, had no tax
liability to which its tax credit from 1989 could be applied. The Court stressed in BPI Family that “the undisputed fact is that [BPI-Family]
suffered a net loss in 1990; accordingly, it incurred no tax liability to which the tax credit could be applied. Consequently, there is no
reason for the BIR and this Court to withhold the tax refund which rightfully belongs to the [BPI-Family].” It was on the basis of this fact
that the Court granted the appeal of BPI-Family, brushing aside all procedural and technical objections to the same through the
following pronouncements: Finally, respondents argue that tax refunds are in the nature of tax exemptions and are to be construed
strictissimi juris against the claimant. Under the facts of this case, we hold that [BPI-Family] has established its claim. [BPI-Family] may
have failed to strictly comply with the rules of procedure; it may have even been negligent. These circumstances, however, should not
compel the Court to disregard this cold, undisputed fact: that petitioner suffered a net loss in 1990, and that it could not have applied
the amount claimed as tax credits.
Same; Irrevocability Rule; Section 76 remains clear and unequivocal; Once the carry-over option is taken, actually or constructively, it
becomes irrevocable.—The Court categorically declared in Philam that: “Section 76 remains clear and unequivocal. Once the carry-
over option is taken, actually or constructively, it becomes irrevocable.” It mentioned no exception or qualification to the irrevocability
rule.
Same; Same; The controlling factor for the operation of the irrevocability rule is that the taxpayer chose an option; and once it had
already done so, it could not longer make another one.—The controlling factor for the operation of the irrevocability rule is that the
taxpayer chose an option; and once it had already done so, it could no longer make another one. Consequently, after the taxpayer opts
to carry-over its excess tax credit to the following taxable period, the question of whether or not it actually gets to apply said tax credit is
irrelevant. Section 76 of the NIRC of 1997 is explicit in stating that once the option to carry over has been made, “no application for tax
refund or issuance of a tax credit certificate shall be allowed therefor.”
Same; Same; Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters
of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application
for tax refund or issuance of a tax credit certificate shall be allowed therefor.—The last sentence of Section 76 of the NIRC of 1997
reads: “Once the option to carry-over and apply the excess quarterly income tax against income tax due for the taxable quarters of the
succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for tax
refund or issuance of a tax credit certificate shall be allowed therefor.” The phrase “for that taxable period” merely identifies the excess
income tax, subject of the option, by referring to the taxable period when it was acquired by the taxpayer. In the present case, the
excess income tax credit, which BPI opted to carry over, was acquired by the said bank during the taxable year 1998. The option of BPI
to carry over its 1998 excess income tax credit is irrevocable; it cannot later on opt to apply for a refund of the very same 1998 excess
income tax credit.
Same; Tax Refund; It is worthy to note that unlike the option for refund of excess income tax, which prescribes after two years from the
filing of the FAR, there is no prescriptive period for the carrying over of the same.—The Court similarly disagrees in the declaration of
the Court of Appeals that to deny the claim for refund of BPI, because of the irrevocability rule, would be tantamount to unjust
enrichment on the part of the government. The Court addressed the very same argument in Philam, where it elucidated that there
would be no unjust enrichment in the event of denial of the claim for refund under such circumstances, because there would be no
forfeiture of any amount in favor of the government. The amount being claimed as a refund would remain in the account of the taxpayer
until utilized in succeeding taxable years, as provided in Section 76 of the NIRC of 1997. It is worthy to note that unlike the option for
refund of excess income tax, which prescribes after two years from the filing of the FAR, there is no prescriptive period for the carrying
over of the same. Therefore, the excess income tax credit of BPI, which it acquired in 1998 and opted to carry over, may be repeatedly
carried over to succeeding taxable years, i.e., to 1999, 2000, 2001, and so on and so forth, until actually applied or credited to a tax
liability of BPI.
Same; Failure of the taxpayer to make an appropriate marking of its option in the Income Tax Return (ITR) does not automatically mean
that the taxpayer has opted for a tax credit.—Failure of the taxpayer to make an appropriate marking of its option in the ITR does not
automatically mean that the taxpayer has opted for a tax credit. The Court ratiocinated in G.R. No. 156637 of Philam: One cannot get a
tax refund and a tax credit at the same time for the same excess income taxes paid. Failure to signify one’s intention in the FAR does
not mean outright barring of a valid request for a refund, should one still choose this option later on. A tax credit should be construed
merely as an alternative remedy to a tax refund under Section 76, subject to prior verification and approval by respondent. The reason
for requiring that a choice be made in the FAR upon its filing is to ease tax administration, particularly the self-assessment and
collection aspects. A taxpayer that makes a choice expresses certainty or preference and thus demonstrates clear diligence.
Conversely, a taxpayer that makes no choice expresses uncertainty or lack of preference and hence shows simple negligence or plain
oversight.
Procedural Rules and Technicalities; Technicalities and legalisms, however exalted, should not be misused by the government to keep
money not belonging to it and thereby enrich itself at the expense of its law-abiding citizens.—Philam reveals a meticulous
consideration by the Court of the evidence submitted by the parties and the circumstances surrounding the taxpayer’s option to carry
over or claim for refund. When circumstances show that a choice has been made by the taxpayer to carry over the excess income tax
as credit, it should be respected; but when indubitable circumstances clearly show that another choice—a tax refund—is in order, it
should be granted. “Technicalities and legalisms, however exalted, should not be misused by the government to keep money not
belonging to it and thereby enrich itself at the expense of its law-abiding citizens.”

24. Commissioner of Internal Revenue vs. Court of Appeals, 234 SCRA 348, G.R. No. 106611. July 21, 1994

Facts: In a letter dated August 26, 1986, herein private respondent corporation filed a claim for refund with the Bureau of
Internal Revenue (BIR) in the amount of P19,971,745.00 representing the alleged aggregate of the excess of its carried-over
total quarterly payments over the actual income tax due, plus carried-over withholding tax payments on government securities
and rental income, as computed in its final income tax return for the calendar year ending December 31, 1985.  3 Two days later,
or on August 28, 1986, in order to interrupt the running of the prescriptive period, Citytrust filed a petition with the Court of Tax
Appeals, docketed therein as CTA Case No. 4099, claiming the refund of its income tax overpayments for the years 1983, 1984
and 1985 in the total amount of P19,971,745.00. 4

In the answer filed by the Office of the Solicitor General, for and in behalf of therein respondent commissioner, it was asserted
that the mere averment that Citytrust incurred a net loss in 1985 does not ipso facto merit a refund. On June 24, 1991, herein
petitioner filed with the tax court a manifestation and motion praying for the suspension of the proceedings in the said case on
the ground that the claim of Citytrust for tax refund in the amount of P19,971,745.00 was already being processed by the Tax
Credit/Refund Division of the BIR, and that said bureau was only awaiting the submission by Citytrust of the required
confirmation receipts which would show whether or not the aforestated amount was actually paid and remitted to the BIR.  

The tax court rendered its decision, it held that petitioner is entitled to a refund but only for the overpaid taxes incurred in 1984
and 1985. The refundable amount as shown in its 1983 income tax return is hereby denied on the ground of prescription.
Respondent is hereby ordered to grant a refund to petitioner Citytrust Banking Corp. in the amount of P13,314,506.14
representing the overpaid income taxes for 1984 and 1985,
A motion for the reconsideration of said decision was initially filed by the Solicitor General on the sole ground that the
statements and certificates of taxes allegedly withheld are not conclusive evidence of actual payment and remittance of the taxes
withheld to the BIR. 12 A supplemental motion for reconsideration was thereafter filed, wherein it was contended for the first
time that herein private respondent had outstanding unpaid deficiency income taxes. Petitioner alleged that through an inter-
office memorandum of the Tax Credit/Refund Division, dated August 8, 1991, he came to know only lately that Citytrust had
outstanding tax liabilities for 1984 in the amount of P56,588,740.91 representing deficiency income and business taxes covered
by Demand/Assessment Notice
Oppositions to both the basic and supplemental motions for reconsideration were filed by private respondent Citytrust.  
Thereafter, the Court of Tax Appeals issued a resolution denying both motions
As indicated at the outset, a petition for review was filed by herein petitioner with respondent Court of Appeals which in due
course promulgated its decision affirming the judgment of the Court of Tax Appeals. Petitioner eventually elevated the case to
this Court, maintaining that said respondent court erred in affirming the grant of the claim for refund of Citytrust, considering
that, firstly, said private respondent failed to prove and substantiate its claim for such refund; and, secondly, the bureau's
findings of deficiency income and business tax liabilities against private respondent for the year 1984 bars such payment.  
Issue: Whether or not private respondent is entitled for a refund.
Held:
The Court ruled that the case be remanded to the CTA for further proceedings.

The Court of Tax Appeals erred in denying petitioner's supplemental motion for reconsideration alleging bringing to said court's
attention the existence of the deficiency income and business tax assessment against Citytrust. The fact of such deficiency
assessment is intimately related to and inextricably intertwined with the right of respondent bank to claim for a tax refund for the
same year. To award such refund despite the existence of that deficiency assessment is an absurdity and a polarity in conceptual
effects. Herein private respondent cannot be entitled to refund and at the same time be liable for a tax deficiency assessment for
the same year.

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

Section 82, Chapter IX of the National Internal Revenue Code of 1977, which was the applicable law when the claim of
Citytrust was filed, provides that "(w)hen an assessment is made in case of any list, statement, or return, which in the opinion of
the Commissioner of Internal Revenue was false or fraudulent or contained any understatement or undervaluation, no tax
collected under such assessment shall be recovered by any suits unless it is proved that the said list, statement, or return was not
false nor fraudulent and did not contain any understatement or undervaluation; but this provision shall not apply to statements or
returns made or to be made in good faith regarding annual depreciation of oil or gas wells and mines."

Moreover, to grant the refund without determination of the proper assessment and the tax due would inevitably result in
multiplicity of proceedings or suits. If the deficiency assessment should subsequently be upheld, the Government will be forced
to institute anew a proceeding for the recovery of erroneously refunded taxes which recourse must be filed within the
prescriptive period of ten years after discovery of the falsity, fraud or omission in the false or fraudulent return involved.  23 This
would necessarily require and entail additional efforts and expenses on the part of the Government, impose a burden on and a
drain of government funds, and impede or delay the collection of much-needed revenue for governmental operations.

CASE SYLLABI:
Administrative Law; The Government is not bound by the errors committed by its governmental agents.—It is a long and
firmly settled rule of law that the Government is not bound by the errors committed by its agents. In the performance of its
governmental functions, the State cannot be estopped by the neglect of its agent and officers. Although the Government may
generally be estopped through the affirmative acts of public officers acting within their authority, their neglect or omission of
public duties as exemplified in this case will not and should not produce that effect.
Taxation; Taxes are the lifeblood of the nation.—Nowhere is the aforestated rule more true than in the field of taxation. It is
axiomatic that the Government cannot and must not be estopped particularly in matters involving taxes. Taxes are the lifeblood
of the nation through which the government agencies continue to operate and with which the State effects its functions for the
welfare of its constituents. The errors of certain administrative officers should never be allowed to jeopardize the Government’s
financial position, especially in the case at bar where the amount involves millions of pesos the collection whereof, if justified,
stands to be prejudiced just because of bureaucratic lethargy.
Same; To award tax refund despite the existence of deficiency assessment is an absurdity.—Further, it is also worth noting
that the Court of Tax Appeals erred in denying petitioner’s supplemental motion for reconsideration alleging and bringing to
said court’s attention the existence of the deficiency income and business tax assessment against Citytrust. The fact of such
deficiency assessment is intimately related to and inextricably intertwined with the right of respondent bank to claim for a tax
refund for the same year. To award such refund despite the existence of that deficiency assessment is an absurdity and a polarity
in conceptual effects. Herein private respondent cannot be entitled to refund and at the same time be liable for a tax deficiency
assessment for the same year.
Same; The grant of a refund is founded on the assumption that the tax return is valid.—The grant of a refund is founded on
the assumption that the tax return is valid, that is, the facts stated therein are true and correct. The deficiency assessment,
although not yet final, created a doubt as to and constitutes a challenge against the truth and accuracy of the facts stated in said
return which, by itself and without unquestionable evidence, cannot be the basis for the grant of the refund.
Same; Actions; Multiplicity of suits; To grant the refund without determination of the proper assessment and the tax due
would inevitably result in multiplicity of proceedings or suits.—Moreover, to grant the refund without determination of the
proper assessment and the tax due would inevitably result in multiplicity of proceedings or suits. If the deficiency assessment
should subsequently be upheld, the Government will be forced to institute anew a proceeding for the recovery of erroneously
refunded taxes which recourse must be filed within the prescriptive period of ten years after discovery of the falsity, fraud or
omission in the false or fraudulent return involved. This would necessarily require and entail additional efforts and expenses on
the part of the Government, impose a burden on and a drain of government funds, and impede or delay the collection of much-
needed revenue for governmental operations.
25. Aguilar vs CIR and CA-

26. Vda. de San Agustin vs. Commissioner of Internal Revenue, 364 SCRA 802, G.R. No. 138485. September 10,
2001
Facts: The BIR assessed the estate of Atty. Agustin, and the sole heir (herein petitioner) paid the assessed tax on protest and
thereafter claimed a refund on appeal. The Commissioner opposed the said petition, alleging that the CTA’s jurisdiction was not
properly invoked inasmuch as no claim for a tax refund of the deficiency tax collected was filed with the Bureau of Internal
revenue before the petition was filed.

Issue: Whether the filing of the claim for refund in this cases is essential before the filing of the petition for review on the
matter.

Held: NO. The case has a striking resemblance to Roman Catholic Archbishop of Cebu vs CIR (4 SCRA 279). The petitioner
in that case paid under protest the sum of P5,201.52 by way of income tax, surcharge and interest and, forthwith, filed a
petition for review before the CTA. Then respondent CIR set up several defences, one of which was the petitioner had failed to
first file a written claim for refund, pursuant to section 306 (now 229) of the tax code, of the amounts paid. Convinced that the
lack of a written claim for refund was fatal to petitioner’s recourse to it, the CTA dismissed the petition for lack of jurisdiction.
On appeal to this court, the Court held:
We agree with petitioner that Section 7 of Republic Act No. 1125, creating the Court of Tax Appeals, in providing for appeals
from -

`(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 the law administered by the Bureau of Internal Revenue -

allows an appeal from a decision of the Collector in cases involving `disputed assessments’ as distinguished from cases
involving `refunds of internal revenue taxes, fees or other charges, x x x’; that the present action involves a disputed
assessment’; because from the time petitioner received assessments Nos. 17-EC-00301-55 and 17-AC-600107-56 disallowing
certain deductions claimed by him in his income tax returns for the years 1955 and 1956, he already protested and refused to
pay the same, questioning the correctness and legality of such assessments; and that the petitioner paid the disputed
assessments under protest before filing his petition for review with the Court a quo, only to forestall the sale of his properties
that had been placed under distraint by the respondent Collector since December 4, 1957. To hold that the taxpayer has now
lost the right to appeal from the ruling on the disputed assessment but must prosecute his appeal under section 306 of the Tax
Code, which requires a taxpayer to file a claim for refund of the taxes paid as a condition precedent to his right to appeal,
would in effect require of him to go through a useless and needless ceremony that would only delay the disposition of the case,
for the Collector (now Commissioner) would certainly disallow the claim for refund in the same way as he disallowed the
protest against the assessment. The law, should not be interpreted as to result in absurdities.”

The Court sees no cogent reason to abandon the above dictum and to require a useless formality that can serve the interest of
neither the government nor the taxpayer. The tax court has aptly acted in taking cognizance of the taxpayer’s appeal to it.

CASE SYLLABI:
Taxation; Actions; Tax Refunds; To hold that the taxpayer has lost the right to appeal from the ruling on the disputed
assessment but must prosecute his appeal under Section 306 of the Tax Code, which requires a taxpayer to file a claim for
refund of the taxes paid as a condition precedent to his right to appeal, would in effect require of him to go through a useless
and needless ceremony that would only delay the disposition of the case—the law should not be interpreted as to result in
absurdities.—The case has a striking resemblance to the controversy in Roman Catholic Archbishop of Cebu vs. Collector of
Internal Revenue. The petitioner in that case paid under protest the sum of P5,201.52 by way of income tax, surcharge and
interest and, forthwith, filed a petition for review before the Court of Tax Appeals. Then respondent Collector (now
Commissioner) of Internal Revenue set up several defenses, one of which was that petitioner had failed to first file a written
claim for refund, pursuant to Section 306 of the Tax Code, of the amounts paid. Convinced that the lack of a written claim for
refund was fatal to petitioner’s recourse to it, the Court of Tax Appeals dismissed the petition for lack of jurisdiction. On appeal
to this Court, the tax court’s ruling was reversed; the Court held: “We agree with petitioner that Section 7 of Republic Act No.
1125, creating the Court of Tax Appeals, in providing for appeals from—x x x allows an appeal from a decision of the Collector
in cases involving ‘disputed assessments’ as distinguished from cases involving ‘refunds of internal revenue taxes, fees or other
charges, x x x’; that the present action involves a disputed assessment’; because from the time petitioner received assessments
Nos. 17-EC-00301-55 and 17-AC-600107-56 disallowing certain deductions claimed by him in his income tax returns for the
years 1955 and 1956, he already protested and refused to pay the same, questioning the correctness and legality of such
assessments; and that the petitioner paid the disputed assessments under protest before filing his petition for review with the
Court a quo, only to forestall the sale of his properties that had been placed under distraint by the respondent Collector since
December 4, 1957. To hold that the taxpayer has now lost the right to appeal from the ruling on the disputed assessment but
must prosecute his appeal under section 306 of the Tax Code, which requires a taxpayer to file a claim for refund of the taxes
paid as a condition precedent to his right to appeal, would in effect require of him to go through a useless and needless
ceremony that would only delay the disposition of the case, for the Collector (now Commissioner) would certainly disallow the
claim for refund in the same way as he disallowed the protest against the assessment. The law, should not be interpreted as to
result in absurdities.” The Court sees no cogent reason to abandon the above dictum and to require a useless formality that can
serve the interest of neither the government nor the taxpayer. The tax court has aptly acted in taking cognizance of the
taxpayer’s appeal to it.
Same; The delay in the payment of the deficiency tax within the time prescribed for its payment in the notice of assessment
justifies the imposition of a 25% surcharge in consonance with Section 248A(3) of the Tax Code.— The delay in the payment
of the deficiency tax within the time prescribed for its payment in the notice of assessment justifies the imposition of a 25%
surcharge in consonance with Section 248A(3) of the Tax Code. The basic deficiency tax in this case being P538,509.50, the
twenty-five percent thereof comes to P134,627.37. Section 249 of the Tax Code states that any deficiency in the tax due would
be subject to interest at the rate of twenty percent (20%) per annum, which interest shall be assessed and collected from the date
prescribed for its payment until full payment is made.
Same; Taxes, the lifeblood of the government, are meant to be paid without delay and often oblivious to contingencies or
conditions.—Regrettably for petitioner, the need for an authority from the probate court in the payment of the deficiency estate
tax, over which respondent Commissioner has hardly any control, is not one that can negate the application of the Tax Code
provisions aforequoted. Taxes, the lifeblood of the government, are meant to be paid without delay and often oblivious to
contingencies or conditions.
27. Republic vs. Hizon, 320 SCRA 574, G.R. No. 130430. December 13, 1999
Facts: On July 18, 1986, the BIR issued to respondent Salud V. Hizon a deficiency income tax assessment of
P1,113,359.68 covering the fiscal year 1981-1982. Respondent not having contested the assessment, petitioner, on
January 12, 1989, served warrants of distraint and levy to collect the tax deficiency. However, for reasons not known, it
did not proceed to dispose of the attached properties.
More than three years later, or on November 3, 1992, respondent wrote the BIR requesting a reconsideration of her tax
deficiency assessment. The BIR, in a letter dated August 11, 1994, denied the request. On January 1, 1997, it filed a case
with the Regional Trial Court, Branch 44, San Fernando, Pampanga to collect the tax deficiency. The complaint was
signed by Norberto Salud, Chief of the Legal Division, BIR Region 4, and verified by Amancio Saga, the Bureau's
Regional Director in Pampanga.
Respondent moved to dismiss the case on two grounds: (1) that the complaint was not filed upon authority of the BIR
Commissioner as required by §221 2 of the National Internal Revenue Code, and (2) that the action had already
prescribed. Over petitioner's objection, the trial court, on August 28, 1997, granted the motion and dismissed the
complaint. Hence, this petition.
Issues:
1. Whether or not the institution of the civil case for collection of taxes was without the approval of the
commissioner in violation of section 221 of the National Internal Revenue Code; and
2. Whether or not the action for collection of taxes filed against respondent had already been barred by the statute
of limitations.
Held: #1
Revenue Administrative Order No. 10-95 specifically authorizes the Litigation and Prosecution Section of the Legal
Division of regional district offices to institute the necessary civil and criminal actions for tax collection. As the
complaint filed in this case was signed by the BIR's Chief of Legal Division for Region 4 and verified by the Regional
Director, there was, therefore, compliance with the law.

As amended by R.A. No. 8424, the NIRC is now even more categorical. Sec. 7 of the present Code authorizes the BIR
Commissioner to delegate the powers vested in him under the pertinent provisions of the Code to any subordinate official with
the rank equivalent to a division chief or higher, except the following:

(a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance;

(b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the
Bureau;

(c) The power to compromise or abate under §204 (A) and (B) of this Code, any tax deficiency:
Provided, however, that assessment issued by the Regional Offices involving basic deficiency taxes of five
hundred thousand pesos (P500,000.00) or less, and minor criminal violations as may be determined by rules
and regulations to be promulgated by the Secretary of Finance, upon the recommendation of the
Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation
board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, heads
of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over
the taxpayer, as members; and

(d) The power to assign or reassign internal revenue officers to establishments where articles subject to excise
tax are produced or kept.

None of the exceptions relates to the Commissioner's power to approve the filing of tax collection cases.

Held: #2
The contention of the petitioner has no merit. Sec. 229  of the Code mandates that a request for reconsideration must be
made within 30 days from the taxpayer's receipt of the tax deficiency assessment, otherwise the assessment becomes
final, unappealable and, therefore, demandable.  The notice of assessment for respondent's tax deficiency was issued by
petitioner on July 18, 1986. On the other hand, respondent made her request for reconsideration thereof only on
November 3, 1992, without stating when she received the notice of tax assessment. She explained that she was
constrained to ask for a reconsideration in order to avoid the harassment of BIR collectors.   In all likelihood, she must
have been referring to the distraint and levy of her properties by petitioner's agents which took place on January 12,
1989. Even assuming that she first learned of the deficiency assessment on this date, her request for reconsideration was
nonetheless filed late since she made it more than 30 days thereafter. Hence, her request for reconsideration did not
suspend the running of the prescriptive period provided under §223(c). Although the Commissioner acted on her request
by eventually denying it on August 11, 1994, this is of no moment and does not detract from the fact that the assessment
had long become demandable.
Petitioner's reliance on the Court's ruling in Advertising Associates Inc.  v.  Court of Appeals is misplaced. What the Court
stated in that case and, indeed, in the earlier case of Palanca v.  Commissioner of Internal Revenue,  is that the timely
service of a warrant of distraint or levy suspends the running of the period to collect the tax deficiency in the sense that
the disposition of the attached properties might well take time to accomplish, extending even after the lapse of the
statutory period for collection. In those cases, the BIR did not file any collection case but merely relied on the summary
remedy of distraint and levy to collect the tax deficiency. The importance of this fact was not lost on the Court. Thus, in
Advertising Associates, it was held: 16 "It should be noted that the Commissioner did not institute any judicial proceeding
to collect the tax. He relied on the warrants of distraint and levy to interrupt the running of the statute of limitations.
For the foregoing reasons, we hold that petitioner's contention that the action in this case had not prescribed when filed
has no merit. Our holding, however, is without prejudice to the disposition of the properties covered by the warrants of
distraint and levy which petitioner served on respondent, as such would be a mere continuation of the summary remedy it
had timely begun. Although considerable time has passed since then, as held in Advertising Associates Inc.  v.  Court of
Appeals and Palanca v.  Commissioner of Internal Revenue, the enforcement of tax collection through summary
proceedings may be carried out beyond the statutory period considering that such remedy was seasonably availed of.
CASE SYLLABI:
Same; Same; A request for reconsideration must be made within 30 days from the taxpayer’s receipt of the tax deficiency
assessment, otherwise the assessment becomes final, unappealable and, therefore, demandable; Respondent’s request for
reconsideration did not suspend the running of the prescriptive period provided under §223(c).—Sec. 229 of the Code
mandates that a request for reconsideration must be made within 30 days from the taxpayer’s receipt of the tax deficiency
assessment, otherwise the assessment becomes final, unappealable and, therefore, demandable. The notice of assessment for
respondent’s tax deficiency was issued by petitioner on July 18, 1986. On the other hand, respondent made her request for
reconsideration thereof only on November 3, 1992, without stating when she received the notice of tax assessment. She
explained that she was constrained to ask for a reconsideration in order to avoid the harassment of BIR collectors. In all
likelihood, she must have been referring to the distraint and levy of her properties by petitioner’s agents which took place on
January 12, 1989. Even assuming that she first learned of the deficiency assessment on this date, her request for reconsideration
was nonetheless filed late since she made it more than 30 days thereafter. Hence, her request for reconsideration did not suspend
the running of the prescriptive period provided under §223(c). Although the Commissioner acted on her request by eventually
denying it on August 11, 1994, this is of no moment and does not detract from the fact that the assessment had long become
demandable.
Same; Same; The timely service of a warrant of distraint or levy suspends the running of the period to collect the tax
deficiency.—Petitioner’s reliance on the Court’s ruling in Advertising Associates, Inc. v. Court of Appeals is misplaced. What
the Court stated in that case and, indeed, in the earlier case of Palanca v. Commissioner of Internal Revenue, is that the timely
service of a warrant of distraint or levy suspends the running of the period to collect the tax deficiency in the sense that the
disposition of the attached properties might well take time to accomplish, extending even after the lapse of the statutory period
for collection. In those cases, the BIR did not file any collection case but merely relied on the summary remedy of distraint and
levy to collect the tax deficiency. The importance of this fact was not lost on the Court. Thus, in Advertising Associates, it was
held: “It should be noted that the Commissioner did not institute any judicial proceeding to collect the tax. He relied on the
warrants of distraint and levy to interrupt the running of the statute of limitations.”

28. Commission of Internal Revenue vs. Javier, Jr., 199 SCRA 824, G.R. No. 78953. July 31, 1991
Facts: On or about June 3, 1977, Victoria L. Javier, the wife of the petitioner (private respondent herein), received from the
Prudential Bank and Trust Company in Pasay City the amount of US$999,973.70 remitted by her sister, Mrs. Dolores Ventosa,
through some banks in the United States, among which is Mellon Bank, N.A.

On or about June 29, 1977, Mellon Bank, N.A. filed a complaint with the Court of First Instance of Rizal (now Regional Trial
Court), (docketed as Civil Case No. 26899), against the petitioner (private respondent herein), his wife and other defendants,
claiming that its remittance of US$1,000,000.00 was a clerical error and should have been US$1,000.00 only, and praying that
the excess amount of US$999,000.00 be returned on the ground that the defendants are trustees of an implied trust for the
benefit of Mellon Bank with the clear, immediate, and continuing duty to return the said amount from the moment it was
received.
November 5, 1977, the City Fiscal of Pasay City filed an Information with the then Circuit Criminal Court (docketed as CCC-
VII-3369-P.C.) charging the petitioner (private respondent herein) and his wife with the crime of estafa, alleging that they
misappropriated, misapplied, and converted to their own personal use and benefit the amount of US$999,000.00 which they
received under an implied trust for the benefit of Mellon Bank and as a result of the mistake in the remittance by the latter.

On March 15, 1978, the petitioner (private respondent herein) filed his Income Tax Return for the taxable year 1977 showing a
gross income of P53,053.38 and a net income of P48,053.88 and stating in the footnote of the return that "Taxpayer was
recipient of some money received from abroad which he presumed to be a gift but turned out to be an error and is now subject of
litigation."

Petitioner (private respondent herein) received a letter from the acting Commissioner of Internal Revenue dated November 14,
1980, together with income assessment notices for the years 1976 and 1977, demanding that petitioner (private respondent
herein) pay on or before December 15, 1980 the amount of P1,615.96 and P9,287,297.51 as deficiency assessments for the years
1976 and 1977 respectively. . . .

Petitioner (private respondent herein) wrote the Bureau of Internal Revenue that he was paying the deficiency income
assessment for the year 1976 but denying that he had any undeclared income for the year 1977 and requested that the assessment
for 1977 be made to await final court decision on the case filed against him for filing an allegedly fraudulent return. . . .

Petitioner (private respondent herein) received from Acting Commissioner of Internal Revenue Romulo Villa a letter dated
October 8, 1981 stating in reply to his December 15, 1980 letter-protest that "the amount of Mellon Bank's erroneous remittance
which you were able to dispose, is definitely taxable." . . . 5

The Commissioner also imposed a 50% fraud penalty against Javier.

Disagreeing, Javier filed an appeal 6 before the respondent Court of Tax Appeals on December 10, 1981.

Issue: Whether or not a taxpayer who merely states as a footnote in his income tax return that a sum of money that he
erroneously received and already spent is the subject of a pending litigation and there did not declare it as income is liable to pay
the 50% penalty for filing a fraudulent return.
Held: Under the then Section 72 of the Tax Code (now Section 248 of the 1988 National Internal Revenue Code), a taxpayer
who files a false return is liable to pay the fraud penalty of 50% of the tax due from him or of the deficiency tax in case payment
has been made on the basis of the return filed before the discovery of the falsity or fraud.

We are persuaded considerably by the private respondent's contention that there is no fraud in the filing of the return and agree
fully with the Court of Tax Appeals' interpretation of Javier's notation on his income tax return filed on March 15, 1978 thus:
"Taxpayer was the recipient of some money from abroad which he presumed to be a gift but turned out to be an error and is now
subject of litigation that it was an "error or mistake of fact or law" not constituting fraud, that such notation was practically an
invitation for investigation and that Javier had literally "laid his cards on the table." 13

In Aznar v. Court of Tax Appeals, 14 fraud in relation to the filing of income tax return was discussed in this manner:

. . . The fraud contemplated by law is actual and not constructive. It must be intentional fraud, consisting of
deception willfully and deliberately done or resorted to in order to induce another to give up some legal right.
Negligence, whether slight or gross, is not equivalent to the fraud with intent to evade the tax contemplated by
law. It must amount to intentional wrong-doing with the sole object of avoiding the tax. It necessarily follows
that a mere mistake cannot be considered as fraudulent intent, and if both petitioner and respondent
Commissioner of Internal Revenue committed mistakes in making entries in the returns and in the assessment,
respectively, under the inventory method of determining tax liability, it would be unfair to treat the mistakes of
the petitioner as tainted with fraud and those of the respondent as made in good faith.

Fraud is never imputed and the courts never sustain findings of fraud upon circumstances which, at most, create only suspicion
and the mere understatement of a tax is not itself proof of fraud for the purpose of tax evasion.

In the case at bar, there was no actual and intentional fraud through willful and deliberate misleading of the government agency
concerned, the Bureau of Internal Revenue, headed by the herein petitioner. The government was not induced to give up some
legal right and place itself at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities because
Javier did not conceal anything. Error or mistake of law is not fraud. The petitioner's zealousness to collect taxes from the
unearned windfall to Javier is highly commendable. Unfortunately, the imposition of the fraud penalty in this case is not
justified by the extant facts. Javier may be guilty of swindling charges, perhaps even for greed by spending most of the money
he received, but the records lack a clear showing of fraud committed because he did not conceal the fact that he had received an
amount of money although it was a "subject of litigation." As ruled by respondent Court of Tax Appeals, the 50% surcharge
imposed as fraud penalty by the petitioner against the private respondent in the deficiency assessment should be deleted.

CASE SYLLABI:

Taxation; Court persuaded that there is no fraud in the filing of the return and agrees fully with the Court of Tax Appeals’
interpretation of Javier’s notation on his income tax return filed on March 15, 1978.—We are persuaded considerably by the
private respondent’s contention that there is no fraud in the filing of the return and agree fully with the Court of Tax Appeals’
interpretation of Javier’s notation on his income tax return filed on March 15, 1978 thus: “Taxpayer was the recipient of some
money from abroad which he presumed to be a gift but turned out to be an error and is now subject of litigation;” that it was an
“error or mistake of fact or law” not constituting fraud, that such notation was practically an invitation for investigation and that
Javier had literally “laid his cards on the table.”
Same; Same; Fraud in relation to the filing of income tax return discussed in Aznar vs. Court of Appeals.— In Aznar v. Court
of Appeals, fraud in relation to the filing of income tax return, was discussed in this manner: xxx The fraud contemplated by law
is actual and not constructive. It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to
in order to induce another to give up some legal right. Negligence, whether slight or gross, is not equivalent to the fraud with
intent to evade the tax contemplated by law. It must amount to intentional wrong-doing with the sole object of avoiding the tax.
It necessarily follows that a mere mistake cannot be considered as fraudulent intent, and if both petitioner and respondent
Commissioner of Internal Revenue committed mistakes in making entries in the returns and in the assessment, respectively,
under the inventory method of determining tax liability, it would be unfair to treat the mistakes of the petitioner as tainted with
fraud and those of the respondent as made in good faith.
Same; Same; Same; Courts never sustain findings of fraud upon circumstances which create only suspicion and the mere
understatement of a tax is not itself proof of fraud for the purpose of tax evasion.—Fraud is never imputed and the courts
never sustain findings of fraud upon circumstances which, at most, create only suspicion and the mere understatement of a tax is
not itself proof of fraud for the purpose of tax evasion.
Same; Same; Same; Same; There was no actual and intentional fraud through willful and deliberate misleading of the
Bureau of Internal Revenue, case at bar; Error or mistake of law is not fraud.—In the case at bar, there was no actual and
intentional fraud through willful and deliberate misleading of the government agency concerned, the Bureau of Internal
Revenue, headed by the herein petitioner. The government was not induced to give up some legal right and place itself at a
disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities because Javier did not conceal anything.
Error or mistake of law is not fraud. The petitioner’s zealousness to collect taxes from the unearned windfall to Javier is highly
commendable. Unfortunately, the imposition of the fraud penalty in this case is not justified by the extant facts.
29. Philippine National Oil Company vs. Court of Appeals, 457 SCRA 32, G.R. No. 109976.  April 26, 2005
Facts: Private respondent Savellano informed the BIR that PNB had failed to withhold the 15% final tax on interest earnings
and/or yields from the money placements of PNOC with the said bank, in violation of Presidential Decree (P.D.) No. 1931.  P.D.
No. 1931, which took effect on 11 June 1984, withdrew all tax exemptions of government-owned and controlled corporations.
In a letter, dated 08 August 1986, the BIR requested PNOC to settle its liability for taxes on the interests earned by its money
placements with PNB and which PNB did not withhold. PNOC proposed to set-off its tax liability against a claim for tax
refund/credit of the National Power Corporation (NAPOCOR), then pending with the BIR, in the amount ofP335,259,450.21. 
The amount of the claim for tax refund/credit was supposedly a receivable account of PNOC from NAPOCOR.

On 09 June 1987, PNOC made another offer to the BIR to settle its tax liability.  This time, however, PNOC proposed a
compromise by paying P91,003,129.89, representing 30% of the P303,343,766.29 basic tax, in accordance with the provisions
of Executive Order (E.O.) No. 44. Then BIR Commissioner Bienvenido A. Tan, in a letter, dated 22 June 1987, accepted the
compromise.  The BIR received a total tax payment on the interest earnings and/or yields from PNOC's money placements with
PNB in the amount of P93,955,479.12. Private respondent Savellano, through four installments, was paid the informer's reward
in the total amount ofP14,093,321.89, representing 15% of the P93,955,479.12 tax collected by the BIR from PNOC and PNB. 
He received the last installment on 01 December 1987. On 07 January 1988, private respondent Savellano, through his legal
counsel, wrote the BIR to demand payment of the balance of his informer's reward.

BIR Commissioner Tan replied through a letter, dated 08 March 1988, that private respondent Savellano was already fully paid
the informer's reward equivalent to 15% of the amount of tax actually collected by the BIR pursuant to its compromise
agreement with PNOC.  BIR Commissioner Tan further explained that the compromise was in accordance with the provisions of
E.O. No. 44, Revenue Memorandum Order (RMO) No. 39-86, and RMO No. 4-87.

Private respondent Savellano submitted another letter, dated 24 March 1988, to BIR Commissioner Tan, seeking reconsideration
of his decision to compromise the tax liability of PNOC.  In the same letter, private respondent Savellano questioned the legality
of the compromise agreement entered into by the BIR and PNOC and claimed that the tax liability should have been collected in
full.

On 08 April 1988, while the aforesaid Motion for Reconsideration was still pending with the BIR, private respondent Savellano
filed a Petition for Review ad cautelam with the CTA, docketed as CTA Case No. 4249.  He claimed therein that BIR
Commissioner Tan acted "with grave abuse of discretion and/or whimsical exercise of jurisdiction" in entering into a
compromise agreement that resulted in "a gross and unconscionable diminution" of his reward.  Private respondent Savellano
prayed for the enforcement and collection of the total tax assessment against taxpayer PNOC and/or withholding agent PNB;
and the payment to him by the BIR Commissioner of the 15% informer's reward on the total tax collected. 18 He would later
amend his Petition to implead PNOC and PNB as necessary and indispensable parties since they were parties to the compromise
agreement.19

In his Answer filed with the CTA, BIR Commissioner Tan asserted that the Petition stated no cause of action against him, and
that private respondent Savellano was already paid the informer's reward due him. 

PNOC and PNB filed separate Motions to Dismiss, both arguing that the CTA lacked jurisdiction to decide the case. In its
Resolution, dated 28 November 1988, the CTA denied the Motions to Dismiss since the question of lack of jurisdiction and/or
cause of action do not appear to be indubitable.

After their Motions to Dismiss were denied by the CTA, PNOC and PNB filed their respective Answers to the amended
Petition.  PNOC averred, among other things, that (1) it had no privity with private respondent Savellano; (2) the BIR
Commissioner's discretionary act in entering into the compromise agreement had legal basis under E.O. No. 44 and RMO No.
39-86 and RMO No. 4-87; and (3) the CTA had no jurisdiction to resolve the case against it. On the other hand, PNB asserted
that (1) the CTA lacked jurisdiction over the case; and (2) the BIR Commissioner's decision to accept the compromise was
discretionary on his part and, therefore, cannot be reviewed or interfered with by the courts. PNOC and PNB later filed their
amended Answer invoking an opinion of the Commission on Audit (COA) disallowing the payment by the BIR of informer's
reward to private respondent Savellano.

The CTA, thereafter, ordered the parties to submit their evidence, to be followed by their respective Memoranda.

On 23 November 1990, private respondent Savellano, filed a Manifestation with Motion for Suspension of Proceedings,
claiming that his pending Motion for Reconsideration with the BIR Commissioner may soon be resolved.  Both PNOC and PNB
opposed the said Motion.

On 11 June 1991, PNB appealed to the Department of Justice (DOJ) the BIR assessment, dated 16 January 1991, for deficiency
withholding tax in the sum of P294,958,450.73.  PNB alleged that its appeal to the DOJ was sanctioned under P.D. No. 242,
which provided for the administrative settlement of disputes between government offices, agencies, and instrumentalities,
including government-owned and controlled corporations.
Three days later, on 14 June 1991, PNB filed a Motion to Suspend Proceedings before the CTA since it had a pending appeal
before the DOJ.
On 20 September 1991, private respondent Savellano filed another Omnibus Motion calling the attention of the CTA to the fact
that the BIR already issued, on 12 August 1991, a warrant of garnishment addressed to the Central Bank Governor and against
PNB.  In compliance with the said warrant, the Central Bank issued, on 23 August 1991, a debit advice against the demand
deposit account of PNB with the Central Bank for the amount ofP294,958,450.73, with a corresponding transfer of the same
amount to the demand deposit-in-trust of BIR with the Central Bank.  Since the assessment had already been enforced, PNB's
Motion to Suspend Proceedings became moot and academic.  Private respondent Savellano, thus, moved for the denial of PNB's
Motion to Suspend Proceedings and for an order requiring BIR to deposit with the CTA the amount of P44,243,767.00 as his
informer's reward, representing 15% of the deficiency withholding tax collected.

The CTA, on 28 May 1992, rendered its decision, wherein it upheld its jurisdiction and disposed of the case as follows:

WHEREFORE, judgment is rendered declaring the COMPROMISE AGREEMENT between the Bureau of Internal
Revenue, on the one hand, and the Philippine National Oil Company and Philippine National Bank, on the other, as
WITHOUT FORCE AND EFFECT;

The Commissioner of Internal Revenue is hereby ordered to ENFORCE the ASSESSMENT of January 16, 1991
against Philippine National Bank which has become final and unappealable by collecting from Philippine National
Bank the deficiency withholding tax, plus interest totalling (sic) P294,958,450.73;

Petitioner may be paid, upon collection of the deficiency withholding tax, the balance of his entitlement to informer's
reward based on fifteen percent (15%) of the deficiency withholding total tax collected in this case or P44,243.767.00
subject to existing rules and regulations governing payment of reward to informers.

PNOC and PNB filed separate appeals with the Court of Appeals seeking the reversal of the CTA decision, In both cases, the
Court of Appeals affirmed the decision of the CTA. Hence, the present petition.
Issue: Whether or not the CTA has a jurisdiction over the case considering that the petition for review was filed neither filed by
the taxpayer nor the CIR but by an informer seeking the collection of the balance of the informers reward.
Held: The CTA correctly retained jurisdiction over CTA Case No. 4249 by virtue of Republic Act No. 1125. Having
established that the BIR demand letter, dated 16 January 1991, did not constitute a new assessment, then, there could be no basis
for PNB's claim that any dispute arising from the new assessment should only be between BIR and PNB.

Still proceeding from the argument that there was a new dispute between PNB and BIR, PNB sought the suspension of the
proceedings in CTA Case No.  4249, after it contested the deficiency withholding tax assessment against it and the demand for
payment thereof before the DOJ, pursuant to P.D. No. 242.  The CTA, however, correctly sustained its jurisdiction and
continued the proceedings in CTA Case No. 4249; and, in effect, rejected DOJ's claim of jurisdiction to administratively settle
or adjudicate BIR's assessment against PNB.

The CTA assumed jurisdiction over the Petition for Review filed by private respondent Savellano based on the following
provision of Rep. Act No. 1125, the Act creating the Court of Tax Appeals:

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; . . . (Underscoring ours.)

In his Petition before the CTA, private respondent Savellano requested a review of the decisions of then BIR Commissioner Tan
to enter into a compromise agreement with PNOC and to reject his claim for additional informer's reward.  He submitted before
the CTA questions of law involving the interpretation and application of (1) E.O. No. 44, and its implementing rules and
regulations, which authorized the BIR Commissioner to compromise delinquent accounts and disputed assessments pending as
of 31 December 1985; and (2) Section 316(1) of the National Internal Revenue Code of 1977 (NIRC of 1977), as amended,
which granted to the informer a reward equivalent to 15% of the actual amount recovered or collected by the BIR. 54 These
should undoubtedly be considered as matters arising from the NIRC and other laws being administered by the BIR, thus,
appealable to the CTA under Section 7(1) of Rep. Act No. 1125.

Sustained herein is the contention of private respondent Savellano that P.D. No. 242 is a general law that deals with
administrative settlement or adjudication of disputes, claims and controversies between or among government offices, agencies
and instrumentalities, including government-owned or controlled corporations. Its coverage is broad and sweeping,
encompassing all disputes, claims and controversies. 

Following the rule on statutory construction involving a general and a special law previously discussed, then P.D. No. 242
should not affect Rep. Act No. 1125.  Rep. Act No. 1125, specifically Section 7 thereof on the jurisdiction of the CTA,
constitutes an exception to P.D. No. 242.  Disputes, claims and controversies, falling under Section 7 of Rep. Act No. 1125,
even though solely among government offices, agencies, and instrumentalities, including government-owned and controlled
corporations, remain in the exclusive appellate jurisdiction of the CTA.  Such a construction resolves the alleged inconsistency
or conflict between the two statutes, and the fact that P.D. No. 242 is the more recent law is no longer significant.

Even if, for the sake of argument, that P.D. No. 242 should prevail over Rep. Act No. 1125, the present dispute would still not
be covered by P.D. No. 242.  Section 1 of P.D. No. 242 explicitly provides that only disputes, claims and
controversies solely between or among departments, bureaus, offices, agencies, and instrumentalities of the National
Government, including constitutional offices or agencies, as well as government-owned and controlled corporations, shall be
administratively settled or adjudicated.  While the BIR is obviously a government bureau, and both PNOC and PNB are
government-owned and controlled corporations, respondent Savellano is a private citizen.  His standing in the controversy could
not be lightly brushed aside.  It was private respondent Savellano who gave the BIR the information that resulted in the
investigation of PNOC and PNB; who requested the BIR Commissioner to reconsider the compromise agreement in question;
and who initiated CTA Case No. 4249 by filing a Petition for Review.

CASE SYLLABI:
Same; Same; Prescription; A judicial action for the collection of a tax may be initiated by the filing of a complaint with the
proper regular trial court, or where the assessment is appealed to the CTA, by filing an answer to the taxpayer’s petition for
review wherein payment of the tax is prayed for; The present case is unique because the Petition for Review was filed by a
tax informer against the BIR, PNOC, and PNB—the BIR (the collecting government agency), PNOC (the taxpayer), and PNB
(the withholding agent) initially found themselves on the same side.—In the case of PNB, an assessment was issued against it by
the BIR on 08 October 1986, so that the BIR had until 07 October 1989 to enforce it and to collect the tax assessed. The filing,
however, by private respondent Savellano of his Amended Petition for Review before the CTA on 02 July 1988 already
constituted a judicial action for collection of the tax assessed which stops the running of the three-year prescriptive period for
collection thereof. A judicial action for the collection of a tax may be initiated by the filing of a complaint with the proper
regular trial court; or where the assessment is appealed to the CTA, by filing an answer to the taxpayer’s petition for review
wherein payment of the tax is prayed for. The present case is unique, however, because the Petition for Review was filed by
private respondent Savellano, the informer, against the BIR, PNOC, and PNB. The BIR, the collecting government agency;
PNOC, the taxpayer; and PNB, the withholding agent, initially found themselves on the same side.
Same; Same; Same; Under Section 271 of the NIRC of 1977, as amended, the running of the prescriptive period to collect
deficiency taxes shall be suspended for the period during which the BIR Commissioner is prohibited from beginning a
distraint or levy or instituting a proceeding in court, and for 60 days thereafter.—Supposing that CTA Case No. 4249 is not a
collection case which stops the running of the prescriptive period for the collection of the tax, CTA Case No. 4249, at the very
least, suspends the running of the said prescriptive period. Under Section 271 of the NIRC of 1977, as amended, the running of
the prescriptive period to collect deficiency taxes shall be suspended for the period during which the BIR Commissioner is
prohibited from beginning a distraint or levy or instituting a proceeding in court, and for 60 days thereafter. Just as in the cases
of Republic v. Ker & Co., Ltd. and Protector’s Services, Inc. v. Court of Appeals, this Court declares herein that the pendency of
the present case before the CTA, the Court of Appeals and this Court, legally prevents the BIR Commissioner from instituting
an action for collection of the same tax liabilities assessed against PNOC and PNB in the CTA or the regular trial courts. To rule
otherwise would be to violate the judicial policy of avoiding multiplicity of suits and the rule on lis pendens.
Same; Same; Same; Under Section 271 of the NIRC of 1977, as amended, the running of the prescriptive period to collect
deficiency taxes shall be suspended for the period during which the BIR Commissioner is prohibited from beginning a
distraint or levy or instituting a proceeding in court, and for 60 days thereafter.—Supposing that CTA Case No. 4249 is not a
collection case which stops the running of the prescriptive period for the collection of the tax, CTA Case No. 4249, at the very
least, suspends the running of the said prescriptive period. Under Section 271 of the NIRC of 1977, as amended, the running of
the prescriptive period to collect deficiency taxes shall be suspended for the period during which the BIR Commissioner is
prohibited from beginning a distraint or levy or instituting a proceeding in court, and for 60 days thereafter. Just as in the cases
of Republic v. Ker & Co., Ltd. and Protector’s Services, Inc. v. Court of Appeals, this Court declares herein that the pendency of
the present case before the CTA, the Court of Appeals and this Court, legally prevents the BIR Commissioner from instituting
an action for collection of the same tax liabilities assessed against PNOC and PNB in the CTA or the regular trial courts. To rule
otherwise would be to violate the judicial policy of avoiding multiplicity of suits and the rule on lis pendens.
Same; Same; Same; The three-year prescriptive period for collection of the tax shall commence to run only after the
promulgation of the decision of the Supreme Court in which the issues of the present case are resolved with finality.—That
CTA Case No. 4249 was initiated by private respondent Savellano, the informer, instead of PNOC, the taxpayer, or PNB, the
withholding agent, would not prevent the suspension of the running of the prescriptive period for collection of the tax. What is
controlling herein is the fact that the BIR Commissioner cannot file a judicial action in any other court for the collection of the
tax because such a case would necessarily involve the same parties and involve the same issues already being litigated before
the CTA in CTA Case No. 4249. The three-year prescriptive period for collection of the tax shall commence to run only after
the promulgation of the decision of this Court in which the issues of the present case are resolved with finality.
Same; Same; Same; Whether the filing of the Amended Petition for Review by private respondent Savellano entirely stops or
merely suspends the running of the prescriptive period for collection of the tax, it had been premature for the BIR
Commissioner to issue a writ of garnishment against PNB on 12 August 1991 and for the Central Bank of the Philippines to
debit the account of PNB on 02 September 1992 pursuant to the said writ, because the case was by then, pending review by
the Court of Appeals.—Whether the filing of the Amended Petition for Review by private respondent Savellano entirely stops
or merely suspends the running of the prescriptive period for collection of the tax, it had been premature for the BIR
Commissioner to issue a writ of garnishment against PNB on 12 August 1991 and for the Central Bank of the Philippines to
debit the account of PNB on 02 September 1992 pursuant to the said writ, because the case was by then, pending review by the
Court of Appeals. However, since this Court already finds that the compromise agreement is without force and effect and hereby
orders the enforcement of the assessment against PNB, then, any issue or controversy arising from the premature garnishment of
PNB’s account and collection of the tax by the BIR has become moot and academic at this point.
30. BPI vs. CIR AUTHOR: Nikki A
[G.R. No. 174942; March 7, 2008] NOTES: (if applicable)
TOPIC: Tax Remedies
PONENTE: Tinga

CASE LAW/ DOCTRINE:

A request for reinvestigation, unacted upon by the BIR, does not suspend the running of the period for filing an action for
collection. It must be shown that the request was granted or denied for the suspension of the action to kick in.

FACTS:
1. BPI is the surviving bank after its merger with Far East Bank. CIR issued a PAN on November 26, 1986.
2. BPI requested for the details of the amounts alleged in the 1986 deficiency taxes mentioned in the PAN. CIR
issued an assessment/ demand notices for deficiency withholding tax at source and DST involving the amounts of
P190,752,860.82 and P24,587,174.63 for the years 1982 to 1986.
3. April 20, 1989 – BPI filed a protest on the demand/assessment notices. BPI requested for an opportunity to present
or submit additional documentation on the swap transactions in connection with the reinvestigation of the
assessment. BPI executed several Waivers of Statutes of Limitations, the last of which was effective until
December 31, 1994.
4. Aug. 9, 2002 – CIR issued a final decision and ordered the cancellation of the deficiency withholding tax but the
DST deficiency tax was retained.
5. BPI received the notice of the decision on January 15, 2003. Thereafter, BPI filed a Petition for Review before the
CTA. CTA denied the petition. Hence, BPI’s recourse to the SC.
BPI Contentions:
- The right of the government to collect the DST had already prescribed because the CIR failed to issue any reply
granting BPI’s request for reinvestigation, warranting the conclusion that prescription had already set in.
- CIR was not precluded from collecting the deficiency within 3 years from the time the notice of assessment was
issued or even until the expiration of the last waiver of the statute of limitations signed by BPI.
CIR Contentions:
- (thru OSG) the prescriptive period was tolled by the protest letters filed by BPI which were granted and acted upon
by the CIR. Thus, it was only upon BPI’s receipt of the Aug 2002 decision that the period to collect commenced to
run again.
- Citing CIR vs. Suyoc, BPI is already estopped from raising the defense of prescription in view of its repeated
requests for reinvestigation which allegedly included the CIR to delay the collection of the assessed tax.
BPI’s rebuttal:
- BPI argues against the application of the Suyoc case on two points: first, it never induced the CIR to postpone tax
 collection; second, its request for reinvestigation was not categorically acted upon by the CIR within the 3-year
collection period after assessment. BPI maintains that it did not receive any communication from the CIR in reply
to its protest letters.

ISSUE(S):
1. WON the collection of the deficiency DST is barred by prescription.
2. WON BPI is liable for DST on its SWAP loan transactions.
HELD:
1. YES.
2. NO, since the action has already prescribed.
RATIO:
Issue No. 1
1. The CIR has three years from the date of the actual filing of the tax return to assess a national internal revenue tax
or to commence court proceedings for the collection thereof without an assessment. When it validly issues an
assessment within the three-year period, it has another three years within which to collect the tax due by distraint,
levy, or court proceeding. The assessment of the tax is deemed made and the 3 year period for collection of the
assessed tax begins to run on the date the assessment notice had been released, mailed, or sent to the taxpayer.
2. As applied to the present case, the CIR had three (3) years from the time he issued assessment notices to BPI on 7
April 1989 or until 6 April 1992 within which to collect the deficiency DST. However, it was only on 9 August
2002 that the CIR ordered BPI to pay the deficiency.
3. In order to determine whether the prescriptive period for collecting the tax deficiency was effectively
tolled by BPI’s filing of the protest letters dated 20 April and 8 May 1989 as claimed by the CIR, we
need to examine Section 320 of the Tax Code of 1977. In order to suspend the running of the prescriptive
periods for assessment and collection, the request for reinvestigation must be granted by the CIR.
4. In BPI v. Commissioner of Internal Revenue, the Court emphasized the rule that the CIR must first grant
the request for reinvestigation as a requirement for the suspension of the statute of limitations. The Court
said:

In the case of Republic of the Philippines v. Gancayco, taxpayer Gancayco requested for a thorough
reinvestigation of the assessment against him and placed at the disposal of the Collector of Internal
Revenue all the evidences he had for such purpose; yet, the Collector ignored the request, and the records
and documents were not at all examined. Considering the given facts, this Court pronounced that—

x x x The act of requesting a reinvestigation alone does not suspend the period. The request should
first be granted, in order to effect suspension. (Collector v. Suyoc Consolidated, supra; also Republic v.
Ablaza, supra). Moreover, the Collector gave appellee until April 1, 1949, within which to submit his
evidence, which the latter did one day before. There were no impediments on the part of the Collector to
file the collection case from April 1, 1949…

5. The Court went on to declare that the burden of proof that the request for reinvestigation had been actually granted
shall be on the CIR. Such grant may be expressed in its communications with the taxpayer or implied from the
action of the CIR or his authorized representative in response to the request for reinvestigation.
6. There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had granted the
request for reinvestigation filed by BPI. What is reflected in the records is the piercing silence and inaction of the
CIR on the request for reinvestigation, as he considered BPI’s letters of protest to be.
7. In this case, BPI’s letters of protest and submission of additional documents pertaining to its SWAP transactions,
which were never even acted upon, much less granted, cannot be said to have persuaded the CIR to postpone the
collection of the deficiency DST.
8. The inordinate delay of the CIR in acting upon and resolving the request for reinvestigation filed by BPI and in
collecting the DST allegedly due from the latter had resulted in the prescription of the government’s right to
collect the deficiency.

Issue No. 2 - Given the prescription of the government’s claim, we no longer deem it necessary to pass upon the validity of
the assessment.

31. Commissioner of Internal Revenue vs. NLRC, 238 SCRA 42, G.R. No. 74965. November 9, 1994
Facts: On January 12, 1984, the CIR demanded payment from private respondent Maritime Company of the Philippines
of deficiency common carrier’s tax, fixed tax, 6% commercial broker’s tax, documentary stamp tax, income tax and
withholding tax totalling P17,284,882.45. The assessment became final and executory, and with private respondent’s
failure to pay the tax liabilities, the CIR issued warrants of distraint of personal property and levy of real property which
were duly served on January 23, 1985. On April 16, 1985, a “receipt of goods, articles and things” was executed
covering, among others, 6 barges as proof of constructive distraint of property but the same was not signed by any
representative of private respondent because of the refusal of the persons actually in possession of the barges
It appeared that 4 of the barges constructively distrained were also levied upon by a deputy sheriff of Manila on July 20,
1985 and sold at public auction to satisfy a judgment for unpaid wages and other benefits of employees of private
respondent.
Issue: Who has the better right- the BIR, or the workers?
Held: This case arose out of the same facts involved in Republic v. Enriquez,  in which we sustained the validity of the distraint
of the six barges, which included the four involved in this case, against the levy on execution made by another deputy sheriff of
Manila in another case filed against Maritime Company. Two barges (MCP-1 and MCP-4) were the subject of a levy in the case.
There we found that the "Receipt for Goods, Articles and Things Seized under Authority of the National Internal Revenue
Code" covering the six barges had been duly executed, with the Headquarters, First Coast Guard District, Farola Compound
Binondo, Manila acknowledging receipt of several barges, vehicles and two (2) bodegas of spare parts belonging to Maritime
Company of the Philippines.

Accordingly, what we said in the prior case in upholding the validity of distraint of two of the six barges (MCP Nos. 1 and 4),
fully applies in this case:

It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private litigant
predicated on a judgment. The tax lien attaches not only from the service of the warrant of distraint of personal
property but from the time the tax became due and payable. Besides, the distraint on the subject properties of
the Maritime Company of the Philippines as well as the notice of their seizure were made by petitioner,
through the Commissioner of the Internal Revenue, long before the writ of the execution was issued by the
Regional Trial Court of Manila, Branch 31. There is no question then that at the time the writ of execution was
issued, the two (2) barges, MPC-1 and MCP-4, were no longer properties of the Maritime Company of the
Philippines. The power of the court in execution of judgments extends only to properties unquestionably
belonging to the judgment debtor. Execution sales affect the rights of the judgment debtor only, and the
purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. It is also
well-settled that the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor.

Nor is there any merit in the contention of the NLRC that taxes are absolutely preferred claims only with respect to movable or
immovable properties on which they are due and that since the taxes sought to be collected in this case are not due on the barges
in question the government's claim cannot prevail over the claims of employees of the Maritime Company of the Philippines
which, pursuant to Art. 110 of the Labor Code, "enjoy first preference."

In addition, we have held that Art. 110 of the Labor Code applies only in case of bankruptcy or judicial liquidation of the
employer. This is clear from the text of the law. This case does not involve the liquidation of the employer's business.

CASE SYLLABI:

Taxation; National Internal Revenue Code; Remedies for collection of delinquent taxes.—The National Internal Revenue
Code provides for the collection of delinquent taxes by any of the following remedies: (a) distraint of personal property or levy
of real property of the delinquent taxpayer and (b) civil or criminal action.
Same; Same; Constructive Distraint.—With respect to the four barges in question, petitioner resorted to constructive distraint
pursuant to § 303 (now § 206) of the NIRC. This provision states: Constructive distraint of the property of a taxpayer.—To
safeguard the interest of the Government, the Commissioner of Internal Revenue may place under constructive distraint the
property of a delinquent taxpayer or any taxpayer who, in his opinion, is retiring from any business subject to tax, or intends to
leave the Philippines, or remove his property therefrom, or hide or conceal his property, or perform any act tending to obstruct
the proceedings, for collecting the tax due or which may be due from him.
Same; Same; Same; It is settled that the claim of the government predicated on a tax lien is superior to the claim of a private
litigant predicated on a judgment.—Accordingly, what we said in the prior case in upholding the validity of distraint of two of
the six barges (MCP Nos. 1 and 4), fully applies in this case: It is settled that the claim of the government predicated on a tax
lien is superior to the claim of a private litigant predicated on a judgment. The tax lien attaches not only from the service of the
warrant of distraint of personal property but from the time the tax became due and payable. Besides, the distraint on the subject
properties of Maritime Company of the Philippines as well as the notice of their seizure were made by petitioner, through the
Commissioner of Internal Revenue, long before the writ of execution was issued by the Regional Trial Court of Manila, Branch
31. There is no question then that at the time the writ of execution was issued, the two (2) barges, MCP-1 and MCP-4, were no
longer properties of the Maritime Company of the Philippines. The power of the court in execution of judgments extends only to
properties unquestionably belonging to the judgment debtor. Execution sales affect the rights of the judgment debtor only, and
the purchaser in an auction sale acquires only such right as the judgment debtor had at the time of sale. It is also well-settled that
the sheriff is not authorized to attach or levy on property not belonging to the judgment debtor.
Same; Same; NLRC; No merit in the contention of the NLRC that taxes are absolutely preferred claims only with respect to
movable or immovable properties on which they are due.—Nor is there any merit in the contention of the NLRC that taxes are
absolutely preferred claims only with respect to movable or immovable properties on which they are due and that since the taxes
sought to be collected in this case are not due on the barges in question the government’s claim cannot prevail over the claims of
employees of the Maritime Company of the Philippines which, pursuant to Art. 110 of the Labor Code, “enjoy first preference.”
32. COMMISSIONER OF INTERNAL REVENUE vs. LA SUERTE CIGAR AND CIGARETTE FACTORY
GR. No. 144942- July 4, 2002

TAX REMEDIES; SECTION 220; WHO SHOULD INSTITUTE APPEAL IN TAX CASES

Facts: In its resolution, dated 15 November 2000, the Supreme Court denied the Petition for Review on Certiorari submitted by the
Commissioner of Internal Revenue for non-compliance with the procedural requirement of verification explicit in Sec. 4, Rule 7 of the
1997 Rules of Civil Procedure and, furthermore, because the appeal was not pursued by the Solicitor-General. When the motion for
reconsideration filed by the petitioner was likewise denied, petitioner filed the instant motion seeking an elucidation on the supposed
discrepancy between the pronouncement of this Court, on the one hand that would require the participation of the Office of the Solicitor-
General and pertinent provisions of the Tax Code, on the other hand, that allow legal officers of the Bureau of Internal Revenue (BIR) to
institute and conduct judicial action in behalf of the Government under Sec, 220 of the Tax Reform Act of 1997.

Issue: Are the legal officer of the BIR authorized to institute appeal proceedings (as distinguished from commencement of proceeding)
without the participation of the Solicitor-General?

Held: NO. The institution or commencement before a proper court of civil and criminal actions and proceedings arising under the Tax
Reform Act which “shall be conducted by legal officers of the Bureau of Internal Revenue” is not in dispute. An appeal from such court,
however, is not a matter of right. Sec. 220 of the Tax Reform Act must not be understood as overturning the long-established procedure
before this Court in requiring the Solicitor-General to represent the interest of the Republic. This court continues to maintain that it is the
Solicitor-General who has the primary responsibility to appear for the government in appellate proceedings. This pronouncement finds
justification in the various laws defining the Office of the Solicitor-General, beginning with Act No. 135, which took effect on 16 June
1901, up to the present Administrative Code of 1987. Sec. 35, Chapter 12, Title III, Book IV of the said code outlines the powers and
functions of the Office of the Solicitor General which includes, but not limited to, its duty to—

1. Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government
and its officers in the Supreme Court, the Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings
in which the Government or any officer thereof in his official capacity is a party.
2. Appear in any court in any action involving the validity of any treaty, law, executive order, or proclamation, rule or regulation when in
his judgment his intervention is necessary or when requested by the Court.

33. Lim, Sr. vs. Court of Appeals, 190 SCRA 616, G.R. Nos. 48134-37. October 18, 1990
Facts: On October 5, 1959, a raid was conducted at their business address by the National Bureau of Investigation by virtue of a
search warrant issued by Judge Wenceslao L. Cornejo of the City Court of Manila. A similar raid was made on petitioners'
premises at 111 12th Street, Quezon City. Seized from the Lim couple were business and accounting records which served as
bases for an investigation undertaken by the Bureau of Internal Revenue (BIR). On September 30, 1964 Senior Revenue
Examiner Raphael S. Daet submitted a memorandum with the findings that the income tax returns filed by petitioners for the
years 1958 and 1959 were false or fraudulent. Daet recommended that an assessment of P835,127.00 be made against the
petitioners. Accordingly, on April 7, 1965, then Acting Commissioner of the BIR, Benjamin M. Tabios informed petitioners that
there was due from them the amount of P922,913.04 as deficiency income taxes for 1958 and 1959, giving them until May 7,
1965 to pay the amount.

On April 10, 1965, petitioner Emilio E. Lim, Sr., requested for a reinvestigation. The BIR expressed willingness to grant such
request but on condition that within ten days from notice, Lim would accomplish a waiver of defense of prescription under the
Statute of Limitations and that one half of the deficiency income tax would be deposited with the BIR and the other half secured
by a surety bond. If within the ten-day period the BIR did not hear from petitioners, then it would be presumed that the request
for reinvestigation had been abandoned. Petitioner Emilio E. Lim, Sr. refused to comply with the above conditions and reiterated
his request for another investigation. On October 10, 1967, the BIR rendered a final decision holding that there was no cause for
reversal of the assessment against the Lim couple. Petitioners were required to pay deficiency income taxes for 1958 and 1959
amounting to P1,237,190.55 inclusive of interest, surcharges and compromise penalty for late payment. The final notice and
demand for payment was served on petitioners through their daughter-in-law on July 3, 1968.

Still, no payment was forthcoming from the delinquent taxpayers. Accordingly on September 1, 1969, the matter was referred
by the BIR to the Manila Fiscal's Office for investigation and prosecution. On June 23, 1970, four (4) separate criminal
informations were filed against petitioners in the then Court of First Instance of Manila, Branch VI for violation of Sections 45
and 51 in relation to Section 73 of the National Internal Revenue Code. 2 Trial ensued. On August 19, 1975, the trial court
rendered two (2) joint decisions finding petitioners guilty as charged. Hence the present petition for review by certiorari. In their
Brief, petitioners contend that the Appellate Court erred in holding that the offenses charged in Criminal Case Nos. 1790 and
1791 prescribed in ten (10) years, instead of five (5) years; that the prescriptive period in Criminal Cases Nos. 1788 and 1789
commenced to run only from July 3, 1968, the date of the final assessment; that Section 316 of the Tax Code as amended by
Presidential Decree No. 69 was applicable to the case at bar; and that the civil obligation of petitioner Emilio E. Lim, Sr. arising
from the crimes charged was not extinguished by his death.

Issue: When is the reckoning date of the five year period for filing a criminal charges against the petitioner?

Held: We hold for the Government. Section 51 (b) of the Tax Code provides:

(b) Assessment and payment of deficiency tax. — After the return is filed, the Commissioner of internal
Revenue shall examine it and assess the correct amount of the tax. The tax or deficiency in tax so discovered
shall be paid upon notice and demand from the Commissioner of Internal Revenue. (Emphasis supplied)

Inasmuch as the final notice and demand for payment of the deficiency taxes was served on petitioners on July 3, 1968, it was
only then that the cause of action on the part of the BIR accrued. This is so because prior to the receipt of the letter-assessment,
no violation has yet been committed by the taxpayers. The offense was committed only after receipt was coupled with the wilful
refusal to pay the taxes due within the alloted period. The two criminal informations, having been filed on June 23, 1970, are
well-within the five-year prescriptive period and are not time-barred.

With regard to Criminal Cases Nos. 1790 and 1791 which dealt with petitioners' filing of fraudulent consolidated income tax
returns with intent to evade the assessment decreed by law, petitioners contend that the said crimes have likewise prescribed.
They advance the view that the five-year period should be counted from the date of discovery of the alleged fraud which, at the
latest, should have been October 15, 1964, the date stated by the Appellate Court in its resolution of April 4, 1978 as the date the
fraudulent nature of the returns was unearthed. 9

On behalf of the Government, the Solicitor General counters that the crime of filing false returns can be considered "discovered"
only after the manner of commission, and the nature and extent of the fraud have been definitely ascertained. It was only on
October 10, 1967 when the BIR rendered its final decision holding that there was no ground for the reversal of the assessment
and therefore required the petitioners to pay P1,237,190.55 in deficiency taxes that the tax infractions were discovered.

Not only that. The Solicitor General stresses that Section 354 speaks not only of discovery of the fraud but also institution of
judicial proceedings. Note the conjunctive word "and" between the phrases "the discovery thereof" and "the institution of
judicial proceedings for its investigation and proceedings." In other words, in addition to the fact of discovery, there must be a
judicial proceeding for the investigation and punishment of the tax offense before the five-year limiting period begins to run. It
was on September 1, 1969 that the offenses subject of Criminal Cases Nos. 1790 and 1791 were indorsed to the Fiscal's Office
for preliminary investigation. Inasmuch as a preliminary investigation is a proceeding for investigation and punishment of a
crime, it was only on September 1, 1969 that the prescriptive period commenced.

The Court is inclined to adopt the view of the Solicitor General. For while that particular point might have been raised in the
Ching Lak case, the Court, at that time, did not give a definitive ruling which would have settled the question once and for all.
As Section 354 stands in the statute book (and to this day it has remained unchanged) it would indeed seem that tax cases, such
as the present ones, are practically imprescriptible for as long as the period from the discovery and institution of judicial
proceedings for its investigation and punishment, up to the filing of the information in court does not exceed five (5) years.

HOW TO PROTESTS OR DISPUTE AN ASSESSMENT ADMINISTRATIVELY

34. Marcos II vs. Court of Appeals, 273 SCRA 47, G.R. No. 120880. June 5, 1997
Facts: Following the death of former President Marcos in 1989, a Special Tax Audit Team was created on June 27, 1990 to
conduct investigations and examinations of tax liabilities of the late president, his family, associates and cronies. The
investigation disclosed that the Marcoses failed to file a written notice of death of the decedent estate tax return and income tax
returns for the years 1982 to 1986, all in violation of the Tax Code. Criminal charges were field against Mrs. Marcos for
violation of Secs. 82, 83 and 84, NIRC. The CIR thereby caused the preparation of the estate tax return for the estate of the late
president, the income returns of the Marcos spouses for 1985 and 1986 and the income tax returns of petitioner Marcos II for
1982 to 1985. On July 26, 1991, the BIR issued deficiency estate tax assessments and the corresponding deficiency income tax
assessments. Copies of deficiency estate and income tax assessments were served personally and constructively on August 26,
1991 and September 12, 1991 upon Mrs. Marcos. Likewise, copies of the deficiency income tax assessments against petitioner
Marcos were personally and constructively served. Formal assessment notices were served upon Mrs. Marcos on October 20,
1992.
The deficiency tax assessments were not administratively protested by the Marcoses within 30 days from service thereof.
Subsequently, the CIR issued a total of 30 notices to levy on real property against certain parcels of land and other real property
owned by Marcoses. Notices of sale at public auction were duly posted at the Tacloban City Hall and the public auction for the
sale of 11 parcels of land took place on July 5, 1993. There being no bidder, the lots were declared forfeited in favor of the
government. Petitioner filed a petition for certiorari and prohibition with an application for TRO before the CA to annul and set
aside the notices of levy as well as the notice of sale and to enjoin the BIR from proceeding with the auction. The CA dismissed
the petition ruling that the deficiency assessments for the estate and income taxes have already become final and unappealable
and may thus be enforced by summary remedy of levying upon the real property.
Issue: Whether or not the failure to protest to the assessment within the time prescribe by law makes deficiency tax assessment
final, executory, and thus, demandable
Held: Apart from failing to file the required estate tax return within the time required for filing the same, petitioner and other
Marcos heirs never questioned the assessment served upon them, allowing the same to lapse into finality, and prompting the BIR
to collect said taxes by levying upon the properties left by the late President Marcos.
The Notice of Levy upon real property were issued within the prescriptive period and in accordance with Sec. 222 of the Tax
Code. The deficiency tax assessment, having become final, executory and demandable, the same can now be collected through
the summary remedy of distraint and levy pursuant to Sec. 205 of the Tax Code.
CASE SYLLABI:
Same; Estates Taxes; The omission to file an estate tax return, and the subsequent failure to contest or appeal the
assessment made by the BIR is fatal, as under Section 223 of the NIRC, in case of failure to file a return, the tax may be
assessed at any time within ten years after the omission, and any tax so assessed may be collected by levy upon real property
within three years following the assessment of the tax.—The omission to file an estate tax return, and the subsequent failure to
contest or appeal the assessment made by the BIR is fatal to the petitioner’s cause, as under the above-cited provision, in case of
failure to file a return, the tax may be assessed at any time within ten years after the omission, and any tax so assessed may be
collected by levy upon real property within three years following the assessment of the tax. Since the estate tax assessment had
become final and unappealable by the petitioner’s default as regards protesting the validity of the said assessment, there is now
no reason why the BIR cannot continue with the collection of the said tax. Any objection against the assessment should have
been pursued following the avenue paved in Section 229 of the NIRC on protests on assessments of internal revenue taxes.
Same; Same; Ill-Gotten Wealth; The mere fact that the decedent has pending cases involving ill-gotten wealth does not
affect the enforcement of tax assessments over the properties indubitably included in his estate.—Petitioner further argues that
“the numerous pending court cases questioning the late president’s ownership or interests in several properties (both real and
personal) make the total value of his estate, and the consequent estate tax due, incapable of exact pecuniary determination at this
time. Thus, respondents’ assessment of the estate tax and their issuance of the Notices of Levy and sale are premature and
oppressive.” He points out the pendency of Sandiganbayan Civil Case Nos. 0001-0034 and 0141, which were filed by the
government to question the ownership and interests of the late President in real and personal properties located within and
outside the Philippines. Petitioner, however, omits to allege whether the properties levied upon by the BIR in the collection of
estate taxes upon the decedent’s estate were among those involved in the said cases pending in the Sandiganbayan. Indeed, the
court is at a loss as to how these cases are relevant to the matter at issue. The mere fact that the decedent has pending cases
involving ill-gotten wealth does not affect the enforcement of tax assessments over the properties indubitably included in his
estate.
Same; Same; Actions; Certiorari; Objections to assessments should be raised by means of the ample remedies afforded the
taxpayer by the Tax Code, with the Bureau of Internal Revenue and the Court of Tax Appeals, and not via a Petition for
Certiorari, under the pretext of grave abuse of discretion.—Moreover, these objections to the assessments should have been
raised, considering the ample remedies afforded the taxpayer by the Tax Code, with the Bureau of Internal Revenue and the
Court of Tax Appeals, as described earlier, and cannot be raised now via Petition for Certiorari, under the pretext of grave abuse
of discretion. The course of action taken by the petitioner reflects his disregard or even repugnance of the established institutions
for governance in the scheme of a well-ordered society. The subject tax assessments having become final, executory and
enforceable, the same can no longer be contested by means of a disguised protest. In the main, Certiorari may not be used as a
substitute for a lost appeal or remedy. This judicial policy becomes more pronounced in view of the absence of sufficient attack
against the actuations of government.
Due Process; Equity; Where there was an opportunity to raise objections to government action, and such opportunity was
disregarded, for no justifiable reason, the party claiming oppression then becomes the oppressor of the orderly functions of
the government; He who comes to court must come with clean hands, otherwise he not only taints his name, but ridicules the
very structure of established authority.—The foregoing notwithstanding, the record shows that notices of warrants of distraint
and levy of sale were furnished the counsel of petitioner on April 7, 1993, and June 10, 1993, and the petitioner himself on April
12, 1993 at his office at the Batasang Pambansa. We cannot therefore, countenance petitioner’s insistence that he was denied
due process. Where there was an opportunity to raise objections to government action, and such opportunity was disregarded,
for no justifiable reason, the party claiming oppression then becomes the oppressor of the orderly functions of government. He
who comes to court must come with clean hands. Otherwise, he not only taints his name, but ridicules the very structure of
established authority.
35. JUDY ANNE SANTOS VS PEOPLE, GR NO. 173176, AUG. 26, 2008
Facts: On 19 May 2005, then Bureau of Internal Revenue (BIR) Commissioner Guillermo L. Parayno, Jr. wrote to the
Department of Justice (DOJ) Secretary Raul M. Gonzales a letter[5] regarding the possible filing of criminal charges against
petitioner. petitioner,... her return... substantial underdeclaration of income, which constituted prima facie evidence of false or
fraudulent return under Section 248(B) Prosecution Attorney Olivia Laroza-Torrevillas issued a Resolution[9] dated 21 October
2005 finding probable cause and recommending the filing of a criminal information against petitioner... for violation of Section
255 in relation to Sections 254 and 248(B) of the NIRC, as amended. Pursuant to the 21 October 2005 DOJ Resolution, an
Information[10] for violation of Section 255 in relation to Sections 254 and 248(B) of the NIRC, as amended, was filed with the
CTA on 3 November 2005. On 10 January 2006, petitioner filed with the CTA First Division a Motion to Quash. The officer
who filed the information had no authority to do so;... the CTA First Division denied petitioner's Motion to Quash. On 1 June
2006, petitioner filed with the CTA en banc a Motion for Extension of Time to File Petition for Review
She filed... her Petition for Review with the CTA en banc on 16 June 2006. A resolution denying a motion to quash is not a
proper subject... of an appeal to the Court En Banc under Section 11 of R.A. No. 9282 because a ruling denying a motion to
quash is only an interlocutory order, as such, it cannot be made the subject of an appeal pursuant to said law and the Rules of
Court.
Petitioner's primary argument is that a resolution of a CTA Division denying a motion to quash is a proper subject of an appeal
to the CTA en banc under Section 18 of Republic Act No. 1125, as amended, because the law does not say that only a resolution
that constitutes a... final disposition of a case may be appealed to the CTA en banc.
Issues: WHETHER A RESOLUTION OF A CTA DIVISION DENYING A MOTION TO QUASH IS A PROPER SUBJECT
OF AN APPEAL TO THE CTA EN BANC UNDER SECTION 11 OF REPUBLIC ACT NO. 9282, AMENDING SECTION
18 OF REPUBLIC ACT NO. 1125
Ruling: Section 18 of Republic Act No. 1125,[25] as amended by Republic Act No. 9282,[26] provides:
SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceedings involving matters arising under the National
Internal Revenue Code... shall be maintained... until... and unless an appeal has been previously filed with the CTA
A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a
petition for review with the CTA en banc. The amendments introduced by Republic Act No. 9282 to Republic Act No. 1125
elevated the rank of the CTA to a collegiate court, with the same rank as the Court of Appeals, and increased the number of its
members to one Presiding Justice and five Associate Justices
The CTA is now allowed to sit en banc or in two Divisions with each Division consisting of three Justices. Four Justices shall
constitute a quorum for sessions en banc, and the affirmative votes of four members of the Court en banc are... necessary for the
rendition of a decision or resolution; while two Justices shall constitute a quorum for sessions of a Division and the affirmative
votes of two members of the Division shall be necessary for the rendition of a decision or resolution. Although the filing of a
petition for review with the CTA en banc from a decision, resolution, or order of the CTA Division, was newly made available
to the CTA, such mode of appeal has long been available in Philippine courts of general jurisdiction. Hence, the Revised CTA
Rules no longer elaborated on it but merely referred to existing rules of procedure on petitions for review and appeals, to wit:...
he petition for review to be filed with the CTA en banc as the mode for appealing a decision, resolution, or order of the CTA
Division, under Section 18 of Republic Act No. 1125, as amended, is not a totally new remedy, unique to the CTA, with a...
special application or use therein. To the contrary, the CTA merely adopts the procedure for petitions for review and appeals
long established and practiced in other Philippine courts.
General rule: The denial of a motion to quash is an interlocutory order which is not the... proper subject of an appeal or a
petition for certiorari. The Petition for Review which petitioner intended to file before the CTA en banc relied on two grounds:
(1) the lack of authority of Prosecuting Attorney Torrevillas to file the Information;
Anent the first ground, petitioner argues that the Information was filed without the approval of the BIR Commissioner in
violation of Section 220 of NIRC, as amended, which provides:
SEC. 220. Form and Mode of Proceeding in Actions Arising under this Code. - Civil and criminal actions and proceedings
instituted in behalf of the Government under the authority of this Code or other law enforced by the Bureau of Internal Revenue
shall be... brought in the name of the Government of the Philippines and shall be conducted by legal officers of the Bureau of
Internal Revenue but no civil or criminal action for the recovery of taxes or the enforcement of any fine, penalty or forfeiture
under this Code shall be filed in... court without the approval of the Commissioner.
Petitioner's argument must fail in light of BIR Commissioner Parayno's letter dated 19 May 2005 to DOJ Secretary Gonzales
referring "for preliminary investigation and filing of an information in court if evidence so warrants," the findings of the BIR
officers recommending... the criminal prosecution of petitioner. In said letter, BIR Commissioner Parayno already gave his
prior approval to the filing of an information in court should the DOJ, based on the evidence submitted, find probable cause
against petitioner during the preliminary... investigation. Section 220 of the NIRC, as amended, simply requires that the BIR
Commissioner approve the institution of civil or criminal action against a tax law violator, but it does not describe in what form
such approval must be given. In this case, BIR Commissioner Parayno's letter of 19 May 2005 already states his express
approval of the filing of an information against petitioner and his signature need not appear on the Resolution of the State
Prosecutor or the Information itself.