CIR v La Flor De La Isabela GR 211289,
January 14, 2019 1. Yes, the prescriptive period under
Facts:
La Flor dela Isabela, Inc. (La Flor) is a domestic
corporation duly organized and existing under
Philippine Law. It filed monthly returns for the
EWT and WTC for CY 2005. On 9/3/2008,
2/16/2009, and 12/2/2009, it executed Waivers
of the Statute of Limitations. On 1/7/2010, it
received four Formal Letters of Demand and
Final Assessment Notices (FANs), all dated
12/17/2009. On 1/15/2010, it filed its Letter of
Protest contesting the assessment notices.
Commissioner of Internal Revenue (CIR)
On 7/20/2010, it issued the Final Decision on
Disputed Assessment (FDDA) involving the
alleged deficiency withholding taxes in the
aggregate amount of P6,835,994.76.
CTA Third Division Decision
In its 8/3/2012 Decision, it ruled in favor of La
Flor and cancelled the deficiency tax
assessments against it.
It ruled that based on the dates when La Flor
filed its returns for EWT and WTC, the CIR had
until 2/15/2008 to 3/1/2009 to issue an
assessment pursuant to the three-year
prescriptive period under Section 203 of the
NIRC. The Waivers entered into by the CIR and
La Flor did not effectively extend the prescriptive
period for the issuance of the tax assessments.
CTA En Banc Decision
In its 9/30/2013 Decision, it affirmed the
Decision of the CTA Division. It ruled that the
EWT and WTC assessments were barred by
prescription. The 9/3/2008 and 12/2/2009
Waivers were inadmissible because they were
never offered in evidence. Further, the 2/16/2009
Waiver was defective because it failed to comply
with RMO No. 20-90 as it did not specify the
kind and amount of tax involved.
Issues:
1. WHETHER THE PRESCRIPTIVE
PERIOD UNDER SECTION 203 OF
THE NIRC APPLIES TO EWT AND
WTC ASSESSMENTS.
2. WHETHER LA FLOR’S EWT AND WTC
ASSESSMENTS FOR 2005 WERE
BARRED BY PRESCRIPTION.
Held:
Section 203 of the NIRC applies to EWT
and WTC assessments.
Yes, La Flor’s EWT and WTC assessments for
2005 were barred by prescription.
Withholding taxes are internal revenue taxes
covered by Section 203 of the NIRC.
SEC. 203. Period of Limitation Upon
Assessment and Collection. – Except as
provided in Section 222, internal revenue taxes
shall be assessed within three (3) years after the
last day prescribed by law for the filing of the
return, and no proceeding in court without
assessment for the collection of such taxes shall
be begun after the expiration of such period:
Provided, That in case where a return is filed
beyond the period prescribed by law, the three
(3)-year period shall be counted from the day
the return was filed. For purposes of this
Section, a return filed before the last day
prescribed by law for the filing thereof shall be
considered as filed on such last day. (Emphasis
supplied)
Under the existing withholding tax system, the
withholding agent retains a portion of the
amount received by the income earner. In turn,
the said amount is credited to the total income
tax payable in transactions covered by the EWT.
On the other hand, in cases of income payments
subject to WTC and Final Withholding Tax, the
amount withheld is already the entire tax to be
paid for the particular source of income. Thus, it
can readily be seen that the payee is the
taxpayer, the person on whom the tax is
imposed, while the payor, a separate entity, acts
as the government’s agent for the collection of
the tax in order to ensure its payment.
Thus, withholding tax assessments such as
EWT and WTC clearly contemplate deficiency
internal revenue taxes. Their aim is to collect
unpaid income taxes and not merely to impose a
penalty on the withholding agent for its failure to
comply with its statutory duty.
Second Issue
In Commissioner of Internal Revenue v. Systems
Technology Institute, Inc., the Court ruled that
waivers extending the prescriptive period of tax
assessments must be compliant with RMO No.
20-90 and must indicate the nature and amount
of the tax due.

WHEREFORE, the petition is DENIED.

The September 30, 2013 Decision and the

February 10, 2014 Resolution of the Court of
Tax Appeals En Banc in CTA EB No. 951 are
AFFIRMED.
 PSE vs Secretary of Finance, GR 213860,
July 5, 2022
FACTS
This is a Petition for Certiorari and Prohibition
assailing the constitutionality of Revenue
Regulations No. (RR) 1-2014 2 (RR 1- 2014),
Revenue Memorandum Circular No. 5-14 3
(RMC 5-2014), and the SEC Memorandum
Circular No. 10-2014 4 (SEC MC 10-2014).
Under RR 1-2014, withholding agents are now
required to submit a digital copy of the alphalist
of their employees and payees. It requires
submission of the tax identification number (TIN)
and the complete name of the payees, together
with the corresponding amount of income and
withholding tax.
Then the Securities and Exchange Commission
(SEC) followed suit and issued SEC MC
10-2014. It directs the Philippine Depository and
Trust Corporation (PDTC) and broker dealers to
provide the listed companies or their transfer
agents an alphalist of all depository account
holders and the total shareholdings in each of
the accounts and sub-accounts.Failure to
comply with these issuances will result to
imposition of administrative and penal sanctions.
ISSUE
1. Whether or not the petitioners have legal
standing.
2. Whether or not the questioned regulations are
valid.
RULING
1. Yes, the petitioners have legal standing.
There is no quibble that petitioners'
businesses directly rely on the
patronage of their investors whose
investing activities appear to be directly
affected by the assailed issuances. In
addition, there is a likelihood that
petitioners will suffer an "injury-in-fact"
because under the questioned
regulations, they will be subject to penal
and administrative sanctions in case of
noncompliance. This gives them a
"sufficiently concrete interest" in the
outcome of the issue in dispute. As
stated in White Light, "the relative
silence in constitutional litigation of such
special interest groups in our nation
such as the American Civil Liberties
Union in the United States may also be
construed as a hindrance for customers
to bring suit.
2. No, the question regulations are void for
being unconstitutional.
Prior to the enactment of RR 1-2014 and the
questioned regulations, whenever there is a
dividend declaration on the stocks listed with the
PSE, the listed company, as withholding agent,
reports this taxable event to the BIR and may
lump the payees into one account (such as
"PCD nominee," "Various Payees," or "Others.")
There is no disclosure of the personal
information of the investors. The broker then
files the required tax return and attachments, as
well as remit the tax due. Subsequently, the
PCD nominee forwards the net dividend
payments to the brokers, who then distribute
them accordingly to their investor clients. Under
RR 1-2014, the withholding agent now cannot
list down PCD Nominees as payees and must
disclose all its principals including their personal
information in the alphalist whenever there is a
dividend declaration. The Court noted that even
without the disclosure of the personal
information, the BIR is able to collect withholding
taxes due from dividend income.
The issuance of the questioned regulations
violated due process
The general rule is that administrative
regulations must comply with the requirements
of the Administrative Code of 1987 69 on prior
notice, hearing, and publication for validity. Here,
the Court finds that the questioned regulations
are not mere interpretative issuances; they are
legislative in nature that change, if not increase,
the burden of those governed. Notice and
hearing are thus required for their validity.
The questioned regulations violate the right
to privacy
Ople mandates the application of the strict
scrutiny test in approaching government actions
that are alleged to be violative of a fundamental
right, including the right to privacy. Government
bears the burden to show and prove that its
action serves a compelling state interest and is
narrowly drawn to prevent abuses. It can be
argued that the questioned regulations serve a
compelling state interest: the effective and
proper collection of taxes. However, the Court
finds that the second requirement was not met.
The questioned regulations were not narrowly
drawn to prevent abuses. Respondents failed to
present any evidence to show and prove that the
questioned regulations were narrowly drawn as
the "least restrictive means for effecting the
invoked interest." The State must show an active
effort in showing the inefficacy of all possible
alternatives; this is to assure that the chosen
course of action is the sole effective means. 89
This can be supported through sound data
gathering, 90 which respondents failed to do or
show in the instant case.

The SEC Chairperson had no authority to

issue SEC MC 10-2014 and The Secretary of
Finance and the Commissioner of Internal
Revenue, in including the prohibition on the
use of "PCD Nominee" in RR 1-2014 and
RMC 5-2014, acted outside their scope of
authority

The Court cannot subscribe to this action of the

SEC. The SEC cannot use its rule-making
power to order compliance with a tax regulation
that is outside its ambit. It cannot require
submission of information for purposes not
covered by the provision. To reiterate, the DOF
and the BIR are the primary agencies
responsible for the enforcement of tax laws.
Nothing in the Tax Code states that the DOF, in
implementing tax laws, and the BIR may
regulate the operation of exchanges and
investor relations. In prohibiting the use of PCD
Nominees as payees in the alphalist for
withholding of taxes, the DOF and the BIR
essentially probed into a field that is outside
taxation. It is a field under securities and is
within the ambit of the SEC. In fine, the Court
declares all assailed issuances — RR 1-2014,
RMC 5- 2014, and SEC MC 10-2014 — void for
being unconstitutional.
 CIR vs PNB, GR 212699, March 13, 2019
FACTS:
■ April 17, 2006: PNB electronically
filed its Annual Income Tax Return
(ITR) for taxable year 2005 with
attachments dated February 12,
2007, June 22, 2007, and March 10,
2008, which were received by the
CIR on February 22, 2007, June 25,
2007, and March 13, 2008,
respectively.
■ PNB filed its claim for refund or
issuance of tax credit certificate of
its excess CWT in the amount of
P74,598,430.47
■ Due to the CIR's inaction to the said
claim, PNB filed a petition for review
for its claim on April 11, 2008 before
the CTA.
■ CTA Third Division: Denied the
petition for review and Motion for
Reconsideration (MR). PNB's
evidence to be insufficient to
support its claim for refund or the
issuance of a tax credit certificate.
Presentation of PNB's Annual ITR
for 2006 is not enough to prove that
it did not carry over the claimed
excess or unutilized CWT to the
subsequent quarters of 2006 and
that succeeding Quarterly ITRs is
vital to its claim for refund.
■ CTA En Banc: Affirmed CTA 3rd
Division but reversed and granted
PNB’s MR as PNB complied with all
the requisites for the filing of such
claim: 1. Within the 2-year
prescription period 2. Income
related to the CW formed part of
taxable income as evidenced by
documents presented: Original
accounting tickets or input sheets;
original deeds of
absolute/conditional sale; general
ledgers for the years 1999 to 2006;
audited financial statements; and
ITRs for the years 1999 to 2006 3.
Supported by original Certificates of
Creditable Tax Withheld at Source
issued in the name of PNB and
dated within the calendar year 2005.
It denied CIR’S MR.
■ CIR filed a petition for review on
certiorari under Rule 45
ISSUE: W/N presentation of the subsequent
Quarterly ITRs (for 2006) is indispensable to the
claim of refund.
HELD:
NO. CTA correctly ruled that there is nothing
under the NIRC that requires the submission of
the Quarterly ITRs of the succeeding taxable
year in a claim for refund. Even the BIR's own
regulations do not provide for such requirement.
■ Winebrenner & Iñigo Insurance
Brokers, Inc. v. Commissioner of
Internal Revenue (GR No. 206526,
January 28, 2015): presentation of
the claimant's quarterly returns is
not a requirement to prove
entitlement to the refund.
■ Republic v. Team Energy (Phils.)
Corporation (G.R. No. 188016,
January 14, 2015)
■ BIR ought to have its own
copies, originals at that, of
the claimant's quarterly
returns on file, on the basis
of which it could have easily
rebut the claim that the
excess or unutilized CWT
sought for refund were
carried over to the
immediately succeeding
taxable quarters. Failure to
present such document
during the trial is fatal
against the BIR's case
rather than the claimant's.
■ It bears stressing that the power to
decide matters concerning refunds
of internal revenue taxes, among
others, is vested in the CIR. It has
the duty to ascertain the veracity of
such claims and should not just wait
and hope for the burden to fall on
the claimant when the issue
reaches the court.
■ Commissioner of Internal Revenue
v. PERF Realty Corporation (G.R.
NO. 163345, July 4, 2008):
■ Duty of the CIR to verify
whether or not the claimant
had carried over its excess
CWT
■ CTA's jurisdiction is
appellate. In the exercise of
its authority to review, the
 CTA cannot dictate what
particular evidence the
parties must present to
prove their respective
cases. The means of
ascertainment of a fact is
best left to the party that
alleges the same. The
court's power is limited only
to the appreciation of that
means pursuant to the
prevailing rules of evidence.
■ Despite PNB's failure to present at
the onset its Quarterly ITRs for
2006, its Annual ITR for 2006 is apt
and sufficient to show that no CWT
carry over was made in 2006.
■ Factual findings of the CTA when
supported by substantial evidence,
will not be disturbed on appeal.
CIR vs PNB, GR 180290, September 29, 2014
Facts:
In several transactions including but not limited
to the sale of real properties, lease and
commissions, [respondent] allegedly earned
income and paid the corresponding income
taxes due which were collected and remitted by
various payors as withholding agents to the
Bureau of Internal Revenue ("BIR") during the
taxable year 2000.
On April 18, 2001, [respondent] filed its tentative
income tax return for taxable year 2000 which [it]
subsequently amended on July 25, 2001.
[Respondent] filed again an amended income
tax return for taxable year 2000 on June 20,
2002, declaring no income tax liability . . . as it
incurred a net loss in the amount of
P11,318,957,602.00 and a gross loss of
P745,713,454.00 from its Regular Banking Unit
("RBU")... transactions. However, [respondent]
had a 10% final income tax liability of
P210,364,280.00 on taxable income of
P1,959,931,182.00 earned from its Foreign
Currency Deposit Unit ("FCDU") transactions for
the same year. Likewise, in the [same] return,
[respondent]... reported a total amount of
P245,888,507.00 final and creditable withholding
taxes which was applied against the final income
tax due of P210,364,280.00 leaving an
overpayment of P35,524,227.00.
In its second amended return, [respondent's]
income tax overpayment of P35,524,227.00
consisted of the balance of the prior year's
(1999) excess credits of P9,057,492.00 to be
carried-over as tax credit to the succeeding
quarter/year and excess creditable withholding
taxes for... taxable year 2000 in the amount of
P26,466,735.00 which [respondent] opted to be
refunded.
On November 11, 2002, [respondent] . . . filed a
claim for refund or the issuance of a tax credit
certificate in the amount of P26,466,735.40 for
the taxable year 2000 with the [BIR].
Due to [BIR's] inaction on its administrative
claim, [respondent] appealed before [the Court
of Tax Appeals] by way of a Petition for Review
on April 11, 2003.
On January 30, 2007, the Court of Tax Appeals
First Division rendered a decision in favor of
respondent
Petitioner's motion for reconsideration was
subsequently denied for lack of merit in the First
Division's resolution dated May 30, 2007.
On appeal, the Court of Tax Appeals En Banc
sustained the First Division's ruling.
Issue:
Whether respondent's claim for refund of
unutilized excess creditable withholding taxes
amounting to P23,762,347.83 were duly
supported by valid certificates of creditable tax
withheld at source
Ruling:
These issues require a review, examination,
evaluation, or weighing of the probative value of
evidence presented, especially the withholding
tax certificates, which this court does not have
the jurisdiction to do, barring the presence of
any exceptional circumstance, as it is not a trier
of facts.
Besides, as pointed out by respondent,
petitioner did not object to the admissibility of the
622 withholding tax certificates when these were
formally offered by respondent before the tax
court.[17] Hence, petitioner is deemed to have
admitted the... validity of these documents.[18]
Petitioner's "failure to object to the offered
evidence renders it admissible, and the court
cannot, on its own, disregard such evidence.
At any rate, the Court of Tax Appeals First
Division and En Banc uniformly found that
respondent has established its claim for refund
or issuance of a tax credit certificate for
unutilized excess creditable withholding taxes
for the taxable year 2000 in the amount of
P23,762,347.83. The Court of Tax Appeals First
Division thoroughly passed upon the evidence
presented by respondent and the report of the
court-commissioned auditing firm, SGV & Co.
This court accords respect to the conclusion
reached by the Court of Tax Appeals and will not
presumptuously set it aside absent any showing
of gross error or abuse on its part.
The certificate of creditable tax withheld at
source[22] is the competent proof to establish
the fact that taxes are withheld.[23] It is not
necessary for the person who executed and
prepared the certificate of creditable tax...
withheld at source to be presented and to testify
personally to prove the authenticity of the
certificates.
In Banco Filipino Savings and Mortgage Bank v.
Court of Appeals,[25] this court declared that a
certificate is complete in the relevant details that
would aid the courts in the evaluation of any
claim for refund of excess creditable
withholding... taxes:
In fine, the document which may be accepted as
evidence of the third condition, that is, the fact of
withholding, must emanate from the payor itself,
and not merely from the payee, and must
indicate the name of the payor, the income
payment basis of the tax withheld,... the amount
of the tax withheld and the nature of the tax
paid.
At the time material to this case, the requisite
information regarding withholding taxes from the
sale of acquired assets can be found in BIR
Form No. 1743.1. As described in Section 6 of
Revenue Regulations No. 6-85, BIR Form No.
1743.1 is a written statement issued by the...
payor as withholding agent showing the income
or other payments made by the said withholding
agent during a quarter or year and the amount of
the tax deducted and withheld therefrom. It
readily identifies the payor, the income payment
and the tax withheld. It is complete in... the
relevant details which would aid the courts in the
evaluation of any claim for refund of creditable
withholding taxes.[26] (Emphasis supplied,
citations omitted)
Moreover, as correctly held by the Court of Tax
Appeals En Banc, the figures appearing in the
withholding tax certificates can be taken at face
value since these documents were executed
under the penalties of perjury, pursuant to
Section 267 of the 1997 National Internal
Revenue Code, as amended, which reads:
SEC. 267. Declaration under Penalties of
Perjury. Any declaration, return and other
statements required under this Code, shall, in
lieu of an oath, contain a written statement that
they are made under the penalties of perjury.
Any person who willfully... files a declaration,
return or statement containing information which
is not true and correct as to every material
matter shall, upon conviction, be subject to the
penalties prescribed for perjury under the
Revised Penal Code.
Thus, upon presentation of a withholding tax
certificate complete in its relevant details and
with a written statement that it was made under
the penalties of perjury, the burden of evidence
then shifts to the Commissioner of Internal
Revenue to prove that (1) the certificate is... not
complete; (2) it is false; or (3) it was not issued
regularly.
Petitioner's posture that respondent is required
to establish actual remittance to the Bureau of
Internal Revenue deserves scant consideration.
Proof of actual remittance is not a condition to
claim for a refund of unutilized tax credits.
Under Sections 57 and 58 of the 1997 National
Internal Revenue Code, as amended, it is the
payor-withholding agent, and not the
payee-refund claimant such as respondent, who
is vested with the responsibility of withholding
and remitting income taxes.
Finally, petitioner's allegation that the
submission of the certificates of withholding
taxes before the Court of Tax Appeals was late
is untenable. The samples of the withholding
tax certificates attached to respondent's
comment bore the receiving stamp of the
Bureau of Internal Revenue's Large Taxpayers
Document Processing and Quality Assurance
Division.[29] As observed by the Court of Tax
Appeals En Banc, "[t]he Commissioner is in no
position to assail the authenticity of the CWT
certificates due to PNB's alleged... failure to
submit the same before the administrative level
since he could have easily directed the claimant
to furnish copies of these documents, if the
refund applied for casts him any doubt."[30]
Indeed, petitioner's inaction prompted
respondent to... elevate its claim for refund to
the tax court.
More importantly, the Court of Tax Appeals is not
precluded from accepting respondent's evidence
assuming these were not presented at the
administrative level. Cases filed in the Court of
Tax Appeals are litigated de novo.[31] Thus,...
respondent "should prove every minute aspect
of its case by presenting, formally offering and
submitting . . . to the Court of Tax Appeals [all
evidence] . . . required for the successful
prosecution of [its] administrative claim."[32]
WHEREFORE, the petition is DENIED.
Winebrenner & Iñigo Insurance Brokers, Inc.
vs CIR, GR 206526, January 28, 2015
FACTS:
On April 15, 2004, petitioner filed its Annual
Income Tax Return for CY 2003.
About two years thereafter or on April 7, 2006,
petitioner applied for the administrative tax
credit/refund claiming entitlement to the refund
of its excess or unutilized CWT for CY 2003, by
filing BIR Form No. 1914 with the Revenue
District Office No. 50 of the Bureau of Internal
Revenue (BIR). There being no action taken on
the said claim, a petition for review was filed by
petitioner before the CTA on April 11, 2006. The
case was docketed as CTA Case No. 7440 and
was raffled to the Special First Division (CTA
Division). On April 13, 2010, CTA Division
partially granted petitioner’s claim for refund of
excess and unutilized CWT for CY 2003 in the
reduced amount of ₱2,737,903.34 in its April 13,
2010 Decision (original decision). The
dispositive portion of the decision reads:
In view of the foregoing, the Petition for Review
is hereby PARTIALLY GRANTED. Accordingly,
respondent is hereby ORDERED to REFUND or
ISSUE A TAX CREDIT CERTIFICATE in favor of
the petitioner in the reduced amount of
₱2,737,903.34 representing its excess/unutilized
creditable withholding taxes for the year 2003.
SO ORDERED.
Petitioner filed a Motion for Partial
Reconsideration with Leave to Submit
Supplemental Evidence. It prayed that an
amended decision be issued granting the
entirety of its claim for refund, or in the
alternative, that it be allowed to submit and offer
relevant documents as supplemental evidence.
Respondent Commissioner of Internal Revenue
(CIR) also moved for reconsideration, praying
for the denial of the entire amount of refund
because petitioner failed to present the quarterly
Income Tax Returns (ITRs) for CY 2004. To the
CIR, the presentation of the 2004 quarterly ITRs
was indispensable in proving petitioner’s
entitlement to the claimed amount because it
would prove that no carry-over of unutilized and
excess CWT for the four (4) quarters of CY 2003
to the succeeding four (4) quarters of CY 2004
was made. In the absence of said ITRs, no
refund could be granted. In the CIR’s view, this
was in accordance with the irrevocability rule
under Section 76 of the NIRC which reads:
SEC. 76. Final Adjustment Return. – Every
corporation liable to tax under Section 27 shall
file an adjustment return covering the total
taxable income for the preceding calendar or
fiscal year. If the sum of the quarterly tax
payments made during the said taxable year is
not equal to the total tax due on the entire
taxable income of that year, the corporation shall
either:
(A) Pay the balance of tax still due; or
(B) Carry-over the excess credits; or
(C) Be credited or refunded with the excess
amount paid, as the case may be.
In case the corporation is entitled to a tax credit
or refund of the excess estimated quarterly
income taxes paid, the excess amount shown on
its final adjustment return may be carried over
and credited against the estimated quarterly
income tax liabilities for the taxable quarters of
the succeeding taxable years. 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 cash refund or issuance of a tax
credit certificate shall be allowed therefor.
On July 27, 2011, the CTA-Division reversed
itself. In an Amended Decision, it denied the
entire claim of petitioner. It reasoned out that
petitioner should have presented as evidence its
first, second and third quarterly ITRs for the year
2004 to prove that the unutilized CWT being
claimed had not been carried over to the
succeeding quarters. Thus:
WHEREFORE,in view of the foregoing,
petitioner’s Motion for Partial Reconsideration is
hereby DENIED while respondent’s Motion for
Reconsideration is hereby GRANTED.
Accordingly, the Decision dated April 13, 2010
granting petitioner’s claim in the reduced amount
of ₱2,737,903.34 is hereby REVERSED AND
SET ASIDE. Consequently, the instant Petition
for Review is hereby DENIEDdue to insufficiency
of evidence.
ISSUE: WON THE PRESENTATION OF
QUARTERLY ITR OF THE SUCCEEDING
PERIOD IS INDISPENSABLE.
HELD: NO. Requiring that the ITR or the FAR of
the succeeding year be presented to the BIR in
requesting a tax refund has no basis in law and
jurisprudence.
First, Section 76 of the Tax Code does not
mandate it. The law merely requires the filing of
the FAR for the preceding – not the succeeding
– taxable year. Indeed, any refundable amount
indicated in the FAR of the preceding taxable
year may be credited against the estimated
income tax liabilities for the taxable quarters of
the succeeding taxable year. However, nowhere
is there even a tinge of a hint in any provisions
of the [NIRC] that the FAR of the taxable year
following the period to which the tax credits are
originally being applied should also be
presented to the BIR.
Second, Section 5 of RR 12-94, amending
Section 10(a) of RR 6-85, merely provides that
claims for refund of income taxes deducted and
withheld from income payments shall be given
due course only (1) when it is shown on the ITR
that the income payment received is being
declared part of the taxpayer’s gross income;
and (2) when the fact of withholding is
established by a copy of the withholding tax
statement, duly issued by the payor to the
payee, showing the amount paid and the income
tax withheld from that amount.
It has been submitted that Philam cannot be
cited as a precedent to hold that the
presentation of the quarterly income tax return is
not indispensable as it appears that the quarterly
returns for the succeeding year were presented
when the petitioner therein filed an
administrative claim for the refund of its excess
taxes withheld in 1997.
It appears however that there is
misunderstanding in the ruling of the Court in
Philam. That factual distinction does not negate
the proposition that subsequent quarterly ITRs
are not indispensable. The logic in not requiring
quarterly ITRs of the succeeding taxable years
to be presented remains true to this day. What
Section 76 requires, just like in all civil cases, is
to prove the prima facie entitlement to a claim,
including the fact of not having carried over the
excess credits to the subsequent quarters or
taxable year. It does not say that to prove such a
fact, succeeding quarterly ITRs are absolutely
needed.
This simply underscores the rule that any
document, other than quarterly ITRs may be
used to establish that indeed the non-carry over
clause has been complied with, provided that
such is competent, relevant and part of the
records. The Court is thus not prepared to make
a pronouncement as to the indispensability of
the quarterly ITRs in a claim for refund for no
court can limit a party to the means of proving a
fact for as long as they are consistent with the
rules of evidence and fair play. The means of
ascertainment of a fact is best left to the party
that alleges the same. The Court’s power is
limited only to the appreciation of that means
pursuant to the prevailing rules of evidence. To
stress, what the NIRC merely requires is to
sufficiently prove the existence of the non-carry
over of excess CWT in a claim for refund.
It goes without saying that the annual ITR
(including any other proof that may be sufficient
to the Court)can sufficiently reveal whether carry
over has been made in subsequent quarters
even if the petitioner has chosen the option of
tax credit or refund inthe immediately 2003
annual ITR. Section 76 of the NIRC requires a
corporation to file a Final Adjustment Return (or
Annual ITR) covering the total taxable income
for the preceding calendar or fiscal year. The
total taxable income contains the combined
income for the four quarters of the taxable year,
as well as the deductions and excess tax credits
carried over in the quarterly income tax returns
for the same period.If the excess tax credits of
the preceding year were deducted, whether in
whole or in part, from the estimated income tax
liabilities of any of the taxable quarters of the
succeeding taxable year, the total amount of the
tax credits deducted for the entire taxable year
should appear in the Annual ITR under the item
“Prior Year’s Excess Credits.” Otherwise, or if
the tax credits were carried over to the
succeeding quarters and the corporation did not
report it in the annual ITR, there would be a
discrepancy in the amounts of combined income
and tax credits carried over for all quarters and
the corporation would end up shouldering a
bigger tax payable. It must be remembered that
taxes computed in the quarterly returns are
mere estimates. It is the annual ITR which
shows the aggregate amounts of income,
deductions, and credits for all quarters of the
taxable year. It is the final adjustment return
which shows whether a corporation incurred a
loss or gained a profit during the taxable quarter.
Thus, the presentation of the annual ITR would
suffice in proving that prior year’s excess credits
were not utilized for the taxable year in order to
make a final determination of the total tax due.
 Rhombus Energy, Inc. vs CIR, GR 206362,
August 1, 2018
SUMMARY: The Court upheld the tax refund in
favor of Rhomubs, on the ground of the
irrevocability rule
DOCTRINE: The irrevocability rule is enunciated
in Section 76 of the National Internal Revenue
Code (NIRC), viz .
Once the option to carry over and apply the
excess quarterly income tax against income tax
due for the taxable years of the succeeding
taxable years has been made, such option shall
be considered irrevocable for that taxable period
and no application for cash refund or issuance of
a tax credit certificate shall be allowed therefor.
It is relevant to mention the requisites for
entitlement to the refund as listed in Republic v.
Team (Phils.)Energy Corporation, to wit:
1. That the claim for refund was filed within the
two-year reglementary period pursuant to
Section 229 of the NIRC;
2. When it is shown on the ITR that the income
payment received is being declared part of the
taxpayer's gross income; and
3. When the fact of withholding is established by
a copy of the withholding tax statement, duly
issued by the payor to the payee, showing the
amount paid and income tax withheld from that
amount.
FACTS:
On April 17, 2006, Rhombus filed its Annual
Income Tax Return ("ITR") for taxable year 200
In said Annual ITR for taxable year 2005,
Rhombus indicated that its excess creditable
withholding tax ("CWT") for the year 2005 was
"To be refunded".
On May 29, 2006, Rhombus filed its Quarterly
Income Tax Return for the first quarter of taxable
year2006 showing prior year's excess credits of
P1,500.653.00.
On August 25, 2006, Rhombus filed its Quarterly
Income Tax Return for the second quarter of
taxable year 2006 showing prior year's excess
credits of P1,500,653.00.
On November 27, 2006, Rhombus filed its
Quarterly Income Tax Return for the third quarter
of taxable year 2006 showing prior year's excess
credits of P1,500,653.00.
On December 29, 2006, Rhombus filed with the
Revenue Region No. 8 an administrative claim
for refund of its alleged excess/unutilized CWT
for the year 2005 in the amount of
P1,500,653.00.
On April 2, 2007, Rhombus filed its Annual
Income Tax Return for taxable year 2006
showing prior year's excess credits of P0.00.
On December 7, 2007, pending CIR’s action on
Rhombus's claim for refund or issuance of a tax
credit certificate of its excess/unutilized CWT for
the year 2005 and before the lapse of the period
for filing an appeal,Rhombus filed a Petition for
Review to the CTA, whose First Division granted
such petition.
CTA en banc reversed.
ISSUE: WoN Rhombus has proved its
entitlement to the refund.
HELD: YES. The CTA En Banc thereby
misappreciated the fact that Rhombus had
already exercised the option for its unutilized
creditable withholding tax for the year 2005 to be
refunded when it filed its annual ITR for the
taxable year ending December 31, 2005. The
irrevocability rule took effect when the option
was exercised. In the case of Rhombus,
therefore, its marking of the box "To be
refunded" in its 2005 annual ITR constituted its
exercise of the option, and from then
onwardsRhombus became precluded from
carrying-over the excess creditable withholding
tax. The fact that the prior year's excess credits
were reported in its 2006 quarterly ITRs did not
reverse the option to be refunded exercised in
its 2005 annual ITR. As such, the CTA En Banc
erred in applying the irrevocability rule against
Rhombus
NOTES: The SC REINSTATES the CA First
Division decision, and DIRECTS the
Commissioner of the Bureauof Internal Revenue
to refund to or to issue a tax credit certificate in
favor of petitioner Rhombus Energy, Inc. inthe
amount of P1,500,653.00 representing excess
creditable withholding tax for the year 2005.
 CIR vs PBCom, GR 211348, February 23, credit/refund to be maintained is that a claim of
2022 refund or credit has been filed before the CIR;
there is no mention in the law that the claim
PBCOM is entitled to a tax credit/refund of its before the CIR should be acted upon first before
CWT in the amount of P4,624,554.63. The a judicial claim may be filed.
requisites for claiming a tax credit or a refund of
CWT are as follows: 1) the claim must be filed
within the two-year period from the date of
payment of the tax; 2) it must be shown on the
return that the income received was declared as
part of the gross income; and 3) the fact of
withholding must be established by a copy of a
statement duly issued by the payor to the payee
showing the amount paid and the amount of the
tax withheld.

PBCOM filed the present claim within the

two-year prescriptive period, satisfying the first
requirement. They also complied with the last
two requirements as to the amount which is
verified by the CTA to have been included in the
former’s General Ledger and Annual Income Tax
Return for taxable year 2006, and supported by
the required Certificates of Creditable Tax
Withheld at Source.

The failure in proving an administrative claim for

a CWT refund/credit dues does not preclude the
filing of the judicial claim for the same.

The taxpayer filed a petition with the CTA

praying for the issuance of a TCC for its
excess/unutilized CWT for the year 2006. It
alleged that the said petition was filed due to the
inaction of the CIR on the former’s claim for a
TCC. On the other hand, the BIR argued that the
taxpayer’s claim for the issuance of a TCC is in
a nature of a refund and thus subject to the
administrative examination of the BIR. It further
argued that the taxpayer failed to fully comply
with the requirements for the administrative
claim for CWT refund/credit, hence the judicial
claim with the CTA was premature.

The Supreme Court affirmed the CTA En Banc’s

ruling that the failure of the taxpayer to comply
with the requirements of its administrative claim
for refund/credit does not preclude its judicial
claim. A judicial claim for tax credit/refund CWT
is independent from its administrative
counterpart as implied in Section 204(C) and
229 of the Tax Code which require that both
administrative and judicial claims to be filed
within the same two-year prescriptive period.
With reference to Section 229 of the NIRC, the
only requirement for a judicial claim of tax
 BDO vs Republic, GR 198756, 2016
FACTS:
The Bureau of Treasury (BTr) in a notice
announced the auction of 10- year Zero-Coupon
Bonds denominated as the Poverty Eradication
and Alleviation Certificates or the PEACE Bonds
on October 16, 2001, which the BTr states shall
not be subject to 20% final withholding tax since
the issue is limited to 19 buyers/lenders.
At the auction, Rizal Commercial Banking
Corporation (RCBC) participated on behalf of
Caucus of Development NGO Networks
(CODE-NGO) and won the bid.
Thus, bonds were issued to RCBC, who, as
appointed issue manager and lead underwriter
of CODE-NGO, then sold and distributed said
government bonds to petitioner-banks.
On October 7, 2011, barely 11 days before
maturity of the PEACe Bonds, the BIR issued
the following:
BIR Ruling No. 370- 201119 declaring that the
PEACe Bonds, being deposit substitutes, were
subject to 20% final withholding tax . Under this,
DOF directed BTr to withhold 20% final tax from
the face value of the PEACe Bonds. BIR Ruling
No. DA 378-201157 clarified that the final
withholding tax should be imposed and withheld
not only on RCBC/CODE NGO but also on all
subsequent holders of the Bonds.
Banco de Oro, et al. thus filed a petition for
Certiorari, Prohibition and Mandamus under
Rule 65 to the Supreme Court contending the
assailed 2011 BIR Ruling, with urgent
application of TRO and/or writ of Preliminary
Injuction.
SC then issued a TRO enjoining the
implementation of the BIR ruling, subject to the
condition that 20% FWT be delivered to the
banks to be placed in escrow. SC Decision
promulgated January 13, 2015, SC granted
petition and ruled that the number of lenders/
investors at every transaction determines
whether a debt instrument is a deposit substitute
subject to 20% FWT. When at any transaction,
funds are simultaneously obtained from 20 or
more lenders/investors, there is deemed to be
public borrowing and bonds are deemed deposit
substitutes. Hence, seller is required to withhold
20% FWT on the imputed interest income from
the bonds.
The two BIR Rulings is void for disregarding the
20-lender rule provided in Section 22 (Y) of the
Tax Code. BTr reprimanded for its continued
retention of the amount corresponding to 20%
FWT. Separate Motions for Reconsideration and
clarification were filed both by BDO, et al and
the Republic, et al.
ISSUES
1. Does CTA have jurisdiction to determine
the constitutionality or validity of tax
laws, rules and regulations, and other
administrative issuances of CIR?
2. May the 20-lender rule apply to PEACe
Bonds?
3. Assuming the PEACe Bonds are
considered “deposit substitutes,”
whether government or the Bureau of
Internal Revenue is estopped from
imposing and/or collecting the 20% final
withholding tax from the face value of
these Bonds?
4. Whether BTr is liable to pay 6% legal
interest rate?
HELD
#1
YES. CTA has jurisdiction and may take
cognizance of cases directly challenging
constitutionality or validity of a tax law, regulation
or administrative issuance such as revenue
order, revenue memorandum circular, and ruling.
RA 9282: appeals from the decisions of
quasi-judicial agencies on tax-related problems
must be brought exclusively to the CTA
#2
YES. The 20-lender rule may apply to PEACe
Bonds, depending on the number of lenders “at
any one time”
The definition of deposit substitutes in Section
22(Y) specifically defined “public” to mean
“twenty (20) or more individual or corporate
lenders at any one time.” Hence, if there are 20
or more lenders, the debt instrument is
considered a deposit substitute which is subject
to the 20% FWT.
“The reckoning of the phrase “20 or more
lenders” should be at the time when the
petitioner-intervenor RCBC Capital sold the
PEACe bonds to investors. Should the number
of investor to whom petitioner-intervenor RCBC
Capital distributes the PEACe bonds, therefore,
be found to be 20 or more, the PEACe Bonds
are considered deposit substitutes subject to
20% final withholding tax. Petitioner-intervenors
RCBC/CODE-NGO and RCBC Capital, as well
as the final bondholders who have recourse to
government upon maturity are liable to pay the
20% final withholding tax.”

#3
YES. The Bureau of Internal Revenue is
estopped from imposing and/or collecting the
20% final withholding tax from the face value of
these Bonds

The Supreme Court interpretation in its January

2015 decision of the phrase “at any one time” to
determine the phrase “20 or more lenders” to
include both the primary and secondary market
cannot be applied to the PEACe Bonds and
should be applied prospectively.

RCBC and the rest of the investors relied in

good faith on the BIR Rulings which provide that
PEACe Bonds are not treated as deposit
substitutes and are subject to the 20% final
withholding tax.

HELD
#4
YES. BTr may be held liable.
The BTr made no effort to release the amount
corresponding to the 20% FWT which is an utter
disregard and defiance of the order of the Court
BTr is ordered to immediately release and pay
the bondholders the amount of
P4,966,207,796.41, representing the 20% final
withholding tax on the PEACe Bonds, with legal
interest of 6% per annum from October 19, 2011
until full payment.