Finale

T AX AT I O N L AW C AS E D I G E S T S | 1
LASCONA LAND CO., INC. v. COMMISSIONER

OF INTERNAL REVENUE
(G.R. No. 171251, March 5, 2012
FACTS: In March 1998, the Commissioner of Internal Revenue (CIR) issued
a formal assessment notice (FAN) to Lascona Land Co, Inc (LLCI) demandin!
the latter to "a# $%&'( in ta)es LLCI filed a timel# "rotest on A"ril *+, 1998
From said date (since no su""ortin! document ,as re-uired to .e su.mitted),
the CIR has 18+ da#s to decide on the "rotest /o,ever, the CIR "romul!ated its
decision on March ', 1999 LLCI received a co"# of the decision on March 1*,
1999 0n A"ril 1*, 1999, LLCI a""ealed the decision to the Court of 1a) A""eals
(C1A) 1he CIR moved for the dismissal of the a""eal on the !round that under a
revenue re!ulation issued .# the 2ureau of Internal Revenue (RR No 1*399), if
the CIR or its re"resentative failed to act on a "rotest ,ithin the 18+3da# "eriod
the ta)"a#er ma# a""eal ,ithin '+ da#s from the la"se of the 18+3da# "eriod to
the C1A other,ise, the decision shall .ecome final and e)ecutor#4 that LLCI
failed to a""eal ,ithin the said "eriod hence the C1A has no 5urisdiction over the
case a""ealed .# LLCI
ISSUE: 6hether or not the contention of the CIR is correct
RULING: No 1he revenue re!ulation is invalid 7nder the la, (8ection **8 of
the National Internal Revenue Code), a ta)"a#er has t,o remedies if the CIR
failed to act on his "rotest ,ithin the 18+3da# "eriod, to ,it4
1) 1he ta)"a#er adversel# affected .# the decision ma# a""eal to the C1A ,ithin
'+ da#s from recei"t of the decision, or
*) Ma# a""eal to the C1A ,ithin '+ da#s from the la"se of the one hundred
ei!ht# (18+)3da# "eriod
Inter"retin! the a.ove "rovision, the ta)"a#er has t,o o"tions in
case of inaction .# the CIR First is to a""eal to the C1A ,ithin '+ da#s from the
la"se of the 18+ da# "eriod4 or second, ,ait for the CIR to issue the decision and
then a""eal, if adverse, to the C1A ,ithin '+ da#s from the recei"t of the decision
.# the ta)"a#er (.ecause even if the CIR failed to decide on the case ,ithin the
18+ da# "eriod, it can still decide on it and ma# even issue a favora.le 5ud!ment
to the ta)"a#er, hence it ma# .e lo!ical to ,ait and onl# a""eal if the adverse
decision is actuall# received)
In the case at .ar, LLCI chose to ,ait for the CIR to decide on the
case and it did not a""eal ,ithin '+ da#s from the la"se of the 18+3da# "eriod
LLCI received the adverse decision of the CIR on March 1*, 1999 It a""ealed on
A"ril 1*, 1999 ,hich is still ,ithin the '+3da# "eriod to a""eal to the C1A 1he
revenue re!ulation in -uestion is invalid .ecause in effect, it limited the remed#
"rovided for .# the la, 8ection **8 of the NIRC "revails over the said revenue
re!ulation 1he said revenue re!ulation cannot validl# ta(e a,a# the o"tion of the
ta)"a#er to continue ,aitin!, even after the la"se of the 18+ da# "eriod, for the
CIR to decide on the case and 5ust a""eal, ,ithin '+ da#s from recei"t, if the
CIR9s rulin! is adverse It must ho,ever .e noted that these t,o remedies are
mutuall# e)clusive
!A"A#EL v. COURT OF TA$ A%%EALS
(G.R. No. 17&75', S()*(+,(r 12, 2011
FACTS: 1he "etitioners ,ere the counsel of 8urfield :evelo"ment
Cor"oration (8urfield), ,hich sou!ht from the 0ffice of the Cit# 1reasurer of
Mandalu#on! Cit# the refund of e)cess realt# ta)es "aid from 199& until *+++
After the Cit# ;overnment of Mandalu#on! Cit# denied its claim for refund,
8urfield initiated a s"ecial civil action for mandamus in the Re!ional 1rial Court
(R1C) in Mandalu#on! Cit#, and later amended its "etition to include its claim for
refund of the e)cess ta)es "aid from *++1 until *++' 0n 0cto.er 1&, *++<, the
R1C dismissed the "etition on the !round that the "eriod to file the claim had
alread# "rescri.ed and that 8urfield had failed to e)haust administrative
remedies 1he R1C ruled that the !rant of a ta) refund ,as not a ministerial dut#
com"ella.le .# ,rit of mandamus 8urfield, re"resented .# the "etitioners,
elevated the dismissal to the C1A via "etition for revie, In its decision, the C1A
First :ivision denied the "etition for lac( of 5urisdiction and for failure to e)haust
the remedies "rovided under 8ection *&' and 8ection **= of Re"u.lic Act No
%1=+ (Local Government Code)
ISSUE: 6hether or not the contention of C1A is correct
RULING: >es, the contention of C1A is correct 8ection % Jurisdiction. ? 1he
C1A shall e)ercise@
(a) A)clusive a""ellate 5urisdiction to revie, .# a""eal, as herein "rovided@
)))
(') :ecisions, orders or resolutions of the Re!ional 1rial Courts in local ta)
cases ori!inall# decided or resolved .# them in the e)ercise of their ori!inal or a""ellate
5urisdiction4
)))
(&) :ecisions of the Central 2oard of Assessment A""eals in the e)ercise of its
a""ellate 5urisdiction over cases involvin! the assessment and ta)ation of real "ro"ert#
ori!inall# decided .# the "rovincial or cit# .oard of assessment a""eals4
)))
As can .e read and seen, 8ection %(a)(') covers onl# a""eals of the
decisions, orders or resolutions of the Regional Trial Courts in local tax cases
originally decided or resolved by them in the exercise of their original or appellate
jurisdiction. 1he "rovision is clearl# limited to local ta) dis"utes decided .# the
Re!ional 1rial Courts In contrast, 8ection %(a)(&) !rants the C1A co!niBance of
a""eals of the Cdecisions of the Central 2oard of Assessment A""eals in the
e)ercise of its a""ellate 5urisdiction over cases involvin! the assessment and
ta)ation of real "ro"ert# ori!inall# decided .# the "rovincial or cit# .oard of
assessment a""ealsD In its resolution of March 1&, *++=, therefore, the C1A First
:ivision forthri!htl# e)"lained ,h#, contrar# to the "etitioners9 ur!in!, 8ection
%(a)(') ,as not a""lica.le .# clarif#in! that a real "ro"ert# ta), .ein! an ad
valorem ta), could not .e treated as a local ta)
MICROSOFT %!IL., INC. v. CIR
(G.R. No. 1-017., A)r/0 1, 2011
FACTS:
Microsoft renders mar(etin! services to t,o affiliated nonresident
forei!n cor"orations ,ith their services .ein! "aid for in forei!n currenc#
Microsoft filed a claim for refund for unutiliBed in"ut EA1 .ut the C1A denied the
same on the .asis that the official recei"ts issued did not .ear the im"rinted ,ord
CBero3ratedD on its face and are thus not valid evidence of Microsoft9s sales
ISSUE: Whether or not Microo!t i entit"e# to $ re!%n#&
RULING: No 1he re!ulations in effect ,hen the sales ,ere made .# Microsoft
clearl# indicate in the "ortion outlinin! the CInvoicin! Re-uirementsD that
the ,ord CBero3ratedD must .e im"rinted in the invoice 6ithout such, the
invoices are not considered as EA1 invoices and thus could not !ive rise to
an# in"ut ta) 1he Court added that the reason for enforcin! this rule even
if onl# .ased on re!ulation is that it "revents .u#ers from falsel# claimin!
in"ut EA1 from their "urchases ,hen no EA1 is actuall# "aid
In this case, the ta)"a#er insists that 8ections 11' and *'% of the National
Internal Revenue Code (NIRC) and 8ection <1+831 of Revenue Re!ulations
(RR) No %39& do not "rovide that failure to indicate the ,ord CBero3ratedD in the
invoices or recei"ts ,ould result in the outri!ht invalidation of these invoices or
recei"ts and the disallo,ance of a claim for ta) credit or refund 8ections 11' (A)
and *'% of the NIRC "rovide for the invoicin! re-uirements for value3added ta)
(EA1) re!istered "ersons Related to these "rovisions, 8ection <1+831 of RR No
%39& enumerates the information ,hich must a""ear on the face of the official
recei"ts or invoices for ever# sale of !oods .# EA13re!istered "ersons At the
time ta)"a#er filed its claim for credit of EA1 in"ut ta), RR No %39& ,as alread#
in effect and it re-uired, amon! others, that the ,ord CBero3ratedD .e im"rinted on
the invoice coverin! Bero3rated sales It also "rovided that onl# EA13re!istered
"ersons are re-uired to "rint their ta) identification num.er follo,ed .# the ,ord
CEA1D in their invoices or recei"ts and this shall .e considered as a CEA1 invoiceD
All "urchases covered .# invoices other than a CEA1 invoiceD shall not !ive rise to
an# in"ut ta) 1he invoicin! re-uirements for EA13re!istered ta)"a#er as
"rovided in the NIRC and revenue re!ulations are clear A EA13re!istered
ta)"a#er is re-uired to com"l# ,ith all the EA1 invoicin! re-uirements to .e a.le
to file a claim for in"ut ta)es on domestic "urchases for !oods or services
attri.uted to Bero3rated sales A CEA1 invoiceD is an invoice that meets the
re-uirements of 8ection <1+831 of RR No %39& Contrar# to ta)"a#er9s claim,
RR No %39& e)"ressl# states that C"urchases covered .# invoices other than a
EA1 invoice shall not !ive rise to an# in"ut ta)D 1a)"a#er9s invoice, lac(in! the
,ord CBero3rated,D is not a CEA1 invoice,D and this cannot !ive rise to an# in"ut
ta) 1he su.se-uent enactment of Re"u.lic Act No 9''% Famendin! the NIRCG
on 1 Novem.er *++& elevatin! "rovisions of RR No %39& into la, merel#
codified into la, administrative re!ulations that alread# had the force and effect
of la, 8uch codification does not mean that "rior to the codification the
administrative re!ulations ,ere not enforcea.le
T AX AT I O N L AW C AS E D I G E S T S | '
SILICON %!ILI%%INES, INC. v. CIR
(G.R. No. 172.7-, 2a34ar5 17, 2011
FACTS:
8ilicon $hili""ines, Inc is a cor"oration dul# or!aniBed and
e)istin! under the la,s of the $hili""ines It is re!istered ,ith the 2IR das a EA13
ta)"a#er and ,ith the 20I as a "referred "ioneer enter"rise 1hen, on Ma#, 1999,
8ilicon filed ,ith the CIR an a""lication for creditHrefund of unutiliBed in"ut
EA1 for the "eriod of 0ct 1, 1998 to :ec '1, 1998:ue to the inaction of the
CIR, 8ilicon, on :ec *%, *+++, filed a $etition for Revie, ,ith the C1A :ivision
8ilicon alle!ed that in the -uarter of 1998, it !enerated and recorded Bero3
rated e)"ort sales "aid to 8ilicon in acce"ta.le forei!n currenc# and that
for the sai d "eri od, 8i l i con "ai d i n"ut EA1 i n the total amount ,hich
have not .een a""lied to an# out"ut EA1 1he CIR, on the other hand, raised
the defenses that@ 1 8ilicon did not sho, that it com"lied ,ith the "rovisions
of 8ec **9 of the 1a) Code4 * 1hat claims for refund are construed strictl#
a!ainst the claimant similar to the nature of e)em"tion from ta)es4 and that
8ilicon failed to "rove that is entitled for refund 1he C1A :i vi si on !r ant ed
8i l i con9 s cl ai m f or r ef und of unuti l i Bed i n"ut EA1 on ca"i tal !oods
/o,ever, i t deni ed 8ilicon9s claim for creditHrefund of in"ut EA1 attri.uta.le to
its Bero3rated e)"ort sales It is .ecause 8ilicon failed to "resent an Authorit# to
$rint (A1$) from the 2IR neither did it "rint on its e)"ort sales invoices the A1$
and the ,ord Bero3rated 8ilicon moved for reconsideration claimin! that it is not
re-uired to secure an A1$ since it has a C$ermit to Ado"t Com"uteriBed
Accounti n! :ocuments such as 8al es Invoi ce and 0ffi ci al Recei"ts
from the 2IR And that the "rintin! of the ,ord CBero3ratedD on its e)"ort sales
invoices is not necessar# .ecause all its finished "roducts are e)"orted to its
mother com"an#, Intel Cor", a non3resident cor"oration and a non3EA1
re!istered entit#
ISSUE: 6hether or not the "etitioner is entitled to a refund
RULING:
No, the "etitioner is not entitled to a refund 1he authorit# to "rint
(A1$) need not .e reflected or indicated in the invoices or recei"ts .ecause there
is no la, or re!ulation re-uirin! it In the a.sence of such la, or re!ulation,
failure to "rint the A1$ on the invoices or recei"ts should not result in the outri!ht
denial of a claim or the invalidation of the invoices or recei"ts for "ur"oses of
claimin! a refund /o,ever, section *'8 of the National Internal Revenue Code
(1a) Code) e)"ressl# re-uires "ersons en!a!ed in .usiness to secure an A1$
from the 2ureau of Internal Revenue "rior to "rintin! invoices or recei"ts 7nder
section 11* (A) of the 1a) Code, a claimant must .e en!a!ed in sales ,hich are
Bero3rated or effectivel# Bero3rated 1o "rove this, dul# re!istered invoices or
recei"ts evidencin! Bero3rated sales must .e "resented /o,ever, since the A1$
is not indicated in the invoices or recei"ts, the onl# ,a# to verif# ,hether the
invoices or recei"ts are dul# re!istered is .# re-uirin! the claimant to "resent its
T AX AT I O N L AW C AS E D I G E S T S | (
A1$ from the 2IR 6ithout this "roof, the invoices or recei"ts ,ould have no
"ro.ative value for the "ur"ose of refund
6E%CO %!ILI%%INES COR%ORATION. v. CIR
(G.R. No. 17''11, 2a34ar5 .1, 2011
FACTS: $etitioner is a value3added ta) !"T# re!istered ta)"a#er en!a!ed in
the "roduction and sale of electricit# as an inde"endent "o,er "roducer It sells
its electricit# to the National $o,er Cor"oration ($%C) Ie"co filed ,ith
res"ondent Commissioner of Internal Revenue (C&R) an a""lication for effective
Bero3ratin! of its sales of electricit# to the N$C 1he C1A 8econd :ivision
rendered a decisionF'G den#in! Ie"co9s claim for refund for failure to "ro"erl#
su.stantiate its effectivel# Bero3rated sales for the ta)a.le #ear 1999 in the total
amount of $8=+,'<+,<889=, ,ith the alle!ed in"ut EA1 of $1+,&*%,*+*&<
directl# attri.uta.le thereto 1he ta) court held that Ie"co failed to com"l# ,ith
the invoicin! re-uirements in clear violation of 8ection <1+831 of Revenue
Re!ulations R.R.# No %39&, im"lementin! 8ection 1+8(2)(') in con5unction ,ith
8ection 11' of the 199% NIRC 0n "etitioner9s a""eal to the C1A An 2anc, the
Court a -uo dismissed the "etition, reasonin! out that Ie"co9s failure to com"l#
,ith the re-uirement of im"rintin! the ,ords CBero3ratedD on its official recei"ts
resulted in non3entitlement to the .enefit of EA1 Bero3ratin! and denial of its claim
for refund of in"ut ta)
ISSUE: 6hether or not Ie"co9s failure to im"rint the ,ords CBero3ratedD on
its official recei"ts issued to N$C 5ustifies an outri!ht denial of its claim for refund
of unutiliBed in"ut ta) credits
RULING:
>es In the &ntel case, the claim for ta) refund or issuance of a ta)
credit certificate ,as denied due to the ta)"a#er9s failure to reflect or indicate in
the sales invoices the 2IR authorit# to "rint 1he Court held that the 2IR
authorit# to "rint ,as not one of the items re-uired .# la, or 2IR re!ulation to .e
indicated or reflected in the invoices or recei"ts, hence, the 2IR erred in den#in!
the claim for refund In the "resent case, ho,ever, the "rinci"al !round for the
denial ,as the a.sence of the ,ord CBero3ratedD on the invoices, in clear
violation of the invoicin! re-uirements under 8ection 1+8(2)(') of the 199% NIRC,
in con5unction ,ith 8ection <1+831 of RR No %39&
Re!ardin! Ie"co9s contention, that non3com"liance ,ith the
re-uirement of invoicin! ,ould onl# su.5ect the non3com"l#in! ta)"a#er to
"enalties of fine and im"risonment under 8ection *=< of the 1a) Code, and not to
the outri!ht denial of the claim for ta) refund or credit, must li(e,ise fail 8ection
*=< cate!oricall# "rovides for "enalties in case of CFailure or Refusal to Issue
Recei"ts or 8ales or Commercial Invoices, Eiolations related to the $rintin! of
such Recei"ts or Invoices and 0ther Eiolations,D .ut not to "enalties for failure to
com"l# ,ith the re-uirement of invoicin! As recentl# held in 'epco %hilippines
Corporation v. Commissioner of &nternal Revenue, C8ection *=< of the 199%
NIRC ,as not intended to e)cuse the com"liance of the su.stantive invoicin!
re-uirement needed to 5ustif# a claim for refund on in"ut EA1 "a#mentsD 1hus,
T AX AT I O N L AW C AS E D I G E S T S | )
for Ie"co9s failure to su.stantiate its effectivel# Bero3rated sales for the ta)a.le
#ear 1999, the claimed $1+,&*%,*+*&< in"ut EA1 cannot .e refunded
SOUT!ERN %!IL. %O#ER COR%. v. CIR
(G.R. No. 17'1.2, Oc*o,(r 20, 2011
FACTS:
$etitioner 8outhern $hili""ines $o,er Cor"oration (8$$) a""lied
,ith the 2ureau of Internal Revenue (2IR) for Bero3ratin! of its transactions under
8ection 1+8(2)(') of the National Internal Revenue Code (NIRC) 1he 2IR
a""roved the a""lication for ta)a.le #ears 1999 and *+++ 0n June *+, *+++
8$$ filed a claim ,ith res"ondent Commissioner of Internal Revenue (CIR) for a
$&,+8','%1&% ta) credit or refund for 1999 0n Jul# 1', *++1 8$$ filed a
second claim of $=,**1,+%8<< in ta) credit or refund for *+++ 1he amounts
re"resented unutiliBed in"ut EA1 attri.uta.le to 8$$9s Bero3rated sale of
electricit# to N$C 0n 8e"tem.er *9, *++1, .efore the la"se of the t,o3#ear
"rescri"tive "eriod for such actions, 8$$ filed ,ith the Court of 1a) A""eals
(C1A) 8econd :ivision a "etition for revie, coverin! its claims for refund or ta)
credit 1he "etition claimed onl# the a!!re!ate amount of $8,='=,1*=%& ,hich
covered the last t,o -uarters of 1999 and the four -uarters in *+++ In his
Comment on the "etition, the CIR maintained that 8$$ is not entitled to ta) credit
or refund since (a) the 2IR ,as still e)aminin! 8$$9s claims for the same4 (.)
8$$ failed to su.stantiate its "a#ment of in"ut EA14 (c) its ri!ht to claim refund
alread# "rescri.ed, and (d) 8$$ has not sho,n com"liance ,ith 8ection *+<(c)
in relation to 8ection **9 of the NIRC as amended and Revenue Re!ulation (RR)
&38% as amended .# RR '388 0n a""eal, the C1A (n )anc affirmed the 8econd
:ivision9s decision dated Jul# '1, *++% 1he C1A (n )anc re5ected 8$$9s
contention that its sales invoices reflected the ,ords CBero3rated,D "ointin! out
that it is on the official recei"ts that the la, re-uires the "rintin! of such ,ords
Moreover, 8$$ did not re"ort in the corres"ondin! -uarterl# EA1 return the sales
su.5ect of its Bero3rated recei"ts 1he C1A (n )anc denied 8$$9s motion for
reconsideration on 8e"tem.er 19, *++%
ISSUE: 6hether or not the C1A (n )anc correctl# re5ected the invoices that
8$$ "resented and, thus, ruled that it failed to "rove the Bero3rated or effectivel#
Bero3rated sales that it made
RULING:
No, the C1A is not correct 6hile ac(no,led!in! that 8$$9s sale of
electricit# to N$C is a Bero3rated transaction, the C1A (n )anc ruled that 8$$
failed to esta.lish that it made Bero3rated sales 1rue, 8$$ su.mitted official
recei"ts and sales invoices stam"ed ,ith the ,ords C2IR EA1 Kero3Rate
A""lication Num.er <19*+++D .ut the C1A (n )anc held that these ,ere not
sufficient to "rove the fact of sale
2ut NIRC 8ection 11+ (A1) "rovides that the in"ut ta) su.5ect of ta)
refund is to .e evidenced .# a EA1 invoice *or+ official recei"t issued in
accordance ,ith 8ection 11' 8ection 11' has .een amended .# Re"u.lic Act
T AX AT I O N L AW C AS E D I G E S T S | ,
(RA) 9''% .ut it is the unamended version that covers the "eriod ,hen the
transactions in this case too( "lace It reads@
8ection 11' Invoicin! and Accountin! Re-uirements for EA13Re!istered $ersons ?
A Invoicin! Re-uirements ? A EA13re!istered "erson shall, for ever# sale,
issue an in-oice or recei.t In addition to the information re-uired under 8ection *'%,
the follo,in! information shall .e indicated in the invoice or recei"t@

(1) A statement that the seller is a EA13re!istered "erson, follo,ed .# his
ta)"a#er9s identification num.er (1IN)4 and
(*) 1he total amount ,hich the "urchaser "a#s or is o.li!ated to "a# to the
seller ,ith the indication that such amount includes the value3added ta) (Am"hasis
su""lied)
1he a.ove does not distin!uish .et,een an invoice and a recei"t
,hen used as evidence of a Bero3rated transaction Conse-uentl#, the C1A
should have acce"ted either or .oth of these documents as evidence of 8$$9s
Bero3rated transactions
T AX AT I O N L AW C AS E D I G E S T S | /
DIA7 v. SECRETAR8 OF FINANCE
(G.R. No. 1'.007, 2405 1', 2011
FACTS:
$etitioners filed this "etition for declarator# relief assailin! the
validit# of the im"endin! im"osition of value3added ta) (EA1) .# the 2ureau of
Internal Revenue (2IR) on the collections of toll3,a# o"erators $etitioners hold
the vie, that Con!ress did not, ,hen it enacted the NIRC, intend to include toll
fees ,ithin the meanin! of Csale of servicesD that are su.5ect to Eat4 that a toll fee
is a Cuser9s ta)D, not a sale of services4 that to im"ose EA1 on toll fees ,ould
amount to a ta) on "u.lic service4 and that, since EA1 ,as never factored into
the formula for com"utin! toll fees, its im"osition ,ould violate the non3
im"airment clause of the Constitution
ISSUE:
6hether or not toll fees collected .# toll3,a# o"erators are su.5ect to EA1
RULING:
>es, toll3,a# o"erators are su.5ect to EA1 1he 8u"reme Court held that@
(1) EA1 is im"osed on Call (inds of servicesD and toll,a# o"erators
,ho are en!a!ed in constructin!, maintainin!, and o"eratin! e)"ress,a#s are no
different from lessors of "ro"ert#, trans"ortation contractors, etc4
(*) Not onl# do the# fall under the .road term under (1) .ut also
come under those descri.ed as Call other franchise !ranteesD ,hich is not
confined onl# to le!islative franchise !rantees since the la, does not distin!uish
1he# are also not a franchise !rantee under 8ection 119 ,hich ,ould have made
them su.5ect to "ercenta!e ta) and not EA14
(') Neither are the services "arts of the enumeration under 8ection
1+9 on EA13e)em"t transactions4
(<) 1he toll fee is not a user9s ta) and thus it is "ermissi.le to im"ose
a EA1 on the said fee 1he MIAA case does not a""l# and the Court em"hasiBed
that toll fees are not ta)es since the# are not assessed .# the 2IR and do not !o
the !eneral coffers of the !overnment 1oll fees are collected .# "rivate o"erators
as reim.ursement for their costs and e)"enses ,ith a vie, to a "rofit ,hile ta)es
are im"osed .# the !overnment as an attri.ute of its soverei!nt# Aven if the toll
fees ,ere treated as user9s ta), the EA1 can not .e deemed as a Lta) on ta)9
since the EA1 is im"osed on the toll,a# o"erator and the fact that it mi!ht "ass3
on the same to the toll,a# user, it ,ill not ma(e the latter directl# lia.le for EA1
since the shifted EA1 sim"l# .ecomes "art of the cost to use the toll,a#s4 and
(&) 1he assertion that the EA1 im"osed is not administrativel#
feasi.le !iven the manner .# ,hich the 2IR intends to im"lement the EA1 (ie,
roundin! off the toll rates and "uttin! an# e)cess collection in an escro, account)
is not enou!h to invalidate the la, Non3o.servance of the canon of
administrative feasi.ilit# ,ill not render a ta) im"osition invalid Ce)ce"t to the
e)tent those s"ecific constitutional or statutor# limitations are im"airedD
%ANASONIC COMMUNICATIONS IMAGING COR% OF T!E
%!ILI%%INES v. CIR
112 SCRA 2-, 2010
FACTS:
$etitioner $anasonic "roduces and e)"orts "lain "a"er co"iers and their
su.3assem.lies, "arts, and com"onents It is re!istered ,ith the 2oard of
Investments as a "referred "ioneer enter"rise under the 0mni.us Investments
Code of 198% It is also a re!istered value3added ta) (EA1) enter"rise Claimin!
that the in"ut EA1 it "aid remained unutiliBed or una""lied, on March 1*, 1999
and Jul# *+, 1999 "etitioner $anasonic filed ,ith the 2ureau of Internal Revenue
(2IR) t,o se"arate a""lications for refund or ta) credit of ,hat it "aid 6hen the
2IR did not act on the same, $anasonic filed on :ecem.er 1=, 1999 a "etition for
revie, ,ith the C1A, averrin! the inaction of the res"ondent Commissioner
of Internal Revenue (CIR) on its a""lications
C1A9s First :ivision rendered 5ud!ment, den#in! the "etition for lac( of
merit 1he First :ivision said that, ,hile "etitioner $anasonic9s e)"ort sales ,ere
su.5ect to +M EA1 under 8ection 1+=(A)(*)(a)(1) of the 199% NIRC, the same did
not -ualif# for Bero3ratin! .ecause the ,ord CBero3ratedD ,as not "rinted on
$anasonic9s e)"ort invoices 1his omission, said the First :ivision, violates the
invoicin! re-uirements of 8ection <1+831 of Revenue Re!ulations (RR) %39& 0n
"etitioner9s a""eal to the C1A en .anc, the latter denied the "etition .ased on the
findin!s of the C1A First :ivision
ISSUE: 6hether or not the C1A en banc correctl# denied "etitioner
$anasonic9s claim for refund of the EA1 it "aid as a Bero3rated ta)"a#er on the
!round that its sales invoices did not state on their faces that its sales ,ere
CBero3ratedD
RULING:
>es 8ection <1+831 of RR %39& "roceeds from the rule3ma(in!
authorit# !ranted to the 8ecretar# of Finance under 8ection *<& of the 19%%
NIRC ($residential :ecree 11&8) for the efficient enforcement of the ta) code and
of course its amendments 1he re-uirement is reasona.le and is in accord ,ith
the efficient collection of EA1 from the covered sales of !oods and services As
a"tl# e)"lained .# the C1A9s First :ivision, the a""earance of the ,ord CBero3
ratedD on the face of invoices coverin! Bero3rated sales "revents .u#ers from
falsel# claimin! in"ut EA1 from their "urchases ,hen no EA1 ,as actuall# "aid
If, a.sent such ,ord, a successful claim for in"ut EA1 is made, the !overnment
,ould .e refundin! mone# it did not collect
Further, the "rintin! of the ,ord CBero3ratedD on the invoice hel"s
se!re!ate sales that are su.5ect to 1+M (no, 1*M) EA1 from those sales that are
Bero3rated 7na.le to su.mit the "ro"er invoices, "etitioner $anasonic has .een
una.le to su.stantiate its claim for refund
$etitioner $anasonic9s citation of &ntel Technology %hilippines, &nc.
v. Commissioner of &nternal Revenue is mis"laced Nuite the contrar#, it
stren!thens the "osition ta(en .# res"ondent CIR In that case, the CIR denied
the claim for ta) refund on the !round of the ta)"a#er9s failure to indicate on its
invoices the C2IR authorit# to "rintD 2ut 8ec <1+831 re-uired onl# the follo,in!
to .e reflected on the invoice@
1 1he name, ta)"a#er9s identification num.er (1IN) and address of seller4 * :ate of
transaction4 ' Nuantit#, unit cost and descri"tion of merchandise or nature of service4 <
1he name, 1IN, .usiness st#le, if an#, and address of the EA13re!istered "urchaser,
customer or client4 & 1he ,ord CBero3ratedD im"rinted on the invoice coverin! Bero3rated
sales4 and =1he invoice value or consideration
1he 8u"reme Court held that, since the C2IR authorit# to "rintD is
not one of the items re-uired to .e indicated on the invoices or recei"ts, the 2IR
erred in den#in! the claim for refund /ere, ho,ever, the !round for denial of
"etitioner $anasonic9s claim for ta) refundOthe a.sence of the ,ord CBero3ratedD
on its invoicesOis one ,hich is s"ecificall# and "recisel# included in the a.ove
enumeration Conse-uentl#, the 2IR correctl# denied $anasonic9s claim for ta)
refund
DUMAGUETE CAT!EDRAL CREDIT COO%ERATIVE v. CIR
(G.R. No. 1-2722, 2a34ar5 22, 2010
FACTS:
:uma!uete Cathedral Credit Coo"erative (the Coo"erative) ,as assessed
.# the Commissioner of Internal Revenue (CIR) on deficienc# ,ithholdin! ta)es
for ta)a.le #ears 1999 and *+++ ,hich it "rotested on Jul# *', *++*1hereafter,
on 0cto.er 1=, *++*, the Coo"erative received t,o (*) other $re3Assessment
Notices for deficienc# ,ithholdin! ta)es also for ta)a.le #ears 1999 and
*+++1he deficienc# ,ithholdin! ta)es cover the "a#ments of the honorarium of
the 2oard of :irectors, securit# and 5anitorial services, le!al and "rofessional
fees, and interest on savin!s and time de"osits of its mem.ers In another letter
dated Novem.er 8, *++*, the Coo"erative informed the CIR, that it ,ould "a# the
,ithholdin! ta)es due on the honorarium and "er diems of the 2oard of
:irectors, securit# and 5anitorial services, commissions and le!al and
"rofessional fees for the #ear *+++ e)cludin! "enalties and interest, and that it
,ould avail of the Eoluntar# Assessment and A.atement $ro!ram (EAA$) of the
2IR under Revenue Re!ulations No 1%3*++* 0n Novem.er *9, *++*, the
Coo"erative availed of the EAA$ and "aid the amounts corres"ondin! to the
,ithholdin! ta)es on the "a#ments for the com"ensation, honorarium of the
2oard of :irectors, securit# and 5anitorial services, and le!al and "rofessional
services, for the #ears 1999 and *+++0n A"ril *<, *++', the Coo"erative
received from the 2IR Re!ional :irector, 8onia L Flores, Letters of :emand
Nos +++*%3*++' and +++*=3*++', ,ith attached 1ranscri"ts of Assessment and
Audit ResultsHAssessment Notices, orderin! it to "a# the deficienc# ,ithholdin!
ta)es, inclusive of "enalties, for the #ears 1999 and *+++ in the amounts of
$1,<89,+=&'+ and $1,<=*,=<<9+, res"ectivel# 0n Ma# 9, *++', the
Coo"erative "rotested the Letters of :emand and Assessment Notices ,ith the
CIR /o,ever, the latter failed to act on the "rotest ,ithin the "rescri.ed 18+3da#
"eriod /ence, on :ecem.er ', *++', the Coo"erative filed a $etition for Revie,
.efore the C1A

1he Court of 1a) A""eals First :ivision "artiall# !ranted the "etition and
cancelled the deficienc# assessment a!ainst the Coo"erative for deficienc#
,ithholdin! ta)es on the honorarium and "er diems of the Coo"erative9s 2oard of
:irectors, securit# and 5anitorial services, commissions and le!al and
"rofessional fees in vie, of its EAA$ a""lication /o,ever, 1he C1A ordered the
Coo"erative to "a# the amounts re"resentin! deficienc# ,ithholdin! ta)es on
interests from savin!s and time de"osits of its mem.ers for the ta)a.le #ears
1999 and *+++"lus the *+M delin-uenc# interest from Ma# *=, *++' until the
amount of deficienc# ,ithholdin! ta)es are full# "aid "ursuant to 8ection *<9 (C)
of the 1a) Code A!!rieved, the Coo"erative filed an a""eal .efore the C1A An
2anc /o,ever, the C1A An 2anc denied its a""eal 1he Coo"erative elevated its
case .efore the 8u"reme Court
Issue@ Is the Coo"erative lia.le to "a# the deficienc# ,ithholdin! ta)es on interest
from savin!s and time de"osits of its mem.ers, as ,ell as the delin-uenc#
interest of *+M "er annum
/eld@
1he 8u"reme Court held that the Coo"erative is not lia.le 1he 8u"reme
Court found that the 2IR has "reviousl# issued rulin!s dealin! ,ith the su.5ect
matter In 2IR Rulin! No &&13888, the 2IR stated that coo"eratives are not
re-uired to ,ithhold ta)es on interest from savin!s and time de"osits of their
mem.ers ,hich rulin! ,as reiterated in 2IR Rulin! F:A3&913*++=G dated 0cto.er
&, *++=1he Court found that .oth 2IR Rulin! No &&13888 and 2IR Rulin! F:A3
&913*++=G are in "erfect harmon# ,ith the Constitution and the la,s the# see( to
im"lement Also, !iven that the Coo"erative is dul# re!istered ,ith the
Coo"erative :evelo"ment Authorit# (C:A), 8ection *<(2)(1) of the NIRC must .e
read to!ether ,ith RA =9'8, as amended .# RA 9&*+ 7nder Article * of RA
=9'8, as amended .# RA 9&*+, it is a declared "olic# of the 8tate to foster the
creation and !ro,th of coo"eratives as a "ractical vehicle for "romotin! self3
reliance and harnessin! "eo"le "o,er to,ards the attainment of economic
develo"ment and social 5ustice 1hus, to encoura!e the formation of coo"eratives
and to create an atmos"here conducive to their !ro,th and develo"ment, the
8tate e)tends all forms of assistance to them, one of ,hich is "rovidin!
coo"eratives a "referential ta) treatment 1he le!islative intent to !ive
coo"eratives a "referential ta) treatment is a""arent in Articles =1 and =* of RA
=9'8, ,hich read@
AR1 =1 1a) 1reatment of Coo"eratives O:ul# re!istered coo"eratives under
this Code ,hich do not transact an# .usiness ,ith non3mem.ers or the !eneral "u.lic
shall not .e su.5ect to an# !overnment ta)es and fees im"osed under the Internal
Revenue La,s and other ta) la,s Coo"eratives not fallin! under this article shall .e
!overned .# the succeedin! section
AR1 =* 1a) and 0ther A)em"tions OCoo"eratives transactin! .usiness ,ith
.oth mem.ers and nonmem.ers shall not .e su.5ect to ta) on their transactions to
mem.ers Not,ithstandin! the "rovision of an# la, or re!ulation to the contrar#, such
coo"eratives dealin! ,ith nonmem.ers shall en5o# the follo,in! ta) e)em"tions4 ) ) )
1his e)em"tion e)tends to mem.ers of coo"eratives It must .e
em"hasiBed that coo"eratives e)ist for the .enefit of their mem.ers In fact, the
"rimar# o.5ective of ever# coo"erative is to "rovide !oods and services to its
mem.ers to ena.le them to attain increased income, savin!s, investments, and
"roductivit# 1herefore, limitin! the a""lication of the ta) e)em"tion to
coo"eratives ,ould !o a!ainst the ver# "ur"ose of a credit coo"erative
A)tendin! the e)em"tion to mem.ers of coo"eratives, on the other hand, ,ould
.e consistent ,ith the intent of the le!islature 1hus, althou!h the ta) e)em"tion
onl# mentions coo"eratives, this should .e construed to include the mem.ers,
"ursuant to Article 1*= of RA =9'8, ,hich "rovides@
AR1 1*=Inter"retation and Construction ?In case of dou.t as to the meanin! of
an# "rovision of this Code or the re!ulations issued in "ursuance thereof, the same shall
.e resolved li.erall# in favor of the coo"eratives and their mem.ers
1he 8u"reme Court li(e,ise noted that the ta) e)em"tion in RA =9'8 ,as
retained in RA 9&*+1he onl# difference is that Article =1 of RA 9&*+ (formerl#
T AX AT I O N L AW C AS E D I G E S T S | 1'
8ection =* of RA =9'8) no, e)"ressl# states that transactions of mem.ers ,ith
the coo"eratives are not su.5ect to an# ta)es and fees
AR1 =1 1a) and 0ther A)em"tions Coo"eratives transactin! .usiness ,ith .oth
mem.ers and non3mem.ers shall not .e su.5ected to ta) on their transactions ,ith
mem.ers In relation to this, the transactions of mem.ers ,ith the coo"erative shall not
.e su.5ect to an# ta)es and fees, includin! .ut not limited to final ta)es on mem.ers9
de"osits and documentar# ta) Not,ithstandin! the "rovisions of an# la, or re!ulation to
the contrar#, such coo"eratives dealin! ,ith nonmem.ers shall en5o# the follo,in! ta)
e)em"tions@ (7nderscorin! 8u""lied)
1his amendment in Article =1 of RA 9&*+, s"ecificall# "rovidin! that
mem.ers of coo"eratives are not su.5ect to final ta)es on their de"osits, affirms
the inter"retation of the 2IR that 8ection *<(2)(1) of the NIRC does not a""l# to
coo"eratives and confirms that such rulin! carries out the le!islative intent
7nder the "rinci"le of le!islative a""roval of administrative inter"retation .#
reenactment, the reenactment of a statute su.stantiall# unchan!ed is "ersuasive
indication of the ado"tion .# Con!ress of a "rior e)ecutive construction
Moreover, no less than the Constitution !uarantees the "rotection of
coo"eratives 8ection 1&, Article PII of the Constitution considers coo"eratives as
instruments for social 5ustice and economic develo"ment At the same time,
8ection 1+ of Article II of the Constitution declares that it is a "olic# of the 8tate to
"romote social 5ustice in all "hases of national develo"ment In relation thereto,
8ection * of Article PIII of the Constitution states that the "romotion of social
5ustice shall include the commitment to create economic o""ortunities .ased on
freedom of initiative and self3reliance 2earin! in mind the fore!oin! "rovisions,
the Court found that an inter"retation e)em"tin! the mem.ers of coo"eratives
from the im"osition of the final ta) under 8ection *<(2)(1) of the NIRC is more in
(ee"in! ,ith the letter and s"irit of the Constitution
T AX AT I O N L AW C AS E D I G E S T S | 1(
TAM"UNTING %A#NS!O%, INC., v. COMMISSIONER
OF INTERNAL REVENUE
(G.R. No. 17'0-5, 2a34ar5 21, 2010

FACTS:
$etitioner ,as assessed for deficienc# Ealue Added 1a) and :ocumentar#
8tam" 1a) on the "remise that, for the Ealue Added 1a), it ,as en!a!ed in the
sale of services
$etitioner ar!ued that $a,nsho"s are not su.5ect to Ealue Added 1a)
"ursuant to 8ection 1+8 of the National Internal Revenue Code and that
$etitioner9s "a,n tic(ets are not su.5ect to documentar# stam" ta) "ursuant to
e)istin! la,s and jurisprudence.
ISSUES:
(1) Is the $etitioner lia.le for Ealue Added 1a)Q
(*) Is $etitioner lia.le for :ocumentar# stam" ta)Q
2ELD:
(1) N0 8ince $etitioner is considered a non3.an( financial intermediar#, it
is su.5ect to 1+M EA1 for the ta) #ears 199= to *++* .ut since the collection of
Ealue Added 1a) from non3.an( financial intermediaries ,as s"ecificall# deferred
.# la,, $etitioner is not lia.le for Ealue Added 1a) durin! these ta) #ears 6ith
the full im"lementation of the Ealue Added 1a) s#stem on non3.an( financial
intermediaries startin! Januar# 1, *++', $etitioner is lia.le for 1+M Ealue Added
1a) for said ta) #ear And .e!innin! *++< u" to the "resent, .# virtue of RA No
9*'8, "etitioner is no lon!er lia.le for EA1 .ut it is su.5ect to "ercenta!e ta) on
!ross recei"ts from +M to &M, as the case ma# .e
(*)>A8 :ocumentar# 8tam" 1a) is an e)cise ta) on the e)ercise of a ri!ht
or "rivile!e to transfer o.li!ations, ri!hts or "ro"erties incident thereto $led!e is
amon! the "rivile!es, the e)ercise of ,hich is su.5ect to :81
T AX AT I O N L AW C AS E D I G E S T S | 1)
So4*h A9r/ca3 A/r:a5; v. CIR
G.R. No. 1-0.51, F(,r4ar5 11, 2010
FACTS:
8outh African Air,a#s is an off3line international carrier sellin! "assa!e
documents throu!h an inde"endent sales a!ent in the $hili""ines 8outh African
Air,a#s is not re!istered ,ith the 8ecurities and A)chan!e Commission as a
cor"oration, .ranch office, or "artnershi" It is not licensed to do .usiness in the
$hili""ines In *++', 8outh African Air,a#s filed a claim for refund as erroneousl#
"aid ta) on ;ross $hili""ine 2illin!s (;$2) for the ta)a.le #ear *+++
ISSUE:
Is the income derived .# 8outh African Air,a#s from the sale of "assa!e
documents coverin! its off3line fli!hts $hili""ine3source income su.5ect to
$hili""ine income ta) (8ection *8 (A)(1) of the 199% NIRC) or ;ross $hili""ine
2illin!sQ
2ELD:
It is su.5ect to $hili""ine income ta) 8ince 8outh African Air,a#s does not
maintain fli!hts to or from the $hili""ines, it shall not .e ta)ed at the rate of *
1H*M of its ;ross $hili""ine 2illin!s Aven if 8outh African Air,a#s is not lia.le for
ta) under 8ec *8(A)(')(a), it is still lia.le to "a# income ta) for its sale of
"assa!e documents in the $hili""ines 2ased on the 2ritish 0verseas Air,a#s
case, off3line air carriers, such as 8outh African Air,a#s, ,hich have !eneral
sales a!ents in the $hili""ines, are en!a!ed in or doin! .usiness in the
$hili""ines and that their income from sales of "assa!e documents is income
from ,ithin the $hili""ines 1hus, off3line air carriers are lia.le for the '*M ta) on
its ta)a.le income
T AX AT I O N L AW C AS E D I G E S T S | 1,
Cha+,(r o9 R(a0 E;*a*( a3< "4/0<(r;= A;;oc/a*/o3;, I3c.,
v. Th( !o3. E>(c4*/v( S(cr(*ar5 A0,(r*o Ro+40o, (* a0
G.R. No. 110751. March ', 2010
FACTS:
$etitioner Cham.er of Real Astate and 2uilders9 Associations, Inc
(CRA2A), an association of real estate develo"ers and .uilders in the
$hili""ines, -uestioned the validit# of 8ection *%(A) of the 1a) Code ,hich
im"oses the minimum cor"orate income ta) (MCI1) on cor"orations
CRA2A ar!ued, amon! others, that the use of !ross income as MCI1 .ase
amounts to a confiscation of ca"ital .ecause !ross income, unli(e net income, is
not realiBed !ain
ISSUE:
Is the im"osition of MCI1 constitutionalQ
2ELD:
>es 1he im"osition of the MCI1 is constitutional An income ta) is ar.itrar#
and confiscator# if it ta)es ca"ital, .ecause it is income, and not ca"ital, ,hich is
su.5ect to income ta) /o,ever, MCI1 is im"osed on !ross income ,hich is
com"uted .# deductin! from !ross sales the ca"ital s"ent .# a cor"oration in the
sale of its !oods, ie, the cost of !oods and other direct e)"enses from !ross
sales Clearl#, the ca"ital is not .ein! ta)ed
T AX AT I O N L AW C AS E D I G E S T S | 1/
COMMISSIONER OF INTERNAL REVENUE v. 6UDOS
METAL COR%ORATION
G.R. No. 17-0-7, Ma5 ', 2010
FACTS:
CIR assessed Iudos Metal Cor"oration for ta)a.le #ear 1998 A 6aiver of
the 8tatute of Limitations ,as e)ecuted on :ecem.er *++1 1he C1A issued a
Resolution cancelin! the assessment notices issued a!ainst $etitioner for havin!
.een issued .e#ond the "rescri"tive "eriod as the ,aiver "ur"ortedl# failed to (a)
have the valid officer e)ecute the same (ie, onl# the Assistant Commissioner
si!ned it and not the CIR)4 (.) the date of acce"tance ,as not indicated4 (c) the
fact of recei"t .# the ta)"a#er ,as not indicated in the ori!inal co"#
ISSUE:
/as the CIR9s ri!ht to assess "rescri.edQ
2ELD:
>A8 1he re-uirements for a valid ,aiver as laid do,n in RM0 *+39+ and
R:A0 No &3+1 are mandator# to !ive effect to 8ection *** of the 1a) Code
8"ecificall#, the fla,s in the ,aiver e)ecuted .# Iudos Metal ,ere as follo,s@ (a)
there ,as no notariBed ,ritten authorit# in favor of the si!nator# for the com"an#4
(.) there is no stated date of acce"tance .# the Commissioner or his
re"resentative4 and (c) the fact of the recei"t of the co"# ,as not indicated in the
ori!inal ,aivers
Neither can it .e said that .# merel# e)ecutin! the ,aiver the ta)"a#er is
alread# esto""ed from dis"utin! an action .# the CIR .e#ond the statutor# '3
#ear "eriod since the e)ce"tion under the 8u#oc case (ie, ,hen the dela#s ,ere
due to ta)"a#er9s acts) does not a""l#
$ote* Re+uisites of a valid ,aiver* i# acceptance date- ii# expiry date- iii# signed
by authori.ed officer of taxpayer and )&R- iv# notari.ed- v# fact of receipt must
be indicated in the copies.
ANGELES CIT8 v. ANGELES ELECTRIC COR%ORATION
G. R. No. 1111.&, 243( 2', 2010
FACTS@
0n Januar# **, *++<, the Cit# 1reasurer issued a Notice of Assessment to
An!eles Alectric Cor"oration (AAC) for "a#ment of .usiness ta), license fee and
other char!es for the "eriod199' to *++< in the total amount of $9<,8=1,19<1+
6ithin the "eriod "rescri.ed .# la,, AAC "rotested the assessment 6hen the
cit# 1reasurer denied the "rotest and ordered "etitioner to settle its o.li!ation,
"etitioner filed ,ith the R1C a "etition "ra#in! for the issuance of a 1R0 ,hich
,as !ranted 1he cit# !overnment o""osed on the !round that "er NIRC the
collection of ta)es cannot .e en5oined
ISSUE:
Can an in5unction .e issued to en5oin the collection of local ta)esQ
2ELD:
>A8 1he Local ;overnment Code does not s"ecificall# "rohi.it an
in5unction en5oinin! the collection of ta)es 1his is different in the case of national
ta)es ,here the 1a) Code e)"ressl# "rovides that no court shall have the
authorit# to !rant an in5unction to restrain the collection on national internal
revenue ta), fee or char!e ,ith the sole e)ce"tion of ,hen the C1A finds that the
collection thereof ma# 5eo"ardiBe the interest of the !overnment andHor the
ta)"a#er Nevertheless, there must still .e "roof of the e)istence of the
re-uirements for in5unction to .e issued under the Rules of Court (ie, clear ri!ht
to .e "rotected and ur!ent necessit# to "revent serious dama!e)
CIR v. F/r;* E>)r(;; %a:3;ho) Co+)a35, I3c.
G.R. No;. 1720&5?&1@ 243( 11 200'
FACTS:
CIR issued assessment notices a!ainst Res"ondent for deficienc# income
ta), EA1 and documentar# stam" ta) on de"osit on su.scri"tion and on "a,n
tic(ets Res"ondent alle!ed that no deficienc# :81 ,as due .ecause 8ection
18+of the National Internal Revenue Code (1a) Code) does not cover an#
document or transaction ,hich relates to res"ondent

ISSUE:
6hether or not de"osit on su.scri"tion is su.5ect to :81
2ELD:
No 1he de"osit on stoc( su.scri"tion is merel# an amount of mone#
received .# a cor"oration ,ith a vie, of a""l#in! the same as "a#ment for
additional issuance of shares in the future, an event ,hich ma# or ma# not
ha""en 1he "erson ma(in! a de"osit on stoc( su.scri"tion does not have the
standin! of a stoc(holder and he is not entitled to dividends, votin! ri!hts or other
"rero!atives and attri.utes of a stoc(holder /ence, res"ondent is not lia.le for
the "a#ment of :81 on its de"osit on su.scri"tion for the reason that there is #et
no su.scri"tion that creates ri!hts and o.li!ations .et,een the su.scri.er and
the cor"oration

SAN ROAUE %O#ER COR%ORATION v. COMMISSIONER
OF INTERNAL REVENUE, G.R. No. 1-0.&5, Nov(+,(r
25, 200'
FACTS:
$etitioner9s sale of "o,er to N$C is su.5ect to EA1 at Bero "ercent
rate $etitioner sou!ht to recover the total amount of $*&+,*&8,+9<*&,
re"resentin! its unutiliBed e)cess EA1 on its im"ortation of ca"ital and other
ta)a.le !oods and services for the #ear *++*
$etitioner .ased its claim on credita.le in"ut EA1 "aid, ,hich is
attri.uta.le to Bero3rated or effectivel# Bero3rated sale 1he C1A in :ivision
and en banc denied "etitioner9s claim statin! that "etitioner made no sale of
electricit# to N$C in *++*
ISSUE: 6hether or not "etitioner ma# claim a ta) refund or credit in the
amount of $*<9,'9%,=*+18 for credita.le in"ut ta) attri.uta.le to Bero3rated or
effectivel# Bero3rated sales even if the transaction ,as not a commercial sale
2ELD:
1he Court is not unmindful of the fact that the transaction descri.ed
hereina.ove ,as not a commercial sale In !rantin! the ta) .enefit to EA13
re!istered Bero3rated or effectivel# Bero3rated ta)"a#ers, 8ection 11*(A) of the
NIRC does not limit the definition of CsaleD to commercial transactions in the
normal course of .usiness Cons"icuousl#, 8ection 1+=(2) of the NIRC, ,hich
deals ,ith the im"osition of the EA1, does not limit the term CsaleD to commercial
sales, rather it e)tends the term to transactions that are C#ee3e#D sale
6hen the term CsaleD is made to include certain transactions for the
"ur"ose of im"osin! a ta), these same transactions should .e included in the
term CsaleD ,hen considerin! the availa.ilit# of an e)em"tion or ta) .enefit from
the same revenue measures It is undis"uted that durin! the fourth -uarter of
*++*, "etitioner transferred to N$C all the electricit# that ,as "roduced durin!
the trial "eriod 1he fact that it ,as not transferred throu!h a commercial sale or
in the normal course of .usiness does not deflect from the fact that such
transaction is deemed as a sale under the la,
S/0Ba/r (S/3Ca)or( %*(, L*<. v. Co++/;;/o3(r O9 I3*(r3a0
R(v(34(, G.R. No.17.5'&, F(,r4ar5 01, 200-
FACTS:
8il(air (8in!a"ore) $te, Ltd, a 8in!a"orean cor"oration en!a!ed in
international air carria!e, filed ,ith the 2ureau of Internal Revenue an a""lication
for the refund of $<,&=%,<&+%9e)cise ta)es "aid for 5et fuel from $etron
Cor"oration from Januar# to June *+++ It .ased its claim from 8ection 1'& of
the 199% NIRC, and Article <(*) of the Air 1rans"ort A!reement .et,een R$ and
8in!a"ore 2IR has not acted u"on said a""lication so 8il(air filed a $etition for
Revie, ,ith the Court of 1a) A""eals, 8econd :ivision 2IR o""osed said
"etition on the !round that the e)cise ta) on "etroleum, .ein! a direct lia.ilit# of
the manufacturer or "roducer, .ecomes "art of the "rice ,hen added to the cost
of said !ood sold to the .u#er C1A dismissed said "etition on the !round that the
latter is not the "ro"er claimant, and li(e,ise denied 8il(air9s su.se-uent Motion
for Reconsideration therefor
ISSUE: 6hether or not 8il(air is the "ro"er "art# to claim for the ta) credit
RULING:
No, 8il(air is not the "ro"er claimant for the ta) credit $etron Cor"oration
is the "ro"er claimant 1he "ro"er "art# to claim refund of the ta) credit is the
statutor# ta)"a#er, the "erson ,ho "aid said ta) im"osed .# la, even if he shifts
the .urden thereof to another $etron, not 8il(air, is thus the one entitled to claim
refund 1he ta) .urden "assed .# $etron to 8il(air is no lon!er a ta) .ut a "art of
the "urchase "rice 1he .est that 8il(air ma# do, if allo,ed, is onl# to see(
reim.ursement of the ta) .urden from $etron
A)em"tion !ranted .# la, does not include indirect ta)es 1he e)em"tion
!ranted under 8ection 1'& (.) of the NIRC of 199% and Article <(*) of the Air
1rans"ort A!reement .et,een R$ and 8in!a"ore cannot, ,ithout a clear
sho,in! of le!islative intent, .e construed as includin! indirect ta)es
COMMISSIONER OF INTERNAL REVENUE v. "URMEISTER
AND #AIN SCANDINAVIAN CONTRACTOR MINDANAO,
INC.
G. R. No. 15.205, 2a34ar5 22, 2007
FACTS:
A forei!n consortium, "arent com"an# of 2urmeister, entered into an 0RM
contract ,ith N$C 1he forei!n entit# then su.contracted the actual 0RM to
2urmeister N$C "aid the forei!n consortium a mi)ture of currencies ,hile the
consortium, in turn, "aid 2urmeister forei!n currenc# in,ardl# remitted into the
$hili""ines 2IR did not ,ant to !rant refund since the services are Cnot destined
for consum"tion a.roadD (or the destination "rinci"le)
ISSUE:
Are the recei"ts of 2urmeister entitled to EA1 Bero3rated statusQ
2ELD:
N0 Considerin! this len!th of time, the Consortium9s o"eration and
maintenance of NA$0C0R9s "o,er .ar!es cannot .e classified as a sin!le or
isolated transaction 1he Consortium does not fall under 8ection 1+*(.)(*) ,hich
re-uires that the reci"ient of the services must .e a "erson doin! .usiness
outside the $hili""ines 1herefore, res"ondent9s services to the Consortium, not
.ein! su""lied to a "erson doin! .usiness outside the $hili""ines, cannot le!all#
-ualif# for +M EA1
Res"ondent, as su.contractor of the Consortium, o"erates and maintains
NA$0C0R9s "o,er .ar!es in the $hili""ines NA$0C0R "a#s the Consortium,
throu!h its non3resident "artners, "artl# in forei!n currenc# out,ardl# remitted In
turn, the Consortium "a#s res"ondent also in forei!n currenc# in,ardl# remitted
and accounted for in accordance ,ith 28$ rules 1his "a#ment scheme does not
entitle res"ondent to +M EA1 As the Court held in Commissioner of Internal
Revenue v American A)"ress International, Inc ($hili""ine 2ranch), the "lace of
"a#ment is immaterial, much less is the "lace ,here the out"ut of the service is
ultimatel# used An essential condition for entitlement to +M EA1 under 8ection
1+*(.)(1) and (*) is that the reci"ient of the services is a "erson doin! .usiness
outside the $hili""ines In this case, the reci"ient of the services is the
Consortium, ,hich is doin! .usiness not outside, .ut ,ithin the $hili""ines
.ecause it has a 1&3#ear contract to o"erate and maintain NA$0C0R9s t,o 1++3
me!a,att "o,er .ar!es in Mindanao
COMMISSIONER OF INTERNAL REVENUE, v. %!ILI%%INE
!EALT! CARE %ROVIDERS, INC.,
G.R. No. 11-12', A)r/0 2&, 2007
FACTS:
1he $hili""ine /ealth Care $roviders, Inc, is a cor"oration or!aniBed and
e)istin! under the la,s of the Re"u.lic of the $hili""ines $ursuant to its
Articles of Incor"oration, its "rimar# "ur"ose is C1o esta.lish, maintain, conduct
and o"erate a "re"aid !rou" "ractice health care deliver# s#stem or a health
maintenance or!aniBation to ta(e care of the sic( and disa.led "ersons enrolled
in the health care "lan and to "rovide for the administrative, le!al, and financial
res"onsi.ilities of the or!aniBationD
0n Jul# *&, 198%, $resident CoraBon C A-uino issued A)ecutive 0rder
(A0) No *%', amendin! the National Internal Revenue Code of 19%%
($residential :ecree No 11&8) .# im"osin! Ealue3Added 1a) (EA1) on the sale
of !oods and services 1his A0 too( effect on Januar# 1, 1988
2efore the effectivit# of A0 No *%', or on :ecem.er 1+, 198%,
res"ondent ,rote the Commissioner of Internal Revenue (CIR), "etitioner,
in-uirin! ,hether the services it "rovides to the "artici"ants in its health care
"ro!ram are e)em"t from the "a#ment of the EA1
0n June 8, 1988, "etitioner CIR, throu!h the EA1 Revie, Committee of the
2ureau of Internal Revenue (2IR), issued EA1 Rulin! No *'1388 statin! that
res"ondent, as a "rovider of medical services, is e)em"t from the EA1 covera!e
1his Rulin! ,as su.se-uentl# confirmed .# Re!ional :irector 0smundo ;
7mali of Revenue Re!ion No 8 in a letter dated A"ril **, 199<
Mean,hile, on Januar# 1, 199=, Re"u.lic Act (RA) No %%1= (A)"anded
EA1 or A3EA1 La,) too( effect, amendin! further the National Internal Revenue
Code of 19%% 1hen on Januar# 1, 1998, RA No 8<*< (National Internal
Revenue Code of 199%) .ecame effective 1his ne, 1a) Code su.stantiall#
ado"ted and re"roduced the "rovisions of A0 No *%' on EA1 and RA No
%%1= on A3EA1
0n 0cto.er 1, 1999, the 2IR sent res"ondent a $reliminar# Assessment
Notice for deficienc# in its "a#ment of the EA1 and documentar# stam" ta)es
(:81) for ta)a.le #ears 199= and 199% 0n 0cto.er *+, 1999, res"ondent filed a
"rotest ,ith the 2IR 0n Januar# *%, *+++, "etitioner CIR sent res"ondent a
letter demandin! "a#ment of Cdeficienc# EA1D in the amount of $1++,&+&,+'+*=
and :81 in the amount of $1*<,19=,=1+9*, or a total of $**<,%+*,=<118 for
ta)a.le #ears 199= and 199% Attached to the demand letter ,ere four (<)
assessment notices
0n Fe.ruar# *', *+++, res"ondent filed another "rotest -uestionin! the
assessment notices
$etitioner CIR did not ta(e an# action on res"ondent9s "rotests /ence, on
8e"tem.er *1, *+++, res"ondent filed ,ith the Court of 1a) A""eals (C1A) a
"etition for revie,
0n A"ril &, *++*, the C1A rendered its :ecision orderin! the "etitioner to
"a# the deficienc# EA1 amountin! to $**,+&<,8'1%& inclusive of *&M surchar!e
"lus *+M interest from Januar# *+, 199% until full# "aid for the 199= EA1
deficienc# and $'1,+9<,1='8% inclusive of *&M surchar!e "lus *+M interest
from Januar# *+, 1998 until "aid for the 199% EA1 deficienc# Accordin!l#, EA1
Rulin! No *'1388 is declared void and ,ithout force and effect 1he 199= and
199% deficienc# :81 assessment a!ainst "etitioner is here.# CANCALLA: AN:
8A1 A8I:A Res"ondent is 0R:ARA: to :A8I81 from collectin! the said :81
deficienc# ta)
Res"ondent filed a motion for "artial reconsideration of the a.ove
5ud!ment concernin! its lia.ilit# to "a# the deficienc# EA1 In its Resolution dated
March *', *++', the C1A !ranted res"ondent9s motion $etitioner seasona.l#
filed ,ith the Court of A""eals a "etition for revie, In its :ecision dated
Fe.ruar# 18, *++&, the Court of A""eals affirmed the C1A Resolution $etitioner
CIR filed a motion for reconsideration, .ut it ,as denied .# the a""ellate court in
its Resolution dated Ma# 9, *++&
/ence, the instant "etition for revie, on certiorari
ISSUE: 60N res"ondent9s services are su.5ect to EA1
2ELD: 8ection 1+*F&G of the National Internal Revenue Code of 19%%, as
amended .# A0 No *%' (EA1 La,) and RA No %%1= (A3EA1 La,), "rovides@
8AC 1+*Ealue3added ta) on sale of services and use or lease of "ro"erties ? (a) Rate
and .ase of ta) ? 1here shall .e levied, assessed and collected, a value3added ta)
e-uivalent to 1+M of !ross recei"ts derived from the sale or e)chan!e of services,
includin! the use or lease of "ro"erties
1he "hrase Csale or e)chan!e of serviceD means the "erformance of all
(inds of services in the $hili""ines for a fee, remuneration or consideration,
includin! those "erformed or rendered .# construction and service contractors
1he im"ort of the a.ove "rovision is "lain It re-uires no inter"retation It
contem"lates the e)em"tion from EA1 of ta)"a#ers en!a!ed in the "erformance
of medical, dental, hos"ital, and veterinar# services
1he court note that the factual findin!s of the C1A ,ere neither modified
nor reversed .# the Court of A""eals It is a doctrine that findin!s of fact of the
C1A, a s"ecial court e)ercisin! "articular e)"ertise on the su.5ect of ta), are
!enerall# re!arded as final, .indin!, and conclusive u"on this Court, more so
,here these do not conflict ,ith the findin!s of the Court of A""eals $erforce, as
res"ondent does not actuall# "rovide medical andHor hos"ital services, as
"rovided under 8ection 1+' on e)em"t transactions, .ut merel# arran!es for the
same, its services are not EA13e)em"t
COMMISSIONER OF INTERNAL REVENUE, v. %LACER
DOME TEC!NICAL SERVICES (%!ILS., INC.,
243( -, 2007, G.R. No. 11&.15
FACTS:
0n *< March 199=, at the 8an Antonio Mines in Marindu-ue o,ned .#
Marco""er Minin! Cor"oration (Marco""er), mine tailin!s from the 1ai"an $it
started to esca"e throu!h the Ma(ula"nit 1unnel and 2oac Rivers, causin! the
cessation of minin! and millin! o"erations, and causin! "otential environmental
dama!e to the rivers and the immediate area 1o contain the dama!e and
"revent the further s"read of the tailin! lea(, $lacer :ome, Inc ($:I), the o,ner
of '99M of Marco""er, undertoo( to "erform the clean3u" and reha.ilitation of
the Ma(alu"nit and 2oac Rivers, throu!h a su.sidiar# 1o accom"lish this, $:I
en!a!ed $lacer :ome 1echnical 8ervices Limited ($:18L), a non3resident
forei!n cor"oration ,ith office in Canada, to carr# out the "ro5ect In turn, $:18L
en!a!ed the services of $lacer :ome 1echnical 8ervices ($hili""ines), Inc
(res"ondent), a domestic cor"oration and re!istered Ealue3Added 1a) (EA1)
entit#, to im"lement the "ro5ect in the $hili""ines
$:18L and res"ondent thus entered into an Im"lementation A!reement
si!ned on 1& Novem.er 199= :ue to the ur!enc# and "otentiall# si!nificant
dama!e to the environment, res"ondent had a!reed to immediatel# im"lement
the "ro5ect, and the Im"lementation A!reement sti"ulated that all im"lementation
services rendered .# res"ondent even "rior to the a!reement9s si!nin! shall .e
deemed to have .een "rovided "ursuant to the said A!reement 1he A!reement
further sti"ulated that $:18L ,as to "a# res"ondent Can amount of mone#, in
78 funds, e-ual to all Costs incurred for Im"lementation 8ervices "erformed
under the A!reement,DF&G as ,ell as Ca fee a!reed to one "ercent (1M) of such
CostsD
In Au!ust of 1998, res"ondent amended its -uarterl# EA1 returns for the
last t,o -uarters of 199=, and for the four -uarters of 199% In the amended
returns, res"ondent declared a total in"ut EA1 "a#ment of $<',+1&,<=198 for the
said -uarters, and $<*,8'%,9''=+ as its total e)cess in"ut EA1 for the same
"eriod 1hen on 11 8e"tem.er 1998, res"ondent filed an administrative claim for
the refund of its re"orted total in"ut EA1 "a#ments in relation to the "ro5ect it had
contracted from $:18L, amountin! to $<',+1&,<=198 In su""ort of this claim
for refund, res"ondent ar!ued that the revenues it derived from services
rendered to $:18L, "ursuant to the A!reement, -ualified as Bero3rated sales
under 8ection 1+*(.)(*) of the then 1a) Code, since it ,as "aid in forei!n
currenc# in,ardl# remitted to the $hili""ines 6hen the Commissioner of Internal
Revenue (CIR) did not act on this claim, res"ondent dul# filed a $etition for
Revie, ,ith the Court of 1a) A""eals (C1A), "ra#in! for the refund of its total
re"orted e)cess in"ut EA1 totalin! $<*,8'%,9''=+ In its Ans,er to the $etition,
the CIR merel# invo(ed the "resum"tion that ta)es are collected in accordance
,ith la,, and that claims for refund of ta)es are construed strictl# a!ainst
claimants, as the same ,as in the nature of an e)em"tion from ta)ation
In its :ecision dated 19 March *++*, the C1A su""orted res"ondent9s le!al
"osition that its sale of services to $:18L constituted a Bero3rated transaction
under the 1a) Code, as these services ,ere "aid for in acce"ta.le forei!n
currenc# ,hich had .een in,ardl# remitted to the $hili""ines in accordance ,ith
the rules and re!ulations of the 2an!(o8entraln!$ili"inas (28$)
1he CIR filed a Motion for Reconsideration ,hich ,as denied .# the
C1A1he rulin!s of the C1A ,ere elevated .# "etitioner to the Court of A""eals
on "etition for Revie, In a decision it affirmed the C1A rulin!s /ence, this
"etition
ISSUE: 60N services "erformed .# EA13re!istered "ersons in the
$hili""ines (other than the "rocessin!, manufacturin! or re"ac(in! of !oods for
"ersons doin! .usiness outside the $hili""ines), ,hen "aid in acce"ta.le forei!n
currenc# and accounted for in accordance ,ith the rules and re!ulations of the
)ang/o 0entral ng %ilipinas are Bero3ratedD
2e"#: 1he EA1 is a ta) on consum"tion Se)"ressed as a "ercenta!e of the
value added to !oods or servicesS "urchased .# the "roducer or ta)"a#er As an
indirect ta) on services, its main o.5ect is the transaction itself or, more
concretel#, the "erformance of all (inds of services conducted in the course of
trade or .usiness in the $hili""ines 1hese services must .e re!ularl# conducted
in this countr#4 underta(en in S"ursuit of a commercial or an economic activit#4S
for a valua.le consideration4 and not e)em"t under the 1a) Code, other s"ecial
la,s, or an# international a!reement
>et even as services ma# .e su.5ect to EA1, our ta) la,s e)tend the
.enefit of Bero3ratin! the EA1 due on certain services 1he aforementioned
8ection 1+*(.) of the 198= NIRC activates such Bero3ratin! on t,o cate!ories of
transactions@ (1) $rocessin!, manufacturin! or re"ac(in! !oods for other "ersons
doin! .usiness outside the $hili""ines ,hich !oods are su.se-uentl# e)"orted,
,here the services are "aid for in acce"ta.le forei!n currenc# and accounted for
in accordance ,ith the rules and re!ulations of the 28$4 and (*) services other
than those mentioned in the "recedin! su."ara!ra"h, the consideration for ,hich
is "aid for in acce"ta.le forei!n currenc# and accounted for in accordance ,ith
the rules and re!ulations of the 28$
EA1 Rulin! No +<+398 relied u"on .# "etitioner is a less !eneral
inter"retation at the administrative level, rendered .# the 2IR commissioner u"on
re-uest of a ta)"a#er to clarif# certain "rovisions of the EA1 la, As correctl# held
.# the CA, ,hen this rulin! states that the service must .e Sdestined for
consum"tion outside of the $hili""inesS in order to -ualif# for Bero ratin!, it
contravenes .oth the la, and the re!ulations issued "ursuant to it 1his "ortion
of EA1 Rulin! No +<+398 is clearl# ultra vires and invalid
As a !eneral rule, the EA1 s#stem uses the destination "rinci"le as a .asis
for the 5urisdictional reach of the ta) ;oods and services are ta)ed onl# in the
countr# ,here the# are consumed 1hus, e)"orts are Bero3rated, ,hile im"orts
are ta)ed 1he "etition is denied
OCEANIC #IRELESS NET#OR6,INC., v. COMMISSIONER
OF INTERNAL REVENUE, T!E COURT OF TA$ A%%EALS,
a3< T!E COURT OF A%%EALS
D(c(+,(r ', 2005, G.R. No. 1&-.-0
FACTS:
0n March 1%, 1988, "etitioner received from the 2ureau of Internal
Revenue (2IR) deficienc# ta) assessments for the ta)a.le #ear 198< in the total
amount of $8,=<<,998%1 $etitioner filed its "rotest a!ainst the ta) assessments
and re-uested a reconsideration or cancellation of the same in a letter to the 2IR
Commissioner dated A"ril 1*, 1988 Actin! in .ehalf of the 2IR Commissioner,
then Chief of the 2IR Accounts Receiva.le and 2illin! :ivision, Mr 8everino 2
2uot, reiterated the ta) assessments ,hile den#in! "etitioner9s re-uest for
reinvesti!ation in a letter dated Januar# *<, 1991
8aid letter li(e,ise re-uested "etitioner to "a# the total amount of
$8,=<<,998%1 ,ithin ten (1+) da#s from recei"t thereof, other,ise the case shall
.e referred to the Collection Anforcement :ivision of the 2IR National 0ffice for
the issuance of a ,arrant of distraint and lev# ,ithout further notice
7"on "etitioner9s failure to "a# the su.5ect ta) assessments ,ithin the
"rescri.ed "eriod, the Assistant Commissioner for Collection, actin! for the
Commissioner of Internal Revenue, issued the corres"ondin! ,arrants of
distraint andHor lev# and !arnishment
0n Novem.er 8, 1991, "etitioner filed a $etition for Revie, ,ith the Court
of 1a) A""eals (C1A) to contest the issuance of the ,arrants to enforce the
collection of the ta) assessments
1he C1A dismissed the "etition for lac( of 5urisdiction in a decision dated
8e"tem.er 1=, 199<, declarin! that said "etition ,as filed .e#ond the thirt# ('+)3
da# "eriod rec(oned from the time ,hen the demand letter of Januar# *<, 1991
.# the Chief of the 2IR Accounts Receiva.le and 2illin! :ivision ,as "resuma.l#
received .# "etitioner, ie, C,ithin a reasona.le time from said date in the re!ular
course of mail "ursuant to 8ection *(v) of Rule 1'1 of the Rules of Court
$etitioner filed a Motion for Reconsideration ar!uin! that the demand letter
of Januar# *<, 1991 cannot .e considered as the final decision of the
Commissioner of Internal Revenue on its "rotest .ecause the same ,as si!ned
.# a mere su.ordinate and not .# the Commissioner himself
6ith the denial of its motion for reconsideration, "etitioner conse-uentl#
filed a $etition for Revie, ,ith the Court of A""eals contendin! that there ,as no
final decision to s"ea( of .ecause the Commissioner had #et to ma(e a "ersonal
determination as re!ards the merits of "etitioner9s case
1he Court of A""eals denied the "etition in a decision dated 0cto.er '1,
*+++ $etitioner9s Motion for Reconsideration ,as li(e,ise denied in a resolution
dated Ma# ', *++1 /ence, this "etition
ISSUE: 60N a demand letter for ta) deficienc# assessments issued and
si!ned .# a su.ordinate officer ,ho ,as actin! in .ehalf of the Commissioner of
Internal Revenue, is deemed final and e)ecutor# and su.5ect to an a""eal to the
Court of 1a) A""eals
2e"#:
1he court rule in the affirmative
A demand letter for "a#ment of delin-uent ta)es ma# .e considered a
decision on a dis"uted or "rotested assessment 1he determination on ,hether
or not a demand letter is final is conditioned u"on the lan!ua!e used or the tenor
of the letter .ein! sent to the ta)"a#er 1he court laid do,n the rule that the
Commissioner of Internal Revenue should al,a#s indicate to the ta)"a#er in
clear and une-uivocal lan!ua!e ,hat constitutes his final determination of the
dis"uted assessment
In this case, the letter of demand dated Januar# *<, 1991, un-uestiona.l#
constitutes the final action ta(en .# the 2ureau of Internal Revenue on
"etitioner9s re-uest for reconsideration ,hen it reiterated the ta) deficienc#
assessments due from "etitioner, and re-uested its "a#ment Failure to do so
,ould result in the Cissuance of a ,arrant of distraint and lev# to enforce its
collection ,ithout further noticeD In addition, the letter contained a notation
indicatin! that "etitioner9s re-uest for reconsideration had .een denied for lac( of
su""ortin! documents
1he demand letter received .# "etitioner veril# si!nified a character of
finalit# 1herefore, it ,as tantamount to a re5ection of the re-uest for
reconsideration As correctl# held .# the Court of 1a) A""eals, C,hile the denial
of the "rotest ,as in the form of a demand letter, the notation in the said letter
ma(in! reference to the "rotest filed .# "etitioner clearl# sho,s the intention of
the res"ondent to ma(e it as FhisG final decisionD
1his no, .rin!s us to the cru) of the matter as to ,hether said demand
letter indeed attained finalit# des"ite the fact that it ,as issued and si!ned .# the
Chief of the Accounts Receiva.le and 2illin! :ivision instead of the 2IR
Commissioner1he !eneral rule is that the Commissioner of Internal Revenue
ma# dele!ate an# "o,er vested u"on him .# la, to :ivision Chiefs or to officials
of hi!her ran( /e cannot, ho,ever, dele!ate the four "o,ers !ranted to him
under the National Internal Revenue Code (NIRC) enumerated in 8ection %
It is clear from the a.ove "rovision that the act of issuance of the demand
letter .# the Chief of the Accounts Receiva.le and 2illin! :ivision does not fall
under an# of the e)ce"tions that have .een mentioned as non3dele!a.le
1hus, the authorit# to ma(e ta) assessments ma# .e dele!ated to su.ordinate
officers 8aid assessment has the same force and effect as that issued .# the
Commissioner himself, if not revie,ed or revised .# the latter such as in this
case
A re-uest for reconsideration must .e made ,ithin thirt# ('+) da#s from the
ta)"a#er9s recei"t of the ta) deficienc# assessment, other,ise, the decision
.ecomes final, una""eala.le and therefore, demanda.le A ta) assessment that
has .ecome final, e)ecutor# and enforcea.le for failure of the ta)"a#er to assail
the same as "rovided in 8ection **8 can no lon!er .e contested
/ere, "etitioner failed to avail of its ri!ht to .rin! the matter .efore the
Court of 1a) A""eals ,ithin the re!lementar# "eriod u"on the recei"t of the
demand letter reiteratin! the assessed delin-uent ta)es and den#in! its re-uest
for reconsideration ,hich constituted the final determination .# the 2ureau of
Internal Revenue on "etitioner9s "rotest 2ein! a final dis"osition .# said a!enc#,
the same ,ould have .een a "ro"er su.5ect for a""eal to the Court of 1a)
A""eals
T!E MANILA "AN6ING COR%ORATION, v.
COMMISSIONER OF INTERNAL REVENUE, A4C4;* 2-,
2001, G.R. No. 11-11-
FACTS:
1he Manila 2an(in! Cor"oration, ,as incor"orated in 19=1 and since then
had en!a!ed in the commercial .an(in! industr# until 198% 0n Ma# **, 198%,
the Monetar# 2oard of the 2an!(o8entraln!$ili"inas (28$) issued Resolution
No &+&, "ursuant to 8ection *9 of Re"u.lic Act (RA) No *=& (the Central 2an(
Act), "rohi.itin! "etitioner from en!a!in! in .usiness .# reason of insolvenc#
1hus, "etitioner ceased o"erations that #ear and its assets and lia.ilities ,ere
"laced under the char!e of a !overnment3a""ointed receiver
Mean,hile, RA No 8<*<, other,ise (no,n as the Com"rehensive 1a)
Reform Act of 199%, .ecame effective on Januar# 1, 1998 0ne of the chan!es
introduced .# this la, is the im"osition of the minimum cor"orate income ta) on
domestic and resident forei!n cor"orations Im"lementin! this la, is Revenue
Re!ulations No 9398 statin! that the la, allo,s a four (<) #ear "eriod from the
time the cor"orations ,ere re!istered ,ith the 2ureau of Internal Revenue (2IR)
durin! ,hich the minimum cor"orate income ta) should not .e im"osed
0n June *', 1999, after 1* #ears since "etitioner sto""ed its .usiness
o"erations, the 28$ authoriBed it to o"erate as a thrift .an( 1he follo,in! #ear,
s"ecificall# on A"ril %, *+++, it filed ,ith the 2IR its annual cor"orate income ta)
return and "aid $'',81=,1=<++ for ta)a.le #ear 1999
$rior to the filin! of its income ta) return, or on :ecem.er *8, 1999,
"etitioner sent a letter to the 2IR re-uestin! a rulin! on ,hether it is entitled to
the four (<)3#ear !race "eriod rec(oned from 1999 In other ,ords, "etitioner9s
"osition is that since it resumed o"erations in 1999, it ,ill "a# its minimum
cor"orate income ta) onl# after four (<) #ears thereafter
0n Fe.ruar# **, *++1, the 2IR issued 2IR Rulin! No ++%3*++1statin! that
"etitioner is entitled to the four (<)3#ear !race "eriod 8ince it reo"ened in 1999,
the minimum cor"orate income ta) ma# .e im"osed Cnot earlier than *++*, ie
the fourth ta)a.le #ear .e!innin! 1999
$ursuant to the a.ove Rulin!, "etitioner filed ,ith the 2IR a claim for
refund of the sum of $'',81=,1=<++ erroneousl# "aid as minimum cor"orate
income ta) for ta)a.le #ear 1999
:ue to the inaction of the 2IR on its claim, "etitioner filed ,ith the Court of
1a) A""eals (C1A) a "etition for revie,
0n A"ril *1, *++', the C1A denied the "etition 1he C1A held that "etitioner
is not entitled to the four (<)3#ear !race "eriod .ecause it is not a ne,
cor"oration 0n June 11, *++', "etitioner filed ,ith the Court of A""eals a
"etition for revie, 0n Ma# 11, *++&, the a""ellate court rendered a :ecision
affirmin! the assailed 5ud!ment of the C1A
1hus, this "etition for revie, on certiorari
ISSUE: 60N the "etitioner is entitled to a refund of its minimum cor"orate
income ta) "aid to the 2IR for ta)a.le #ear 1999
2ELD:
Revenue Re!ulations No 9398, im"lementin! RA No 8<*< im"osin! the
minimum cor"orate income ta) on cor"orations, "rovides that for "ur"oses of this
ta), the date ,hen .usiness o"erations commence is the #ear in ,hich the
domestic cor"oration re!istered ,ith the 2IR /o,ever, under Revenue
Re!ulations No <39&, the date of commencement of o"erations of thrift .an(s,
such as herein "etitioner, is the date the "articular thrift .an( ,as re!istered ,ith
the 8AC or the date ,hen the Certificate of Authorit# to 0"erate ,as issued to it
.# the Monetar# 2oard of the 28$, ,hichever comes later
Clearl# then, Revenue Re!ulations No <39&, not Revenue Re!ulations No
9398, a""lies to "etitioner, .ein! a thrift .an( It is, therefore, entitled to a !race
"eriod of four (<) #ears counted from June *', 1999 ,hen it ,as authoriBed .#
the 28$ to o"erate as a thrift .an( Conse-uentl#, it should onl# "a# its
minimum cor"orate income ta) after four (<) #ears from 1999
1he "etition is !ranted and the Commissioner of Internal Revenue is directed to
refund to "etitioner .an( the sum of $'',81=,1=<++ "rematurel# "aid as
minimum cor"orate income ta)
COMMISSIONER OF INTERNAL REVENUE v. CIT8TRUST
INVESTMENT %!ILS., INC., S()*(+,(r 27, 2001,
G.R. No. 1.'7-1
FACTS:
Cit#trust, is a domestic cor"oration en!a!ed in -uasi3.an(in! activities In
199<, Cit#trust re"orted the amount of $11+,%88,&<*'+ as its total !ross recei"ts
and "aid the amount of $&,&'9,<*%11 corres"ondin! to its &M ;R1
Mean,hile, on Januar# '+, 199=, the C1A, in Asian 2an( Cor"oration v
Commissioner of Internal Revenue ruled that the .asis in com"utin! the &M ;R1
is the !ross recei"ts minus the *+M F61 In other ,ords, the *+M F61 on a
.an(9s "assive income does not form "art of the ta)a.le !ross recei"ts
0n Jul# 19, 199=, Cit#trust, ins"ired .# the a.ove3mentioned C1A rulin!,
filed ,ith the Commissioner a ,ritten claim for the ta) refund or credit in the
amount of $'*=,++%+1 It alle!ed that its re"orted total !ross recei"ts included
the *+M F61 on its "assive income amountin! to $'*,=++,%+1*& 1hus, it
sou!ht to .e reim.ursed of the &M ;R1 it "aid on the "ortion of *+M F61 or the
amount of $'*=,++%+1
0n the same date, Cit#trust filed a "etition for revie, ,ith the C1A, ,hich
eventuall# !ranted its claim 0n a""eal .# the Commissioner, the Court of
A""eals affirmed the C1A :ecision /ence this "etition
ISSUE: 60N the t,ent# "ercent (*+M) final ,ithholdin! ta) (F61) on a
.an(9s "assive income form "art of the ta)a.le !ross recei"ts for the "ur"ose of
com"utin! the five "ercent (&M) !ross recei"ts ta) (;R1)Q
2ELD:
1he issue of ,hether the *+M F61 on a .an(9s interest income forms "art
of the ta)a.le !ross recei"ts for the "ur"ose of com"utin! the &M ;R1 is no
lon!er novel 1his has .een "reviousl# resolved .# this Court in a catena of
cases, such as China 2an(in! Cor"oration v Court of A""eals, Commissioner of
Internal Revenue v 8olid.an( Cor"oration, Commissioner of Internal Revenue v
2an( of Commerce,and the latest, Commissioner of Internal Revenue v 2an( of
the $hili""ine Islands
1he a.ove cases are unanimous in definin! C!ross recei"tsD as Cthe entire
recei"ts ,ithout an# deductionD
As commonl# understood, the term C!ross recei"tsD means the entire
recei"ts ,ithout an# deduction :eductin! an# amount from the !ross recei"ts
chan!es the result, and the meanin!, to net recei"ts An# deduction from !ross
recei"ts is inconsistent ,ith a la, that mandates a ta) on !ross recei"ts, unless
the la, itself ma(es an e)ce"tion
No,, .ereft of an# lauda.le statutor# .asis, Cit#trust and Asian.an( sim"l#
anchor their ar!ument on 8ection <(e) of Revenue Re!ulations No 1*38+
statin! that Cthe rates of ta)es to .e im"osed on the !ross recei"ts of such
financial institutions shall .e .ased on all items of income actuall# receivedD
1he# contend that since the *+M F61 is ,ithheld at source and is "aid directl#
to the !overnment .# the entities from ,hich the .an(s derived the income, the
same cannot .e considered actuall# received, hence, must .e e)cluded from the
ta)a.le !ross recei"ts
1he ar!ument is .ereft of merit
First, 8ection <(e) merel# reco!niBes that income ma# .e ta)a.le either at
the time of its actual recei"t or its accrual, de"endin! on the accountin! method
of the ta)"a#er It does not reall# e)clude accrued interest income from the
ta)a.le !ross recei"ts .ut merel# "ost"ones its inclusion until actual "a#ment of
the interest to the lendin! .an( 1hus, ,hile it is true that 8ection <(e) states that
Cthe rates of ta)es to .e im"osed on the !ross recei"ts of such financial
institutions shall .e .ased on all items of income actuall# received,D it !oes on to
distin!uish actual recei"t from accrual, ie, that Cmere accrual shall not .e
considered, .ut once "a#ment is received in such accrual or in case of
"re"a#ment, then the amount actuall# received shall .e included in the ta) .ase
of such financial institutionsD
And second, Revenue Re!ulations No 1*38+, issued on Novem.er %,
198+, had .een su"erseded .# Revenue Re!ulations No 1%38< issued on
0cto.er 1*, 198< 8ection <(e) of Revenue Re!ulations No 1*38+ "rovides that
onl# items of income actuall# received shall .e included in the ta) .ase for
com"utin! the ;R1 0n the other hand, 8ection %(c) of Revenue Re!ulations
No 1%38< includes all interest income in com"utin! the ;R1
COMMISSIONER OF INTERNAL REVENUE, v;. MIRANT
%AG"ILAO COR%ORATION (9or+(r05 SOUT!ERN ENERG8
AUE7ON, INC.
Oc*o,(r 12, 2001, G.R. No. 15'5'.
FACTS:
M$C is a domestic cor"oration dul# or!aniBed and e)istin! under and .#
virtue of the la,s of the $hili""ines ,ith "rinci"al office address in $a!.ilao
;rande Island, $a!.ilao, NueBon It is licensed .# the 8ecurities and A)chan!e
Commission to "rinci"all# en!a!e in the .usiness of "o,er !eneration and
su.se-uent sale thereof It is re!istered ,ith the 2ureau of Internal Revenue as a
EA1 re!istered entit# ,ith Certificate of Re!istration .earin! R:0 Control No 9=3
=++3++*<98, dated Januar# *=, 199=
For the "eriod A"ril 1, 199= to :ecem.er '1, 199=, M$C seasona.l# filed
its Nuarterl# EA1 Returns reflectin! an accumulated in"ut ta)es in the amount of
$'9,''+,&++8& 1hese in"ut ta)es ,ere alle!edl# "aid .# M$C to the su""liers
of ca"ital !oods and services for the construction and develo"ment of the "o,er
!eneratin! "lant and other related facilities in $a!.ilao, NueBon $ursuant to the
"rocedures "rescri.ed under Revenue Re!ulations No %39&, as amended, M$C
filed on June '+, 1998, an a""lication for ta) credit or refund of the
aforementioned unutiliBed EA1 "aid on ca"ital !oods
6ithout ,aitin! for an ans,er from the 2IR Commissioner, M$C filed the
instant "etition for revie, on Jul# 1+, 1998, in order to toll the runnin! of the t,o3
#ear "rescri"tive "eriod for claimin! a refund under the la,
In ans,er to the $etition, the 2IR Commissioner advanced as s"ecial and
affirmative defenses that SM$CTs claim for refund is still "endin! investi!ation and
consideration .efore the office of the 2IR Commissioner accordin!l#, the filin! of
the "resent "etition is "remature
0n Jul# 1<, 1998, ,hile the case ,as "endin! trial, Revenue 0fficer,
Rosemarie M Eitto, ,as assi!ned to investi!ate M$CTs a""lication for ta) credit
or refund of in"ut ta)es As a result, a memorandum re"ort, dated Au!ust *%,
1998, ,as su.mitted recommendin! a favora.le action .ut in a reduced amount
of $<9,=1=<+ re"resentin! una""lied in"ut ta)es on ca"ital !oods
M$C availed of the services of an inde"endent Certified $u.lic Accountant,
Mr Ru.en R Ru.io, $artner of 8;E R Com"an# to verif# the accurac# of M$CTs
summar# of in"ut ta)es A re"ort, dated March 8, 1999, ,as "resented statin!
the audit "rocedures "erformed and the findin! that out of the total claimed in"ut
ta)es of $'9,''+,&++8&, onl# the sum of $*8,%<&,&+*<+ ,as "ro"erl#
su""orted .# valid invoices andHor official recei"ts
1he C1A ruled in favor of M$C, and declared that M$C had
over,helmin!l# "roved, throu!h the EA1 invoices and official recei"ts it had
"resented, that its "urchases of !oods and services ,ere necessar# in the
construction of "o,er "lant facilities ,hich it used in its .usiness of "o,er
!eneration and sale 1he ta) court, ho,ever, reduced the amount of refund to
,hich M$C ,as entitled
1he C1A su.se-uentl# denied the 2IR CommissionerTs Motion for
Reconsideration in a Resolution dated '1 Au!ust *++1 A!!rieved, the 2IR
Commissioner filed ,ith the Court of A""eals a $etition for Revie, ho,ever it
,as dismissed for lac( of merit Refusin! to !ive u" his cause, the 2IR
Commissioner filed the "resent $etition
ISSUE:
60N the Court of A""eals committed reversi.le error in affirmin! the
:ecision of the C1A holdin! res"ondent entitled to the refund of the amount of
$*8,%<<,=*=9&, alle!edl# re"resentin! in"ut EA1 on ca"ital !oods and services
for the "eriod A"ril 1, 199= to :ecem.er '1, 199=
2ELD:
The general rule is that a party cannot change his theory of the case
on appeal.
1here is a "al"a.le shift in the 2IR CommissionerTs defense a!ainst the
claim for refund of M$C and an evident chan!e of theor# 2efore the C1A, the
2IR Commissioner admitted that the M$C is a EA13re!istered ta)"a#er, .ut
char!ed it ,ith the .urden of "rovin! its entitlement to refund /o,ever, .efore
the Court of A""eals, the 2IR Commissioner, in effect denied that the M$C is
su.5ect to EA1, ma(in! an affirmative alle!ation that it is a "u.lic utilit# lia.le,
instead, for franchise ta) Irrefra!a.l#, the 2IR Commissioner raised for the first
time on a""eal -uestions of .oth fact and la, not ta(en u" .efore the ta) court,
an actualit# ,hich the 2IR Commissioner himself does not den#, .ut he ar!ues
that he should .e allo,ed to do so as an e)ce"tion to the technical rules of
"rocedure and in the interest of su.stantial 5ustice
It is alread# ,ell3settled in this 5urisdiction that a "art# ma# not chan!e his
theor# of the case on a""eal 8uch a rule has .een e)"ressl# ado"ted in Rule
<<, 8ection 1& of the 199% Rules of Civil $rocedure
1he 2IR Commissioner "leads ,ith this Court not to a""l# the fore!oin!
rule to the instant case, for a rule on technicalit# should not defeat su.stantive
5ustice 1he 2IR Commissioner a""arentl# for!ets that there are s"ecific reasons
,h# technical or "rocedural rules are im"osed u"on the courts, and that
com"liance ,ith these rules, should still .e the !eneral course of action
1he courts have the "o,er to rela) or sus"end technical or "rocedural
rules or to e)ce"t a case from their o"eration ,hen com"ellin! reasons so
,arrant or ,hen the "ur"ose of 5ustice re-uires it 6hat constitutes !ood and
sufficient cause that ,ould merit sus"ension of the rules is discretionar# u"on the
courts
1herefore, the Court of A""eals correctl# refused to consider the issues
raised .# the 2IR Commissioner for the first time on a""eal Its discussion on
,hether the M$C is a "u.lic utilit# and ,hether it is su.5ect to EA1 or franchise
ta) is nothin! more than obiter dictum It is .est not at all to discuss these issues
for the# do not sim"l# involve -uestions of la,, .ut also closel#3related -uestions
of fact ,hich neither the Court of A""eals nor this Court could "resume or !arner
from the evidence on record
1he "etition is denied and the 2IR Commissioner ,as ordered to issue in
favor of M$C a ta) credit certificate in the amount of $*8,%<<,=*=9&
re"resentin! in"ut EA1 "aid on ca"ital !oods and services for the "eriod of 1
A"ril 199= to '1 :ecem.er 199=
ALLIED "AN6ING COR%ORATION AS TRUSTEE FOR
T!E TRUST FUND OF COLLEGE ASSURANCE %LAN
%!ILI%%INES, INC. (CA%, V. T!E AUE7ON CIT8
GOVERNMENT, T!E AUE7ON CIT8 TREASURER, T!E
AUE7ON CIT8 ASSESSOR AND T!E CIT8 MA8OR OF
AUE7ON CIT8
Oc*o,(r 11, 2005, G.R. No. 15&121
FACTS:
0n Jul# 1, 1998, "etitioner, as trustee for Colle!e Assurance $lan of the
$hili""ines, Inc, "urchased from Li,ana! C Natividad et al a 1,+++ s-uare
meter "arcel of land located alon! Aurora 2oulevard, NueBon Cit# in the amount
of $'8,+++,+++++ $rior to the sale, Natividad et al had .een "a#in! the total
amount of $8&,+&+++ as annual real "ro"ert# ta) .ased on the "ro"ert#9s fair
mar(et value of $<,&++,+++++ and assessed value of $1,8++,+++++ under 1a)
:eclaration No :31+*3+'%%8
After its ac-uisition of the "ro"ert#, "etitioner ,as, in accordance ,ith
8ection ' of the ordinance, re-uired to "a# $1+*,=++++ as -uarterl# real estate
ta) under 1a) :eclaration No :31+*3+'%8+ ,hich "e!!ed the mar(et value of
the "ro"ert# at $'8,+++,+++++ ? the consideration a""earin! in the :eed of
A.solute 8ale, and its assessed value at $1&,*++,+++++
$etitioner "aid the -uarterl# real estate ta) for the "ro"ert# from the 1
st
-uarter of 1999 u" to the '
rd
-uarter of *+++ Its ta) "a#ments for the *
nd
, '
rd
, and
<
th
-uarter of 1999, and 1
st
and *
nd
-uarter of *+++ ,ere, ho,ever, made under
"rotest
$etitioner, throu!h its counsel, later sent on March *<, *+++ a demand
letter to the NueBon Cit# 1reasurer9s 0ffice see(in! a refund of the real estate
ta)es it erroneousl# collected from it /o,ever it ,as denied on the !round that
the ordinance is "resumed valid and le!al unless other,ise declared .# a court
of com"etent 5urisdiction
$etitioner thereu"on filed a "etition for "rohi.ition and declarator# relief
.efore the NueBon Cit# R1C for the declaration of nullit# of 8ection ' of the
ordinance4 the en5oinin! of res"ondents ? NueBon Cit# 1reasurer, NueBon Cit#
Assessor, and Cit# Ma#or of NueBon Cit# ? from further im"lementin! the
ordinance4 for the NueBon Cit# 1reasurer to .e ordered to refund the amount of
$='',1&+++ re"resentin! the real "ro"ert# ta) erroneousl# collected and "aid
under "rotest4 and for res"ondents to "a# attorne#9s fees in the amount of
$1,+++,+++++ and costs of the suit
2efore res"ondents could file an# res"onsive "leadin! or on March =,
*++1, res"ondent NueBon Cit# ;overnment enacted 0rdinance No8$31+'*, 83
*++1 ,hich re"ealed the assailed "roviso in 8ection ' of the 199& 0rdinance
$etitioner su.se-uentl# moved to declare res"ondents in default for failure
to file a res"onsive "leadin! ,ithin the "eriod, as e)tended 2efore the motion
could .e heard, ho,ever, res"ondents moved to dismiss the "etition, averrin!
that the "assa!e of the re"ealin! ordinance had rendered the "etition moot and
academic 2# Resolution of A"ril 1+, *++*, the trial court !ranted res"ondents9
motion to dismissIts Motion for Reconsideration havin! .een denied, "etitioner
comes .efore this Court on a""eal .# certiorari under Rule <&
ISSUE: 6/A1/AR 0R N01 8AC1I0N ', N7AK0N CI1> 0R:INANCA N0
'&%, 8ARIA8 0F 199&, 6/IC/ 6A8 A2R0;A1A: F0R 2AIN;
7NC0N81I171I0NAL CAN 2A 1/A 2A8I8 0F C0LLAC1IN; RAAL A81A1A
1APA8 $RI0R 10 I18 RA$AAL
2e"#:
1his Court holds that the "roviso in -uestion is in-$"i# as it ado"ts a
method of assessment or a""raisal of real "ro"ert# contrar# to the Local
;overnment Code, its Im"lementin! Rules and Re!ulations and the Local
Assessment Re!ulations No 139* issued .# the :e"artment of Finance

7nder these immediatel# stated authorities, real "ro"erties shall .e
a""raised at the current and fair mar(et value "revailin! in the localit# ,here the
"ro"ert# is situated and classified for assessment "ur"oses on the .asis of its
actual use

Accordin!l#, this Court holds that the "roviso directin! that the real
"ro"ert# ta) .e .ased on the actual amount reflected in the deed of conve#ance
or the "revailin! 2IR Bonal value is invalid not onl# .ecause it mandates an
e)clusive rule in determinin! the fair mar(et value .ut more so .ecause it de"arts
from the esta.lished "rocedures stated in the Local Assessment Re!ulations No
139* and undul# interferes ,ith the duties statutoril# "laced u"on the local
assessor .# com"letel# dis"ensin! ,ith his anal#sis and discretion ,hich the
Code and the re!ulations re-uire to .e e)ercised An ordinance that contravenes
an# statute is ultra vires and void
Further, it is noted that there is nothin! in the Charter of NueBon Cit# and
the NueBon Cit# Revenue Code of 199' that authoriBe "u.lic res"ondents to
a""raise "ro"ert# at the consideration stated in the deed of conve#ance
7sin! the consideration a""earin! in the deed of conve#ance to assess or
a""raise real "ro"erties is not onl# ille!al since Cthe a""raisal, assessment, lev#
and collection of real "ro"ert# ta) shall not .e let to an# "rivate "erson,D .ut it ,ill
com"letel# destro# the fundamental "rinci"le in real "ro"ert# ta)ation ? that real
"ro"ert# shall .e classified, valued and assessed on the .asis of its actual use
re!ardless of ,here located, ,hoever o,ns it, and ,hoever uses it Necessaril#,
allo,in! the "arties to a "rivate sale to dictate the fair mar(et value of the
T AX AT I O N L AW C AS E D I G E S T S | '1
"ro"ert# ,ill dis"ense ,ith the distinctions of actual use stated in the Code and in
the re!ulations
1he invalidit# of the assessment or a""raisal s#stem ado"ted .# the
"roviso is not cured even if the "roviso mandates the com"arison of the stated
consideration as a!ainst the "revailin! 2IR Bonal value, ,hichever is hi!her,
.ecause an inte!ral "art of that s#stem still "ermits valuin! real "ro"ert# in
disre!ard of its Cactual useD
In the same vein, there is also nothin! in the Code or the re!ulations
sho,in! the con!ressional intent to re-uire an immediate ad5ustment of ta)es on
the .asis of the latest mar(et develo"ments as, in fact, real "ro"ert#
assessments ma# .e revised andHor increased onl# once ever# three (') #ears
Conse-uentl#, the real "ro"ert# ta) .urden should not .e inter"reted to include
those .e#ond ,hat the Code or the re!ulations e)"ressl# and clearl# state
In the case at .ar, there is nothin! in the Local ;overnment Code, the
im"lementin! rules and re!ulations, the local assessment re!ulations, the
NueBon Cit# Charter, the NueBon Cit# Revenue Code of 199' and the C6hereasD
clauses of the 199& 0rdinance from ,hich this Court can dra,, at the ver# least,
an intimation of this state interest As such, the "roviso must .e stric(en do,n
for .ein! contrar# to "u.lic "olic# and for restrainin! trade

In fine, "u.lic res"ondent NueBon Cit# ;overnment e)ceeded its statutor#
authorit# ,hen it enacted the "roviso in -uestion 1he "rovision is thus null and
void ab initio for .ein! ultra vires and for contravenin! the "rovisions of the Local
;overnment Code, its im"lementin! re!ulations and the Local Assessment
Re!ulations No 139* As such, it ac-uired no le!al effect and conferred no ri!hts
from its ince"tion
A ,ord on the a""lica.ilit# of the doctrine in this decision It a""lies onl#
in the determination of real estate ta) "a#a.le .# o,ners or administrators of real
"ro"ert#
In li!ht of the fore!oin! dis-uisitions, addressin! the issue of retroactivit#
of the re"ealin! ordinance is rendered unnecessar#

1he assailed "ortion of the "rovisions of 8ection ' of NueBon Cit#
0rdinance No '&%, 8eries of 199& is here.# declared invalid
LU7 R. 8AMANE, /3 h(r ca)ac/*5 a; *h( CIT8
TREASURER OF MA6ATI CIT8, v. "A LE%ANTO
CONDOMINUM COR%ORATION,
Oc*o,(r 25, 2005, G.R. No. 15&''.
FACTS:
2A3Le"anto Condominium Cor"oration is a dul# or!aniBed condominium
cor"oration ,hich o,ns and holds title to the common and limited common areas
of the 2A3Le"anto Condominium, situated in $aseo de Ro)as, Ma(ati Cit#
0n :ecem.er 1&, 1998, the Cor"oration received a Notice of Assessment
si!ned .# the Cit# 1reasurer ,hich stated that the Cor"oration is Clia.le to "a#
the correct cit# .usiness ta)es, fees and char!es,D com"uted as totalin!
$1,=+1,+1'%% for the #ears 199& to 199% 1he Notice of Assessment ,as silent
as to the statutor# .asis of the .usiness ta)es assessed
1hrou!h counsel, the Cor"oration res"onded ,ith a ,ritten ta) "rotest
addressed to the Cit# 1reasurer It ,as evident in the "rotest that the Cor"oration
,as "er"le)ed on the statutor# .asis of the ta) assessment
1he "rotest ,as re5ected .# the Cit# 1reasurer From the denial of the
"rotest, the Cor"oration filed an "ppeal ,ith the Re!ional 1rial Court (R1C) of
Ma(ati 0n March 1, *+++, the Ma(ati R1C 2ranch &% rendered a 1ecision
dismissin! the a""eal for lac( of merit
From this 1ecision of the R1C, the Cor"oration filed a %etition for Revie,
under Rule <* of the Rules of Civil $rocedure ,ith the Court of A""eals Initiall#,
the "etition ,as dismissed outri!ht on the !round that onl# decisions of the R1C
.rou!ht on a""eal from a first level court could .e elevated for revie, under the
mode of revie, "rescri.ed under Rule <* /o,ever, the Cor"oration "ointed out
in its 2otion for Reconsideration that under 8ection 19& of the Local ;overnment
Code, the remed# of the ta)"a#er on the denial of the "rotest filed ,ith the local
treasurer is to a""eal the denial ,ith the court of com"etent 5urisdiction
$ersuaded .# this contention, the Court of A""eals reinstated the "etition
0n % June *++*, the Court of A""eals 8"ecial 8i)teenth :ivision rendered the
1ecision reversin! the R1C and declared that the Cor"oration ,as not lia.le to
"a# .usiness ta)es to the Cit# of Ma(ati 7"on denial of her 2otion for
Reconsideration, the Cit# 1reasurer elevated the "resent %etition for Revie,
under Rule <&
ISSUE: 60N the Cor"oration had filed the ,ron! mode of a""eal .efore the
Court of A""eals ,hen it filed its $etition for Revie, under Rule <*
2ELD:
It is evident that the stance of the Cit# 1reasurer is correct as a matter of
la,, and that the "ro"er remed# of the Cor"oration from the R1C 5ud!ment is an
ordinar# a""eal under Rule <1 to the Court of A""eals /o,ever, this
"ronouncement is su.5ect to t,o im"ortant -ualifications First, in this "articular
case there are nonetheless si!nificant reasons for the Court to overloo( the
"rocedural error and ultimatel# u"hold the ad5udication of the 5urisdiction
e)ercised .# the Court of A""eals in this case 8econd, the doctrinal ,ei!ht of
the "ronouncement is confined to cases and controversies that emer!ed "rior to
the enactment of Re"u.lic Act No 9*8*, the la, ,hich e)"anded the 5urisdiction
of the Court of 1a) A""eals (C1A)
Re"u.lic Act No 9*8* definitivel# "roves in its 8ection %(a)(') that the
C1A e)ercises e)clusive a""ellate 5urisdiction to revie, on a""eal decisions,
orders or resolutions of the Re!ional 1rial Courts in local ta) cases ori!inal
decided or resolved .# them in the e)ercise of their ori!inall# or a""ellate
5urisdiction Moreover, the "rovision also states that the revie, is tri!!ered C.#
filin! a "etition for revie, under a "rocedure analo!ous to that "rovided for under
Rule <* of the 199% Rules of Civil $rocedureD
Re"u.lic Act No 9*8*, ho,ever, ,ould not a""l# to this case sim"l#
.ecause it arose "rior to the effectivit# of that la, 1he Court of A""eals could
ver# ,ell have treated the Cor"oration9s "etition for revie, as an ordinar# a""eal
Moreover, the Cor"oration9s error in elevatin! the R1C decision for revie,
via Rule <* actuall# ,or(ed to the .enefit of the Cit# 1reasurer 1here is ,ider
latitude on the "art of the Court of A""eals to refuse co!niBance over a "etition
for revie, under Rule <* than it ,ould have over an ordinar# a""eal under Rule
<1 7nder 8ection 1', Rule <1, the stated !rounds for the dismissal of an ordinar#
a""eal "rior to the transmission of the case records are ,hen the a""eal ,as
ta(en out of time or ,hen the doc(et fees ,ere not "aid 0n the other hand,
8ection =, Rule <* "rovides that in order that the Court of A""eals ma# allo, due
course to the "etition for revie,, it must first ma(e a prima facie findin! that the
lo,er court has committed an error that ,ould ,arrant the reversal or
modification of the decision under revie, 1here is no similar re-uirement of a
prima facie determination of error in the case of ordinar# a""eal, ,hich is
"erfected u"on the filin! of the notice of a""eal in due time

Avidentl#, .# em"lo#in! the Rule <* mode of revie,, the Cor"oration faced
a !reater ris( of havin! its "etition re5ected .# the Court of A""eals as com"ared
to havin! filed an ordinar# a""eal under Rule <1 1his ,as not an error that
,or(ed to the "re5udice of the Cit# 1reasurer
COMMISSIONER OF INTERNAL REVENUE v. %!IL%%INE
NATIONAL "AN6
Oc*o,(r 25, 2005, G.R. No. 111''7
FACTS:
In A"ril 1991, $hili""ine National 2an( ($N2) issued to the 2ureau of
Internal Revenue (2IR) $N2 Cashier9s Chec( No 1+9<'& for $18+,+++,+++++
1he chec( re"resented $N29s advance income ta) "a#ment for the .an(9s 1991
o"erations and ,as remitted in res"onse to then $resident CoraBon C A-uino9s
call to !enerate more revenues for national develo"ment 1he 2IR ac(no,led!ed
recei"t of the amount .# issuin! $a#ment 0rder No C31+1&1<=& and 2IR
Confirmation Recei"t No **+='&&', .oth dated A"ril 1&, 1991
$N2 re-uested the issuance of a ta) credit certificate (1CC) to .e utiliBed
a!ainst future ta) o.li!ations of the .an( thru letters dated A"ril 19 and *9, 1991
and Ma# 1<, 1991 to then 2IR Commissioner Jose C 0n!
2# the end of 1991, $N29s annual income ta) lia.ilit# amounted to
1<<,*&',**9%8, ,hich, ,hen com"ared to its claimed total credits and ta)
"a#ments of $*1%,&&*,1**'8 resulted to a credit .alance in its favor in the
amount of $%',*98,89*=+& 1his credit .alance ,as carried3over to cover ta)
lia.ilit# for the #ears 199* to 199=, .ut, as $N2 alle!ed, ,as never a""lied o,in!
to the .an(9s ne!ative ta) "osition for the said inclusive #ears, havin! incurred
losses durin! the <3#ear "eriod
0n Au!ust 1<, *++1, $N2 a!ain ,rote the 2IR re-uestin! that it .e
allo,ed to a""l# its unutiliBed advance ta) "a#ment of $%',*98,89*=+ to the
.an(9s future !ross recei"ts ta) lia.ilit# /o,ever the 2IR Commissioner denied
$N29s claim for ta) credit
$N2, via a "etition for revie,, a""ealed the denial action of the 2IR
Commissioner to the Court of 1a) A""eals (C1A) 1he Revenue Commissioner
filed a motion to dismiss $N29s aforementioned "etition on !round of "rescri"tion
under the 19%% National Internal Revenue Code (NIRC) In its Resolution of
0cto.er 1+, *++*, the C1A !ranted the Commissioner9s motion to dismiss and,
accordin!l#, denied $N29s "etition for revie,
In time, $N2 filed a "etition for revie, ,ith the Court of A""eals ar!uin!
that the a""lica.ilit# of the t,o (*)3#ear "rescri"tive "eriod is not 5urisdictional
and that said rule admits of certain e)ce"tions $N2 filed a 8u""lement to its
$etition for Revie, In its :ecision dated 0cto.er 1<, *++', the a""ellate court
reversed the rulin! of the C1A /ence, this "etition
ISSUE: 60N $N29s claim for ta) credit is .arred .# "rescri"tion
2e"#:
T AX AT I O N L AW C AS E D I G E S T S | ''
Eeril#, the sus"ension of the t,o (*)3#ear "rescri"tive "eriod is ,arranted
not solel# .# the o.5ective or "ur"ose "ursuant to ,hich res"ondent $N2 made
the advance income ta) "a#ment in 1991 Records sho, that "etitioner9s ver#
o,n conduct led the .an( to .elieve all alon! that its ori!inal intention to a""l#
the advance "a#ment to its future income ta) o.li!ations ,ill .e res"ected .# the
2IR Not,ithstandin! res"ondent $N29s failure to re-uest for ta) credit after
incurrin! ne!ative ta) "osition in 199*, u" to ta)a.le #ear 199=, there a""ears to
.e a valid reason to assume that the a!reed carr#in! for,ard of the .alance of
the advance "a#ment e)tended to succeedin! ta)a.le #ears, and not onl# in
199* 1hus, u"on "ostin! a net income in 199% and re!ainin! a "rofita.le
.usiness o"eration, res"ondent .an( "rom"tl# sou!ht the issuance of a 1CC for
the reason that its credit .alance of $%', *98,89*=+ remained unutiliBed If ever,
"etitioner9s "ose a.out res"ondent $N2 never havin! made a ,ritten claim for
refund onl# serves to .uttress the latter9s "osition that it ,as not out to secure a
refund or recover the aforesaid amount, .ut for the 2IR to issue a 1CC so it can
a""l# the same to its future ta) o.li!ations
Lest it .e overloo(ed, "etitioner "erem"toril# denied the re-uest for ta)
credit on the !round of its havin! .een filed .e#ond the t,o (*)3#ear "rescri"tive
"eriod In the same .reath, ho,ever, "etitioner a""ears to have !lossed over an
incident ,hich amounts to an earlier 2IR rulin! that 3there is no legal +uestion to
be resolved but only a factual investigationD in the "rocessin! of $N29s claim
Aven as "etitioner concluded such administrative investi!ation, it did not den# the
re-uest for issuance of a ta) credit certificate on an# factual findin!, such as the
veracit# of alle!ed .usiness losses in the ta)a.le #ears 199* to 199=, durin!
,hich the res"ondent .an( alle!ed the credit .alance ,as not a""lied Lastl#,
there is no indication that "etitioner considered res"ondent9s re-uest as an
ordinar# claim for refund, the ver# reason ,h# the same ,as referred .# the 2IR
for "rocessin! to the 0"erations ;rou" of the 2ureau
/ence, no reversi.le error ,as committed .# the CA in holdin! that, u"on
.asic considerations of e-uit# and fairness, res"ondent9s re-uest for issuance of
a ta) credit certificate should not .e su.5ect to the t,o (*)3#ear limitation in
8ection *'+ of the NIRC

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T AX AT I O N L AW C AS E D I G E S T S | 1

LASCONA LAND CO., INC. v. COMMISSIONER

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