Leonen: Facts

TEAM ENERGY CORPORATION (FORMERLY: MIRANT PAGBILAO
CORPORATION AND SOUTHERN ENERGY QUEZON, INC.) v. COMMISSIONER OF

INTERNAL REVENUE, G.R. No. 197663, March 14, 2018
REPUBLIC OF THE PHILIPPINES REP. BY THE BUREAU OF INTERNAL

REVENUE v. TEAM ENERGY CORPORATION G.R. No. 197770, March 14, 2018, J.
Leonen
Facts:
Team Energy is a VAT-registered entity engaged in power generation and electricity sale to
National Power Corporation (NPC) under a Build, Operate, and Transfer scheme. On November
13, 2002, Team Energy filed with the Bureau of Internal Revenue (BIR) "an Application for
Effective Zero-Rate of its supply of electricity to the NPC, which was subsequently approved."
On December 17, 2004, Team Energy filed with the Revenue District Office No. 60 in Lucena
City a claim for refund of unutilized input VAT in the amount of P83,465,353.50, for the first to
fourth quarters of taxable year 2003.
On April 22, 2005, Team Energy appealed before the Court of Tax Appeals its 2003 first quarter
VAT claim of PI 5,085,320.31. The appeal was docketed as CTA Case No. 7229. Subsequently,
on July 22, 2005, Team Energy appealed its VAT refund claims for the second to fourth quarters
of 2003 in the amount of P68,380,033.19, docketed as CTA Case No. 7298.
As special and affirmative defenses, the Commissioner alleged that it was imperative upon Team
Energy to prove its compliance with the registration requirements of a VAT taxpayer; the
invoicing and accounting requirements for VAT-registered persons; and the checklist of
requirements for a VAT refund under Revenue Memorandum Order No. 53-98. Furthermore, the
Commissioner contended that Team Energy must prove that the claims were filed within the
prescriptive periods and that the input taxes being claimed had not been applied against any
output tax liability or were not carried over in the succeeding quarters.
On October 12, 2005, the two (2) cases were consolidated. The Court of Tax Appeals First
Division partially granted Team Energy's petition. It held that NPC's exemption from direct and
indirect taxes had long been resolved by this Court. Consequently, NPC's electricity purchases
from independent power producers, such as Team Energy, were subject to 0% VAT pursuant to
Section 108(B)(3) of the 1997 NIRC.
Upon the denial of her Motion for Reconsideration, the Commissioner filed on March 31, 2010 a
Petition for Review with the Court of Tax Appeals En Banc. On April 8, 2011, the Court of Tax
Appeals En Banc promulgated its Decision, partially granting Team Energy's petition.
The separate partial motions for reconsideration of Team Energy and the Commissioner were
denied in the Court of Tax Appeals En Banc July 7, 2011 Resolution. Thus, Team Energy and
the Commissioner filed their separate Petitions for Review before this Court, docketed as G.R.
Nos. 197663 and 197770, respectively.
Issue of the Taxpayer:
Whether or not the Court of Tax Appeals erred in disallowing Team Energy Corporation's claim
for tax refund of its unutilized input VAT for the second to fourth quarters of 2003 on the ground
of lack of jurisdiction.
Whether or not Team Energy Corporation's failure to submit the Registration and Certificate of
Compliance issued by the Energy Regulatory Commission (ERC) disqualifies it from claiming a
tax refund/credit.
Issue of the Government:
Whether or not the Court of Tax Appeals erred in failing to recognize the interchangeability of
VAT invoices and VAT official receipts to comply with the substantiation requirements for
refunds of excess or unutilized input tax under Sections 110 and 113 of the 1997 National
Internal Revenue Code, resulting in the disallowance of P258,874.55
Held:
I.
No. The prescriptive periods regarding judicial claims for refunds or tax credits of input VAT are
explicitly set forth in Section 112(D) of the 1997 NIRC. The law is clear that resort to an appeal
with the Court of Tax Appeals should be made within 30 days either from receipt of the decision
denying the claim or the expiration of the 120-day period given to the Commissioner to decide
the claim.
In this case, Team Energy's judicial claim was filed beyond the 30-day period required in Section
112(D). The administrative claim for refund was filed on December 17, 2004. Thus, BIR had 120
days to act on the claim, or until April 16, 2005. Team Energy, in turn, had until May 16, 2005 to
file a petition with the Court of Tax Appeals but filed its appeal only on July 22, 2005, or 67
days late. Thus, the Court of Tax Appeals En Banc correctly denied its claim for refund due to
prescription.
II.
No. The Commissioner submits that the Court of Tax Appeals En Banc erred in granting Team
Energy a tax refund/credit of P11,161,392.67, representing unutilized input VAT attributable to
zero-rated sales of electricity to NPC. She maintains that Team Energy is not entitled to any tax
refund or credit because it cannot qualify for VAT zero-rating under Republic Act No. 9136 or
the Electrical Power Industry Reform Act (EPIRA) Law for failure to submit its ERC
Registration and Certificate of Compliance Team Energy's claim for unutilized or excess input
VAT was anchored not on the EPIRA Law but on Section 108(B)(3) of the 1997 NIRC, in
relation to Section 13 of Republic Act No. 6395 or the NPC's charter, before its repeal by
Republic Act No. 9337.
Considering that Team Energy's refund claim is premised on Section 108(B)(3) of the 1997
NIRC, in relation to NPC's charter, the requirements under the EPIRA are inapplicable. To
qualify its electricity sale to NPC as zero-rated, Team Energy needs only to show that it is a
VAT-registered entity and that it has complied with the invoicing requirements under Section
108(B)(3) of the 1997 NIRC, in conjunction with Section 4.108-1 of Revenue Regulations No. 7-
95. In sum, the Court of Tax Appeals En Banc found proper the refund of P11,161,392.67,
representing unutilized input VAT attributable to Team Energy's zero-rated sales for the first
quarter of 2003.
III.
No. Team Energy posits that Section 113, prior to its amendment by Republic Act No. 9337,
must be applied to its input VAT incurred in 2003, and that the disallowed amount of
P258,874.55 supported by VAT invoice or official receipts should be allowed.
Team Energy's contention is untenable. It should be noted that the seller will only become liable
to pay the output VAT upon receipt of payment from the purchaser. If we are to use sales invoice
in the sale of services, an absurd situation will arise when the purchaser of the service can claim
tax credit representing input VAT even before there is payment of the output VAT by the seller
on the sale pertaining to the same transaction. As a matter of fact if the seller is not paid on the
transaction, the seller of service would legally not have to pay output tax while the purchaser
may legally claim input tax credit thereon. The government ends up refunding a tax which has
not been paid at all. Hence, to avoid this, VAT official receipt for the sale of services is an
absolute requirement.
In conjunction with this rule, Revenue Memorandum Circular No. 42-03 expressly provides that
an "invoice is the supporting document for the claim of input tax on purchase of goods whereas
official receipt is the supporting document for the claim of input tax on purchase of services." It
further states that a taxpayer's failure to comply with the invoicing requirements will result to the
disallowance of the claim for input tax.
If the claim for refund is based on the existence of zero-rated sales by the taxpayer but it fails to
comply with the invoicing requirements in the issuance of sales invoices (e.g. failure to indicate
the TIN), its claim for tax credit/refund of VAT on its purchases shall be denied considering that
the invoice it is issuing to its customers does not depict its being a VAT-registered taxpayer
whose sales are classified as zero-rated sales.
Pursuant to Sections 106(D) and 108(C) in relation to Section 110 of the 1997 NIRC, the output
or input tax on the sale or purchase of goods is determined by the total amount indicated in the
VAT invoice, while the output or input tax on the sale or purchase of services is determined by
the total amount indicated in the VAT official receipt.
Thus, the Court of Tax Appeals properly disallowed the input VAT of P258,874.55 for Team
Energy's failure to comply with the invoicing requirements.
PEN:
A claim for input VAT refund or credit is construed strictly against the taxpayer. Accordingly,
there must be strict compliance with the prescriptive periods and substantive requirements set by
law before a claim for tax refund or credit may prosper. The 120+30-day periods in Section 112
is not a mere procedural technicality that can be set aside if the claim is otherwise meritorious. It
is a mandatory and jurisdictional condition imposed by law.
Claim a refund of unutilized or excess input VAT, purchase of goods or properties must be
supported by VAT invoices, while purchase of services must be supported by VAT official
receipts.
2.
COMMISSIONER OF INTERNAL REVENUE v. COVANTA ENERGY PHILIPPINE

HOLDINGS, INC., G.R. No. 203160, January 24, 2018, J. Reyes, Jr.
Facts:
On Dec 6 2004, the CIR issued Formal Letters of Demand and Assessment Notices against
CEPHI for deficiency VAT and expanded withholding tax. The deficiency assessments were an
aggregate amount of P754,496.99, representing CEPHI's VAT and EWT liabilities for the
taxable year 2001.
CEPHI protested the assessments by filing 2 separate Letters of Protest on Jan 19 2005.
However, the CIR issued another Formal Letter of Demand and Assessment Notice dated
January 11, 2005, assessing CEPHI for deficiency minimum corporate income tax (MCIT) in the
amount of P467,801.99, likewise for the taxable year 2001. This assessment lead to CEPHI filing
a Letter of Protest on the MCIT assessment on February 16, 2015.
The protests remained unacted upon. Thus, CEPHI filed separate petitions before the CTA,
seeking the cancellation and withdrawal of the deficiency assessments. The petitions were filed
on October 10, 2005, for the deficiency VAT and EWT and on November 9, 2005, for the
deficiency MCIT.
Then the CIR filed an answer which were eventually consolidated upon the CIR's motion. After
the parties' respective submission of their formal offer of evidence, CEPHI filed a Supplemental
Petition on October 7, 2008, informing the CTA that it availed of the tax amnesty under R.A. No.
9480. CEPHI afterwards submitted a Supplemental Formal Offer of Evidence, together with the
documents relevant to its tax amnesty.
In a Decision dated July 27, 2010, the CTA Second Division partially, granted the petitions of
CEPHI with respect to the deficiency VAT and MCIT assessments for 2001. Subsequently, the
CTA en banc denied the appeal in the assailed Decision.
Whether or not CEPHI is entitled to tax amnesty
Whether or not CEPHI's failure to provide complete information in its Statement of Assets,
Liabilities and Net worth (SALN), particularly the columns requiring the Reference and Basis of
Valuation, is sufficient basis to disqualify CEPHI from the tax amnesty program.
Held:
Yes. CEPHI is entitled to the immunities and privileges of the tax amnesty program upon full
compliance with the requirements of R.A. No. 9480.
In this case, it is undisputed that CEPHI submitted all the documentary requirements for the tax
amnesty program. The CIR argued, however, that CEPHI cannot enjoy the privileges attendant
to the tax amnesty program because its SALN failed to comply with the requirements of R.A.
No. 9480. The CIR specifically points to CEPHI's supposed omission of the information relating
to the Reference and Basis for valuation columns in CEPHI's original and amended SALNs.
It is evident from CEPHI's original and amended SALN that the information statutorily
mandated in R.A. No. 9480 were all reflected in its submission to the BIR. While the columns
for Reference and Basis for Valuation were indeed left blank, CEPHI attached schedules to its
SALN (Schedules 1 to 7), both original and amended, which provide the required information
under R.A. No. 9480 and its implementing rules and regulations.38 A review of the SALN form
likewise reveals that the information required in the Reference and Basis for Valuation columns
are actually the specific description of the taxpayer's declared assets. As such, these were deemed
filled when CEPHI referred to the attached schedules in its SALN. On this basis, the CIR cannot
disregard or simply set aside the SALN submitted by CEPHI.
Considering that CEPHI completed the requirements and paid the corresponding amnesty tax, it
is considered to have totally complied with the tax amnesty program. As a matter of course,
CEPHI is entitled to the immediate enjoyment of the immunities and privileges of the tax
amnesty program. Nonetheless, the Court emphasizes that the immunities and privileges granted
to taxpayers under R.A. No. 9480 is not absolute. It is subject to a resolutory condition insofar as
the taxpayers' enjoyment of the immunities and privileges of the law is concerned. These
immunities cease upon proof that they underdeclared their net worth by 30%. Unfortunately for
the CIR, however, there is no such proof in CEPHI' s case. The Court, thus, finds it necessary to
deny the present petition. While tax amnesty is in the nature of a tax exemption, which is strictly
construed against the taxpayer,43 the Court cannot disregard the plain text of R.A. No. 9480.
PEN:
Immunities and privileges granted to taxpayers under R.A. No. 9480 is not absolute. It is subject
to a resolutory condition insofar as the taxpayers' enjoyment of the immunities and
privileges of the law is concerned. These immunities cease upon proof that they underdeclared
their net worth by 30%.
Time/or Filing and Payment of Amnesty Tax. - The filing of the Tax Amnesty Return, together
with the SALN, and the payment of the amnesty tax shall be made within six (6) months from
the effectivity of these Rules.31 (Emphasis and underscoring Ours)
Upon the taxpayer's full compliance with these requirements, the taxpayer is immediately
entitled to the enjoyment of the immunities and privileges of the tax amnesty program.32
But when: (a) the taxpayer fails to file a SALN and the Tax Amnesty Return; or (b) the net
worth of the taxpayer in the SALN as of December 31, 2005 is proven to be understated to
the extent of 30% or more, the taxpayer shall cease to enjoy these immunities and
privileges.
1.
COMMISSIONER OF INTERNAL REVENUE v. LANCASTER PHILIPPINES, INC.,

G.R. No. 183408, July 12, 2017, J. Martires
Facts:
Lancaster Philippines, Inc. is a domestic corporation engaged in the production, processing and
marketing of tobacco. BIR issued a Letter of Authority (LOA) authorizing its revenue officers to
examine Lancaster’s books of accounts and other accounting records for all internal revenue
taxes due from taxable year 1998 to an unspecified date.
After the conduct of an examination pursuant to the LOA, the BIR issued a Preliminary
Assessment Notice (PAN) which cited Lancaster for: (1) overstatement of its purchases for the
fiscal year April 1998 to March 1999; (2) noncompliance with the generally accepted accounting
principle of proper matching of cost and revenue; and (3) disallowance of purchases of tobacco
from farmers for the months of February and March 1998 as deductions against income for the
fiscal year April 1998 to March 1999.
Lancaster replied to the PAN contending that it had used an entire “tobacco cropping season” to
determine its total purchases covering a one-year period from October 1 to September 30 of the
following year; that it has been adopting the 6-month timing difference to conform to the
matching concept; and that this has long been installed as part of the company’s system and
consistently applied in its accounting books. It also argued that the February and March 1998
purchases should not have been disallowed. It concluded that they correctly posted the subject
purchases in the fiscal year ending March 1999 as it was the only in this year that the gross
income from the crop was realized.
Subsequently, Lancaster received from the BIR a final assessment notice (FAN) which assessed
Lancaster’s deficiency income tax amounting to P11,496,770.18, as a consequence of the
disallowance of purchases claimed for the taxable year ending March 31, 1999.
After trial, the CTA Division granted the petition of Lancaster. The CIR move but failed to obtain
reconsideration of the CTA Division ruling. Aggrieved, the CIR sought recourse from the CTA En
Banc to seek a reversal of the decision and the resolution of the CTA Division. However, the
CTA En Banc found no reversible error in the CTA Division's ruling, thus, it affirmed the
cancellation of the assessment against Lancaster.
Whether or not the deficiency tax assessment against Lancaster for the taxable year 1998 should be
cancelled and withdrawn
Whether or not petitioner's revenue officers exceeded their authority to investigate the perjod not
covered by their letter of authority.
Held:
I.
Yes. In the present case, the Court find it wholly justifiable for Lancaster, as a business engaged in the
production and marketing of tobacco, to adopt the crop method of accounting. A taxpayer is authorized to
employ what it finds suitable for its purpose so long as it consistently does so, and in this case, Lancaster
does appear to have utilized the method regularly for many decades already. Considering that the crop
year of Lancaster starts from October up to September of the following year, it follows that all of its
expenses in the crop production made within the crop year starting from October 1997 to September
1998, including the February and March 1998 purchases covered by purchase invoice vouchers, are
rightfully deductible for income tax purposes in the year when the gross income from the crops are
realized. Pertinently, nothing from the pleadings or memoranda of the parties, or even from their
testimonies before the CT A, would support a finding that the gross income from the crops (to which the
subject expenses refer) was actually realized by the end of March 1998, or the closing of Lancaster's
fiscal year for 1998. Instead, the records show that the February and March 1998 purchases were recorded
by Lancaster as advances and later taken up as purchases by the close of the crop year in September
1998, or as stated very clearly above, within the fiscal year 1999. On this point, the Court quote with
approval the ruling of the CT A En Banc, thus:
Considering that [Lancaster] is engaged in the production of tobacco, it applied the crop year
basis in determining its total purchases for each fiscal year. Thus, [Lancaster's] total cost for the
production of its crops, which includes its purchases, must be taken as a deduction in the year in
which the gross income is realized. Thus, We agree with the following ratiocination of the First
Division:
Evident from the foregoing, the crop year basis is one unusual method of accounting wherein the
entire cost of producing the crops (including purchases) must be taken as a deduction in the year
in which the gross income from the crop is realized. Since the petitioner's crop year starts in
October and ends in September of the following year, the same does not coincide with
petitioner's fiscal year which starts in April and ends in March of the following year. However,
the law and regulations consider this peculiar situation and allow the costs to be taken up at the
time the gross income from the crop is realized, as in the instant case.
[Lancaster's] fiscal period is from April 1, 1998 to March 31, 1999. On the other hand, its crop
year is from October 1, 1997 to September 1, 1998. Accordingly, in applying the crop year
method, all the purchases made by the respondent for October 1, 1997 to September 1, 1998
should be deducted from the fiscal year ending March 31, 1999, since it is the time when the
gross income from the crops is realized.
II.
The Court agreed with the trial court when it ruled the LOA authorizing BIR Revenue Officers to
examine the books of account of Lancaster for the taxable year 1998 only or since Lancaster
adopted a fiscal year for the period April 1, 1997 to March 31, 1998. However, the deficiency
income tax assessment which the BIR eventually issue against Lancaster was based on the
disallowance of expenses reported in FY 1999, or for the period April 1, 1998 to March 31,
1999. The CTA concluded that the revenue examiners had exceeded their authority when they
issued the assessment against Lancaster and, consequently, declared such assessment to be
without force and effect.
The LOA gives notice to the taxpayer that it is under investigation for possible deficiency tax
assessment; at the same time it authorizes or empowers a designated revenue officer to examine,
verify, and scrutinize a taxpayer’s books and records, in relation to internal revenue tax liabilities
for a particular period.
The taxable year covered by the assessment being outside of the period specified in the LOA in
this case, the assessment issued against Lancaster is, therefore, void.
PEN:
The audit process normally commences with the issuance by the CIR of a Letter of Authority.
The LOA gives notice to the taxpayer that it is under investigation for possible deficiency tax
assessment; at the same time it authorizes or empowers a designated revenue officer to examine,
verify, and scrutinize a taxpayer's books and records, in relation to internal revenue tax liabilities
for a particular period
An accounting method is a "set of rules for determining when and how to report income and
deductions."46 The provisions under Chapter VIII, Title II of the NIRC cited above enumerate
the methods of accounting that the law expressly recognizes, to wit:
(1) Cash basis method;47
(2) Accrual method;48
(3) Installment method;49
(4) Percentage of completion method;50 and
(5) Other accounting methods.
Any of the foregoing methods may be employed by any taxpayer so long as it reflects its income
properly and such method is used regularly. The peculiarities of the business or occupation
engaged in by a taxpayer would largely determine how it would report incomes and expenses in
its accounting books or records. The NIRC does not prescribe a uniform, or even specific,
method of accounting.
Too, other methods approved by the CIR, even when not expressly mentioned in the NIRC, may
be adopted if such method would enable the taxpayer to properly reflect its income. Section 43
of the NIRC authorizes the CIR to allow the use of a method of accounting that in its opinion
would clearly reflect the income of the taxpayer. An example of such method not expressly
mentioned in the NIRC, but duly approved by the CIR, is the 'crop method of accounting'
authorized under RAM No. 2-95
4.
PROCTER & GAMBLE ASIA PTE LTD. v. COMMISSIONER OF INTERNAL

REVENUE, G.R. No. 205652, September 06, 2017, J. Caguioa
P&G is a foreign corporation duly organized and existing under the laws of Singapore and is
maintaining a Regional Operating Headquarter in the Philippines.
On March 22, 2007 and May 2, 2007, P&G filed applications and letters addressed to the BIR
Revenue District Office (RDO) No. 49, requesting the refund or issuance of tax credit certificates
(TCCs) of its input VAT attributable to its zero-rated sales covering the taxable periods of
January 2005 to March 2005, and April 2005 to June 2005.
On March 28, 2007, P&G filed a petition for review with the CTA seeking the refund or issuance
of TCC in the amount of P23,090,729.17 representing input VAT paid on goods or services
attributable to its zero-rated sales for the first quarter of taxable year 2005. The case was
docketed as CTA Case No. 7581.
On June 8, 2007, P&G filed with the CTA another judicial claim for refund or issuance of TCC
in the amount of P19,006,753.58 representing its unutilized input VAT paid on goods and
services attributable to its zero-rated sales for the second quarter of taxable year 2005. The case
was docketed as CTA Case No. 7639.
On July 30, 2007, the CTA Division granted P&G's Motion to Consolidate CTA Case No. 7581
with 7639, inasmuch as the two cases involve the same parties and common questions of law
and/or facts.
In a Decision dated November 17, 2010, the CTA Division dismissed P&G's judicial claim, for
having been prematurely filed. Citing Aichi, the CTA Division held that the CIR is granted by
law a period of 120 days to act on the administrative claim for refund.
Aggrieved, P&G elevated the matter to the CTA En Banc insisting, among others, that the
Court's ruling in Aichi should not be given a retroactive effect.On September 21, 2012, the
CTA En Banc rendered the assailed Decision affirming in toto the CTA Division's Decision and
Resolution.
Whether or not P&G's judicial claims for refund is tenable.
Whether or not the CTA En Banc erred in dismissing P&G's judicial claims for refund on the
ground of prematurity.
Held:
Yes. The Court finds the petition meritorious. Based on the plain language of Sec. 112 of NIRC,
the CIR is given 120 days within which to grant or deny a claim for refund. Upon receipt of
CIR's decision or ruling denying the said claim, or upon the expiration of the 120-day period
without action from the CIR, the taxpayer has 30 days within which to file a petition for review
with the CTA.
In this case, records show that P&G filed its judicial claims for refund on March 28, 2007 and
June 8, 2007, respectively, or after the issuance of BIR Ruling No. DA-489-03, but before the
date when Aichi was promulgated. Thus, even though P&G filed its judicial claim without
waiting for the expiration of the 120-day mandatory period, the CTA may still take cognizance
of the case because the claim was filed within the excepted period stated in San Roque. In other
words, P&G's judicial claims were deemed timely filed and should not have been dismissed by
the CTA.
PEN:
In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for
creditable input taxes within one hundred twenty (120) days from the date of submission of
complete documents in support of the application filed in accordance with Subsection (A)
hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part
of the Commissioner to act on the application within the period prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the claim or after
the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim
with the Court of Tax Appeals.
5.
COMMISSIONER OF INTERNAL REVENUE v. PHILIPPINE-ALUMINUM WHEELS,

INC., G.R. No. 216161, August 9, 2017, J. Carpio
Facts:
Respondent is a corporation organized and existing under Philippine laws which engages in the
manufacture, production, sale, and distribution of automotive parts and accessories. On 16
December 2003, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice
(PAN) against respondent covering deficiency taxes for the taxable year 2001. On 28 March
2004, the BIR issued a Final Assessment Notice (FAN) against respondent in the amount of
P32,100,613.42. On 23 June 2004, respondent requested for reconsideration of the FAN issued
by the BIR. On 8 November 2006, the BIR issued a Final Decision on Disputed Assessment
(FDDA) and demanded full payment of the deficiency tax assessment from respondent.
In a second letter dated 16 July 2008, the BIR reiterated that the FDDA had become final and
executory for the failure of the respondent to appeal the FDDA with the CTA within the
prescribed period of thirty (30) days. The BIR demanded the full payment of the tax assessment
and contended that the respondent's availment of the tax amnesty under RA 9480 had no effect
on the assessment due to the finality of the FDDA prior to respondent's tax amnesty availment.
On 1 August 2008, respondent filed a Petition for Review with the CTA assailing the letter of the
BIR dated 16 July 2008.
On 12 November 2012, the CTA granted respondent's Petition for Review and set aside the
assessment in view of respondent's availment of a tax amnesty under RA 9480. On 19 May 2014,
the CTA En Banc held that a qualified tax amnesty applicant who has completed the
requirements of RA 9480 shall be deemed to have fully complied with the Tax Amnesty
Program.
Whether or not the respondent is entitled to the benefits of the Tax Amnesty Program under RA
9480.
Whether or not the respondent's availment of the tax amnesty under RA 9480 had no effect on
the assessment due to the finality of the FDDA prior to respondent's tax amnesty availment.
Held:
This Court denies the petition in view of the respondent's availment of the Tax Amnesty Program
under RA 9480. In Philippine Banking Corporation v. Commissioner of Internal Revenue, this
Court held that the taxpayer's completion of the requirements under RA 9480, as implemented by
DO 29-07, will extinguish the taxpayer's tax liability, additions and all appurtenant civil,
criminal, or administrative penalties under the National Internal Revenue Code.
On 19 September 2007, respondent availed of the Tax Amnesty Program under RA 9480, as
implemented by DO 29-07.1âwphi1 Respondent submitted its Notice of Availment, Tax
Amnesty Return, Statement of Assets, Liabilities and Net Worth, and comparative financial
statements for 2005 and 2006. Respondent paid the amnesty tax to the Development Bank of the
Philippines, evidenced by its Tax Payment Deposit Slip dated 21 September 2007. Respondent's
completion of the requirements of the Tax Amnesty Program under RA 9480 is sufficient to
extinguish its tax liability under the FDDA of the BIR.
The CIR contends that respondent is disqualified to avail of the tax amnesty under RA 9480. The
CIR asserts that the finality of its assessment, particularly its FDDA is equivalent to a final and
executory judgment by the courts, falling within the exceptions to the Tax Amnesty Program
under Section 8 of RA 9480.
The CIR is wrong. Section 8(f) is clear: only persons with "tax cases subject of final and
executory judgment by the courts" are disqualified to avail of the Tax Amnesty Program under
RA 9480. There must be a judgment promulgated by a court and the judgment must have
become final and executory. Obviously, there is none in this case.
PEN:
Completion of the requirements shall be deemed full compliance with the tax amnesty program,
the law mandates that the taxpayer shall thereafter be immune from the payment of taxes, and
additions thereto, as well as the appurtenant civil, criminal or administrative penalties under the
NIRC of 1997.
The Court held that in case there is a discrepancy between the law and a regulation issued to
implement the law, the law prevails because the rule or regulation cannot go beyond the terms
and provisions of the law, to wit: "[t]he Circular cannot extend the law or expand its coverage as
the power to amend or repeal a statute is vested with the legislature." To give effect to the
exception under RMC No. 19-2008 of delinquent accounts or accounts receivable by the BIR, as
interpreted by the BIR, would unlawfully create a new exception for availing of the Tax
Amnesty Program under RA 9480.
6.
NORTHERN MINDANAO POWER CORPORATION v. COMMISSIONER OF

INTERNAL REVENUE, G.R. No. 185115, February 18, 2015, CJ. Sereno
Petitioner is engaged in the production sale of electricity as an independent power producer and
sells electricity to National Power Corporation (NPC). Petitioner filed an administrative claim
for a refund on 20 June 2000 for the 3rd and the 4th quarters of taxable year 1999, and on 25 July
2001 for taxable year 2000 in the sum of P6,411,892.84.
The CTA First Division denied the Petition and the subsequent Motion for Reconsideration for
lack of merit. The Court in Division found that the term “zero-rated” was not imprinted on the
receipts or invoices presented by petitioner in violation of Section 4.108-1 of Revenue
Regulations No. 7-95. On appeal to the CTA En Banc, the Petition was likewise denied.
Whether or not Section 4.108-1 of Revenue Regulations (RR) No. 7-95 which expanded the
statutory requirements for the issuance of official receipts and invoices found in Section 113 of
the 1997 Tax Code by providing for the additional requirement of the imprinting of the terms
“zero-rated” is unconstitutional.
Whether or not company invoices are sufficient to establish the actual amount of sale of electric
power services to the National Power Corporation and therefore sufficient to substantiate
Petitioner’s claim for refund.

Whether or not the petitioner failed to substantiate its claim for a refund and to strictly comply
with the invoicing requirements of the law and tax regulations
Held:
No. The issue of the requirement of imprinting the word “zero-rated” has already been settled by
the Court in a number of cases. In Western Mindanao Power Corporation v. CIR:
The Court ruled that this provision is “reasonable and is in accord with the efficient collection of
VAT from the covered sales of goods and services.” Moreover, we have held in Kepco
Philippines Corporation v. Commissioner of Internal Revenue that the subsequent incorporation
of Section 4.108-1 of RR 7-95 in Section 113 (B) (2) (c) of R.A. 9337 actually confirmed the
validity of the imprinting requirement on VAT invoices or official receipts – a case falling under
the principle of legislative approval of administrative interpretation by reenactment.
In fact, the Court has consistently held as fatal the failure to print the word “zero-rated” on the
VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated
sales, even if the claims were made prior to the effectivity of R.A. 9337.
As regards the sufficiency of a company invoice to prove the sales of services to NPC, the Court
find this claim is without sufficient legal basis. Section 113 of the NIRC of 1997 provides that a
VAT invoice is necessary for every sale, barter or exchange of goods or properties, while a VAT
official receipt properly pertains to every lease of goods or properties; as well as to every sale,
barter or exchange of services.
PEN:
A “sales or commercial invoice” is a written account of goods sold or services rendered

indicating the prices charged therefor or a list by whatever name it is known which is used in the
ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods
and services.
A “receipt” on the other hand is a written acknowledgment of the fact of payment in money or
other settlement between seller and buyer of goods, debtor or creditor, or person rendering
services and client or customer.cralawred
A VAT invoice is the seller’s best proof of the sale of goods or services to the buyer, while a
VAT receipt is the buyer’s best evidence of the payment of goods or services received from the
seller. A VAT invoice and a VAT receipt should not be confused and made to refer to one and
the same thing. Certainly, neither does the law intend the two to be used alternatively.
7.
CHINA BANKING CORPORATION V. COMMISSIONER OF INTERNAL REVENUE,
G.R. NO. 172509, February 4, 2015, CJ. Sereno
Facts:
China Banking Corporation (“CBC”) is a universal bank duly organized under the laws of the
Philippines.
On 19 April 1989, CBC was assessed by the BIR for deficiency DST on the sales of foreign bills
of exchange to the Central Bank amounting to P 11,383, 165.50. CBC protested asserting five
defenses: double taxation, absence of liability, due process violation, validity of assessment and
tax exemption.
On 6 December 2001, more than 12 years after the filing of the protest, the Commissioner of
Internal Revenue (CIR) rendered a decision reiterating the deficiency DST assessment and
ordered the payment thereof plus increments within 30 days from receipt of the Decision.
The CIR replied to the CBC’s protest only on 06 December 2001 in which it ordered CBC to pay
its tax deficiency. Thereafter, CBC filed a Petition for Review with the CTA.The CTA denied
CBC’s petition ruling that the SWAP transaction is a telegraphic transfer subject to DST; thus,
CBC is liable to pay the alleged deficiency.
On appeal, CBC raised for the first time the issue of prescription. The BIR did not address the
issue of prescription in its Comment.
Whether or not the petitioner is liable for deficiency DST on the sales of foreign bills of
exchanged to the Central Bank.
Whether or not the right of the BIR to collect the assessed DST from CBC is barred by
prescription.
Held:
Yes. The Court grants the Petition on the ground that the right of the BIR to collect the assessed
DST is barred by the statute of limitations. Prescription Has Set In.
To recall, the Bureau of Internal Revenue (BIR) issued the assessment for deficiency DST on 19
April 1989, whenthe applicable rule was Section 319(c) of the National Internal Revenue Code
of 1977, as amended. In that provision, the time limit for the government to collect the assessed
tax is set at three years, to be reckoned from the date when the BIR mails/releases/sends the
assessment notice to the taxpayer. Further, Section 319(c) states that the assessed tax must be
collected by distraint or levy and/or court proceeding within the three-year period.
In this case, the records do not show when the assessment notice was mailed, released or sent to
CBC. Nevertheless, the latest possible date that the BIR could have released, mailed orsent the
assessment notice was on the same date that CBC received it, 19 April 1989. Assuming therefore
that 19 April 1989 is the reckoning date, the BIR had three years to collect the assessed DST.
However, the records of this case show that there was neither a warrant of distraint or levy
served on CBC's properties nor a collection case filed in court by the BIR within the three-year
period.
PEN:
The running of the statute of limitations was not suspended by the request for reinvestigation. A
request for reinvestigation alone will not suspend the statute of limitations. Two things must
concur: there must be a request for reinvestigation and the CIR must have granted it.
As a rule, the failure to raise the defense of prescription at the administrative level prevents the
taxpayer from raising it at the appeal stage. This rule, however, is not absolute. BPI thus provides
an exception to the rule against raising the defense of prescription for the first time on appeal: the
exception arises when the pleadings or the evidence on record show that the claim is barred by
prescription.
8.
VISAYAS GEOTHERMAL POWER COMPANY v. COMMISSIONER OF INTERNAL

REVENUE, G.R. No. 197525, June 4, 2014, J. Mendoza
Facts:
Petitioner VGPC is a special limited partnership principally engaged in the business of power
generation through geothermal energy and the sale of generated power to the Philippine National
Oil Company, pursuant to the Energy Conversion Agreement. VGPC filed with the BIR its
Original Quarterly VAT Returns for the first to fourth quarters of taxable year 2005. On 2006, it
filed an administrative claim for refund for the amount of 14,160,807.95 with the BIR District
Office of Ormoc City on the ground that it was entitled to recover excess and unutilized input
VAT payments for the four quarters of taxable year 2005, pursuant to Republic Act R.A. No.
9136, which treated sales of generated power subject to VAT to a 0%. Nearly one month later,
while its administrative claim was pending, VGPC filed its judicial claim via a petition for
review with the CTA praying for a refund or the issuance of a tax credit certificate covering the 4
quarters of taxable year 2005. In its order, the CTA Second Division found that only the amount
of 7,699,366.37 was duly substantiated by the required evidence. Both VGPC and the CIR
appealed to the CTA En Banc. The CTA En Banc reversed and set aside the decision and
resolution of the CTA Second Division, and dismissed the original petition for review for having
been filed prematurely. Petitioner argues that the CIR should have been estopped from
questioning the jurisdiction of the CTA after actively participating in the proceedings before the
CTA Second Division.
Whether or not the petitioner’s judicial claim for refund was prematurely filed.
Whether or not the CTA En Banc erred in applying Aichi to Petitioner VGPC’s claim for refund.
Whether or not the CTA En Banc erred in finding that Respondent CIR is not estopped from
questioning the jurisdiction of the CTA. Respondent CIR, by her actions and pronouncements,
should have been precluded from questioning the jurisdiction of the CTA-Division.
Held:
I.
No. The general rule is that the 120+30 day period is mandatory and jurisdictional from the effectivity of
the 1997 NIRC on January 1, 1998, up to the present. As an exception, judicial claims filed from
December 10, 2003 to October 6, 2010 need not wait for the exhaustion of the 120-day period.
A review of the facts of the present case reveals that petitioner VGPC timely filed its
administrative claim with the CIR on December 6, 2006, and later, its judicial claim with the
CTA on January 3, 2007. The judicial claim was clearly filed within the period of exception and
was, therefore, not premature and should not have been dismissed by the CTA En Banc.
II.
No. Article 8 of the Civil Code provides that judicial decisions applying or interpreting the law shall form
part of the legal system of the Philippines and shall have the force of law. The interpretation placed upon
a law by a competent court establishes the contemporaneous legislative intent of the law. Thus, such
interpretation constitutes a part of the law as of the date the statute is enacted. It is only when a prior
ruling of the Court is overruled, and a different view adopted, that the new doctrine may have to be
applied prospectively in favor of parties who have relied on the old doctrine and have acted in good faith.
Considering that the nature of the 120+30 day period was first settled in Aichi, the interpretation
by the Court of its being mandatory and jurisdictional in nature retro acts to the date the NIRC
was enacted. It cannot be applied prospectively as no old doctrine was overturned.
The petitioner cannot rely either on the alleged jurisprudence prevailing at the time it filed its
judicial claim. The Court notes that the jurisprudence relied upon by the petitioner consists of
CTA cases. It is elementary that CTA decisions do not constitute precedent and do not bind this
Court or the public. Only decisions of this Court constitute binding precedents, forming part of
the Philippine legal system.
III.
No. CIR not estopped. It is a well-settled rule that the government cannot be estopped by the
mistakes, errors or omissions of its agents. It has been specifically held that estoppel does not
apply to the government, especially on matters of taxation. Taxes are the nation’s lifeblood
through which government agencies continue to operate and with which the State discharges its
functions for the welfare of its constituents. Thus, the government cannot be estopped from
collecting taxes by the mistake, negligence, or omission of its agents. Upon taxation depends the
ability of the government to serve the people for whose benefit taxes are collected. To safeguard
such interest, neglect or omission of government officials entrusted with the collection of taxes
should not be allowed to bring harm or detriment to the people.
PEN:
under Section 112(A), the taxpayer may, within 2 years after the close of the taxable quarter
when the sales were made, via an administrative claim with the CIR, apply for the issuance of a
tax credit certificate or refund of creditable input tax due or paid attributable to such sales. Under
Section 112(D), the CIR must then act on the claim within 120 days from the submission of the
taxpayer’s complete documents. In case of (a) a full or partial denial by the CIR of the claim, or
(b) the CIR’s failure to act on the claim within 120 days, the taxpayer may file a judicial claim
via an appeal with the CTA of the CIR decision or unacted claim, within 30 days (a) from receipt
of the decision; or (b) after the expiration of the 120-day period.
The 2-year period under Section 229 does not apply to appeals before the CTA in relation to
claims for a refund or tax credit for unutilized creditable input VAT.Section 229 pertains to the
recovery of taxes erroneously, illegally, or excessively collected. San Roque stressed that "input
VAT is not ‘excessively’ collected as understood under Section 229 because, at the time the
input VAT is collected, the amount paid is correct and proper." It is, therefore, Section 112
which applies specifically with regard to claiming a refund or tax credit for unutilized creditable
input VAT.
Upholding the ruling in Aichi, San Roque held that the 120+30 day period prescribed under
Section 112(D) mandatory and jurisdictional. The jurisdiction of the CTA over decisions or
inaction of the CIR is only appellate in nature and, thus, necessarily requires the prior filing of an
administrative case before the CIR under Section 112.
9.
BUREAU OF INTERNAL REVENUE, represented by the COMMISSIONER OF
INTERNAL REVENUE, v. HON. ERNESTO D. ACOSTA, ET AL. OF THE SPECIAL
FIRST DIVISION OF THE COURT OF TAX APPEALS and CHEVRON PHILIPPINES,
INC. (formerly Caltex Philippines, Inc.), G.R. No. 195320, April 23, 2018, J. Reyes Jr.
Facts:
On October 7, 2004, Chevron Philippines, Inc. (Chevron) filed an administrative claim for
refund or credit with the BIR under Claim No. 2004-XP-11/03. The claim in the aggregate
amount of P131,175,480.18 represented alleged overpayment of excise taxes on imported
finished unleaded premium gasoline and diesel fuel withdrawn from its refinery in San Pascual,
Batangas for the month of November 2003.
The BIR, however, did not act on Chevron's claim. Thus, on the basis of Section 7 of Republic
Act (R.A.) No. 1125, as amended by R.A. No. 9282, Chevron elevated the case to the CTA-
Special First Division on October 28, 2005 via a petition for review.
On July 12, 2010, the CTA-Special First Division rendered its Decision partly granting the
petition. The BIR moved for the reconsideration of this Decision. The CTA-Special First
Division, in the assailed Resolution dated September 24, 2010, agreed with Chevron and denied
the BIR's motion for reconsideration.
On January 11, 2011, Chevron moved for the issuance of a Writ of Execution of the CTA-
Special First Division's Decision dated July 12, 2010. In response, the BIR filed a Motion to Lift
Entry of Judgment before the CTA-Special First Division on the ground that it intended to
exhaust the remedy of filing a Petition for Certiorari before the Supreme Court under Rule 65 of
the Revised Rules of Court
Whether or not Chevron is entitled to refund or credit because of its overpayment of excise taxes
on imported finished unleaded premium gasoline and diesel fuel.
Whether or not the CTA-Special First Division gravely abused its discretion in declaring the
motion for reconsideration filed by the BIR on October 14, 2010 to be a pro forma motion, and
in rendering the Decision promulgated on July 12, 2010 final and executory.
Held:
I.
Yes. It must be stressed that the Resolution dated December 3, 2010 of the CTA-Special First
Division which declared its Decision dated July 12, 2010 final and executory is a final judgment.
It disposed of the case on the merits.
The main issue resolved by the CTA-Special First Division in the Decision dated July 12, 2010
was Chevron's entitlement to refimd or credit because of its overpayment of excise taxes on
imported finished unleaded premium gasoline and diesel fuel. In its decision, the CTA-Special
First Division found sufficient basis for Chevron's claim and partially granted the petition. The
BIR was ordered to refund One Hundred Eight Million Five Hundred Eighty-Five Thousand One
Hundred Sixty-Two and Ninety-Five Centavos (P108,585,162.95), representing the excess
excise tax paid tor November 2003.
II.
No. The Court finds that the CTA-Special First Division did not gravely abuse its discretion.
A petition for certiorari under Rule 65 of the Rules of Court covers errors of jurisdiction or
grave abuse of discretion amounting to excess or lack of jurisdiction. Errors of jurisdiction refer
to acts done by the court without or in excess of its jurisdiction, and which error is correctible
only by the extraordinary writ of certiorari. The petitioner, or the BIR in this case, bears the
burden to prove not merely reversible error, but grave abuse of discretion on the part of the
public respondent absent which in the exercise of judicial power a petition for certiorari cannot
prosper.
In this case, the BIR was unable to show that the resolutions of the CTA-Special First Division
were patent and gross to warrant striking them down through a petition for certiorari. No
argument was advanced to establish that the CTA-Special First Division exercised its judgment
capriciously, whimsically, arbitrarily, or despotically by reason of passion and hostility.
It is not disputed that the BIR's Motion for Reconsideration dated August 3, 2010 failed to
comply with the provisions provided for by the Revised Rules of the CTA. Specifically, the
motion filed by the BIR did not include a notice for hearing and necessarily, the BIR likewise
failed to set the motion for hearing. In denying the motion, the CTA-Special First Division cited
Sections 3 and 6 of the Revised Rules of the CTA as its basis. It is clear therefore that the CTA-
Special First Division simply applied the applicable rules which the BIR concededly failed to
observe. Accordingly, CTA-Special First Division's dismissal of the motion for reconsideration
was discretion duly exercised, not misused or abused.
PEN:
Under the Rules of Court, the remedy against a final judgment or order is an appeal. In Pahila-
Garrido v. Tortogo, et al.,30 the Court has held that a final judgment disposes of the subject
matter in its entirety or terminates a particular proceeding or action. A final judgment or order
leaves nothing more to be done except to enforce by execution what the court has determined.31
For cases before the CTA, a decision rendered by a division of the CTA is appealable to the CTA
En Banc as provided by Section 18 of R.A. No. 1125, as amended by R.A. No. 9282. It reads as
follows:
SEC. 18. Appeal to the Court of Tax Appeals En Banc. - No civil proceeding involving matter
arising under the National Internal Revenue Code, the Tariff and Customs Code or the Local
Government Code shall be maintained, except as herein provided, until and unless an appeal has
been previously filed with the CTA and disposed of in accordance with the provisions of this Act
A party adversely affected by a resolution of a Division of the CTA on a motion for

reconsideration or new trial, may file a petition for review with the CTA En Banc.
Section 2 of Rule 4 of the Revised Rules of the CTA also states that the CTA En Banc has
exclusive appellate jurisdiction relative to the review of the court divisions' decisions or
resolutions on motion for reconsideration or new trial, in cases arising from administrative
agencies such as the BIR.
SEC. 2. Cases within the jurisdiction of the Court En Banc. - The Court En Banc shall exercise
exclusive appellate jurisdiction to review by appeal the following:
(a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions
in the exercise of its exclusive appellate jurisdiction over:
(1) Cases arising from administrative agencies - Bureau of Internal Revenue, Bureau of Customs,
x x x.
10.
PROTECTOR’S SERVICES, INC., v. COURT OF APPEALS AND COMMISSIONER

OF INTERNAL REVENUE, G.R. No 118176, April 12, 2000, J. Quisumbing
Facts:
Petition Protector’s Services, Inc., (PSI) is a contractor engaged in recruiting security guards for
clients. After an audit investigation, the BIR assessed PSI deficiency percentage taxes including
surcharges, penalties and interests of P503,564.39, P831,464.30 and P1,514,047.86 for 1983,
1984 and 1985, respectively. On December 7, 1987, respondent CIR sent demand letters for
payment of said assessments for 1983 and 1984 on December 10, 1987, but denied receiving the
notice of deficiency tax for 1985.
Petitioner PSI, sent a protest letter dated January 12, 1988 regarding the 1983 and 1984
assessments, claiming that gross receipts subject to percentage tax should exclude salaries of the
security guards, employer’s share of SSS, SIF and Medicare contributions. Without formally
acting thereon, the BIR sent a follow-up letter dated July 12, 1988 for the settlement of the taxes
based on its computation, plus additional documentary stamp taxes of P2,025 on PSI’s
capitalization for 1983 and 1984 and as deficiency expanded withholding tax of P703.41, thereby
bringing the total unsettled tax to P2,851,805.16.
On July 12, 1988, petition paid the P2,025 documentary stamp tax and P703.41 deficiency
expanded withholding tax. The following day, PSI filed its second protest for the 1983 and 1984
assessments and included for the first time its protest against the 1985 assessment. On November
9, 1990, the BIR denied the protests stating that salaries of security guards are part of taxable
gross receipts for determination of contractor’s tax.
PSI filed a petition for review on December 5, 1990 with the CTA averring that assessments for
documentary stamp and expanded withholding taxes and without basis having been paid on July
22, 1988; the period for collection of the 1985 assessment letter therefore, the period to collect
the percentage taxes for the first, second and third quarter of 1984 has lapsed, the assessment
letter therefore having been sent on December 10, 1987, or beyond 3 years from filing of the
quarterly returns, and that the base amount was erroneous since salaries of security guards,
employer’s share of SSS, SIF and medicare contributions should not form part of taxable gross
receipts.
The CTA dismissed the petition stating that: (1) the assessments were made within the 3-year
prescriptive period which should be reckoned from January 20, 1985, the date of filing the final
return; (2) receipt of the 1985 assessment cannot be denied as all assessments were sent in 1
envelope, as testified to by BIR personal; and (3) the protest letter having filed only on January
12, 1988, or 33 days from December 10, 1987, the request for reinvestigation was filed out of
time. On review by the CA, the CTA’s decision was affirmed.
Whether the assessments against the petitioner for deficiency percentage tax for taxable years
1983 and 1984 were made after the lapse of the prescriptive period.
Whether the period for the collection of taxes for taxable years 1983, 1984, and 1985 has already
prescribed.
Whether the assessments are correct
Held:
I.
Yes. The pertinent provision of the National Internal Revenue Code of 1977 (NIRC 1977),
concerning the period within which to file a protest before the CIR, reads:
Sec. 270. Protesting of assessment. — When the Commissioner of Internal Revenue or his duly
authorized representative finds that proper taxes should be assessed, he shall first notify the
taxpayer of his findings. Within a period to be prescribed by implementing regulations, the
taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the
Commissioner shall issue an assessment based on his findings.
Such assessment may be protested administratively by filing a request for reconsideration or

reinvestigation in such form and manner as may be prescribed by the implementing regulations
within thirty (30) days from receipt of the assessment; otherwise, the assessment shall become
final, and unappealable.
If the protest is denied in whole or in part, the individual, association or corporation adversely
affected by the decision on the protest may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision; otherwise, the decision shall become final, executory and
demandable.
On December 10, 1987, petitioner received the BIR's assessment notices. On January 12, 1988,
petitioner protested the 1983 and 1984 assessments and requested for a reinvestigation. From
December 10, 1987 to January 12, 1988, thirty-three days had lapsed. Thereafter petitioner may
no longer dispute the correctness of the assessments. Hence, the CTA correctly dismissed the
appeal for lack of jurisdiction.
II.
No. The three-year prescriptive period for assessment and collection of revenue taxes applied to
taxes paid beginning 1984. Clearly, the tax assessment made on December 10, 1987, for the year
1983 was still covered by the five-year statutory prescriptive period. This rule was emphasized in
Revenue Memorandum Circular (RMC) No. 33-84, published on November 12, 1984, which
defined the salient features of the application of BP 70.
III.
No. The Court see no compelling reason in this case to rule otherwise. These rulings were made
by the CIR in the exercise of his power to "make judgments or opinions in connection with the
implementation of the provisions of the internal revenue code." The opinions and rulings of
officials of the government called upon to execute or implement administrative laws, command
respect and weight.
Contractor's tax on gross receipts imposed on business agents including private detective
watchman agencies, was a tax on the sale of services or labor, imposed on the exercise of a
privilege. The term "gross receipts" means all amounts received by the prime or principal
contractor as the total price, undiminished by the amount paid to the subcontractor under a
subcontract arrangement. Hence, gross receipts could not be diminished by employer's SSS, SIF
and Medicare contributions. Furthermore, it has been consistently ruled by the BIR that the
salaries paid to security guards should form part of the gross receipts, subject to tax.
PEN:
B. Effectivity of Prescriptive Periods of Assessment and Collection
1 Assessment made on or after April 5, 1984 (date, of approval of BP 700) will still be governed
by the original five-year period if the taxes assessed thereby cover taxable years prior to January
1, 1984. (emphasis supplied)
Corollarily, assessments made before April 5, 1984 shall still be governed by the original five-
year period.
However, assessments made on or April 5, 1984 covering taxable years beginning January 1,
1984 shall be under the new three-year period.
Under Section 333 (renumbered to 271 during the instant case) of the Tax Code the running of
the prescriptive period to collect deficiency taxes shall be suspended for the period during which
the Commissioner of Internal Revenue is prohibited from beginning a distraint and levy or
instituting a proceeding in court, and for sixty days thereafter. In the case at bar, the pendency of
the taxpayer's appeal in the Court of Tax Appeals and in the Supreme Court had the effect of
temporarily staying the hands of the said Commissioner. If the taxpayer's stand that the pendency
of the appeal did not stop the running of the period because the Court of Tax Appeals did not
have jurisdiction over the case of taxes is upheld, taxpayers would be encouraged to delay the
payment of taxes in the hope of ultimately avoiding the same. Under the circumstances, the
running of the prescriptive period was suspended.
11.
UNIVERSITY PHYSICIANS SERVICES, INC. – MANAGEMENT, INC., V.

COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 205955, March 7, 2018, J.
Martires
Facts:
On 16 April 2007, University Physicians Services, Inc. – Management, Inc. (UPSI-MI) filed its Annual
Income Tax Return (ITR) for the year ended 31 December 2006. UPSI-MI chose the option, and marked
the corresponding box, “To be issued a tax credit certificate” with respect to the unutilized excess
creditable taxes for the taxable year ending 31 December 2006 amounting to ₱2,927,834.00..
In 2007, University Physicians Services, Inc. – Management, Inc. (UPSI-MI) changed its taxable
period from calendar year to fiscal year ending on the last day of March. Thus, UPSI-MI filed on
14 November 2007 an Annual Income Tax Return (ITR) covering the short period from 01
January 2007 to 31 March 2007. On the same day, UPSI-MI amended the Annual ITR for the
short period by excluding the sum of ₱2,927,834.00 under the line “Prior Year’s Excess
Credits”.
On 10 October 2008, UPSI-MI filed with the office of the Commissioner of Internal Revenue
(CIR) a claim for refund and/or issuance of a Tax Credit Certificate (TCC) in the amount of
₱2,927,834.00, representing the alleged excess and unutilized creditable withholding taxes for
taxable year 2006. For failure of the CIR to act on the claim for refund/tax credit, UPSI-MI filed
a Petition for Review before the Court of Tax Appeals on 14 April 2009.
The CTA Division denied the petition for review for lack of merit. The CTA En Banc ruled that
UPI-MI is barred by Section 76 of the NIRC from claiming a refund of its excess tax credits for
the taxable 2006.
Whether or not UPSI-MI may still be entitled to the refund of its 2006 excess tax credits in the
amount of ₱2,927,834.00 when it thereafter filed its income tax return (for the short period
ending 31 March 2007) indicating the option of carry-over.
Whether or not the honorable court of tax appeals (en banc) seriously erred when it decided on
the issue of whether or not petitioner carried over its 2006 excess tax credits to the succeeding
short taxable period of 2007 when the same was never raised in the joint stipulation of facts.
Held:
I.
No. The irrevocability rule is provided in the last sentence of Section 76. A perfunctory reading of the
law unmistakably discloses that the irrevocable option referred to is the carry-over option only.
In other words, the law does not prevent a taxpayer who originally opted for a refund or tax
credit certificate from shifting to the carry-over of the excess creditable taxes to the taxable
quarters of the succeeding taxable years. However, in case the taxpayer decides to shift its option
to carryover, it may no longer revert to its original choice due to the irrevocability rule. As
Section 76 unequivocally provides, once the option to carry over has been made, it shall be
irrevocable. Furthermore, the provision seems to suggest that there are no qualifications or
conditions attached to the rule on irrevocability.
UPSI-MI is barred from recovering its excess creditable tax through refund or TCC. It is
undisputed that despite its initial option to refund its 2006 excess creditable tax, UPSI-MI
subsequently indicated in its 2007 short-period FAR that it carried over the 2006 excess
creditable tax and applied the same against its 2007 income tax due.
II.
No. The petitioner is clearly mistaken in its view that the irrevocability rule also applies to the option of
refund or tax credit certificate. In view of the court's finding that it constructively chose the option of can-
y-over, it is already barred from recovering its 2006 excess creditable tax through refund or TCC even if
it was its initial choice.
However, the petitioner remains entitled to the benefit of carry-over and thus may apply the 2006
overpaid income tax as tax credit in succeeding taxable years until fully exhausted. This is
because, unlike the remedy of refund or tax credit certificate, the option of carry-over under
Section 76 is not subject to any prescriptive period.
PEN:
taxpayer cannot avail of both refund and automatic tax credit at the same time. Thus, as Philam
declared: "One cannot get a tax refund and a tax credit at the same time for the same excess
income taxes paid." This is the import of the Court's pronouncement that the options under
Section 76 are alternative in nature.
The current rule specifically addresses the problematic situation when a taxpayer, after claiming
cash refund or applying for the issuance of tax credit, and during the pendency of such claim or
application, automatically carries over the same excess creditable tax and applies it against the
estimated quarterly income tax liabilities of the succeeding year. Thus, the rule not only eases tax
administration but also obviates double recovery of the excess creditable tax.
Under the law, there are two options available to the corporation whenever it overpays its income
tax for the taxable year: (1) to carry over and apply the overpayment as tax credit against the
estimated quarterly income tax liabilities of the succeeding taxable years (also known as
automatic tax credit) until fully utilized (meaning, there is no prescriptive period); and (2) to
apply for a cash refund or issuance of a tax credit certificate within the prescribed period. Such
overpayment of income tax is usually occasioned by the over-withholding of taxes on the income
payments to the corporate taxpayer.
12.
COMMISSIONER OF INTERNAL REVENUE v. COURT OF TAX APPEALS AND
AYALA LAND, INC., G.R. No. 190680, September 13, 2012, J. Reyes
Facts:
Petitioner received respondent’s (herein petitioner) Final Assessment Notice (hereinafter referred
to as the 2003 FAN) dated 29 October 2004 whereby respondent was assessing petitioner alleged
deficiency 10% value added tax (VAT) on its alleged income from cinema operations for the
taxable year 2003 in the aggregate amount of One Hundred Three Million Three Hundred Forty-
Six Thousand Six Hundred Ninety-One and 40/100 Pesos (₱ 103,346,691.40) inclusive of 20%
interest.
On 10 December 2004, petitioner filed its protest with the office of respondent contesting the
factual and legal bases of the VAT assessment. On 28 April 2005, petitioner received
respondent’s 25 April 2005 Decision denying petitioner’s protest, with a notation that the same
constitutes respondent’s Final Decision on the matter.
Petitioner received on 23 November 2004, respondent’s 19 November 2004 Letter of Authority

No. 0002949 for the examination of ALL INTERNAL REVENUE TAXES of petitioner from 1
January 2003 to 31 December 2003.
In order to protect its right, petitioner filed the Petition for Review pursuant to Section 228 of the
Tax Code. On April 11, 2008, the CTA Second Division rendered its Decision granting ALI’s
petition for review. The assessment against ALI for deficiency VAT in the amount of ₱
103,346,691.40 for the calendar year 2003 was ordered cancelled and set aside. The CIR’s
motion for reconsideration was denied, prompting him to file an appeal to the CTA en banc.
On February 12, 2009, the CTA en banc rendered its Decision affirming the decision of the CTA
Second Division. Feeling aggrieved, the CIR filed a motion for reconsideration, but this was
denied by the CTA en banc in its Resolution dated March 25, 2009.
Issue:
Whether or not the CTA committed grave abuse of discretion amounting to lack or excess of
jurisdiction in ruling that the petition for relief of the CIR was filed beyond the 60-day
reglementary period under Rule 38
Held:
No. Section 3, Rule 38 of the Rules of Court provides:
Sec. 3. Time for filing petition; contents and verification. – A petition provided for in either of
the preceding sections of this Rule must be verified, filed within sixty (60) days after the
petitioner learns of the judgment, final order, or other proceeding to be set aside, and not more
than six (6) months after such judgment or final order was entered, or such proceeding was
taken; and must be accompanied with affidavits showing the fraud, accident, mistake, or
excusable negligence relied upon, and the facts constituting the petitioner’s good and substantial
cause of action or defense, as the case may be. (Emphasis ours)
By the CIR’s own evidence and admissions, particularly in the narration of facts in the petition
for relief, the OSG’s letter and the affidavit of merit attached thereto, it is evident that both the
CIR and the OSG had known of the CTA’s Resolution dated March 25, 2009 long before August
3,2009. Granting that we give credence to the CIR’s argument that he could not have known of
the Resolution dated March 25, 2009 by his receipt on June 17, 2009 of the Resolution dated
June 10, 2009, the CIR’s petition for relief was still filed out of time.
The CIR then can no longer validly dispute that he had known of the CTA’s Resolution dated
March 25, 2009 on June 22, 2009. Even as we reckon the 60-day period under Section 3, Rule 38
from said date, the petitioner only had until August 21, 2009 within which to file a petition for
relief. Since August 21, 2009, a Friday, was a non-working holiday, the petitioner should have
filed the petition at the latest on August 24, 2009. The CIR’s filing with the CTA of the petition
for relief on October 2, 2009 then did not conform to the 60-day requirement.
PEN:
The Supreme Court has ruled that "a party filing a petition for relief from judgment must strictly
comply with two reglementary periods; first, the petition must be filed within sixty (60) days
from knowledge of the judgment, order or other proceeding to be set aside; and second, within a
fixed period of six (6) months from entry of such judgment, order or other proceeding. Strict
compliance with these periods is required because a petition for relief from judgment is a final
act of liberality on the part of the State, which remedy cannot be allowed to erode any further the
fundamental principle that a judgment, order or proceeding must, at some definite time, attain
finality in order to put at last an end to litigation."
13
COMMISSIONER OF INTERNAL REVENUE v. BANK OF THE PHILIPPINE

ISLANDS, G.R. No. 134062 , April 17, 2007, J. Corona
Facts:
In two notices dated October 28, 1988, petitioner Commissioner of Internal Revenue (CIR)
assessed respondent Bank of the Philippine Islands’ (BPI’s) deficiency percentage and
documentary stamp taxes for the year 1986 in the total amount of ₱129,488,656.63.
On July 6, 1991, BPI requested a reconsideration of the assessments stated in the CIR’s May 8,
1991 letter. This was denied in a letter dated December 12, 1991, received by BPI on January 21,
1992.
On February 18, 1992, BPI filed a petition for review in the CTA. In a decision dated November
16, 1995, the CTA dismissed the case for lack of jurisdiction since the subject assessments had
become final and unappealable. The CTA ruled that BPI failed to protest on time under Section
270 of the National Internal Revenue Code (NIRC) of 1986 and Section 7 in relation to Section
11 of RA 1125.
On appeal, the CA reversed the tax court’s decision and resolution and remanded the case to the
CTA for a decision on the merits.
Whether or not BPI is liable for the payment of disputed taxes
Whether or not the October 28, 1988 notices were valid assessments
Held:
I.
Yes. The Court realize that these assessments (which have been pending for almost 20 years) involve a
considerable amount of money. Be that as it may, it cannot legally presume the existence of something
which was never there. The state will be deprived of the taxes validly due it and the public will suffer if
taxpayers will not be held liable for the proper taxes assessed against them:
Taxes are the lifeblood of the government, for without taxes, the government can neither exist
nor endure. A principal attribute of sovereignty, the exercise of taxing power derives its source
from the very existence of the state whose social contract with its citizens obliges it to promote
public interest and common good. The theory behind the exercise of the power to tax emanates
from necessity; without taxes, government cannot fulfill its mandate of promoting the general
welfare and well-being of the people.
II.
Yes. The court conclude that [BPI] was indeed aware of the nature and basis of the assessments,
and was given all the opportunity to contest the same but ignored it despite the notice
conspicuously written on the assessments which states that "this ASSESSMENT becomes final
and unappealable if not protested within 30 days after receipt." Counsel resorted to dilatory
tactics and dangerously played with time. Unfortunately, such strategy proved fatal to the cause
of his client.
Under the former Section 270, there were two instances when an assessment became final and
unappealable: (1) when it was not protested within 30 days from receipt and (2) when the
adverse decision on the protest was not appealed to the CTA within 30 days from receipt of the
final decision.
Considering that the October 28, 1988 notices were valid assessments, BPI should have protested
the same within 30 days from receipt thereof. The December 10, 1988 reply it sent to the CIR did
not qualify as a protest since the letter itself stated that "[a]s soon as this is explained and
clarified in a proper letter of assessment, we shall inform you of the taxpayer’s decision on
whether to pay or protest the assessment." Hence, by its own declaration, BPI did not regard
this letter as a protest against the assessments. As a matter of fact, BPI never deemed this a
protest since it did not even consider the October 28, 1988 notices as valid or proper
assessments.
The inevitable conclusion is that BPI’s failure to protest the assessments within the 30-day
period provided in the former Section 270 meant that they became final and unappealable. Thus,
the CTA correctly dismissed BPI’s appeal for lack of jurisdiction. BPI was, from then on, barred
from disputing the correctness of the assessments or invoking any defense that would reopen the
question of its liability on the merits.
PEN
Tax assessments by tax examiners are presumed correct and made in good faith. The taxpayer
has the duty to prove otherwise. In the absence of proof of any irregularities in the performance
of duties, an assessment duly made by a Bureau of Internal Revenue examiner and approved by
his superior officers will not be disturbed. All presumptions are in favor of the correctness of tax
assessments.
Accordingly, when the assessments were made pursuant to the former Section 270, the only
requirement was for the CIR to "notify" or inform the taxpayer of his "findings." Nothing in the
old law required a written statement to the taxpayer of the law and facts on which the
assessments were based. The Court cannot read into the law what obviously was not intended by
Congress. That would be judicial legislation, nothing less.
Jurisprudence, on the other hand, simply required that the assessments contain a computation of
tax liabilities, the amount the taxpayer was to pay and a demand for payment within a prescribed
period.26 Everything considered, there was no doubt the October 28, 1988 notices sufficiently
met the requirements of a valid assessment under the old law and jurisprudence.
14.
COMMISSIONER OF INTERNAL REVENUE v. METRO STAR SUPERAMA, INC.,
G.R. No. 185371, December 8, 2010, J. Mendoza

Petitioner is a domestic corporation.
On January 26, 2001, the Regional Director of Revenue in Legazpi City, issued Letter of
Authority to examine petitioner’s books of accounts and other accounting records for taxable
year 1999.
For petitioner’s failure to comply with several requests to present the records and Subpoena
Duces Tecum, BIR Legal Division issued an Indorsement to proceed with the investigation
based on the best evidence obtainable preparatory to the issuance of assessment notice.
Then, RDO issued a Preliminary Assessment Notice Letter stating a deficiency in VAT and
withholding taxes in the amount of P292, 874.16 for the year 1999. Thereafter, a formal letter of
demand was sent. The Final Notice of Seizure came next, giving Metro Star Superama last
opportunity to settle its deficiency tax liabilities within ten (10) days from receipt thereof,
otherwise BIR shall be constrained to serve and execute the Warrants of Distraint and/or Levy
and Garnishment to enforce collection.
Not able to comply, Metro Super Rama received a Warrant of Distraint and/or Levy demanding
payment of deficiency value-added tax and withholding tax payment in the amount of
P292,874.16.
The Commissioner denied the MOR filed by Metro Super Rama.
Denying that it received a Preliminary Assessment Notice (PAN) and claiming that it was not
accorded due process, Metro Star filed a petition for review with the CTA.
The CTA-Second Division rendered a decision in favor of the Metro Super Rama.
The CTA-Second Division opined that “while there is a disputable presumption that a mailed
letter is deemed received by the addressee in the ordinary course of mail, a direct denial of the
receipt of mail shifts the burden upon the party favored by the presumption to prove that the
mailed letter was indeed received by the addressee.”
It found that there was no clear showing that Metro Star actually received the alleged PAN. It,
accordingly, ruled that the Formal Letter of Demand and the Warrant of Distraint and/or Levy
dated were void, as Metro Star was denied due process.
CTA En Banc affirmed in toto the CTA Second Division’s decision. Hence, this petition.
Whether or not Metrostar is denied of due process

Whether or not the deficiency assessments issued by the respondent are void for failure to state
the law and/or facts upon which they are based
Held:
I.
Yes. Section 228 of the Tax Code clearly requires that the taxpayer must first be informed that he
is liable for deficiency taxes through the sending of a PAN. He must be informed of the facts and
the law upon which the assessment is made. The law imposes a substantive, not merely a formal,
requirement. To proceed heedlessly with tax collection without first establishing a valid
assessment is evidently violative of the cardinal principle in administrative investigations - that
taxpayers should be able to present their case and adduce supporting evidence. This is confirmed
under the provisions R.R. No. 12-99 of the BIR
It is clear that the sending of a PAN to taxpayer to inform him of the assessment made is but part
of the "due process requirement in the issuance of a deficiency tax assessment," the absence of
which renders nugatory any assessment made by the tax authorities. The use of the word "shall"
in subsection 3.1.2 describes the mandatory nature of the service of a PAN. The persuasiveness
of the right to due process reaches both substantial and procedural rights and the failure of the
CIR to strictly comply with the requirements laid down by law and its own rules is a denial of
Metro Star’s right to due process
II.
Yes. The taxpayers shall be informed in writing of the law and the facts on which the assessment is
made; otherwise, the assessment shall be void.
Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be
required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly
authorized representative shall issue an assessment based on his findings.
The Court found that there was no clear showing that Metro Star actually received the alleged
PAN, dated January 16, 2002. It, accordingly, ruled that the Formal Letter of Demand dated
April 3, 2002, as well as the Warrant of Distraint and/or Levy dated May 12, 2003 were void, as
Metro Star was denied due process. Thus, for its failure to send the PAN stating the facts and the
law on which the assessment was made as required by Section 228 of R.A. No. 8424, the
assessment made by the CIR is void.
PEN:
On the matter of service of a tax assessment, a further perusal of our ruling in Barcelon is
instructive, viz:
Jurisprudence is replete with cases holding that if the taxpayer denies ever having received an
assessment from the BIR, it is incumbent upon the latter to prove by competent evidence that
such notice was indeed received by the addressee. The onus probandi was shifted to respondent
to prove by contrary evidence that the Petitioner received the assessment in the due course of
mail. The Supreme Court has consistently held that while a mailed letter is deemed received by
the addressee in the course of mail, this is merely a disputable presumption subject to
controversion and a direct denial thereof shifts the burden to the party favored by the
presumption to prove that the mailed letter was indeed received by the addressee (Republic vs.
Court of Appeals, 149 SCRA 351). Thus as held by the Supreme Court in Gonzalo P. Nava vs.
Commissioner of Internal Revenue, 13 SCRA 104, January 30, 1965:
"The facts to be proved to raise this presumption are (a) that the letter was properly addressed
with postage prepaid, and (b) that it was mailed. Once these facts are proved, the presumption is
that the letter was received by the addressee as soon as it could have been transmitted to him in
the ordinary course of the mail. But if one of the said facts fails to appear, the presumption does
not lie. (VI, Moran, Comments on the Rules of Court, 1963 ed, 56-57 citing Enriquez vs. Sunlife
Assurance of Canada, 41 Phil 269)."
x x x. What is essential to prove the fact of mailing is the registry receipt issued by the Bureau of
Posts or the Registry return card which would have been signed by the Petitioner or its
authorized representative. And if said documents cannot be located, Respondent at the very least,
should have submitted to the Court a certification issued by the Bureau of Posts and any other
pertinent document which is executed with the intervention of the Bureau of Posts. This Court
does not put much credence to the self serving documentations made by the BIR personnel
especially if they are unsupported by substantial evidence establishing the fact of mailing. Thus:
"While we have held that an assessment is made when sent within the prescribed period, even if
received by the taxpayer after its expiration (Coll. of Int. Rev. vs. Bautista, L-12250 and L-
12259, May 27, 1959), this ruling makes it the more imperative that the release, mailing or
sending of the notice be clearly and satisfactorily proved. Mere notations made without the
taxpayer’s intervention, notice or control, without adequate supporting evidence cannot suffice;
otherwise, the taxpayer would be at the mercy of the revenue offices, without adequate
protection or defense." (Nava vs. CIR, 13 SCRA 104, January 30, 1965).
Provisions R.R. No. 12-99 of the BIR which pertinently provide:
SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. —
3.1 Mode of procedures in the issuance of a deficiency tax assessment:
3.1.1 Notice for informal conference. — The Revenue Officer who audited the taxpayer's records
shall, among others, state in his report whether or not the taxpayer agrees with his findings that
the taxpayer is liable for deficiency tax or taxes. If the taxpayer is not amenable, based on the
said Officer's submitted report of investigation, the taxpayer shall be informed, in writing, by the
Revenue District Office or by the Special Investigation Division, as the case may be (in the case
Revenue Regional Offices) or by the Chief of Division concerned (in the case of the BIR
National Office) of the discrepancy or discrepancies in the taxpayer's payment of his internal
revenue taxes, for the purpose of "Informal Conference," in order to afford the taxpayer with an
opportunity to present his side of the case. If the taxpayer fails to respond within fifteen (15)
days from date of receipt of the notice for informal conference, he shall be considered in default,
in which case, the Revenue District Officer or the Chief of the Special Investigation Division of
the Revenue Regional Office, or the Chief of Division in the National Office, as the case may be,
shall endorse the case with the least possible delay to the Assessment Division of the Revenue
Regional Office or to the Commissioner or his duly authorized representative, as the case may
be, for appropriate review and issuance of a deficiency tax assessment, if warranted.
3.1.2 Preliminary Assessment Notice (PAN). — If after review and evaluation by the
Assessment Division or by the Commissioner or his duly authorized representative, as the case
may be, it is determined that there exists sufficient basis to assess the taxpayer for any deficiency
tax or taxes, the said Office shall issue to the taxpayer, at least by registered mail, a Preliminary
Assessment Notice (PAN) for the proposed assessment, showing in detail, the facts and the law,
rules and regulations, or jurisprudence on which the proposed assessment is based (see
illustration in ANNEX A hereof). If the taxpayer fails to respond within fifteen (15) days from
date of receipt of the PAN, he shall be considered in default, in which case, a formal letter of
demand and assessment notice shall be caused to be issued by the said Office, calling for
payment of the taxpayer's deficiency tax liability, inclusive of the applicable penalties.
3.1.3 Exceptions to Prior Notice of the Assessment. — The notice for informal conference and
the preliminary assessment notice shall not be required in any of the following cases, in which
case, issuance of the formal assessment notice for the payment of the taxpayer's deficiency tax
liability shall be sufficient:
(i) When the finding for any deficiency tax is the result of mathematical error in the computation
of the tax appearing on the face of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent; or
(iii) When a taxpayer who opted to claim a refund or tax credit of excess creditable withholding
tax for a taxable period was determined to have carried over and automatically applied the same
amount claimed against the estimated tax liabilities for the taxable quarter or quarters of the
succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not been paid; or
(v) When an article locally purchased or imported by an exempt person, such as, but not limited
to, vehicles, capital equipment, machineries and spare parts, has been sold, traded or transferred
to non-exempt persons.
3.1.4 Formal Letter of Demand and Assessment Notice. — The formal letter of demand and
assessment notice shall be issued by the Commissioner or his duly authorized representative. The
letter of demand calling for payment of the taxpayer's deficiency tax or taxes shall state the facts,
the law, rules and regulations, or jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and assessment notice shall be void (see illustration in ANNEX B
hereof).
15.
COMMISSIONER OF INTERNAL REVENUE, v. HAMBRECHT & QUIST

PHILIPPINES, INC., G.R. No. 169225, November 17, 2010, J. Leonardo-De Castro
Facts:
Respondent informed the Bureau of Internal Revenue (BIR), through its West-Makati District
Office of its change of business address from the 2nd Floor Corinthian Plaza, Paseo de Roxas,
Makati City to the 22nd Floor PCIB Tower II, Makati Avenue corner H.V. De la Costa Streets,
Makati City. Said letter was duly received by the BIR-West Makati on February 18, 1993.
Respondent received a tracer letter or follow-up letter issued by the Accounts

Receivable/Billing Division of the BIR’s National demanding for payment of alleged
deficiency income and expanded withholding taxes for the taxable year 1989 amounting
to P2,936,560.87.
Respondent, through its external auditors, filed with the same Accounts Receivable/Billing
Division of the BIR’s National Office, its protest letter against the alleged deficiency tax
assessments for 1989 as indicated in the said tracer letter dated October 11, 1993.
The alleged deficiency income tax assessment apparently resulted from an adjustment made to
respondent’s taxable income for the year 1989, on account of the disallowance of certain items of
expense, namely, professional fees paid, donations, repairs and maintenance, salaries and wages,
and management fees. The latter item of expense, the management fees, made up the bulk of the
disallowance, the examiner alleging, among others, that petitioner failed to withhold the
appropriate tax thereon. This is also the same basis for the imposition of the deficiency
withholding tax assessment on the management fees. Revenue Regulations No. 6-85 (EWT
Regulations) does not impose or prescribe EWT on management fees paid to a non-resident.
On November 7, 2001, nearly eight (8) years later, respondent’s external auditors received a
letter from herein petitioner Commissioner of Internal Revenue. The letter advised the
respondent that petitioner had rendered a final decision denying its protest on the ground
that the protest against the disputed tax assessment was allegedly filed beyond the 30-day
reglementary period prescribed in then Section 229 of the National Internal Revenue Code.
CTA: held that the subject assessment notice sent by registered mail on January 8, 1993 to
respondent’s former place of business was valid and binding since respondent only gave
formal notice of its change of address on February 18, 1993. Thus, the assessment had
become final and unappealable for failure of respondent to file a protest within the 30-day
period provided by law. However, the CTA (a) held that the CIR failed to collect the assessed
taxes within the prescriptive period; and (b) directed the cancellation and withdrawal of
Assessment Notice No. 001543-89-5668.
Undaunted, the CIR filed a Petition for Review with the CTA En Banc
CTA En Banc: Petition DISMISSED
Whether or not the court of tax appeals has jurisdiction to rule that the government’s right to
collect the tax has prescribed.
Whether or not the period to collect the assessment has prescribed
Held:
I.
Yes. The jurisdiction of the CTA is governed by Section 7 of Republic Act No. 1125, as amended, and
the term "other matters" referred to by the CIR in its argument can be found in number (1) of the
aforementioned provision, to wit:
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction
to review by appeal, as herein provided –
1. Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments,

refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or
other matters arising under the National Internal Revenue Code or other law as part of law
administered by the Bureau of Internal Revenue.
Plainly, the assailed CTA En Banc Decision was correct in declaring that there was nothing in
the foregoing provision upon which petitioner’s theory with regard to the parameters of the term
"other matters" can be supported or even deduced. What is rather clearly apparent, however, is
that the term "other matters" is limited only by the qualifying phrase that follows it.
Thus, on the strength of such observation, the court have previously ruled that the appellate
jurisdiction of the CTA is not limited to cases which involve decisions of the CIR on matters
relating to assessments or refunds. The second part of the provision covers other cases that arise
out of the National Internal Revenue Code (NIRC) or related laws administered by the Bureau of
Internal Revenue (BIR).
II.
Yes. The pertinent provision of the 1986 NIRC is Section 224, to wit:
Section 224. Suspension of running of statute. – The running of the statute of limitations
provided in Sections 203 and 223 on the making of assessment and the beginning of distraint or
levy or a proceeding in court for collection, in respect of any deficiency, shall be suspended for
the period during which the Commissioner is prohibited from making the assessment or
beginning distraint or levy or a proceeding in court and for sixty days thereafter; when the
taxpayer requests for a re-investigation which is granted by the Commissioner; when the
taxpayer cannot be located in the address given by him in the return filed upon which a tax is
being assessed or collected: Provided, That, if the taxpayer informs the Commissioner of any
change in address, the statute will not be suspended; when the warrant of distraint and levy is
duly served upon the taxpayer, his authorized representative, or a member of his household with
sufficient discretion, and no property could be located; and when the taxpayer is out of the
Philippines.
The plain and unambiguous wording of the said provision dictates that two requisites must
concur before the period to enforce collection may be suspended: (a) that the taxpayer requests
for reinvestigation, and (b) that petitioner grants such request.
In order to suspend the running of the prescriptive periods for assessment and collection, the
request for reinvestigation must be granted by the CIR.
Consequently, the mere filing of a protest letter which is not granted does not operate to suspend
the running of the period to collect taxes. In the case at bar, the records show that respondent
filed a request for reinvestigation on December 3, 1993, however, there is no indication that
petitioner acted upon respondent’s protest.
There is nothing in the record that would show what action was taken in connection with the
protest of the petitioner. In fact, petitioner did not hear anything from the respondent nor
received any communication from the respondent relative to its protest, not until eight years later
when the final decision of the Commissioner was issued (TSN, March 7, 2002, p. 24). In other
words, the request for reinvestigation was not granted
PEN:
Any internal revenue tax which has been assessed within the period of limitation above-
prescribed may be collected by distraint or levy or by a proceeding in court within three years
following the assessment of the tax.
the phraseology of Section 7, number (1), denotes an intent to view the CTA’s jurisdiction over
disputed assessments and over "other matters" arising under the NIRC or other laws
administered by the BIR as separate and independent of each other. This runs counter to
petitioner’s theory that the latter is qualified by the status of the former, i.e., an "other matter"
must not be a final and unappealable tax assessment or, alternatively, must be a disputed
assessment.
the appellate jurisdiction of the CTA is not limited to cases which involve decisions of the CIR
on matters relating to assessments or refunds. The second part of the provision covers other cases
that arise out of the National Internal Revenue Code (NIRC) or related laws administered by the
Bureau of Internal Revenue (BIR)

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TEAM ENERGY CORPORATION (FORMERLY: MIRANT PAGBILAO

CORPORATION AND SOUTHERN ENERGY QUEZON, INC.) v. COMMISSIONER OF

REPUBLIC OF THE PHILIPPINES REP. BY THE BUREAU OF INTERNAL

Issue of the Taxpayer:

Issue of the Government:

COMMISSIONER OF INTERNAL REVENUE v. COVANTA ENERGY PHILIPPINE

Issue of the Taxpayer:

Whether or not CEPHI is entitled to tax amnesty

Issue of the Government:

COMMISSIONER OF INTERNAL REVENUE v. LANCASTER PHILIPPINES, INC.,

Issue of the Taxpayer:

Issue of the Government:

(1) Cash basis method;47

(2) Accrual method;48

(3) Installment method;49

(4) Percentage of completion method;50 and

(5) Other accounting methods.

PROCTER & GAMBLE ASIA PTE LTD. v. COMMISSIONER OF INTERNAL

Issue of the Taxpayer:

Whether or not P&G's judicial claims for refund is tenable.

Issue of the Government:

COMMISSIONER OF INTERNAL REVENUE v. PHILIPPINE-ALUMINUM WHEELS,

Issue of the Taxpayer:

Issue of the Government:

NORTHERN MINDANAO POWER CORPORATION v. COMMISSIONER OF

Issue of the Taxpayer:

Issue of the Government:

A “sales or commercial invoice” is a written account of goods sold or services rendered

Issue of the Taxpayer:

Issue of the Government:

VISAYAS GEOTHERMAL POWER COMPANY v. COMMISSIONER OF INTERNAL

Issue of the Taxpayer:

Issue of the Government:

Issue of the Taxpayer:

Issue of the Government:

A party adversely affected by a resolution of a Division of the CTA on a motion for

PROTECTOR’S SERVICES, INC., v. COURT OF APPEALS AND COMMISSIONER

Issue of the Taxpayer:

Issue of the Government:

Such assessment may be protested administratively by filing a request for reconsideration or

B. Effectivity of Prescriptive Periods of Assessment and Collection

UNIVERSITY PHYSICIANS SERVICES, INC. – MANAGEMENT, INC., V.

Issue of the Taxpayer:

Issue of the Government:

Petitioner received on 23 November 2004, respondent’s 19 November 2004 Letter of Authority

No. Section 3, Rule 38 of the Rules of Court provides:

COMMISSIONER OF INTERNAL REVENUE v. BANK OF THE PHILIPPINE

Issue of the Taxpayer:

Whether or not BPI is liable for the payment of disputed taxes

Issue of the Government:

COMMISSIONER OF INTERNAL REVENUE v. METRO STAR SUPERAMA, INC.,

G.R. No. 185371, December 8, 2010, J. Mendoza

The Commissioner denied the MOR filed by Metro Super Rama.

Issue of the Taxpayer:

Whether or not Metrostar is denied of due process

Issue of the Government:

Provisions R.R. No. 12-99 of the BIR which pertinently provide:

SECTION 3. Due Process Requirement in the Issuance of a Deficiency Tax Assessment. —

3.1 Mode of procedures in the issuance of a deficiency tax assessment:

COMMISSIONER OF INTERNAL REVENUE, v. HAMBRECHT & QUIST

Respondent received a tracer letter or follow-up letter issued by the Accounts

CTA En Banc: Petition DISMISSED

Issue of the Taxpayer: