4 Taxation Law Justice Del Castillo Digests

DE LA SALLE UNIVERSITY COLLEGE OF LAW
Lasallian Commission on Bar Operations 2018
TAXATION LAW
Justice Del Castillo Digests
Chel Sy Tet Valeza Lourd Manataring
LCBO Chairperson Academic Affairs Miguel Ocampo
Chairperson Taxation Law Chairpersons
Nico Garcia
LCBO Vice Chair for Janine Tutanes Clark Otocan
Internals Rod Zantua Taxation Law Deputy
Academic Affairs Deputy Chairperon
Steph Griar Chairpersons
LCBO Vice Chair for Lara Pioquinto
Externals Tax I Subject Head
Pat Costales Kristine Magsanay

LCBO Executive Secretary Tax II Subject Head
Ces Naga
LCBO Executive Treasurer
Tazation Law Justice Del Castillo Digests
GENERAL PRINCIPLES OF TAXATION
BIR v. MANILA HOME TEXTILE, INC., THELMA LEE AND SAMUEL LEE
G.R. No. 203057 | 6 June 2016
Construction and Interpretation of Tax Exemptions and Exclusions
DOCTRINE: Taxation is the rule and tax exemption the exception. Tax exemptions should be granted only
by clear and unequivocal provision of law on the basis of language too plain to be misunderstood.
FACTS:
• A tax evasion and perjury case were filed by the BIR against respondents Manila Home Textile,
Inc. (MHI), its President Thelma Lee, and VP Samuel Lee, with having violated Secs. 254, 255, 257,
and 267 of the NIRC.
• Investigation of the MHI's importations documents revealed that for the taxable years 2001 and
2002, it made several importations of PVC (or polyvinyl chloride) materials, woven fabrics, PVC
leather and other raw materials used in the manufacture of its end-products.
• On Jan. 14, 2005 BIR issued a LOA to MHI advising it that BIR agents had been authorized to
examine its books of accounts and other accounting records for all internal revenue taxes for
taxable years 1997-2002 and unverified prior years.
• Several attempts to serve the LOA were made by the BIR. It’s alleged that MHI understated its
importations and/or purchases which information is contrary to the data provided by the BIR’s
amended information covering MHI’s Importers Detailed Report.
• Thus, in conclusion, it’s alleged that "MHI, through its corporate officers, directors and/or
employees, willfully under-declared the amount of its purchases and/or importations for taxable,
years 2001 and 2002 by as much as P428,408,634 and P554,802,368, respectively. This under-
declaration resulted in estimated Deficiency Income Taxes in the amount of P43,716,161,84 for
taxable year 2001, and P34,561,975,40 for taxable year 2002, both inclusive of interests and
increments.
• Thelma and Samuel allegedly argued that MHI, in the year 2001 and 2002, merely received various
consignments of raw materials worth P431,764,487 and P555,778, 491, respectively, imported tax-
free. These were processed at its customs bonded warehouse and eventually re-exported as
finished handbags or unused materials.
• MHI did not declare as purchases the foregoing importations of raw materials because it did not
buy them. It processed them into finished products for its foreign customers. The rest it returned
as excess raw materials.
• Investigating prosecutor dismisses the informations. DOJ dismissed BIR’s appeal. CA affirms.
ISSUE: Whether or not the CA erred in dismissing the BIR’s certiorari petition.
HELD: Yes, CA’s ruling is reversed and set aside. DOJ’s resolution revoked and nullified. Prosecutor is
directed to file the appropriate informations.
• In the course of this inquiry, data gathered by BIR from certified copies of MHI’s ITR, the VAT,
and other returns indicated that MHI might have understated its purchases/importations for the
years 2001 and 2002.
• MHI declared in its audited financial statements purchases/importations to the tune of P976,123
for 2002 and P3,355,853 for 2001. In contrast, data from the BIR showed that MHI’s importations
and/or purchases were P555,778,491 for 2002, and P431,764,487 for 2001, which indicates that the
MHI and its President, Thelma and VP Samuel, deliberately understated the amounts of
importations and/or purchases by as much as £428,408,634 for 2001, and P554,802,368 for 2002.
• This explains why MHI and its responsible corporate officers are being charged with violations of
Secs 254, 255, 257 and 267 vis-a-vis Secs 52(A), 105 and 114(A) of the NIRC.
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• BIR has clearly made out a prima facie case or shown probable cause to indict respondents for tax
evasion under the pertinent sections of the NTRC. The annexes appended to the records of this
case, Annexes "A" to "M", submitted in support of BIR's affidavit-complaint do already provide
viable support to its plea for the indictment of the said respondents for tax evasion.
• In contrast, respondents' argument is the untenable claim of "consignment" with an alleged tax-
free guaranty. They have not produced even a slip of paper purporting to prove that the raw
materials valued at hundreds of millions of pesos were delivered to them on "consignment."
• It must be borne in mind that tax exemptions, which respondents obviously want or desire to avail
of in this case, are strictissimi juris. Taxation is the rule and tax exemption the exception. Tax
exemptions should be granted only by clear and unequivocal provision of law on the basis of
language too plain to be misunderstood.
• This case is only a determination of probable cause to file such informations.
COMMISSIONER OF INTERNAL REVENUE v. ST. LUKE’S MEDICAL CENTER

G.R. No. 203514 | 13 February 2017
Exemptions from Taxation
DOCTRINE: For an institution to be completely exempt from income tax, it is required that the
institution should operate exclusively for charitable or social welfare purpose. In case such institution
earns income from its for-profit activities, it will not lose its tax exemption. However, its income from for
profit activities will be subject to income tax at the preferential 10% rate pursuant to Sec. 27(B) of the
NIRC.
FACTS:
• The respondent received from the Large Taxpayers Service-Documents Processing and Quality
Assurance Division of the Bureau of Internal Revenue (BIR) an audit assessment assessing for
deficiency income tax under Section 27 (B) of the NIRC.
• The respondent filed with petitioner an administrative protest assailing the assessments and
claimed that as a nonstick, nonprofit charitable and social welfare organization under Section 30
(E) and (G) of the NIRC, it is exempt from paying income tax. However, the same was denied by
the petitioner.
• Aggrieved, the respondent elevated the matter to the Court of Tax Appeals (CTA) and rendered a
decision finding that the respondent is not liable for deficiency income tax since it is exempt from
paying such.
• The CTA En Banc affirmed the cancellation and setting aside of the audit assessment issued
against the respondent.
ISSUE: Whether or not the respondent is liable to pay income tax under Section 27 (B) of the NIRC
insofar as its revenues from paying patients are concerned
HELD: Yes, the respondent is subject to 10% income tax insofar as its revenues from paying patients are
concerned.
• The respondent failed to meet the requirements under Section 30(E) and (G) of the NlRC to be
completely tax exempt from all its income. However, it remains a proprietary nonprofit hospital
under Section 27(B) of the NIRC as long as it does not distribute any of its profits to its members
and such profits are reinvested pursuant to its corporate purposes. St. Luke’s, as a proprietary
nonprofit hospital, is entitled to the preferential tax rate of 10% on its net income from its for-
profit activities.
• To be clear, for an institution to be completely exempt from income tax, Section 30(E) and (G) of
the 1997 NIRC requires said institution to operate exclusively for charitable or social welfare
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purpose. But in case an exempt institution under Section 30(E) or (G) of the said Code earns
income from its for-profit activities, it will not lose its tax exemption. However, its income from
for profit activities will be subject to income tax at the preferential 10% rate pursuant to Section
27(B) thereof.
ISSUE: Whether or not the respondent is liable to pay compromise penalty under Section 248 (A) of the
NIRC for the alleged failure to file its quarterly income tax returns
HELD: No, the imposition of surcharges and interest under Sections 248 and 249 of the NIRC were
deleted on the basis of good faith and honest belief on the part of the respondent that it is not subject to
tax. Thus, following the ruling of the Court in the case of CIR v. SLMC (G.R Nos. 195909 and 195960), the
respondent is not liable to pay compromise penalty under Section 248(A) of the NIRC.
NATIONAL TAXATION
CIR v. SM PRIME HOLDINGS

G.R. No. 183505 | 26 February 2010
Value – Added Tax
DOCTRINE: Legislature never intended to include cinema/theater operators or proprietors in the coverage
of VAT.
FACTS:
• Respondents SM Prime Holdings and First Asia Realty Dev’t Corporation are domestic corporations
engaged in the business of operating cinema houses.
• This case involves 4 cases of protests against the Preliminary Assessment Notice (PAN) issued by the BIR
against SM Prime Holdings and First Asia Realty Development Corporation. The PAN was issued for the
collection of VAT deficiencies.
• In all cases, the Commissioner of Internal Revenue denied the protest filed by the respondents.
o CIR stated in its decision that the business of operating of cinema houses is subject to VAT.
• All of the cases were appealed to the Court of Tax Appeals. SM filed a motion to consolidate all cases because
it stated that it is also a majority shareholder of First Asia Realty.
• CTA division ruled in favor of the respondents and stated that “the activity of showing cinematographic
films is not a service covered by the NIRC, but an activity subject to amusement tax under the Local
Government Code.”
• CTA en banc affirmed CTA division.
• On appeal, the petitioner CIR raised the ff. arguments
o That the list provided by law is not exhaustive because it covers all sales of services unless exempted
by law.
o CTA erred in ruling because the provisions are clear and unambiguous.
• On appeal, the respondent raised the ff. arguments:
o That a plain reading of Sec. 108 provides that gross receipts of operators of cinemas and theaters
derived from public admission are not among the services subject to VAT.
ISSUE: Whether or not the gross receipts of cinema houses is subject to Value Added Tax (VAT).
HELD: No, They are subject to amusement tax under the Local Government Code.
• Historical facts:
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1. Historically, the activity of showing motion pictures, films or movies by cinema/theater

operators or proprietors has always been considered as a form of entertainment subject to
amusement tax.
2. Prior to the Local Tax Code, all forms of amusement tax were imposed by the national
government.
3. When the Local Tax Code was enacted, amusement tax on admission tickets from theaters,
cinematographs, concert halls, circuses and other places of amusements were transferred to
the local government.
4. Under the NIRC of 1977, the national government imposed amusement tax only on
proprietors, lessees or operators of cabarets, day and night clubs, Jai-Alai and race tracks.
5. The VAT law was enacted to replace the tax on original and subsequent sales tax and
percentage tax on certain services.
6. When the VAT law was implemented, it exempted persons subject to amusement tax under
the NIRC from the coverage of VAT.
7. When the Local Tax Code was repealed by the LGC of 1991, the local government continued
to impose amusement tax on admission tickets from theaters, cinematographs, concert halls,
circuses and other places of amusements
8. Amendments to the VAT law have been consistent in exempting persons subject to amusement
tax under the NIRC from the coverage of VAT.
9. Only lessors or distributors of cinematographic films are included in the coverage of VAT.
• The historical antecedents of the laws reveal the legislative intent not to impose VAT on persons
already covered by the amusement tax. This holds true even in the case of cinema/theater
operators taxed under the LGC of 1991 precisely because the VAT law was intended to replace the
percentage tax on certain services.
• The mere fact that they are taxed by the local government unit and not by the national government
is immaterial. The Local Tax Code, in transferring the power to tax gross receipts derived by
cinema/theater operators or proprietor from admission tickets to the local government, did not
intend to treat cinema/theater houses as a separate class. No distinction must, therefore, be made
between the places of amusement taxed by the national government and those taxed by the local
government.
• To hold otherwise would impose an unreasonable burden on cinema/theater houses operators or
proprietors, who would be paying an additional 10% VAT on top of the 30% amusement tax
imposed by Section 140 of the LGC of 1991, or a total of 40% tax.
• Such imposition would result in injustice, as persons taxed under the NIRC of 1997 would be in a
better position than those taxed under the LGC of 1991. We need not belabor that a literal
application of a law must be rejected if it will operate unjustly or lead to absurd results. Thus, we
are convinced that the legislature never intended to include cinema/theater operators or
proprietors in the coverage of VAT.
ISSUE: Whether or not the enumeration of subject services in Sec. 108 of the NIRC is exclusive.
HELD: No, they are not exclusive.

• A cursory reading of the foregoing provision clearly shows that the enumeration of the "sale or
exchange of services" subject to VAT is not exhaustive. The words, "including," "similar services,"
and "shall likewise include," indicate that the enumeration is by way of example only.
• Among those included in the enumeration is the "lease of motion picture films, films, tapes and
discs." This, however, is not the same as the showing or exhibition of motion pictures or films. As
pointed out by the CTA En Banc:
"Exhibition" in Black's Law Dictionary is defined as "To show or display. x x x To
produce anything in public so that it may be taken into possession" (6th ed., p. 573).
While the word "lease" is defined as "a contract by which one owning such property
grants to another the right to possess, use and enjoy it on specified period of time in
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exchange for periodic payment of a stipulated price, referred to as rent (Black's Law
Dictionary, 6th ed., p. 889).
• Since the activity of showing motion pictures, films or movies by cinema/ theater operators or
proprietors is not included in the enumeration, it is incumbent upon the court to the determine
whether such activity falls under the phrase "similar services." The intent of the legislature must
therefore be ascertained.
J.R.A PHILIPPINES, INC. v. CIR

G.R. No. 177127 |11 October 2010
Value – Added Tax
DOCTRINE: The absence of the word "zero-rated" on the invoices/receipts is fatal to a claim for
credit/refund of input VAT
FACTS:
• Petitioner J.R.A. Philippines, Inc., a domestic corporation, is engaged in the manufacture and
wholesale export of jackets, pants, trousers, overalls, shirts, polo shirts, ladies' wear, dresses
and other wearing apparel
• It is registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer and as an Ecozone
Export Enterprise with the Philippine Economic Zone Authority (PEZA).
• On separate dates, petitioner filed with the Revenue District Office (RDO) No. 54 of the BIR,
Trece Martires City, applications for tax credit/refund of unutilized input VAT on its zero-
rated sales for the taxable quarters of 2000 in the total amount of P8,228,276.34.
• The claim for credit/refund, however, remained unacted by the respondent. Hence, petitioner
was constrained to file a petition before the CTA.
• On April 16, 2002, petitioner filed a Petition for Review with the CTA for the
refund/credit of the same input VAT.
o CIR contended the ff. in its answer:
▪ Petitioner's alleged claim for refund is subject to administrative routinary
investigation/examination by the Bureau.
▪ Being allegedly registered with the Philippine Economic Zone Authority as an
export enterprise, petitioner's business is not subject to VAT pursuant to
Section 24 of R.A. No. 7916 in relation to Section 109 (q) of the Tax Code.
Hence, it is not entitled to tax credit of input taxes pursuant to Section 4.103-1
of Revenue Regulations No. 7-95.
▪ The amount of P8,228,276.34 being claimed by petitioner as alleged unutilized
VAT input taxes for the year 2000 was not properly documented.
▪ In an action for refund, the burden of proof is on the taxpayer to establish its
right to refund, and failure to [do so] is fatal to the claim for refund/ credit.
▪ Petitioner must show that it has complied with the provisions of Section 204
(c) and 229 of the Tax Code on the prescriptive period for claiming tax
refund/credit.
▪ Claims for refund are construed strictly against the claimant for the same
partake the nature of exemption from taxation.
• CTA division denied the petition. MR also denied.

• CTA en banc affirmed division’s ruling
ISSUE: Whether the failure to print the word "zero-rated" on the invoices/receipts is fatal to a claim for
credit/ refund of input VAT on zero-rated sales.
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HELD: Yes, the absence of the word "zero-rated" on the invoices/receipts is fatal to a claim for
credit/refund of input VAT.
• This was resolved in Panasonic Communications Imaging Corporation of the Philippines (formerly
Matsushita Business Machine Corporation of the Philippines) v. Commissioner of Internal Revenue where
the Court said that the denial of petitioner's claim for tax credit/refund for non-compliance with
Sec. 4.108-1 of R.R. No. 7-95, which requires the word "zero rated" to be printed on the
invoices/receipts covering zero-rated sales.
• Zero-rated transactions generally refer to the export sale of goods and services. The tax rate in this
case is set at zero. When applied to the tax base or the selling price of the goods or services sold,
such zero rate results in no tax chargeable against the foreign buyer or customer. But, although the
seller in such transactions charges no output tax, he can claim a refund of the VAT that his suppliers
charged him. The seller thus enjoys automatic zero rating, which allows him to recover the input
taxes he paid relating to the export sales, making him internationally competitive.
• Petitioner Panasonic points out that Secs. 113 and 237 did not require the inclusion of the word
"zero-rated" for zero-rated sales covered by its receipts or invoices. The BIR incorporated this
requirement only after the enactment of R.A. 9337 on Nov. 1, 2005, a law that did not yet exist at
the time it issued its invoices.
• But when petitioner Panasonic made the export sales subject of this case, i.e., from April 1998 to
March 1999, the rule that applied was Sec. 4.108-1 of RR 7-95, otherwise known as the Consolidated
Value-Added Tax Regulations, which the Secretary of Finance issued on Dec. 9, 1995 and which
took effect on January 1, 1996. It already required the printing of the word "zero-rated" on the
invoices covering zero-rated sales. When R.A. 9337 amended the 1997 NIRC on November 1, 2005,
it made this particular revenue regulation a part of the tax code.
• Sec. 4.108-1 of RR 7-95 proceeds from the rule-making authority granted to the Secretary of Finance
under Section 245 of the 1977 NIRC (P. D. 1158) for the efficient enforcement of the Tax code and
its amendments.
• The requirement is reasonable and is in accord with the efficient collection of VAT from the covered
sales of goods and services. As explained by the CTA's First Division, the appearance of the word
"zero-rated" on the face of invoices covering zero-rated sales prevents buyers from falsely claiming
input VAT from their purchases when no VAT was actually paid. If, absent such word, a successful
claim for input VAT is made, the government would be refunding money it did not collect.
• Further, the printing of the word "zero-rated" on the invoice helps segregate sales that are subject
to 10% (now 12%) VAT from those sales that are zero-rated. Unable to submit the proper invoices,
petitioner Panasonic has been unable to substantiate its claim for refund.
• Consistent with jurisprudence, petitioner's claim for credit/ refund of input VAT for the taxable
quarters of 2000 must be denied. Failure to print the word "zero-rated" on the invoices/receipts is
fatal to a claim for credit/ refund of input VAT on zero-rated sales.
FORT BONIFACTIO DEV’T CORP. v. CIR

G.R. No. 173425 | 4 September 2012
Value – Added Tax
DOCTRINE: Prior payment of taxes is not required for a taxpayer to avail of the 8% transitional input tax
credit
FACTS:
• Petitioner Fort Bonifacio Development Corporation (FBDC) is a duly registered domestic
corporation engaged in the development and sale of real property.
• On February 8, 1995, by virtue of RA 7227 and Executive Order No. 40, dated December 8, 1992,
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petitioner purchased from the national government a portion of the Fort Bonifacio reservation, now
known as the Fort Bonifacio Global City (Global City).
• On January 1, 1996, RA 7716 restructured the Value-Added Tax (VAT) system by amending certain
provisions of the old National Internal Revenue Code (NIRC). RA 7716 extended the coverage of
VAT to real properties held primarily for sale to customers or held for lease in the ordinary course
of trade or business.
• On September 19, 1996, petitioner submitted to the Bureau of Internal Revenue (BIR) Revenue
District No. 44, Taguig and Pateros, an inventory of all its real properties, the book value of which
aggregated P71,227,503,200.10 Based on this value, petitioner claimed that it is entitled to a
transitional input tax credit of P5,698,200,256, pursuant to Section 105 of the old NIRC.
• In October 1996, petitioner started selling Global City lots to interested buyers.
• For the first quarter of 1997, petitioner generated a total amount of P3,685,356,539.50 from its sales
and lease of lots, on which the output VAT payable was P368,535,653.95. Petitioner paid the output
VAT by making cash payments to the BIR totalling P359,652,009.47 and crediting its unutilized
input tax credit on purchases of goods and services of P8,883,644.48.
• Realizing that its transitional input tax credit was not applied in computing its output VAT for the
first quarter of 1997, petitioner on November 17, 1998 filed with the BIR a claim for refund of the
amount of P359,652,009.47 erroneously paid as output VAT for the said period.
• On February 24, 1999, due to the inaction of the respondent Commissioner of Internal Revenue
(CIR), petitioner elevated the matter to the Court of Tax Appeals (CTA) via a Petition for Review.
• On October 12, 2000, the CTA denied petitioner’s claim for refund.
o According to the CTA, “the benefit of transitional input tax credit comes with the condition
that business taxes should have been paid first.”
o In this case, since petitioner acquired the Global City property under a VAT-free sale
transaction, it cannot avail of the transitional input tax credit.
o The CTA likewise pointed out that under Revenue Regulations No. (RR) 7-95,
implementing Section 105 of the old NIRC, the 8% transitional input tax credit should be
based on the value of the improvements on land such as buildings, roads, drainage system
and other similar structures, constructed on or after January 1, 1998, and not on the book
value of the real property.
ISSUE: Whether or not petitioner is entitled to a refund of P359,652,009.47 erroneously paid as output VAT
for the first quarter of 1997.
HELD: Yes, it is entitled.

• Prior payment of taxes is not required for a taxpayer to avail of the 8% transitional input tax credit
• Section 105 of the old NIRC reads:
o SEC. 105. Transitional input tax credits. – A person who becomes liable to value-added tax
or any person who elects to be a VAT-registered person shall, subject to the filing of an
inventory as prescribed by regulations, be allowed input tax on his beginning inventory of
goods, materials and supplies equivalent to 8% of the value of such inventory or the actual
value- added tax paid on such goods, materials and supplies, whichever is higher, which
shall be creditable against the output tax.
• Contrary to the view of the CTA and the CA, there is nothing in the above- quoted provision to
indicate that prior payment of taxes is necessary for the availment of the 8% transitional input tax
credit. Obviously, all that is required is for the taxpayer to file a beginning inventory with the BIR.
• Clearly, limiting the value of the beginning inventory only to goods, materials, and supplies, where
prior taxes were paid, was not the intention of the law. Otherwise, it would have specifically stated
that the beginning inventory excludes goods, materials, and supplies where no taxes were paid.
• Moreover, prior payment of taxes is not required to avail of the transitional input tax credit because
it is not a tax refund per se but a tax credit. Tax credit is not synonymous to tax refund. Tax refund
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is defined as the money that a taxpayer overpaid and is thus returned by the taxing authority. Tax
credit, on the other hand, is an amount subtracted directly from one’s total tax liability. It is any
amount given to a taxpayer as a subsidy, a refund, or an incentive to encourage investment. Thus,
unlike a tax refund, prior payment of taxes is not a prerequisite to avail of a tax credit.
• It is apparent that the transitional input tax credit operates to benefit newly VAT-registered
persons, whether or not they previously paid taxes in the acquisition of their beginning inventory
of goods, materials and supplies. During that period of transition from non-VAT to VAT status,
the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer.
• At the very beginning, the VAT-registered taxpayer is obliged to remit a significant portion of the
income it derived from its sales as output VAT. The transitional input tax credit mitigates this initial
diminution of the taxpayer's income by affording the opportunity to offset the losses incurred
through the remittance of the output VAT at a stage when the person is yet unable to credit input
VAT payments.
• The Court found petitioner entitled to the 8% transitional input tax credit provided in Section 105
of the old NIRC. The fact that it acquired the Global City property under a tax-free transaction
makes no difference as prior payment of taxes is not a pre-requisite.
• As to the scope of the 8% transitional input tax, the Court ruled that RR 7-95 is void because it went
beyond the ambit of what Sec. 105 of the NIRC stated. It is clear that the law includes:
o SEC. 100. Value-added tax on sale of goods or properties. – (a) Rate and base
of tax. – There shall be levied, assessed and collected on every sale, barter or
exchange of goods or properties, a value-added tax equivalent to 10% of the
gross selling price or gross value in money of the goods or properties sold,
bartered or exchanged, such tax to be paid by the seller or transferor.
o The term “goods or properties” shall mean all tangible and intangible objects
which are capable of pecuniary estimation and shall include:
o Real properties held primarily for sale to customers or held for lease in the
ordinary course of trade or business; x x x
• As the Court sees it then, the 8% transitional input tax credit should not be limited to the value of
the improvements on the real properties but should include the value of the real properties as well.
FORT BONIFACIO DEVELOPMENT CORPORATION v. CIR (RESOLUTION)

G.R. No. 173425 | 22 January 2013
Value – Added Tax
DOCTRINE: Prior payment of taxes is not required before a taxpayer could avail of transitional input tax
credit
FACTS:
• Refer to the previous case as this is only a resolution of the motion for reconsideration.
• In this motion, respondents argue that:
o Prior payment of tax is inherent in the nature and payment of the 8% transitional input tax;
o R.R. No. 7-95 providing for 8% transitional input tax based on the value of the improvements
on the real properties is a valid legislative rule;
o For failure to clearly prove its entitlement to the transitional input tax credit, petitioner's claim
for tax refund must fail in light of the basic doctrine that tax refund partakes of the nature of a
tax exemption which should be construed strictissimi juris against the taxpayer."
ISSUE: Whether or not the motion should be granted.
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HELD: No, as for the 1st argument - Prior payment of taxes is not necessary before a taxpayer could avail
of the 8% transitional input tax credit:
o Sec. 105 of the old NIRC clearly provides that for a taxpayer to avail of the 8% transitional input
tax credit, all that is required from the taxpayer is to file a beginning inventory with the BIR. It
was never mentioned in Sec. 105 that prior payment of taxes is required. Otherwise, it would
tantamount to judicial legislation;
o A transitional input tax credit is not a tax refund per se but a tax credit. As SC said, "tax credit
is not synonymous to tax refund. Tax refund is defined as the money that a taxpayer overpaid
and is thus returned by the taxing authority. Tax credit, on the other hand, is an amount
subtracted directly from one’s total tax liability. It is any amount given to a taxpayer as a
subsidy, a refund, or an incentive to encourage investment.";
o While a tax liability is essential to the availment or use of any tax credit, prior tax payments are
not. On the contrary, for the existence or grant solely of such credit, neither a tax liability nor a
prior tax payment is needed. The NIRC is full of provisions granting or allowing tax credits,
even though no taxes have been previously paid.
o In sum, prior tax payments are not indispensable to the availment of a tax credit.
• As for the 2nd and 3rd arguments – It’s inaccurate to say that the NIRC doesn’t allow a cash refund,
only a tax credit:
o Sec. 112 of the NIRC speaks of zero-rated or effectively zero-rated sales. Notably, the
transaction involved in this case is not zero-rated or effectively zero-rated sales;
o Sec. 112 would show that it allows either a cash refund or a tax credit for input VAT on zero-
rated or effectively zero-rated sales;
o Sec. 112 does not prohibit cash refund or tax credit of transitional input tax in the case of zero-
rated or effectively zero-rated VAT registered taxpayers, who do not have any output VAT.
The phrase "except transitional input tax" in Sec. 112 was inserted to distinguish creditable
input tax from transitional input tax credit.
o Transitional input tax credits are input taxes on a taxpayer’s beginning inventory of goods,
materials, and supplies equivalent to 8% (then 2%) or the actual VAT paid on such goods,
materials and supplies, whichever is higher. It may only be availed of once by first-time VAT
taxpayers. Creditable input taxes, on the other hand, are input taxes of VAT taxpayers in the
course of their trade or business, which should be applied within 2 years after the close of the
taxable quarter when the sales were made;
o As regards Sec. 110, while the law only provides for a tax credit, a taxpayer who erroneously
or excessively pays his output tax is still entitled to recover the payments he made either as a
tax credit or a tax refund;
o Clearly, the CIR has the option to return the amount claimed either in the form of tax credit or
refund.
CIR v. TOLEDO POWER COMPANY

G.R. No. 196451 | 2 December 2015
Value – Added Tax
DOCTRINE: A taxpayer has 2 years from the close of the taxable quarter when the zero-rated sales were
made within which to file with the CIR an administrative claim for refund or credit of unutilized input
VAT attributable to such sales.
FACTS:
• On Dec. 22, 2003, resp. Toledo Power Corporation (TPC) filed with the BIR RDO an administrative
claim for refund/credit of its unutilized input VAT for taxable year 2002 amounting to
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P14,254,013.27 under RA 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA) and the
NIRC.
• On April 22, 2004, due to the inaction of the CIR, TPC filed with the CTA-Division a petition for
review. CIR argued that TPC failed to prove its entitlement to a tax refund/credit.
• On Nov. 11, 2009, CTA-Division partially granted TPC’s claim in the amount of P7,598,279.29. Since
NAPOCOR is exempt from the payment all taxes, including VAT, the CTA-Division allowed TPC
to claim a refund or credit of its unutilized input VAT attributable to its zero-rated sales of
electricity to NAPOCOR for 2002.
• The CTA Division, however, denied the claim attributable to TPC's sales of electricity to CEBECO,
ACMDC and AFC due to the failure of TPC to prove that it is a generation company under the
EPIRA. It did not consider the said sales as valid zero-rated sales because TPC did not submit a
Certificate of Compliance (COC) from the Energy Regulatory Commission (ERC). Although TPC
filed an application for a COC on June 20, 2002 with the ERC, the CTA-Division found this
insufficient to prove that TPC is a generation company under the EPIRA.
• TPC - Moved for partial reconsideration, arguing that, as an existing generation company, it wasn’t
required to obtain a COC from the ERC as a prerequisite for its operations, and that the issue of
whether it’s a generation company was never raised during the trial. In any case, it attached
photocopies of its application for a COC dated June 20, 2002 and its COC dated June 23, 2004.
• CIR – Also sought the same, arguing that, the administrative claim was merely pro forma since TPC
failed to submit the complete documents required under RMO No. 53-98, which were necessary to
ascertain the correct amount to be refunded in the administrative claim.
• On Nov. 22, 2010, the CTA En Banc dismissed both petitions and affirmed the CTA-Division’s
ruling. It sustained that findings of the CTA-Division that both the administrative and judicial
claims were timely filed and that TPC’s non-compliance with the RMO No. 53-98 was not fatal to
its claim.
• Also, since TPC was not yet issued a COC in 2002, CTA En banc agreed with the CTA-Divisin that
TPC’s sales of electricity for 2002 couldn’t qualify for a VAT zero-rating under the EPIRA. It also
noted that, contrary to TPC’s claim, there’s no stipulation in the Joint Stipulation of Facts and Issues
(JSFI) that TPC is a generation company under the EPIRA.
ISSUES: Whether or not the administrative and judicial claims for tax refund/credit were timely and
validly filed; and effectively entitles TPC to the full amount of its claim for tax refund/credit.
HELD:
• As to whether the claims were timely and validly filed, yes, a taxpayer has 2 years from the close
of the taxable quarter when the zero-rated sales were made within which to file with the CIR an
administrative claim for refund or credit of unutilized input VAT attributable to such sales.
• In the present case, TPC applied for a claim for refund/credit of its unutilized input VAT for the
taxable year 2002 on Dec. 22, 2003. Since the CIR didn’t act on its application within the 120-day
period, TPC appealed the inaction on April 22, 2004. Both the administrative and the judicial claims
were filed within the prescribed period provided in Section 112 of the NIRC.
• Also, the administrative claim was not pro forma as TPC submitted documents to support its claim
for refund and even manifested its willingness to submit additional documents if necessary. The
CIR, however, never requested TPC to submit additional documents. Thus, CIR cannot now raise
the issue that TPC failed to submit the complete documents.
• Hence, TPC’s administrative and judicial claim were timely and validly filed.
• As to the amount, no, TPC is not entitled to the whole amount. TPC is not entitled to a
refund/credit of unutilized input VAT attributable to its sales of electricity to CEBECO, ACMDC,
and AFC.
• To be entitled to a refund/credit of unutilized input VAT attributable to the sale of electricity under
the EPIRA, a taxpayer must establish: (1) that it is a generation company, and (2) that it derived
sales from power generation.
12
• In the present case, TPC failed to present a COC from the ERC during the trial. On partial
reconsideration, TPC argued that there was no need for it to present a COC because the parties
already stipulated in the JSFI that TPC is a generation company and that it became entitled to the
rights under the EPIRA when it filed its application with the ERC on June 20, 2002.
• But the Court ruled that there’s nothing in the JSFI that would show that the parties agreed that
TPC is a generation company under the EPIRA. They only stipulated that TPC is engaged in the
business of power generation and that it filed an application with the ERC on June 20, 2002. Being
engaged in the business of power generation does not make TPC a generation company under the
EPIRA. Neither did TPC's filing of an application for COC with the ERC automatically entitle TPC
to the rights of a generation company under the EPIRA.
• Under the EPIRA, all new generation companies and existing generation facilities are required to
obtain a COC from the ERC. New generation companies must show that they have complied with
the requirements, standards, and guidelines of the ERC before they can operate.
• As for existing generation facilities, they must submit to the ERC an application for a COC together
with the required documents within 90 days from the effectivity of the EPIRA Rules and
Regulations.
• Based on the documents submitted, the ERC will determine whether the applicant has complied
with the standards and requirements for operating a generation company. If the applicant is found
compliant, only then will the ERC issue a COC.
• Here, when the EPIRA took effect in 2001, TPC was an existing generation facility. And at the time
the sales of electricity were made in 2002, TPC was not yet a generation company under EPIRA.
• Although it filed an application for a COC on June 20, 2002, it did not automatically become a
generation company. It was only on June 23,2005, when the ERC issued a COC in favor of TPC,
that it became a generation company under EPIRA.
• Consequently, TPC's sales of electricity to CEBECO, ACMDC, and AFC cannot qualify for VAT
zero-rating under the EPIRA. Hence, the CTA En Banc’s ruling is affirmed. Only entitled to
P7,598,279.29, representing unutilized input taxes attributable to zero-rated sales for 2002.
PRUDENTIAL BANK v. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 180390 | 27 July 2011
Documentary Stamp Tax
DOCTRINE: A certificate of deposit need not be in a specific form. Thus, a passbook of an interest-earning deposit
account issued by a bank is a certificate of deposit drawing interest that is subject to documentary stamp tax.
FACTS:
• Petitioner Prudential Bank is a banking corporation organized and existing under Philippine law. On July
23, 1999, Prudential Bank received from the respondent Commissioner of Internal Revenue (CIR) a Final
Assessment Notice No. ST-DST-95-0042-99 and a Demand Letter for deficiency Documentary Stamp Tax
(DST) for the taxable year 1995 on its Repurchase Agreement with the Bangko Sentral ng Pilipinas [BSP],
Purchase of Treasury Bills from the BSP, and on its Savings Account Plus [SAP] product, in the amount
of P18,982,734.38.
• Prudential Bank protested the assessment on the ground that the documents subject matter of the assessment
is not subject to DST. However, CIR denied the protest. Thus, Prudential Bank filed a Petition for Review
before the CTA.
• CTA affirmed the assessment for deficiency DST insofar as the SAP is concerned, but cancelled and set aside
the assessment on Prudential Bank’s repurchase agreement and purchase of treasury bills with the
BSP. Prudential Bank is ordered to pay CIR the reduced amount plus 20% delinquency interest.
• Prudential Bank’s motion for partial consideration was denied, hence, its appeal to the CTA En Banc. Then
again, this latter court denied the appeal.
13
• Prudential Bank sought reconsideration but later moved to withdraw the same in view of its availment of
the Improved Voluntary Assessment Program (IVAP) pursuant to Revenue Regulation (RR) No. 18-2006 in
relation to RR No. 15-2006 and Revenue Memorandum Order (RMO) No. 23-2006. CTA En Banc denied
their motion to withdraw for non-compliance with the requirements for abatement. It found that the amount
paid for purposes of the abatement program was not in accordance with Revenue Memorandum Circular
(RMC) No. 66-2006, which provides that the amount to be paid should be based on the original assessment
or the court’s decision, whichever is higher. It also noted that it failed to comply with RMO No. 23-2006,
specifically with the requirement to submit the letter of termination and authority to cancel assessment
signed by the CIR.
ISSUE: Whether or not a passbook of an interest-earning deposit account issued by a bank is subject to
DST?
HELD: Yes, petitioners Savings Account Plus (SAP) is subject to Documentary Stamp Tax. The DST is imposed on
certificates of deposit bearing interest pursuant to Section 180 of the old NIRC, as amended, to wit:
Sec. 180. Stamp tax on all loan agreements, promissory notes, bills of exchange,
drafts, instruments and securities issued by the government or any of its
instrumentalities, certificates of deposit bearing interest and others not payable on
sight or demand . . . x x x . . .or any of its instrumentalities or certificates of deposits
drawing interest, or orders for the payment of any sum of money otherwise than
at the sight or on demand, or on all promissory notes, whether negotiable or non-
negotiable, . . x x x . . , there shall be collected a documentary stamp tax of Thirty
centavos (P0.30) on each Two hundred pesos, or fractional part thereof, of the face
value of any such agreement, bill of exchange, draft, certificate of deposit, or note:
Provided, That only one documentary stamp tax shall be imposed on either loan
agreement, or promissory note x x x.
• A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum
of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor,
or to some other person or his order, whereby the relation of debtor and creditor between the bank and the
depositor is created.
• In China Banking Corporation v. Commissioner of Internal Revenue, we held that the Savings Plus Deposit
Account, which has the following features:
o Amount deposited is withdrawable anytime;
o The same is evidenced by a passbook;
o The rate of interest offered is the prevailing market rate, provided the depositor would maintain his
minimum balance in thirty (30) days at the minimum, and should he withdraw before the period,
his deposit would earn the regular savings deposit rate;
• Similarly, in this case, although the money deposited in a SAP is payable anytime, the withdrawal of the
money before the expiration of 30 days results in the reduction of the interest rate. In the same way, a time
deposit withdrawn before its maturity results to a lower interest rate and payment of bank charges or
penalties.
• The fact that the SAP is evidenced by a passbook likewise cannot remove its coverage from Section 180 of
the old NIRC, as amended. A document to be considered a certificate of deposit need not be in a specific
form. Thus, a passbook issued by a bank qualifies as a certificate of deposit drawing interest because it is
considered a written acknowledgement by a bank that it has accepted a deposit of a sum of money from a
depositor.
• To avail of the IVAP, a taxpayer must pay the 100% basic tax of the original assessment of the BIR or the CTA
Decision, whichever is higher and submit the letter of termination and authority to cancel assessment signed
by the respondent. In this case, petitioner failed to submit the letter of termination and authority to cancel
14
assessment as CIR found the payment of P5,084,272.50 not in accordance with RMC No. 66-2006. Hence, we
find no error on the part of the CTA En Banc in denying Prudential Bank’s motion to withdraw.
• Prudential Bank’s payment of P5,084,272.50, without the supporting documents, cannot be deemed
substantial compliance as tax amnesty must be construed strictly against the taxpayer and liberally in favor
of the taxing authority. Nevertheless, the amount of P5,084,272.50 paid by Prudential Bank to the BIR must
be considered as partial payment of petitioner’s tax liability.
COMMISSIONER OF INTERNAL REVENUE v. LA TONDENA DISTILLERS, INC.

G.R. No. 175188 | 15 July 2015
Documentary Stamp Tax
DOCTRINE: Transfer of real property to a surviving corporation pursuant to a merger is not subject to
Documentary Stamp Tax (DST).
FACTS:
• Respondent La Tondeña Distillers, Inc. entered into a Plan of Merger with three other beverage
and bottling companies. As a result of the merger, the assets and liabilities of the absorbed
corporations were transferred to respondent, the surviving corporation. Respondent later changed
its corporate name to Ginebra San Miguel, Inc. (GSMI).
• Respondent requested for a confirmation of the tax-free nature of the said merger from the Bureau
of Internal Revenue (BIR) which later issued a ruling stating that pursuant to Section 40(C)(2) and
(6)(b) of the 1997 National Internal Revenue Code (NIRC), “No gain or loss shall be recognized by the
absorbed corporations as transferors of all assets and liabilities”. However, the transfer of assets, such as
real properties, shall be subject to DST imposed under Section 196 of the NIRC.
• October 31, 2001 - Paid the BIR P14.14 Million in DST.
• October 14, 2003 - Claiming its exemption from paying DST, respondent filed with petitioner
Commissioner of Internal Revenue (CIR) an administrative claim for tax refund or tax of the P14.14
Million paid representing the DST it allegedly erroneously paid on the occasion of the merger.
• CTA 2ND DIVISION – Declared the respondent entitled to its claim for tax refund Section 196 of the
NIRC does not apply because there is no purchaser or buyer in the case of a merger.
• CTA EN BANC – Affirmed the Division’s ruling.
ISSUE: Whether or not the respondent exempted from payment of DST?
HELD: Yes, petition dismissed.

• In a merger, the real properties are not deemed "sold" to the surviving corporation and the latter
could not be considered as "purchaser" of realty since the real properties subject of the merger were
merely absorbed by the surviving corporation by operation of law and these properties are deemed
automatically transferred to and vested in the surviving corporation without further act or deed.
Therefore, the transfer of real properties to the surviving corporation in pursuance of a merger is
not subject to documentary stamp tax.
ALLIED BANKING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 175097 | 5 February 2010
Taxpayer’s Remedies
15
DOCTRINE: The Commissioner of Internal Revenue (CIR) as well as his duly authorized representative must
indicate clearly and unequivocally to the taxpayer whether an action constitutes a final determination on a disputed
assessment. It will determine whether the taxpayer should exhaust administrative remedies before the CIR or file an
appeal to the CTA.
FACTS:
• On April 30, 2004, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice (PAN) to
petitioner Allied Banking Corporation (Allied) for deficiency Documentary Stamp Tax (DST) in the amount
of P12,050,595.60 and Gross Receipts Tax (GRT) in the amount of P38,995,296.76 on industry issue for the
taxable year 2001. Allied received the PAN on May 18, 2004 and filed a protest against it on May 27, 2004.
• On July 16, 2004, the BIR wrote a Formal Letter of Demand with Assessment Notices to Allied, and was
received by the latter on August 30, 2004. The demand letter stated:
“It is requested that the above deficiency tax be paid immediately upon receipt hereof, inclusive of
penalties incident to delinquency. This is our final decision based on investigation. If you disagree, you
may appeal the final decision within thirty (30) days from receipt hereof, otherwise said deficiency tax
assessment shall become final, executory and demandable.”
• On September 29, 2004, Allied filed a Petition for Review with the CTA. After CIR filed its answer, it filed
a Motion to Dismiss on the ground that Allied failed to file an administrative protest on the Formal Letter
of Demand with Assessment Notices. Allied opposed the Motion to Dismiss.
• The CTA granted the CIR’s Motion to Dismiss and ruled that: “neither the assessment nor the formal
demand letter itself is appealable to this Court. It is the decision of the CIR on the disputed assessment
that can be appealed to this Court. A disputed assessment is one wherein the taxpayer or his duly
authorized representative filed an administrative protest against the formal letter of demand and
assessment notice within thirty (30) days from date [of] receipt thereof. In this case, petitioner failed to file
an administrative protest on the formal letter of demand with the corresponding assessment notices.
Hence, the assessments did not become disputed assessments as subject to the Courts review under
Republic Act No. 9282.
• Allied’s MR was denied by the first division of the CTA, hence, the case was decided by the CTA en banc.
This latter court affirmed the decision of the former. It emphasized that an administrative protest is an
integral part of the remedies given to a taxpayer in challenging the legality or validity of an
assessment. Although there are exceptions to the doctrine of exhaustion of administrative remedies, this
case does not fall in any of the exceptions.
ISSUE: Whether or not the Formal Letter of Demand can be construed as a final decision of the CIR appealable to
the CTA under RA 9282?
HELD: Yes, sec. 7 of RA 9282 expressly provides that the CTA exercises exclusive appellate jurisdiction to review by
appeal decisions of the CIR in cases involving disputed assessments.
• The word “decisions” in the provision of RA 9282 has been interpreted to mean the decisions of the CIR on
the protest of the taxpayer against the assessments.
• A careful reading of the Formal Letter of Demand with Assessment Notices led the Court to agree with
Allied that this is an exception to the rule on exhaustion of administrative remedies. It found the CIR
estopped from claiming that the filing of the Petition for Review was premature because Allied failed to
exhaust all administrative remedies.
• The Formal Letter of Demand with Assessment Notices reads:
“It is requested that the above deficiency tax be paid immediately upon receipt
hereof, inclusive of penalties incident to delinquency. This is our final decision
based on investigation. If you disagree, you may appeal this final decision within
thirty (30) days from receipt hereof, otherwise said deficiency tax assessment shall
become final, executory and demandable.”
16
• It appears from the demand letter that the CIR has already made a final decision on the matter and that the
remedy of Allied is to appeal the final decision within 30 days. Records show that Allied disputed the PAN
but not the Formal Letter of Demand with Assessment Notices. Nevertheless, the Court cannot blame Allied
for not filing a protest against the Formal Letter of Demand with Assessment Notices since the language
used and the tenor of the demand letter indicate that it is the final decision of the CIR. The CIR should
indicate, in a clear and unequivocal language, whether his action on a disputed assessment constitutes his
final determination thereon in order for the taxpayer concerned to determine when his or her right to appeal
to the tax court accrues.
• Moreover, CIR used the word “appeal” instead of protest, reinvestigation, or reconsideration. Although
there was no direct reference for Allied to bring the matter directly to the CTA, it cannot be denied that the
word “appeal” under prevailing tax laws refers to the filing of a Petition for Review with the CTA. As aptly
pointed out by petitioner, under Section 228 of the NIRC, the terms “protest, reinvestigation and
reconsideration” refer to the administrative remedies a taxpayer may take before the CIR, while the term
“appeal” refers to the remedy available to the taxpayer before the CTA.
• The Court is not disregarding the rules of procedure, but in this particular case, it is saying that the Formal
Letter of Demand can be considered a final decision of the CIR appealable to the CTA because the words
used, specifically the words “final decision” and “appeal”, taken together led petitioner to believe that the
Formal Letter of Demand with Assessment Notices was in fact the final decision of the CIR on the letter-
protest it filed and that the available remedy was to appeal the same to the CTA.
CIR v. FAR EAST BANK & TRUST COMPANY (BPI)

G.R. No. 173854 |15 March 2010
DOCTRINE: Since tax refunds partake of the nature of tax exemptions, which are construed strictissimi juris against
the taxpayer, evidence in support of a claim must likewise be strictissimi scrutinized and duly proven.
FACTS:
• On April 10, 1995, respondent filed 2 Corporate ITRs, one for its Corporate Banking Unit (CBU),
and one for its Foreign Currency Deposit Unit (FCDU), for taxable year Dec. 31, 1994. The return
for the CBU consolidated the respondent’s overall income tax liability for 1994, which reflected a
refundable income tax of P12,682,864.
• Pursuant to Sec. 69 of the old NIRC, the amount stated was carried over and applied against its
income tax liability for taxable year Dec. 31, 1995. On April 15, 1996, respondent filed its 1995 ITR
which showed a total overpaid income tax of P17,443,133. Out of such amount, only P13,645,109
was sought to be refunded by respondent. As to the remaining P3,798,024, respondent opted to
carry it over to the next taxable year.
• On May 17, 1996, respondent filed a claim for refund of the amount of P13,645,109 with the BIR. Due CIR’s
inaction, respondent was compelled to bring the matter to the CTA on April 8, 1997 via a Petition for Review.
• To prove its entitlement to a refund, respondent presented several documents which consisted of
ITRs, certificates of creditable.
• CTA – Denied respondent’s refund claim because the latter failed to show that the income derived
from rentals and sale of real property from which the taxes were withheld were reflected in its 1994
ITR.
• CA – Reversed CTA ruling. Respondent duly proved that the income derived from rentals and sale
of real property upon which the taxes were withheld were included in the return as part of the
gross income.
ISSUE: Whether or not respondent proved its entitlement to the refund.
17
HELD: No, A taxpayer claiming for a tax credit or refund of creditable withholding tax must comply with the
following requisites:
(1) The claim must be filed with the CIR within the two-year period from the date of payment of the tax
(Sec. 229, NIRC);
(2) It must be shown on the return that the income received was declared as part of the gross income (Sec.
10 of RR No. 6-85); and
(3) The fact of withholding must be established by a copy of a statement duly issued by the payor to the
payee showing the amount paid and the amount of the tax withheld (Sec. 10 of RR No. 6-85).
• Respondent only complied with the 1st requirement but not the 2nd and 3rd requirements. To
establish the fact of withholding, respondent submitted Certificates of Creditable Tax Withheld at Source
and Monthly Remittance Returns of Income Taxes Withheld, which pertain to rentals and sales of real
property, respectively. However, its 1994 ITR shows that the gross income was derived solely from sales of
services. The phrase “NOT APPLICABLE” was printed on the schedules pertaining to rent, sale of real
property, and trust income.
• Thus, based on the ITR, the income derived from rentals and sales of real property upon which the creditable
taxes were withheld were not included in respondent’s gross income as reflected in its ITR. Since no income
was reported, no tax was withheld. It’s incumbent upon the taxpayer to reflect in his ITR the income upon
which any creditable tax is required to be withheld at the source.
• Respondents explanation that its income derived from rentals and sales of real properties were included in
the gross income but were classified as Other Earnings in its Schedule of Income attached to the return is not
supported by the evidence.
COMMISSIONER OF INTERNAL REVENUE v. KUDOS METAL CORPORATION

G.R. No. 178087 | 5 May 2010
DOCTRINE: The prescriptive period on when to assess taxes benefits both the government and the
taxpayer. Exceptions extending the period to assess must, therefore, be strictly construed.
FACTS:
• On April 15, 1999, the respondent filed its Annual Income Tax Return (ITR) for the taxable year
1998.
• Pursuant to a Letter of Authority dated September 7, 1999, the Bureau of Internal Revenue (BIR)
served upon respondent three Notices of Presentation of Records which the latter failed to
comply and led to the issuance of the Subpoena Duces Tecum dated September 21, 2006, receipt
of which was acknowledged by respondent’s President, Mr. Chan Ching Bio, in a letter dated
October 20, 2000.
• A review and audit of respondent’s records then ensued.
• On December 10, 2001, Nelia Pasco, respondent’s accountant, executed a Waiver of the Defense
of Prescription, which was notarized on January 22, 2002, received by the BIR Enforcement
Service on January 31, 2002 and by the BIR Tax Fraud Division on February 4, 2002, and accepted
by the Assistant Commissioner of the Enforcement Service, Percival T. Salazar.
• This was followed by a second Waiver of Defense of Prescription executed by the respondent’s
accountant on February 18, 2003, notarized on February 19, 2003, received by the BIR Tax Fraud
Division on February 28, 2003 and accepted by Assistant Commissioner Salazar.
• On August 25, 2003, the BIR issued a Preliminary Assessment Notice for the taxable year 1998
against the respondent which was followed by a Formal Letter of Demand with Assessment
Notices for taxable year 1998, dated September 26, 2003 which was received by respondent on
November 12, 2003.
18
• Believing that the government’s right to assess taxes had prescribed, respondent filed a Petition
for Review with the Court of Tax Appeals (CTA).
• The CTA Second Division issued a Resolution cancelling the assessment notices issued against
respondent for having been issued beyond the prescriptive period and found that the first
Waiver of the Statute of Limitations incomplete and defective for failure to comply with the
provisions of Revenue Memorandum Order (RMO) No. 20-90.
• On appeal, the CTA En Banc affirmed the cancellation of the assessment notices. Although it
ruled that the Assistant Commissioner was authorized to sign the waiver pursuant to Revenue
Delegation Authority Order (RDAO) No. 05-01, it found that the first waiver was still invalid
based on the second and third grounds stated by the CTA Second Division (i.e., the waiver failed
to indicate the date of acceptance and the fact of receipt by the taxpayer of his file copy was not
indicated on the original copy.
• Thus, this petition for review on certiorari seeks to set aside the decision of the CTA affirming the
cancellation of the assessment notices for having been issued beyond the prescriptive period and
the resolution denying the motion for consideration.
ISSUE: Whether or not the government’s right to assess unpaid taxes of respondent prescribed
HELD: Yes, Sec. 203 of the NIRC mandates the government to assess internal revenue taxes within 3
years from the last day prescribed by law for the filing of the tax return or the actual date of filing of such
return, whichever comes later. Hence, an assessment notice issued after the three-year prescriptive period
is no longer valid and effective subject to exceptions provided under Section 222 of the Tax Code, as
amended.
• Sec. 222(b) of the NIRC provides that the period to assess and collect taxes may only be extended
upon a written agreement between the CIR and the taxpayer executed before the expiration of the
three-year period.
• RMO No. 20-90 issued on April 4, 1990 and RDAO No. 05-01 issued on August 2, 2001 lay down
the procedure for the proper execution of the waiver, to wit:
o The phrase “but not after ______ 19 ___”, which indicates the expiry date of the period
agreed upon to assess/collect the tax after the regular three-year period of prescription,
should be filled up.
o The waiver must be signed by the taxpayer himself or his duly authorized representative.
In the case of a corporation, by any of its responsible officials. In case the authority is
delegated by the taxpayer to a representative, such delegation should be in writing and
duly notarized.
o The waiver should be duly notarized.
o The CIR or the revenue official authorized by him must sign the waiver indicating that
the BIR has accepted and agreed to the waiver. The date of such acceptance by the BIR
should be indicated. However, before signing the waiver, the CIR or the revenue official
authorized by him must make sure that the waiver is in the prescribed form, duly
notarized, and executed by the taxpayer or his duly authorized representative.
o Both the date of execution by the taxpayer and date of acceptance by the Bureau should
be before the expiration of the period of prescription or before the lapse of the period
agreed upon in case a subsequent agreement is executed.
o The waiver must be executed in 3 copies, the original copy to be attached to the docket of
the case, the second copy for the taxpayer and the third copy for the Office accepting the
waiver. The fact of receipt by the taxpayer of his/her file copy must be indicated in the
original copy to show that the taxpayer was notified of the acceptance of the BIR and the
perfection of the agreement.
• A perusal of the waivers executed by respondent’s accountant reveals the following infirmities:
19
oThe waivers were executed without the notarized written authority of the respondent’s
accountant to sign the waiver in behalf of respondent;
o The waivers failed to indicate the date of acceptance; and
o The fact of receipt by the respondent of its file copy was not indicated in the original
copies of the waivers.
• Due to the defects in the waivers, the period to assess or collect taxes was not extended.
Consequently, the assessments were issued by the BIR beyond the three-year period and are
void.
CIR v. SMART COMMUNICATIONS

G.R. No. 179045-46| 25 August 2010
DOCTRINE: The withholding agent has authority to file a claim for refund on behalf of the principal
taxpayer because the withholding agent is considered the statutory taxpayer, and he is an agent of the
principal taxpayer.
FACTS:
• Smart entered into an agreement with Malaysian company Prism, where Prism will provide
programming and installation services to Smart for the latter’s services such as Smart Money, etc.
• Initially thinking that Smart’s payments to Prism constitute royalties, Smart withheld a 25% royalty
tax that was provided under RP-Malaysia Tax Treaty. This was remitted to BIR.
• Later, Smart filed a claim for refund on the ground that it erroneously withheld from Prism, when
the payments were actually business profits, hence, not subject to royalty tax.
o Under the treaty, royalties are payments for the right to use the patent, trade mark, etc.
o Under the treaty, business profits of an enterprise in a contracting state are taxable only in
that State, unless it has a permanent establishment in the other contracting state.
• CIR questions the validity of the claim for refund, and the authority of Smart to file the claim
despite being merely a withholding agent.
ISSUE: Whether Smart, as the withholding agent of Prism, can file a claim for refund.
HELD: Yes, Smart has the authority, based on the case of CIR v P&G.
• The withholding agent may file the claim for refund because it is considered as the statutory
taxpayer. Under the Tax Code, the person entitled to claim the refund is the taxpayer, and the
taxpayer is the person subject to the tax imposed. Similarly, the withholding agent is held
personally liable for the tax withheld, and ensures that the same is remitted to BIR. As such, the
withholding agent is considered the statutory taxpayer.
• The withholding agent is an agent of the principal taxpayer. As agent, he is authorized to file the
necessary return, and pay the tax to the government; such authority may reasonably be held to
include the authority to file a claim for refund, and to bring action for recovery of the same.
Corollary thereto, the refund claimed belongs to the principal and therefore, must be returned to
him.
a. There is nothing in that case that requires that in order for the withholding agent to have
the authority to file the claim, the taxpayer and agent must be related parties, i.e., wholly
owned subsidiary of the taxpayer.
ISSUE: Whether the claim for refund is valid on the ground that the payment was not royalties but business
profits.
20
HELD: Yes, it is valid claim for refund because some of the payments are royalties, while others were
business profits; hence, there can be a refund with respect to the business profits erroneously treated as
royalties. Some of the services to be installed by Prism are intellectual properties of Prism while others were
intellectual property of Smart. Payments for the installation of those belonging to Prism are royalties, the
rest are business profits.
COMMISSIONER OF INTERNAL REVENUE v. AICHI FORGING COMPANY OF

ASIA, INC.
G.R. No. 184823 | 6 October 2010
DOCTRINE: A taxpayer must prove not only his entitlement to a refund but also his compliance with the
procedural due process as non-observance of the prescriptive periods within which to file the
administrative and the judicial claims would result in the denial of his claim.
FACTS:
• Respondent Aichi Forging Company of Asia (Aichi) is a VAT-registered enterprise engaged in the
manufacturing, producing, and processing of steel.
• On September 30, 2004, respondent filed a claim for refund/credit of input VAT for the period July
1, 2002 to September 30, 2002 in the total amount of ₱3,891,123.82 with the petitioner CIR through
DOF.
• Respondent filed a Petition for Review 7with petitioner CTA for the refund/credit of input VAT.
o It alleged that for the period July 1, 2002 to September 30, 2002:
▪ It generated and recorded zero-rated sales in the amount of ₱131,791,399.00 which
it paid;
▪ It incurred and paid input VAT amounting to ₱3,912,088.14 from purchases and
importation attributable to its zero-rated sales;
▪ In its application for refund/credit filed with the DOF One-Stop Shop Inter-
Agency Tax Credit and Duty Drawback Center, it only claimed the amount of
₱3,891,123.82.11.
• Petitioner argues that Respondent must prove first that it paid VAT input taxes for the period in
question
• CTA – Granted Aichi's refund. The CTA found that the first three requirements enumerated in
Section 112 (A) of the NIRC have been complied with by the respondent and that it has sufficiently
proved that it is entitled to a refund or issuance of a tax credit certificate representing unutilized
excess input VAT payments for the period July 1, 2002 to September 30, 2002, which are attributable
to its zero-rated sales for the same period, but in the reduced amount of ₱3,239,119.25
• CTA EN BANC – Affirmed the award for refund but dismissed the petition for review on the
ground that Aichi filed its VAT return beyond the reckoning period. That the reckoning date starts
from payment of tax not from the close of the taxable quarter when the sales were made.
• Applying Section 114 of the 1997 NIRC, respondent had until October 25, 2002 to file its quarterly
return for its gross sales or receipts [with] which it complied when it filed its VAT Quarterly Return
on October 20, 2002.
ISSUE: Whether or not the reckoning date begins from the payment of tax?
HELD: No, the right to claim the refund must be reckoned from the “close of the taxable quarter when the
sales were made” – in this case September 30, 2004. The Court added that the rules under Sections 204 (C)
and 229 as cross-referred to Section 114 do not apply as they only cover erroneous payments or illegal
21
collections of taxes which is not the case for refund of unutilized input VAT. Thus, the claim was filed on
time even if 2004 was a leap year since the sanctioned method of counting is the number of months.
ISSUE: Whether or not the case was filed prematurely
HELD: Yes, the court dismissed the case for being premature. Section 112 mandates that the taxpayer filing
the refund must either wait for the decision of the CIR or the lapse of the 120-day period provided therein
before filing its judicial claim. Failure to observe this rule is fatal to a claim. Thus, Section 112 (A) was
interpreted to refer only to claims filed with the CIR and not appeals to the CTA given that the word used
is “application”. Finally, the Court said that applying the 2-year period even to judicial claims would render
nugatory Section 112 (D) which already provides for a specific period to appeal to the CTA --- i.e., (a) within
30 days after a decision within the 120-day period and (b) upon expiry of the 120-day without a decision.
BELLE CORPORATION v. CIR

G.R. No. 181298 | 10 January 2011
DOCTRINE: Once the option to carry-over excess income tax payments to the succeeding years has been made, it
becomes irrevocable.
FACTS:
• On May 30, 1997, petitioner filed its ITR of 1st Qtr. of 1997, showing a gross income of P741,607,495,
a deduction of P65,381,054, a next taxable income of P676,226,441, and an income tax due of
P236,679,254, which petitioner paid on even date through PCI Bank.
• On Aug. 14, 1997, petitioner filed its 2nd Qtr. ITR, declaring an overpayment of income taxes
amounting to P66,634,290. Because of this, no taxes were paid for the 2 nd and 3rd Qtrs. of 1997.
Petitioner’s ITR for the taxable year ending Dec. 31, 1997 thereby reflected an overpayment of
income taxes totaling P132,043,528.
• Instead of claiming the amount as a tax refund, petitioner decided to apply it as a tax credit to the
succeeding taxable year by marking the tax credit option box in its 1997 ITR. For 1998, petitioner
amended its ITR showing an overpayment of P106,447,318.
• On April 12, 2000, petitioner filed its administrative claim for refund for the excess payment for
1997 totaling P106,447,318. Notwithstanding the filing of the administrative claim for refund, petitioner
carried over the amount of P106,447,318 to the taxable year 1999 and applied a portion thereof to its
1999 MCIT liability, as evidenced by its 1999 ITR.
• On April 14, 2000, due to the CIR’s inaction, petitioner appealed its refund claim with the CTA. To
prove entitlement, it submitted its ITR for the 1st Qtr. of 1997, tentative ITRs for the rest of the Qtrs.
and 1998, its final ITRs for 1997-1999, its letter-claim for refund, and official receipt issued by PCI
Bank.
• CTA denies the refund claim. CA affirms CTA ruling.
ISSUE: Whether or not respondent is entitled to the refund.
HELD: No, applying Sec. 76 of the NIRC, remedies are refund or carry-over the excess to the succeeding
years. Availment of one precludes the other. But the option to carry-over is irrevocable. Hence, unutilized
excess income tax payments may no longer be refunded.
• Since petitioner already carried over its 1997 excess income tax payments to 1998, it may no longer
file a refund claim of unutilized tax credits for 1997.
22
• Once the option to carry-over excess income tax payments to the succeeding years has been made, it becomes
irrevocable. Thus, applications for refund of the unutilized excess income tax payments may no longer be
allowed.
SILICON PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 172378 | 17 January 2011
DOCTRINE: The burden of proving entitlement to a refund lies with the claimant.
FACTS:
• On May 21, 1999, petitioner filed with the respondent, through the One-Stop Shop Inter-Agency
Tax Credit and Duty Drawback Center of the Department of Finance (DOF), an application for
credit/refund of unutilized input VAT for the period October 1, 1998 to December 31, 1998 in the
amount of P31,902,507.50.
• Due to the inaction of the respondent, petitioner filed a Petition for Review with the Court of Tax
Appeals (CTA) alleging that for the 4 th quarter of 1998, it generated and recorded zero-rated
export sales in the amount of P3,027,880,818.42, paid to petitioner in acceptable foreign currency
and accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas; and that for the said period, petitioner paid input VAT in the total amount of
P31,902,507.50, which have not been applied to any output VAT.
• The CTA rendered a decision partially granting petitioner’s claim for refund of unutilized input
VAT on capital goods as the portion of the related purchases (e.g., training materials, office
supplies, posters, banners, t-shirts, books, and other similar items) were not considered capital
goods under Section 4.106-1 (b) of Revenue Regulations (RR) No. 7-95 (Consolidated Value-
Added Tax Regulations). With regard to petitioner’s claim for credit / refund of input VAT
attributable to its zero-rated export sales, the CTA denied the same since the petitioner failed to
present an Authority to Print (ATP) from the BIR, neither did it print on its export sales invoices
the ATP and the word “zero-rated”.
• The petitioner elevated the case to the CTA EN Banc via a Petition for Review which was denied
for lack of merit.
ISSUE: Whether the CTA En Banc erred in denying petitioner’s claim for credit/refund of input VAT
attributable to its zero-rated sales due to its failure: (1) To show that it secured an ATP from the BIR and
to indicate the same in its export sales invoices; and (2) to print the word “zero-rated” in its export sales
invoices
HELD: No, because the failure to indicate the word “zero-rated” in the sales invoices or receipts are fatal
to a claim for credit/refund of input VAT on zero-rated sales. The failure to indicate the ATP in the sales
invoices or receipts, on the other hand, is not.
• The Supreme Court discussed two types of input VAT credits: (1) One is a credit/refund of input
VAT attributable to zero-rated sales under Section 112 (A) of the NIRC; and (2) The other is a
credit/refund of input VAT on capital goods pursuant to Section 112 (B) of the same Code.
• In a claim for credit/refund of input VAT attributable to zero-rated sales, Section 112 (A) of the
NIRC lays down four requisites, to wit: 1) the taxpayer must be VAT-registered; 2) the taxpayer
must be engaged in sales which are zero-rated or effectively zero-rated; 3) the claim must be filed
within two years after the close of the taxable quarter when such sales were made; and 4) the
creditable input tax due or paid must be attributable to such sales, except the transitional input
tax, to the extent that such input tax has not been applied against the output tax.
23
• With respect to a claim for refund of input VAT on capital goods, Section 112 (B) of the NIRC
requires that: 1. the claimant must be a VAT registered person; 2. the input taxes claimed must
have been paid on capital goods; 3. the input taxes must not have been applied against any
output tax liability; and 4. the administrative claim for refund must have been filed within two
(2) years after the close of the taxable quarter when the importation or purchase was made.
• Section 4.106-1 (b) of RR No. 7-95 defines capital goods as follows: “Capital goods or properties”
refer to goods or properties with estimated useful life greater that one year and which are treated
as depreciable assets under Section 29 (f), used directly or indirectly in the production or sale of
taxable goods or services. The disallowed input VAT on certain purchases cannot be classified as
input VAT paid on capital goods.
BUREAU OF INTERNAL REVENUE v. COURT OF APPEALS

G.R. No. 197590 | 24 November 2014
Government Remedies
DOCTRINE: The government is allowed to resort to all evidence or resources available to determine a
taxpayer’s income and to use methods to reconstruct his income.
FACTS:
• The revenue officers executed a Joint Affidavit alleging that, despite the respondent Antonio’s
modest income based on his reported or declared annual income for taxable years 1998-2003,
respondent spouses were able to purchase in cash several properties.
• Since respondent spouses failed to show the source of their cash purchases, the revenue officers
concluded that respondent Antonio’s Income Tax Returns (ITRs) for taxable years 2000, 2001, and
2003 were underdeclared. And since the underdeclaration exceeded 30% of the reported or
declared income, it was considered a prima facie evidence of fraud with intent to evade the
payment of proper taxes due to the government. The revenue officers, thus, recommended the
filing of criminal cases against respondent spouses for failing to supply correct and accurate
information in their ITRs for the years 2000, 2001, and 2003.
• The State Prosecutor recommended the filing of criminal charges against respondent spouses.
• On appeal to the Secretary of Justice via a Petition for Review, Acting Justice Secretary reversed
the resolution of State Prosecutor finding no willful failure to pay or attempt to evade or defeat
the tax on the part of respondent spouses as petitioner allegedly failed to specify the amount of
tax due and the likely source of income from which the same was based and the failure to issue a
deficiency tax assessment against respondent spouses which is a prerequisite to the filing of a
criminal case for tax evasion.
• The petitioner filed a Petition for Certiorari with the Court of Appeals (CA) but was dismissed
stating that, although it disagreed that an assessment is a condition sine qua non in filing a
criminal case for tax evasion, there was no probable cause to charge respondent spouses as
petitioner allegedly failed to state their exact tax liability and to show sufficient proof of their
likely source of income.
ISSUE: Whether or not the CA committed grave abuse of discretion amounting to lack or excess of
jurisdiction in holding that: (1) The exact amount of tax due from the private respondent should be
specifically alleged and since the BIR failed to make such findings, they consequently failed to build a
case for tax evasion against respondent spouses; and (2) The BIR failed to show sufficient proof of a likely
source of respondent spouses income
24
HELD: Yes, in Ungab v. Judge Cusi, Jr., the Supreme Court ruled that tax evasion is deemed complete
when the violator has knowingly and willfully filed a fraudulent return with intent to evade and defeat a
part or all of the tax.
• An assessment of the tax deficiency is not required in a criminal prosecution for tax evasion.
However, in Commissioner of Internal Revenue v. Court of Appeals, it was clarified that although a
deficiency assessment is not necessary, the fact that a tax is due must first be proved before one
can be prosecuted for tax evasion.
• In the case of income, for it to be taxable, there must be a gain realized or received by the
taxpayer, which is not excluded by law or treaty from taxation. The government is allowed to
resort to all evidence or resources available to determine a taxpayer’s income and to use methods
to reconstruct his income.
• The expenditure method is used by the government, which is a method of reconstructing a
taxpayer’s income by deducting the aggregate yearly expenditures from the declared yearly
income. The theory of this method is that when the amount of the money that a taxpayer spends
during a given year exceeds his reported or declared income and the source of such money is
unexplained, it may be inferred that such expenditures represent unreported or undeclared
income.
• Respondent spouses’ defense that they had sufficient savings to purchase the properties remains
self-serving as they do not have any evidence to support such claim. As such, it is safe to assume
that that money is income or a flow of wealth other than a mere return on capital. Income denotes
a flow of wealth during a definite period of time, while capital is a fund or property existing at
one distinct point in time.
• Moreover, by just looking at the tables presented by petitioner, it is obvious that respondent
spouses had underdeclared their income. The huge disparity between respondent Antonio’s
reported or declared annual income for the past several years and respondent spouses’ cash
acquisitions for the years 2000, 2001, and 2003 cannot be ignored.
LOCAL TAXATION
CE CASECAN WATER AND ENERGY COM. v NUEVA ECIJA

G.R. No. 196278| 17 June 2015
Real Property Taxation
DOCTRINE: It is the CTA that has the power to determine whether the RTC committed grave abuse of
discretion in issuing an interlocutory order in a local tax case. Local tax cases include cases involving RPT
because RPT is a local tax.
FACTS:
• CE Company entered into a Build-operate-transfer with NIA wherein NIA will reimburse CE for
any real prop tax (RPT) that the latter will be made to pay.
• CE was assessed with RPT by Nueva Ecija Provincial Assessor, which CE assailed before Local
Board of Assessment Appeals (LBAA).
• LBAA dismissed the case, so CE filed an appeal before Central Board of Assessment Appeals.
• During pendency of appeal, CE was made to pay under protest current RPT and its arrearages.
• CE made another appeal on the assessed arrearages before the LBAA.
• Without waiting for the LBAA and CBAA, CE filed a complaint for injunction and damages
before RTC to restrain the collection of RPT.
• RTC dismissed, while CA dismissed the Pet for Certiorari for lack of jurisdiction.
ISSUE: Whether CA properly dismissed on the ground of lack of jurisdiction.
25
HELD: Yes, the dismissal is proper because appellate jurisdiction over local tax cases is with CTA.
• It is the CTA which has the power to rule on the Pet for Certiorari assailing an interlocutory order
of the RTC relating to a local tax case.
o This is based on jurisprudence which provides that CTA has jurisdiction to determine
whether RTC committed grave abuse of discretion in issuing an interlocutory order in
cases falling within the CTA’s exclusive appellate jurisdiction.
o In tax cases, CTA is the tribunal with the specialized competence over tax and tariff
matters. Furthermore, law expressly confers upon the CTA the role of judicial review over
local tax cases without mention of any other court that may exercise such power.
• The injunction case is clearly a local tax case because in praying to restrain the collection of RPT,
CE also implicitly questions the propriety of the assessment of such RPT. Hence, in ruling as to
whether to restrain the collection, the RTC must first necessarily rule on the propriety of the
assessment. CE was indirectly challenging the validity of the assessment. Moreover, it has been
previously held that RPT is a local tax.
JUDICIAL REMEDIES
ASIA TRUST DEVELOPMENT BANK, INC. v. CIR

G.R. No. 201530, 201680-81| 19 April 2017
Judicial Procedures
DOCTRINE: An appeal to the CTA En Banc must be preceded by the timely filing of a motion for
reconsideration or new trial with the CTA Division; amended decisions are considered different decisions,
hence, a separate MR or MNT must be filed assailing the same.
FACTS:
• In 2000, BIR issued assessment notice to Asiatrust for several deficiency taxes from 1996- 1998.
• Asiatrust protested, but due to CIR’s inaction, it filed a PetRev before CTA raising the defense of
prescription and that it availed of Tax Abatement Program, and the Tax Amnesty Law.
• CTA Division cancelled the assessment made outside the prescriptive period of 3 years; but it
sustained validity of other assessment because Asiatrust failed to prove that it availed of the Tax
Abatement Program and Tax Amnesty Law because it failed to present the letter of termination
supposedly issued by BIR granting the application to avail of the programs.
o On CTA Division’s first decision, CIR was able to file an MR, albeit, denied; but not on the
Amended decision that CTA Division later issued.
• Upon appeal, CTA En Banc affirmed the ruling as to Asiatrust, but denied CIR’s appeal on the
ground that it didn’t file an MR on the Amended Decision of CTA Division.
ISSUE: Whether letter of intention is required to show that Asiatrust’s application for the programs were
granted.
26
HELD: Yes, letter of intention is required.

• Application for tax abatement is considered approved only upon issuance of the letter of
termination. Based on the relevant rules, it is clear that he last step in the tax abatement process is
the issuance of the termination letter. Its presentation is essential as it proves that the taxpayer's
application for tax abatement has been approved; and without which, a tax assessment cannot be
considered closed and terminated.
• Even if Asiatrust shows that it had paid the basic tax as part of the tax abatement program, it still
does not show that the application was granted; it only shows that Asiatrust paid the basic tax.
ISSUE: Whether MR before CTA Division is required before CIR can appeal before CTA En Banc.
HELD: Yes, MR is required.

• An appeal to the CTA En Banc must be preceded by the filing of a timely motion for reconsideration
or new trial with the CTA Division. Under the Rules of CTA, in order for the CTA En Banc to take
cognizance of an appeal via a petition for review, a timely motion for reconsideration or new trial
must first be filed with the CTA Division that issued the assailed decision or resolution.
• Failure to do so is a ground for the dismissal of the appeal as the word "must" indicates that the
filing of a prior motion is mandatory, and not merely directory.
• The same rule applies in amended decisions because an amended decision is a different decision,
and thus, is a· proper subject of a motion for reconsideration. An amended decision is defined as
"any action modifying or reversing a decision of the Court en banc or in Division."
• For failure to do so, the CTA Division’s Amended decision has attained finality insofar as CIR is
concerned and therefore, may no longer question the merits of the case.
27

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DE LA SALLE UNIVERSITY COLLEGE OF LAW

Lasallian Commission on Bar Operations 2018

Pat Costales Kristine Magsanay

GENERAL PRINCIPLES OF TAXATION

COMMISSIONER OF INTERNAL REVENUE v. ST. LUKE’S MEDICAL CENTER

CIR v. SM PRIME HOLDINGS

1. Historically, the activity of showing motion pictures, films or movies by cinema/theater

HELD: No, they are not exclusive.

J.R.A PHILIPPINES, INC. v. CIR

• CTA division denied the petition. MR also denied.

FORT BONIFACTIO DEV’T CORP. v. CIR

HELD: Yes, it is entitled.

FORT BONIFACIO DEVELOPMENT CORPORATION v. CIR (RESOLUTION)

ISSUE: Whether or not the motion should be granted.

CIR v. TOLEDO POWER COMPANY

PRUDENTIAL BANK v. COMMISSIONER OF INTERNAL REVENUE

COMMISSIONER OF INTERNAL REVENUE v. LA TONDENA DISTILLERS, INC.

ISSUE: Whether or not the respondent exempted from payment of DST?

HELD: Yes, petition dismissed.

ALLIED BANKING CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CIR v. FAR EAST BANK & TRUST COMPANY (BPI)

ISSUE: Whether or not respondent proved its entitlement to the refund.

COMMISSIONER OF INTERNAL REVENUE v. KUDOS METAL CORPORATION

CIR v. SMART COMMUNICATIONS

COMMISSIONER OF INTERNAL REVENUE v. AICHI FORGING COMPANY OF

ISSUE: Whether or not the case was filed prematurely

BELLE CORPORATION v. CIR

ISSUE: Whether or not respondent is entitled to the refund.

SILICON PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

BUREAU OF INTERNAL REVENUE v. COURT OF APPEALS

CE CASECAN WATER AND ENERGY COM. v NUEVA ECIJA

ISSUE: Whether CA properly dismissed on the ground of lack of jurisdiction.

ASIA TRUST DEVELOPMENT BANK, INC. v. CIR

HELD: Yes, letter of intention is required.

HELD: Yes, MR is required.

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