REFUND

Vda. De Aguinaldo vs. CIR (1965)

FACTS:
Leopoldo R. Aguinaldo and his wife received in 1952 cash dividends in
the sum of P10,000.00 from Aguinaldo Brothers, Inc. The spouses did
not declare said dividends in their joint income tax return for 1952,
but declared P5,000.00 thereof in their income tax return for 1953. In
1954, they paid the tax due on their declared income for 1953.
In 1955, the BIR readjusted the returns, increasing the declared
income for 1952 by P10,000.00 and eliminating from the 1953 income
tax return the reported dividends of P5,000.00. The result was a
deficiency income tax of P3,840.00 for 1952 and an overpayment of
tax in the amount of P1,600.00 for 1953.
The CIR assessed against Aguinaldo the amount of P3,840.00 as
deficiency income tax for 1952, without crediting in his favor the
overpayment in 1953.
The CIR said that the amount of P1,600.00 cannot be credited against
the tax for 1952 inasmuch as the claim for tax credit was filed beyond
the two-year period provided for in Section 309 of the NIRC
Later, Leopoldo died. His surviving spouse appealed to the CTA. After
hearing, the Tax Court dismissed the appeal for "lack of cause of
action".
ISSUE:
Whether petitioner is entitled to tax credit for the year 1953
RULING:
No, petitioners claim for refund was filed beyond the 2 year period.
The Aguinaldos paid the income tax for 1953 on 1954 although the
adjustment took place on 1955. From both dates to 1958, when the
claim for tax credit was filed, more than two years have elapsed.
Section 309 requires the filing by the taxpayer of a written
claim for credit or refund within two years after payment of the
tax, before the Commissioner of Internal Revenue can exercise his
authority to grant the credit or refund.

CIR vs. Aichi Forging Company of Asia (2010)

MAIN POINT: Non-compliance with the 120-day period for VAT refunds
makes appeal to the CTA premature
FACTS:
On September 30, 2004, Aichi Forging filed a claim for refund/credit
of input VAT attributable to its zero-rated sales for the period July 1,
2002 to September 30, 2002 with the CIR through the DOF One-Stop
Shop. On the same day, Aichi Forging filed a Petition for Review with
the CTA for the same action.
 The BIR disputed the claim and alleged that the same was filed
beyond the two-year period given that 2004 was a leap year and thus
the claim should have been filed on September 29, 2004.
The CIR also raised issues related to the reckoning of the 2-year
period and the simultaneous filing of the administrative and judicial
claims.
ISSUES:
1. Was the Petitioners administrative claim filed out of time?
2. Was the filing of the judicial claim premature?
RULING:
1. 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 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.
2. YES. 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. 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.

Gibbs vs. CIR (1960)

FACTS:
Allison and Esther Gibbs protested the 1950 deficiency income tax
assessment issued against them by the CIR, on the ground that said
deficiency assessment was based on a disallowance of bad debts and
losses claimed in their income tax return for 1950.
CIR rejected Gibbs' protest and reiterated his demand.
Gibbs however paid the deficiency and at the same time demanding
the immediate refund of the amount paid.
CIR denied the request for refund, and required Gibbs to pay the
amounts of P1.5k and P2k as surcharge, interest, and compromise
penalty.
Notice of said denial was received by Gibbs on November 14, 1956.
On September 27, 1957 - Gibbs filed with CTA a petition for review
and refund, with a motion for suspension of collection of penalties.
 CIR filed a motion to dismiss, on the ground that the petition was filed
beyond the 30-day period provided under Section 11, in relation to
Section 7, of RA No. 1125, which motion, was opposed by Gibbs.
CTA dismissed the petition saying they no longer had jurisdiction
because Gibbs filed the appeal 10 months after the receipt, clearly
beyond the 30-day period set by law.
Gibbs argued that Section 306 of the Revenue Code provides that
judicial proceedings may be instituted for recovery of an internal
revenue tax within two years from the date of payment.
CTA said this was before RA1125 was enacted.
ISSUE:
Whether the appeal of Gibbs was made within the statutory period
RULING:
NO, the appeal was NOT made w/in the statutory period. RA No. 1125
provides that CTA has appellate jurisdiction to review decisions of the
CIR in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation
thereto but filing must be within 30 days after receipt of such ruling.
SEC. 306 of the Tax Code provides that for Recovery of tax
erroneously or illegally collected, the suit shall be begun within 2
years from the date of payment of the tax or penalty.
RA No. 1125 was intended to cope with a situation where the
taxpayer, upon receipt of a decision or ruling of the CIR, elects to
appeal to the CTA instead of paying the tax. For this reason, the latter
part of said Section 11 RA 1125, provides that no such appeal would
suspend the payment of the tax demanded by the Government, unless
for special reasons, the CTA would deem it fit to restrain said
collection. Section 306 of the Tax Code, on the other hand,
contemplates of a case wherein the taxpayer paid the tax, whether
under protest or not, and later on decides to go to court for its
recovery. THUS, where payment has already been made and the
taxpayer is merely asking for its refund, he must first file with the CIR
a claim for refund WITHIN 2 YEARS from time of payment before
taking the matter to the CTA, as required by Section 306 of the NIRC.
Appeals from decisions of CIR to CTA must ALWAYS be perfected
within 30 days after the receipt of the decision that is being appealed,
as required by Section 11 of RA No. 1125. If the CIR takes time in
deciding the claim, and the period of two years is about to end, the
suit or proceeding must be started in the CTA before the end of the 2-
year period without awaiting the decision of the Collector. This is so
because of the positive requirement of Section 306 and the doctrine
that delay of the Collector in rendering decision does not extend the
peremptory period fixed by the statute. THERE is no conflict and the 2
laws must be reconciled. In this case, Gibbs filed the appeal MORE
 THAN 10 MONTHS after receipt of the CIRs notice of denial. Thus, it
was beyond the 30-day period.

Gibbs vs. CIR (1965)

FACTS:
On Feb 1956, CIR issued against Finley Gibbs a deficiency income tax
assessment notice.
1 month after, Allison Gibbs, signing as attorney in fact for her
brother, acknowledged receipt of the above assessment notice and
notified the CIR that Finley Gibbs was then living in California and
that the latter was notified by him of the said deficiency assessment.
In the same letter, Allison Gibbs questioned the disallowance of
certain items which gave rise to the deficiency assessment and
requested for a correction of it.
CIR denied the request on August 1965.
Having deemed the denial as the final decision of the CIR, Allison
Gibbs wrote on October 1956 the CIR saying they are paying the
assessed amount as a sign of good faith, but reiterated that the
assessment is contrary to law. She also demanded refund of the
payment.
In a letter in Oct 1956, CIR denied petitioners claim for refund. Such
denial was admittedly received by the office of Allison Gibbs on NOV
1956.
In Sept 1958, Allison, signing as counsel for Finley, wrote another
letter addressed to CIR to reiterate the demand for refund. Letter also
said that the denial letter in Oct 1956 was NOT a ruling on Finleys
claim for refund.
On Oct 1958, petitioners filed with the CTA a Petition for Review and
Refund of Income Tax with Motion for Suspension of Collection of
Additional Taxes, alleging mainly the claims for refunds and tax
credits in the letter.
CTA dismissed the case on the ground of lack of jurisdiction given that
the petition for review was filed BEYOND 30 days from date of receipt
of CIRs decision.
ISSUE
1. Whether Gibbs claims have already prescribed
2. Whether withholding tax credits amount to payment for the purpose
of determining the 2-year period provided in Sec 306 of the NIRC
RULING:
1. YES, Gibbs claims HAVE already prescribed. Petitioners contend that
the claims had NOT yet prescribed because there was no evidence
that they received a copy of the letter in Oct 1956 DENYING their
claim for refund, and the letter itself is NOT a denial of their claim for
refund. HOWEVER, it is has been proven that Allison is not a
 mere atty-in-fact but counsel of Gibbs, and thus, upon receipt
she should have immediately filed an appeal upon denial. Also,
the claim that the letter of Oct 26 1956 was NOT a denial of the claim
for refund was unmeritorious. The letter clearly states that for
reasons stated in our letter dated Aug 28 1956, THIS OFFICE has NO
JUSTIFIABLE BASIS to grant your request.
2. YES, w/holding tax credits = payment! 2 year period shall be counted
from the DATE THE WITHOLDING TAX IS DUE. A taxpayer, resident
or non-resident, who contributes to the withholding tax system, does
so not really to deposit an amount to the CIR but to perform and
extinguish his tax obligation for the year concerned. In other words,
he is paying his tax liabilities for that year. Consequently, a taxpayer
whose income is withheld at the source will be deemed to have paid
his tax liability when the same falls due at the end of the tax year.
THUS, it is when the tax liability falls due, that the 2-year prescriptive
period under Section 306 of the Revenue Code starts to run with
respect to payments effected through the withholding tax system. It is
of no consequence whatever that a claim for refund or credit against
the amount withheld at the source may have been presented and may
have remained unresolved since. Taxpayer who has paid the tax,
whether under protest or not, and who is claiming a refund of the
same, must file a claim for refund with the CIR within 2 years from
the date of his payment of the tax (Sec 306, NIRC) He must then
appeal to the CTA w/in 30 DAYS from receipt of the CIRs decision
denying claim for refund (Sec 11, RA 1125) If, however, the Collector
takes time in deciding the claim, and the period of two years is about
to end, the suit or proceeding must be started in the CTA BEFORE the
end of the 2-year period WITHOUT awaiting the decision of the
Collector. This is so because of the positive requirement of Section
306 and the doctrine that delay of the Collector in rendering decision
does not extend the peremptory period fixed by the statute.

CIR vs. Sweeney (1959)

FACTS:
This is a claim for refund of the amounts representing fixed and
percentage taxes supposedly due from the International Club of Iloilo
(alleged by Sweeney to be a private one, not organized for profit), as
operator of a bar, which were paid in protest by its past presidents,
including Sweeney, etc., under a compromise agreement to avoid
criminal prosecution which might affect their standing as
businessmen in their community
On the same day that Sweeney and others made payment under
protest, they filed the corresponding petition for refund.
 The petitioner contends that the CTA has no jurisdiction to order
refund of the taxes involved, first, because said amounts had been
paid by respondents in extra-judicial settlement of the case against
them, and second because respondents have no cause of action in as
much as petitioner has not yet ruled upon their requests for refund
ISSUE:
Whether the court has jurisdiction to order the refund of the amounts
paid
RULING:
Yes. Taxpayers need not wait for the action of the Collector of Internal
Revenue on the request for refund before taking the matter to court.
The taxpayer's failure to comply with the requirement regarding the
institution of the action or proceeding in court within 2 years after the
payment of the taxes bars him from the recovery of the same,
irrespective of whether a claim for the refund of such taxes filed with
the Collector or Internal Revenue is still pending action of the latter.

CIR vs. Tokyo Shipping Co. Ltd. (1995)

FACTS:
Private respondent is a foreign corporation represented in the
Philippines by Soriamont Steamship Agencies, Incorporated.
Claiming the pre-payment of income and common carrier's taxes as
erroneous since no receipt was realized from the charter
agreement, private respondent instituted a claim for tax credit or
refund before petitioner Commissioner of Internal Revenue on March
23, 1981.
Petitioner failed to act promptly on the claim, hence, on May 14, 1981,
private respondent filed a petition for review before Court of Tax
Appeals.
Petitioner contested the petition. As special and affirmative defenses,
it alleged the following: that taxes are presumed to have been
collected in accordance with law; that in an action for refund, the
burden of proof is upon the taxpayer to show that taxes are
erroneously or illegally collected, and the taxpayer's failure to sustain
said burden is fatal to the action for refund; and that claims for refund
are construed strictly against tax claimants.
ISSUE:
Whether private respondent Tokyo Shipping Co. Ltd., is entitled to a
refund or tax credit for amounts representing pre-payment of income
and common carrier's taxes
RULING:
YES. Sufficient evidence has been adduced by the private respondent
proving that it derived no receipt from its charter agreement.
 A claim for refund is in the nature of a claim for exemption and should
be construed in strictissimi juris against the taxpayer.
The power of taxation is sometimes called also the power to destroy.
Therefore it should be exercised with caution to minimize injury to the
proprietary rights of a taxpayer. It must be exercised fairly, equally
and uniformly, lest the tax collector kill the "hen that lays the golden
egg." And, in order to maintain the general public's trust and
confidence in the Government this power must be used justly and not
treacherously.

CIR vs. CA (January 21, 1999)

FACTS:
BPI acted as the liquidator of Paramount Acceptance Corporation
after its dissolution
BPI filed a claim for refund of overpaid income tax
The Court of Tax Appeals rendered a decision considering the two-
year period of prescription to have commenced to run from April 15,
1986, the last day for filing the corporate income tax return, and,
since the claim for refund was filed on April 14, 1988 and the action
was brought on April 15, 1988, it held that prescription had not set in
ISSUE:
Whether the two-year period of prescription for filing a claim for
refund is to be counted from April 2, 1986 when the corporate income
tax return was actually filed or from April 15, 1986 when the final
adjustment return could still be filed without incurring any penalty.
RULING:
Paramount filed its corporate annual income tax return on April 2,
1986. However, private respondent BPI, as liquidator of Paramount,
filed a written claim for refund only on April 14, 1988 and a petition
for refund only on April 15, 1988. Both claim and action for refund
were thus barred by prescription.
The two-year period should be computed from the time of actual filing
of the Adjustment Return or Annual Income Tax Return. This is so
because at that point, it can already be determined whether there has
been an overpayment by the taxpayer

CIR vs. PNB (October 25, 2005)

Section 230 [now Sec. 229, 1997 NIRC] of the Tax Code, as couched,
particularly its statute of limitations component, is, in context, intended to
apply to suits for the recovery of internal revenue taxes or sums
erroneously, excessively, illegally or wrongfully collected. Black defines the
term
erroneous or illegal tax as one levied without statutory authority. In the
strict legal viewpoint, therefore, PNBs claim for tax credit did not
proceed from, or is a consequence of overpayment of tax erroneously
or illegally collected. It is beyond cavil that respondent PNB issued to the
BIR the check for P180 Million in the concept of tax payment in advance,
thus eschewing the notion that there was error or illegality in the payment.
Even if the two (2)-year prescriptive period, if applicable, had already
lapsed, the same is not jurisdictional and may be suspended for reasons of
equity and other special circumstances. Records show that the BIRs very
own conduct led PNB to believe all along that its original intention to apply
the advance payment to its future income tax obligations will be respected
by the BIR.

Asiaworld Properties Philippines Corporation vs. CIR (2010)

The application of the option to carry-over the excess creditable tax
is not limited only to the immediately following tax year but extends
to the next succeeding taxable years. Thus, once the taxpayer opts to
carry-over the excess income tax against the taxes due for the succeeding
taxable years, such option is irrevocable for the whole amount of the excess
income tax, thus, prohibiting the taxpayer from applying for a refund for
that same excess income tax in the nest succeeding taxable years. The
unutilized excess tax credits will remain in the taxpayers account and will
be carried over and applied against the taxpayers income tax liabilities
until fully utilized.

CIR vs. Smart Communication (August 25, 2010)

FACTS:
Smart entered into an Agreement with Prism, a nonresident foreign
corporation domiciled in Malaysia, whereby Prism will provide
programming and consultancy services to Smart. Thinking that the
payments to Prism were royalties, Smart withheld 25% under the RP-
Malaysia Tax Treaty. Smart then filed a refund with the BIR alleging
that the payments were not subject to Philippine withholding taxes
given that they constituted business profits paid to an entity without a
permanent establishment in the Philippines.
ISSUE:
Does Smart have the right to file the claim for refund?
RULING:
YES. The Court reiterated the ruling in Procter & Gamble stating that
a person liable for tax has sufficient legal interest to bring a suit for
refund of taxes he believes were illegally collected from him. Since
the withholding agent is an agent of the beneficial owner of the
payments (i.e., nonresident), the authority as agent is held to include
 the filing of a claim for refund. The Silkair case was held inapplicable
as it involved excise taxes and not withholding taxes.
Smart was granted a refund given that only a portion of its payments
represented royalties since it is only that portion over which Prism
maintained intellectual property rights and the rest involved full
transfer of proprietary rights to Smart and were thus treated as
business profits of Prism.

FACTS:
Smart Communications, Inc. (Smart) entered into 3 agreements with Prism
Transactive (M) Sdn. Bhd. (Prism), a non-resident Malaysian corporation,
under which Prism would provide programming and consultancy services
for the installation of the Service Download Manager (SDM Agreement) and
the Channel Manager (CM Agreement), and for the installation and
implementation of Smart Money and Mobile Banking Service SIM
Applications and Private Text Platform (SIM Application Agreement). Prism
billed Smart US$547,822.45. Thinking that the amount constituted
royalties, Smart withheld from its payments to Prism the amount
ofUS$136,955.61 or P7,008,840.43, representing the 25% royalty tax under
the RP-Malaysia Tax Treaty. Within the 2-year period to claim a refund,
Smart filed an administrative claim with the Bureau of Internal Revenue
(BIR) for the refund of the withheld amount (P7,008,840.43). When the
Commissioner of Internal Revenue (CIR) failed to act on its claim, Smart
filed a Petition for Review with the Court of Tax Appeals (CTA). Smart
averred that its payments to Prism were not royalties but business profits,
as defined in the RP-Malaysian Tax Treaty, which were not taxable because
Prism did not have a permanent establishment in the Philippines. The CIR
countered that Smart, as a withholding agent was not a party-in-interest to
file the claim for refund, and even if it were the proper party,there was no
showing that the payments to Prism constituted business profits. The
CTAs Second Division sustained Smarts right to file the claim for refund,
citing the cases ofCommissioner of Internal Revenue vs. Wander
Philippines, Inc. [243 Phil. 717 (1988)], Commissioner of Internal Revenue
vs. Procter & Gamble Philippine Manufacturing Corporation (G.R. No.
66838, 2 December 1991, 204 SCRA 377) and Commissioner of Internal
Revenue vs. The Court of Tax Appeals [G.R. No. 93901, 11 February 1992
(Minute Resolution)]. However, it granted only the refund of the withholding
tax on Smarts payment for the SDM Agreement (P3,989,456.43) because
only the payment for the SDM Agreement constituted royalty which was
subject to withholding tax. The court considered the payments for the CM
and SIM Application agreements as business profits which were not
subject to tax under the RP-Malaysia Tax Treaty. On appeal, the CTA En
Banc affirmed its Second Divisions ruling. The CIR, thus, brought the case
to the Supreme Court for review, arguing that the cases cited by the CTA in
upholding Smarts right to claim the refund, were inapplicable because the
withholding agents therein were wholly owned subsidiaries of the
taxpayers, unlike in this case where the withholding agent was unrelated to
the taxpayer. The CIR maintained that the proper party to file the refund
was the taxpayer, Prism, citing the case of Silkair (Singapore) Pte, Ltd. vs.
Commissioner of Internal Revenue (G.R. No. 173594, 6 February 2008, 544
SCRA 100). The CIR further argued that assuming Smart was the proper
party to file the claim, it was still not entitled to any refund because its
payments to Prism were taxable as royalties, having been made in
consideration for the use of the programs owned by Prism.
ISSUE:
Whether or not Smart had the right to file the claim for refund
RULING:
Smart, as withholding agent, may file the claim for refund. The person
entitled to claim a tax refund is the taxpayer [Sections 204(c) and 229 of the
National Internal Revenue Code (NIRC)]. However, in case the taxpayer
does not file a claim for refund, the withholding agent may file the claim.
Thus, in Commissioner of Internal Revenue v. Procter & Gamble Philippine
Manufacturing Corporation (G.R. No. 66838, December 2, 1991, 204 SCRA
377), a withholding agent was considered a proper party to file a claim for
refund of the withheld taxes of its foreign parent company. The CIR was
incorrect in saying that this ruling applies only when the withholding agent
and the taxpayer are related parties, i.e., where the withholding agent is a
wholly owned subsidiary of the taxpayer. Although such relation between
the taxpayer and the withholding agent is a factor that increases the latters
legal interest to file a claim for refund, there is nothing in the decision in
said case to suggest that such relationship is required or that the lack of
such relation deprives the withholding agent of the right to file a claim for
refund. Rather, what is clear in the decision is that a withholding agent has
a legal right to file a claim for refund for two reasons. First, he is
considered a taxpayer under the NIRC as he is personally liable for the
withholding tax as well as for deficiency assessments, surcharges, and
penalties, should the amount of the tax withheld be finally found to be less
than the amount that should have been withheld under law. Second, as an
agent of the taxpayer, his authority to file the necessary income tax return
and to remit the tax withheld to the government impliedly includes the
authority to file a claim for refund and to bring an action for recovery of
such claim. Silkair (Singapore) Pte, Ltd. vs. Commissioner of Internal
Revenue (supra), cited by the CIR, was inapplicable as it involved excise
taxes, not withholding taxes. In that case, it was ruled that the proper party
to question, or seek a refund of, an indirect tax is the statutory taxpayer,
the person on whom the tax is imposed by law and who paid the same even
if he shifts the burden thereof to another. As an agent of the taxpayer, it is
the duty of the withholding agent to return to the principal taxpayer what
he has recovered. Otherwise, he would be unjustly enriching himself at the
expense of the principal taxpayer from whom the taxes were withheld, and
from whom he derives his legal right to file a claim for refund.
United Airlines vs. CIR (September 29, 2010)
Facts:
International airline, petitioner United Airlines, filed a claim for income tax
refund. Petitioner sought to be refunded the erroneously collected income
tax from in the amount of P5,028,813.23 on passenger revenue from tickets
sold in the Philippines, the uplifts of which did not originate in the
Philippines. The airlines ceased operation originating form the Philippines
since February 21, 1998.

Court of tAx appeals ruled the petitioner is not entitled to a refund because
under the NIRC, income tax on GPB also includes gross revenue from
carriage of cargoes from the Philippines. And upon assessment by the CTA,
it was found out that petitioner deducted items from its cargo revenues
which should have entitled the government to an amount of P 31.43 million,
which is obviously higher than the amount the petitioner prayed to be
refunded.

Petitioner argued that the petitioners supposed underpayment cannot

offset his claim to a refund as established by well-settled jurisprudence.

Issue:
Whether or not petitioner is entitled to a refund?

HELD:

Petitioner was correct in averring that his claim to a refund cannot be

subject to offsetting or, as it claimed the offsetting to be, a legal
compensation under Sec. 28(A)(3)(a)

Petitioners (similar) tax refund claim assumes that the tax return that it
filed was correct. Given, however, the finding of the CTA that petitioner,
although not liable under Sec. 28(A)(3)(a) of the 1997 NIRC, is liable under
Sec. 28(A)(1), the correctness of the return filed by petitioner is now put in
doubt. As such, we(the court) cannot grant the prayer for a refund.

The court held that the petitioner is not entitled to a refund, Having
underpaid the GPB tax due on its cargo revenues for 1999, the amount of
the former being even much higher (P31.43 million) than the tax refund
sought (P5.2 million).

Under Section 72 [Suit to Recover Tax Based on False or Fraudulent

Returns] of the National Internal Revenue Code, the Court of Tax Appeals
can make a valid finding that taxpayer made erroneous deductions on its
gross cargo revenue; that because of the erroneous deductions, taxpayer
reported a lower cargo revenue and paid a lower income tax thereon; and
that taxpayers underpayment of the income tax on cargo revenue is even
higher than the income tax it paid on passenger revenue subject of the
claim for refund, such that the refund cannot be granted. On the
assumption that taxpayer filed a correct return, it had the right to file a
claim for refund of the Gross Philippine Billings (GPB) tax on passenger
revenues it paid in 1999 when it was not operating passenger flights to and
from the Philippines. However, upon examination by the CTA, taxpayers
return was found erroneous as it understated its gross cargo revenue for
the same taxable year due to deductions of two items. Having underpaid the
GPB tax due on its cargo revenues for 1999, taxpayer is not entitled to a
refund of its GPB tax on its passenger revenue, the amount of the former
being even much higher than the tax refund sought.

COURT OF TAX APPEALS

Surigao Electric Co. vs. CTA (June 28, 1974)

Facts:
Petitioner Surigao Electric Co., grantee of a legislative electric franchise,
contested a warrant of distraintand levy to enforce the collection from
"Mainit Electric" of a deficiency franchise tax plus surcharge.Thereafter the
Commissioner, by letter dated April 2, 1961, advised the petitioner to take
up the matter with the General Auditing Office, enclosing a copy of the 4th
Indorsement of the Auditor General dated November 23, 1960. This
indorsement indicated that the petitioner's liability for deficiency franchise
taxfor the period from September 1947 to June 1959 was P21,156.06,
excluding surcharge. Subsequently, ina letter to the Auditor General dated
August 2, 1962, the petitioner asked for reconsideration of theassessment,
admitting liability only for the 2% franchise tax in accordance with its
legislative franchiseand not at the higher rate of 5% imposed by Sec. 259 of
the NIRC, which latter rate the Auditor Generalused as basis in computing
the petitioner's deficiency franchise tax. An exchange of correspondence
between the petitioner, on the one hand, and the Commissioner and the
Auditor General, on the other,ensued, all on the matter of the petitioner's
liability for deficiency franchise tax. The controversyculminated in a revised
assessment dated April 29, 1963 in the amount of P11,533.53, representing
the petitioner's deficiency franchise-tax and surcharges thereon for the
period from April 1, 1956 to June 30,1959. The petitioner then requested a
recomputation of the revised assessment in a letter to theCommissioner
dated June 6, 1963. The Commissioner, however, in a letter dated June 28,
1963 deniedthe request for recomputation.Petitioner appealed to the CTA
which was subsequently dismised on the ground that the appeal was filed
beyond the thirty-day period of appeal provided by Sec. 11 of Republic Act
1125.
Issue:
WON the petitioner's appeal to the CTA was time-barred.
Ruling:
YES. To sustain the petitioner's contention that the Commissioner's letter of
June 28, 1963 denying itsrequest for further amendment of the revised
assessment constitutes the ruling appealable to the tax courtand that the
thirty-day period should, therefore, be counted from July 16, 1963, the day
it received theJune 28, 1963 letter, would, in effect, leave solely to the
petitioner's will the determination of thecommencement of the statutory
thirty-day period, and place the petitioner and for that matter,
anytaxpayer in a position, to delay at will and on convenience the finality
of a tax assessment. This absurdinterpretation espoused by the petitioner
would result in grave detriment to the interests of theGovernment,
considering that taxes constitute its life-blood and their prompt and certain
availability is animperative need
MAIN POINT: the letter of demand unquestionably constitutes the final
action taken by the commissioner on the companys several requests for
reconsideration and re-computation. In this letter the commissioner not only
in effect demanded that the company pay the amount but also gave warning
that in the event it failed to pay, the said commissioner would be
constrained to enforce the collection thereof by means of the remedies
provided by law. The tenor of the letter, specifically the statement regarding
the resort to legal remedies, unmistakably indicated the final nature of the
determination made by the commissioner of the companys deficiency
franchise tax liability

CIR vs. Union Shipping Corporation (May 21, 1990)

Facts: In a letter dated December 27, 1974 herein petitioner Commissioner

of Internal Revenue assessed against Tee Fong Hong Ltd. and/or herein
private respondent Union Shipping Corporation, the total sum of
Php583,155.22 as deficiency income taxes due for the years 1971 and 1972.
Said letter was received on January 4, 1975, and in a letter dated January
10, 1975, received by petitioner on January 13, 1975, private responded
protested the assessment. Petitioner, without ruling on the protest, issued a
warrant of distraint and levy, which was served on private respondents
counsel, Clemente Celso, on November 25, 1976. In a letter dated
November 27, 1976, received by petitioner on November 29, 1976, private
respondent reiterated its request for reinvestigation of the assessment and
for the reconsideration of the summary collection thru the warrant of
distraint and levy. Petitioner again, without acting on the request for
reinvestigation and reconsideration of the warrant of distraint and levy, filed
a collection suit before branch XXI of the the CFI of Manila and docketed as
civil case no. 120459 against private respondent. Summons in the said
collection case issued to private respondent on December 28, 1978.

Issue: Whether or not issuance of writ of distraint and levy is a proof of

finality of an assessment.

Held: Yes. The main thrust of their petition is that the issuance of a warrant
distraint and levy is proof of the finality of an assessment because it is the
most drastic action of all media of enforcing the collection of tax, and is
tantamount to an outright denial of a motion for reconsideration of an
assessment. Among others, petitioners contends that the warrant of
distraint and levy was issued after respondent corporation filed a request
for reconsideration of subject assessment, thus constituting petitioners
final decision in the disputed assessment.

We deem it appropriate to state that the commissioner of internal revenue

should always indicate to the taxpayer is clear and unequivocal language
whenever his action on an assessment questioned by a taxpayer constitute
his final determination on the disputed assessment as contemplated by
sections 7 and 11 of RA 1125 as amended. On the basis of this statement
indubitably showing that the commissioners communicated action is his
final decision on the contested assessment, the aggrieved taxpayer would
then be able to take recourse to the tax court at the opportune time.
Without needless difficulty, the taxpayer would be able to determine when
his right to appeal to the tax court accrues. This rule of conduct would also
obviate all desire and opportunity on the part of the taxpayer to continually
delay the finality of the assessment and, consequently, the collection of
the amount demanded as taxes by repeated request for recomputation and
reconsideration. On the part of the commissioner, this would encourage his
office to conduct a careful and thorough study of every questioned
assessment and render a correct and definite decision thereon in the first
instance. This would also deter the commissioner from unfairly making the
taxpayer grope in the dark and speculate as to which action continues the
decision appealable to the tax court of greater imports this rule of conduct
would must a pressing need for fair play, regularity, and orderliness in the
administrative action.

Under the circumstances, the commissioner of internal revenue, not having

clearly signified his final action on the disputed assessment, legally the
period to appeal has not commenced to run. Thus, it was only when private
respondent received the summons on the civil suit for collection of
deficiency income on December 28, 1978 that the period of appeal
commenced to run.

City of Makati vs. CIR (CTA Case No. 641, September 2, 2011)

Allied Banking Corporation vs. CIR (February 10, 2010)

Allied Bank received from the CIR a PAN of deficiency DST in the amount of
around P12M. Allied protested and thereafter received a Formal Letter of
Demand with Assessment Notices. Allied filed within 30 days from the
receipt of the Formal Letter of Demand a petition for review in the CTA. It
was dismissed because the CTA ratiocinated that it is neither the
assessment nor the formal demand letter itself that is appealable to the
CTA. It is the decision of the CIR on the disputed assessment that can be
appealed to the CTA. CTA says administrative is necessary first.

The case is an exception to the exhaustion of administrative remedies, by

way of estoppel from the part of BIR. It appears from the foregoing demand
letter that the CIR has already made a final decision on the matter and that
the remedy of petitioner is to appeal the final decision within 30 days. Allied
cannot be faulted for relying on the Formal Letter of Demand since the
language used and the tenor of the demand letter indicate that it is the final
decision of the respondent on the matter.The Formal Letter of Demand
which was not administratively protested by the petitioner 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.

Judy Ann L. Santos vs. People and BIR (August 26, 2008)
FACTS:
The case began when then CIR Guillermo L. Parayno Jr. recommended the
criminal prosecution of Juday to Justice Secretary Raul M. Gonzales for
substantial underdeclaration of income.
Consequently, an Information charging Juday for violation of Section 255 in
relation to Sections 254 and 248 (B) of the Tax Code was filed with the CTA.
Juday then filed a Motion to Quash the Information which the CTA denied.
Similarly, Judays reconsideration was also denied by the CTAs First
Division. Juday then filed with the CTA en banc, a Motion for Extension of
Time to File Petition for Review to appeal the denial of the abovementioned
Motion to Quash. In the meantime, while Juday was able to file her Petition
for Review with the CTA en banc on June 16, 2006, the CTA en banc denied
on June 19, 2006 the Motion for Extension of time to file Petition for Review
previously filed by Juday. Aggrieved, Juday sought redress from the
Supreme Court asserting that the resolution of the CTA Division denying a
motion to quash is appealable to the CTA en banc pursuant to Section 18 of
Republic Act No. 1125, as amended. Juday alleged that if that is not the
case, a procedural void would be created, leaving the parties without any
remedy involving erroneous resolutions of the CTA Division.

ISSUE:
Is the filing of a Petition for Review with the CTA En Banc the proper
remedy for a party aggrieved by an interlocutory order of a Division of the
CTA?

RULING:
The SC ruled that the petition for review to be filed with the CTA en banc
as the mode for appealing a decision, resolution, or order of the CTA
Division, under Section 18 of Republic Act No. 1125, as amended, is not a
totally new remedy, unique to the CTA, with a special application or use
therein. To the contrary, the CTA merely adopts the procedure for petitions
for review and appeals long established and practiced in other Philippine
courts. Accordingly, doctrines, principles, rules, and precedents laid down
in jurisprudence by this Court as regards petitions for review and appeals in
courts of general jurisdiction should likewise bind the CTA, and it cannot
depart therefrom. Section 1, Rule 41 of the Revised Rules of Court,
governing appeals from the Regional Trial Courts (RTCs) to the Court of
Appeals, provides that an appeal may be taken only from a judgment or final
order that completely disposes of the case or of a matter therein when
declared by the Rules to be appealable. Said provision, thus, explicitly
states that no appeal may be taken from an interlocutory order. It is well-
settled that after a final order or judgment has been issued, the court
should have nothing more to do in respect of the relative rights of the
parties to the case. Conversely, "an interlocutory order is one that does not
finally dispose of the case and does not end the Court's task of adjudicating
the parties' contentions in determining their rights and liabilities as regards
each other, but obviously indicates that other things remain to be done by
the Court."

CIR vs. Leal (November 18, 2002)

CIR issued RMO 15-91 imposing 5% lending investors tax on pawnshops
based on their gross income and requiring all investigating units of BIR to
assess the lending investors tax due them., pursuant to Sec 116 of the
NIRC. Subsequently, CIR issued RMC 43-91 subjecting the pawn ticket to
DST. Affected, respondents, owner of Josefinas pawnshops, asked for a
reconsideration of the RMO and RMC but was denied with finality by CIR.
Thus, respondent filed with RTC a petition for prohibition against CIR from
implementing the revenue orders. CIR filed a motion to dismiss but was
denied by the RTC.

While the CA correctly took cognizance of the petition for certiorari,

however, the jurisdiction to review the rulings of the CIR pertains to
the CTA, not to the RTC.The questioned RMO No. 15-91 and RMC No. 43-
91 are actually rulings or opinions of the Commissioner implementing the
Tax Code on the taxability of pawnshops. Such revenue orders were issued
pursuant to CIRs powers the Tax Code. As such, it comes within the
purview of Republic Act No. 1125, Section 7 of which provides that the
Court of Tax Appeals shall exercise exclusive appellate jurisdiction to
review by appeal x x x decisions of the Collector of Internal Revenue in x x x
matters arising under the National Internal Revenue Code or other law or
part of the law administered by the Bureau of Internal Revenue.

City of Manila vs. Coca-Cola Bottles Philippines (August 4, 2009)

Prior to Feb 25, 2000, Respondent Coke had been paying City of Manila
local business tax under Sec 14 of Tax Ordinance 7794 (Tax on
manufacturers and assemblers), being exempted from payment of tax under
Sec 21 (Tax on Businesses subject to Excise, VAT or percentage Tax). It was
later amended, making respondent liable to pay local business tax both
under Sec 14 and Sec 21. City of Manila assessed respondents of P18.6M
tax deficiency which Coke protested contending double taxation. Petitioner
did not respond to the protest. Thus, respondent filed with RTC an action
for cancellation of the assessment against respondent for business taxes.
Petition was granted in compliance with an earlier decision declaring the
amendments null and void.
Petitioner filed with CTA 2 Motions for Extension of Time to File Petition for
Review, praying for a 15-day extension and an additional 10-day extension
within which to file their petition. Upon filing their Petition for Review, the
same was dismissed by CTA First Division for being filed out of time. CTA
en banc affirmed.

The period to appeal the decision or ruling of the RTC to the CTA via a
Petition for Review is specifically governed by Section 11 of Republic Act
No. 9282 and Section 3(a), Rule 8 of the Revised Rules of the CTA. The
afore-quoted provisions provide that to appeal an adverse decision or
ruling of the RTC to the CTA, the taxpayer must file a Petition for
Review with the CTA within 30 days from receipt of said adverse
decision or ruling of the RTC. However, Section 11 of Republic Act No.
9282 does state that the Petition for Review shall be filed with the
CTA following the procedure analogous to Rule 42 of the Revised
Rules of Civil Procedure. Section 1, Rule 42[16] of the Revised Rules of
Civil Procedure provides that the Petition for Review of an adverse
judgment or final order of the RTC must be filed with the Court of Appeals
within: (1) the original 15-day period from receipt of the judgment or final
order to be appealed; (2) an extended period of 15 days from the lapse
of the original period; and (3) only for the most compelling
reasons, another extended period not to exceed 15 days from the
lapse of the first extended period.

Following by analogy Section 1, Rule 42 of the Revised Rules of Civil

Procedure, the 30-day original period for filing a Petition for Review
with the CTA under Section 11 of Republic Act No. 9282, as
implemented by Section 3(a), Rule 8 of the Revised Rules of the CTA,
may be extended for a period of 15 days. No further extension shall
be allowed thereafter, except only for the most compelling reasons,
in which case the extended period shall not exceed 15 days.

In this case, the CTA First Division erred in finding that petitioners failed to
file their Petition for Review in CTA within the reglementary period.

Philippine British Assurance Company vs. Republic (February 2,

2010)
Petitioner issues customs bonds to its clients in favor of the BOC, which
secure the release of imported goods from BOC without prior payment of
corresponding customs duties. Petitioner and its client bind themselves to
pay the BOC the value of the bonds. Republic, represented by BOC, filed a
complaint against petition for collection of money with damages before RTC
alleging that petition had outstanding unliquidated customs bonds with
BOC which was granted. CA dismissed the appeal filed by petitioner on
ground that it has no jurisdiction over the appeal and the same lies with
CTA because the case is a tax collection case.

Although the original obligation of petitioner arose from non-payment of

taxes, the complaint against petitioner is predicated upon the bond
executed by them. Thus, respondents right originally arising from law has
become a right based upon a written contract, the bond being a contract
between Respondent and Petitioner.

RA 9282 amended Section 7 of RA 1125 and provided that the CTA

shall have Exclusive appellate jurisdiction to review by appeal
decisions, orders or resolutions of the Regional Trial Courts in local
tax cases originally decided or resolved by them in the exercise of
their original or appellate jurisdiction. In the case at bar, the original
complaint filed with the trial court was in the nature of a collection case. An
action to collect on a bond used to secure the payment of taxes is not
a tax collection case, but rather a simple case for enforcement of a
contractual liability. Verily, the instant case is not a tax collection case;
hence, appellate jurisdiction over the petition properly lies with the CA and
not the Court of Tax Appeals.