CIR V GONZALES

Facts:

Commissioner of Internal Revenue (petitioner) Dakila B. Fonacier conducted a

fraud investigation for all internal revenue taxes to ascertain/determine the tax liabilities
of respondent L. M. Camus Engineering Corporation (LMCEC) for the taxable years
1997, 1998 and 1999. The audit and investigation against LMCEC was precipitated by
the information provided by an informer that LMCEC had substantial underdeclared
income for the said period. For failure to comply with the subpoena duces tecum issued
in connection with the tax fraud investigation, a criminal complaint was instituted by the
Bureau of Internal Revenue (BIR) against LMCEC for violation of Section 266 of the
NIRC of the Office of the City Prosecutor of Quezon City).

LMCEC Argue that it cannot be held liable whatsoever for the alleged tax deficiency
which had become due and demandable; They also assail as invalid the assessment
notices which bear no serial numbers. LMCEC further averred that it had availed of the
Bureaus Tax Amnesty Programs (Economic Recovery Assistance Payment [ERAP]
Program and the Voluntary Assessment Program [VAP]) for 1998 and 1999; for 1997,
its tax liability was terminated and closed under Letter of Termination issued by
petitioner and signed by the Chief of the Assessment Division. LMCEC argued that
petitioner is now estopped from further taking any action against it and its corporate
officers concerning the taxable years 1997 to 1999. the grant of immunity from audit
from the companys availment of ERAP and VAP, which have a feature of a tax
amnesty, the element of fraud is negated the moment the Bureau accepts the offer of
compromise or payment of taxes by the taxpayer.

Issue:

WON Petitioner is now estopped from assessing any tax deficiency against
LMCEC after issuance of the aforementioned documents of immunity from
audit/investigation and settlement of tax liabilities?

Ruling:

NO, petitioner is NOT estopped from assessing any tax deficiency against
LMCEC after issuance of the aforementioned documents of immunity from
audit/investigation and settlement of tax liabilities. It is axiomatic that the State can
never be in estoppel, and this is particularly true in matters involving taxation. The errors
of certain administrative officers should never be allowed to jeopardize the governments
financial position.
CIR V PERF REALTY CORP

Facts:

Respondent PERF is a domestic corporation engaged in the business of leasing

properties to various clients including the Philippine American Life and General
Insurance Company (Philamlife) and Read-Rite Philippines (Read-Rite). PERF filed its
Annual Income Tax Return (ITR) for the year 1997 showing a net taxable income in the
amount of P6,430,345.00 and income tax due of P2,250,621.00.

For the year 1997, its tenants, Philamlife and Read-Rite, withheld and subsequently
remitted creditable withholding taxes in the total amount of P3,531,125.00. After
deducting creditable withholding taxes in the total amount of P3,531,125.00 from its
total income tax due of P2,250,621.00, PERF showed in its 1997 ITR an overpayment
of income taxes in the amount of P1,280,504.00. PERF filed an administrative claim
with the appellate division of the BIR for refund of overpaid income taxes in the amount
of P1,280,504.00.

CTA denied the petition of PERF on the ground of insufficiency of evidence. The CTA
noted that PERF did not indicate in its 1997 ITR the option to either claim the excess
income tax as a refund or tax credit pursuant to Section 69[2] (now 76) of the National
Internal Revenue Code (NIRC)

Issue:

Won respondent Perf is entitled to tax refund considering the latters failure to
substantially establish its claim for refund?

Ruling:

Yes, the court favor to respondent.

The requisites for a claim for refund, thus:

1) That the claim for refund was filed within the two (2) year period as prescribed under
Section 230 of the National Internal Revenue Code;

2) That the income upon which the taxes were withheld were included in the return of
the recipient;

3) That the fact of withholding is established by a copy of a statement (BIR Form

1743.1) duly issued by the payor (withholding agent) to the payee, showing the amount
paid and the amount of tax withheld therefrom.
 We find that PERF filed its administrative and judicial claims for refund on
November 3, 1999 and December 3, 1999, respectively, which are within the two-year
prescriptive period under Section 230 (now 229) of the National Internal Tax Code.
Although the certificates of creditable withholding tax at source for 1997 reflected a total
amount of P4,153,604.18 corresponding to the rental income of P83,072,076.81, PERF
is claiming only the amount of P3,531,125.00 pertaining to a rental income of
P70,813,079.00. The amount of P3,531,125.00 less the income tax due of PERF of
P2,250,621.00 leaves the refundable amount of P1,280,504.00.

More so, the Tax Code allows the refund of taxes to a taxpayer that claims it in writing
within two years after payment of the taxes erroneously received by the BIR. Despite
the failure of petitioner to make the appropriate marking in the BIR form, the filing of its
written claim effectively serves as an expression of its choice to request a tax refund,
instead of a tax credit. To assert that any future claim for a tax refund will be instantly
hindered by a failure to signify ones intention in the FAR is to render nugatory the clear
provision that allows for a two-year prescriptive period.

COMMISSIONER OF CUSTOMS v. MARINA SALES, INC

Facts:

Respondent Marina Sales, Inc. (Marina) is engaged in the manufacture of Sunquick

juice concentrates. It was appointed by CO-RO Food A/S of Denmark, maker of
Sunquick Juice Concentrates, to be its manufacturing arm in the Philippines. As such,
Marina usually imports raw materials into the country for the purpose. In the past, the
Bureau of Customs (BOC) assessed said type of importations under Tariff Heading H.S.
2106.90 10 with a 1% import duty rate.

However, BOC, reclassified Import Entry No. C-33771-03 and Import Entry No. C-
67560-03 under Tariff Heading H.S. 2106.90 50 at 7% import duty rate. , Marina
appealed before the Commissioner challenging VCRCs reclassification.\

CTA Second Division ruled in favor of Marina[ the importation covered by Import Entry
Nos. C-33771-03 and C-67560-03 are reclassified under Tariff Harmonized System
Heading H.S. 2106.90 10 with an import duty rate of 1%.
The Commissioner insists that Marinas two importations should be classified under
Tariff Heading H.S. 2106.90 50 with an import duty rate of 7% because the
concentrates are ready for consumption by mere dilution with water.

Issue:

Won decision of the court of tax appeals second division holding that
respondents importation are covered by import entry nos. c-33771-03 and c-67560-03
are classified under tariff harmonized system heading h.s. 2106.90 10 with an import
duty rate of one percent (1%) is not correct?

Ruling:

After examining the records of the case, the Court is of the view that the import
duty rate of 1%, as determined by the CTA Second Division, is correct.

TARIFF HEADING IMPORT DUTY RATE

COVERAGE

H.S. 2106.90 10 1%

Covers flavouring materials, nes., of kind used in food and drink industries; other food
preparations to be used as raw material in preparing composite concentrates for making
beverages

H.S. 2106.90 507%

Covers composite concentrate for simple dilution with water to make beverages

H.S. 2009. 19 00 7%

Covers orange juice, not frozen

H.S. 2009.80 00 7%

Covers juice of any other single fruit or vegetable

H.S. 2009.90 00 10%

Covers mixtures of juices

In this case, however, the laboratory analysis of Marinas samples yielded a different
result. The report supported Marinas position that the subject importations are not yet
ready for human consumption. Moreover, Marinas plant manager, Rebecca
Maronilla, testified that the juice compounds could not be taken in their raw form
because they are highly concentrated and must be mixed with other additives before
they could be marketed as Sunquick juice products. If taken in their unprocessed form,
the concentrates without the mixed additives would produce a sour taste. In other
words, the concentrates, to be consumable, must have to lose their original character.
Accordingly, the 1% tariff import duty rate under Tariff Heading H.S. 2106.90 10 was
correctly applied to the subject importations

COMMISSIONER OF CUSTOMS, vs AGFHA INCORPORATED

Facts:

On December 12, 1993, a shipment containing bales of textile grey cloth arrived
at the Manila International Container Port (MICP). The Commissioner, however, held
the subject shipment because its owner/consignee was allegedly fictitious. AGFHA
intervened and alleged that it was the owner and actual consignee of the subject
shipment. After seizure and forfeiture proceedings took place, the District Collector of
Customs, MICP, rendered a decision ordering the forfeiture of the subject shipment in
favor of the government.

CTA-Second Division ORDERED to effect the immediate RELEASE of the subject

shipment of goods in favor of the petitioner.In CA decision the Commissioner of
Customs is hereby ordered to effect the immediate release of the shipment of AGFHA.

Thereafter, the subject shipment arrived at the Bureau of Customs, the Chief of the
Auction and Cargo Disposal Division of the MICP could not determine the status,
whereabouts and disposition of said shipment.

CTA-Second Division adjudged the Commissioner liable to AGFHA. The Bureau of

Customs is adjudged liable to petitioner AGFHA, INC. for the value of the subject
shipment in the amount of ONE HUNDERED SIXTY THOUSAND THREE HUNDRED
FORTY EIGHT AND 08/100 US DOLLARS (US$160,348.08). The Bureau of Custom’s
liability may be paid in Philippine Currency, computed at the exchange rate prevailing at
the time of actual payment, with legal interests thereon at the rate of 6% per annum
computed from February 1993 up to the finality of this Resolution.

Issue:
 1.Whether or not the Court of Tax Appeals was correct in awarding the
respondent the amount of US$160,348.08, as payment for the value of the subject lost
shipment that was in the custody of the petitioner?

2. Won the BOC enjoys immunity from suit since it is invested with an inherent
power of sovereignty which is taxation and the State may not be sued without its
consent?

Ruling:

1. The Court agrees with the ruling of the CTA that AGFHA is entitled to recover the
value of its lost shipment based on the acquisition cost at the time of payment.
The Court held in a number of cases that the rate of exchange for the conversion
in the peso equivalent should be the prevailing rate at the time of payment.

Therefore, the Commissioner of Customs should pay AGFHA the value of

the subject lost shipment in the amount of US$160,348.08 which liability may be
paid in Philippine currency computed at the exchange rate prevailing at the time
of the actual payment.

2. No, The Commissioner cannot escape liability for the lost shipment of goods.
The circumstances of this case warrant its exclusion from the purview of
the state immunity doctrine As previously discussed, the Court cannot turn a
blind eye to BOC's ineptitude and gross negligence in the safekeeping of
respondent's goods. We are not likewise unaware of its lackadaisical attitude in
failing to provide a cogent explanation on the goods' disappearance, considering
that they were in its custody and that they were in fact the subject of litigation.
The situation does not allow us to reject respondent's claim on the mere
invocation of the doctrine of state immunity. Succinctly, the doctrine must be
fairly observed and the State should not avail itself of this prerogative to take
undue advantage of parties that may have legitimate claims against it.