GR No.

219340 November 7, 2018

COMMISSIONER OF INTERNAL REVENUE v STANDARD INSURANCE CO., INC.

Taxation Law; Lifeblood Doctrine; Injunction; Taxes, being the lifeblood of the Government, should be collected
promptly and without hindrance or delay. Section 218 of the NIRC expressly provides that no court shall have the
authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by
the National Internal Revenue Code.

BERSAMIN J.:

FACTS: Standard Insurance Co. received its Preliminary Notice of Assessment from the BIR
concerning its deficient documentary stamp tax for the year 2011 amounting P337,038,679. From
the contest of the respondent, BIR issued on November 5, 2014 the Final Decision on Disputed
Assessment received by the Standard Insurance on December 4, 2014. Pending respondent's motion
for reconsideration, the latter instituted a civil action for declaratory relief before the RTC of Makati
assailing the constitutionality of Sections 108 and 184 of the NIRC further requesting the issuance
of a writ of injunction. The RTC issued a TRO and later on, the challenged writ of preliminary
injunction.

ISSUE: WON the RTC may enjoin the collection of taxes by injunction in an action for declaratory
relief?

HELD: NEGATIVE. Taxes, being the lifeblood of the Government, should be collected
promptly and without hindrance or delay. Section 218 of the NIRC expressly provides that no court
shall have the authority to grant an injunction to restrain the collection of any national internal
revenue tax, fee or charge imposed by the National Internal Revenue Code. Also, pursuant to
Section 11 of R.A. No. 1125, as amended, the decisions or rulings of the Commissioner of Internal
Revenue, among others, assessing any tax, or levying, or distraining, or selling any property of
taxpayers for the satisfaction of their tax liabilities are immediately executory, and their enforcement
is not to be suspended by any appeals thereof to the Court of Tax Appeals unless "in the opinion of
the Court of Tax Appeals the collection by the Bureau of Internal Revenue or the Commissioner of
Customs may jeopardize the interest of the Government and/or the taxpayer," in which case the
Court of Tax Appeals at any stage of the proceeding may suspend the said collection and require the
taxpayer either to deposit the amount claimed or to file a surety bond for not more than double the
amount. In view of the foregoing, the RTC not only grossly erred in giving due course to the
petition for declaratory relief, and in ultimately deciding to permanently enjoin the enforcement of
the specified provisions of the NIRC against the respondent, but even worse acted without
jurisdiction.
GR No. 230651 September 18, 2018

ALLIANCE OF QUEZON CITY HOMEOWNERS ASSOCIATION INC vTHE

QUEZON CITY GOVERNMENT, represented by HON. MAYOR HERBERT
BAUTISTA, QUEZON CITY ASSESSOR'S OFFICE, and QUEZON CITY
TREASURER'S OFFICE

Taxation Law; Local Taxation; Remedies of Tax paper; Exhaustion of Administrative Remedies; The exhaustion
of administrative remedies doctrine requires that before a party may seek intervention from the court, he or she should
have already exhausted all the remedies in the administrative level.

Same; Same; Same; Same; Exceptions;However, this principle is not an ironclad rule and admits of exceptions such
as when there is strong public interest involved, in view of the more substantive matters.

PERLAS-BERNABE,.J.:

FACTS: Pursuant to a memorandum issued by the Department of Finance implementing Section

219 of the Local Government Code which required assessors to revise the real property assessments
in their respective jurisdiction every 3 years, the City Government of Quezon City enacted QC
Ordinance No. SP-2556. The ordinance approved the revised schedule of fair market values over
Quezon City further setting the new assessment levels at 5% and 14% for residential and
commercial/industrial classifications respectively. Petitioner directly filed the instant petition for
certiorari before the Supreme Court praying, among others, that the Ordinance be declared
unconstitutional for violating substantive due process, and invalid for violating Section 130 of the
Local Government Code. They alleged that the increase of 500% in taxes to be paid was unjust,
excessive, oppressive, arbitrary, and confiscatory. On its comments, respondent Quezon City
challenged the propriety of the petition on the grounds that it failed to exhaust its administrative
remedies under the LGC, which were to question the assessments on the taxpayers' properties by
filing a protest before the City Treasurer, as well as to assail the constitutionality of the 2016
Ordinance before the Secretary of Justice. In addition, that it has no legal capacity to sue since its
Certificate of Registration as a corporation was revoked by the Securities and Exchange Commission
in an Order dated February 10, 2004.

ISSUE: WON petitioners direct resort to Supreme Court in assailing the validity of ordinance valid?

HELD: NEGATIVE. The exhaustion of administrative remedies doctrine requires that before a
party may seek intervention from the court, he or she should have already exhausted all the remedies
in the administrative level. The Local Government Code provides two remedies in relation to real
property tax assessments or tax ordinances. These are Sections 226 and 252 thereof which allow a
taxpayer to question the reasonableness of the amount assessed before the city treasurer then appeal
to the Local Board of Assessment Appeals; and Section 187 thereof which allows an aggrieved
taxpayer to question the validity or legality of a tax ordinance by duly filing an appeal before the
Secretary of Justice before seeking judicial intervention. In the present case, Alliance admitted that
these administrative remedies were not complied with, and that the petition was immediately filed
before the Court.

However, this principle is not an ironclad rule and admits of exceptions such as when there is strong
public interest involved,in view of the more substantive matters, as in this case. As for QC, the
widespread effect of the 2016 Ordinance to its constituents is glaringly apparent, considering that
QC has a land area of 16,112.8 hectares, which is almost one-fourth of the entire Metro Manila.
Moreover, QC holds 23.3% of Metro Manila's total population. While taxation is an inherent power
of the State, the exercise of this power should not be unjust, excessive, oppressive, or confiscatory as
explicitly prohibited under the LGC. As Alliance proffers, the alleged exorbitant increase in real
property taxes to be paid based on the assailed Ordinance triggers a strong public interest against the
imposition of excessive or confiscatory taxes. Courts must therefore guard the public's interest
against such government action.
G.R. No. 206362 August 01, 2018

RHOMBUS ENERGY, INC. v COMMISSIONER OF INTERNAL REVENUE

Taxation Law; Creditable Withholding Tax; Revocability of option to Carry Over; Once the option to carry over and
apply the excess quarterly income tax against income tax due for the taxable years of the succeeding taxable years has
been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or
issuance of a tax credit certificate shall be allowed.

BERSAMIN, J.:

FACTS: When petitioner Rhombus Energy in 2006 its Annual Income Tax Return for taxable year
2005, it indicated an excess creditable withholding tax amounting 1,500,653.00 for the year 2005
which respondent further indicated that it was "To be refunded". In 2006, petitioner filed its
Quarterly Income Tax Returns for the first to third quarters of taxable year 2006 showing, contrary
to its prior indication, that prior year's excess credits of P1, 500.653.00 are to be carried over as tax
payments for the said quarters. On December 29, 2006, respondent filed with the Revenue Region
No. 8 an administrative claim for refund of its alleged excess/unutilized CWT for the year 2005 in
the amount of P1, 500,653.00. During the pendency of the claim, in order that the prescriptive
period for refund would not lapse, petitioner filed a petition for review before the Court of Tax
Appeals First Division who favorably ruled for them granting the refund. However, upon CIR’s
petition for review before the CTA En Banc, the latter reversed and set aside the decision of the
First Division stating in wise that Section 76 is clear and unequivocal that once the carry-over option
is taken, actually or constructively, it becomes irrevocable. Consequently, when Rhombus Energy
opted to carry-over its unutilized creditable withholding tax of P1, 500,653.00 for taxable year 2005
to the first, second and third quarters of taxable year 2006, said option to carry-over becomes
irrevocable and it cannot anymore claim for the refund thereof.

ISSUE: Whether or not the taxpayer is barred by the irrevocability rule in claiming for the refund of
its excess and/or unutilized creditable withholding tax?

HELD: NEGATIVE. The irrevocability rule is enunciated in Section 76 of the National Internal
Revenue Code which states that in case the corporation is entitled to a tax credit or refund of the
excess estimated quarterly income taxes paid, the excess amount shown on its final adjustment
return may be carried over and credited against the estimated quarterly income tax liabilities for the
taxable quarters of the succeeding taxable years. Once the option to carry over and apply the excess
quarterly income tax against income tax due for the taxable years of the succeeding taxable years has
been made, such option shall be considered irrevocable for that taxable period and no application
for cash refund or issuance of a tax credit certificate shall be allowed.

Citing the findings of the CTA First Division as correct, the Supreme Court held that the CTA En
Banc thereby misappreciated the fact that Rhombus had already exercised the option for its
unutilized creditable withholding tax for the year 2005 “to be refunded” when it filed its annual ITR
for the taxable year ending December 31, 2005. Following the common thread in jurisprudence, the
irrevocability rule took effect when the option was exercised. In the case of Rhombus, therefore, its
marking of the box "To be refunded" in its 2005 annual ITR constituted its exercise of the option,
and from then onwards Rhombus became precluded from carrying-over the excess creditable
withholding tax. The fact that the prior year's excess credits were reported in its 2006 quarterly ITRs
did not reverse the option to be refunded exercised in its 2005 annual ITR. As such, the CTA En
Banc erred in applying the irrevocability rule against Rhombus.