SHUTAX CASE DIGESTS
1 CAGAYAN ELECTRIC POWER &
LIGHT CO., INC. , petitioner, vs.
COMMISSIONER OF INTERNAL
REVENUE and COURT OF TAX
APPEALS
This is about the liability of petitioner
Cagayan Electric Power & Light Co., Inc.
for income tax amounting to P75,149.73
for the more than seven-month period of
the year 1969 in addition to franchise tax.
Facts:
- Cagayan is the holder of a legislative
franchise, RA 3247, under wc payment
of 3% tax on its gross earning from sle of
electric current is “in lieu of all taxes and
assessments of whatever authority upon
privileges, earnings, income, franchise,
and poles, wires, transformers, and
insulators of the grantee, from which
taxes and assessments the grantee is
hereby expressly exempted”
- On June 27, 1968, Republic Act No.
5431 amended section 24 of the Tax
Code by making liable for income tax all
corporate taxpayers not specifically
exempt under paragraph (c) (1) of said
section and section 27 of the Tax Code
notwithstanding the "provisions of
existing special or general laws to the
contrary".
- Thus, franchise companies were
subjected to income tax in addition to
franchise tax
- Its franchise was amended by RA 6020
so the amendment reenacted the tax
exemption in its orig charter
- CIR in a demand letter required petitioner
to pay deficiency income taxes for 1968
and 1969
- Cagayan filed a petrev with the Tax
Court wc held petit liable for only for the
income tax for the period form January 1
to Aug 3 1969 or before RA 6020 wc
reiterated its tax exemption
Issues: Tax Court erred (2) in not holding
that the franchise tax paid by the
petitioner is a commutative tax wc
already includes the income tax; (2) in
holding that RA 5431 altered or repealed
petit’s franchise; (3) in holding that the
petit’s franchise is a contract wc can be
impaired by an implied repeal and (4) in
not holding that sec 24(d) of the Tax
Code should be construed strictly against
the govt
Held:
- The Constitution provides that a
franchise is subject to amendment,
alteration or repeal by the Congress
when the public interest so requires (Sec.
8, Art. XIV, 1935 Constitution; Sec. 5,
Art. XIV, 1973 Constitution)
- The Tax Court acted correctly in holding
that the exemption was restored by the
subsequent enactment on August 4,
1969 of Republic Act No. 6020 which
reenacted the said tax exemption.
Hence, the petitioner is liable only for the
income tax for the period from January 1
to August 3, 1969 when its tax exemption
was modified by Republic Act No. 5431
- It is relevant to note that franchise
companies, like the Philippine Long
Distance Telephone Company, have
been paying income tax in addition to the
franchise tax
2 AMERICAN BIBLE SOCIETY, plaintiff-
appellant, vs. CITY OF MANILA,
defendant-appellee
Facts:
- American Bible Society is a foreign, non-
stock, non-profit, religious, missionary
corporation duly registered and doing
business in the Philippines through its
Philippine agency established in Manila
in November, 1898
- City of Manila is a municipal corporation
with powers that are to be exercised in
conformity with the provisions of
 SHUTAX CASE DIGESTS
Republic Act No. 409, known as the
Revised Charter of the City of Manila
- Bible Society has been distributing and
selling bibles and/or gospel portions
throughout the Philippines and
translating the same into several
Philippine dialect
- City Treasurer of Manila informed
American Bible Society that it was
violating several Ordinances for
operating without the necessary permit
and license, thereby requiring the
corporation to secure the permit and
license fees covering the period from 4Q
1945-2Q 1953
- To avoid closing of its business,
American Bible Society paid the City of
Manila its permit and license fees under
protest
- American Bible filed a complaint,
questioning the constitutionality and
legality of the Ordinances 2529 and
3000, and prayed for a refund of the
payment made to the City of Manila.
They contended:
a. They had been in the Philippines since
1899 and were not required to pay any
license fee or sales tax
b. it never made any profit from the sale of
its bibles
- City of Manila prayed that the complaint
be dismissed, reiterating the
constitutionality of the Ordinances in
question
- Trial Court dismissed the complaint;
American Bible Society appealed to the
Court of Appeals
Issue: WON American Bible Society
liable to pay sales tax for the distribution
and sale of bibles—NO
Held:
- Section 1, subsection (7) of Article III of
the Constitution, provides that:
(7) No law shall be made
respecting an establishment of religion,
or prohibiting the free exercise thereof,
and the free exercise and enjoyment of
religious profession and worship, without
discrimination or preference, shall forever
be allowed. No religion test shall be
required for the exercise of civil or
political rights. The provision aforequoted
is a constitutional guaranty of the free
exercise and enjoyment of religious
profession and worship, which carries
with it the right to disseminate religious
information.
- It may be true that in the case at bar the
price asked for the bibles and other
religious pamphlets was in some
instances a little bit higher than the actual
cost of the same but this cannot mean
that appellant was engaged in the
business or occupation of selling said
"merchandise" for profit. For this reason.
The Court believe that the provisions of
City of Manila Ordinance No. 2529, as
amended, cannot be applied to appellant,
for in doing so it would impair its free
exercise and enjoyment of its religious
profession and worship as well as its
rights of dissemination of religious
beliefs.
- With respect to Ordinance No. 3000, as
amended, the Court do not find that it
imposes any charge upon the enjoyment
of a right granted by the Constitution, nor
tax the exercise of religious practices.
- Further, the case also mentioned that the
power to tax the exercise of a privilege is
the power to control or suppress its
enjoyment.
- Under Sec. 27(e) of Commonwealth Act
No. 466 or the National Internal Revenue
Code, Corporations or associations
organized and operated exclusively for
religious, charitable, . . . or educational
purposes, . . .: Provided, however, That
the income of whatever kind and
character from any of its properties, real
or personal, or from any activity
conducted for profit, regardless of the
disposition made of such income, shall
be liable to the tax imposed under this
Code shall not be taxed
- Therefore, the Ordinance cannot be
applied for in doing so it would impair
 SHUTAX CASE DIGESTS
American Bible Society’s free exercise
and enjoyment of its religious profession
and worship as well as its rights of
dissemination of religious beliefs.
3 Tiu vs. Court of Appeals
Synopsis:
- This is a petition for review under Rule
45 of the Revised Rules of Court,
seeking the reversal of the Court of
Appeals' Decision upholding the
constitutionality and validity of
Executive Order No. 97-A. Under the
said Executive Order, the grant and
enjoyment of the tax and duty
incentives authorized under Republic
Act No. 7227 were limited to the
business enterprises and residents
within the fenced-in area of the Subic
Special Economic Zone
- Petitioners challenged the
constitutionality of EO 97-A for
allegedly being violative of their right
to equal protection of the laws.
Petitioners contended that the provisions
of EO 97-A confining the application of
R.A. 7227 within the secured area and
excluding the residents of the zone
outside of the secured area is
discriminatory.
- The Supreme Court ruled in favor of the
constitutionality and validity of the
assailed EO. Said Order is not violative
of the equal protection clause; neither
is it discriminatory. Rather, the Court
found real and substantive distinctions
between the circumstances obtaining
inside and those outside the Subic Naval
Base, thereby justifying a valid and
reasonable classification. The Court
believed that it was reasonable for the
President to have delimited the
application of some incentives to the
confines of the former Subic military
base. It is this specific area which the
government intends to transform and
develop from its status quo ante as an
abandoned naval facility into a self-
sustaining industrial and commercial
zone.
- The equal protection guarantee does not
require territorial uniformity of laws.
Anyone, including the petitioners,
possessing the requisite investment
capital can always avail of the same
benefits by channeling his or her
resources or business operations into the
fenced-off free port zone.
- The Court also believed that the
classification set forth by the executive
issuance does not apply merely to
existing conditions. As laid down in RA
7227, the objective is to establish a "self-
sustaining, industrial, commercial,
financial and investment center" in the
area. There will, therefore, be a long-
term difference between such investment
center and the areas outside it. Lastly,
the classification applies equally to all the
resident individuals and businesses
within the "secured area". The residents,
being in like circumstances or
contributing directly to the achievement
of the end purpose of the law, are not
categorized further. Instead, they are all
similarly treated, both in privileges
granted and in obligations required. No
undue favor or privilege was therefore
extended. Thus, the Court held that the
classification occasioned by EO 97-A
was not unreasonable, capricious or
unfounded. It was based, rather, on fair
and substantive considerations that were
germane to the legislative purpose. The
Court therefore affirmed the assailed
Decision and Resolution.
Doctrines:
CONSTITUTIONAL LAW; BILL OF
RIGHTS; EQUAL PROTECTION CLAUSE;
NOT ABSOLUTE BUT SUBJECT TO
REASONABLE CLASSIFICATION;
REQUISITES FOR VALIDITY OF
CLASSIFICATION, ENUMERATED. — The
fundamental right of equal protection of the
laws is not absolute, but is subject to
 SHUTAX CASE DIGESTS
reasonable classification. If the groupings
are characterized by substantial distinctions
that make real differences, one class may
be treated and regulated differently from
another. The classification must also be
germane to the purpose of the law and must
apply to all those belonging to the same
class. Classification, to be valid, must:
(1) rest on substantial distinctions,
(2) be germane to the purpose of the
law,
(3) not be limited to existing conditions
only, and
(4) apply equally to all members of the
same class
- DOES NOT REQUIRE TERRITORIAL
UNIFORMITY OF LAWS. — It is well-
settled that the equal-protection
guarantee does not require territorial
uniformity of laws. As long as there are
actual and material differences between
territories, there is no violation of the
constitutional clause. And of course,
anyone, including the petitioners,
possessing the requisite investment
capital can always avail of the same
benefits by channeling his or her
resources or business operations into the
fenced-off free port zone.
- NOT VIOLATED BY AN EXECUTIVE
ORDER GRANTING TAX AND DUTY
INCENTIVES ONLY TO BUSINESSES
AND RESIDENTS WITHIN THE
"SECURED AREA" OF THE SUBIC
SPECIAL ECONOMIC ZONE. — The
Constitution does not require absolute
equality among residents. It is enough
that all persons under like circumstances
or conditions are given the same
privileges and required to follow the
same obligations. In short, a
classification based on valid and
reasonable standards does not violate
the equal protection clause.
ABAKADA GURO PARTY LIST v. ERMITA
GR 168056
TOLENTINO v. SEC of FINANCE
CIR v. ALGUE 158 SCRA 9
Nursery Care Corp v. Acevedo and City of
Manila
Doctrine: Double taxation
City of Manila assessed and collected taxes
from the individual petitioners pursuant to
Section 15 (Tax on Wholesalers, Distributors,
or Dealers) and Section 17 (Tax on Retailers)
of the Revenue Code of Manila. At the same
time, the City of Manila imposed additional
taxes upon the petitioners pursuant to Section
21 of the same Code. The Court finds that there
is double taxation: Firstly, because Section 21
imposed the tax on a person who sold goods
and services in the course of trade or business
based on a certain percentage of his gross
sales or receipts in the preceding calendar
year, while Section 15 and 17 likewise imposed
the tax on a person who sold goods and
services in the course of trade or business but
only identified such person with particularity,
namely, the wholesaler, distributor or dealer
(Section 15), and the retailer (Section 17), all
the taxes – being imposed on the privilege of
doing business in the City of Manila in order to
make the taxpayers contribute to the city’s
revenues – were imposed on the same subject
matter and for the same purpose. Secondly,
the taxes were imposed by the same taxing
authority (the City of Manila) and within the
same jurisdiction in the same taxing period
(i.e., per calendar year). Thirdly, the taxes were
all in the nature of local business taxes.
 SHUTAX CASE DIGESTS
1 COMMISSIONER OF INTERNAL
REVENUE, petitioner, vs. BANK OF
THE PHILIPPINE ISLANDS,
respondent.
Nature: Petrev (R45) assailing resolution of
CTA on petits CIR tax assessment on BPI
Facts:
- Citytrust Banking Corp (CBC) filed
annual ITRs for taxable year 1986
on April 15, 1987
- CBC executed waivers of statute of
limitations under NIRC
- March 7, 1991, CIR issued a PAN
against CBC for deficiency taxes,
among wc is for deficiency Income
Tax for TY 1986. Counsel for CBC
filed protest against the PAN on April
22, 1991
- CIR demanded for payment of
deficiency taxes within 30d from
receipt of notice. CBC filed Protest
against assessments on 1991 and
another on 1992
- Counsel for CBC sent Letter to CIR
offering a compromise settlement on
deficiency ITax assessment for TY
1986, w an attached application for
compromise settlement/abatement
of penalties
- CIR approved compromise
settlement of CBC provided that
100% of defi ITax for TY 1986 be
paid w/in 15d
- CBC asked for recon. Petit
disapproved
- Meanwhile, Oct 4, 1996, SEC
approved Merger between BPI and
CBC. Bpi surviving.
- CIR issued notice of denial v BI,
requesting for payment of CBC’s defi
ITax for TY 1986 w/in 15d; CIR sent
another letter denying compromise
and requesting for payment of 19M
plus all increments incident to
delinquency
- CIR issued a warrant of distraint
and/or levy v BPI wc prompted
petrev with CTA
CTA:
- BPI can validly assail the warrant of
distraint and/or levy, as its appellate
jurisdiction is not limited to cases
which involve decisions of CIR on
matters relating to assessments or
refunds
- Assessment Notices, being issued
only on May 6, 1991, were already
issued beyond the 3-year period to
assess, counting from April 15 1987,
when CBC filed its ITR for TY 1986
- On waivers on Statute of Limitations,
not in accordance with proper form
of valid waiver – so failed to extend
the period given to petit to assess
CIR:
- CTA did not acquire jd over case for
BPI’s failure to contest the
assessments made against it by the
BIR within the period prescribed.
- Principle of Estoppel, Bpi not
allowed to raise prescription against
efforts of the govt to collect the tax
assessed against it
Issues:
- CTA en banc erred in affirming CTA
division exercise of jd
- CTA en banc erred in affirming
annulment of warrant of distraint/levy
against BPI given CIR’s clear right to
the same
Held:
- CTA has jurisdiction over cases
asking for cancellation and
withdrawal of a warrant of
distraint/levy (sec 7 of RA 9282)
o EAJ to review by appeal:
“…other matter arising under
the National Internal Revenue
Code or other laws
administered by the Bureau of
Internal Revenue…”
 SHUTAX CASE DIGESTS
- An assessment becomes final and
unappealable w/in 30d from receipt,
the taxpayer fails to file his or her
protest requesting for recon or
reinvestigation (Sec. 229)
- CIR’s right to assess respondent has
prescribed. The release, mailing, or
sending of notice should be clearly
and satisfactorily proved. Mere
notations made wout taxpayer’s
intervention, notice or control, wout
evidence, cannot suffice. Otherwise,
the taxpayer would be at the mercy
of the revenue offices, wout
adequate protection or defense.
- (Warrant of Distraint/Levy is a mode
of collection)
- It must be remembered that “The law
imposes a substantive, not merely
a formal, requirement. To proceed
heedlessly with tax collection
without first establishing a valid
assessment is evidently violative
of the cardinal principle in
administrative investigations: that
taxpayers should be able to
present their case and adduce
supporting evidence. Although
taxes are the lifeblood of the
government, their assessment and
collection "should be made in
accordance with law as any
arbitrariness will negate the very
reason for government itself."
2 ASIAN TRANSMISSION
CORPORATION , petitioner, vs.
COMMISSIONER OF INTERNAL
REVENUE, respondent.
Doctrine: Taxpayer has the primary
responsibility for the proper preparation
of the waiver of the prescriptive period
for assessing deficiency taxes. Hence,
CIR may not be blamed for any defects in
execution of waiver.
Nature: seeks review and reversal of CTA
en banc reversed and set aside decision by
CTA in division holding waivers executed by
ATC invalid and did not operate to extend 3-
year period of presc to assess deficiency
taxes for TY 2002
Facts:
- ATC is a corp duly organized and
existing under PH law w business
address at Calamba, Laguna;
manufacturer of motor vehicle
component parts and engines of
Mitsubishi vehicles; organized and
registered with SEC w cert of
incorporation
- CIR’s office address, Diliman, QC.
- Jan 3 and March 3, 2003, ATC filed
annual information return of ITax
withheld on compensation and final
withholding taxed and annual
information return of creditable
income taxed withheld/income
payments exempt from withholding
tax
- Aug 11, 2004, ATC received Letter
of Authority (2004) where CIR
informed ATC that its revenue
officers shall examine books – then
CIR issued PAN to ATC
- Then VP executed several “Waiver
of Defense of Prescription under
Statute of Limitations of NIRC”
- 2008, ATC availed of Tax Amnesty
Program under RA 9480
- July 15, 2008, ATC received a
formal letter of demand from CIR for
defi WTC in 69M, EWT of 6M, FWT
of 501k. Aug 14, 2008 – ATC’s
Protest letter
- Apr 14, 2009, ATC received final
decision on disputed assessment
where CIR found ATC liable to pay
defi tax of 75M. May 14, 2009, ATC
filed appeal/request for recon w CIR.
- Apr 10, 2010, ATC received CIR’s
denial of request for recon. ATC filed
petrev
-
 SHUTAX CASE DIGESTS
CTA in Division:
- Granting ATC’s petrev. ATC was not
estopped from raising invalidity of
waivers inasmuch as BIR had itself
cause the defects:
(a) Not notarized by its own ee
despite not being validly
commissioned to perform
notarial acts
(b) BIR did not indicate date of
acceptance
(c) BIR did not specify amts of and
particular taxes involved
(d) CIR did not sign waivers despite
clear mandate
- Waivers, being invalid, did not
operate to toll or extend the three-
year period of prescription
*CIR files petrev in CTA en banc*
CTA En Banc:
- Reversed and set aside CTA in div.
Waivers valid. CIR’s right to assess
deficiency withholding taxes for CY
2002 against ATC had not yet
prescribed.
Issue: ATC insists that CTA en banc acted
with GAOD-LOEJ in applying CIR v Next
Mobile, Inc and equitable principles of in
pari delicto, unclean hands, Estoppel
Held:
- No merit.
- In CIR v Next Mobile, GR: a waiver
did not comply with the reqs of
validity specified in RMO No. 20-90
and RDAO 01-05 was invalid and
ineffective to extend prescriptive
period to assess deficiency taxes.
XPNs: due to peculiar circs obtaining
(1) In pari delicto/in equal fault. Two
parties to a controversy are
equally culpable or guilty and
they shall have no action against
each other. However, the court
may interfere and grant relief at
the suit of one of them, where
public policy requires its
intervention, even though the
result may be that a benefit will
be derived by one party who is in
equal guilt with the other.
Here, to uphold the validity of
the Waivers would be
consistent with the public
policy embodied in the
principle that taxes are the
lifeblood of the government,
and their prompt and certain
availability is an imperious
need. Taxes are the nation's
lifeblood through which
government agencies continue
to operate and which the State
discharges its functions for
the welfare of its constituents.
As between the parties, it
would be more equitable if
CIR’s lapses were allowed to
pass and consequently uphold
the Waivers in order to
support this principle and
public policy.
(2) Unclean hands. Resp should not
be allowed to benefit from the
flaws in its own waivers and
successfully insist on their
invalidity in order to evade its
responsibility to pay taxes
(3) Estopped. Resp is estopped
from questioning validity of
waivers. Court has repeatedly
held that the estopped should be
used sparingly as an exception
to statute of limitations for tax
assessment, court finds
justification here. Estoppel in this
case would promote
administration of law, prevent
injustice and avert the
accomplishment of a wrong and
undue advantage. CIR relied on
validity of waivers until it
assessed taxes and penalties
against it. Estoppel must be
applied here to prevent undue
injury to govt.
(4) Situation is highly suspicious.
Taxpayer, after voluntarily
 SHUTAX CASE DIGESTS
executing waivers, insisted on
their validity by raising the same
defects it caused. BIR, failed to
exact from respondent
compliance w its rules. BIR’s
negligence was so gross that it
amounted to malice and bad
faith.
Yes, CIR also at fault bec
careless in compliance but BIR’s
right to assess and collect taxes
should not be jeopardized merely
because of the mistakes and
lapses of its officers, especially
in cases like this where taxpayer
is obviously in bad faith.
- The defects noted in the waivers
were not solely attributable to CIR.
Doctrine applied.
- Estoppel was applicable. Execution
of waivers was to ATC’s advantage
because waivers would provide ATC
the sufficient time to gather and
produce voluminous records for
audit. Would be unfair to permit ATC
to assail waivers only after final
assessment proved to be adverse. It
was able to postpone the payment of
taxes as well as contest and
negotiate the assessment against it.
The act of impugning the waivers
after benefiting therefrom and
allowing BIR to rely on the same
is an act of bad faith.
3 SAN ROQUE POWER
CORPORATION, petitioner, vs.
COMMISSIONER OF INTERNAL
REVENUE, respondent
Re: Application of 120-day and 30-day
periods provided in Sec 112 C, NIRC
* In CIR v Aichi, “WON simultaneous filing
of both admin claim (in BIR) and judicial
claim (CTA) for refund/credit of input VAT
under the cited law is permissible. Court
held that premature filing of Aichi’s claim for
refund/credit before CTA warrants a
dismissal inasmuch as no jurisdiction was
acquired by CTA.
No established precedence prior to Aichi
that permits simultaneous filing of admin
and judicial claims for R/C under Sec 112.
We concede that CTA has jd. Here,
upholding Aichi, recognized an exception to
the mandatory and jurisdictional character
of the 120d period: taxpayers who relied on
BIR Ruling DA-489-03 until the Aichi
reversal, are shielded from vice of
prematurity—“a taxpayer-claimant need not
wait for lapse of 120d period before it could
seek judicial relief w CTA by way of petrev”
Facts:
- San Roque Power Corp is a VAT-
registered taxpayer wc was granted
by the BIR a zero-rating on its sales
of electricity to NPC Jan 14-Dec 31
2004
- On Dec 22 2005 and Feb 27 2006,
San Roque filed 2 separate admin
claims for R/C of its alleged
unutilized input tax for Jan 1-Mar 31
2004 and Par 1-Dec 31 2004
- Due to inaction of CIR, SRoque filed
petrevs w CTA on Mar 30 2006 for
UIT#1 and June 20 2006 for UIT#2
CTA Division:
- Partially granted refund claim bec
CIR waived right to present evidence
due to failure to appear in two
schedule hearings
CTA En Banc:
- Sided with CIR in ruling that judicial
claims of SRoque were prematurely
filed in violation of 120d and 30d
periods prescribed in sec 112 of
NIRC
- By reasons of prematurity of its
petrevs, SRoque failed to exhaust
admin remedies wc is fatal to
invocation of court’s power of review
Issue:
- WON CTA En Banc erred in
applying retroactively Aichi ruling
 SHUTAX CASE DIGESTS
(1) Aichi ruling laid down new rule of
procedure wc cant be given
retroactive effect wout impairing
vested rights
(2) Judicial ruling overruling a prev
one cant be applied retroactively
before its abandonment
(3) Judicial decision wc declares an
otherwise permissible act as
impermissible viotes ex post
facto rule
- WON 120d and 30d periods
provided in 112 apply or basta by
two-year presc period in 112 (A)
- WON SRoque can benefit from BIR
Ruling even if did not invoke
expressly
Held:
- No retroactive application of Aichi
Ruling. A taxpayer can file a
judicial claim only within thirty
(30) days from the expiration of
the 120-day period if the
Commissioner does not act within
the 120-day period. The taxpayer
cannot file such judicial claim
prior to the lapse of the 120-day
period, unless the CIR partially or
wholly denies the claim within
such period. The taxpayer-
claimant must strictly comply with
the mandatory period by filing an
appeal to the CTA within thirty
days from such inaction;
otherwise, the court cannot
validly acquire jurisdiction over it.
- SRoque timely filed its admin
claims for R/C—period for wc
is ‘within the two-year presc
period’—and CIR had 120d to
decide
- BUT, SRoque kasi, without
waiting for fuill expiration of
120d and wout any decision by
CIR, immed filed its petrevs a
mere 98d and 113d from
submission of said claims. So,
premature.
- BIR Ruling No. DA-489-03
constitutes an XPN to the
mandatory and jurisdictional
nature of 120+30d period
- the 120+30-day period is
generally mandatory and
jurisdictional from the
effectivity of the 1997 NIRC on
1 January 1998, up to the
present. By way of an
exception, judicial claims filed
during the window period from
10 December 2003 to 6
October 2010, need not wait
for the exhaustion of the 120-
day period
- Beneficiaries of BIR Ruling No. DA-
489-03 include does who did not
specifically invoke it
- BIR Ruling is a general
interpretative rule. ALL
taxpayers can rely on it.
4 COMMISSIONER OF INTERNAL
REVENUE, petitioner, vs. MIRANT
PAGBILAO CORPORATION (now
TeaM Energy Corporation) ,
respondent.
- Jd may be raised at any point;
compliance w 120d mandatory;
viol is a viol of provision of law
bec exchaustion of admin
remedies = premature = no cause
of action = CTA doesn’t acquire jd
Nature: appeal by petrev on certiorari seeks
to reverse and set aside decision and reso
of CTA en banc, ordering CIR to issue a
refund or tax credit cert = 118M to MPC
Facts:
- MPC duly registered corp in Quezon
and primarily engaged in the
generation and distribution of
electricity to NAPOCOR; registered
with BIR as VAT taxpayer in
accordance with Sec 236 NIRC
- BIR approved MPC’s app for
effective zero-rating for constr and
operation of power plant
 SHUTAX CASE DIGESTS
- TY 2000, quarterly VAT returns
showed an excess input VAT paid =
127M
- Mar 11 2002, MPC filed before BIR
an admin claim for refund of input
VAT, in accordance w sec 112
subsecs A and B of NIRC. Mar 26,
2002, fearing that the period for
judicial claim for refund was abt to
expire, MPC file a petrev before
CTA, wout CIR’s decision on the
admin claim
Issue: WON CTA had jd to entertain MPC’s
judicial claim
Held:
- Well settled that a court’s
jurisdiction may be raised at any
stage of the proceedings, even on
appeal
- Premature filing of a claim for R/C of
input Vat before the CTA warrants a
dismissal, inasmuch as no jd is
acquired by the tax court
- Compliance w 120d waiting period
is mandatory and jurisdictional.
Failure violates a provision of law.
It violates the doctrine of
exhaustion of administrative
remedies and renders the petition
premature and thus without a
cause of action, with the effect
that the CTA does not acquire
jurisdiction over the taxpayer’s
petition.
- The 30d period was adopted so that
under the VAT system, the taxpayer
will always have 30d to file the
judicial claim even if the CIR acts
only on the 120th day or not at all
- Tax refunds or tax credits – just like
tax exemptions – are strictly
construed against taxpayers, the
latter having the burden to prove
strict compliance with conditions for
the grant of the tax refund or credit
- “a void judgment for want of
jurisdiction is no judgment at all”
5 COMMISSIONER OF INTERNAL
REVENUE, petitioner, vs. KEPCO
ILIJAN CORPORATION, respondent.
- CTA jd over petition for
annulment of judgment?
-
Nature: petrev on certiorari (R45) seeking
reversal of resos of CTA En Banc
Facts
- Respondent KEPCO ILIJAN
Corporation filed with the Bureau of
Internal Revenue (BIR) its claim for
refund for input tax incurred for the
first and second quarters of the
calendar year 2000 from its
importation and domestic purchases
of capital goods and services
preparatory to its production and
sales of electricity to the National
Power Corporation.
- For failure of petitioner BIR to act
upon respondent’s claim for refund
or issuance of tax credit certificate,
respondent filed a Petition for
Review. Thereafter, respondent filed
its Memorandum, but petitioner
failed to file its Memorandum despite
notice, thus, the case was submitted
for decision.
- Court of Tax Appeals (CTA) First
Division rendered a Decision,
holding that respondent is entitled to
a refund for its unutilized input VAT
paid. There being no motion for
reconsideration filed by the
petitioner, the said decision became
final and executory.
- Aggrieved, petitioner filed a petition
for annulment of judgment with the
CTA en banc but the same was
dismissed, and its motion for
reconsideration was likewise denied.
Petitioner elevated the case to the
Supreme Court via petition for
review.
Issue:
 SHUTAX CASE DIGESTS
- WON CTA en banc has jurisdiction
to take cognizance of the Petition for
Annulment of Judgment filed by
petitioner
Held:
- The Revised Rules of the CTA and
even the Rules of Court which
apply suppletory thereto provide
for no instance in which the en
banc may reverse, annul or void a
final decision of a division. Verily,
the Revised Rules of the CTA
provide(s) for no instance of an
annulment of judgment at all. On the
other hand, the Rules of Court,
through Rule 47, provides, with
certain conditions, for annulment of
judgment done by a superior court,
like the Court of Appeals, against the
final judgment, decision or ruling of
an inferior court, which is the
Regional Trial Court, based on the
grounds of extrinsic fraud and lack of
jurisdiction. The Regional Trial
Court, in turn, also is empowered to,
upon a similar action, annul a
judgment or ruling of the
Metropolitan or Municipal Trial
Courts within its territorial
jurisdiction. But, again, the said
Rules are silent as to whether CTA
en banc may annul a final judgment
of its own division. As earlier
explained, the silence of the Rules
may be attributed to the need to
preserve the principles that there
can be no hierarchy within a collegial
court between its divisions and the
en banc, and that a court’s
judgment, once final, is immutable.
- A direct petition for annulment of
a judgment of the CTA to the
Supreme Court, meanwhile, is
likewise unavailing, for the same
reason that there is no identical
remedy with the High Court to
annul a final and executory
judgment of the Court of Appeals.
RA No. 9282, Section 1 puts the
CTA on the same level as the Court
of Appeals, so that if the latter’s final
judgments may not be annulled
before the Supreme Court, then the
CTA’s own decisions similarly may
not be so annulled. And more
importantly, it has been previously
discussed that annulment of
judgment is an original action, yet, it
is not among the cases enumerated
in the Constitution, Article VIII,
Section 5, over which the Supreme
Court exercises original jurisdiction.
Annulment of judgment also often
requires an adjudication of facts, a
task that the Court loathes to
perform, as it is not a trier of facts.
- Instead, what remained as a
remedy for the petitioner was to
file a petition for certiorari under
Rule 65, which could have been
filed as an original action before
this Court and not before the CTA
en banc. xxx In any event,
petitioner’s failure to avail of this
remedy and mistake in filing of the
wrong action are fatal to its case and
renders and leaves the CTA First
Division’s decision as indeed final
and executory. By the time the
instant petition for revie///w was filed
by petitioner with this Court, more
than sixty (60) days have passed
since petitioner’s alleged discovery
of its loss in the case as brought
about by the alleged negligence or
fraud of its counsel.
6 LIQUIGAZ PHILIPPINES
CORPORATION , petitioner, vs.
COMMISSIONER OF INTERNAL
REVENUE, respondent.
Nature: petrev on certiorari (R45) decision
and reso of CTA en banc which affirmed
CTA division
Facts:
 SHUTAX CASE DIGESTS
- Liquigas a corporation duly
organized and existing under PH
laws
- July 11, 2006 received a copy of
Letter of authority issued by CIR
authorizing the investigation of all
internal revenue taxes for TY 2005
- Apr 9, 2008, Liquigaz received a
letter purporting to be the Notice of
Informal Conference and detailed
computation of its supposed tax liab
- July 25, 2008, Liquigaz filed protest
against the Formal Letter of
Demand/Formal Assessment Notice
w supporting documents
- July 1, 2010, Liquigaz received a
copy of the FDDA – CIR still found
Liqui liabl for defi withholding tax
liabs inclusive of interest 22M
- Liqui filed petrev before CTA division
assailing validity of FDDA issued by
CIR
CTA Division:
- Partially granted liqui’s petition
cancelling EWT and FBT
assessments but affirmed w
modification
- CTA div noted that unlike PAN and
FLD/FAN, the FDDA did not provide
details hence Liqui had no
knowledge of which items were
considered by CIR in arriving at the
defi assessments
CTA en banc
- Affirmed CTA div
- The taxpayer should be informed in
writing of the law and the facts on wc
the assessment was made applies
to the FDDA – otw void
- FDDA determined the final tax liab of
taxpayer, wc may be subject of an
appeal before the CTA
Issue: When may a Final Decision on
Disputed Assessment be declared void, and
in the event that the FDDA is found void,
what would be its effect on the tax
assessment?
Held:
- Due procees requirement in the
issuance of a deficiency tax
assessment
- The letter o demand calling for
payment of taxpayer’s
deficiency tax or taxes shall
state the facts, the law, rules
and regulations, or
jurisprudence on which the
assessment is based,
otherwise, the formal letter of
demand and assessment
notice shall be void
- Administrative Decision on a
Disputed Assessment – the
decision of the Commissioner
or his duly authorized
representative shall (a) state
the facts, the applicable law,
rules and regulations, or
jurisprudence on which such
decision is based, otherwise
the decision shall be void
- Sed 228’s use of the word “shall” re
the requirement of informing
taxpayer is mandatory – in order to
afford the taxpayer adequate
opportunity to file a protest on the
assessment and thereafter file an
appeal in case of an adverse
decision
- A void FDDA does not ipso factor
render the assessment void
- Decision v assessment – where
taxpayer questions an
assessment and asks Collector
to recon or cancel bec taxpayer
believe he is not liable, the
assessment becomes a
“disputed assessment” that the
Collector must decide and then
taxpayer can appeal to CTA only
upon receipt of CIR decision on
the disputed assessment
 SHUTAX CASE DIGESTS

- An assessment becomes operation enlarged so as to embrace matters

disputed after a taxpayer has not specifically provided.
filed its protest to the
assessment in the administrative
level. Then, CIR either issues a
decision or fails to act on it -
(denial) -> appeal to CTA
- FDDA not only means that the
final tax liab of a taxpayer is
fixed, also inaction of CIR
results in finality of taxpayer’s
tax liabl as deemed as denial of
protest
- FDDA must state the facts and
laws on which it is based to
provide the taxpayer the
opportunity to file an intelligent
appeal
- Due process in administrative
law. A void assessment bears
no valid fruit.
- Respondent has not been
informed of the basis of the
estate tax liability. Without
complying with the
unequivocal mandate of first
informing the taxpayer of the
government’s claim, there can
be no deprivation of property,
because no effective protest
can be made.
- The Court cannot
countenance on assessment
based on estimates that
appear to have been
arbitrarily or capriciously
arrived at
- The assessment remains valid
notwithstanding the nullity of the
FDDA because as discussed
above, the assessment itself
differs from a decision on the
disputed assessment

*Basically, a. “decision” differs from an

“assessment” and failure of the FDDA to
state the facts and law on which it is based
renders the decision void – but not
necessarily the assessment. Tax laws may
not be extended by implication beyond the
clear import of their language, nor their