TEAM ENERGY CORPORATION (formerly MIRANT PAGBILAO CORP.

),
Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE
G.R. No. 190928
January 13, 2014
Third Division
713 SCRA 142
Facts:
Petitioner is principally engaged in the business of power generation
and subsequent sale thereof to the National Power Corporation (NPC) under a
Build, Operate, Transfer (BOT) scheme. As such, it is registered with the BIR
as a VAT taxpayer in accordance with Section 107 of the National Internal
Revenue Code (NIRC). On December 17, 2004, petitioner filed with the BIR
Audit Information, Tax Exemption and Incentives Division an Application for
VAT Zero-Rate for the supply of electricity to the NPC from January 1, 2005 to
December 31, 2005, which was subsequently approved.
On December 20, 2006, petitioner filed an administrative claim for
cash refund or issuance of tax credit certificate corresponding to the input
VAT reported in its Quarterly VAT Returns for the first three quarters of 2005
and Monthly VAT Declaration for October 2005 in the amount of
P80,136,251.60, citing as legal bases Section 112 (A).
Due to respondents inaction on its claim, petitioner filed the instant
Petition for Review before the Court of Tax Appeals on April 18, 2007. In a
Decision dated July 13, 2010, the CTA Special First Division partially granted
petitioners claim for refund or issuance of tax credit certificate in the
amount of P79,185,617.33. CIR filed a motion for reconsideration
CTA granted the motion for reconsideration in light of the Courts ruling
in Commissioner of Internal Revenue v. Aichi Forging Company, Inc. (Aichi), it
reversed and set aside the earlier decision of the CTA Special First Division.
The Aichi ruling provides that the 120 day mandatory period under Section
112 of the NIRC before filing an appeal. Observing the 120-day period for the
Commissioner to render a decision on the administrative claim, as required
under Section 112 (D) of the NIRC, petitioners judicial claim should have
been filed not earlier than April 19, 2007. Petitioner, however, filed its judicial
claim on April 18, 2007, thus prematurely filed.
Issues:

1. Whether or not the 120-30-day period in Section 112 (C) of the NIRC is
mandatory? Yes
2. Whether or not the Aichi doctrine is applicable in the case at bar? No
Rulings:
1.

The 120-30-day period in Section 112 (C) of the NIRC is mandatory.

SEC. 112. Refunds or Tax Credits of Input Tax.

(C) Period within which Refund or Tax Credit of Input Taxes shall be
Made.In proper cases, the Commissioner shall grant a refund or issue the
tax credit certificate for creditable input taxes within one hundred twenty
(120) days from the date of submission of complete documents in support of
the application filed in accordance with Subsection (A) hereof.
In the Aichi case, this Court ruled that the 120-30-day period in Section
112 (C) of the NIRC is mandatory and its non-observance is fatal to the filing
of a judicial claim with the CTA. In this case, the Court explained that if after
the 120-day mandatory period, the Commissioner of Internal Revenue (CIR)
fails to act on the application for tax refund or credit, the remedy of the
taxpayer is to appeal the inaction of the CIR to the CTA within thirty (30)
days. The judicial claim, therefore, need not be filed within the two-year
prescriptive period but has to be filed within the required 30-day period after
the expiration of the 120 days.

2.

The Aichi doctrine is not applicable in the case at bar.

In the case of Commissioner of Internal Revenue v. San Roque Power

Corporation (San Roque), the Court clarified that the mandatory and
jurisdictional nature of the 120-30-day rule does not apply on claims for
refund that were prematurely filed during the interim period from the
issuance of Bureau of Internal Revenue (BIR) Ruling No. DA-489-03 on
December 10, 2003 to October 6, 2010 when the Aichi doctrine was adopted.
The exemption was premised on the fact that prior to the promulgation of
the Aichi decision, there was an existing interpretation laid down in BIR
Ruling No. DA-489-03 where the BIR expressly ruled that the taxpayer need
not wait for the expiration of the 120-day period before it could seek judicial
relief with the CTA.
In the present case, petitioner filed its judicial claim on April 18, 2007
or after the issuance of BIR Ruling No. DA-489-03 on December 10, 2003 but

before October 6, 2010, the date when the Aichi case was promulgated.
Thus, even though petitioner s judicial claim was prematurely filed without
waiting for the expiration of the 120-day mandatory period, the CT A may
still take cognizance of the instant case as it was filed within the period
exempted from the 120-30-day mandatory period.

Bonifacio, Christine Joy

BUREAU OF INTERNAL REVENUE, AS REPRESENTED BY THE
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. COURT OF
APPEALS, SPOUSES ANTONIO VILLAN MANLY, AND RUBY ONG MANLY,
Respondents.
G.R. No. 197590
November 24, 2014
Second Division
Facts:
Respondent Antonio Villan Manly (Antonio) is a stockholder and the
Executive Vice-President of Standard Realty Corporation, a family-owned
corporation. He is also engaged in rental business. His spouse, respondent
Ruby Ong Manly, is a housewife
On April 27, 2005, petitioner Bureau of Internal Revenue (BIR) issued
Letter of Authority No. 2001 000123878 authorizing its revenue officers to
investigate respondent spouses internal revenue tax liabilities for taxable
year 2003 and prior years. On June 6, 2005, petitioner issued a letter to
respondent spouses requiring them to submit documentary evidence to
substantiate the source of their cash purchase of a 256-square meter log
cabin in Tagaytay City worth P17,511,010.00. Respondent spouses, however,
failed to comply with the letter. Thereafter, on June 23, 2005, the revenue
officers executed a Joint Affidavit alleging that respondent Antonios reported
or declared annual income for the taxable years 1998-2003 were under
declared. Since the underdeclaration exceeded 30% of the reported or
declared income, it was considered a prima facie evidence of fraud with
intent to evade the payment of proper taxes due to the government.
The revenue officers, thus, recommended the filing of criminal cases
against respondent spouses for failing to supply correct and accurate
information in their ITRs for the years 2000, 2001, and 2003, punishable
under Sections 254 and 255 in relation to Section 248(B) of Republic Act No.
8424 or the Tax Reform Act of 1997, hereinafter referred to as the National
Internal Revenue Code (NIRC)

Respondent spouses, in their Joint Counter-Affidavit, denied the

accusations hurled against them and alleged that they used their
accumulated savings from their earnings for the past 24 years in purchasing
the properties. They also contended that the criminal complaint should be
dismissed because petitioner failed to issue a deficiency assessment against
them
On August 31, 2006, State Prosecutor Ma. Cristina A. Montera-Barot
issued a Resolution in I.S. No. 2005-573 recommending the filing of criminal
charges against respondent spouses. On appeal to the Secretary of Justice
via a Petition for Review, Acting Justice Secretary Agnes VST Devanadera
(Devanadera) reversed the Resolution of the State Prosecutor. She also
pointed out petitioners failure to issue a deficiency tax assessment against
respondent spouses which is a prerequisite to the filing of a criminal case for
tax evasion. On appeal, the Court of Appeals affirmed the resolution of the
Secretary of Justice finding no probable cause for filing a case for tax
evasion.
Issues:
1. Whether or not a deficiency tax assessment is necessary for the criminal
prosecution of tax evasion? No
2. Whether or not there is probable cause for the filing of a complaint for tax
evasion? Yes
Rulings:
1.

A deficiency tax assessment is not necessary for the criminal

prosecution of tax evasion.

In Ungab v. Judge Cusi, Jr., we ruled that tax evasion is deemed

complete when the violator has knowingly and willfully filed a fraudulent
return with intent to evade and defeat a part or all of the tax. Corollarily, an
assessment of the tax deficiency is not required in a criminal prosecution for
tax evasion. However, in Commissioner of Internal Revenue v. Court of
Appeals, the court clarified that although a deficiency assessment is not
necessary, the fact that a tax is due must first be proved before one can be
prosecuted for tax evasion.
2.

There is probable cause for the filing of a complaint for tax evasion.

A method commonly used by the government is the expenditure

method, which is a method of reconstructing a taxpayers income by
deducting the aggregate yearly expenditures from the declared yearly
income. The theory of this method is that when the amount of the money
that a taxpayer spends during a given year exceeds his reported or declared
income and the source of such money is unexplained, it may be inferred that

such expenditures represent unreported or undeclared income. In the case at

bar, petitioner used this method to determine respondent spouses tax
liability. Petitioner deducted respondent spouses major cash acquisitions
from their available funds.
Particulars
2000
Unexplained Funds
[P] 15,854,758.98
[Underdeclaration]
Sources of Funds
as per Financial
Statements
as
attached to the
Income Tax Return [P] 1,656,251.02
Percentage
of
957.27%
underdeclaration

2001

2003

[P] 632,462.68

[P] 1,142,525.45

[P] 717,537.32

[P] 817,474.55

88.14%

133.24%[77]

Since the underdeclaration is more than 30% of respondent spouses

reported or declared income, which under Section 248(B) of the NIRC
constitutes as prima facie evidence of false or fraudulent return, petitioner
recommended the filing of criminal cases against respondent spouses under
Sections 254 and 255, in relation to Section 248(B) of the NIRC.
The amount of tax due from respondent spouses was specifically
alleged in the Complaint-Affidavit. The computation, as well as the method
used in determining the tax liability, was also clearly explained. The revenue
officers likewise showed that the underdeclaration exceeded 30% of the
reported or declared income.
In the case at bar, by just looking at the tables presented by petitioner,
there is a manifest showing that respondent spouses had underdeclared their
income. The huge disparity between respondent Antonios reported or
declared annual income for the past several years and respondent spouses
cash acquisitions for the years 2000, 2001, and 2003 cannot be ignored.
The Supreme Court held that there is probable cause to indict
respondent spouses for tax evasion as petitioner was able to show that a tax
is due from them. Probable cause, for purposes of filing a criminal
information, is defined as such facts that are sufficient to engender a wellfounded belief that a crime has been committed, that the accused is
probably guilty thereof, and that he should be held for trial

Bonifacio, Christine Joy