Deutsche Knowledge Services PTE
LTD vs. CIR G.R. no. 197980
December 1, 2016
Facts: On March 31, 2009, DK filed
an application for tax credit/refund of
its allegedly excess unutilized input
VAT for the first quarter of the
calendar year 2007. On April 17,
2009 or 17 days after, DK filed a
judicial claim with CTA 2nd division. On
the other hand, CIR filed a motion to
dismiss on the ground that the petition
for review is filed beyond the 2 year
prescriptive period. Said motion was
granted by the CTA 2nd div even if the
case was ordered transferred to 3rd
division because of expansion of
membership under AC no. 01-2010.
CTA en banc affirmed the decision of
the 2nd division. CTA en banc further
ruled that there was premature filing
since DK filed its petition before the
expiration of the 120 day period or
before waiting for the decision of the
CIR.
Issues:
1. Can the CTA 2nd division
properly resolve the MR filed by
DK even if the case was already
transferred to the CTA 3rd
division?
2. When should the two year
prescriptive period for filing of
claims for refund be reckoned
with?
Held:
Under the case of CIR vs. Mirant
Pagbilao Corporation, it is the close
of the taxable quarter which should be
the reckoning period of the 2 year
prescriptive period.
As reiterated under the case of CIR
vs. Aichi Forging Company of Asia,
Inc., unutilized input VAT must be
claimed within the two years after the
close of taxable quarter.
Under the case of CIR vs. Mirant
Pagbilao Corporation, Sec. 112(A) is
the applicable provision in determining
the start of the 2 year period for
claiming a refund/credit of unutilized
input VAT, and Sections 204(C) and
229 of the NIRC are inapplicable as
both provisions apply only to instances
of erroneous payment or illegal
collection of internal revenue taxes.
In the instant case, DKs
administrative claim was filed within
the 2 year period. However, DK filed
its JC without waiting for the decision
of the CIR or the lapse of the 120 day
period or until July 29, 2009. But
because of RR no. DA-489-03 dated
December 10, 2003 but before the
adoption of the Aichi doctrine which is
promulgated on Oct. 6, 2010, the JC
filed by DK should be considered
timely filed.
Exceptions to the 120 day period:
1. The CIR thru specific ruling
misleads a particular taxpayer
to prematurely file a judicial
claim with the CTA (applicable
only to a particular taxpayer);
2. General interpretative rule
which mislead all taxpayers
(equitable estoppels).
 Note: Sec. 246- non-retroactivity of
rulings (which includes reversal by
the SC) if it would be prejudicial to
taxpayers who relied to it in good
faith with certain exceptions one of
which is bad faith.
CIR vs. De LaSalle University G.R.
no. 196596 November 9, 2016
Facts: On May 19, 2004, BIR issued a
Preliminary Assessment Notice to
DLSU after the examination.
Subsequently on August 18, 2004, the
BIR thru Formal Letter of Demand
assessed DLSU deficiency taxes: 1.
Rental income; 2. VAT on business
income; 3. DST on loans and lease.
DLSU protested on said assessment.
Due to CIRs inaction, DLSU filed a
petition for review with the CTA on
August 3, 2005. DLSU alleged that as
a non-stock, non- profit educational
institution, it is exempt from payment
of taxes and duties as provided under
Art. 14, Sec 4(3) of the constitution.
CTA partially granted the petition and
ruled that DLSU is only liable for
deficiency income tax. CIR appealed to
CTA en banc arguing that DLSUs use
of its revenues and assets for
commercial purposes, hence not
anymore exempted. DLSU on the other
offered documentary evidence to
prove that its rental income is used
actually, directly and exclusively for
educational purpose. CTA en banc
accepted the additional evidence
presented by DLSU. However, only
those matters covered duly proved by
the additional evidence which the
court exempted.
CTA en banc ruled that a LOA should
cover only one taxable period and that
the practice of issuing a LOA covering
audit of unverified prior years is
prohibited. Hence, only the
assessment for year 2003 is valid.
Arguments of the CIR:
1. DLSU's operations canteens and
bookstores within its campus
even though exclusively serving
the university community do
not negate income tax liability
because it was conducted for
profit.
2. DLSU is exempt only from
property tax but not income tax
even if it would be used for
educational purpose;
3. DLSU did not prove the fact of
DST payment. And it is not
qualified to use the On-line
Electronic DST Imprinting
Machine
4. Admission of DLSUs
supplemental evidence to CTA
en banc is improper.
Argument of DLSU:
1. LOA is entirely void for being
issued with indication of
unverified years in violation of
RMO no. 43-90;
2. It invokes uniformity of taxation
considering that CTA en banc
did not appreciate evidence
similar of that presented by
Ateneo;
3. All its assets and revenues for
being non-stock and non-profit
organization must be exempted

To be granted exemption:
a. Non-stock non-profit educational
institution;
b. Income is actually, directly and
exclusively for educational
purpose;
4. It is not liable for DST
Issues:
1. WON DLSUS income and
revenues are actually, directly
and exclusively for educational
purpose, therefore exempt from
taxes and duties;
2. WON the entire assessment
should be voided due to
defective LOA;
3. WON the admission of the
supplemental piece of evidence
is proper;
As to the first issue:
Article 14 Sec 4(3) - involves two
kids of institution: 1. Non-profit and
non-stock educational institution 2.
Proprietary educational institution
1997 tax code did not qualify the
tax exemption constitutionally
granted to non-profit and non-stock
educational institution.
In the case of YMCA, a charitable
institution which can be classified
as such under article 6, section
28(3), it is only exempt from
property tax not from income it
derived from rentals of its property.
Pronouncement of the SC- The
phrase all revenues is unqualified
by any reference to the source of
revenues.
Under the cases of Abra Valley
College, Inc. vs. Aquino, the test of
exemption is the use of the
property for purposes mentioned
by the constitution. The exemption
extends to facilities which are
incidental to and reasonably
necessary for the accomplishment
of the main purpose.
Test: use of asset and use of
revenue
Note: the tax exemption granted to
non-stock and non-profit
educational institutions are not
subject to limitations provided for
by law unlike in the case of
proprietary educational institutions
subject 10% income tax if it is non-
profit and its gross income from
unrelated trade, business or
activity does not exceed 50% of its
total gross income as provided
under Sec. 27 of NIRC.
Note: Sec. 30 of the NIRC is without
force and effect for being contrary
to the constitution.
SC agreed with the DLSU.
As to the second issue:
LOA is not entirely void. The
assessment for taxable year 2003
is valid.
A LOA is the authority given to the
appropriate revenue officer to
examine books of account and
other accounting records of the
taxpayer in order to determine the
taxpayers correct internal revenue
liabilities and for the purpose of
collecting the correct amount of
tax. It must cover only one taxable
year

As to the third issue: CTA is correct

1. The CIR failed to timely object

to the formal offer.
2. CTA is not governed strictly by
the technical rules of evidence

Secretary of Finance and CIR

vs. Lazatin and Ecozone Plastic
Enterprises Corporation G.R.
no. 210588 November 29, 2016

Facts: