Univation Motor Phil. Inc. vs. CIR, GR. NO.

231581, APRIL 10, 2019

Facts:

On July 8, 2011, Respondent Univation Motor Philippines, Inc. (Univation) filed its amended Annual Income Tax
Return (ITR) for 2010 and an overpayment of income taxes. Univation opted to claim its overpayment of income
tax through a tax credit certificate. On March 12, 2012, Univation filed its administrative claim with the BIR
explaining that the overpayment consists of prior year’s excess credits less minimum corporate income tax and
creditable withholding taxes (CWTs) accumulated during the four quarters of 2010. Univation filed its Application
for Tax Credit. The BIR failed to act upon Univation’s administrative claim. As such, Univation filed a petition for
review with the CTA on April 12, 2013.

On March 10, 2015, the Court of Tax Appeals (CTA) First Division partially granted Univation’s petition for review
and ordered Petitioner Commissioner of Internal Revenue (CIR) to issue a tax credit certificate representing
Univation’s unutilized or excess CWTs for taxable year (TY) ending December 21, 2010. The CIR filed a motion for
reconsideration but it was denied.

The CIR elevated the case to the CTA En Banc and the latter affirmed the Decision of the CTA First Division. The CIR
moved to reconsider but still it was denied. Hence, this petition for review on certiorari before the Supreme Court
was filed by the CIR.

Issues:

1. Did the CTA prematurely assume the jurisdiction on Univation's claim for tax refund or credit?

2. Was Univation's non-submission of complete documents fatal to its claim for tax refund/credit?

3. Was Univation entitled to the tax refund/credit?

Ruling:

1. No. Sections 204 and 229 of the Tax Code provide for the refund of erroneously or illegally collected taxes.
Section 204 applies to administrative claims for refund, while Section 229 to judicial claims for refund. Indeed, the
2-year period is counted from the date of payment of the tax. Jurisprudence, however, clarified that the 2-year
prescriptive period to claim a refund actually commences to run, at the earliest, on the date of filing of the
adjusted final tax return because this is where the figures of the gross receipts and deductions have been audited
and adjusted, reflective of the results of the operations of a business enterprise. In CIR v TMX Sales, Inc. 282 Phil.
19, 207 (1992), it was held that, only when the Adjustment Return covering the whole year is filed that the
taxpayer would know whether a tax is still due or a refund can be claimed based on the adjusted and audited
figures.

In this case, the 2-year period to file a claim for refund is reckoned from April 15, 2011, the date Univation filed its
Final Adjustment Return. Since Univation filed its administrative claim on March 12, 2012 and its judicial claim on
April 12, 2013, then both Univation’s administrative and judicial claim for refund were filed on time or within the
2-year prescriptive period provided by law. Further, the law only requires that an administrative claim be priorly
filed to give the BIR at the administrative level an opportunity to act on said claim. As such, for as long as the
administrative claim and the judicial claim were filed within the 2-year period, then there was exhaustion of the
administrative remedies. Hence, Univation’s immediate resort to the Court is justified.
 2. No. In Pilipinas Total Gas, Inc. v. CIR, 774 Phil. 473 (2015), it was held that a distinction must be made between
administrative cases appealed due to inaction and those dismissed at the administrative level due to the failure of
the taxpayer (TP) to submit supporting documents. If an administrative claim was dismissed by the CIR due to the
TP’s failure to submit complete documents despite notice/request, then the judicial claim before the CTA would be
dismissible, not for lack of jurisdiction but for TP’s failure to substantiate the claim at the administrative level. It is
imperative for the TP to show the CTA that not only is he entitled under substantive law to his claim for refund or
credit, but also, that he satisfied all the documentary and evidentiary requirements for an administrative claim.

In this case, it was the inaction of the CIR that prompted Univation to seek judicial recourse with the CTA. The CIR
did not send any written notice to Univation informing it that the documents it submitted were incomplete or at
least require it to submit additional documents. The CIR did not even render a Decision denying Univation’s
administrative claim on the ground that it had failed to submit all the required documents. Further, the CTA is not
limited by the evidence presented in the administrative claim in the BIR. The claimant may present new and
additional evidence to the CTA to support its case for tax refund because cases filed in the CTA are litigated de
novo.

3. Yes. Jurisprudence laid down the requirements in order for a taxpayer to claim tax credit or refund of CWTs:

1. The claim must be filed with the CIR within the 2-year period from the date of payment of the tax (Section 229 of
the Tax Code).
2. The fact of withholding is established by a copy of a statement duly issued by the payor to the payee showing the
amount paid and the amount of tax withheld (Section 2.58.3(B) of Revenue Regulations (RR) 2-98); and
3. It must be shown on the return of the recipient that the income received was declared as part of the gross income
(Section 2.58.3(B) of Revenue Regulations (RR) 2-98).

Univation complied all the requirements. While the income payments from which the CWTs which were declared
in its return covered the years 2006, 2008, 2009, and 2010, there was nothing wrong with it, as what is important
is that, the income which the taxes were withheld was included in the returns of Univation. The CTA En Banc
correctly appreciated the explanation of the independent certified public accountant (ICPA) why the income
payments from which the CWTs were withheld, were declared in Univation’s returns covering the years 2006,
2008, 2009, and 2010. This is because, there were delays in the collection of certain income payments to
Univation. Certain sales made by Univation to its dealers in 2008 and 2009 were only paid in 2010. Indeed, there
were certain income payments which, although Univation expected to receive in 2006, 2008, and 2009, were only
remitted in 2010. The delay in collection of certain income payments of Univation caused the timing difference
between the actual reporting of the income by Univation and the actual withholding of the corresponding
creditable income tax by Univation’s customers. What is important is that the CWTs corresponding to the related
income in Univation’s books for CYs 2006, 2008, and 2009 were not yet claimed as income tax credits in
Univation’s annual ITRs corresponding to the said years. Hence, it is just proper that these income payments
should form part of Univation’s tax credit for 2010.
Bank of the Philippine Islands vs. CIR , G.R. 224327, June 11, 2018

Facts:

Respondent thru then Revenue Service Chief Cesar M. Valdez, issued to the petitioner a pre-assessment notice
(PAN) dated November 26, 1986

On April 7, 1989, respondent issued to the petitioner, assessment/demand notices... for deficiency withholding tax
at source (Swap Transactions) and DST

On April 20, 1989, petitioner filed a protest on the demand/assessment notices.

Petitioner executed several Waivers of the Statutes of Limitations, the last of which was effective until December
31, 1994.

On August 9, 2002, respondent issued a final decision on petitioner's protest ordering the withdrawal and
cancellation of the deficiency withholding tax assessment

On the other hand, the... deficiency DST assessment

Petitioner received a copy of the said decision on January 15, 2003.

January 24,... 2003, petitioner filed a Petition for Review before the Court.

denying the petitioner's Petition for Review

THIS TAX COURT ERRED IN HOLDING THAT THE COLLECTION OF ALLEGED DEFICIENCY TAX HAS NOT PRESCRIBED.

CIR, asserting that the prescriptive period was tolled by the protest letters filed by BPI which were granted and
acted upon by the CIR

Thus, it was only upon BPI's receipt on 13 January 2003 of the 9 August 2002 Decision that the period to... collect
commenced to run again.

Issues:

whether the collection of the deficiency DST is barred by prescription... whether the prescriptive period for
collecting the tax deficiency was effectively tolled by BPI's filing of the protest letters

Ruling:

the tax court,... In its Petition for Review[5] dated 24 November 2006, BPI argues that the government's right to
collect the DST had already prescribed because the Commissioner of Internal Revenue (CIR) failed to issue any
reply granting BPI's request for reinvestigation... manifested in the protest letters

Thus, the CIR has three (3) years from the date of actual filing of the tax... return to assess a national internal
revenue tax or to commence court proceedings for the collection thereof without an assessment.
When it validly issues an assessment within the three (3)-year period, it has another three (3) years within which to
collect the tax due by distraint, levy, or court proceeding.

The assessment of the tax is deemed made and the three (3)-year period for collection of the... assessed tax begins
to run on the date the assessment notice had been released, mailed or sent to the taxpayer.

As applied to the present case, the CIR had three (3) years from the time he issued assessment notices to BPI on 7
April 1989 or until 6 April 1992 within which to collect the deficiency DST.

However, it was only on 9 August 2002 that the CIR ordered BPI to pay the... deficiency.

Section 320[12] of the Tax Code of

1977,... The running of the statute of limitations... shall be suspended... when the taxpayer requests for a re-
investigation which is granted by the

Commissioner

In order to suspend the running of the prescriptive periods for assessment and collection, the request for
reinvestigation must be granted by the CIR.

the CIR must first grant the request for reinvestigation as a requirement for the suspension of the statute of
limitations

There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had granted the
request for reinvestigation filed by BPI. What is reflected in the records is the piercing silence and inaction of the
CIR on the request for reinvestigation, as he... considered BPI's letters of protest to be.

there is no evidence in this case that the CIR actually conducted a reinvestigation upon the request of BPI or that
the latter was made aware of the action taken on its request. Hence, there is no basis for the tax... court's ruling
that the filing of the request for reinvestigation tolled the running of the prescriptive period for collecting the tax
deficiency.
VY Domingo Jewellers Inc. vs. CIR, GR 221780 - MARCH 25, 2019

Facts:

On September 9, 2009, the BIR issued a Preliminary Assessment Notice (PAN) against V.Y. Domingo Jewellers, Inc.
(VY), a corporation engaged in manufacturing and selling emblematic jewelry, assessing VY for deficiency income
tax and value added tax (VAT), inclusive of interest, for the taxable year 2006.

VY filed a Request for Re-evaluation/Re-investigation and Reconsideration dated September 17, 2009 with the
Regional Director of BIR – Revenue Region No. 6, requesting a “thorough re-evaluation and re-investigation to
verify the accuracy of the computation as well as the accounts included in the PAN.”

VY then received a Preliminary Collection Letter (PCL) informing it of the existence of Assessment Notice No. 32-
06-IT-0242 and Assessment Notice 32-060VT-0243, both dated November 18, 2010, for collection of its tax
liabilities.

On September 12, 2011 VY sent a letter to the BIR Revenue District Office No. 28 in Quezon City, requesting
certified true copies of the said assessment notices. Upon receipt of the notices on September 15, 2011, VY filed a
Petition for Review with the Court of Tax Appeals (CTA) Division, under Section 7(1) of R.A. No. 1125 and Section 4,
Rule 8 of the Revised Rules of the CTA, praying that said assessment notices be declared null and void, cancelled,
withdrawn, and with no force and effect, for allegedly having been issued beyond the prescriptive period for
assessment and collection of internal revenue taxes.

The CTA Division denied VY’s petition including the subsequent motion for reconsideration. It then filed a petition
for review before the CTA En Banc and it was granted. Hence, Petitioner Commissioner of Internal Revenue (CIR)
filed a petition for review on certiorari under Rule 45 before the Supreme Court.

Issues:

Did the CTA have the jurisdiction to entertain VY’s petition for review?

Ruling:

No. A protesting taxpayer like VY has only three options to dispute an assessment as provided for under Section 7
of R.A. No. 1125 (as amended by R.A. No. 9282), Section 228 of R.A. No. 8424 (The Tax Reform Act of 1997, as
amended) and implemented by Section 3.1.5 Revenue Regulations (RR) No. 12-99. These options are as follows:

1. If the protest is wholly or partially denied by the CIR or his authorized representative, then the taxpayer
may appeal to the CTA within 30 days from receipt of the whole or partial denial of the protest;
2. If the protest is wholly or partially denied by the CIR’s authorized representative, then the taxpayer may
appeal to the CIR within 30 days from receipt of the whole or partial denial of the protest;
3. If the CIR or his authorized representative failed to act upon the protest within 180 days from submission
of the required supporting documents, then the taxpayer may appeal to the CTA within 30 days from the
lapse of the 180-day period.
In this case, VY received the PCL issued by CIR, informing VY of the assessment notices. On September 12, 2011, VY
sent a letter request to the BIR requesting for certified copies of the said notices. Instead of filing an administrative
protest against the assessment notice within 30 days from receipt of the requested copies of the assessment
notices, VY elected to file its petition for review before the CTA First Division, ratiocinating that the issuance of the
PCL and the alleged finality of the terms used for demanding payment therein proved that its Request for Re-
evaluation/Re-investigation and Reconsideration had been denied by the CIR.
That VY believed that the PCL “undeniably shows” the intention of the CIR to make it as its final “decision” did not
give it cause of action to disregard the procedure set forth by the law in protesting tax assessments and act
prematurely by filing a petition for review before the courts. The word “decisions” in the aforementioned provision
of R.A. No. 9282 has been interpreted to mean the decisions of the CIR on the protest of the taxpayer against the
assessments. Definitely, said word does not signify the assessment itself. Where a taxpayer questions an
assessment and asks the Collector to reconsider or cancel the same because the taxpayer believes he is not liable
therefor, the assessment becomes a “disputed assessment” that the Collector must decide, and the taxpayer can
appeal to the CTA only upon receipt of the decision of the Collector on the disputed assessment.

Further, VY’s immediate recourse to the CTA First Division was in violation of the doctrine of exhaustion of
administrative remedies. Under this doctrine, before a party is allowed to seek the intervention of the court, he or
she should have availed himself or herself of all the means of administrative processes afforded him or her. Section
228 of the Tax Code requires taxpayers to exhaust administrative remedies by filing a request for reconsideration
or reinvestigation within 30 days from receipt of the assessment. Exhaustion of administrative remedies is required
prior to resort to the CTA precisely to give the CIR the opportunity to “re-examine its findings and conclusions” and
to decide the issues raised within her competence.
Transfield Philippines vs. CIR - GR 211449 - JANUARY 16, 2019

Facts:

Respondent Transfield Philippines, Inc. (Transfield) received copies of Final Assessment Notice (FAN) issued by
Petitioner Commissioner of Internal Revenue (CIR) for deficiency income tax, expanded withholding tax (EWT), and
value-added tax (VAT), inclusive of interest and compromise penalties for the fiscal year ending (FYE) June 30,
2002.

On June 5, 2007, Transfield filed a protest with the Bureau of Internal Revenue (BIR). Without acting on the said
protest, the BIR issued the First Collection Letter dated August 3, 2007, demanding immediate payment of the
assessments. Transfield received this letter on August 28, 2007.

On January 17, 2008, the CIR constructively served a Final Notice Before Seizure dated December 20, 2007 to
Transfield’s office.

On February 29, 2008, Transfield availed of the benefits of R.A. No. 9480 submitting these documents to the
Development Bank of the Philippines (DBP): 1) Notice of Availment of Tax Amnesty; 2) Tax Amnesty Return (BIR
Form No. 2116); 3) Statement of Assets, Liabilities and Net Worth (SALN) as of December 31, 2005; and 4) Tax
Amnesty Payment Form (BIR Form No. 0617). On the same day, Transfield paid the BIR through DBP an amnesty
tax.

On May 5, 2008, Transfield informed the BIR Large Taxpayers District Office (LTDO) of Makati City in a letter dated
April 28, 2008, that it availed of the benefits of R.A. 9480 and furnished the LTDO with copies of the tax amnesty
documents. The same was received by BIR LTDO of Makati City on the same day.

On July 20, 2008, the CIR wrote Transfield, saying that under Revenue Memorandum Circular No. 19-2008, those
“with delinquent accounts/accounts receivable considered as assets of the BIR/Government, including self-
assessed tax,” are not allowed to avail of the benefits of R.A. No. 9480.

On September 8, 2008, the CIR issued a Warrant of Distraint and/or Levy (WDAL) directing the seizure of
Transfield’s goods, chattels or effects, and other personal properties, and/or levy of its real property and interest
in/or rights to real property. On the same day, the Bank of the Philippine Islands, informed Transfield that its
account was being put on hold because of the WDAL.

Transfield filed a Petition for Review before the Court of Tax Appeals (CTA) Division but it was denied including its
subsequent motion for reconsideration. It filed a Petition for Review before the CTA En Banc but it was denied
including its subsequent motion for reconsideration. Hence, this Petition for Review on Certiorari before the
Supreme Court (SC).

Issues:

1. Was Transfield entitled to the immunities under the Tax Amnesty Program provided in R.A. No. 9480?

2. Was the exception (delinquent accounts or accounts receivable considered as assets by the BIR or the
Government, including self-assessed tax) under Revenue Memorandum Circular (RMC) 19-2008 valid?

3. Was the Petition for Review timely filed?

Ruling:
1. Yes. On May 24, 2007, R.A. No. 9480 took effect and authorized the grant of a tax amnesty to qualified taxpayers
for all national internal revenue taxes for the taxable year 2005 and prior years, with or without assessments, that
have remained unpaid as of December 31, 2005. To implement R.A. No. 9480, the Department of Finance issued
DOF Department Order No. 29-07 (DO 29-07), in which under Section 6 Paragraph 3 thereof, it was provided that
the completion of the requirements under Section 6 of DO 29-07 shall be deemed full compliance with the
provisions of R.A. No. 9480. In this regard, Transfield complied with all the requirements pertaining to its
application for tax amnesty by submitting to the BIR a Notice of Availment of Tax Amnesty, Tax Amnesty Return,
SALN as of December 31, 2005, and Tax Amnesty Payment Form. Further, it paid the corresponding amnesty taxes.
Hence, Transfield was entitled to all immunities under R.A. No. 9480.

2. No. In CIR v Philippine Aluminum Wheels, Inc., the SC ruled that in case there is a discrepancy between the law
and a regulation issued to implement the law, the law prevails because the rule or regulation cannot go beyond
the terms and provisions of the law. To give effect to the exception under RMC 19-2008 of delinquent accounts or
accounts receivable by the BIR, as interpreted by the BIR, would unlawfully create a new exception for availing of
the amnesty under R.A. No. 9480.

3. The SC found this issue immaterial because the assessments have already been extinguished by Transfield’s
compliance with the requirements for tax amnesty under R.A. No. 9480.
City of Manila vs. Coca Bottlers Inc. (G.R. No. 181845, August 4, 2009)

Facts:

Petitioner City of Manila is a public corporation empowered to collect and assess business taxes, revenue fees, and
permit fees, through its officers, petitioners Toledo and Santiago, in their capacities as City Treasurer and Chief of
the Licensing Division, respectively. On the... other hand, respondent Coca-Cola Bottlers Philippines, Inc. is a
corporation engaged in the business of manufacturing and selling beverages, and which maintains a sales office in
the City of Manila

Prior to 25 February 2000, respondent had been paying the City of Manila local business tax only under Section 14
of Tax Ordinance No. 7794,[6] being expressly exempted from the business tax under Section 21 of the same tax
ordinance

Petitioner City of Manila subsequently approved on 25 February 2000, Tax Ordinance No. 7988,[7] amending
certain sections of Tax Ordinance No. 7794, particularly: (1) Section 14, by increasing the tax rates applicable to
certain establishments operating... within the territorial jurisdiction of the City of Manila; and (2) Section 21, by
deleting the proviso found therein, which stated "that all registered businesses in the City of Manila that are
already paying the aforementioned tax shall be exempted from payment thereof."

Petitioner City of Manila approved only after a year, on 22 February 2001, another tax ordinance, Tax Ordinance
No. 8011, amending Tax Ordinance No. 7988.

Tax Ordinances No. 7988 and No. 8011 were later declared by the Court null and void in Coca-Cola Bottlers
Philippines, Inc. v. City of Manila[8] (Coca-Cola case) for the following reasons: (1) Tax Ordinance No. 7988 was
enacted in... contravention of the provisions of the Local Government Code (LGC) of 1991 and its implementing
rules and regulations; and (2) Tax Ordinance No. 8011 could not cure the defects of Tax Ordinance No. 7988, which
did not legally exist.

However, before the Court could declare Tax Ordinance No. 7988 and Tax Ordinance No. 8011 null and void,
petitioner City of Manila assessed respondent on the basis of Section 21 of Tax Ordinance No. 7794, as amended
by the aforementioned tax ordinances, for deficiency local... business taxes, penalties, and interest, in the total
amount of P18,583,932.04, for the third and fourth quarters of the year 2000

Respondent filed a protest with petitioner Toledo on the ground that the said assessment amounted to double
taxation, as respondent was taxed... twice, i.e., under Sections 14 and 21 of Tax Ordinance No. 7794, as amended
by Tax Ordinances No. 7988 and No. 8011. Petitioner Toledo did not respond to the protest of respondent.

The RTC, though, in an Order[10] dated 16 November 2006, granted the Motion for Reconsideration of
respondent, decreed the cancellation and withdrawal of the assessment against the latter, and barred petitioners
from... further imposing/assessing local business taxes against respondent under Section 21 of Tax Ordinance No.
7794... the CTA First Division already issued a Resolution dismissing C.T.A. AC No. 31 for failure of petitioners to
timely file their Petition for Review on 20 May 2007.

The CTA en banc rendered its Decision on 18 January 2008, dismissing the Petition for Review of petitioners and
affirming the Resolutions dated 24 May 2007, 8 June 2007, and 26 July 2007 of the CTA First Division. The CTA en
banc similarly denied the Motion for

Reconsideration of petitioners in a Resolution dated 18 February 2008.

Issues:

WHETHER OR NOT THE ENFORCEMENT OF [SECTION] 21 OF THE [TAX ORDINANCE NO. 7794, AS AMENDED]
CONSTITUTES DOUBLE TAXATION

Ruling:

Section 14 of Tax Ordinance No. 7794 imposes local business tax on manufacturers, etc. of liquors, distilled spirits,
wines, and any other article of commerce, pursuant to Section 143(a) of the LGC. On the other hand, the local
business tax under Section 21 of Tax

Ordinance No. 7794 is imposed upon persons selling goods and services in the course of trade or business, and
those importing goods for business or otherwise, who, pursuant to Section 143(h) of the LGC, are subject to excise
tax, value-added tax (VAT), or percentage tax under... the National Internal Revenue Code (NIRC). Thus, there can
be no double taxation when respondent is being taxed under both Sections 14 and 21 of Tax Ordinance No. 7794,
for under the first, it is being taxed as a manufacturer; while under the second, it is being taxed as a... person
selling goods in the course of trade or business subject to excise, VAT, or percentage tax.

Emphasis must be given to the fact that prior to the passage of Tax Ordinance No. 7988 and Tax Ordinance No.
8011 by petitioner City of Manila, petitioners subjected and assessed respondent only for the local business tax
under Section 14 of Tax Ordinance No. 7794, but never... under Section 21 of the same. This was due to the clear
and unambiguous proviso in Section 21 of Tax Ordinance No. 7794, which stated that "all registered business in the
City of Manila that are already paying the aforementioned tax shall be exempted from payment... thereof." The
"aforementioned tax" referred to in said proviso refers to local business tax. Stated differently, Section 21 of Tax
Ordinance No. 7794 exempts from the payment of the local business tax imposed by said section, businesses that
are already paying such tax... under other sections of the same tax ordinance. The said proviso, however, was
deleted from Section 21 of Tax Ordinance No. 7794 by Tax Ordinances No. 7988 and No. 8011. Following this
deletion, petitioners began assessing respondent for the local business tax under

Section 21 of Tax Ordinance No. 7794, as amended.

The Court easily infers from the foregoing circumstances that petitioners themselves believed that prior to Tax
Ordinance No. 7988 and Tax Ordinance No. 8011, respondent was exempt from the local business tax under
Section 21 of Tax Ordinance No. 7794. Hence, petitioners had to... wait for the deletion of the exempting proviso in
Section 21 of Tax Ordinance No. 7794 by Tax Ordinance No. 7988 and Tax Ordinance No. 8011 before they
assessed respondent for the local business tax under said section

Petitioners obstinately ignore the exempting proviso in Section 21 of Tax Ordinance No. 7794, to their own
detriment. Said exempting proviso was precisely included in said section so as to avoid double taxation

Double taxation means taxing the same property twice when it should be taxed only once; that is, "taxing the same
person twice by the same jurisdiction for the same thing." It is obnoxious when the taxpayer is taxed twice, when it
should be but once. Otherwise described as

"direct duplicate taxation," the two taxes must be imposed on the same subject matter, for the same purpose, by
the same taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of
the same kind or... character.[18]

Using the aforementioned test, the Court finds that there is indeed double taxation if respondent is subjected to
the taxes under both Sections 14 and 21 of Tax Ordinance No. 7794, since these are being imposed: (1) on the
same subject matter - the privilege of doing business in... the City of Manila; (2) for the same purpose - to make
persons conducting business within the City of Manila contribute to city revenues; (3) by the same taxing authority
- petitioner City of Manila; (4) within the same taxing jurisdiction - within the territorial jurisdiction... of the City of
Manila; (5) for the same taxing periods - per calendar year; and (6) of the same kind or character - a local business
tax imposed on gross sales or receipts of the business.

WHEREFORE, premises considered, the instant Petition for Review on Certiorari is hereby DENIED
Capitol Wireless Inc. vs. Provincial Treasurer of Batangas, G.R. 183416, May 30, 2016

CAPITOL WIRELESS, INC., PETITIONER, VS. THE PROVINCIAL TREASURER OF BATANGAS, THE PROVINCIAL ASSESSOR
OF BATANGAS, THE MUNICIPAL TREASURER AND ASSESSOR OF NASUGBU, BATANGAS, RESPONDENTS.D E C I S I O
N

Petitioner Capitol Wireless Inc. (Capwire) is a Philippine corporation in the business of providing international
telecommunications services... ed agreements with other local and foreign telecommunications companies...
international network of submarine cable systems... o-ownership and other rights among the parties over the
network

Petitioner Capwire claims that it is co-owner only of the so-called "Wet Segment" of the APCN, while the landing
stations or terminals and Segment E of APCN located in Nasugbu, Batangas are allegedly owned by the Philippine
Long Distance Telephone Corporation (PLDT).

as co-owner, it does not own any particular physical part of the cable system

However, for loan restructuring purposes, Capwire claims that "it was required to register the value of its right,"
hence, it engaged an appraiser to "assess the market value of the international submarine cable system and the
cost to Capwire."

Capwire claims that it also reported that the system "interconnects at the PLDT Landing Station in Nasugbu,
Batangas," which is covered by a transfer certificate of title and tax declarations in the name of PLDT

Provincial Assessor of Batangas (Provincial Assessor) issued the following Assessments of Real Property (ARP)
against Capwire

BMP-CNS

019-00968 APCN

019-00969 SEA-ME-WE3-CNS

019-00970 GP-CNS... the Provincial Assessor had determined that the submarine cable systems described in
Capwire's Sworn Statement of True Value of Real Properties are taxable real property, a determination that was
contested by Capwire

The reason cited by Capwire is that the cable system lies outside of Philippine territory, i.e., on international
waters.

Capwire received a Warrant of Levy and a Notice of Auction Sale, respectively, from the respondent Provincial
Treasurer of Batangas

Capwire filed a Petition for Prohibition and Declaration of Nullity of Warrant of Levy, Notice of Auction Sale and/or
Auction Sale with the Regional Trial Court (RTC) of Batangas City... the RTC issued an Order dismissing the petition
for failure of the petitioner Capwire to follow the requisite of payment under protest as well as failure to appeal to
the Local Board of Assessment Appeals... appeal to the Court of Appeals... the Court of Appeals promulgated its
Decision dismissing the appeal filed by Capwire and affirming the order of the trial court
The appellate court held that the trial court correctly dismissed Capwire's petition because of the latter's failure to
comply with the requirements set in Sections 226 and 229 of the Local Government Code, that is, by not availing of
remedies before administrative bodies like the LBAA and the Central Board of Assessment Appeals (CBAA)

Capwire claims that it saw no need to undergo administrative proceedings because its petition raises purely legal
questions, the appellate court did not share this view and noted that the case raises questions of fact, such as the
extent to which parts of the submarine cable system lie within the territorial jurisdiction of the taxing authorities,
the public respondents.

the CA noted that Capwire failed to pay the tax assessed against it under protest, another strict requirement under
Section 252 of the Local Government Code

Issues:

Petitioner Capwire asserts that recourse to the Local Board of Assessment Appeals, or payment of the tax under
protest, is inapplicable to the case at bar since there is no question of fact involved, or that the question involved is
not the reasonableness of the amount assessed but, rather, the authority and power of the assessor to impose the
tax and of the treasurer to collect it.

It contends that there is only a pure question of law since the issue is whether its submarine cable system, which it
claims lies in international waters, is taxable

Capwire holds the position that the cable system is not subject to tax.

Respondents assessors and treasurers of the Province of Batangas ana Municipality of Nasugbu, Batangas disagree
with Capwire and insist that the case presents questions of fact such as the extent and portion of the submarine
cable system that lies within the jurisdiction of the said local governments, as well as the nature of the so-called
indefeasible rights as property of Capwire

Is the case cognizable by the administrative agencies and covered by the requirements in Sections 226 and 229 of
the Local Government Code which makes the dismissal of Capwire's petition by the RTC proper? May submarine
communications cables be classified as taxable real property by the local governments?

Ruling:

The petition is denied. No error attended the ruling of the appellate court that the case involves factual questions
that should have been resolved before the appropriate administrative bodies.

whether submarine wires or cables used for communications may be taxed like other real estate.We hold in the
affirmative.

Principles:

In disputes involving real property taxation, the general rule is to require the taxpayer to first avail of
administrative remedies and pay the tax under protest before allowing any resort to a judicial action, except when
the assessment itself is alleged to be illegal or is made without legal authority... the general rule of a prerequisite
recourse to administrative remedies applies when questions of fact are raised, but the exception of direct court
action is allowed when purely questions of law are involved... doubt dichotomy.

calibration dichotomy... the Court sustains the CA's finding that petitioner's case is one replete with questions of
fact instead of pure questions of law, which renders its filing in a judicial forum improper because it is instead
cognizable by local administrative bodies like the Board of Assessment Appeals, which are the proper venues for
trying these factual issues.

"whether or not an indefeasible right over a submarine cable system that lies in international waters can be
subject to real property tax in the Philippines,"... is not the genuine issue that the case presents -... such factual
issues as the extent and status of Capwire's ownership of the system, the actual length of the cable/s that lie in
Philippine territory, and the corresponding assessment and taxes due on the same, because the public
respondents imposed and collected the assailed real property tax on the finding that at least a portion or some
portions of the submarine cable system that Capwire owns or co-owns lies inside Philippine territory.

Capwire argues and makes claims on mere assumptions of certain facts as if they have been already admitted or
established, when they have not, since no evidence of such have yet been presented in the proper agencies and
even in the current petition... remains unsettled whether Capwire is a mere co-owner, not full owner, of the
subject submarine cable and, if the former, as to what extent; whether all or certain portions of the cable are
indeed submerged in water; and whether the waters wherein the cable/s is/are laid are entirely outside of
Philippine territorial or inland waters, i.e., in international waters.

apwire argues based on mere legal conclusions, culminating on its claim of illegality of respondents' acts, but the
conclusions are yet unsupported by facts that should have been threshed out quasi-judicially before the
administrative agencies.

Capwire's resort to judicial action, premised on its legal conclusion that its cables (the equipment being taxed) lie
entirely on international waters, without first administratively substantiating such a factual premise, is improper
and was rightly denied.

proposition that the cables lie entirely beyond Philippine territory, and therefore, outside of Philippine
sovereignty, is a fact that is not subject to judicial notice since,... Jurisprudence on the Local Government Code is
clear that facts such as these must be threshed out administratively, as the courts in these types of cases step in at
the first instance only when pure questions of law are involved.

Submarine or undersea communications cables are akin to electric transmission lines which this Court has recently
declared in Manila Electric Company v. City Assessor and City Treasurer of Lucena City... may qualify as
"machinery" subject to real property tax under the Local Government Code

Both electric lines and communications cables, in the strictest sense, are not directly adhered to the soil but pass
through posts, relays or landing stations, but both may be classified under the term "machinery" as real property
under Article 415(5)... absent any showing from Capwire of any express grant of an exemption for its lines and
cables from real property taxation, then this interpretation applies and Capwire's submarine cable may be held
subject to real property tax.

Having determined that Capwire is liable, and public respondents have the right to impose a real property tax on
its submarine cable, the issue that is unresolved is how much of such cable is taxable based on the extent of
Capwire's ownership or co-ownership of it and the length that is laid within respondents' taxing jurisdiction. The
matter, however, requires a factual determination that is best performed by the Local and Central Boards of
Assessment Appeals, a remedy which the petitioner did not avail of.

It is not in dispute that the submarine cable system's Landing Station in Nasugbu, Batangas is owned by PLDT and
not by Capwire. Obviously, Capwire is not liable for the real property tax on this Landing Station. Nonetheless,
Capwire admits that it co-owns the submarine cable system that is subject of the tax assessed and being collected
by public respondents.
As the Court takes judicial notice that Nasugbu is a coastal town and the surrounding sea falls within what the
United Nations Convention on the Law of the Sea (UNCLOS) would define as the country's territorial sea

It easily belies Capwire's contention that the cable system is entirely in international waters. And even if such
portion does not lie in the 12-nautical-mile vicinity of the territorial sea but further inward... the Philippines
exercises sovereignty over the body of water lying landward of (its) baselines, including the air space over it and
the submarine areas underneath."

And as far as local government units are concerned, the areas described above are to be considered subsumed
under the term "municipal waters" which, under the Local Government Code, includes "not only streams, lakes,
and tidal waters within the municipality, not being the subject of private ownership and not comprised within the
national parks, public forest, timber lands, forest reserves or fishery reserves, but also marine waters included
between two lines drawn perpendicularly to the general coastline from points where the boundary lines of the
municipality or city touch the sea at low tide and a third line parallel with the general coastline and fifteen (15)
kilometers from it."

Although the term "municipal waters" appears in the Code in the context of the grant of quarrying and fisheries
privileges for a fee by local governments,... its inclusion in the Code's Book II which covers local taxation means
that it may also apply as guide in determining the territorial extent of the local authorities' power to levy real
property taxation.

the jurisdiction or authority over such part of the subject submarine cable system lying within Philippine
jurisdiction includes the authority to tax the same, for taxation is one of the three basic and necessary attributes of
sovereignty... and such authority has been delegated by the national legislature to the local governments with
respect to real property taxation.

a way for Capwire to claim that its cable system is not covered by such authority is by showing a domestic
enactment or even contract, or an international agreement or treaty exempting the same from real property
taxation. It failed to do so, however, despite the fact that the burden of proving exemption from local taxation is
upon whom the subject real property is declared

Under the Local Government Code, every person by or for whom real property is declared, who shall claim tax
exemption for such property from real property taxation "shall file with the provincial, city or municipal assessor
within thirty (30) days from the date of the declaration of real property sufficient documentary evidence in support
of such claim."

And even under Capwire's legislative franchise, RA 4387, which amended RA 2037, where it may be derived that
there was a grant of real property tax exemption for properties that are part of its franchise, or directly meet the
needs of its business... such had been expressly withdrawn by the Local Government Code, which took effect on
January 1, 1992,... Section 193. Withdrawal of Tax Exemption Privileges. - Unless otherwise provided in this Code,
tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including
government-owned or controlled corporations, except local water districts, cooperatives duly registered under
R.A. No. 6938, nonstock and nonprofit hospitals and educational institutions, are hereby withdrawn upon the
effectivity of this Code.

Section 234. Exemptions from Real Property Tax

Except as provided herein, any exemption from payment of real property tax previously granted to, or presently
enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations
arc hereby withdrawn upon the effectivity of this Code
Capwire fails to allege or provide any other privilege or exemption that were granted to it by the legislature after
the enactment of the Local Government Code. Therefore, the presumption stays that it enjoys no such privilege or
exemption. Tax exemptions are strictly construed against the taxpayer because taxes are considered the lifeblood
of the nation.
Coral Bay Nickel Corp. vs. CIR CTA EB NOS. 1735 AND 1737 - JULY 18, 2019

FACTS:

Petitioner, a domestic corporation registered as an Ecozone Export Enterprise at the Rio Tuba Export Processing
Zone, filed on 05 August 2003 its Amended VAT Return declaring unutilized input tax from its domestic purchases
of capital goods, other than capital goods and services, for the third and fourth quarters of 2002. On 14 June 2004,
it filed with the BIR its Application for Tax Credits/Refund together with supporting documents.

Due to the alleged inaction of the respondent, petitioner elevated its claim to the CTA on 08 July 2004 by petition
for review. The CTA in Division however on 10 March 2008 denied petitioner's claim for refund on the ground that
petitioner was not entitled to same. CTA En Banc also denied the petition.

ISSUE(S):

Whether or not petitioner is entitled to the refund of its unutilized input taxes for purchases of goods and services
that were destined for consumption within the ecozone.

HELD:

NO. The purchases of goods and services by petitioner that were destined for consumption within the ecozone
should be free of VAT; hence, no input VAT should then be paid on such purchases, rendering petitioner not
entitled to claim a tax refund or credit. Verily, if petitioner had paid the input VAT, its proper recourse was not
against the Government but against the seller who had shifted to it the output VAT.
BPI VS. CIR G.R. 139736, OCT. 17, 2000

FACTS:
On June 6 and 14, 1985, petitioner bank sold $500,000.00 to the Central Bank, for the total sale amount
of $1M. BIR issued deficiency assessment for DST in the amount of 28,020.00 for the said sales. On October
20,1989, petitioner received the notice and consequently filed a protest in November 16,1989. Petitioner did not
receive a reply but soon after, October 15, 1992, BIR issued a Warrant of distraint, and finally in August 13, 1997,
BPI received a letter denying its request for reconsideration. Petitioner alleged prescription to CTA but the latter
denied the same. CTA likewise ruled in the negative that the sales of currency by petitioner was not subject to DST.
CA sustained first issue but reinstated the second.
ISSUE:
Whether or not the right to collect has prescribed;
Request for reconsideration
It will not suspend the running of the statute of limitations because reconsideration of tax assessment is limited to
the evidence.
Request for reinvestigation
will suspend the running of statute of limitations because it entails the reception and re-evaluation of additional
evidence. It will take more time.
RULING:
The period for the BIR to assess and collect an internal revenue tax is limited to three years by Section
203 of the Tax Code. This period is limited by Section 223
Exemptions… a) in the case of a false or fraudulent return with intent to evade tax or of failure to file a return, the
tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at
any time within 10 years after the discovery of the falsity, fraud or omission…
BPI executed no waiver of the Statute of Limitations, thus it did not suspend running of the prescription.
Likewise, BPI requested for a reconsideration and suspension of the running of the statute of limitations shouldn’t
apply. The statute of limitations for collection “against BPI had expired; none of the conditions from the statute of
limitations on collection exists herein.”
Philippine Daily Inquirer vs. CIR, GR. 213 943, MARCH 22, 2017

Facts:

Before the Court is a petition for review[1] as

PDI is a corporation engaged in the business of newspaper publication.

On 15 April 2005, it filed its Annual Income Tax Return for taxable year 2004.

On 10 August 2006, PDI received a letter dated 30 June 2006 from Region 020 Large Taxpayers' Service of BTR

BIR alleged that based on the computerized matching it conducted on the information and data provided by third
party sources against PDI's declaration on its VAT Returns for taxable year 2004, there was an underdeclaration of
domestic purchases from its suppliers amounting to P317,705,610.52.

In response, PDI submitted reconciliation reports, attached to its letters dated 22 August 2006 and 19 December
2006, to BIR-LTAID. On 21 March 2007, PDI executed a Waiver of the Statute of Limitation (First Waiver)
consenting to the assessment and/or collection of taxes for the year 2004 which may be found due after the
investigation, at any time before or after the lapse of the period of limitations fixed by Sections 203 and 222 of the
National Internal Revenue Code (NIRC) but not later than 30 June 2007.

In a Preliminary Assessment Notice (PAN) dated 15 October 2007 issued by the BIR-LTAID, PDI was assessed for
alleged deficiency income tax and VAT for taxable year 2004

PDI sought reconsideration of the PAN and expressed its willingness to execute another Waiver (Third Waiver),
which it did on the same date, thus extending BIR's right to assess and/or collect from it until 30 April 2008.

PDI received a Formal Letter of Demand dated 11 March 2008 and an Audit Result/Assessment Notice from the
BIR, demanding for the payment of alleged deficiency VAT and income tax

On 16 May 2008, PDI filed its protest. On 12 December 2008, PDI filed a Petition for Review against the
Commissioner of Internal Revenue (CIR) alleging that the 180-day period within which the BIR should act on its
protest had already lapsed.

On the basis of the consolidation and cross-referencing of third party information, discrepancy reports on sales
and purchases were generated to uncover under-declared income and over-claimed purchases (goods and
services).

Section 222 of the NIRC provides the exceptions as regards to the provisions laid down under Section 203. In
particular, as shown under Section (1) thereof, the three (3) [year] period of limitation in making assessment shall
not apply in cases where it involves false or fraudulent return or in cases where there is failure to file a return [by]
the person obliged to file such return.

Such being the case, the three (3) [year] period of limitation for the assessment of internal revenue tax liabilities
reckoned from the last day prescribed by law for the filing of the return shall not apply in the case at hand for the
simple reason that petitioner falsely filed the return for taxable year 2004.
Petitioner emphasized that it is a service company deriving its main source of income from newspaper and
advertising sales, thus any understatement of expenses or purchases (also mostly from services) does not mean it
understated its sales.

The CTA First Division further ruled that Section 222(b) of the NIRC authorizes the extension of the original three-
year prescriptive period by the execution of a valid waiver upon the agreement in writing between the taxpayer
and the BIR, provided: (1) the agreement was made before the expiration of the three-year period and (2) the
guidelines in the proper execution of the waiver are strictly followed.

the CIR filed a petition for review on certiorari before this Court.

Issues:

The CTA En Banc erred in ruling that respondent is not estopped from raising the defense of prescription.

Ruling:

The CIR alleges that PDI filed a false or fraudulent return.

The CIR argues that the ten-year period starts from the time of the issuance of its Letter Notice on 10 August 2006.
As such, the assessment made through the Formal Letter of Demand dated 11 March 2008 is within the
prescriptive period.We do not agree.

Under Section 203 of the NIRC, the prescriptive period to assess is set at three years. This rule is subject to the
exceptions provided under Section 222 of the NIRC.

this Court ruled that fraud is never imputed. The Court stated that it will not sustain findings of fraud upon
circumstances which, at most, create only suspicion.[25] The Court added that the mere understatement of a tax is
not itself proof of fraud for the purpose of tax evasion.

The fraud contemplated by law is actual and not constructive. It must be intentional fraud, consisting of deception
willfully and deliberately done or resorted to in order to induce another to give up some legal right. Negligence,
whether slight or gross, is not equivalent to fraud with intent to evade the tax contemplated by law. It must
amount to intentional wrongdoing with the sole object of avoiding the tax.

Thus, while the filing of a fraudulent return necessarily implies that the act of the taxpayer was intentional and
done with intent to evade the taxes due, the filing of a false return can be intentional or due to honest mistake.

In this case, we do not find enough evidence to prove fraud or intentional falsity on the part of PDLSince the case
does not fall under the exceptions, Section 203 of the NIRC should apply.

Waiver was not a unilateral act of the taxpayer; hence, the BIR must act on it, either by conforming to or by
disagreeing with the extension. A waiver of the statute of limitations, whether on assessment or collection, should
not be construed as a waiver of the right to invoke the defense of prescription but, rather, an agreement between
the taxpayer and the BIR to extend the period to a date certain, within which the latter could still assess or collect
taxes due. The waiver does not imply that the taxpayer relinquishes the right to invoke prescription unequivocally.

Since the three Waivers in this case are defective, they do not produce any effect and did not suspend the three-
year prescriptive period under Section 203 of the NIRC.
CIR vs. Fortune Tobacco Corp. GR. 167274-75 (2008)

FACTS:
Fortune Tobacco is a manufacturer and producer of some cigarette brands. Prior to January 1, 1997, its cigarette
brands were subject to ad valorem tax but on January 1, 1997, R.A. No. 8240 took effect whereby a shift from the
ad valorem tax (AVT) system to the specific tax system was made and subjecting its cigarette brands to specific tax.

For the period covering January 1-31, 2000, Fortune Tobacco paid specific taxes on all brands manufactured so it
filed a claim for refund or tax credit of its overpaid excise tax for the month of January 2000.

The Court of Tax Appeals (CTA) and the Court of Appeals, granted the tax refund or tax credit representing specific
taxes erroneously collected from its tobacco products. However, the Commissioner of Internal Revenue reclaims
the grant of tax refund. Hence, this petition.

ISSUE:
Whether or not Fortune Tobacco is entitled to tax refund.

RULING:
Yes. Although tax refund partakes the nature of a tax exemption, this rule does not apply to Fortune Tobacco’s
claim. The parity between tax refund and tax exemption exists only when the former is based either on a tax
exemption statute or a tax refund statute. In the present case, Fortune Tobacco’s claim for refund is premised on
its erroneous payment of the tax, or the government’s exaction in the absence of a law.

Tax exemption is granted by the legislature thus, the one who claims an exemption from the burden of taxation
must justify his claim by showing that the legislature intended to exempt him by words too plain to be mistaken. In
the same manner, a claim for tax refund may also be based on statutes granting tax exemption or tax refund. In
this case, the rule of strict interpretation against the taxpayer is applicable as the claim for refund partakes of the
nature of an exemption.

However, tax refunds (or tax credits) are not founded principally on legislative grant but on the legal principle of
solutio indebiti, the government cannot unjustly enrich itself at the expense of the taxpayers. Under the Tax Code,
in recognition of the pervasive quasi-contract principle, a claim for tax refund may be based on the following:
(a) erroneously or illegally assessed or collected internal revenue taxes;
(b) penalties imposed without authority; and
(c) any sum alleged to have been excessive or in any manner wrongfully collected.