taxpayer by the BIR in support of the
Summary of Significant
Supreme Court Decisions
on Tax Cases (August
2008 – January 2009)
by Atty. Oliver Gil M. Beltran
1. COMMISSIONER OF INTERNAL
REVENUE vs. ENRON SUBIC POWER
CORPORATION (G.R. No. 166368, January
19, 2009)
Is it mandatory for the BIR to indicate the
legal and factual bases of their findings in the
assessment? Is the notice requirement
satisfied when the BIR advised the taxpayer’s
representative of the tax deficiency during the
pre-assessment stage, and furnished the
taxpayer of a copy of the audit working
papers?
Enron, a duly registered Subic Bay Freeport
Zone enterprise received a formal notice of
assessment from the Commissioner of
Internal Revenue (CIR) despite filing its
protest letter to the preliminary five-day letter.
The Company filed a Petition for Review with
the Court of Tax Appeals (CTA) since the CIR
failed to resolve its protest against the formal
notice of assessment within the mandated
180-day period. Enron alleged that the BIR
failed to provide the legal and factual bases of
the assessment in violation of Section 3.1.4 of
Revenue Regulations No. 12.99
Finding for Enron, the CTA held that the
assessment notice sent to the Company
failed to comply with the requirements of a
valid written notice set by the law. The CIR’s
motion for reconsideration was likewise
denied.
On appeal, the Court of Appeals (CA)
affirmed the decision of the CTA and held that
the audit working papers presented to the
assessment did not substantially comply with
Section 228 of the NIRC and RR No. 12-99
because the aforementioned documents
failed to show the applicability of the law the
BIR cited to the facts of the assessment.
The CIR then elevated the case to the SC
claiming that Enron was informed of the legal
and factual bases of the deficiency
assessment against it.
In denying the CIR’s petition for review, the
SC held that Section 3.1.4 of RR No. 12-99 is
explicit that “a taxpayer must be informed in
writing of the legal and factual bases of the
tax assessment made against it.”
The Court said that the use of the word “shall”
indicates the mandatory nature of the
requirements laid down therein.
Even so, taking note of the CTA’s findings,
the SC held that “the CIR merely issued a
formal assessment and indicated therein the
supposed tax, surcharge, interest and
compromise penalty due thereon. The
Revenue Officers of the CIR in the issuance
of the Final Assessment Notice did not
provide Enron with the written bases of the
law and facts on which the subject
assessment is based. The CIR did not bother
to explain how it arrived at such an
assessment. Moreso, he failed to mention the
specific provision of the Tax Code or rules
and regulations which were not complied with
by Enron.
The SC gave weight to the findings of the
CTA and CA that the BIR failed to indicate the
factual and legal bases of the deficiency tax
assessment as the same merely itemized the
deductions disallowed and included these in
the gross income, aside from imposing the
preferential rate of 5% on some items
categorized by Enron as costs.
Ultimately, the CIR alleged that during the
pre-assessment stage, they supposedly have
advised and informed Enron’s representative
of the proposed tax deficiency through a
preliminary five-day letter apart from
furnishing the latter a copy of the audit
working paper.
However, the SC ruled that “(t)he advice of
tax deficiency, given by the CIR to an
employee of Enron, as well as the preliminary
five-day letter, were not valid substitutes for
the mandatory notice in writing of the legal
and factual bases of the assessment.”
According to the SC, “the requirement for
issuing a preliminary or final notice, as the
case may be, informing a taxpayer of the
existence of a deficiency tax assessment is
markedly different from the requirement of
what such notice must contain. Just because
the CIR issued an advice, a preliminary letter
during the pre-assessment stage and a final
notice, in the order required by law, does not
necessarily mean that Enron was informed of
the law and facts on which the deficiency
assessment was made.”
Hence, the assessment against Enron was
declared to be void by reason of the absence
of a fair opportunity for Enron to be informed
of the aforesaid assessment’s legal and
factual bases.
2. EL GRECO SHIP MANNING AND
MANAGEMENT CORPORATION vs.
COMMISSIONER OF CUSTOMS (G.R. NO.
177188, December 4, 2008)
What pieces of information are helpful in
identifying a particular vessel? What are the
quantum of proof required and the essence of
due process in proceedings pending before
the Bureau of Customs (BOC)? When is the
penalty of forfeiture imposed?
A Warrant of Seizure and Detention (Seizure
Identification No. 06-2001) was issued by the
Legaspi District Collector for the 35,000 bags
of imported rice shipped by M/V Criston on
the ground that it allegedly left the Port of
Manila without the necessary clearance from
the Philippine Coast Guard.
Since Seizure Identification No. 06-2001
merely covered the cargo, but not the M/V
Criston which transported it, Seizure
Identification No 6-2001-A was subsequently
issued particularly for the said vessel.
The 35,000 bags of rice were consequently
released to the consignees, Antonio Chua Jr.
and Carlos Carillo, after the two have posted
the P31,450,000.00 bond required by the
Regional Trial Court of Tabaco, Albay.
Meanwhile, as M/V Criston was under the
custody of the Bureau of Customs of the
Province of Albay, the vessel was allowed to
temporarily transfer to another anchorage
area in order to prevent any damage which
could be caused by typhoon “Manang”.
Nonetheless, M/V Criston failed to return to
the Port of Tabaco after “Manang” had
passed through the area.
M/V Crimson was thereafter found in the
waters of Bataan sporting the name M/V
Neptune Breeze.
The BOC District Collector of the Port of
Manila issued a Warrant of Seizure and
Detention under Seizure Identification No.
2001-208 against M/V Neptune Breeze in
view of the vessel’s failure to present a
clearance from its last port of call.
On June 27, 2002, the Legaspi District
Collector rendered a Decision in seizure
Identification No. 06-2001 and Seizure
Identification No. 06-2001-a ordering the
forfeiture of M/V Criston (M/V Neptune
Breeze), and its cargo, for violating Section
2530 (a), (f) and (k) of the Tariff and Customs
Code.
El Greco, filed a Motion for Intervention and
Motion to Quash with the Manila District
Collector asserting that M/V Neptune Breeze
was a foreign registered vessel owned by
Atlantic Pacific Corporation, Inc. and different
from M/V Criston. The Manila District
Collector ruled in favor of El Greco for lack of
probable cause showing that M/V Nuptune
Breeze is the same vessel known as M/V
Criston.
The abovementioned ruling by the Manila
District Collector was reversed by BOC
Commissioner Antonio Bernardo when the
latter ruled that M/V Neptune Breeze and M/V
Criston were one the same and that the
Legaspi District Collector had already
acquired prior jurisdiction over the vessel.
El Greco sought the reversal of the
aforementioned Decision and accordingly
filed a Petition for Review with the CTA
claiming that M/V Criston is entirely different
from M/V Neptune Breeze the two have
different and separate Certificates of Registry,
and that the decision of the Manila District
Collector already became final and executory
in view of the BOC Commissioner’s failure to
act thereon within the 30-day period required
under Section 2313 of the tariff and Customs
Code.
The 2nd Division of the CTA denied the
Petition and held that both vessels were
indeed one and the same by giving credence
to the crime laboratory report submitted by the
Philippine National Police which indicated that
the M/V Criston and M/V Neptune Breeze
have similar serial numbers in their respective
engines and generators.
The CTA En Banc dismissed the Petition for
Review filed by El Greco for lack of merit.
On appeal, the Supreme Court sustained the
findings of the CTA En Banc and ruled that
there is more than substantial evidence to
establish that M/V Neptune Breeze is the very
same vessel as M/V Criston.
The SC took judicial notice of the fact that
along with the gross tonnage, net tonnage,
length and breadth of the vessel, the serial
numbers of its engine and generator are the
necessary information identifying the vessel.
According to the SC, “(i)n as much the same
way, the identity of a land motor vehicle is
established by its unique motor and chassis
numbers. It is, thus, highly improbable that
two totally different vessels would have
engines and generators bearing the very
same serial numbers; and the only logical
conclusion is that they must be one and the
same vessel.
The SC further said that the failure of the
supposed operator to appear before the
Legaspi District Collector is surprising since it
is highly unfathomable for a purported owner
to ignore proceedings for the seizure of its
vessel since it risks the loss of a property of
enormous value.
While the foreign registration of M/V Neptune
Breeze proves that it was registered in a
foreign country; it does not render impossible
the conclusions consistently reached by the
Legaspi District Collector, the CTA Second
Division, the CTA En Banc, and the SC that
M/V Neptune Breeze was the very same
vessel used in the conduct of smuggling
activities in the name M/V Criston.
The technical rules of procedure and
evidence are not strictly applied in
administrative proceedings. The essence of
due process in BOC proceedings “is simply
an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek
reconsideration of the action or ruling
complained of”.1
Hence, El Greco cannot claim that it was
denied due process since it was given ample
opportunity to rebut the findings of the
Legaspi District Collector.
Further, the fact that M/V Neptune Breeze
(a.k.a. M/V Criston), was caught carrying
35,000 bags of imported rice without the
necessary papers showing that they were
entered lawfully through a Philippine port after
the payment of appropriate taxes and duties
thereon, gives rise to the presumption that the
1Danan vs. Court of Appeals, G.R. No. 132759, 25 October
2005.
importation involved was illegal. By reason of
El Greco’s failure to rebut such presumption,
the 35,000 bags of rice and the concerned
vessel are subject to forfeiture.
The penalty of forfeiture is imposed on any
vessel engaged in smuggling, provided that
the following conditions are present: 1.) The
vessel is “used unlawfully in the importation or
exportation of articles into or from” the
Philippines; 2.) The articles are imported to or
exported from any Philippine port or place,
except a port of entry”; or 3.) If the vessel has
a capacity of less than 30 tons and is “used in
the importation of articles into any Philippine
port or place other than a port of the Sulu
Sea, where importation in such vessel may be
authorized by the Commissioner, with the
approval of the department head.2
Lastly, the Decision of the Manila District
Collector could not have become final and
executory since Section 2313 of the Tariff and
Customs Code provides that “in the case the
BOC Commissioner fails to decide on the
automatic appeal of the Collector’s Decision
within 30 days from receipt of the records
thereof, the case shall again be deemed
automatically appealed to the Secretary of
Finance.”
3. SILKAIR (SINGAPORE) PTE. LTD.,
vs. COMMISSIONER OF INTERNAL
REVENUE (G.R. No. 171383 & 172379, 14
November 2008)
Who is the proper party to claim a refund for
the payment of excise taxes? What is an
excise tax? What is the remedy of a taxpayer
who enjoys tax exemption with regard to the
payment of excise taxes?
Silkair (Singapore Pte. Ltd. purchased
aviation jet fuel from Petron, to which the
latter imposed a P3.67 per liter excise
(specific) tax.
2 Commissioner of Customs vs. Manila Star Ferry, Inc., G.R. No.
31776-78, 21 October 1993.
Claiming exemption from payment of excise
taxes pursuant to Section 135 of the Tax
Code and Article 4 of the Philippines
Singapore Air Agreement, Silkair filed a
formal claim for refund with the Commissioner
of Internal Revenue (CIR).
Silkair alleged that it was the one who actually
paid the excise taxes due on the transactions
while Petron merely remitted the payment to
the BIR, thereby negating the tax exemption
expressly granted to it.
Nonetheless, the Supreme Court held that
“the proper party to question, or seek a refund
of an indirect tax is the statutory taxpayer, the
person on whom the tax is imposed by law
and who paid the same even if he shifts the
burden thereof to another.”3
Excise tax, “whether classified as specific or
ad valorem tax, is basically an indirect tax
imposed on the consumption of a specified
list of goods or products. The tax is directly
levied on the manufacturer upon removal of
the table goods from the place of production
but in reality, the tax is passed on to the end
consumer as part of the selling price of goods
sold.”4
In view thereof, while Petron actually passed
on the burden of the tax to Silkair, the
additional amount billed to the latter was
essentially a part of the purchase price and
not a tax in itself.
Hence, the SC ruled that “even if the
consumers or purchasers ultimately pay for
the tax, they are not considered the
taxpayers. The fact that Petron, on whom the
excise tax is imposed, can shift the tax
burden to its purchasers does not make the
latter the taxpayers and the former the
withholding agent.”
3
Silkair (Singapore) Pte. Ltd. vs. Commissioner of Internal
Revenue, G.R. No. 173594, 6 February 2008.
4
De Leon and De Leon, Jr., The National Internal Revenue Code
Annotated, Volume 2 (2003), p. 198.
Although it was ruled in the instant case that
Petron is the proper party that can claim the
refund of the excise taxes paid to BIR, the SC
said that Silkair may nevertheless invoke its
tax exemption to Petron before buying
aviation jet fuel in the future.
4. ANTAM PAWNSHOP
CORPORATION vs. COMMISSIONER OF
INTERNAL REVENUE (G.R. No. 167962, 19
September 2008)
Are pawn tickets subject to documentary
stamp tax (DST)? What contract is entered
into by the pawnshop and the
pawner/borrower? Is good faith enough
justification to spare a taxpayer from payment
of interest and surcharges?
The Petitioner (Antam), alleged that a pawn
ticket, being merely a receipt for pawn, is not
subject to DST. It is neither a security nor a
printed evidence of indebtedness.
On the other hand, the CIR averred that a
pawn ticket is proof of a contract of pledge,
and as such, is subject to DST.
In ruling for the CIR, the Supreme Court held
that in accordance with Articles 2085, 2087
and 2093 of the Civil Code, a pawnshop in
essence, as defined under Section 3 of P.D.
No. 114, enters into a contract of pledge with
the pawner or the borrower.
The Court further said that is a pawn ticket is
a proof of a contract of pledge, since for every
transaction, a pawnshop is required to deliver
to each person a signed copy thereof
containing, among others: 1.) the amount of
the loan; 2.) the date the loan was granted;
3.) rate of interest; 4.) the name and
residence of the pawnee.
Moreover, though the law neither considers a
pawn ticket as a security nor a printed
evidence of indebtedness, what is subject to
DST is not the ticket itself but the privilege of
entering into a contract of pledge.
In spite of such pronouncement, the SC still
declared that Antam is not liable for
delinquency interest and surcharges by
reason of its good faith in relying on its honest
belief that one is not subject to tax in the light
of the BIR’s previous interpretation that a
pawn ticket is not a printed evidence of
indebtedness.
5. COMMISSIONER OF INTERNAL
REVENUE vs. DOMINADOR MENGUITO
(G.R. No. 167560, September 17, 2008)
What are the circumstances that would
warrant the piercing of the veil of corporate
fiction? Is the taxpayer’s right to due process
of law violated with the non-issuance of a
post-reporting notice and pre-assessment
notice?
Menguito is a restaurateur who operated
branches in the cities of Pasay and Baguio.
Sometime in 1997, Menguito and his wife
were informed by the Assessment Division of
the BIR Baguio that the results of their
investigation showed that they have
undeclared sales for the periods 1991, 1992
and 1993, thereby resulting to deficiency
income and percentage taxes amounting to
P34, 193,041.55. The BIR alleged that
Menguito committed fraud with intent to
evade the payment of tax by under declaring
his sales.
The CTA ruled in favor of the CIR and
ordered Menguito to pay deficiency and
percentage tax liabilities. Menguito’s motion
for reconsideration was likewise denied.
Menguito then sought redress with the Court
of Appeals (CA), arguing that Copper Kettle
Catering Services, Inc. (CKCS, Inc.) was a
separate and distinct entity from Copper
Kettle Cafeteria Specialist (CKCS) and in view
thereof:
 1.) the sales and revenues of CKCS, Inc.
could not be ascribed to CKCS;
2.) neither may the taxes due from one,
charged to the other;
3.) nor the notices to be served on the
former, coursed through the latter.
The CA gave greater weight to the arguments
of Menguito and reversed the decision of the
CTA. The motion for reconsideration
subsequently filed by the CIR was also
denied by the CA.
Nevertheless, the SC overturned the decision
of the CA and interpreted the presence of the
following circumstances as substantial
evidence in support of the CIR’s contention
that CKSC, Inc. and CKSC are actually one
juridical taxable personality:
1. the owner of one directs and controls
the operations of the other; and
2. the payments effected or received by
one are for the accounts due from or
payable to the other; or
3. when the properties or products of one
are all sold to the other, which in turn
immediately sells them to the public.5
The Supreme Court said that the facts and
circumstances of the case belie the claim of
Menguito that CKCS, Inc. is different from
CKCS. Although it is established that the
Articles of Incorporation of CKCS, Inc was
issued in 1989, the pieces of documentary
evidence submitted before the Court indicate
that after the aforementioned issuance,
CKCS, Inc. has also assumed the name
CKCS, and vice-versa.
Hence, the SC ruled that it is undeniable that
the Menguito spouses operated the
restaurants in Club John Hay and Texas
Instruments under the names Copper Kettle
Cafeteria Specialist (CKCS) and Copper
Kettle Catering Services or Copper Kettle
Catering Services, Inc.
5
Liddell & Co., Inc. vs. Commissioner of Internal Revenue, 112
Phil. 524. See also Commissioner of Internal Revenue vs. Toda,
G.R. No. 147188, September 14, 2004.
As regards, the issue on the non-issuance of
a post-reporting notice and pre-assessment
notice by the BIR, the SC stressed that the
stringent requirement that an assessment
notice be satisfactorily proven to have been
issued and released or, if receipt thereof is
denied, that said assessment notice have
been served on the taxpayer, applies only to
formal assessments prescribed under Section
228 of the National Internal Revenue Code,
and not to post-reporting notices or pre-
assessment notices.
According to the SC, “a post-reporting notice
and pre-assessment notice do not bear the
gravity of a formal assessment notice. The
post-reporting notice and pre-assessment
notice merely hint at the initial findings of the
BIR against a taxpayer and invites the latter
to an “informal” conference or clarificatory
meeting. Neither notice contains a declaration
of the tax liability of the taxpayer or a demand
for payment thereof. Hence, the lack of such
notices inflicts no prejudice on the taxpayer
for as long as the latter is properly served a
formal assessment notice.”
However, “(t)he issuance of a valid formal
assessment is a substantive prerequisite to
tax collection, for it contains not only a
computation of tax liabilities but also a
demand for payment within a prescribed
period, thereby signaling the time when
penalties and interests begin to accrue
against the taxpayer and enabling the latter to
determine his remedies therefore. Due
process requires that it must be served on
and received by the taxpayer.6
6. COMMISSIONER OF INTERNAL
REVENUE vs. MIRANT PAGBILAO
CORPORATION (Formerly SOUTHERN
ENERGY QUEZON, INC.) (G.R. No. 172129,
12 September 2008)
6 Roxas Securities, Inc. vs. Commissioner of Internal Revenue,
G.R. No. 157064, August 7, 2006.
What is the best evidence to substantiate the
payment of input VAT? Is the non-payment of
interest by reason of the late payment of input
VAT fatal to a claim for refund thereof? How is
the prescriptive period in filing a claim for
refund of unutilized input VAT reckoned?
Mirant Pagbilao Corporation (MPC) sells its
generated power to the National Power
Corporation (NPC).
By reason of NPC’s tax exempt status, MPC
filed an Application for Effective Zero Rating
with the BIR’s Revenue District Office No. 60
in Lucena City.
Getting no response from the RDO, MPC filed
a request for ruling with the VAT Review
Committee at the BIR National Office.
Subsequently, the CIR issued VAT Ruling No.
052-99, stating that “the supply of electricity
by Hopewell Phil. To the NPC shall be subject
to zero percent (0%) VAT.
MPC then chose not to pay the VAT in the
progress billings from Mitsubishi for the period
covering April 1993 to September 1996. It
was only in April 14, 1998 that MPC paid
Mitsubishi the abovementioned VAT
component of P135,993,570.
While awaiting the approval of its application
with the RDO, MPC filed its quarterly VAT
return for the second quarter of 1998 on
August 25, 1998 where it reflected an input
VAT of P148,003,047.62, which amount
includes the abovementioned P135,993,570
supported by Official Receipt 0189.
MPC subsequently filed an administrative
claim for refund of unutilized input VAT,
however, the CIR failed to act on the same.
Hence, MPC filed a petition with the CTA.
The CTA granted MPC’s claim for input VAT
refund or credit, but only for the amount of
P10,766,939.48.
On appeal, the CA modified the decision of
the CTA and granted MPC’s claim for tax
refund or credit in the total amount of
P146,760,509.48. The CA likewise denied the
CIR’s motion for reconsideration.
The main difference between the decisions of
the CTA and CA involves the sufficiency of
O.R. No. 0189 to substantiate the payment of
input VAT. While the CA claimed that O.R.
No. 0189 was the best evidence for the
payment of input VAT by MPC to Mitsubishi,
on the other hand, the CTA claims otherwise
and doubted the veracity and genuineness of
O.R. No. 0189.
Eventually, the SC held that O.R. No. 0189
undoubtedly proves payment by MPC of its
creditable input VAT relative to its purchases
from Mitsubishi.
The SC affirmed that O.R. No. 0198 in itself
sufficiently proves payment of creditable input
VAT involved pursuant to Section 110
(A)(1)(B) of the NIRC. The Court said that
although the BIR is not precluded from
requiring additional evidence to prove that
input VAT had indeed been paid or, in fine,
that the taxpayer is indeed entitled to a tax
refund or credit for input VAT,KxxxK..the law
considers a duly executed VAT invoice or OR
as sufficient evidence to support a claim for
input tax credit.
The SC further said that any doubt as to what
OR 0198 was issued for was put to rest by
the report of the independent accountant that
O.R. No. 0189 dated April 14, 1998 is for
payment of the VAT on the progress billings
from Mitsubishi Japan.
Furthermore, the SC ruled that MPC’s non-
payment of interest to Mitsubishi, in view of
the former’s late payment of creditable input
VAT, is not fatal to MPC’s claim for refund
since such issue does not belie the fact of
payment by MPC of the input VAT involved,
as well as, the genuineness of OR 0189.
Nonetheless, the Court affirmed that MPC has
already lost its right to file the instant claim for
refund of the unutilized input VAT since
prescription has already set in.
Section 112(A) of the NIRC declares that a
VAT registered person may file for the
issuance of a tax credit certificate or refund of
creditable input tax within two (2) years after
the close of the taxable quarter when the
sales were made.
As pronounced by the Court, “prescriptive
period commences from the close of the
taxable quarter when the sales were made
and not from the time the input VAT was paid
nor from the time the official receipt was
issued. Thus when a zero-rated VAT taxpayer
pays its input VAT a year after the pertinent
transaction, said taxpayer only has a year to
file a claim for refund or tax credit of the
unutilized creditable input VAT. The reckoning
frame would always be the end of the quarter
when the pertinent sales or transaction was
made, regardless when the input VAT was
paid.
Hence, while the creditable input VAT
involved in the present case relates to the
progress billing dated September 6, 1996,
MPC filed the present claim for refund only on
December 10, 1999, which is clearly beyond
the period provided under the law.
7. JUDY ANNE L. SANTOS vs.
PEOPLE OF THE PHILIPPINES, ET AL.
(G.R. No. 173176, August 26, 2008)
Is the filing of a Petition for Review with the
CTA En Banc the proper remedy for a party
aggrieved by an interlocutory order of a
Division of the CTA?
The case began when then CIR Guillermo L.
Parayno Jr. recommended the criminal
prosecution of Juday to Justice Secretary
Raul M. Gonzales for substantial
underdeclaration of income.
Juday allegedly declared in her Income Tax
Return for 2002 an income of P8,033,332.70
solely derived from the talent fees paid to her
by the Kapamilya Network.
However, this was belied by documents given
by Juday’s accountant and other parties,
which establish that Juday actually had an
income of at least P14,796,234.70, coming
not only from the Kapamilya Network, but
from movies and product endorsements as
well. The non-declaration made by Juday
amounts to at least 84.18% of the income
declared in her ITR, which constitutes prima
facie evidence of false or fraudulent return.
Consequently, an Information charging Juday
for violation of Section 255 in relation to
Sections 254 and 248 (B) of the Tax Code
was filed with the CTA.
Juday then filed a Motion to Quash the
Information which the CTA denied. Similarly,
Juday’s reconsideration was also denied by
the CTA’s First Division.
Juday then filed with the CTA en banc, a
Motion for Extension of Time to File Petition
for Review to appeal the denial of the
abovementioned Motion to Quash.
In the meantime, while Juday was able to file
her Petition for Review with the CTA en banc
on June 16, 2006, the CTA en banc denied
on June 19, 2006 the Motion for Extension of
time to file Petition for Review previously filed
by Juday.
Aggrieved, Juday sought redress from the
Supreme Court asserting that the resolution
of the CTA Division denying a motion to
quash is appealable to the CTA en banc
pursuant to Section 18 of Republic Act No.
1125, as amended. Juday alleged that if that
is not the case, a procedural void would be
created, leaving the parties without any
remedy involving erroneous resolutions of the
CTA Division.
However, this failed to persuade the Supreme
Court.
The SC ruled that “the petition for review to
be filed with the CTA en banc as the mode for
appealing a decision, resolution, or order of
the CTA Division, under Section 18 of
Republic Act No. 1125, as amended, is not a
totally new remedy, unique to the CTA, with a
special application or use therein. To the
contrary, the CTA merely adopts the
procedure for petitions for review and appeals
long established and practiced in other
Philippine courts. Accordingly, doctrines,
principles, rules, and precedents laid down in
jurisprudence by this Court as regards
petitions for review and appeals in courts of
general jurisdiction should likewise bind the
CTA, and it cannot depart therefrom.”
Section 1, Rule 41 of the Revised Rules of
Court, governing appeals from the Regional
Trial Courts (RTCs) to the Court of Appeals,
provides that an appeal may be taken only
from a judgment or final order that completely
disposes of the case or of a matter therein
when declared by the Rules to be appealable.
Said provision, thus, explicitly states that no
appeal may be taken from an interlocutory
order.
It is well-settled that after a final order or
judgment has been issued, the court should
have nothing more to do in respect of the
relative rights of the parties to the case.
Conversely, "an interlocutory order is one that
does not finally dispose of the case and does
not end the Court's task of adjudicating the
parties' contentions in determining their rights
and liabilities as regards each other, but
obviously indicates that other things remain to
be done by the Court."7
Further, the SC stressed that one reason why
the law does not permit an appeal from an
interlocutory order is to avoid the multiplicity
of appeals in a single action, which would
result into the delay of the trial on the merits
of the case in the course of such appeal.
7BA Finance Corporation vs. Court of Appeals, G.R. No.
84294, October 16, 1989.
Finally, the SC emphasized that “there is no
dispute that a court order denying a motion to
quash is interlocutory. The denial of the
motion to quash means that the criminal
information remains pending with the court,
which must proceed with the trial to determine
whether the accused is guilty of the crime
charged therein. Equally settled is the rule
that an order denying a motion to quash,
being interlocutory, is not immediately
appealable,8 nor can it be the subject of a
petition for certiorari. Such order may only be
reviewed in the ordinary course of law by an
appeal from the judgment after trial.9”
Therefore, the Petition for Review filed by
Juday is the wrong remedy to assail an
interlocutory order denying her Motion to
Quash.
The SC declared that assuming Juday’s
Petition for Review was treated by the CTA as
a special civil action for certiorari, the same
would still be dismissed for lack of merit.
According to the Court, although “the City
Prosecutor has the power to investigate
crimes, misdemeanors, and violations of
ordinances committed within the territorial
jurisdiction of the city, and which can be
prosecuted before the trial courts of the said
city,” however, said prosecutor had no
authority to appear before the CTA where the
case was already pending.
Besides, “there is nothing in the Revised
Quezon City Charter which would suggest
that the power of the City Prosecutor to
investigate and prosecute crimes,
misdemeanors, and violations of ordinances
committed within the territorial jurisdiction of
the city is to the exclusion of the State
Prosecutors.”
Moreover, there could not have been a
violation of Juday’s right to due process and
equal protection of laws just because a similar
8 Villasin vs. Seven-Up Bottling Co. of the Philippines, 107 Phil.
801.
9 Gamboa vs. Cruz, G.R. No. L-56291, June 27, 1988.
case filed against the Songbird were
dismissed by the DOJ.
The SC emphasized that the more
appropriate course of action that Juday
should have taken is to appeal the Resolution
of the State Prosecutor to the DOJ Secretary.
Juday was also not denied of due process
since she was “given the opportunity to file
her affidavits and other pleadings and submit
evidence before the DOJ during the
preliminary investigation of her case and
before the Information was filed against her.
Due process is merely an opportunity to be
heard. In addition, preliminary investigation
conducted by the DOJ is merely inquisitorial.
It is not a trial of the case on the merits. Its
sole purpose is to determine whether a crime
has been committed and whether the
respondent therein is probably guilty of the
crime. It is not the occasion for the full and
exhaustive display of the parties' evidence.
Hence, if the investigating prosecutor is
already satisfied that he can reasonably
determine the existence of probable cause
based on the parties' evidence thus
presented, he may terminate the proceedings
and resolve the case.10”
There was likewise no violation of Juday’s
rights to equal protection of the law since she
was not able to establish that she and the
Songbird were similarly situated, i.e., that they
committed identical acts for which they were
charged with the violation of the same
provisions of the NIRC; and that they
presented similar arguments and evidence in
their defense — yet, they were treated
differently.
Much less, aside from her claim that a similar
charge against the Songbird was dismissed
while that against her prospered, Juday has
failed to present evidence showing that the
DOJ committed a clear and intentional
discrimination against her.
10 De Ocampo vs. Secretary of Justice, G.R. No. 147932, 25
January 2006.
8. CHEVRON PHILIPPINES, INC. vs.
COMMISSIONER OF CUSTOMS (G.R. No.
178759, 11 August 2008)
Does “entry” under Section 1301 in relation to
Section 1801 of the Tariff and Customs Code
(TCC) refer to the Import Entry Declation
(IED) or the Import Entry and Internal
Revenue Declaration (IEIRD)? When should
the IED and IEIRD be filed? How are
importations considered abandoned under
Section 1801 of the TCC? Is notice necessary
before importations shall be deemed as
impliedly abandoned by the importer?
Chevron is engaged in importing, distributing
and marketing of petroleum products.
In 1996, the importations made by the
Company were appraised at a duty rate of 3%
pursuant to RA 8180.
In 1999, then Finance Secretary Edgardo
Espiritu received a letter from a certain
Alfonso A. Orioste, which alleged the
deliberate concealment, manipulation and
scheme employed by petitioner and Pilipinas
Shell in the importation of crude oil, thereby
resulting in huge losses of revenue for the
government.
Subsequent to an investigation conducted by
the Bureau of Customs, Chevron received a
demand letter from the District Collector of
Customs of the Port of Batangas, requiring
the immediate settlement of the amount of
P73,535,830 which represents the difference
between the 10% duty rate prior to the
effectivity of RA 8180 on April 16, 1996 and
the 3% tariff rate under RA 8180 on the
shipments made by the Company.
Acting on Chevron’s request for the creation
of a unified team with exclusive authority to
act on the matter, the Commissioner of
Customs assigned the Investigation and
Prosecution Division, Customs Intelligence
and Investigation Service (IPD-CIIS), to the
exclusion of the Legal Division and the District
Collector, to handle the case.
The IPD-CIIS alleged that since the import
entries pertaining to Chevron’s transactions in
1996 were filed beyond the 30-day non-
extendible period, the importations were
already considered abandoned in favor of the
government.
The Commissioner of Customs subsequently
informed Chevron of the findings of
irregularity in the filing and acceptance of the
import entries beyond the period required by
customs law and in the release of the
shipments after the same had already been
deemed abandoned in favor of the
government. In view of the foregoing,
Chevron was ordered to pay the amount of
P1,180,170,769.21 representing the total
dutiable value of the importations.
On appeal with the CTA, the Court’s First
Division affirmed the existence of fraud and
ordered Chevron to pay deficiency customs
duties equal to P105,899,569.05.
The CTA En Banc sustained the findings of
fraud by the First Division and ordered
Chevron to pay the total dutiable value of the
shipments equal to P893,781,768.21.
Chevron then filed an appeal to the Supreme
Court, which ruled that “(t)he term "entry" in
customs law has a triple meaning. It means
(1) the documents filed at the customs house;
(2) the submission and acceptance of the
documents and (3) the procedure of passing
goods through the customs house.11”
According to the SC, “the IED serves as basis
for the payment of advance duties on
importations whereas the IEIRD evidences
the final payment of duties and taxes.”
Moreover, Section 205 of the TCC defines the
precise moment when imported articles are
deemed “entered” in the Philippines as the
11 Rodriguez vs. CA, G.R. No. 115218, September 18, 1995.
period when the specified entry form is
properly filed and accepted.
Hence, the operative act that constitutes
"entry" of the imported articles at the port of
entry is the filing and acceptance of the
"specified entry form" together with the other
documents required by law and regulations.
There is no dispute that the "specified entry
form" refers to the IEIRD.
In addition, the word “entry” was interpreted in
Go Ho Lim vs. The Insular Collector of
Customs (64 Phil. 64) as referring to the
regular consumption entry, which in present
terms is the IEIRD and not the IED which
indicates provisional entry only.
The important purposes addressed by the
filing of the IEIRD are the following:
1. to ascertain the value of the imported
articles; 2. collect the correct and final amount
of customs duties and avoid smuggling of
goods into the country.
Lastly, the IEIRD accompanies the final
payment of duties and taxes which must first
be paid in full before the BOC can allow the
release of the imported goods from its
custody.
For the abovementioned reasons, the SC
held that the submission of the IEIRD cannot
be left to the exclusive discretion or whim of
the importer.
Therefore, both the IED and IEIRD should be
filed within 30 days from the date of discharge
of the last package from the vessel or aircraft.
The SC likewise found Chevron guilty of
fraud since the evidence showed that the
Company bided its time to file the IEIRD in
order to enable it to avail of the new rate of
3% mandated under RA 8180, instead of the
previous rate of 10%.
The SC stated that “(t)here was a calculated
and preconceived course of action adopted
by petitioner purposely to evade the payment
of the correct customs duties then prevailing.”

As proven during the investigation of the IPD-
CIIS which was further affirmed by the CTA
First Division and CTA En Banc, indications of
Chevron’s deliberate intention to defraud the
government were its collusion with the former
District Collector, who allowed the acceptance
of the late IEIRDs and the collection of duties
using the 3% declared rate; as well as, the
Company’s non-disclosure of discrepancies
on the duties declared in the IEDs (10%) and
IEIRDs (3%) covering the shipments.
Under RA 7651, Chevron’s failure to file the
required IEIRD within the non-extendible
period of 30 days indicates that the Company
is already deemed to have renounced all its
interests and property rights to the
importations, even as the cargo shall be
considered as impliedly abandoned in favor of
the government.
Consequently, the SC ruled that in order for a
shipment to be considered abandoned, it
already sufficient that an importer fails to file
the required import entries within the
indicated reglementary period as the law no
longer requires that there be acts or
omissions where intent to abandoned may be
inferred.
Moreover, the SC likewise held that notice to
the importer is not required in view of the
peculiar facts of the case.
Company already had actual physical
possession of the property.
Since “the purpose of posting an "urgent
notice to file entry" pursuant to Section B.2.1
of CMO 15-94 is only to notify the importer of
the "arrival of its shipment" and the details of
said shipment.” Compliance with the notice
requirement is no longer required in the
instant case.
Finally, the SC ruled that the commencement
of abandonment proceedings is not a
necessary requirement in order to effect the
transfer of ownership of the abandoned
articles to the government.
Section 1802 of the TCC makes use of the
term “ipso facto”, which may be translated as
“by the fact itself”.
Accordingly, “there was no need for any
affirmative act on the part of the government
with respect to the abandoned imported
articles since the law itself provides that the
abandoned articles shall ipso facto be
deemed the property of the government.
Ownership over the abandoned importation
was transferred to the government by
operation of law under Section 1802 of the
TCC, as amended by R.A. 7651.”

A review of the deliberation of the Committee

on Ways and Means of the House of
Representatives concerning the proposed
amendment to Section 1801 of the TCC,
revealed that the phrase “after due notice”
was intended to assist the owners/importers
who live in rural areas or places far from the
port and are unfamiliar with customs
procedures and need help and advice of
people on how to file an entry.

More importantly, notice to Chevron is no

longer necessary as it was aware that the
shipments already arrived at the Port of
Batangas, aside from the fact that the