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G.R. No.

158150

September 10, 2014

AGRIEX CO., LTD., Petitioner,


vs.
HON. TITUS B. VILLANUEVA, Commissioner, Bureau of
Customs (now replaced by HON. ANTONIO M. BERNARDO),
and HON. BILLY C. BIBIT, Collector of Customs, Port of Subic
(now replaced by HON. EMELITO VILLARUZ), Respondents.
Facts:
Petitioner, a foreign corporation from Thailand, entered into a
contract of sale with an Indonesian corporation for 180,000 bags of
white Thai Rice. The Thai corporation also entered into a contract
with R&C Agro Trade of Cebu City for 20,000 bags of white Thai
Rice. The petitioner chartered a vessel to transport the rice to the
Subic Free Port Zone for transhipment to their designated
consignees. Collector of Customs Bibit to issued a Warrant of
Seizure and Detention against the 200,000 bags of white Thai rice.
Collector Bibit then issued a Notice of Sale. However, a temporary
restraining order was by the CA to desist from the auction sale.
Petitioner appealed the ruling by Collector Bibit to Commissioner
Villanueva. Commissioner Villanueva modified the ruling ordering
that the 20,000 bags bound for Cebu be released while affirming
the forfeiture of the 180,000 bags bound for Indonesia.
Issues:
Won the court of appeals erred in not declaring the seizure
proceedings null and void for lack of jurisdiction over petitioners
rice shipment.
Held:
The Court affirms the exclusive jurisdiction of the Bureau of
Customs over seizure cases within the Subic Freeport Zone.
The Court declares that the Collector of Customs was authorized to
institute seizure proceedings and to issue WSDs in the Subic Bay
Freeport, subject to the review by the Commissioner of Customs
Ratio:

The treatment of the Subic Bay Freeport as a separate customs


territory cannot completely divest the Government of its right to
intervene in the operations and management of the Subic Bay
Freeport, especially when patent violations of the customs and tax
laws are discovered.
Customs officers may seize any article found during a Customs
search upon entering or leaving the SBF to be in violation of any
provision of the customs laws for which a seizure is authorized, and
such seizure shall be disposed of according to the customs laws.
Articles which are prohibited or excluded from the SBF under the
rules and regulations of the SBMA which are found by the Customs
officials during an audit, examination or check within the SBF may
be seized by them and turned over to the SBMA for disposition.
The authority of the Bureau of Customs to seize and forfeit goods
and articles entering the Subic Bay Freeport does not contravene
the nature of the Subic Bay Freeport as a separate customs
authority. Indeed, the investors can generally and freely engage in
any kind of business as well as import into and export out goods
with minimum interference from the Government.

G.R. No. 157583

September 10, 2014

FRUMENCIO E. PULGAR, Petitioner,


vs.
THE REGIONAL TRIAL COURT OF MAUBAN, QUEZON, BRANCH
64, QUEZON POWER (PHILIPPINES) LIMITED, CO., PROVINCE
OF QUEZON, and DEPARTMENT OF FINANCE, Respondents.
Facts:
Municipal Assessor of Mauban, Quezon issued 34 tax declarations
on the buildings and machineries of QPL and thereby assessed it
with a market value of 29,626,578,291.00 and, hence, 500 Million,
more or less, in realty taxes per annum. QPL tendered partial
payment of the tax but the Municipal Assessor rejected the same.
QPL filed a complaint with the RTC for consignation and damages, it
also contested the assessment made by the Municipal assessor.
Pulgar intervened. The RTC ruled that the proper jurisdiction over
this case is with the Local Board of Assessment Appeals.
Issues:
The issue advanced before the Court is whether or not the RTC
erred in dismissing Pulgars motion for intervention as a
consequence of the dismissal of the main case. While
acknowledging the RTCs lack of jurisdiction, Pulgar nonetheless
prays that the Court pass upon the correctness of the Municipal
Assessors assessment of QPLs realty taxes, among others.
Held:
Jurisdiction over an intervention is governed by jurisdiction over the
main action.19 Accordingly, an intervention presupposes the
pendency of a suit in a court of competent jurisdiction.
WHEREFORE, the petition is DENIED.
Ratio:
[I]ntervention is never an independent action, but is ancillary and
supplemental to the existing litigation. Its purpose is not to obstruct
nor x x x unnecessarily delay the placid operation of the machinery
of trial, but merely to afford one not an original party, yet having a

certain right or interest in the pending case, the opportunity to


appear and be joined so he could assert or protect such right or
interests.
Otherwise stated, the right of an intervenor should only be in aid of
the right of the original party. Where the right of the latter has
ceased to exist, there is nothing to aid or fight for; hence, the right
of intervention ceases.

G.R. Nos. 212536-37

August 27, 2014

COMMISSIONER OF INTERNAL REVENUE and COMMISSIONER


OF CUSTOMS, Petitioners,
vs.
PHILIPPINE AIRLINES, INC., Respondent.
Facts:
PD 1590 provides that PAL, during the lifetime of its franchise, shall
pay the government either basic corporate income tax or franchise
tax based on revenues and/or the rate defined in the provision,
whichever is lower and the taxes thus paid under either scheme
shall be in lieu of all other taxes, duties and other fees. Pursuant to
sec 6 of RA 9334 which amended sec 131 of the NIRC, PAL was
assessed excised taxes on its importation of cigarettes and
alcoholic drinks for its commissary supplies used in its international
flights. PAL paid the taxes under protest. The CTA second division
ordered the BIR to pay PAL by way of refund the excise taxes it
paid. This decision was affirmed by the CTA en banc citing a
previous case which held in the main that held in the main that the
"in lieu of all taxes" clause in PALs franchise exempts it from excise
tax, an exemption that, contrary to petitioners unyielding posture,
has not been withdrawn by Congress when it enacted RA9334. CTA
denied BIRs reconsideration. Hence, this petition.
Issues:
Whether or not PALs importations of alcohol and tobacco products
for its commissary supplies are subject to excise tax
Held:
NO.
WHEREFORE, the instant Petition for Review is DENIED. The
assailed Decision of the Court of Tax Appeals en bane dated
December 9, 2013 and its Resolution dated May 2, 2014 are hereby
AFFIRMED.
Ratio:
It is a basic principle of statutory construction that a later law,
general in terms and not expressly repealing or amending a prior

special law, will not ordinarily affect the special provisions of such
earlier statute.9 So it must be here.
The tax privilege of PAL provided in Sec. 13 of PD 1590 has not
been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec.
6 of RA 9334.
That the Legislature chose not to amend or repeal [PD] 1590 even
after PAL was privatized reveals the intent of the Legislature to let
PAL continue to enjoy, as a private corporation, the very same
rights and privileges under the terms and conditions stated in said
charter.
Any lingering doubt, however, as to the continued entitlement of
PAL under Sec. 13 of its franchise to excise tax exemption on
otherwise taxable items contemplated therein, e.g., aviation gas,
wine, liquor or cigarettes, should once and for all be put to rest by
the fairly recent pronouncement in Philippine Airlines, Inc. v.
Commissioner of Internal Revenue.12 In that case, the Court, on the
premise that the "propriety of a tax refund is hinged on the kind of
exemption which forms its basis,"13 declared in no uncertain terms
that PAL has "sufficiently prove[d]" its entitlement to a tax refund of
the excise taxes and that PALs payment of either the franchise tax
or basic corporate income tax in the amount fixed thereat shall be
in lieu of all other taxes or duties, and inclusive of all taxes on all
importations of commissary and catering supplies, subject to the
condition of their availability and eventual use.

G.R. No. 180651

July 30, 2014

NURSERY CARE CORPORATION; SHOEMART, INC.; STAR


APPLIANCE CENTER, INC.; H&B, INC.; SUPPLIES STATION,
INC.; and HARDWARE WORKSHOP, INC., Petitioners,
vs.
ANTHONY ACEVEDO, in his capacity as THE TREASURER OF
MANILA; and THE CITY OF MANILA,Respondents.
Facts:
The City of Manila assessed and collected taxes from the individual
petitioners pursuant to Section 15 (Tax on Wholesalers,
Distributors, or Dealers) and Section 17 (Tax on Retailers) of the
Revenue Code of Manila.3 At the same time, the City of Manila
imposed additional taxes upon the petitioners pursuant to Section
21 of the Revenue Code of Manila, as amended, as a condition for
the renewal of their respective business licenses for the year 1999.
Petitioners paid the taxes assessed under section 21 under protest.
The City Treasurer denied the petitioners claim for tax credit or
refund. Subsequently, petitioners filed their respective petitions
with the RTC alleging, among others, double taxation.
The RTC ruled that the tax imposed under Section 15 and 17, as
against that imposed under Section 21, are levied against different
tax objects or subject matter. The tax under Section 15 is imposed
upon wholesalers, distributors or dealers, while that under Section
17 is imposed upon retailers. In short, taxes imposed under Section
15 and 17 is a tax on the business of wholesalers, distributors,
dealers and retailers. On the other hand, the tax imposed upon
herein petitioners under Section 21 is not a tax against the
business of the petitioners (as wholesalers, distributors, dealers or
retailers)but is rather a tax against consumers or end-users of the
articles sold by petitioners. In effect, the petitioners only act as the
collection or withholding agent of the City while the ones actually
paying the tax are the consumers or end-users of the articles being
sold by petitioners. The CA dismissed the appeal for lack of
jurisdiction. Hence, this appeal.
Issues:

The main issues for resolution are, therefore, (1) whether or not the
CA properly denied due course to the appeal for raising pure
questions of law; and (2) whether or not the petitioners were
entitled to the tax credit or tax refund for the taxes paid under
Section 21, supra.
Held:
The CA did not err in dismissing the appeal; but the rules should be
liberally applied
for the sake of justice and equity
Collection of taxes pursuant to Section 21 of the
Revenue Code of Manila constituted double taxation
WHEREFORE, the Court GRANTS the petition for review on
certiorari; REVERSES and SETS ASIDE the resolutions promulgated
on June 18, 2007 and November 14, 2007 in CA-G.R. SP No. 72191;
and DIRECTS the City of Manila to refund the payments made by
the petitioners of the taxes assessed and collected for the first
quarter of 1999 pursuant to Section 21 of the Revenue Code of
Manila.
Ratio:
The CA rightly concluded that the petitioners thereby raised only a
question of law. The dismissal of their appeal was proper, strictly
speaking, because Section 2, Rule 50 of the Rules of Court provides
that an appeal from the RTC to the CA raising only questions of law
shall be dismissed;
On the basis of the rulings in City of Manila v. Coca-Cola Bottlers
Philippines, Inc., 595 SCRA 299 (2009) and Swedish Match
Philippines, Inc. v. The Treasurer of the City of Manila, 700 SCRA
428 (2013), the Court now holds that all the elements of double
taxation concurred upon the City of Manilas assessment on and
collection from the petitioners of taxes for the first quarter of 1999
pursuant to Section 21 of the Revenue Code of Manila. Firstly,
because Section 21 of the Revenue Code of Manila imposed the tax
on a person who sold goods and services in the course of trade or
business based on a certain percentage of his gross sales or
receipts in the preceding calendar year, while Section 15 and

Section 17 likewise imposed the tax on a person who sold goods


and services in the course of trade or business but only identified
such person with particularity, namely, the wholesaler, distributor
or dealer (Section 15), and the retailer (Section 17), all the taxes
being imposed on the privilege of doing business in the City of
Manila in order to make the taxpayers contribute to the citys
revenues were imposed on the same subject matter and for the
same purpose. Secondly, the taxes were imposed by the same
taxing authority (the City of Manila) and within the same
jurisdiction in the same taxing period (i.e., per calendar year).
Thirdly, the taxes were all in the nature of local business taxes.
[Nursery Care Corporation vs. Acevedo, 731 SCRA 280(2014)]

G.R. No. 183664

July 28, 2014

AIRLIFT ASIA CUSTOMS BROKERAGE, INC. and ALLAN G.


BENEDICTO, Petitioners,
vs.
COURT OF APPEALS, COMMISSIONER OF THE BUREAU OF
CUSTOMS, AND THE SECRETARY OF FINANCE, Respondents.
Facts:
CAO 3-2006 was issued by the then Commissioner of the Bureau of
Customs (BOC) Napoleon L. Morales, it requires "customs brokers
desiring to practice their profession at the BOC [to] apply for
accreditation and [to] obtain a Certificate of Accreditation before
they may engage in customs brokerage practice. The petitioners
assailed the validity of CAO 3-2006 through an action for
declaratory relief. They primarily claimed that CAO 3-2006 was
issued without authority, contravenes Republic Act No. 9280 (RA
9280) or the Customs Brokers Act of 2004, and violates their right
to practice the customs broker profession. The RTC upheld the
petitioners contentions and nullified CAO 3-2006. It found that the
BOC Commissioner had no authority to issue rules governing the
practice of the customs brokerage profession. The trial court also
held that the required accreditation amounted to a licensing
requirement prohibited under Section 19 of RA No. 9280. The CA
reversed the RTCs ruling stating that, although the accreditation
requirement was an added burden to customs brokers, it
nevertheless bore a reasonable connection to the BOCs aim to
ensure accountability and integrity in the transactions involving
customs duties and tariff laws.
Issues:
WON BOC Commissioner had authority to issue CAO 3-2006.
Held:
No. RA No. 9280 expressly repealed Sections 3401 to 3409 of the
TCCP and transferred the supervision and regulation of the customs
brokerage profession from the Board of Examiners to the PRBCB.
Ratio:

Republic Act (R.A.) No. 9280 excluded the Bureau of Customs (BOC)
Commissioner as member of the Professional Regulatory Board for
Customs Brokers (PRBCB).Section 39 of RA 9280 expressly
repealed the TCCP provisions (Section 3401 to 3409) on the
customs brokers profession. Section 39 of RA 9280 further declared
that all laws...and parts thereof which are inconsistent with [RA
9280] are [deemed] modified, suspended, or repealed accordingly.
In lieu of the Board of Examiners, RA 9280 created the PRBCB
whose members are appointed by the President from a list of
recommendees submitted by the PRC which has supervisory and
administrative control over the PRBCB. Significantly, RA 9280
excluded the BOC Commissioner as member of the PRBCB. The
exclusion of the BOC Commissioner as a member of the PRBCB
evinces the legislative intent to remove any power he previously
exercised over custom brokers, and to transfer the supervision,
control and regulation of this profession to the PRBCB. By
conferring these powers on the PRBCB, the declared policy of RA
9280 to professionalize the practice of the customs broker
profession is executed and fulfilled.
With the repeal of Section 3409 of the Tariff and Customs Code of
the Philippines (TCCP) by Republic Act (R.A.) No. 9280, this specific
rule-making power was transferred to the Professional Regulatory
Board for Customs Brokers (PRBCB) to complement its supervisory
and regulatory powers over customs brokers.The BOC
Commissioners power under Section 608 of the TCCP is a general
grant of power to promulgate rules and regulations necessary to
enforce the provisions of the TCCP. Under the rules of statutory
construction, this general rule-making power gives way to the
specific grant of power to promulgate rules and regulations on the
practice of customs brokers profession to the CSC Commissioner
under Section 3409 of the TCCP. Indeed, in the exercise of this
specific power, the Board of Examiners (of which the BOC
Commissioner serves as ex officio chairman) was to perform only a
recommendatory role. With the repeal of Section 3409 of the TCCP
by RA 9280, this specific rule-making power was transferred to the
PRBCB to complement its supervisory and regulatory powers over
customs brokers.
Under Republic Act (R.A.) No. 9280, a successful examinee of the
customs brokers examinations acquires a Certificate of

Registration, which entitles him to practice the profession as a


customs broker with all the benefits and privileges appurtenant
thereto.With the exception of consulting with clients, and
teaching tariff and customs administration, most of the above
enumerated activities involve dealing with the BOC. In other words,
a large part of a custom brokers work involves practice before the
BOC, and CAO 3-2006 practically compels all customs brokers
already certified by the PRC to comply with the accreditation
requirement for them to practice their profession. This is contrary
to the terms of Section 19 of RA 9280, which provides that a
customs broker shall be allowed to practice the profession in any
collection district without the need of securing another license from
the [BOC].

G.R. No. 207443

July 23, 2014

GENATO INVESTMENTS, INC., Petitioner,


vs.
HON. JUDGE OSCAR P. BARRIE~TOS, in his capacity as the
Presiding Judge of the Regional Trial Court, of Caloocan
City, Branch 123, EMILY .p. DIZON, in her capacity as the
Branch Clerk of Court of the Regional Trial Court of
Caloocan City, Branch 123, JIMMY T. SORO, Court Process
Server of the Regional Trial Court of . Caloocan, Branch 123,
EVELINA M. GARMA, City Treasurer of Caloocan City, PHILLIP
L. YAM, Officer-in-Charge, Real Property Tax Division of the
Caloocan City Treasurer's Office, ANTHONY B. PULMANO,
Officer-in-Charge, City Assessor of Caloocan City, and
LAVERNE REALTY & DEVELOPMENT
CORPORATION, Respondents.
Facts:
Petitioner owns a parcel of Land in Caloocan city. Due to alleged
deficiency in real property taxes due on Lot no. 13-B-1, the City
Treasurer sold the lot on a public auction to private respondent.
Petitioner learned of the auction sale only when the Sheriff of the
RTC of Caloocan left it a Notice to Vacate. Petitioner claims that real
property taxes due on Lots 1-A and 13-B-1, with a combined
assessed value of P8,697,870.00, up to the 4th quarter of 2011,
have been duly paid. Petitioner, filed with the CA a Petition for
Annulment of Judgment praying, among others, for the annulment
and setting aside of the Orders dated 31 August 2011 and 26 April
2012 and the Writ of Possession issued by the RTC Caloocan. CA
dismissed the petition stating that the proper remedy was to file an
action for reconveyance on the ground of fraud, hence, this
petition.
Issues:
WON auction sale was valid. WON petitioner fully paid its property
taxes.
Held:
Petitioner fully paid its real estate taxes due on Lot 13-B-1.

WHEREFORE, the petition is GRANTED. The Resolutions of the Court


of Appeals dated 27 February 2013 and 30 May 2013 in CA-G.R. SP
No. 128187 are SET ASIDE. Necessarily, the Orders dated 31 August
2011, 26 April 2012 and 19 November 2012, and the Writ of
Possession dated 27 April 2012 in LRC Case No. C-5748, are all
vacated.
Ratio:
Considering the foregoing, private respondent did not acquire any
valid right to petition the RTC Caloocan for the cancellation of TCT
No. 33341 and, more importantly, take possession of Lot 13-B-1,
much less Lot 1-A. We reiterate the principle that strict adherence
to the statutes governing tax sales is imperative, not only for the
protection of the taxpayers, but also to allay any possible suspicion
of collusion between the buyer and the public officials called upon
to enforce the laws.
Petitioner confronts respondents with copies of its Real Property Tax
Receipts33 issued by the Office of the City Treasurer of the City of
Caloocan spanning the period from 2000 to 2012,as well as the
Payment History34 from 1995 to 2011 evidencing full payment of
real property taxes due on its land, whose assessed value was
adjusted in 2005 to P8,697,870.00.
Petitioner likewise confronts respondents with the
Certification35 dated 19 September 2011 issued by the Office of the
City Treasurer of Caloocan, through its OIC Land Tax Division,
respondent Yam, certifying that the real property taxes due on Lots
1-A and 13-B-1, with an assessed value of P8,697,870.00, up to the
4th quarter of 2011, and previous years, have been duly paid by
petitioner.
The alleged delinquency of petitioner in its real property taxes and
the basis for the auction sale stemmed from the supposed nonpayment of real property taxes due on Lot 13-B-1, with an assessed
value of P4,866,350.00 covered by another tax declaration,38 D12109-00013-C under Property Index No. 113-12-109-01-014.

Shortly before private respondent took over the property of


petitioner in 2012, the Office of the City Assessor, through
respondent Pulmano, issued yet another tax declaration, no. 12109-00153-12-C under Property Index No. 113-12-109-01-013, this
time covering only Lot No. 1-A, with an assessed value
of P3,831,520.00. This new issuance cancelled petitioners original
Tax Declaration No. D12-109-00012-C under Property Index No.
113-12-109-01-013, which previously covered both Lots Nos. 1-A
and 13-B-1.
As petitioner duly points out,39 a simple mathematical application
would show that if the assessed values in the 2nd and 3rd tax
declarations were added, P4,866,350.00 and P3,831,520.00, the
same would amount toP8,697,870.00, the assessed value of the
property as indicated in the original tax declaration.
Therefore, if all the tax declarations issued by respondent Pulmano
refer to one and the same property of petitioner, and the latter fully
paid all its realty taxes due on the same, then it would follow that
the finding of delinquency did not have any basis.
G.R. No. 176317

July 23, 2014

MANOLITO GIL Z. ZAFRA, Petitioner,


vs.
PEOPLE OF THE PHILIPPINES, Respondent.
Facts:
Appellant was the only Revenue Collection Agent of the Bureau of
Internal Revenue (BIR), Revenue District 3, in San Fernando, La
Union from 1993-1995. Among his duties was to receive tax
payments for which BIR Form 25.24 or the revenue official receipts
(ROR) were issued. The original of the ROR was then given to the
taxpayer while a copy thereof was retained by the collection officer.
On 06 July 1995, an audit team composed of Revenue Officers
Helen D. Rosario, Maria Lourdes G.Morada, Marina B. Magluyan and
Norma Duran, all from the central office of the BIR, was tasked to
audit the cash and non-cash accountabilities of the appellant. A
comparison of the entries in various documents revealed that the
data pertaining to 18 RORs with the same serial number vary with
respect to the name of the taxpayer, the kind of tax paid, the

amount of tax and the date of payment. Thus, the audit team sent
to appellant a demand letter requiring him to restitute the total
amount of Php614,151.93. Appellant ignored the letter, thus,
prompting the institution of the 18 cases for malversation of public
funds through falsification of public document against him.
Appellant denied that he committed the crimes charged. He
averred that as Revenue Collection Officer of San Fernando, La
Union, he never accepted payments from taxpayers nor issued the
corresponding RORs. It was his subordinates, Andrew Aberin and
Rebecca Supsupin, who collected the taxes and issued the
corresponding RORs. RTC rendered its consolidated decision
convicting the petitioner of 18 counts of malversation of public
funds through falsification of public documents. The CA affirmed
the decision of the RTC.
Issues:
WON RTC and the CA erroneously convicted him of several counts
of malversation of public funds through falsification of public
documents on the basis of the finding that he had been negligent in
the performance of his duties as Revenue District Officer;18 that the
acts imputed to him did not constitute negligence; and that he
could not be convicted of intentional malversation and
malversation through negligence at the same time.
Held:
No. WHEREFORE, the Court AFFIRMS the decision promulgated on
August 16, 2006 by the Court of Appeals subject to the modification
of the penalties imposed as stated in this decision.
Ratio:
The particular pages of the Monthly Reports from which witness
Magluyan based her examination to determine the discrepancies in
the Official Receipts listed by the accused therein, bore only the
typewritten name of the accused without any signature. However,
prosecution witness Rebecca Rillorta showed that those individual
pages were part of a number of pages of a report submitted for a
particular month, and she showed that the last pages of the related
reports were duly signed by the accused.
In addition, the testimony of Maria Domagas establishes that the
questionable receipts were within the series of receipts
accountability of accused for a particular month. x x x. The

testimony of State Auditor Domagas established the link of accused


accountable receipts, with the receipts numbers reported in his
Monthly Collection Report as well as to the receipts issued to the
taxpayers.
The findings of fact of the RTC were affirmed by the CA. Hence, the
petitioner was correctly convicted of the crimes charged because
such findings of fact by the trial court, being affirmed by the CA as
the intermediate reviewing tribunal, are now binding and
conclusive on the Court.

G.R. No. 205055

July 18, 2014

COMMISSIONER OF INTERNAL REVENUE, Petitioner,


vs.
TEAM SUAL CORPORATION (formerly MIRANT SUAL
CORPORATION), Respondent.
Facts:
TSC is a value-added tax (VAT) payer duly registered with the
Bureau of Internal Revenue (BIR). TSC applied for the VAT zerorating of its sale of electric power to NPC for the taxable year 2004.
TSCs application was subsequently approved by the BIR. On 26
April 2004, 26 July 2004, 25 October 2004 and 25 January 2005,
TSC filed its quarterly VAT returns for the four quarters of 2004 with
the BIR, through the Electronic Filing and Payment Scheme (EFPS).
On 21 December 2005, TSC filed an administrative claim for refund
of its input VAT, which it incurred for the four quarters of 2004. On
24 April 2006, due to the BIRs inaction, TSC filed a petition for
review with the Court of Tax Appeals (CTA). TSC prayed for the
refund or issuance of tax credit certificate for its alleged unutilized
input VAT for year 2004.
The CTA Division ruled that TSC complied with the five
requirements to be entitled to a refund or issuance of tax credit
certificate on its input VAT. The CTA en banc affirmed the decision
of the division.
Issues:
WON THE [CTA EB] GRAVELY ERRED IN DENYING DUE COURSE TO
[CIR]S PETITION FOR REVIEW IN [CTA] EB NO. 768 AND IN
AFFIRMING THE DECISION OF ITS SPECIAL FIRST DIVISION THAT
[TSC] IS ENTITLED TO A REFUND OR TAX CREDIT CERTIFICATE IN
THE AMOUNT OF P96,846,234.31 BECAUSE IT WAS ABLE TO SUBMIT
THE LEGALLY REQUIRED DOCUMENTS IN ITS APPLICATION FOR
REFUND
Held:
No. WHEREFORE, we DENY the petition for lack of merit. The
Decision and Resolution of the Court of Tax Appeals, dated 27 July
2012 and 6 December 2012, respectively, are AFFIRMED.

Ratio:
Once the taxpayer has established by sufficient evidence that it is
entitled to a refund or issuance of a tax credit certificate, in
accordance with the requirements of Section 112(A) of the National
Internal Revenue Code (NIRC), its claim should be granted.Under
Section 112(C) of the NIRC, the CIR has 120 days to decide the
taxpayers claim from the date of submission of complete
documents in support of the application filed in accordance with
Section 112(A) of the NIRC. In Intel Technology v. Commissioner of
Internal Revenue, 522 SCRA 657 (2007), we ruled that once the
taxpayer has established by sufficient evidence that it is entitled to
a refund or issuance of a tax credit certificate, in accordance with
the requirements of Section 112(A) of the NIRC, its claim should be
granted.
Only preponderance of evidence as applied in ordinary civil cases is
needed to substantiate a claim for tax refund.We likewise applied
RR 3-88 in AT&T Communications Services Philippines, Inc. v.
Commissioner of Internal Revenue, 626 SCRA 567 (2010), and held
that only preponderance of evidence as applied in ordinary civil
cases is needed to substantiate a claim for tax refund.

G.R. No. 181836

July 9, 2014

BANK OF THE PHILIPPINE ISLANDS, Petitioner,


vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Facts:

invalidated because the statute of limitations on the collection of


the alleged deficiency DST had already expired.
Issues:
The issue boils down to whether or not BIR has a right to collect the
assessed DST from BPI.
Held:

On 19 May 1989, the Bureau ofInternal Revenue (BIR) issued


Assessment No. FAS-5-85-89-0009885 finding BPI liable for
deficiency DST on its sales of foreign bills of exchange to the
Central Bank. On 16 June 1989, BPI received the assessment notice
and demand letter from the BIR.
On 23 June 1989, BPI, through its counsel, filed a protest
letter6 requesting for the reinvestigation and/or reconsideration of
the assessment for lack of legal and factual bases. In a letter dated
4 August 1998,7 then Commissioner of Internal Revenue (CIR)
Beethoven L. Rualo denied the "request for reconsideration." The
CIR held that BPIs arguments were legally untenable. The CIR cited
BIR Unnumbered Ruling dated 30 May 1977 and BIR Ruling No. 14484 dated 3 September 1984, where the liability to pay DST was
shifted to the other party, who was not exempt from the tax.
BPI filed a petition for review before the CTA. The CTA ordered the
cancellation of the assessed DST on BPI. The CTA ruled that neither
BPI nor Central Bank, which was tax-exempt, could be liable for the
payment of the assessed DST. The CTA reasoned out that before PD
1994 took effect in 1986, there was no law that shifted the liability
to the other party, in case the party liable to pay the DST was tax
exempt.
The CA reversed the CTA decision, and adopted the arguments of
the CIR and CTA Associate Justice Ramon O. De Veyra, in his
dissent.
On 12 February 2008, the CA denied the motion for reconsideration
filed by BPI. Hence, BPI filed a petition for review before the Court.
In a Resolution dated 5 August 2013,12 the Court, through the Third
Division, found that the assailed tax assessment may be

We deny the right of the BIR to collect the assessed DST on the
ground of prescription.
Before 2004 or the year Republic Act No. 9282 took effect, the
judicial action to collect internal revenue taxes fell under the
jurisdiction of the regular trial courts, and not the CTA. Evidently,
prescription has set in to bar the collection of the assessed DST.
Ratio:
In the present case, although there was no allegation as to when
the assessment notice had been released, mailed or sent to BPI,
still, the latest date that the BIR could have released, mailed or
sent the assessment notice was on the date BPI received the same
on 16 June 1989. Counting the three year prescriptive period from
16 June1989, the BIR had until 15 June 1992 to collect the assessed
DST. But despite the lapse of 15 June 1992, the evidence
established that there was no warrant of distraint or levy served on
BPIs properties, or any judicial proceedings initiated by the BIR.
To determine prescription, what is essential only is that the facts
demonstrating the lapse of the prescriptive period were sufficiently
and satisfactorily apparent on the record either in the allegations of
the plaintiffs complaint, or otherwise established by the evidence.
To determine prescription, what is essential only is that the facts
demonstrating the lapse of the prescriptive period were sufficiently
and satisfactorily apparent on the record either in the allegations of
the plaintiffs complaint, or otherwise established by the evidence.
Under the then applicable Section 319(c) [now, 222(c)] of the
National Internal Revenue Code (NIRC) of 1977, as amended, any
internal revenue tax which has been assessed within the period of
limitation may be collected by distraint or levy, and/or court
proceeding within three years following the assessment of the tax.

The assessment of the tax is deemed made and the three-year


period for collection of the assessed tax begins to run on the date
the assessment notice had been released, mailed or sent by the
BIR to the taxpayer. [Bank of the Philippine Islands vs.
Commissioner of Internal Revenue, 729 SCRA 375(2014)]

G.R. No. 197515

July 2, 2014

1. Whether or not the Court of Tax Appeals is governed


strictly by the technical rules of evidence;

COMMISSIONER OF INTERNAL REVENUE, Petitioner,


vs.
UNITED SALVAGE AND TOWAGE (PHILS.), INC., Respondent.

2. Whether or not the Expanded Withholding Tax


Assessments issued by petitioner against the respondent for
taxable year 1994 was without any factual and legal basis;
and

Facts:
In the course of respondents operations, petitioner found
respondent liable for deficiency income tax, withholding tax, valueadded tax (VAT) and documentary stamp tax (DST) for taxable
years 1992,1994, 1997 and 1998.4Particularly, petitioner, through
BIR officials, issued demand letters with attached assessment
notices for withholding tax on compensation (WTC) and expanded
withholding tax (EWT) for taxable years 1992, 1994 and 1998. On
February 21, 2003, USTP appealed by way of Petition for Review
before the Court in action (which was thereafter raffled to the CTASpecial First Division) alleging, among others, that the Notices of
Assessment are bereft of any facts, law, rules and regulations or
jurisprudence; thus, the assessments are void and the right of the
government to assess and collect deficiency taxes from it has
prescribed on account of the failure to issue a valid notice of
assessment within the applicable period. USTP moved to withdraw
the aforesaid Petition because it availed of the benefits of the Tax
Amnesty Program. The CTA-Special First Division held that the
Preliminary Assessment Notices (PANs) for deficiency EWT for
taxable years 1994 and 1998 were not formally offered; hence,
pursuant to Section 34, Rule 132 of the Revised Rules of Court, the
Court shall neither consider the same as evidence nor rule on their
validity.12 As regards the Final Assessment Notices (FANs) for
deficiency EWT for taxable years 1994 and 1998, the CTA-Special
First Division held that the same do not show the law and the facts
on which the assessments were based.13 Said assessments were,
therefore, declared void for failure to comply with Section 228 of
the 1997 National Internal Revenue Code (Tax Code). Nevertheless,
the CTA-Special First Division declared that the right of petitioner to
collect the deficiency EWT and WTC, respectively, for taxable year
1992 had already lapsed pursuant to Section 203 of the Tax Code.
Issues:

3. Whether or not petitioners right to collect the creditable


withholding tax and expanded withholding tax for taxable
year 1992 has already prescribed.

Held:
After careful review of the records and evidence presented before
us, we find no basis to overturn the decision of the CTA En Banc.
Hence, we agree with the CTA En Bancs observation that the 1994
and 1998 PANs for EWT deficiencies were not duly identified by
testimony and were not incorporated in the records of the case, as
required by jurisprudence.
EWT assessment issued for taxable year 1994 has factual and legal
basis
WHEREFORE, the petition is DENIED. The June 27, 2011 Decision of
the Court of Tax Appeals En Banc in C.T.A. EB No. 662 is hereby
AFFIRMED.
Ratio:
The Court of Tax Appeals (CTA) shall have the power to promulgate
rules and regulations for the conduct of its business, and as may be
needed, for the uniformity of decisions within its jurisdiction.
Under Section 8 of Republic Act (R.A.) No. 1125, the CTA is
categorically described as a court of record. As such, it shall have
the power to promulgate rules and regulations for the conduct of its
business, and as may be needed, for the uniformity of decisions
within its jurisdiction. Moreover, as cases filed before it are litigated
de novo, party-litigants shall prove every minute aspect of their
cases. Thus, no evidentiary value can be given the pieces of
evidence submitted by the BIR, as the rules on documentary

evidence require that these documents must be formally offered


before the CTA. Pertinent is Section 34, Rule 132 of the Revised
Rules on Evidence which reads: SEC. 34. Offer of evidence.
The court shall consider no evidence which has not been formally
offered. The purpose for which the evidence is offered must be
specified.
Indeed, Section 228 of the Tax Code provides that the taxpayer
shall be informed in writing of the law and the facts on which the
assessment is made. Otherwise, the assessment is void. To
implement the aforesaid provision, Revenue Regulation No. 12-99
was enacted by the BIR, of which Section 3.1.4 thereof reads: 3.1.4.
Formal Letter of Demand and Assessment Notice. The use of the
word shall in these legal provisions indicates the mandatory
nature of the requirements laid down therein.
The statute of limitations on assessment and collection of national
internal revenue taxes was shortened from five (5) years to three
(3) years by virtue of Batas Pambansa Blg. 700. Thus, petitioner
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.
However, 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.
While taxes are the lifeblood of the government, the power to tax
has its limits, in spite of all its plenitude.We ought to reiterate our
earlier teachings that in balancing the scales between the power
of the State to tax and its inherent right to prosecute perceived
transgressors of the law on one side, and the constitutional rights
of a citizen to due process of law and the equal protection of the
laws on the other, the scales must tilt in favor of the individual, for
a citizens right is amply protected by the Bill of Rights under the
Constitution.

G.R. No. 161759

July 2, 2014

Issues:

1999. We rule against the Commissioner of Customs. The CTA


correctly ruled that the reckoning date for Oilinks appeal was July
12, 1999, not July 2, 1999, because it was on the former date that
the Commissioner of Customs denied the protest of Oilink. Clearly,
the filing of the petition on July 30, 1999 by Oilink was well within
its reglementary period to appeal. The insistence by the
Commissioner of Customs on reckoning the reglementary period to
appeal from November 25, 1998, the date when URC received the
final demand letter, is unwarranted. We note that the November
25, 1998 final demand letter of the BoC was addressed to URC, not
to Oilink. As such, the final demand sent to URC did not bind Oilink
unless the separate identities of the corporations were disregarded
in order to consider them as one.

(a) The CTA gravely erred in holding that it had jurisdiction over the
subject matter; (b) the CTA gravely erred in holding that Oilink had
a cause of action;

The principle of non-exhaustion of administrative remedies was not


an iron-clad rule because there were instances in which the
immediate resort to judicial action was proper.

COMMISSIONER OF CUSTOMS, Petitioner,


vs.
OILINK INTERNATIONAL CORPORATION, Respondent.
Facts:
URC and Oilink had interlocking directors when Oilink started its
business.

Held:
The CTA had jurisdiction over the controversy
Oilink had a valid cause of action
Ratio:
Republic Act (R.A.) No. 1125, the law creating the Court of Tax
Appeals (CTA), defined the appellate jurisdiction of the CTA as
follows: The Court of Tax Appeals shall exercise exclusive appellate
jurisdiction to review by appeal, as herein provided: Decisions of
the Commissioner of Customs in cases involving liability for
Customs duties, fees or other money charges; seizure, detention or
release of property affected; fines, forfeitures or other penalties
imposed in relation thereto; or other matters arising under the
Customs Law or other law or part of law administered by the
Bureau of Customs (BOC).There is no question that the CTA had
the jurisdiction over the case. Nonetheless, the Commissioner of
Customs contends that the CTA should not take cognizance of the
case because of the lapse of the 30-day period within which to
appeal, arguing that on November 25, 1998 URC had already
received the BoCs final assessment demanding payment of the
amount due within 10 days, but filed the petition only on July 30,

209287, etc. Araullo v. Aquino, et.al. DAP Case


Facts:
When President Benigno Aquino III took office, his administration
noticed the sluggish growth of the economy. The World Bank
advised that the economy needed a stimulus plan. Budget
Secretary Florencio Butch Abad then came up with a program
called the Disbursement Acceleration Program (DAP).
The DAP was seen as a remedy to speed up the funding of
government projects. DAP enables the Executive to realign funds
from slow moving projects to priority projects instead of waiting for
next years appropriation. So what happens under the DAP was that
if a certain government project is being undertaken slowly by a
certain executive agency, the funds allotted therefor will be
withdrawn by the Executive. Once withdrawn, these funds are
declared as savings by the Executive and said funds will then be
reallotted to other priority projects. The DAP program did work to
stimulate the economy as economic growth was in fact reported
and portion of such growth was attributed to the DAP (as noted by
the Supreme Court).
Other sources of the DAP include the unprogrammed funds from
the General Appropriations Act (GAA). Unprogrammed funds are
standby appropriations made by Congress in the GAA.
Meanwhile, in September 2013, Senator Jinggoy Estrada made an
expos claiming that he, and other Senators, received Php50M from
the President as an incentive for voting in favor of the
impeachment of then Chief Justice Renato Corona. Secretary Abad
claimed that the money was taken from the DAP but was disbursed
upon the request of the Senators.
This apparently opened a can of worms as it turns out that the DAP
does not only realign funds within the Executive. It turns out that
some non-Executive projects were also funded; to name a few:
Php1.5B for the CPLA (Cordillera Peoples Liberation Army), Php1.8B
for the MNLF (Moro National Liberation Front), P700M for the
Quezon Province, P50-P100M for certain Senators each, P10B for
Relocation Projects, etc.
This prompted Maria Carolina Araullo, Chairperson of the Bagong
Alyansang Makabayan, and several other concerned citizens to file

various petitions with the Supreme Court questioning the validity of


the DAP. Among their contentions was:
DAP is unconstitutional because it violates the constitutional rule
which provides that no money shall be paid out of the Treasury
except in pursuance of an appropriation made by law.
Secretary Abad argued that the DAP is based on certain laws
particularly the GAA (savings and augmentation provisions thereof),
Sec. 25(5), Art. VI of the Constitution (power of the President to
augment), Secs. 38 and 49 of Executive Order 292 (power of the
President to suspend expenditures and authority to use savings,
respectively).
Issues:
I. Whether or not the DAP violates the principle no money shall be
paid out of the Treasury except in pursuance of an appropriation
made by law (Sec. 29(1), Art. VI, Constitution).
II. Whether or not the DAP realignments/transfers are
constitutional.
III. Whether or not the sourcing of unprogrammed funds to the DAP
is constitutional.
IV. Whether or not the Doctrine of Operative Fact is applicable
Held and Ratio:
I. No, the DAP did not violate Section 29(1), Art. VI of the
Constitution. DAP was merely a program by the Executive and is
not a fund nor is it an appropriation. It is a program for prioritizing
government spending. As such, it did not violate the Constitutional
provision cited in Section 29(1), Art. VI of the Constitution. In DAP
no additional funds were withdrawn from the Treasury otherwise, an
appropriation made by law would have been required. Funds, which
were already appropriated for by the GAA, were merely being
realigned via the DAP.
II. No, the transfers made through the DAP were unconstitutional.
It is true that the President (and even the heads of the other
branches of the government) are allowed by the Constitution to
make realignment of funds, however, such transfer or realignment
should only be made within their respective offices. Thus, no
cross-border transfers/augmentations may be allowed. But

under the DAP, this was violated because funds appropriated by the
GAA for the Executive were being transferred to the Legislative and
other non-Executive agencies. (Third requisite, must be in their
respective office.)
Further, transfers within their respective offices also contemplate
realignment of funds to an existing project in the GAA. Under the
DAP, even though some projects were within the Executive, these
projects are non-existent insofar as the GAA is concerned because
no funds were appropriated to them in the GAA. Although some of
these projects may be legitimate, they are still non-existent under
the GAA because they were not provided for by the GAA. As such,
transfer to such projects is unconstitutional and is without legal
basis. (Second requisite, savings generated from the
appropriations for their respective offices)
On the issue of what are savings
These DAP transfers are not savings contrary to what was being
declared by the Executive. Under the definition of savings in the
GAA, savings only occur, among other instances, when there is an
excess in the funding of a certain project once it is completed,
finally discontinued, or finally abandoned. The GAA does not refer
to savings as funds withdrawn from a slow moving project. Thus,
since the statutory definition of savings was not complied with
under the DAP, there is no basis at all for the transfers. Further,
savings should only be declared at the end of the fiscal year. But
under the DAP, funds are already being withdrawn from certain
projects in the middle of the year and then being declared as
savings by the Executive particularly by the DBM.
(Second requisite, savings generated from the
appropriations for their respective offices)
In addition, the court also ruled that there is no law pertaining to
such transfer because the GAA were textually unfaithful to the
Constitution for not carrying the phrase "for their respective
offices" in 2011 and 2012. (First Requisite)
III No. Unprogrammed funds from the GAA cannot be used as
money source for the DAP because under the law, such funds may
only be used if there is a certification from the National Treasurer to
the effect that the revenue collections have exceeded the revenue

targets. In this case, no such certification was secured before


unprogrammed funds were used. Also, the unprogrammed funds,
as standby appropriations, were to be released only when there
were revenues in excess of what the programmed appropriations
required. As such, the revenue targets should be considered as a
whole, not individually; otherwise, we would be dealing with
artificial revenue surpluses. Moreover, to release the
unprogrammed funds simply because there was an excess revenue
as to one source of revenue would be an unsound fiscal
management measure because it would disregard the budget plan
and foster budget deficits, in contravention of the Governments
surplus budget policy.
IV. Yes. The Doctrine of Operative Fact, which recognizes the legal
effects of an act prior to it being declared as unconstitutional by the
Supreme Court, is applicable. The DAP has definitely helped
stimulate the economy. It has funded numerous projects. If the
Executive is ordered to reverse all actions under the DAP, then it
may cause more harm than good. The DAP effects can no longer be
undone. The beneficiaries of the DAP cannot be asked to return
what they received especially so that they relied on the validity of
the DAP. However, the Doctrine of Operative Fact may not be
applicable to the authors, implementers, and proponents of the
DAP if it is so found in the appropriate tribunals (civil, criminal, or
administrative) that they have not acted in good faith.

Take note:

Four phases comprise the Philippine budget process,


specifically: (1) Budget Preparation; (2) Budget Legislation;
(3) Budget Execution; and (4) Accountability
The DAP comes into play in the Budget Execution
phase. Appropriation comes in the Budget Legislation
Phase.
Requisites for the valid transfer of appropriated funds
under Section

25(5), Article VI of the 1987 Constitution (Realignment of


Funds)
The transfer of appropriated funds, to be valid under
Section 25(5), supra, must be made upon a concurrence of
the following requisites, namely:
(1) There is a law authorizing the President, the President
of the Senate, the Speaker of the House of Representatives,
the Chief Justice of the Supreme Court, and the heads of
the Constitutional Commissions to transfer funds within
their respective offices;
(2) The funds to be transferred are savings generated
from the appropriations for their respective offices; and
(3) The purpose of the transfer is to augment an item in
the general appropriations law for their respective
offices.

Savings Under GAA


Savings refer to portions or balances of any programmed
appropriation in this Act free from any obligation or
encumbrance which are: (i) still available after the
completion or final discontinuance or abandonment of the
work, activity or purpose for which the appropriation is
authorized; (ii) from appropriations balances arising from
unpaid compensation and related costs pertaining to vacant
positions and leaves of absence without pay; and (iii) from
appropriations balances realized from the implementation
of measures resulting in improved systems and efficiencies
and thus enabled agencies to meet and deliver the required
or planned targets, programs and services approved in this
Act at a lesser cost.

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