UNIVERSIDAD DE MANILA

COLLEGE OF LAW
TAXATION LAW REVIEW
1st Semester, S.Y. 2019-2020

CASE DIGEST
in

TAXATION LAW REVIEW

Submitted by:
Carmelo Madriaga
 SILICON PHILS. VS CIR
GR No. 182737, March 2, 2016
FIRST DIVISION, SERENO, C.J.

FACTS: Silicon Phils. claimed tax refund or issuance of TCC relating to its
excess or unutilized input valued-added tax (VAT) for the last 3 quarters of
2001. Due to continuous inaction by the CIR on its claims amounting to 25
million pesos, Silicon Phils. filed a petition for review before the CTA Div. The
CTA Div ruled against Silicon Phils. The CTA Div ruled that, under the NIRC, TF
or TC of unused input VAT is allowed only when the excess input is due to
zero-rated or effectively zero-rated sales and when the excess input is due to
capital goods purchased by a VAT-registered person. To prove zero-rated
export sales, one must show (a) sales invoice; (b) export declaration or bil of
lading/airway bill as proof of actual shipment from the PH; and bank credit
advice or certificate of remittance proving payment of goods in foreign
currency. The CTA Div found that Silicon Phils. presented nothing more than a
certificate of inward remittances for the entire year 2001. Hence, the CTA Div
held SP's export sales amounting to 2.4 billion pesos NOT VAT zero-rated sales.
Moreover, accoring to the CTA Div, a taxpayer claiming TF or TCC of input
VAT paid on capital goods must prove all of the following: (a) registration as
VAT entity; (b) payment of input VAT; (c) payments covered by VAT invoces
or official receipts; (d) no offsetting against output VAT liability; and (e) filing
within the 2-year prescriptive period. According to the CTA Div, only the first
and fifth requirements were complied with. Not all purchases are capital
goods.

ISSUE: Whether CTA have jurisdiction over SP's petitions for review,
considering the period set for by law regarding judicial tax remedies.

DECISION: No, the CTA has no jurisdiction over SP's petitions. Upon the filing of
an administrative claim, the CIR has 120 days to grant refund or issue TCC or
to fully or partially deny the claim. A judicial claim shall be filed within a
period of 30 days after receipt of the CIR's decision or after the expiration of
the 120-day period, whichever is sooner.Periods for appeal in tax cases are
jurisdictional in nature. Any claim filed in a period less than or beyond the 120-
day period or the 30-day period provided by the Tax Code is outside the
jurisdiction of the CTA. In this case, SP's 3 petitions were 502 days, 261 days
and 332 days late.Silicon Phils.cannot use BIR Ruling No. DA-489-03 providing
that a taxpayer-claimant need not wait for the lapse of the 120-day period
before it could seek judicial relief with the CTA by way of Petition for
Review. This rule does not allow filing of judicial claims long after the
expiration of the 120 or 30-day periods.Therefore, SP's judicial claims before
the CTA must be dismissed for lack of jurisdiction.
 Spouses Pacquiao vs CTA
GR No. 213394, April 6, 2016
SECOND DIVISION, MENDOZA, J.

FACTS: Spouses Pacquiao filed an urgent motion for the CTA to lift the
warrants of distraint, levy and garnishments issued by the CIR against them in
connection with their deficiency income tax and VAT assessments for taxable
year 2008 and 2009. CTA issued a resolution grating the petitioners’ urgent
motion, ordering the CIR to desist from collecting on the deficiency tax
assessments against the petitioners.

ISSUE: Whether the CTA may issue injunctive writs to restrains the collection of
tax.

DECISION: Yes, the CTA has ample authority to issue injunctive writs to restrain
the collection of tax and to even dispense with the deposit of the amount
claimed of the filing of the required bond whenever the method employed
by CIR in the collection of tax jeopardized the interests of the taxpayer for
being patently in violation of the law. Such authority emanates from the
jurisdiction conferred to it not only by section 11 of RA 1125 but also by
section 7 of the same law which, as amended provides that the CTA shall
exercise exclusive appellate jurisdiction to review by appeal
 Takenaka Corp. vs CIR
GR No. 193321, October 19, 2016
FIRST DIVISION, BERSAMIN, J.

FACTS: Respondent Takenaka as a subcontractor, entered into an On-Shore

Construction Contract with Philippine Air Terminal Co., Inc. (PIATCO) for the
purpose of constructing the Ninoy Aquino Terminal III (NAIA-IPT3).BIR issued
VAT Ruling No. 011-03 which states that the sales of goods and services
rendered by respondent Takenaka to PIATCO are subject to zero-percent
(0%) VAT and requires no prior approval for zero rating. Takenaka filed its
claim for tax refund but BIR failed to act on Takenaka’s claim. Thus, Takenaka
filed a Petition for Review.Former First Division rendered a Decision partly
granted the Petition for Review and ordering herein petitioner CIR to refund
to respondent Takenaka a reduced amount. Takenaka filed for an MR and
was granted. CIR also filed an MR but was denied.

ISSUE: Whether the sales invoices presented by the petitioner were sufficient
as evidence to prove its zero-rated sale of services to PIATCO, thereby
entitling it to claim the refund of its excess input VAT for taxable year 2002.

DECISION: No. The Court held that the issue of jurisdiction over the subject
matter may at any time either be raised by the parties or considered by the
Court motuproprio. As such, the jurisdiction of the CTA over the appeal could
still be determined by this Court despite its not being raised as an issue by the
parties.The mere fact that petitioner's application for zero-rating has been
approved by the CIR does not justify the grant of a refund or tax credit. The
taxpayer claiming the refund must further comply with the invoicing and
accounting requirements mandated by the NIRC, as well as by revenue
regulations implementing them.
 Tridharma vs CTA and CIR
GR No. 215950, June 20, 2016
FIRST DIVISION, BERSAMIN, J.

FACTS: BIR assessed Tridharma with various tax deficiencies amounting to

more than 4.640 billion pesos. Protest was filed. Tridharma paid 5.8 million
pesos for its assessment on withholding tax on compensation, documentary
tax stamp and expanded withholding tax and reiterated its interest to
compromise alleged income tax and VAT deficiencies. FDDA was issued at
4.473 billion pesos.Tridharma appealed the CIR's decision to the CTA and
moved for the suspension of tax collection against it. However, the CTA
required Tridharma to post bond equivalent to 150% of the assessment within
15 days from notice. Hence, Tridharma was ordered to post 6.701 billion pesos
as bond.Tridharma petitioned for certiorari.

ISSUE: Whether the CTA abuse its discretion in requiring bond that T is legally
and physically incapable of procuring.

DECISION: Yes, the CTA abused its discretion. Although the Tax Code
empowers the CTA to suspend tax collection by requiring either the deposit
of the tax claimed or surety bond for not more than double the amount,
Tridharma was able to show that it is not capable of producing the amount
of 6.701 billion pesos as its net worth is only almost 1 billion pesos. Plus, it is
legally impossible to procure the bond from bonding companies that are
limited in their risk assumptions.What the CTA should have done is to conduct
a preliminary hearing on Tridharma's ability to deposit or procure bond. While
there is legal justification for the bond requirement, the power to tax is not the
power to destroy. For the bond to equal the deficiency assessment would
practically deny to the petitioner the meaningful opportunity to contest the
validity of the assessments, and would likely even impoverish it as to force it
out of business.
 Aichi Forging Company vs CTA
GR 193625, August 30, 2017
THIRD DIVISION, MARTIRES, J.

FACTS: On September 30, 2004, Aichi Forging filed a claim for refund/credit of
input VAT attributable to its zero-rated sales for the period July 1, 2002 to
September 30, 2002 with the CIR through the DOF One-Stop Shop. On the
same day, Aichi Forging filed a Petition for Review with the CTA for the same
action. The BIR disputed the claim and alleged that the same was filed
beyond the two-year period given that 2004 was a leap year and thus the
claim should have been filed on September 29, 2004. The CIR also raised
issues related to the reckoning of the 2-year period and the simultaneous
filing of the administrative and judicial claims.

ISSUE: Whether AICHI sufficiently proved its entitlement to the refund or tax
credit.

DECISION: The CTA had no jurisdiction over the judicial claim.

AICHI's judicial claim was filed prematurely and, thus, without cause of
action.On the judicial claim for refund or tax credit of AICHI, the CTA did not
validly acquire jurisdiction over such judicial claim because the appeal
before the court was made prematurely. When the CTA acts without
jurisdiction, its decision is void. Consequently, the answer to the second issue,
i.e., whether AICHI can still question the CTA ruling, becomes irrelevant. The
Court had interpreted the 120-day period as both mandatory and
jurisdictional such that the taxpayer is forced to await the expiration of the
period before initiating an appeal before the CTA. This must be so because
prior to the expiration of the period, the CIR still has the statutory authority to
render a decision. If there is no decision and the period has not yet expired,
there is no reason to complain of in the meantime. Otherwise stated, there is
no cause of action yet as would justify a resort to the court.Considering our
holding that the CTA did not acquire jurisdiction over the appeal of AICHI,
the decision partially granting the refund claim must therefore be set aside as
a void judgment.The rule is that where there is want of jurisdiction over a
subject matter, the judgment is rendered null and void.Since the judgment of
the CTA Division is void, it becomes futile for any of the parties to question it.
It, therefore, does not matter whether AICHI had timely filed a motion for
reconsideration to question either the decision of the CTA En Banc or the CTA
Division.
 Alcantara vs. Republic of the Philippines
GR No. 192536 March 15, 2017
THIRD DIVISION, BERSAMIN, J.

FACTS: Plaintiff-appellant Demetrio R. Alcantara (hereinafter, appellant) was

the owner of a parcel of land, 301 square meters in area, situated at
Panorama Monies, Buhangin, Davao City, and covered by Transfer
Certificate of Title (TCT) No. T-113015.Defendants-appellees (hereinafter,
appellees) arc: The Republic of the Philippines thru its agency, Bureau of
Internal Revenue (BIR), Revenue Region No. 11-B, Davao City and the
following officers of the said Revenue Region: Region Enforcement Officer
Amerigo D. Villegas, Assistant Regional Director Teodorica R. Arcega, and
Regional Director Jose C. Batausa; Themistocles R. Montalban, Assistant
Commissioner for Collection Service of the BIR; the Register of Deeds of
Davao City; and Maximo Lagahit.

ISSUE: Whether or not the CA erred in ruling that the RTC had no jurisdiction
to try and decide Alcantara's complaint.

DECISION: It is clear from the foregoing allegations that despite assailing the
supposedly illegal confiscation of his property in order to satisfy his tax
liabilities, Alcantara was really challenging the assessment and collection of
taxes made against him for being in violation of his right to due process. As
such, the complaint concerned the validity of the assessment and eventual
collection of the taxes by the BIR. The declaration of nullity of the sale and
reconveyance was founded on the validity of the assessment and eventual
collection by the BIR. That the main relief sought by his complaint was "to
declare the assessments conducted by the BIR on the Income Tax Returns of
Alcantara for 1982 and 1983 as null and void ab initio" as well as to declare all
notices and deeds in relation to collection of the assessed taxed liabilities as
null and void bolsters this conclusion.CA correctly determined that the RTC
had no jurisdiction to resolve the issues raised in Alcantara's complaint.

The remedies available to a taxpayer like Alcantara were laid down by law.
Section 229 of Presidential Decree (P.D.) No. 1158,the law in effect at the time
of the disputed assessment, stated that prior resort to the administrative
remedies was necessary; otherwise, the assessment would attain finality. Such
assessment may be protested administratively by filing a request for
reconsideration or reinvestigation in such form and manner as may be
prescribed by implementing regulation within thirty (30) days from receipt of
the assessment; otherwise, the assessment shall become final and
unappealable.If the protest is denied in whole or in part, the individual,
association or corporation adversely affected by the decision on the protest
may appeal to the Court of Tax Appeals within thirty (30) days from receipt of
the said decision; otherwise, the decision shall become final, executory and
demandable.
 Asia Trust Development Bank vs CIR
GR No. 201530, April 19, 2017
FIRST DIVISION, DEL CASTILLO, J.

FACTS: Asiatrust Development Bank, Inc. (Asiatrust), on separate dates in

February 2000, received from the Commissioner of Internal Revenue (CIR)
three Formal Letters of Demand (FLD) with Assessment Notices for deficiency
internal revenue taxes in the amounts of P131,909,161.85, P83,012,265.78, and
₱l44,012,918.42 for fiscal years ending June 30, 1996, 1997, and 1998,
respectively.Asiatrust timely protested the assessment notices. Due to the
inaction of the CIR on the protest, Asiatrust filed before the CTA a Petition for
Review praying for the cancellation of the tax assessments for deficiency
income tax, documentary stamp tax (DST) - regular, DST - industry issue, final
withholding tax, expanded withholding tax, and fringe benefits tax issued
against it by the CIR. The CIR issued against Asiatrust new Assessment Notices
for deficiency taxes in the amounts of ₱l 12,816,258.73, ₱53,314,512.72, and
₱133,013,458.73, covering the fiscal years ending June 30, 1996, 1997, and
1998, respectively and Asiatrust partially paid said deficiency tax assessments
thus leaving balance.

ISSUE: Whether the CTA En Banc erred in resolving the issue of alleged
deficiency final withholding tax for fiscal year ending June 30, 1998 based on
mere technicalities.

DECISION: The Petitions lack merit. G.R. No. 201530 An application for tax
abatement is considered approved only upon the issuance of a termination
letter. Section 204(B) of the 1997 National lnten1al Revenue Code (NIRC)
empowers the CIR to abate or cancel a tax liability. The BIR issued RR No. 15-
06 prescribing the guidelines on the implementation of the one-time
administrative abatement of all penalties/surcharges and interest on
delinquent accounts and assessments (preliminary or final, disputed or not).
Section 4 of RR No. 15-06 provides: SECTION 4. Who May Avail, - Any person/
taxpayer, natural or juridical, may settle thru this abatement program any
delinquent account or assessment which has been released as of June 30,
2006, by paying an amount equal to One Hundred Percent (100%) of the
Basic Tax assessed with the Accredited Agent Bank (AAB) of the Revenue
District Office (RDO)/Large Taxpayers Service (LTS)/Large Taxpayers District
Office (LTDO) that has jurisdiction over the taxpayer. In the absence of an
AAB, payment may be made with the Revenue Collection Officer/Deputized
Treasurer of the RDO that has jurisdiction over the taxpayer. After payment of
the basic tax, the assessment for penalties/surcharge and interest shall be
cancelled by the concerned BIR Office following existing rules and
procedures.
 BIR vs Lepanto Ceramics
GR No. 224764, April 24, 2017
FIRST DIVISION, PERLAS-BERNABE, J.

FACTS: Lepanto Ceramics, Inc. (LCI) filed a petition for corporate

rehabilitation under RA 10142 with the RTC in Calamba City. Aside from
financial difficulties, the petition for rehab also alleged LCI's tax liability at 6.3
million pesos. The Rehabilitation (Rehab Court) issued a Commencement
Order (Order). The Order declared LCI under rehab and suspended all
actions or proceedings, in court or otherwise, for the enforcement of claims
against LCI. It also directed the BIR to file and serve on LCI its comment or
opposition to the petition, or its claims against LCI. Despite this, petitioners,
acting as Assistant Commissioner, Group Supervisor, and Examiner, sent LCI a
notice of informal conference, informing the latter of its tax liabilities for the
fiscal year ending June 30, 2010. Despite receiving LCI's letter-reply regarding
the pendency of a rehab proceeding, the BIR sent LCI a Formal Letter of
Demand.

ISSUE: Whether the petitioners guilty of indirect contempt for issuing a notice
of informal conference despite the fact that they simple wanted to toll the
prescriptive period and considering the lifeblood doctrine.

DECISION: Yes, they are guilty of indirect contempt. According to RA 10142,

upon the issuance of a commencement order, the distressed corporation
shall be temporarily immune from the enforcement of all claims against it,
including all claims of the government, whether national or local, including
taxes, tariffs and customs duties. To clarify, however, creditors of the
distressed corporation are not without remedy as they may still submit their
claims to the rehabilitation court for proper consideration so that they may
participate in the proceedings, keeping in mind the general policy of the
law.Petitioners' act of issuing a notice of informal conference and later a
formal letter of demand, all despite the written reminder by LCI regarding the
pendency of the rehab proceeding, is in clear defiance of the
Commencement Order. As aptly put by the RTC Br. 35, they could have easily
tolled the running of such prescriptive period, and at the same time, perform
their functions as officers of the BIR, without defying the Commencement
Order and without violating the laudable purpose of RA 10142 by simply
ventilating their claim before the Rehabilitation Court.
 CE Luzon Geothermal vs CIR
GR No. 197526, July 2017
SECOND DIVISION, LEONEN, J.

FACTS: These are two (2) consolidated Petitions for Review concerning the
prescriptive period in filing judicial claims for unutilized creditable input tax or
input Value Added Tax (VAT). The first Petition was filed by CE Luzon
Geothermal Power Company, Inc. (CE Luzon) against the Commissioner of
Internal Revenue. The second Petitionwas instituted by the Bureau of Internal
Revenue, on behalf of the Republic of the Philippines, against CE Luzon.CE
Luzon is a domestic corporation engaged in the energy industry.It owns and
operates the CE Luzon Geothermal Power Plant, which generates power for
sale to the Philippine National Oil Company-Energy Development
Corporation by virtue of an energy conversion agreement. CE Luzon is a VAT-
registered taxpayer. In the course of its operations, CE Luzon incurred
unutilized creditable input tax. Without waiting for the Commissioner of
Internal Revenue to act on its claim, or for the expiration of 120 days, CE
Luzon instituted before the Court of Tax Appeals a judicial claim for refund of
its first quarter unutilized creditable input tax on March 30, 2005.CE Luzon
received the Commissioner of Internal Revenue's decision denying its claim
for refund of creditable input tax for the second quarter of 2003.CE Luzon
filed before the Court of Tax Appeals a judicial claim for refund of unutilized
creditable input tax for the second to fourth quarters of taxable year 2003.

ISSUE: Whether CE Luzon Geothermal Power, Inc. is entitled to the refund of

input Value Added Tax for the second quarter of taxable year 2003.

DECISION: In the present case, only CE Luzon's second quarter claim was filed
on time. Its claims for refund of creditable input tax for the first, third, and
fourth quarters of taxable year 2003 were filed prematurely. It did not wait for
the Commissioner of Internal Revenue to render a decision or for the 120-day
period to lapse before elevating its judicial claim with the Court of Tax
Appeals.However, despite its non-compliance with Section 112(C) of the
National Internal Revenue Code, CE Luzon's judicial claims are shielded from
the vice of prematurity. It relied on the Bureau of Internal Revenue Ruling DA-
489-03, which expressly states that "a taxpayer-claimant need not wait for the
lapse of the 120-day period before it could seek judicial relief with the [Court
of Tax Appeals] by way of a Petition for Review."
 CIR vs APO Cement
GR No. 193381, February 8, 2017
SECOND DIVISION, LEONEN, J.

FACTS: BIR sent Apo cement a Final Assessment Notice (FAN) for deficiency
taxes for the taxable year 1999, totalling to more than 144 million pesos. Apo
Cement protested the FAN. However, BIR denied the protest. A Final Decision
on Disputed Assessment (FDDA) was issued. Apo Cement petitioned for
review with the CTA. The CIR admiteed that Apo Cement had already paid
the deficieny assessment in the FDDA, except the documentary stamp taxes
(DST) based on several real property transactions. In the meantime, Apo
Cement availed of the tax amnesty under Republic Act No. 9480, particularly
affecting the 1999 deficiency. Hence, it filed a motion to cancel tax
assessment. The CTA granted the motion. The CIR motioned for
reconsideration and appealed but failed. One of the requirements for tax
amnesty under said law is the submission of SALN. The CIR wished to question
the correctness of Apo Cement's SALN.

ISSUES: Whether Apo Cement entitled to tax amnesty under RA 9480?

DECISION: Yes, Apo Cement is entitled to tax amnesty. Submission of the

documentary requirements and payment of the amnesty tax is considered
full compliance with Republic Act No. 9480 and the taxpayer can
immediately enjoy the immunities and privileges enumerated in Section 6 of
the law.
 NAPOCOR vs The Province of Pangasinan
GR No. 210191, March 4, 2019
SECOND DIVISION, REYES JR. J., J.

FACTS: NAPOCOR is a GOCC that entered into an Energy Conversion

Agreement (ECA) under a build-operate-transfer (BOT) arrangement with
Mirant Pagbilao Corp. Under the agreement, Mirant will build and finance a
thermal power plant in Quezon, and operate and maintain the same for 25
years, after which, Mirant will transfer the power plant to the Respondent
without compensation. NPC also undertook to pay all taxes that the
government may impose on Mirant. Quezon then assessed Mirant real
property taxes on the power plant and its machineries.Invoking its entitlement
to an exemption under the provisions of R.A. No. 7160, NPC filed a petition for
exemption with the LBAA. praying for an order to be issued: (a) recalling the
Notice of Assessment dated September 10, 2003; (b) declaring the machinery
and equipment of the power to be exempt from real property tax, arguing
that the same are actually, directly, and exclusively used for power
generation, and as such are exempted from said taxes under Section
234(c) of R.A. No. 7160; and (c) if not exempt, declaring that the subject
properties be classified as special under Section 216 of the same Act and as
such be given a lower assessment level.

ISSUE: Whether the subject machinery and equipment are exempted from
real property tax under Section 234(c) or Section 234(e) of R.A. 7160.

DECISION: Real property tax liability rests on the owner of the property or on
the person with the beneficial use thereof such as taxes on government
property leased to private persons or when tax assessment is made on the
basis of the actual use of the property.In this case, however, NPC is neither
the owner nor the possessor or beneficial user of the subject facilities. Hence,
it cannot be considered to have any legal interest in the subject property to
clothe it with the personality to question the assessment and claim for
exemptions and privileges. Further, as correctly observed by the LBAA, there
is nothing in the ECA which expressly grants the NPC the right or authority to
use directly or indirectly the power plant and the facilities therein during the
cooperation period. Article 5 of the ECA specifically provides that Mirant has
the responsibility to manage, operate, and maintain the power plant until the
Transfer Date. Such acts of management, operation, maintenance, and
repair are inherent in and are necessary and incidental to Mirant's ownership
and actual use of the power plant and the facilities therein.