Calamba Steel vs.

CIR

Facts:

Petitioner is a domestic corporation engaged in the manufacture of steel blanks for the use
by manufacturer of automotives, electrical, electronics in industrial and household
appliances.

In it’s amended Corporate Annual Income Tax Return on 1996 it declared a net taxable
income of Php 9.4 Million, tax credits of Php 6.7 Million and tax due in the amount of Php 3.3
Million. It also reported quarterly payments for the second and third quarters of 1995 in the
amount of Php 2.3 M and Php 1.08 M respectively.

The petitioner contended in the 1997 case that it is entitled to a refund. The refund was due
to the income tax withheld and remitted in its behalf by withholding agents. Such withheld
as indicated in the 1997 return were no utilized in 1996 due to its income loss for the three
quarters of 1996.

Issue:

Whether or not a tax refund may be claimed even beyond the taxable year following the tax
credit arises.

Held:

Yes. But the claimant must prove that it is entitled to such refund. Tax refund has the same
nature of tax exemption and such must be construed strictly against the one claiming it.
NIRC provided that the only limitation as regards the tax refund is that such must be made
within two years for the payment. Calamba steel had complied with such requirement.

The act of the counsel in submitting the final adjustment after the trial has been conducted
was accepted by the court because the rules of ordinary procedure are applied suppletorily.
Moreover the Court said that Judicial notice could have been taken by the CA and the CTA of
the 1996 final adjustment return made by Calamba Steel in another case pending in the
CTA.

BPI vs. CIR

Facts:

Petitioner BPI, sold $500,000 in 1985 to the Central Bank for the total amount of $1,000,000.
On October 1989, the BIR assessed BPI for tax deficiency of documentary tax on its
aforementioned sales of foreign bills of exchange. BPI filed and protested the assessment on
1989 through its counsel. BPI did not receive any immediate reply to its protest. On 1992
BIR issued a warrant of Distraint and/or Levy against the petitioner. The warrant was served
on 1992 but never heard anything from the BIR until the 1997 when the reconsideration was
denied.

BPI filed a petition for Review with the CTA and raised prescription as a defense. It alleged
that the right to collect must be done within 3 years only, but the BIR waited more than 7
years to deny the protest. BIR reiterated its position and remained silent as regards the
issue on prescription.

CTA rendered the decision in favor BIR stating that the action has not prescribed but the
sale of foreign currency is not subject to documentary stamp tax. Further the assessment
was order for cancellation because the transaction between BPI and the Central Bank was
tax exempt.

The CA sustained the finding of the CAT that the action has not yet prescribed, but it
adopted the position of the BIR that the sale of foreign currency was not tax exempt.

Issue :

Whether or not the right of the BIR to collect from BPI the alleged deficiency on
documentary stamp tax had prescribed?

Held:

The Supreme Court ruled that the action for collection had already prescribed. The period to
collect the deficiency is limited to 3 years as provided by Section 203 of the Tax Code.

The statute of limitation on collection may be interrupted or suspended by a valid waiver

executed in accordance with paragraph (d) of Sections 223 and 224 of the Tax Code as
amended. The purpose of the limitation is to protect the taxpayer form the prolonged and
unreasonable assessment and investigation by the BIR.

Atlas Consolidated Mining vs. CIR

Facts:

Atlas filed its VAT return in 1st quarter of 1992 likewise filing its application for tax refund or
credit on it zero-rated sales. The application was not acted upon by the BIR. The case was
filed with the CTA asking that the CIR allowed them to have credit or refund for the VAT it
had paid in 1992. The CIR countered that there is no cause of action the case, the case was
denied due to prescription of the action. The case was elevated to the CA but upheld the
ruing of the CTA.

Atlas in another case claims refund or credit for the VAT paid covering the 2 nd to the 4th
quarter of 1990. When the BIR has not acted upon the request, Atlas had filed with the CTA
petitions for review. CTA ruled in favor of the CIR also based on prescription.

Atlas appealed the case to CA and found that though the action has not yet prescribed there
was a failure to substantiate the claim for refund or credit.

Issue:

Whether or not the action is not yet barred by prescription in order to claim for refund or
credit from the VAT paid.

Held:

The 2-year prescriptive period for filing a claim for refund/tax credit of excess input VAT
attributable to zero-rated sales should be counted from the date of filing of the return and
payment of the tax due. Unlike corporate income tax that is reported and paid on
installment every quarter but is eventually subjected to a final adjustment at the end of the
taxable year, the VAT is computed and paid on a purely quarterly basis without need for a
final adjustment at the end of the taxable year.

Hence, until and unless the taxpayer prepares and submits to the BIR its quarterly VAT
return, there is no way of knowing with certainty just how much input VAT the taxpayer may
apply against its output VAT; how much output VAT it is due to pay for the quarter or how
much excess input VAT it may carry- over to the following quarter; or how much of its input
VAT it may claim as refund/tax credit.

On the aspect of evidence, the taxpayer-claimant must first establish that its sales qualify
for VAT zero-rating under the existing laws (legal basis), and then present sufficient
evidence that said sales were actually made and resulted in refundable or creditable input
VAT in the amount being claimed (factual basis).

Hence, although this Court agreed with the petitioner corporation that the two-year
prescriptive period for the filing of claims for refund/credit of input VAT must be counted
from the date of filing of the quarterly VAT return, and that sales to EPZA-registered
enterprises operating within economic processing zones were effectively zero-rated and
were not covered by Revenue Regulations No. 2-88, it still denies the claims of petitioner
corporation for refund of its input VAT on its purchases of capital goods and effectively zero-
rated sales during the second, third, and fourth quarters of 1990 and the first quarter of
1992, for not being established and substantiated by appropriate and sufficient evidence.

Estate of Vda. De Gabriel vs. CIR

Facts:

During the lifetime of de Gabriel, the business affairs were managed by PHITRUST. When she
died the latter filed an income tax return but not inform the BIR that she was dead. IT was
found that the there was still unpaid tax liability, and the CIR sent an assessment notice to
PHILTURST.

The CIR issued a levy on estate to enforce the tax liability. Heirs opposed it and filed a letter
of protest. Cir said that it is final and executory. Lower court sais that the charge cannot be
imposed due to lack of notice. CA reversed the ruling.

Issue:

Whether or not the levy can be enforced to satisfy the tax liability?

Held:

Upon the death of the decedent the latter’s relation with PHITRUST has been severed. The
sending of notice to PHILTRUST does not make the assessment final and executory due to
improper notice. Further, the collection was way beyond the 5 year period for collection of
taxes, thus it became barred by prescription.

Apex Mining vs. CIR

Facts:

Apex mining is engaged in the in the business of mining, milling, concentrating, converting,
smelting, manufacturing, buying, selling and otherwise producing and dealing in all kinds of
ores, metals and mineral, as well as the products and by-products thereof.

In 1988 Apex bought from small miners and from these transactions the BIR assessed an ad
valorem tax. Apex filed a protest regarding the said assessment of ad valorem tax.

On 1990 Apex reiterated its protest for ad valorem taxes as applied to the transactions with
small miners. The application was denied and coupled with demand to pay the taxes.
CTA ruled that Apex should pay the delinquency taxes plus surcharges and interest. The ad
valorem taxes were cancelled due to lack of legal basis. CA reveres the ruling of the CTA as
regard the cancellation of the ad valorem taxes.

The decision was received thru counsel in Sept 11, 1995 and on the 22nd a 30 day extension
of time to file a motion for reconsideration. The motion for reconsideration was field on the
11th of October. The Court in its resolution denied the reconsideration for being filed out of
time.

Issue:

Whether or not the motion for reconsideration should not be dismissed for being filed out of
time?

Held:

A judicious perusal of the records show that the decision of the appellate court had became
final and executory due to the untimely filing of the motion for reconsideration. Thus the ad
valorem assessment for the purchases to small miners stands.

Sps. Tan vs. Batengui

Facts:

A parcel of land located in La Loma Q.C. is registered under the name of Bantegui. The said
land was rented out to Caedo spouses. She went to the USA and upon her return she assign
Ms. Bautista as representative then went back to the USA again.

The RPT until 1977 was paid but from 1987 to 1983 remained unpaid. For tax delinquency
the property was sold in auction and the Sps. Capistrano got the property for Php 10,000.
The property was never redeemed by the owner as a result the title was consolidated in the
name of the Capistranos. The latter never took possession nor informed the occupant about
the sale and never ask for a rent from the occupant.

The lot was sold to Pereyras and the title was now in the name of the latter. The lot was
mortgage to the Rural Bank of Imus by Pereyras which was annotated in the title.

The transactions were never known to Bantegui and Caedos, despite that the rents were
paid by the latter to the former.

Bantegui asked for a reconstitution of title because her title was destroyed by fire. She also
paid the RPT for 1987 to 1989.

The land was now sold to Sps. Tan by paying the mortgage and the overdue taxes and
expenses by Pereyras. Tans never took possession of the lot like their predecessors. Later
thru counsel informed that Caedos to vacate the property and an ejectment case was filed
against the Caedos. The latter lost the case and appealed.

The CA rule the case that the purchaser where not in good faith. Further the auction sale
was tainted with irregularity for having no notice of sale to the owner and the owner
continued to pay the RPT even after the sale.

Issue:

Whether or not the auction sale for the enforcement of tax liability for non-payment of RPT
was valid?

Held:
The auction sale of real property for the collection of delinquent taxes is in personam, not in
rem. Publication of the auction sale does not suffice considering that tax sales are in
personam. It is incumbent upon the city treasure tot sent notice directly to the owner in
order to protect the interest of the latter. Although preceded by proper publication and
advertisement, it is still void absent the actual notice to the taxpayer.

CIR vs. Tulio

Facts:

On Feb. 28, 1991, the CIR assessed Mr. Tulio, who was engaged in the construction
business, for the payment of deficiency percentage taxes in the amount of P188, 585.76 and
P245, 669.53 for the taxable years of 1986 and 1987. Mr. Tulio failed to act on the said
assessment notices making it final and excutory.

On several occasions, notices were sent to Mr. Tulio to settle his deficiency tax liabilities.
Sue tot eh lack of action by the respondent the case for collection was brought to the RTC
with emphasis that the latter has jurisdiction not the CTA.

The case was dismissed in favor of Mr. Tulio due to prescription of action. CIR appealed the
case.

Issue:

Whether or not the civil case on money claims may be dismissed on the ground of
prescription?

Held:

The lower court erroneously applied Sec 203 of the Code, the 3 years prescription from the
date of filing the tax return with the BIR after assessment. The failure of Mr. Tulio to file the
return is not covered by the Sec 203, but Sec 223 which provides for 10 year prescriptive
period.

Sec 223 specifies 3 instances wherein 3 year period does not apply. 1) filing false return, 2)
filing fraudulent return with intent to evade tax and 3) failure to file return. The period within
which to assess tax is 10 years from the discovery of the fraud, falsification, or omission.

CIR vs. PNB

Facts:

PNB paid in advance the amount of Php 180 Million to BIR for the purpose of future tax
obligation. The said act was pursuant to the Pres/ Cory’s call to generate revenue for
national development. PNB wrote to BIR requesting the issuance of Tax Credit Certificate
(TCC) based o the said amount.

In 1991 inclusive of the advance payment PNB paid in additional income tax due for the 1 st
and 2nd quarter of 1991. All in all the credits amounting Php 73.2 Million was never used due
to the losses it suffered in the years 1992 to 1996. In 1997 the PNB again wrote to BIR for
the issuance OF the TCC, the request was forwarded to the Office of the Deputy Comm. for
Legal and Inspection Group.

PNB sought reconsideration not to take jurisdiction because it is limited to hear tax cases
involving illegal and erroneous taxes where there are questions of fact and does not claim
for refund on advanced payments.
BIR denied the claim for refund due to prescription because it was field beyond 2 years from
filing. CTA affirmed the ruling of the CIR. The CA annulled and set aside the decision of the
CTA and remanded it back to CIR for further study.

Issue:

Whether or not the claim for tax credit is barred by the 2 years prescription?

Held:

The Court ruled that the advance payments made by PBN is not classified as illegally or
erroneously paid taxes. The prescriptive period of 2 years applies only to illegally or
erroneously paid taxes.

Citing the case of CIR vs. PHILAM Life the absent any provision in the TAX Code and special
Article 1444 of the Civi code would apply, specifically 10 years.

It would thus indeed, be unfair, as the CA correctly observed, to leave respondent PNB to
suffer losing millions of pesos advanced by it for future tax liabilities. The cut becomes all
the more painful when it is considered that PNB’s failure to apply the balance of such
advance income tax payment from 1992 to 1996 was, to repeat, due to business downturn
experienced by the bank so that it incurred no tax liability for the period.

Oceanic Wireless Network vs. CIR

Facts:

On March 17, 1988 BIR sent a deficiency tax assessment for the year 1984 for the amount of
P8.645 Million. Petitioner filed a protest and requested reconsideration or cancellation of the
same. In reply the BIR Accounts Receivable and Billing Division, acting in behalf of the BIR
Comm., requested Oceanic to pay the amount within ten days from the receipt thereof
otherwise the case would be referred to the Collection Enforcement Division. Upon failure to
pay, the Assistant Comm. Issued a warrant of distrant and/or levy and garnishment served
to petitioner on Oct. 1999.

Nov. 1991 Oceanic filed a petition for Review with the CTA to contest the issuance of the
warrant. The CTA dismissed the case for lack of jurisdiction in the Sept. 1994 decision,
declaring that the said petition was filed beyond the 30 day period from the time the letter
from the BIR Accounts Receivables and Billing Division was received by the petitioner.

Further the issuance of the warrants was not barred by prescription. Due to the filing of the
protest which was given due course by the BIR the running of prescription was suspended.

Oceanic filed a motion for reconsideration arguing that the demand letter cannot be
considered as final because it was signed by a subordinate officer. The motion was denied
and the case as elevated to the CA.

Issue:

Whether or not the a demand letter for tax delinquency assessment issued and signed by a
subordinate officer acting in behalf of the CIR is deemed final and executory.

Held:

A demand letter for payment of the delinquent tax may be considered a decision on a
disputed assessment. The demand letter is deemed final basing on the tenor of the letter to
the taxpayer. The reiteration of the BIR’s former position which is to pay the tax liability
after the request from the tax payer indicates that latter’s request was denied.

The powers of the CIR may be delegated subject to a few exemptions, which are:

• Power to recommend the promulgation of rules and regulation by the Sec of Finance

• Power to issue rulings of first impression or to reverse, revoke or modify any existing
rulings of the BIR

• Power to compromise or abate

• Power to assign or re-assign internal revenue officers to establishment where articles

subject to excise tax are produced or kept.

The act of the subordinate officer does not fall under the exemption. Thus the assessment
had become final and executory.

PHILAM Asset vs. CIR

Facts:

Petitioner is a domestic corporation duly organized and existing under the laws of the
Philippines. It acts as the investment manager of Philippine Fund, Inc. (PFI) and PHILAM Bond
Fund Inc. (PBFI), which are open-end investment companies in the sale of their shares of
stocks and in the investment of the proceeds of the sale into diversified portfolio of debt and
equity securities. Petitioner being an investment manager it provides a management and
technical services to PFI and PBFI. Likewise it provides takes charge of the both companies
sale of shares to prospective investors. It is agreed that between the companies and the
petitioner that latter be pay by way of compensation and the former is allowed to withhold
5% of the management fee as equivalent creditable tax.

Petitioner filed its annual income tax return for 1997 with a net loss of 2.6 Million pesos. It
failed to utilize the tax credit withheld by the PBFI ad PFI. Petitioner filed an administrative
claim for refund with the BIR on the unutilized excess tax credit for 1997. However the BIR
did not act on the petitioner’s claim for refund. Case was filed with the CTA in 1999.

On 1999 PHILAM Asset again filed its annual income tax return with the BIR for the taxable
year 1998 declaring a loss of Php 1.5 Million. Another amount withheld by the companies for
1998 was claimed as unutilized creditable tax.

The cases for refund were denied by the CTA. The CA’s decision reasoned out that the ITRs
did not indicate its option whether to refund or to carry over the amount withheld to the
succeeding year. Further saying that a corporation must indicate its option, if not indicated
the amount would still remain in the account of the taxpayer until utilized in the succeeding
year.

Issue:

Whether or not the petitioner is entitled for a refund of its creditable taxes withheld for the
years 1997 and 1998?

Held:

Sec 76 of the NIRC provides that a corporation with excess quarterly income tax payments
may apply for either tax refund or tax credit, but not both. Failure to indicate the choice will
not bar a valid request for a refund. The requirement for indicating the choice is merely for
the purpose facilitating tax collection. A

The Code requires that the choice to be made in writing and made know to the BIR two
years from the payment of the taxes erroneously made.

The Court declared that as regards the refund for 1997 must be allowed, but as to the 1998
refund should not be allowed. Subsequent acts of the petitioner indicate that it had chosen
the carry-over option. The Code provides that once the option of carry-over was chosen it
would be irrevocable .