LAW

ON TAXATION

SC rulings penned by Lucas P. Bersamin, J.

GENERAL PRINCIPLES OF TAXATION
Concept of Taxation; Power to tax
At this juncture, it becomes imperative to reiterate the principle that the power to tax is
not the power to destroy. In Philippine Health Care Providers, Inc. vs. Commissioner of
Internal Revenue, 600 SCRA 413 (2009), the Court has stressed that:
As a general rule, the power to tax is an incident of sovereignty and is unlimited in its
range, acknowledging in its very nature no limits, so that security against its abuse is to
be found only in the responsibility of the legislature which imposes the tax on the
constituency who is to pay it. So potent indeed is the power that it was once opined that
the power to tax involves the power to destroy xxx. Petitioner, just like any concern
organized for a lawful economic activity, has a right to maintain a legitimate business. As
aptly held in Roxas, et al. vs. CTA, et al.:
The power of taxation is sometimes called also the power to destroy. Therefore it
should be exercised with caution to minimize injury to the proprietary rights of a
taxpayer. It must be exercised fairly, equally and uniformly, lest the tax collector
"kill the hen that lays the golden egg."
Legitimate enterprises enjoy the constitutional protection not to be taxed out of
existence. Incurring losses because of a tax imposition may be an acceptable consequence
but killing the business of an entity is another matter and should not be allowed. It is
counter-productive and ultimately subversive of the nation's thrust towards a better
economy which will ultimately benefit the majority of our people. (Tridharma Marketing
Corporation vs. Court of Tax Appeals, G.R. No. 215950, June 20, 2016).

NATIONAL TAXATION
NIRC; Income taxation; Deductions
To be entitled to claim a tax deduction, the taxpayer must competently establish the
factual and documentary bases of its claim. (H. Tambunting Pawnshop vs. CIR, G.R. No.
173373, July 29, 2013).
The rule that tax deductions, being in the nature of tax exemptions, are to be construed
in strictissimi juris against the taxpayer is well settled. Corollary to this rule is the principle
that when a taxpayer claims a deduction, he must point to some specific provision of the
statute in which that deduction is authorized and must be able to prove that he is entitled
to the deduction which the law allows. An item of expenditure, therefore, must fall
squarely within the language of the law in order to be deductible. A mere averment that
 LAW ON TAXATION
the taxpayer has incurred a loss does not automatically warrant a deduction from its gross
income. (H. Tambunting Pawnshop vs. CIR, G.R. No. 173373, July 29, 2013).
The requisites for the deductibility of ordinary and necessary trade or business expenses,
like those paid for security and janitorial services, management and professional fees, and
rental expenses, are that: (a) the expenses must be ordinary and necessary; (b) they must
have been paid or incurred during the taxable year; (c) they must have been paid or
incurred in carrying on the trade or business of the taxpayer; and (d) they must be
supported by receipts, records or other pertinent papers. (H. Tambunting Pawnshop vs.
CIR, G.R. No. 173373, July 29, 2013).
Tambunting did not discharge its burden of substantiating its claim for deductions due to
the inadequacy of its documentary support of its claim. Its reliance on withholding tax
returns, cash vouchers, lessors certifications, and the contracts of lease was futile
because such documents had scant probative value. As the CTA En Banc succinctly put it,
the law required Tambunting to support its claim for deductions with the corresponding
official receipts issued by the service providers concerned. (H. Tambunting Pawnshop vs.
CIR, G.R. No. 173373, July 29, 2013).
NIRC; Income taxation; Option of carry over
The predecessor provision of Section 76 of the NIRC of 1997 is Section 79 of the NIRC of
1985, xxx. As can be seen, Congress added a sentence to Section 76 of the NIRC of 1997
in order to lay down the irrevocability rule, to wit: x x x Once the option to carry-over
and apply the excess quarterly income tax against income tax due for the taxable quarters
of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for tax refund or issuance of a tax
credit certificate shall be allowed therefor. (CIR vs. PL Management International
Philippines, Inc., G.R. No. 160949, April 4, 2011).
In Philam Asset Management, Inc. vs. Commissioner of Internal Revenue, 477 SCRA 761
(2005), the Court expounds on the two alternative options of a corporate taxpayer whose
total quarterly income tax payments exceed its tax liability, and on how the choice of one
option precludes the other, viz.: The first option is relatively simple. Any tax on income
that is paid in excess of the amount due the government may be refunded, provided that
a taxpayer properly applies for the refund. The second option works by applying the
refundable amount, as shown on the FAR of a given taxable year, against the estimated
quarterly income tax liabilities of the succeeding taxable year. xxx. (CIR vs. PL
Management International Philippines, Inc., G.R. No. 160949, April 4, 2011).
The two options are alternative and not cumulative in nature, that is, the choice of one
precludes the other. The logic behind the rule, according to Philam Asset Management,
Inc. vs. Commissioner of Internal Revenue, 477 SCRA 761 (2005), is to ease tax
administration, particularly the self-assessment and collection aspects. (Republic vs. Team
[Phils.] Energy Corporation [formerly Mirant {Phils.} Energy Corporation], G.R. No. 188016,
January 14, 2015).

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In Commissioner of Internal Revenue vs. Bank of the Philippine Islands, 592 SCRA 219
(2009), the Court, xxx points out that Section 76 of the NIRC of 1997 is clear and
unequivocal in providing that the carry-over option, once actually or constructively
chosen by a corporate taxpayer, becomes irrevocable. The Court explains:
Hence, the controlling factor for the operation of the irrevocability rule is that the
taxpayer chose an option; and once it had already done so, it could no longer make
another one. Consequently, after the taxpayer opts to carry-over its excess tax credit to
the following taxable period, the question of whether or not it actually gets to apply said
tax credit is irrelevant. Section 76 of the NIRC of 1997 is explicit in stating that once the
option to carry over has been made, no application for tax refund or issuance of a tax
credit certificate shall be allowed therefor.
The last sentence of Section 76 of the NIRC of 1997 reads: Once the option to carry-over
and apply the excess quarterly income tax against income tax due for the taxable quarters
of the succeeding taxable years has been made, such option shall be considered
irrevocable for that taxable period and no application for tax refund or issuance of a tax
credit certificate shall be allowed therefor. The phrase for that taxable period merely
identifies the excess income tax, subject of the option, by referring to the taxable period
when it was acquired by the taxpayer. In the present case, the excess income tax credit,
which BPI opted to carry over, was acquired by the said bank during the taxable year 1998.
The option of BPI to carry over its 1998 excess income tax credit is irrevocable; it cannot
later on opt to apply for a refund of the very same 1998 excess income tax credit.
xxx xxx xxx
xxx [T]here would be no unjust enrichment in the event of denial of the claim for refund
under such circumstances, because there would be no forfeiture of any amount in favor
of the government. The amount being claimed as a refund would remain in the account
of the taxpayer until utilized in succeeding taxable years, as provided in Section 76 of the
NIRC of 1997. It is worthy to note that unlike the option for refund of excess income tax,
which prescribes after two years from the filing of the FAR, there is no prescriptive period
for the carrying over of the same. Therefore, the excess income tax credit of BPI, which it
acquired in 1998 and opted to carry over, may be repeatedly carried over to succeeding
taxable years, i.e., to 1999, 2000, 2001, and so on and so forth, until actually applied or
credited to a tax liability of BPI. (CIR vs. PL Management International Philippines, Inc.,
G.R. No. 160949, April 4, 2011).


NIRC; Income taxation; Taxpayers remedies;
Refund
Consequently, the only issue that remains is whether the respondent was entitled to the
refund of excess withholding tax. The requirements for entitlement of a corporate

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taxpayer for a refund or the issuance of tax credit certificate involving excess withholding
taxes are as follows: 1. That the claim for refund was filed within the two-year
reglementary period pursuant to Section 229 of the NIRC; 2. When it is shown on the ITR
that the income payment received is being declared part of the taxpayers gross income;
and 3. When the fact of withholding is established by a copy of the withholding tax
statement, duly issued by the payor to the payee, showing the amount paid and income
tax withheld from that amount. (Republic vs. Team [Phils.] Energy Corporation [formerly
Mirant {Phils.} Energy Corporation], G.R. No. 188016, January 14, 2015).
NIRC; Value-Added Tax; Refund or tax credit of
excess input VAT
A claim for refund or tax credit for unutilized input VAT may be allowed only if the
following requisites concur, namely: (a) the taxpayer is VAT-registered; (b) the taxpayer
is engaged in zero-rated or effectively zero-rated sales; (c) the input taxes are due or paid;
(d) the input taxes are not transitional input taxes; (e) the input taxes have not been
applied against output taxes during and in the succeeding quarters; (f) the input taxes
claimed are attributable to zero-rated or effectively zero-rated sales; (g) for zero-rated
sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable
foreign currency exchange proceeds have been duly accounted for in accordance with the
rules and regulations of the Bangko Sentral ng Pilipinas; (h) where there are both zero-
rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes
cannot be directly and entirely attributable to any of these sales, the input taxes shall be
proportionately allocated on the basis of sales volume; and (i) the claim is filed within two
years after the close of the taxable quarter when such sales were made. (Luzon Hydro
Corporation vs. CIR, G.R. No. 188260, November 13, 2013).
The petitioner did not competently establish its claim for refund or tax credit. We agree
with the CTA En Banc that the petitioner did not produce evidence showing that it had
zero-rated sales for the four quarters of taxable year 2001. As the CTA En Banc precisely
found, the petitioner did not reflect any zero-rated sales from its power generation in its
four quarterly VAT returns, which indicated that it had not made any sale of electricity.
Had there been zero-rated sales, it would have reported them in the returns. Indeed, it
carried the burden not only that it was entitled under the substantive law to the
allowance of its claim for refund or tax credit but also that it met all the requirements for
evidentiary substantiation of its claim before the administrative official concerned, or in
the de novo litigation before the CTA in Division. Although the petitioner has correctly
contended here that the sale of electricity by a power generation company like it should
be subject to zero-rated VAT under Republic Act No. 9136,31 its assertion that it need not
prove its having actually made zero-rated sales of electricity by presenting the VAT official
receipts and VAT returns cannot be upheld. It ought to be reminded that it could not be
permitted to substitute such vital and material documents with secondary evidence like
financial statements. (Luzon Hydro Corporation vs. CIR, G.R. No. 188260, November 13,
2013).

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NIRC; Value-Added Tax; Refund or tax credit of
excess input VAT; Who may claim / apply
We should also take into consideration the nature of VAT as an indirect tax. Although the
seller is statutorily liable for the payment of VAT, the amount of the tax is allowed to be
shifted or passed on to the buyer. However, reporting and remittance of the VAT paid to
the BIR remained to be the seller/supplier's obligation. Hence, the proper party to seek
the tax refund or credit should be the suppliers, not the petitioner. (Coral Bay Nickel
Corporation vs. CIR, G.R. No. 190506, June 13, 2016).
The purchases of goods and services by the petitioner that were destined for
consumption within the ECOZONE should be free of VAT; hence, no input VAT should then
be paid on such purchases, rendering the petitioner not entitled to claim a tax refund or
credit. Verily, if the petitioner had paid the input VAT, the CTA was correct in holding that
the petitioner's proper recourse was not against the Government but against the seller
who had shifted to it the output VAT following RMC No. 42-03,22 which provides: In case
the supplier alleges that it reported such sale as a taxable sale, the substantiation of
remittance of the output taxes of the seller (input taxes of the exporter-buyer) can only
be established upon the thorough audit of the suppliers' VAT returns and corresponding
books and records. It is, therefore, imperative that the processing office recommends to
the concerned BIR Office the audit of the records of the seller. In the meantime, the claim
for input tax credit by the exporter-buyer should be denied without prejudice to the
claimant's right to seek reimbursement of the VAT paid, if any, from its supplier. (Coral
Bay Nickel Corporation vs. CIR, G.R. No. 190506, June 13, 2016).
NIRC; Value-Added Tax; Refund or tax credit of
excess input VAT; Period to file
As pronounced in Silicon Philippines Inc. vs. Commissioner of Internal Revenue (G.R. No.
173241, March 25, 2015) the exception to the mandatory and jurisdictional compliance
with the 120+30 day-period is when the claim for the tax refund or credit was filed in the
period between December 10, 2003 and October 5, 2010 during which BIR Ruling No. DA-
489-03 was still in effect. Accordingly, the premature filing of the judicial claim was
allowed, giving to the CTA jurisdiction over the appeal. (Coral Bay Nickel Corporation vs.
CIR, G.R. No. 190506, June 13, 2016).
NIRC; Value-Added Tax; Refund or tax credit of
excess input VAT; Related principles
With the issuance of RMC 74-99, the distinction under the old rule was disregarded and
the new circular took into consideration the two important principles of the Philippine
VAT system: the Cross Border Doctrine and the Destination Principle. Thus, Commissioner
of Internal Revenue vs. Toshiba Information Equipment (Phils.) Inc., 466 SCRA 221 (2005),
opined:
The rule that any sale by a VAT-registered supplier from the Customs Territory to a PEZA-
registered enterprise shall be considered an export sale and subject to zero percent (0%)

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VAT was clearly established only on 15 October 1999, upon the issuance of RMC No. 74-
99. Prior to the said date, however, whether or not a PEZA-registered enterprise was VAT-
exempt depended on the type of fiscal incentives availed of by the said enterprise. This
old rule on VAT-exemption or liability of PEZA-registered enterprises, followed by the BIR,
also recognized and affirmed by the CTA, the Court of Appeals, and even this Court,
cannot be lightly disregarded considering the great number of PEZA-registered
enterprises which did rely on it to determine its tax liabilities, as well as, its privileges.
x x x. [The] old rule clearly did not take into consideration the Cross Border
Doctrine essential to the VAT system or the fiction of the ECOZONE as a foreign territory.
It relied totally on the choice of fiscal incentives of the PEZA-registered enterprise. Again,
for emphasis, the old VAT rule for PEZA-registered enterprises was based on their choice
of fiscal incentives: (1) If the PEZA-registered enterprise chose the five percent (5%)
preferential tax on its gross income, in lieu of all taxes, as provided by Rep. Act No. 7916,
as amended, then it would be VAT-exempt; (2) If the PEZA-registered enterprise availed
of the income tax holiday under Exec. Order No. 226, as amended, it shall be subject to
VAT at ten percent (10%). Such distinction was abolished by RMC No. 74-99, which
categorically declared that all sales of goods, properties, and services made by a VAT-
registered supplier from the Customs Territory to an ECOZONE enterprise shall be
subject to VAT, at zero percent (0%) rate, regardless of the tatter's type or class of PEZA
registration; and, thus, affirming the nature of a PEZA-registered or an ECOZONE
enterprise as a VAT-exempt entity. (Boldfacing Supreme Court). (Coral Bay Nickel
Corporation vs. CIR, G.R. No. 190506, June 13, 2016).
Furthermore, Section 8 of Republic Act No. 7916 mandates that PEZA shall manage and
operate the ECOZONE as a separate customs territory. The provision thereby establishes
the fiction that an ECOZONE is a foreign territory separate and distinct from the customs
territory. Accordingly, the sales made by suppliers from a customs territory to a purchaser
located within an ECOZONE will be considered as exportations. Following the Philippine
VAT system's adherence to the Cross Border Doctrine and Destination Principle, the VAT
implications are that no VAT shall be imposed to form part of the cost of goods destined
for consumption outside of the territorial border of the taxing authority. Thus, Toshiba
has discussed that: xxx. The national territory of the Philippines outside of the
proclaimed borders of the ECOZONE shall be referred to as the Customs Territory. Section
8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate
the ECOZONES as a separate customs territory; thus, creating the fiction that the
ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs
Territory to a purchaser in the ECOZONE shall be treated as an exportation from the
Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a
purchaser in the Customs Territory shall be considered as an importation into the
Customs Territory. (Underscoring and boldfacing Supreme Court). (Coral Bay Nickel
Corporation vs. CIR, G.R. No. 190506, June 13, 2016).
NIRC; Excise Tax

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Under Section 129 of the NIRC, as amended, excise taxes are imposed on two kinds of
goods, namely: (a) goods manufactured or produced in the Philippines for domestic sales
or consumption or for any other disposition; and (b) things imported. Undoubtedly, the
excise tax imposed under Section 129 of the NIRC is a tax on property. With respect to
imported things, Section 131 of the NIRC declares that excise taxes on imported things
shall be paid by the owner or importer to the Customs officers, conformably with the
regulations of the Department of Finance and before the release of such articles from the
customs house, unless the imported things are exempt from excise taxes and the person
found to be in possession of the same is other than those legally entitled to such tax
exemption. For this purpose, the statutory taxpayer is the importer of the things subject
to excise tax. (Chevron Philippines, Inc. vs. CIR, G.R. No. 210836, September 1, 2015).
Excise tax on petroleum products is essentially a tax on property, the direct liability for
which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any
excise tax paid by the statutory taxpayer on petroleum products sold to any of the entities
or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt
from excise tax is deemed illegal or erroneous, and should be credited or refunded to the
payor pursuant to Section 204 of the NIRC. This is because the exemption granted under
Section 135 of the NIRC must be construed in favor of the property itself, that is, the
petroleum products. (Chevron Philippines, Inc. vs. CIR, G.R. No. 210836, September 1,
2015).
Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law
exempt from direct and indirect taxes are exempt from excise tax. The phrase which are
by law exempt from direct and indirect taxes describes the entities to whom the
petroleum products must be sold in order to render the exemption operative. Section
135(c) should thus be construed as an exemption in favor of the petroleum products on
which the excise tax was levied in the first place. The exemption cannot be granted to the
buyers that is, the entities that are by law exempt from direct and indirect taxes
because they are not under any legal duty to pay the excise tax. (Chevron Philippines, Inc.
vs. CIR, G.R. No. 210836, September 1, 2015).
It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for
the payment of which may fall on a person other than whoever actually bears the burden
of the tax. Simply put, the statutory taxpayer may shift the economic burden of the excise
tax payment to another usually the buyer. (Chevron Philippines, Inc. vs. CIR, G.R. No.
210836, September 1, 2015).
In cases involving excise tax exemptions on petroleum products under Section 135 of the
NIRC, the Court has consistently held that it is the statutory taxpayer, not the party who
only bears the economic burden, who is entitled to claim the tax refund or tax credit. But
the Court has also made clear that this rule does not apply where the law grants the party
to whom the economic burden of the tax is shifted by virtue of an exemption from both
direct and indirect taxes. In which case, such party must be allowed to claim the tax refund

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or tax credit even if it is not considered as the statutory taxpayer under the law. (Chevron
Philippines, Inc. vs. CIR, G.R. No. 210836, September 1, 2015).

TARIFF AND CUSTOMS CODE
Remedies; Search, seizure, forfeiture, arrest
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. Accordingly, the proper remedy to question the order or
resolution of the Commissioner of Customs was an appeal to the CTA, not to the CA.
(Agriex Co., Ltd. vs. Villanueva, G.R. No.158150, September 10, 2014).
The Subic Special Economic Zone, or the Subic Bay Freeport, was established pursuant to
Section 12 of Republic Act No. 7227 (The Bases Conversion and Development Act of 1992),
to be operated and managed as a special customs territory. On the other hand, the Subic
Bay Metropolitan Authority (SBMA) was created under Section 13 of RA No. 7227 to serve
as an operating and implementing arm of the Conversion Authority within the SBF. xxx.
Both the SBMA and the Bureau of Customs have the power to seize and forfeit goods or
articles entering the Subic Bay Freeport, except that SBMAs authority to seize and forfeit
goods or articles entering the Subic Bay Freeport has been limited only to cases involving
violations of RA No. 7227 or its IRR. There is no question therefore, that the authority of
the Bureau of Customs is larger in scope because it covers cases concerning violations of
the customs laws. 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. (Agriex Co., Ltd. vs. Villanueva, G.R. No.158150,
September 10, 2014).
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. After all, Section 602 of the Tariff and Customs Code vests
exclusive original jurisdiction in the Bureau of Customs over seizure and forfeiture cases
in the enforcement of the tariff and customs laws. (Agriex Co., Ltd. vs. Villanueva, G.R.
No.158150, September 10, 2014).
Remedies; Taxpayer; Protest
The CA correctly held that 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. This was one such exceptional instance when the principle did
not apply. As the records indicate, the Commissioner of Customs already decided to deny
the protest by Oilink on July 12, 1999, and stressed then that the demand to pay was final.

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In that instance, the exhaustion of administrative remedies would have been an exercise
in futility because it was already the Commissioner of Customs demanding the payment
of the deficiency taxes and duties. (COC vs. Oilink International Corporation, G.R. No.
161759, July 02, 2014).

JUDICIAL REMEDIES
Jurisdiction of the CTA; Prescriptive period
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 (Union Refinery Corporation) had already received the BoCs
final assessment demanding payment of the amount due within 10 days, but filed the
petition only on July 30, 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. (COC vs. Oilink International
Corporation, G.R. No. 161759, July 02, 2014).
Judicial procedures; civil cases; new trial
Ordinarily, the concept of newly discovered evidence is applicable to litigations in which
a litigant seeks a new trial or the re-opening of the case in the trial court. Seldom is the
concept appropriate when the litigation is already on appeal, particularly in this Court.
The absence of a specific rule on newly discovered evidence at this late stage of the
proceedings is not without reason. The propriety of remanding the case for the purpose
of enabling the CTA to receive newly discovered evidence would undo the decision
already on appeal and require the examination of the pieces of newly discovered
evidence, an act that the Court could not do by virtue of its not being a trier of facts.
Verily, the Court has emphasized in Atlas Consolidated Mining and Development
Corporation v. Commissioner of Internal Revenue32 that a judicial claim for tax refund or
tax credit brought to the CTA is by no means an original action but an appeal by way of a
petition for review of the taxpayers unsuccessful administrative claim; hence, the
taxpayer has to convince the CTA that the quasi-judicial agency a quo should not have
denied the claim, and to do so the taxpayer should prove every minute aspect of its case
by presenting, formally offering and submitting its evidence to the CTA, including
whatever was required for the successful prosecution of the administrative claim as the
means of demonstrating to the CTA that its administrative claim should have been

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granted in the first place. (Luzon Hydro Corporation vs. CIR, G.R. No. 188260, November
13, 2013).
Nonetheless, on the proposition that we may relax the stringent rules of procedure for
the sake of rendering justice, we still hold that the concept of newly discovered evidence
may not apply herein. In order that newly discovered evidence may be a ground for
allowing a new trial, it must be fairly shown that: (a) the evidence is discovered after the
trial; (b) such evidence could not have been discovered and produced at the trial even
with the exercise of reasonable diligence; (c) such evidence is material, not merely
cumulative, corroborative, or impeaching; and (d) such evidence is of such weight that it
would probably change the judgment if admitted.
The first two requisites are not attendant. To start with, the proposed evidence was
plainly not newly discovered considering the petitioner s admission that its former
Finance and Accounting Manager had misplaced the VAT official receipts. If that was true,
the misplaced receipts were forgotten evidence. And, secondly, the receipts, had they
truly existed, could have been sooner discovered and easily produced at the trial with the
exercise of reasonable diligence. But the petitioner made no convincing demonstration
that it had exercised reasonable diligence. The Court cannot accept its tender of such
receipts and return now, for, indeed, the non-production of documents as vital and
material as such receipts and return were to the success of its claim for refund or tax
credit was improbable, as it goes against the sound business practice of safekeeping
relevant documents precisely to ensure their future use to support an eventual
substantial claim for refund or tax credit. (Luzon Hydro Corporation vs. CIR, G.R. No.
188260, November 13, 2013).
Judicial procedures; civil cases; effect of appeal
Section 11 of Republic Act No. 1125 (R.A. No. 1125),15 as amended by Republic Act No.
9282 (RA 9282) it is stated that:Sec. 11. Who may appeal; effect of appeal. x x x
xxx xxx xxx
No appeal taken to the Court of Tax Appeals from the decision of the Collector of Internal
Revenue or the Collector of Customs shall suspend the payment, levy, distraint, and/or
sale of any property of the taxpayer for the satisfaction of his tax liability as provided by
existing law: Provided, however, That when in the opinion of the Court the collection by
the Bureau of Internal Revenue or the Commissioner of Customs may jeopardize the
interest of the Government and/or the taxpayer the Court at any stage of the
proceeding may suspend the said collection and require the taxpayer either to deposit
the amount claimed or to file a surety bond for not more than double the amount with
the Court. (boldfacing Supreme Court). (Tridharma Marketing Corporation vs. Court of
Tax Appeals, G.R. No. 215950, June 20, 2016).
Clearly, the CTA may order the suspension of the collection of taxes provided that the
taxpayer either: (1) deposits the amount claimed; or (2) files a surety bond for not more

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than double the amount. (Tridharma Marketing Corporation vs. Court of Tax Appeals, G.R.
No. 215950, June 20, 2016).
Moreover, Section 11 of R.A. 1125, as amended, indicates that the requirement of the
bond as a condition precedent to suspension of the collection applies only in cases where
the processes by which the collection sought to be made by means thereof are carried
out in consonance with the law, not when the processes are in plain violation of the law
that they have to be suspended for jeopardizing the interests of the taxpayer. (Tridharma
Marketing Corporation vs. Court of Tax Appeals, G.R. No. 215950, June 20, 2016).
The surety bond amounting to P4,467,391,881.76 imposed by the CTA was within the
parameters delineated in Section 11 of R.A. 1125, as amended. The Court holds, however,
that the CTA in Division gravely abused its discretion under Section 11 because it fixed the
amount of the bond at nearly five times the net worth of the petitioner without
conducting a preliminary hearing to ascertain whether there were grounds to suspend
the collection of the deficiency assessment on the ground that such collection would
jeopardize the interests of the taxpayer. Although the amount of P4,467,391,881.76 was
itself the amount of the assessment, it behoved the CTA in Division to consider other
factors recognized by the law itself towards suspending the collection of the assessment,
like whether or not the assessment would jeopardize the interest of the taxpayer, or
whether the means adopted by the CIR in determining the liability of the taxpayer was
legal and valid. Simply prescribing such high amount of the bond like the initial 150% of
the deficiency assessment of P4,467,391,881.76 (or P6,701,087,822.64), or later on even
reducing the amount of 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. (Tridharma
Marketing Corporation vs. Court of Tax Appeals, G.R. No. 215950, June 20, 2016).

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