G.R. No.

197561 April 7, 2014

COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,

vs.
CITY OF MANILA; LIBERTY M. TOLEDO, in her capacity as Officer-in-Charge (OIC), Treasurer of the City of Manila;
JOSEPH SANTIAGO, in his capacity as OIC, Chief License Division of the City of Manila; REYNALDO MONTALBO, in his
capacity as City Auditor of the City of Manila, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Orders1 dated
December 22, 2010 and June 21, 2011, respectively, of the Regional Trial Court of Manila (RTC-Manila) in Civil Case No. 00-97081.

The factual and procedural antecedents follow:

This case springs from the Decision2 rendered by the RTC-Manila, dated September 28, 2001, in the case entitled Coca-Cola Bottlers
Philippines, Inc. v. City of Manila, et al., docketed as Civil Case No. 00-97081, granting petitioners request for tax refund or credit
assessed under Section 213 of the Revenue Code of Manila upon finding that there was double taxation in the imposition of local business
taxes. The dispositive portion of said Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to either refund or credit the tax assessed under
Section 21 of the Revenue Code of Manila and paid for by plaintiff on the first quarter of year 2000 in the amount of 3,036,887.33.

The defendants City of Manila, etc. are enjoined from collecting the tax from plaintiff Coca-Cola Bottlers Phils., Inc. under Section 21 of
the Revenue Code of Manila. The counterclaims [sic] of respondents is hereby DENIED for lack of merit.

Accordingly, the Injunction bond posted by petitioner is hereby CANCELLED.

SO ORDERED.4

Aggrieved by the foregoing, respondents herein appealed to the Court of Appeals via an ordinary appeal. 5 On April 9, 2003, the Court of
Appeals issued a Resolution dismissing respondents appeal on the ground that the same was improperly brought to the said Court
pursuant to Section 2, Rule 50 of the Revised Rules of Court. Despite respondents motion for reconsideration, the Court of Appeals
affirmed its decision in its Resolution dated February 28, 2005.6

On February 10, 2010, this Court promulgated a Resolution denying the Petition for Review filed by the respondents, the dispositive
portion of which reads:

WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 09 April 2003 and 28 February 2005 Resolutions of the Court of
Appeals in CA-G.R. CV No. 74517.

SO ORDERED.7

On May 12, 2010, the Clerk of Court of this Court issued an Entry of Judgment 8 relative to the aforesaid Resolution and declared the
same final and executory on March 10, 2010.

On June 3, 2010, petitioner filed with the RTC-Manila a Motion for Execution for the enforcement of the Decision dated September 28,
2001 and the issuance of the corresponding writ of execution. 9 Finding merit therein, on June 11, 2010, the RTC-Manila issued an
Order10 granting petitioners Motion for Execution and directed the Branch Clerk of Court to issue the corresponding writ of execution to
satisfy the judgment.

On June 15, 2010, the Branch Clerk of Court, Branch 21 of the RTC Manila issued a Writ of Execution directing the Sheriff to cause the
execution of the Decision dated September 28, 2001, disposing as follows:

NOW THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment, including payment in full of your lawful
fees for the service of this writ.11

Aggrieved, respondents filed a Motion to Quash Writ of Execution. In response, petitioner filed its Opposition thereto on December 12,
2010.12

On December 22, 2010, the RTC-Manila issued an Order13 granting the Motion to Quash Writ of Execution, ruling:

Finding the motion to be prejudicial to the defendants, if implemented, and considering that the projects of the City will be hampered,
the same is hereby GRANTED.

WHEREFORE, premises considered, the Motion to Quash the Writ of Execution is hereby GRANTED.

SO ORDERED.14
Herein petitioner filed a Motion for Reconsideration, but the same was denied by the RTC-Manila in its Order dated June 21, 2011,
reasoning that both tax refund and tax credit involve public funds. Thus, pursuant to SC Administrative Circular No. 10-2000,15 the
enforcement or satisfaction of the assailed decision may still be pursued in accordance with the rules and procedures laid down in
Presidential Decree (P.D.) No. 1445, otherwise known as the Government Auditing Code of the Philippines. 16

Hence, the present Petition for Review on Certiorari raising the following assignment of errors:

1. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE WRIT OF EXECUTION (FOR
SPECIAL JUDGMENT) ISSUED BY THE BRANCH CLERK OF COURT DOES NOT INVOLVE THE LEVY OR GARNISHMENT OF FUNDS
AND PROPERTY USED OR BEING USED FOR PUBLIC PURPOSE,ADMINISTRATIVE CIRCULAR NO. 10-2000 HAS THEREFORE NO
RELEVANCE IN THIS CASE.

2. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE JUDGMENT IN THIS CASE
REQUIRES EITHER TAX REFUND (PAYMENT OF SUM OF MONEY) OR TAX CREDIT (ISSUANCE OF TAX CREDIT CERTIFICATE).

3. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE DEFENDANTS HAVE BEEN
ISSUING TAX CREDIT CERTIFICATES TO OTHER TAXPAYERS FOR ILLEGALLY COLLECTED TAXES EVEN WITHOUT ANY
APPROPRIATE MEASURE.

4. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT THE REASON CITED IN THE
ORDER IN QUASHING THE WRIT OF EXECUTION IS NOT ONE OF THE GROUNDS LAID DOWN BY LAW. (GUTIERREZ VS.
VALIENTE, 557 SCRA 211)

5. THE HONORABLE COURT A QUOSERIOUSLY ERRED WHEN IT FAILED TO CONSIDER THAT ITS ASSAILED ORDER HAS IN
EFFECT REVERSED THE JUDGMENT IN THIS CASE, THUS, DEPRIVING PETITIONER THE FRUITS OF ITS LABOR BEFORE THE
COURTS.17

At the onset, it bears stressing that while petitioner lays down various grounds for the allowance of the petition, the controversy boils
down to the propriety of the issuance of the writ of execution of the judgment ordering respondents either to refund or credit the tax
assessed under Section 2118 of the Revenue Code of Manila in the amount of Php3,036,887.33.

After careful consideration of the facts and laws obtaining in this case, we find that the issuance of the Writ of Execution was superfluous,
given the clear directive of the RTC-Manila in its Decision dated September 28, 2001. We do not, however, agree with respondents view
that Administrative Circular No. 10-2000 is applicable to the instant case for reasons discussed hereinbelow.

In its first assigned error, petitioner argues that the writ of execution issued by the Branch Clerk of Court does not involve the levy or
garnishment of funds and property used or being used for public purpose given that the writ was issued "For: Special Judgment." Thus,
Administrative Circular No. 10-2000 has no relevance in the instant case.

In its Decision dated September 28,2001, the RTC-Manila directs respondents to either refund or credit the tax under Section 21 of the
Revenue Code of Manila, which was improperly assessed but nevertheless paid for by petitioner on the first quarter of year 2000 in the
amount of 3,036,887.33. The judgment does not actually involve a monetary award or a settlement of claim against the government.

Under the first option, 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.19 On the other hand, the second option works by applying the refundable amount against the
tax liabilities of the petitioner in the succeeding taxable years.20

Hence, instead of moving for the issuance of a writ of execution relative to the aforesaid Decision, petitioner should have merely requested
for the approval of the City of Manila in implementing the tax refund or tax credit, whichever is appropriate. In other words, no writ was
necessary to cause the execution thereof, since the implementation of the tax refund will effectively be a return of funds by the City of
Manila in favor of petitioner while a tax credit will merely serve as a deduction of petitioners tax liabilities in the future.

In fact, Section 252 (c) of the Local Government Code of the Philippines is very clear that "[i]n the event that the protest is finally decided
in favor of the taxpayer, the amount or portion of the tax protested shall be refunded to the protestant, or applied as tax credit against
his existing or future tax liability." It was not necessary for petitioner to move for the issuance of the writ of execution because the
remedy has already been provided by law.

Thus, under Administrative Order No. 270 prescribing rules and regulations implementing the Local Government Code, particularly Article
286 thereof, the tax credit granted a taxpayer shall be applied to future tax obligations of the same taxpayer for the same business, to
wit:

ARTICLE 286. Claim for Refund or Tax Credit. All taxpayers entitled to a refund or tax credit provided in this Rule shall file with the
local treasurer a claim in writing duly supported by evidence of payment (e.g., official receipts, tax clearance, and such other proof
evidencing overpayment)within two (2) years from payment of the tax, fee, or charge. No case or proceeding shall be entertained in any
court without this claim in writing, and after the expiration of two (2) years from the date of payment of such tax, fee, or charge, or from
the date the taxpayer is entitled to a refund or tax credit.

The tax credit granted a taxpayer shall not be refundable in cash but shall only be applied to future tax obligations of the same taxpayer
for the same business. If a taxpayer has paid in full the tax due for the entire year and he shall have no other tax obligation payable to
the LGU concerned during the year, his tax credits, if any, shall be applied in full during the first quarter of the next calendar year on the
tax due from him for the same business of said calendar year.

Any unapplied balance of the tax credit shall be refunded in cash in the event that he terminates operation of the business involved
within the locality.21
Accordingly, while we find merit in petitioners contention that there are two (2) ways by which respondents may satisfy the judgment
of the RTC-Manila: (1) to pay the petitioner the amount of Php3,036,887.33 as tax refund; or (2) to issue a tax credit certificate in the
same amount which may be credited by petitioner from its future tax liabilities due to the respondent City of Manila, 22 the issuance of
the Writ of Execution relative thereto was superfluous, because the judgment of the RTC-Manila can neither be considered a judgment
for a specific sum of money susceptible of execution by levy or garnishment under Section 9, 23 Rule 39 of the Rules of Court nor a special
judgment under Section 11,24 Rule 39 thereof.

Moreover, given that Presidential Decree No. 1445 and Administrative Circular No. 10-2000 involve a settlement of a claim against a local
government unit, the same finds no application in the instant case wherein no monetary award is actually awarded to petitioner but a
mere return or restoration of petitioners money, arising from an excessive payment of tax erroneously or illegally imposed and received.

It could not have been the intention of the law to burden the taxpayer with going through the process of execution under the Rules of
Civil Procedure before it may be allowed to avail its tax credit as affirmed by a court judgment. If at all, the City of Manila Local Treasury
may be allowed to verify documents and information relative to the grant of the tax refund or tax credit (i.e., determine the correctness
of the petitioner's returns, and the tax amount to be credited), in consonance with the ruling in San Carlos Milling Co., Inc. v. Commissioner
of Internal Revenue,25 which may be applied by analogy to the case at bar, to wit:

It is difficult to see by what process of ratiocination petitioner insists on the literal interpretation of the word "automatic." Such literal
interpretation has been discussed and precluded by the respondent court in its decision of 23 December1991 where, as aforestated, it
ruled that "once a taxpayer opts for either a refund or the automatic tax credit scheme, and signified his option in accordance with the
regulation, this does not ipso facto confer on him the right to avail of the same immediately. An investigation, as a matter of procedure,
is necessary to enable the Commissioner to determine the correctness of the petitioner's returns, and the tax amount to be credited.

Prior approval by the Commissioner of Internal Revenue of the tax credit under then section 86 (now section 69) of the Tax Code would
appear to be the most reasonable interpretation to be given to said section. An opportunity must be given the internal revenue branch
of the government to investigate and confirm the veracity of the claims of the taxpayer. The absolute freedom that petitioner seeks to
automatically credit tax payments against tax liabilities for a succeeding taxable year, can easily give rise to confusion and abuse,
depriving the government of authority and control over the manner by which the taxpayers credit and offset their tax liabilities, not to
mention the resultant loss of revenue to the government under such a scheme.26

In its third assignment of error, petitioner postulates that the RTC Manila seriously erred when it failed to consider that the respondents
have been issuing tax credit certificates to other taxpayers for illegally collected taxes even without any appropriate measure. 1wphi1

On the other hand, respondents argue that the same raises a question of fact which would entail an examination of probative value of
documentary evidence which, in fact, were not introduced in the course of the trial but only as a mere attachment to the Motion for
Reconsideration of petitioner.27

Petitioners sweeping statement cannot hold water as the factual and legal milieu of the tax refund cases submitted to the City of Manila,
as well as the circumstances availing in each of those cases, vary, requiring a different action from the City of Manila. As such, the case
of Asian Terminals Inc. as well as the case of Tupperware Brands Phils., Inc. and Smart Communications, Inc., as cited by
petitioner,28 should not be compared to the instant case because it has not been proven that the factual and procedural circumstances
availing therein are similar to the instant case.

For its fourth assigned error, petitioner argues that the reason cited in the Order quashing the Writ of Execution is not one of the grounds
laid down by law.

Respondents aver, on the other hand, that in granting the Motion to Quash, the RTC-Manila plainly conceded that the Writ of Execution
was improvidently issued as it was prejudicial to the respondents. Respondents also argue that the rule that government funds are
generally exempt from execution is based on obvious considerations of public policy; thus, the primary functions and devolved public
welfare services rendered by the respondent City of Manila cannot be interrupted or abandoned by the withdrawal of its meager resources
from their lawful and particular purpose based on the appropriation ordinance.29

Finding that the issuance of the Writ of Execution was superfluous in the first place, this Court finds the foregoing issue inapt for
discussion. Nevertheless, this Court disagrees with petitioners fifth contention that the assailed decision of the RTC-Manila granting the
Motion to Quash the Writ of Execution has, in effect, reversed the judgment in the instant case.

What is at issue in the instant petition is merely the propriety of the enforcement of the writ of execution issued by the RTC-Manila.
Clearly, this Court has already ruled upon the validity of the tax refund or the tax credit due to the petitioner and has rendered the same
final and executory.

The lower court, therefore, has not effectively reversed the judgment in favor of petitioner. The court a quos reason for quashing the
Writ of Execution was to allow the parties to enforce the judgment by complying first with the rules and procedures of P.D. No. 1445 and
Administrative Circular No. 10-2000.30

WHEREFORE, premises considered, the petition is GRANTED. Accordingly, petitioner Coca-Cola Bottlers, Inc. is entitled to a tax refund
or tax credit without need for a writ of execution, provided that petitioner complies with the requirements set by law for a tax refund or
tax credit, whichever is applicable.

SO ORDERED.

COMMISSIONER OF INTERNAL
REVENUE, vs JULIETA ARIETE
 Mercado filed an affidavit attesting that respondent earned substantial income in 1994, 1995, and 1996 without paying income
tax. The SID then issued an order to investigate the denunciation made and submit a progress repot. Thereafter, the revenue officer
submitted a report stating that respondent admitted her non-filing of income tax returns.

The respondent then filed her income tax returns under the Voluntary Assessment Program (VAP). A notice of assessment was
then issued against respondent finding a tax deficiency amounting to P191,463.04.

Upon assessment, respondent filed for assessment protest and offered a compromise settlement but the same was denied.
Consequently, respondent filed a petition for review and the CTA granted such and rendered a decision cancelling the deficiency
assessments. The CTA stated that when respondent filed her income tax returns on 2 December 1997, she was not yet under investigation
by the Special Investigation Division. The Letter of Authority to investigate respondent for tax purposes was issued only on 28 July 1998.
Further, respondents case was not duly recorded in the Official Registry Book of the BIR before she availed of the VAP.

The CTA, quoting RMO Nos. 59-97, 60-97, and 63-97, ruled that the requirements before a person may be excluded from the coverage
of the VAP are:

a. The person(s) must be under investigation by the Tax Fraud Division and/or the regional Special Investigation Division;

b. The investigation must be as a result of a verified information filed by an informer under Section 281 of the NIRC, as amended; and

c. The investigation must be duly registered in the Official Registry Book of the Bureau before the date of availment under the VAP.12

The CTA ruled that the conjunctive word "and" is used; therefore, all of the above requisites must be present before a person may be
excluded from the coverage of the VAP. The CTA explained that the word "and" is a conjunction connecting words or phrases expressing
the idea that the latter is to be added or taken along with the first.

Issue: WON the CA erred in holding that the recording in the Official Registry Book of the BIR of the information filed by the informer
under Section 28 of the Tax Code is a mandatory requirement before a taxpayer-applicant may be excluded from the coverage of the
VAP.

Held: Petitioner contends that the VAP, being in the nature of a tax amnesty, must be strictly construed against the taxpayer-applicant
such that petitioners failure to record the information in the Official Registry Book of the BIR does not affect respondents disqualification
from availment of the benefits under the VAP. Petitioner argues that taxpayers who are under investigation for non-filing of income tax
returns before their availment of the VAP are not covered by the program and are not entitiled to its benefits. Petitioner alleges that the
underlying reason for the disqualification is that availment of the VAP by such taxpayer is no longer voluntary. Petitioner asserts that
voluntariness is the very essence of the Voluntary Assessment Program.

It is well-settled that where the language of the law is clear and unequivocal, it must be given its literal application and applied without
interpretation. The general rule of requiring adherence to the letter in construing statutes applies with particular strictness to tax laws
and provisions of a taxing act are not to be extended by implication. A careful reading of the RMOs pertaining to the VAP shows that the
recording of the information in the Official Registry Book of the BIR is a mandatory requirement before a taxpayer may be excluded from
the coverage of the VAP.

CIR VS SMC

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails as said rule or
regulation cannot go beyond the terms and provisions of the basic law.

For the period of June 1, 2004 to December 31, 2004, taxpayer was made to pay excise taxes amounting to P2,286,488,861.58 for the
323,407,194 liters of its beer products based on the tax rate which was being applied to its products prior to January 1, 2000, in
accordance with the last paragraph of Section 1 of Revenue Regulations (RR) No. 17-99. RR No. 17-99 created a new tax rate when it
added in the last paragraph of Section 1 thereof, the qualification that the tax due after the Page 2 of 2 12% increase becomes effective
"shall not be lower than the tax actually paid prior to January 1, 2000."

The Supreme Court held that there is nothing in Section 143 of the Tax Reform Act of 1997 which clothes the BIR with the power or
authority to rule that the new specific tax rate should not be lower than the excise tax that is actually being paid prior to January 1, 2000,
hence, such interpretation is clearly an invalid exercise of the power of the Secretary of Finance to interpret tax laws and to promulgate
rules and regulations necessary for the effective enforcement of the Tax Reform Act of 1997. It bears reiterating that tax burdens are
not to be imposed, nor presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construed
strictissimi juris against the government. In case of discrepancy between the basic law and a rule or regulation issued to implement said
law, the basic law prevails as said rule or regulation cannot go beyond the terms and provisions of the basic law. It must be stressed
that the objective of issuing BIR Revenue Regulations is to establish parameters or guidelines within which our tax laws should be
implemented, and not to amend or modify its substantive meaning and import. As held in Commissioner of Internal Revenue v. Fortune
Tobacco Corporation.

--

Facts: Respondent San Miguel Corporation, a domestic corporation engaged in the manufacture and sale of fermented liquor, produces
as one of its products "Red Horse" beer which is sold in 500-ml. and 1-liter bottle variants. On January 1, 1998, Republic Act (R.A.) No.
8424 or the Tax Reform Act of 1997 took effect. It reproduced, as Section 143 thereof, the provisions of Section 140 of the old National
Internal Revenue Code as amended by R.A. No. 8240 which became effective on January 1, 1997. Part of Section 143 of the Tax Reform
Act of 1997 reads:

The excise tax from any brand of fermented liquor within the next three (3) years from the effectivity of Republic Act No. 8240 shall not
be lower than the tax which was due from each brand on October 1, 1996.
The rates of excise tax on fermented liquor under paragraphs (a), (b) and (c) hereof shall be increased by twelve percent (12%) on
January 1, 2000.
Thereafter, on December 16, 1999, the Secretary of Finance issued Revenue Regulations No. 17-99 increasing the applicable
tax rates on fermented liquor by 12%. This increase, however, was qualified by the last paragraph of Section 1 of Revenue Regulations
No. 17-99 which reads:

Provided, however, that the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines
and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000.
For the period June 1, 2004 to December 31, 2004, respondent was assessed and paid excise taxes amounting to
P2,286,488,861.58. Respondent, however, later contended that the said qualification in the last paragraph of Section 1 of Revenue
Regulations No. 17-99 has no basis in the plain wording of Section 143 and filed before the BIR a claim for refund or tax credit of the
amount of P60,778,519.56 as erroneously paid excise taxes for the period of May 22, 2004 to December 31, 2004. Later, said amount
was reduced to P58,213,294.92 because of prescription.

On September 26, 2007, the CTA Second Division granted the petition and ordered petitioner to refund P58,213,294.92 to
respondent or to issue in the latters favor a Tax Credit Certificate for the said amount for the erroneously paid excise taxes. The CTA
held that Revenue Regulations No. 17-99 modified or altered the mandate of Section 143 of the Tax Reform Act of 1997. The CTA En
Banc affirmed the Decision. Hence, this petition for review on certiorari.

Issue: Whether or not Section 1 of Revenue Regulations No. 17-99 is an invalid administrative interpretation of Section 143 of the Tax
Reform Act of 1997.

Ruling: Yes. Section 143 of the Tax Reform Act of 1997 is clear and unambiguous. It provides for two periods: the first is the 3- year
transition period beginning January 1, 1997, the date when R.A. No. 8240 took effect, until December 31, 1999; and the second is the
period thereafter. During the 3-year transition period, Section 143 provides that "the excise tax from any brand of fermented liquor...shall
not be lower than the tax which was due from each brand on October 1, 1996." After the transitory period, Section 143 provides that
the excise tax rate shall be the figures provided under paragraphs (a), (b) and (c) of Section 143 but increased by 12%, without regard
to whether the revenue collection starting January 1, 2000 may turn out to be lower than that collected prior to said date. Revenue
Regulations No. 17-99, however, created a new tax rate when it added in the last paragraph of Section 1 thereof, the qualification
that the tax due after the 12% increase becomes effective "shall not be lower than the tax actually paid prior to January 1, 2000."

It bears reiterating that tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly
and clearly imports, tax statutes being construed strictissimi juris against the government. In case of discrepancy between the basic law
and a rule or regulation issued to implement said law, the basic law prevails as said rule or regulation cannot go beyond the terms and
provisions of the basic law.

As there is nothing in Section 143 of the Tax Reform Act of 1997 which clothes the BIR with the power or authority to rule that
the new specific tax rate should not be lower than the excise tax that is actually being paid prior to January 1, 2000, such interpretation
is clearly an invalid exercise of the power of the Secretary of Finance to interpret tax laws and to promulgate rules and regulations
necessary for the effective enforcement of the Tax Reform Act of 1997.

Diaz vs. Secretary of Finance (2011)

Facts:

Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed this petition for declaratory relief assailing the validity of the
impending imposition of value-added tax (VAT) by the Bureau of Internal Revenue (BIR) on the collections of tollway operators. Court
treated the case as one of prohibition.

Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to include toll fees within the meaning of "sale of
services" that are subject to VAT; that a toll fee is a "user's tax," not a sale of services; that to impose VAT on toll fees would amount to
a tax on public service; and that, since VAT was never factored into the formula for computing toll fees, its imposition would violate the
non-impairment clause of the constitution.

The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees, including tollway operations; that the
Court should seek the meaning and intent of the law from the words used in the statute; and that the imposition of VAT on tollway
operations has been the subject as early as 2003 of several BIR rulings and circulars.

The government also argues that petitioners have no right to invoke the non-impairment of contracts clause since they clearly have no
personal interest in existing toll operating agreements (TOAs) between the government and tollway operators. At any rate, the non-
impairment clause cannot limit the State's sovereign taxing power which is generally read into contracts.

Issue:
May toll fees collected by tollway operators be subjected to VAT (Are tollway operations a franchise and/or a service that is subject to
VAT)?

Ruling:

When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latter's use of the tollway facilities over which the
operator enjoys private proprietary rights that its contract and the law recognize. In this sense, the tollway operator is no different from
the service providers under Section 108 who allow others to use their properties or facilities for a fee.

Tollway operators are franchise grantees and they do not belong to exceptions that Section 119 spares from the payment of VAT. The
word "franchise" broadly covers government grants of a special right to do an act or series of acts of public concern. Tollway operators
are, owing to the nature and object of their business, "franchise grantees." The construction, operation, and maintenance of toll facilities
on public improvements are activities of public consequence that necessarily require a special grant of authority from the state.

A tax is imposed under the taxing power of the government principally for the purpose of raising revenues to fund public expenditures.
Toll fees, on the other hand, are collected by private tollway operators as reimbursement for the costs and expenses incurred in the
construction, maintenance and operation of the tollways, as well as to assure them a reasonable margin of income. Although toll fees
are charged for the use of public facilities, therefore, they are not government exactions that can be properly treated as a tax. Taxes
may be imposed only by the government under its sovereign authority, toll fees may be demanded by either the government or private
individuals or entities, as an attribute of ownership.

CIR v. Estate of Benigno Toda, G.R. No. 147188. September 14, 2004

Facts:
Cebiles Insurance Corporation authorized Benigno P. Toda, Jr., President and owner of 99.991% of its issued and outstanding capital
stock, to sell the Cibeles Building and the two parcels of land on which the building stands for an amount of not less than P90 million.

Toda purportedly sold the property for P100 million to Rafael A. Altonaga. However, Altonaga in turn, sold the same property on the
same day to Royal Match Inc. for P200 million. These two transactions were evidenced by Deeds of Absolute Sale notarized on the same
day by the same notary public.

For the sale of the property to Royal Dutch, Altonaga paid capital gains tax [6%] in the amount of P10 million.
Issue:
Whether or not the scheme employed by Cibelis Insurance Company constitutes tax evasion.

Ruling:
Yes! The scheme, explained the Court, resorted to by CIC in making it appear that there were two sales of the subject properties, i.e.,
from CIC to Altonaga, and then from Altonaga to RMI cannot be considered a legitimate tax planning. Such scheme is tainted with fraud.

Fraud in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment
involving a breach of legal or equitable duty, trust or confidence justly reposed, resulting in the damage to another, or by which an undue
and unconscionable advantage is taken of another.

It is obvious that the objective of the sale to Altonaga was to reduce the amount of tax to be paid especially that the transfer from
him to RMI would then subject the income to only 5% individual capital gains tax, and not the 35% corporate income tax. Altonagas
sole purpose of acquiring and transferring title of the subject properties on the same day was to create a tax shelter. Altonaga never
controlled the property and did not enjoy the normal benefits and burdens of ownership. The sale to him was merely a tax ploy, a sham,
and without business purpose and economic substance. Doubtless, the execution of the two sales was calculated to mislead the BIR
with the end in view of reducing the consequent income tax liability.

In a nutshell, the intermediary transaction, i.e., the sale of Altonaga, which was prompted more on the mitigation of tax liabilities than
for legitimate business purposes constitutes one of tax evasion.

Generally, a sale or exchange of assets will have an income tax incidence only when it is consummated. The incidence of taxation
depends upon the substance of a transaction. The tax consequences arising from gains from a sale of property are not finally to be
determined solely by the means employed to transfer legal title. Rather, the transaction must be viewed as a whole, and each step from
the commencement of negotiations to the consummation of the sale is relevant. A sale by one person cannot be transformed for tax
purposes into a sale by another by using the latter as a conduit through which to pass title. To permit the true nature of the transaction
to be disguised by mere formalisms, which exist solely to alter tax liabilities, would seriously impair the effective administration of the tax
policies of Congress.

To allow a taxpayer to deny tax liability on the ground that the sale was made through another and distinct entity when it is proved
that the latter was merely a conduit is to sanction a circumvention of our tax laws. Hence, the sale to Altonaga should be disregarded
for income tax purposes. The two sale transactions should be treated as a single direct sale by CIC to RMI.

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, v. 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, 4 as amended, as a condition for the renewal of their
respective business licenses for the year 1999.

By letter dated March 1, 1999, the petitioners formally requested the Office of the City Treasurer for the tax credit or refund of the local
business taxes paid on the first quarter of 1999 in compliance with the Section 21. However, then City Treasurer Anthony Acevedo
(Acevedo) denied the request through his letter of March 10, 1999. On April 29, 1999, the petitioners files their respective petitions for
certitorari in the RTC on the issue as consolidated whether or not the collection of taxes under Section 21 of rdinance No. 7794 as
amended constitutes double taxation.

The RTC ruled that thhe 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.

Moreover, the petitioners only act as the collection 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 taxes imposed under Sec. 21 represent additional amounts added by the business
establishment to the basic prices of its goods and services which are paid by the end-users to the businesses. It is actually not taxes on
the business of petitioners but on the consumers. Hence, there is no double taxation. This in effect resolves in favor of the constitutionality
of the assailed sections of Ordinance No. 7807 of the City of Manila.

Petitioners appealed to the CA which was dismissed for lack of jurisdiction.

ISSUE:

Whether the act of the City Treasurer of Manila in imposing , assessing, and collecting the additional business tax under section 21 of
Ordinance No. 7794 as amended by Ordinance No. 7807 is constitutive of double taxation and violative of the local government code of
1991.

RULING:

The imposition of the tax under Section 21 of the Revenue Code of Manila constituted double taxation.

Double taxation means taxing the same property twice when it should be taxed only once; that is, taxing the same person twice by the
same jurisdiction for the same thing. It is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise described
as direct duplicate taxation, the two taxes must be imposed on the same subject matter, for the same purpose, by the same
taxing authority, within the same jurisdiction, during the same taxing period; and the taxes must be of the same kind or
character.

The Court 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.

La Suerte Cigar v. C.A

Facts:

This case involves the taxability of stemmed leaf tobacco imported and locally purchased by La Suerte Cigar & Cigarette Factory for use
as raw material in the manufacture of their cigarettes. Stemmed leaf tobacco, as herein used means leaf tobacco which has had the stem
or mid rib removed. On January 12, 1990, La Suerte protested the excise tax deficiency assessment stressing that the BIR assessment
was based solely on Section 141(b) of the Tax Code, partially prepared or manufactured tobacco is subject to specific tax. Without,
however, applying Section 137 thereof, the more specific provision, which expressly allows the sale of stemmed leaf tobacco as raw
material by one manufacturer directly to another without payment of the excise tax. However, in a letter, dated August 31,
1990,Commissioner Jose U. Ong denied La Suertes protest, insisting that stemmed leaf tobacco is subject to excise tax "unless there is
an express grant of exemption from the payment of tax."

Issue: Was there Double Taxation?

Held:

There is no double taxation. The contention that the cigarette manufacturers are doubly taxed because they are paying the specific tax
on the raw material and on the finished product in which the raw material was a part is also devoid of merit.

For double taxation in the objectionable or prohibited sense to exist, the same property must be taxed twice, when it should be taxed
but once. [B]oth taxes must be imposed on the same property or subject-matter, for the same purpose, by the same taxing authority,
within the same jurisdiction or taxing district, during the same taxing period, and they must be the same kind or character of tax.

At all events, there is no constitutional prohibition against double taxation in the Philippines

It is something not favored, but is permissible, provided some other constitutional requirement is not thereby violated, such as the
requirement that taxes must be uniform.

Excise taxes are essentially taxes on property because they are levied on certain specified goods or articles manufactured or produced
in the Philippines for domestic sale or consumption or for any other disposition, and on goods imported. In this case, there is no double
taxation in the prohibited sense because the specific tax is imposed by explicit provisions of the Tax Code on two different articles or
products: (1) on the stemmed leaf tobacco; and (2) on cigar or cigarette.

G.R. No. 204429, February 18, 2014

SMART COMMUNICATIONS, INC., Petitioner, v. MUNICIPALITY OF MALVAR, BATANGAS, Respondent.

This petition for review1 challenges the 26 June 2012 Decision2 and 13 November 2012 Resolution of the Court of Tax. Appeals (CTA)
En Banc.

Th e CTA En Banc affirmed the 17 December 2010 Decision4 and 7 April 2011 Resolution5 of the CTA First Division, which in turn affirmed
the 2 December 2008 Decision6 and 21 May 2009 Order7 of the Regional Trial Court of Tanauan City, Batangas, Branch 6. The trial court
declared void the assessment imposed by respondent Municipality of Malvar, Batangas against petitioner Smart Communications, Inc. for
its telecommunications tower for 2001 to July 2003 and directed respondent to assess petitioner only for the period starting 1 October
2003.

FACTS:

Petitioner Smart Communications, Inc. (Smart) In the course of its business, Smart constructed a telecommunications tower within the
territorial jurisdiction of the Municipality. The construction of the tower was for the purpose of receiving and transmitting cellular
communications within the covered area.

On 30 July 2003, the Municipality passed Ordinance No. 18, series of 2003, entitled "An Ordinance Regulating the Establishment of
Special Projects."

On 24 August 2004, Smart received from the Permit and Licensing Division of the Office of the Mayor of the Municipality an assessment
letter with a schedule of payment for the total amount of P389,950.00 for Smarts telecommunications tower.

Due to the alleged arrears in the payment of the assessment, the Municipality also caused the posting of a closure notice on the
telecommunications tower.

On 9 September 2004, Smart filed a protest, claiming lack of due process in the issuance of the assessment and closure notice. In the
same protest, Smart challenged the validity of Ordinance No. 18 on which the assessment was based. The Municipality denied Smarts
protest.

On 17 November 2004, Smart filed with Regional Trial Court of Tanauan City, Batangas, Branch 6, an "Appeal/Petition" assailing the
validity of Ordinance No. 18.

TRIAL COURT RULED:

The trial court held that the assessment covering the period from 2001 to July 2003 was void since Ordinance No. 18 was approved only
on 30 July 2003. However, the trial court declared valid the assessment starting 1 October 2003, citing Article 4 of the Civil Code of the
Philippines,9 in relation to the provisions of Ordinance No. 18 and Section 166 of Republic Act No. 7160 or the Local Government Code
of 1991 (LGC).10 The dispositive portion of the trial courts Decision reads:

WHEREFORE, in light of the foregoing, the Petition is partly GRANTED.

CTA division and CTA en banc dismissed the petition for review of Smart.

The Ruling of the CTA En Banc:

The CTA En Banc dismissed the petition on the ground of lack of jurisdiction. The CTA En Banc declared that it is a court of special
jurisdiction and as such, it can take cognizance only of such matters as are clearly within its jurisdiction. Citing Section 7(a), paragraph
3, of Republic Act No. 9282, the CTA En Banc held that the CTA has exclusive appellate jurisdiction to review on appeal, decisions, orders
or resolutions of the Regional Trial Courts in local tax cases originally resolved by them in the exercise of their original or appellate
jurisdiction. However, the same provision does not confer on the CTA jurisdiction to resolve cases where the constitutionality of a law or
rule is challenged.

ISSUES:

The petition raises the following arguments:

1. The [CTA En Banc Decision and Resolution] should be reversed and set aside for being contrary to law and jurisprudence considering
that the CTA En Banc should have exercised its jurisdiction and declared the Ordinance as illegal.

2. The [CTA En Banc Decision and Resolution] should be reversed and set aside for being contrary to law and jurisprudence considering
that the doctrine of exhaustion of administrative remedies does not apply in [this case].

3. The [CTA En Banc Decision and Resolution] should be reversed and set aside for being contrary to law and jurisprudence considering
that the respondent has no authority to impose the so-called "fees" on the basis of the void ordinance.

HELD:

Petitioner: Smart argues that the "fees" in Ordinance No. 18 are actually taxes since they are not regulatory, but revenue-raising. Smart
contends that the designation of "fees" in Ordinance No. 18 is not controlling.

COURT:

The Court finds that the fees imposed under Ordinance No. 18 are not taxes.

Section 5, Article X of the 1987 Constitution provides that "each local government unit shall have the power to create its own sources of
revenues and to levy taxes, fees, and charges subject to such guidelines and limitations as the Congress may provide, consistent with
the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government."

Consistent with this constitutional mandate, the LGC grants the taxing powers to each local government unit. Specifically, Section 142 of
the LGC grants municipalities the power to levy taxes, fees, and charges not otherwise levied by provinces. Section 143 of the LGC
provides for the scale of taxes on business that may be imposed by municipalities while Section 147 of the same law provides for the
fees and charges that may be imposed by municipalities on business and occupation.

The LGC defines the term "charges" as referring to pecuniary liability, as rents or fees against persons or property, while the term "fee"
means "a charge fixed by law or ordinance for the regulation or inspection of a business or activity."

In this case, the Municipality issued Ordinance No. 18, which is entitled "An Ordinance Regulating the Establishment of Special Projects,"
to regulate the "placing, stringing, attaching, installing, repair and construction of all gas mains, electric, telegraph and telephone wires,
conduits, meters and other apparatus, and provide for the correction, condemnation or removal of the same when found to be dangerous,
defective or otherwise hazardous to the welfare of the inhabitant[s]." It was also envisioned to address the foreseen "environmental
depredation" to be brought about by these "special projects" to the Municipality. Pursuant to these objectives, the Municipality imposed
fees on various structures, which included telecommunications towers.

As clearly stated in its whereas clauses, the primary purpose of Ordinance No. 18 is to regulate the "placing, stringing, attaching, installing,
repair and construction of all gas mains, electric, telegraph and telephone wires, conduits, meters and other apparatus" listed therein,
which included Smarts telecommunications tower. Clearly, the purpose of the assailed Ordinance is to regulate the enumerated activities
particularly related to the construction and maintenance of various structures. The fees in Ordinance No. 18 are not impositions on the
building or structure itself; rather, they are impositions on the activity subject of government regulation, such as the installation and
construction of the structures.

Since the main purpose of Ordinance No. 18 is to regulate certain construction activities of the identified special projects, which included
"cell sites" or telecommunications towers, the fees imposed in Ordinance No. 18 are primarily regulatory in nature, and not primarily
revenue-raising. While the fees may contribute to the revenues of the Municipality, this effect is merely incidental. Thus, the fees imposed
in Ordinance No. 18 are not taxes.

In Progressive Development Corporation v. Quezon City, the Court declared that "if the generating of revenue is the primary purpose
and regulation is merely incidental, the imposition is a tax; but if regulation is the primary purpose, the fact that incidentally revenue is
also obtained does not make the imposition a tax."

Considering that the fees in Ordinance No. 18 are not in the nature of local taxes, and Smart is questioning the constitutionality of the
ordinance, the CTA correctly dismissed the petition for lack of jurisdiction. Likewise, Section 187 of the LGC, which outlines the procedure
for questioning the constitutionality of a tax ordinance, is inapplicable, rendering unnecessary the resolution of the issue on non-
exhaustion of administrative remedies.

PETITIONER:

Smart argues that the Municipality exceeded its power to impose taxes and fees as provided in Book II, Title One, Chapter 2, Article II
of the LGC. Smart maintains that the mayors permit fees in Ordinance No. 18 (equivalent to 1% of the project cost) are not among those
expressly enumerated in the LGC.

COURT:

As discussed, the fees in Ordinance No.18 are not taxes. Logically, the imposition does not appear in the enumeration of taxes under
Section 143 of the LGC.

Moreover, even if the fees do not appear in Section 143 or any other provision in the LGC, the Municipality is empowered to impose
taxes, fees and charges, not specifically enumerated in the LGC or taxed under the Tax Code or other applicable law. Section 186 of the
LGC, granting local government units wide latitude in imposing fees, expressly provides:
Section 186. Power To Levy Other Taxes, Fees or Charges. - Local government units may exercise the power to levy taxes, fees or
charges on any base or subject not otherwise specifically enumerated herein or taxed under the provisions of the National Internal
Revenue Code, as amended, or other applicable laws: Provided, That the taxes, fees, or charges shall not be unjust, excessive, oppressive,
confiscatory or contrary to declared national policy: Provided, further, That the ordinance levying such taxes, fees or charges shall not
be enacted without any prior public hearing conducted for the purpose.

PETITIONER: argues that the Municipality is encroaching on the regulatory powers of the National Telecommunications Commission
(NTC).

COURT: The fees are not imposed to regulate the administrative, technical, financial, or marketing operations of telecommunications
entities, such as Smarts; rather, to regulate the installation and maintenance of physical structures Smarts cell sites or
telecommunications tower. The regulation of the installation and maintenance of such physical structures is an exercise of the police
power of the Municipality. Clearly, the Municipality does not encroach on NTCs regulatory powers.

PETITIONER: Ordinance No. 18 violates Sections 130(b)(3)27 and 186 of the LGC since the fees are unjust, excessive, oppressive and
confiscatory

COURT: On the constitutionality issue, Smart merely pleaded for the declaration of unconstitutionality of Ordinance No. 18 in the Prayer
of the Petition, without any argument or evidence to support its plea. Nowhere in the body of the Petition was this issue specifically
raised and discussed. Significantly, Smart failed to cite any constitutional provision allegedly violated by respondent when it issued
Ordinance No. 18.

Settled is the rule that every law, in this case an ordinance, is presumed valid. To strike down a law as unconstitutional, Smart has the
burden to prove a clear and unequivocal breach of the Constitution, which Smart miserably failed to do.

WHEREFORE, the Court DENIES the petition.

SO ORDERED.

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. NIPPON EXPRESS (PHILS.) CORPORATION, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 18, 2013 and the Resolution3 dated June 10, 2014 of
the Court of Tax Appeals (CTA) En Banc in CTA EB No. 924, which affirmed the Resolution4 dated July 31, 2012 of the CTA Third Division
(CTA Division) in CTA Case No. 6967, granting respondent Nippon Express (Phils.) Corporation's (Nippon) motion to withdraw petition
for review5 (motion to withdraw).

The Facts

Nippon is a domestic corporation duly organized and existing under Philippine laws which is primarily engaged in the business of freight
forwarding, namely, in the international and domestic air and sea freight and cargo forwarding, hauling, carrying, handling, distributing,
loading, and unloading general cargoes and all classes of goods, wares, and merchandise, and the operation of container depots,
warehousing, storage, hauling, and packing facilities.6 It is a Value-Added Tax (VAT) registered entity with Tax Identification No. VAT
Registration No. 004-669-434-000.7 As such, it filed its quarterly VAT returns for the year 2002 on April 25, 2002, July 25, 2002, October
25, 2002, and January 27, 2003, respectively.8 It maintained that during the said period it incurred input VAT attributable to its zero-
rated sales in the amount of P28,405,167.60, from which only P3,760,660.74 was applied as tax credit, thus, reflecting refundable excess
input VAT in the amount of P24,644,506.86.9

On April 22, 2004, Nippon filed an administrative claim for refund10 of its unutilized input VAT in the amount of P24,644,506.86 for the
year 2002 before the Bureau of Internal Revenue (BIR).11 A day later, or on April 23, 2004, it filed a judicial claim for tax refund, by way
of petition for review,12 before the CTA, docketed as CTA Case No. 6967.13

For its part, petitioner the Commissioner of Internal Revenue (CIR) asserted, inter alia, that the amounts being claimed by Nippon as
unutilized input VAT were not properly documented, hence, should be denied.14

Proceedings Before the CTA Division

In a Decision15 dated August 10, 2011, the CTA Division partially granted Nippon's claim for tax refund, and thereby ordered the CIR to
issue a tax credit certificate in the reduced amount of P2,614,296.84, representing its unutilized input VAT which was attributable to its
zero-rated sales.16 It found that while Nippon timely filed its administrative and judicial claims within the two (2)-year prescriptive
period,17 it, however, failed to show that the recipients of its services - which, in this case, were mostly Philippine Economic Zone Authority
registered enterprises - were non-residents "doing business outside the Philippines." Accordingly, it concluded that Nippon's purported
sales therefrom could not qualify as zero-rated sales, hence, the reduction in the amount of tax credit certificate claimed. 18

Before its receipt of the August 10, 2011 Decision, or on August 12, 2011, Nippon filed a motion to withdraw,19 considering that the
BIR, acting on its administrative claim, already issued a tax credit certificate in the amount of P21,675,128.91 on July 27, 2011 (July 27,
2011 Tax Credit Certificate).

Separately, the CIR moved for reconsideration20 of the August 10, 2011 Decision and filed its comment/opposition 21 to Nippon's motion
to withdraw, claiming that: (a) the CTA Division had already resolved the factual issue pertaining to Nippon's entitlement to a tax credit
certificate, which, after trial, was proven to be only in the amount of P2,614,296.84; ( b) the issuance of the July 27, 2011 Tax Credit
Certificate was bereft of factual and legal bases, and prejudicial to the interest of the government; and ( c) Nippon's motion to withdraw
was "tantamount to [a] withdrawal and abandonment of its [mjotion for [reconsideration also filed in this case."22

Thereafter, Nippon, which maintained that it only had notice of the August 10, 2011 Decision on August 16, 2011, 23 likewise sought for
reconsideration,24 praying that the CTA Division set aside its August 10, 2011 Decision and render judgment ordering the CIR to issue a
tax credit certificate in the full amount of P24,644,506.86, or in the alternative, grant its motion to withdraw. 25cralawred

In a Resolution dated July 31, 2012,26 the CTA Division granted Nippon's motion to withdraw and, thus, considered the case closed and
terminated.27 It found that pursuant to Revenue Memorandum Circular No. 49-03 (RMC No. 49-03) dated August 15, 2003,
Nippon correctly availed of the proper remedy notwithstanding the promulgation of the August 10, 2011 Decision. It added that in
approving the withdrawal of Nippon's petition for review, it exercised its discretionary authority under Section 3, Rule 50 of the Rules of
Court after due consideration of the reasons proffered by Nippon, namely: ( a) that the parties had already arrived at a reasonable
settlement of the issues; (b) further legal and related costs would be avoided; and (c) the court's time and resources would be saved.28

Aggrieved, the CIR elevated29 its case to the CTA En Banc.

The CTA En Banc Ruling

In a Decision30 dated December 18, 2013, the CTA En Banc affirmed the July 31, 2012 Resolution of the CTA Division granting Nippon's
motion to withdraw.31 It debunked the CIR's assertions that Nippon failed to comply with the requirements set forth in RMC No. 49-03
- i.e., that Nippon failed to notify the BIR that it agreed with its findings and to file the necessary motion before the CTA Division prior to
the promulgation of its Decision -noting that RMC No. 49-03 did not expressly require a taxpayer to inform the BIR of its assent nor
prescribe a definite period for filing a motion to withdraw. It also observed that the CIR did not deny the existence and issuance of the
July 27, 2011 Tax Credit Certificate. In this regard, the same may be taken judicial notice of, and the need for its formal offer dispensed
with.32

The CIR moved for partial reconsideration33 which was, however, denied by the CTA En Banc in a Resolution34 dated June 10, 2014;
hence, this petition.

The Issue Before the Court

The core issue in this case is whether the CTA properly granted Nippon's motion to withdraw.

The Court's Ruling

The petition is meritorious.

A perusal of the Revised Rules of the Court of Tax Appeals 35 (RRCTA) reveals the lack of provisions governing the procedure for the
withdrawal of pending appeals before the CTA. Hence, pursuant to Section 3, Rule 1 of the RRCTA, the Rules of Court shall suppletorily
apply:
Sec. 3. Applicability of the Rules of Court. - The Rules of Court in the Philippines shall apply suppletorily to these Rules.
Rule 50 of the Rules of Court - an adjunct rule to the appellate procedure in the CA under Rules 42, 43, 44, and 46 of the Rules of Court
which are equally adopted in the RRCTA36 - states that when the case is deemed submitted for resolution, withdrawal of appeals made
after the filing of the appellee's brief may still be allowed in the discretion of the court:
RULE 50
DISMISSAL OF APPEAL

xxxx

Section 3. Withdrawal of appeal. An appeal may be withdrawn as of right at any time before the filing of the appellee's
brief. Thereafter, the withdrawal may be allowed in the discretion of the court. (Emphasis supplied)
Impelled by the BIR's supervening issuance of the July 27, 2011 Tax Credit Certificate, Nippon filed a motion to withdraw the case,
proffering that:
Having arrived at a reasonable settlement of the issues with the [CIR]/BIR, and to avoid incurring further legal and related costs, not to
mention the time and resources of [the CTA], [Nippon] most respectfully moves for the withdrawal of its Petition for Review.37
Finding the aforementioned grounds to be justified, the CTA Division allowed the withdrawal of Nippon's appeal thereby ordering the
case closed and terminated, notwithstanding the fact that the said motion was filed after the promulgation of its August 10, 2011 Decision.

While it is true that the CTA Division has the prerogative to grant a motion to withdraw under the authority of the foregoing legal
provisions, the attendant circumstances in this case should have incited it to act otherwise.

First, it should be pointed out that the August 10, 2011 Decision was rendered by the CTA Division after a full-blown hearing in which
the parties had already ventilated their claims. Thus, the findings contained therein were the results of an exhaustive study of the
pleadings and a judicious evaluation of the evidence submitted by the parties, as well as the report of the commissioned certified public
accountant. In Reyes v. Commission on Elections,38 the Court only noted, and did not grant, a motion to withdraw the petition filed after
it had already acted on said petition, ratiocinating in the following wise:
It may well be in order to remind petitioner that jurisdiction, once acquired, is not lost upon the instance of the parties, but continues
until the case is terminated. When petitioner filed her Petition for Certiorari jurisdiction vested in the Court and, in fact, the Court exercised
such jurisdiction when it acted on the petition. Such jurisdiction cannot be lost by the unilateral withdrawal of the petition by petitioner.39
The primary reason, however, that militates against the granting of the motion to withdraw is the fact that the CTA Division, in its August
10, 2011 Decision, had already determined that Nippon was only entitled to refund the reduced amount of P2,614,296.84 since it failed
to prove that the recipients of its services were non-residents "doing business outside the Philippines"; hence, Nippon's purported sales
therefrom could not qualify as zero-rated sales, necessitating the reduction in the amount of refund claimed. Markedly different from this
is the BIR's determination that Nippon should receive P21,675,128.91 as per the July 27, 2011 Tax Credit Certificate, which is, in
all, P19,060,832.07 larger than the amount found due by the CTA Division. Therefore, as aptly pointed out by Associate Justice Teresita
J. Leonardo-De Castro during the deliberations on this case, the massive discrepancy alone between the administrative and judicial
determinations of the amount to be refunded to Nippon should have already raised a red flag to the CTA Division. Clearly, the interest of
the government, and, more significantly, the public, will be greatly prejudiced by the erroneous grant of refund - at a substantial amount
at that - in favor of Nippon. Hence, under these circumstances, the CTA Division should not have granted the motion to withdraw.

In this relation, it deserves mentioning that the CIR is not estopped from assailing the validity of the July 27, 2011 Tax Credit Certificate
which was issued by her subordinates in the BIR. In matters of taxation, the government cannot be estopped by the mistakes, errors or
omissions of its agents for upon it depends the ability of the government to serve the people for whose benefit taxes are collected.40

Finally, the Court has observed that based on the records, Nippon's administrative claim for the first taxable quarter of 2002 which closed
on March 31, 2002 was already time-barred41 for being filed on April 22, 2004, or beyond the two (2)-year prescriptive period pursuant
to Section 112(A)42 of the National Internal Revenue Code of 1997. Although prescription was not raised as an issue, it is well-settled
that if the pleadings or the evidence on record show that the claim is barred by prescription, the Court may motu proprio order its
dismissal on said ground.43

All told, the CTA committed a reversible error in granting Nippon's motion to withdraw. The August 10, 2011 Decision of the CTA Division
should therefore be reinstated, without prejudice, however, to the right of either party to appeal the same in accordance with the RRCTA.

WHEREFORE, the petition is GRANTED. The Decision dated December 18, 2013 and the Resolution dated June 10, 2014 of the Court
of Tax Appeals En Banc in CTA EB Case No. 924 are hereby SET ASIDE. The Decision dated August 10, 2011 of the Court of Tax Appeals
Third Division in CTA Case No. 6967 is REINSTATED, without prejudice, however, to the right of either party to appeal the same in
accordance with the Revised Rules of the Court of Tax Appeals.

SO ORDERED.

Meralco v. City Assessor GR No. 166102

Before the Court is a Petition for Review on Certiorari seeking the reversal of the Decision1 dated May 13, 2004 and Resolution dated
November 18, 2004 of the Court of Appeals in CA-G.R. SP No. 67027. The appellate court affirmed the Decision3 dated May 3, 2001 of
the Central Board of Assessment Appeals (CBAA) in CBAA Case No. L-20-98, which, in turn, affirmed with modification the Decision4
dated June 17, 19985 of the Local Board of Assessment Appeals (LBAA) of Lucena City, Quezon Province, as regards Tax Declaration
Nos. 019-6500 and 019-7394, ruling that MERALCO is liable for real property tax on its transformers, electric posts (or poles), transmission
lines, insulators, and electric meters, beginning 1992.

MERALCO failed to persuade the Court of Appeals that the transformers, transmission lines, insulators, and electric meters mounted on
the electric posts of MERALCO were not real properties. The appellate court invoked the definition of "machinery" under Section 199(o)
of the Local Government Code and then wrote that:

We firmly believe and so hold that the wires, insulators, transformers and electric meters mounted on the poles of [MERALCO]
may nevertheless be considered as improvements on the land, enhancing its utility and rendering it useful in distributing
electricity. The said properties are actually, directly and exclusively used to meet the needs of [MERALCO] in the distribution of
electricity.

In addition, "improvements on land are commonly taxed as realty even though for some purposes they might be considered
personalty. It is a familiar personalty phenomenon to see things classed as real property for purposes of taxation which on
general principle might be considered personal property."

Issue: Whether or not the transformers, electric posts (or poles), transmission lines, insulators, and electric meters are real properties.

Held: While the Local Government Code still does not provide for a specific definition of "real property," Sections 199(o) and 232 of the
said Code, respectively, gives an extensive definition of what constitutes "machinery" and unequivocally subjects such machinery to real
property tax. The Court reiterates that the machinery subject to real property tax under the Local Government Code "may or may not be
attached, permanently or temporarily to the real property;" and the physical facilities for production, installations, and appurtenant service
facilities, those which are mobile, self-powered or self-propelled, or are not permanently attached must (a) be actually, directly, and
exclusively used to meet the needs of the particular industry, business, or activity; and (2) by their very nature and purpose, be designed
for, or necessary for manufacturing, mining, logging, commercial, industrial, or agricultural purposes.

Article 415, paragraph (1) of the Civil Code declares as immovables or real properties "[l]and, buildings, roads and constructions of all
kinds adhered to the soil." The land, buildings, and roads are immovables by nature "which cannot be moved from place to place,"
whereas the constructions adhered to the soil are immovables by incorporation "which are essentially movables, but are attached to an
immovable in such manner as to be an integral part thereof."57 Article 415, paragraph (3) of the Civil Code, referring to "[ejverything
attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or
deterioration of the object," are likewise immovables by incorporation. In contrast, the Local Government Code considers as real property
machinery which "may or may not be attached, permanently or temporarily to the real property," and even those which are "mobile."

Article 415, paragraph (5) of the Civil Code considers as immovables or real properties "[machinery, receptacles, instruments or
implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land,
and which tend directly to meet the needs of the said industry or works." The Civil Code, however, does not define "machinery."

The properties under Article 415, paragraph (5) of the Civil Code are immovables by destination, or "those which are essentially movables,
but by the purpose for which they have been placed in an immovable, partake of the nature of the latter because of the added utility
derived therefrom."58 These properties, including machinery, become immobilized if the following requisites concur: (a) they are placed
in the tenement by the owner of such tenement; (b) they are destined for use in the industry or work in the tenement; and (c) they tend
to directly meet the needs of said industry or works.59 The first two requisites are not found anywhere in the Local Government Code.

Furthermore, in Caltex (Philippines), Inc. v. Central Board of Assessment Appeals,62 the Court acknowledged that "[i]t is a familiar
phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal
property[.]" Therefore, for determining whether machinery is real property subject to real property tax, the definition and requirements
under the Local Government Code are controlling.