G.R. No. 158150 September 10, 2014AGRIEX CO., LTD.,Petitioner,vs.HON. TITUS B. VILLANUEVA, Commissioner, Bureau of Customs (now replaced by HON. ANTONIO M. BERNARDO), and HON. BILLY C. BIBIT, Collector of Customs, Port of Subic (now replaced by HON. EMELITO VILLARUZ),Respondents.Facts:Petitioner, a foreign corporation from Thailand, entered into a contract of sale with an Indonesian corporation for 180,000 bags of white Thai Rice. The Thai corporation also entered into a contract with R&C Agro Trade of Cebu City for 20,000 bags of white Thai Rice. The petitioner chartered a vessel to transport the rice to the Subic Free Port Zone for transhipment to their designated consignees. Collector of Customs Bibit to issued a Warrant of Seizure and Detention against the 200,000 bags of white Thai rice. Collector Bibit then issued a Notice of Sale. However, a temporary restraining order was by the CA to desist from the auction sale. Petitioner appealed the ruling by Collector Bibit to Commissioner Villanueva. Commissioner Villanueva modified the ruling ordering that the 20,000 bags bound for Cebu be released while affirming the forfeiture of the 180,000 bags bound for Indonesia.Issues:Won the court of appeals erred in not declaring the seizure proceedings null and void for lack of jurisdiction over petitioners rice shipment.Held:The Court affirms the exclusive jurisdiction of the Bureau of Customs over seizure cases within the Subic Freeport Zone.The Court declares that the Collector of Customs was authorized to institute seizure proceedings and to issue WSDs in the Subic Bay Freeport, subject to the review by the Commissioner of CustomsRatio:The treatment of the Subic Bay Freeport as a separate customs territory cannot completely divest the Government of its right to intervene in the operations and management of the Subic Bay Freeport, especially when patent violations of the customs and tax laws are discovered.Customs officers may seize any article found during a Customs search upon entering or leaving the SBF to be in violation of any provision of the customs laws for which a seizure is authorized, and such seizure shall be disposed of according to the customs laws. Articles which are prohibited or excluded from the SBF under the rules and regulations of the SBMA which are found by the Customs officials during an audit, examination or check within the SBF may be seized by them and turned over to the SBMA for disposition.The authority of the Bureau of Customs to seize and forfeit goods and articles entering the Subic Bay Freeport does not contravene the nature of the Subic Bay Freeport as a separate customs authority. Indeed, the investors can generally and freely engage in any kind of business as well as import into and export out goods with minimum interference from the Government.

G.R. No. 157583 September 10, 2014FRUMENCIO E. PULGAR,Petitioner,vs.THE REGIONAL TRIAL COURT OF MAUBAN, QUEZON, BRANCH 64, QUEZON POWER (PHILIPPINES) LIMITED, CO., PROVINCE OF QUEZON, and DEPARTMENT OF FINANCE,Respondents.Facts:Municipal Assessor of Mauban, Quezon issued 34 tax declarations on the buildings and machineries of QPL and thereby assessed it with a market value of 29,626,578,291.00 and, hence, 500 Million, more or less, in realty taxes per annum. QPL tendered partial payment of the tax but the Municipal Assessor rejected the same. QPL filed a complaint with the RTC for consignation and damages, it also contested the assessment made by the Municipal assessor. Pulgar intervened. The RTC ruled that the proper jurisdiction over this case is with the Local Board of Assessment Appeals.Issues:The issue advanced before the Court is whether or not the RTC erred in dismissing Pulgars motion for intervention as a consequence of the dismissal of the main case. While acknowledging the RTCs lack of jurisdiction, Pulgar nonetheless prays that the Court pass upon the correctness of the Municipal Assessors assessment of QPLs realty taxes, among others.Held:Jurisdiction over an intervention is governed by jurisdiction over the main action.19Accordingly, an intervention presupposes the pendency of a suit in a court of competent jurisdiction.WHEREFORE, the petition is DENIED.Ratio:[I]ntervention is never an independent action, but is ancillary and supplemental to the existing litigation. Its purpose is not to obstruct nor x x x unnecessarily delay the placid operation of the machinery of trial, but merely to afford one not an original party, yet having a certain right or interest in the pending case, the opportunity to appear and be joined so he could assert or protect such right or interests.Otherwise stated, the right of an intervenor should only be in aid of the right of the original party. Where the right of the latter has ceased to exist, there is nothing to aid or fight for; hence, the right of intervention ceases.

G.R. Nos. 212536-37 August 27, 2014COMMISSIONER OF INTERNAL REVENUE and COMMISSIONER OF CUSTOMS,Petitioners,vs.PHILIPPINE AIRLINES, INC.,Respondent.Facts:PD 1590 provides that PAL, during the lifetime of its franchise, shall pay the government either basic corporate income tax or franchise tax based on revenues and/or the rate defined in the provision, whichever is lower and the taxes thus paid under either scheme shall be in lieu of all other taxes, duties and other fees. Pursuant to sec 6 of RA 9334 which amended sec 131 of the NIRC, PAL was assessed excised taxes on its importation of cigarettes and alcoholic drinks for its commissary supplies used in its international flights. PAL paid the taxes under protest. The CTA second division ordered the BIR to pay PAL by way of refund the excise taxes it paid. This decision was affirmed by the CTA en banc citing a previous case which held in the main that held in the main that the "in lieu of all taxes" clause in PALs franchise exempts it from excise tax, an exemption that, contrary to petitioners unyielding posture, has not been withdrawn by Congress when it enacted RA9334. CTA denied BIRs reconsideration. Hence, this petition.Issues:Whether or not PALs importations of alcohol and tobacco products for its commissary supplies are subject to excise taxHeld:NO.WHEREFORE, the instant Petition for Review is DENIED. The assailed Decision of the Court of Tax Appeals en bane dated December 9, 2013 and its Resolution dated May 2, 2014 are hereby AFFIRMED.Ratio:It is a basic principle of statutory construction that a later law, general in terms and not expressly repealing or amending a prior special law, will not ordinarily affect the special provisions of such earlier statute.9So it must be here.The tax privilege of PAL provided in Sec. 13 of PD 1590 has not been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec. 6 of RA 9334.That the Legislature chose not to amend or repeal [PD] 1590 even after PAL was privatized reveals the intent of the Legislature to let PAL continue to enjoy, as a private corporation, the very same rights and privileges under the terms and conditions stated in said charter.Any lingering doubt, however, as to the continued entitlement of PAL under Sec. 13 of its franchise to excise tax exemption on otherwise taxable items contemplated therein, e.g., aviation gas, wine, liquor or cigarettes, should once and for all be put to rest by the fairly recent pronouncement in Philippine Airlines, Inc. v. Commissioner of Internal Revenue.12In that case, the Court, on the premise that the "propriety of a tax refund is hinged on the kind of exemption which forms its basis,"13declared in no uncertain terms that PAL has "sufficiently prove[d]" its entitlement to a tax refund of the excise taxes and that PALs payment of either the franchise tax or basic corporate income tax in the amount fixed thereat shall be in lieu of all other taxes or duties, and inclusive of all taxes on all importations of commissary and catering supplies, subject to the condition of their availability and eventual use.

G.R. No. 180651 July 30, 2014NURSERY CARE CORPORATION; SHOEMART, INC.; STAR APPLIANCE CENTER, INC.; H&B, INC.; SUPPLIES STATION, INC.; and HARDWARE WORKSHOP, INC.,Petitioners,vs.ANTHONY ACEVEDO, in his capacity as THE TREASURER OF MANILA; and THE CITY OF MANILA,Respondents.Facts:The City of Manila assessed and collected taxes from the individual petitioners pursuant to Section 15 (Tax on Wholesalers, Distributors, or Dealers) and Section 17 (Tax on Retailers) of the Revenue Code of Manila.3At the same time, the City of Manila imposed additional taxes upon the petitioners pursuant to Section 21 of the Revenue Code of Manila,as amended, as a condition for the renewal of their respective business licenses for the year 1999. Petitioners paid the taxes assessed under section 21 under protest. The City Treasurer denied the petitioners claim for tax credit or refund. Subsequently, petitioners filed their respective petitions with the RTC alleging, among others, double taxation. The RTC ruled that the tax imposed under Section 15 and 17, as against that imposed under Section 21, are levied against different tax objects or subject matter. The tax under Section 15 is imposed upon wholesalers, distributors or dealers, while that under Section 17 is imposed upon retailers. In short, taxes imposed under Section 15 and 17 is a tax on the business of wholesalers, distributors, dealers and retailers. On the other hand, the tax imposed upon herein petitioners under Section 21 is not a tax against the business of the petitioners (as wholesalers, distributors, dealers or retailers)but is rather a tax against consumers or end-users of the articles sold by petitioners. In effect, the petitioners only act as the collection or withholding agent of the City while the ones actually paying the tax are the consumers or end-users of the articles being sold by petitioners. The CA dismissed the appeal for lack of jurisdiction. Hence, this appeal.Issues:The main issues for resolution are, therefore, (1) whether or not the CA properly denied due course to the appeal for raising pure questions of law; and (2) whether or not the petitioners were entitled to the tax credit or tax refund for the taxes paid under Section 21, supra.Held:The CA did not err in dismissing the appeal; but the rules should be liberally appliedfor the sake of justice and equityCollection of taxes pursuant to Section 21 of theRevenue Code of Manila constituted double taxationWHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the resolutions promulgated on June 18, 2007 and November 14, 2007 in CA-G.R. SP No. 72191; and DIRECTS the City of Manila to refund the payments made by the petitioners of the taxes assessed and collected for the first quarter of 1999 pursuant to Section 21 of the Revenue Code of Manila.Ratio:The CA rightly concluded that the petitioners thereby raised only a question of law. The dismissal of their appeal was proper, strictly speaking, because Section 2, Rule 50 of the Rules of Court provides that an appeal from the RTC to the CA raising only questions of law shall be dismissed;On the basis of the rulings in City of Manila v. Coca-Cola Bottlers Philippines, Inc., 595 SCRA 299 (2009) and Swedish Match Philippines, Inc. v. The Treasurer of the City of Manila, 700 SCRA 428 (2013), the Court now holds that all the elements of double taxation concurred upon the City of Manilas assessment on and collection from the petitioners of taxes for the first quarter of 1999 pursuant to Section 21 of the Revenue Code of Manila. Firstly, because Section 21 of the Revenue Code of Manila imposed the tax on a person who sold goods and services in the course of trade or business based on a certain percentage of his gross sales or receipts in the preceding calendar year, while Section 15 and Section 17 likewise imposed the tax on a person who sold goods and services in the course of trade or business but only identified such person with particularity, namely, the wholesaler, distributor or dealer (Section 15), and the retailer (Section 17), all the taxes being imposed on the privilege of doing business in the City of Manila in order to make the taxpayers contribute to the citys revenues were imposed on the same subject matter and for the same purpose. Secondly, the taxes were imposed by the same taxing authority (the City of Manila) and within the same jurisdiction in the same taxing period (i.e., per calendar year). Thirdly, the taxes were all in the nature of local business taxes. [Nursery Care Corporation vs. Acevedo, 731 SCRA 280(2014)]

G.R. No. 183664 July 28, 2014AIRLIFT ASIA CUSTOMS BROKERAGE, INC. and ALLAN G. BENEDICTO,Petitioners,vs.COURT OF APPEALS, COMMISSIONER OF THE BUREAU OF CUSTOMS, AND THE SECRETARY OF FINANCE,Respondents.Facts:CAO 3-2006 was issued by the then Commissioner of the Bureau of Customs (BOC) Napoleon L. Morales, it requires "customs brokers desiring to practice their profession at the BOC [to] apply for accreditation and [to] obtain a Certificate of Accreditation before they may engage in customs brokerage practice. The petitioners assailed the validity of CAO 3-2006 through an action for declaratory relief.They primarily claimed that CAO 3-2006 was issued without authority, contravenes Republic Act No. 9280 (RA 9280) or the Customs Brokers Act of 2004, and violates their right to practice the customs broker profession. The RTC upheld the petitioners contentions and nullified CAO 3-2006.It found that the BOC Commissioner had no authority to issue rules governing the practice of the customs brokerage profession. The trial court also held that the required accreditation amounted to a licensing requirement prohibited under Section 19 of RA No. 9280. The CA reversed the RTCs ruling stating that, although the accreditation requirement was an added burden to customs brokers, it nevertheless bore a reasonable connection to the BOCs aim to ensure accountability and integrity in the transactions involving customs duties and tariff laws.Issues:WON BOC Commissioner had authority to issue CAO 3-2006.Held:No. RA No. 9280 expressly repealed Sections 3401 to 3409 of the TCCP and transferred the supervision and regulation of the customs brokerage profession from the Board of Examiners to the PRBCB.Ratio:Republic Act (R.A.) No. 9280 excluded the Bureau of Customs (BOC) Commissioner as member of the Professional Regulatory Board for Customs Brokers (PRBCB).Section 39 of RA 9280 expressly repealed the TCCP provisions (Section 3401 to 3409) on the customs brokers profession. Section 39 of RA 9280 further declared that all laws...and parts thereof which are inconsistent with [RA 9280] are [deemed] modified, suspended, or repealed accordingly. In lieu of the Board of Examiners, RA 9280 created the PRBCB whose members are appointed by the President from a list of recommendees submitted by the PRC which has supervisory and administrative control over the PRBCB. Significantly, RA 9280 excluded the BOC Commissioner as member of the PRBCB. The exclusion of the BOC Commissioner as a member of the PRBCB evinces the legislative intent to remove any power he previously exercised over custom brokers, and to transfer the supervision, control and regulation of this profession to the PRBCB. By conferring these powers on the PRBCB, the declared policy of RA 9280 to professionalize the practice of the customs broker profession is executed and fulfilled.With the repeal of Section 3409 of the Tariff and Customs Code of the Philippines (TCCP) by Republic Act (R.A.) No. 9280, this specific rule-making power was transferred to the Professional Regulatory Board for Customs Brokers (PRBCB) to complement its supervisory and regulatory powers over customs brokers.The BOC Commissioners power under Section 608 of the TCCP is a general grant of power to promulgate rules and regulations necessary to enforce the provisions of the TCCP. Under the rules of statutory construction, this general rule-making power gives way to the specific grant of power to promulgate rules and regulations on the practice of customs brokers profession to the CSC Commissioner under Section 3409 of the TCCP. Indeed, in the exercise of this specific power, the Board of Examiners (of which the BOC Commissioner serves as ex officio chairman) was to perform only a recommendatory role. With the repeal of Section 3409 of the TCCP by RA 9280, this specific rule-making power was transferred to the PRBCB to complement its supervisory and regulatory powers over customs brokers. Under Republic Act (R.A.) No. 9280, a successful examinee of the customs brokers examinations acquires a Certificate of Registration, which entitles him to practice the profession as a customs broker with all the benefits and privileges appurtenant thereto.With the exception of consulting with clients, and teaching tariff and customs administration, most of the above enumerated activities involve dealing with the BOC. In other words, a large part of a custom brokers work involves practice before the BOC, and CAO 3-2006 practically compels all customs brokers already certified by the PRC to comply with the accreditation requirement for them to practice their profession. This is contrary to the terms of Section 19 of RA 9280, which provides that a customs broker shall be allowed to practice the profession in any collection district without the need of securing another license from the [BOC].

G.R. No. 207443 July 23, 2014GENATO INVESTMENTS, INC.,Petitioner,vs.HON. JUDGE OSCAR P. BARRIE~TOS, in his capacity as the Presiding Judge of the Regional Trial Court, of Caloocan City, Branch 123, EMILY .p. DIZON, in her capacity as the Branch Clerk of Court of the Regional Trial Court of Caloocan City, Branch 123, JIMMY T. SORO, Court Process Server of the Regional Trial Court of . Caloocan, Branch 123, EVELINA M. GARMA, City Treasurer of Caloocan City, PHILLIP L. YAM, Officer-in-Charge, Real Property Tax Division of the Caloocan City Treasurer's Office, ANTHONY B. PULMANO, Officer-in-Charge, City Assessor of Caloocan City, and LAVERNE REALTY & DEVELOPMENT CORPORATION,Respondents.Facts:Petitioner owns a parcel of Land in Caloocan city. Due to alleged deficiency in real property taxes due on Lot no. 13-B-1, the City Treasurer sold the lot on a public auction to private respondent. Petitioner learned of the auction sale only when the Sheriff of the RTC of Caloocan left it a Notice to Vacate. Petitioner claims that real property taxes due on Lots 1-A and 13-B-1, with a combined assessed value ofP8,697,870.00, up to the 4th quarter of 2011, have been duly paid. Petitioner, filed with the CA a Petition for Annulment of Judgment praying, among others, for the annulment and setting aside of the Orders dated 31 August 2011 and 26 April 2012 and the Writ of Possession issued by the RTC Caloocan. CA dismissed the petition stating that the proper remedy was to file an action for reconveyance on the ground of fraud, hence, this petition.Issues:WON auction sale was valid. WON petitioner fully paid its property taxes.Held:Petitioner fully paid its real estate taxes due on Lot 13-B-1.WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated 27 February 2013 and 30 May 2013 in CA-G.R. SP No. 128187 are SET ASIDE. Necessarily, the Orders dated 31 August 2011, 26 April 2012 and 19 November 2012, and the Writ of Possession dated 27 April 2012 in LRC Case No. C-5748, are all vacated.Ratio:Considering the foregoing, private respondent did not acquire any valid right to petition the RTC Caloocan for the cancellation of TCT No. 33341 and, more importantly, take possession of Lot 13-B-1, much less Lot 1-A. We reiterate the principle that strict adherence to the statutes governing tax sales is imperative, not only for the protection of the taxpayers, but also to allay any possible suspicion of collusion between the buyer and the public officials called upon to enforce the laws. Petitioner confronts respondents with copies of its Real Property Tax Receipts33issued by the Office of the City Treasurer of the City of Caloocan spanning the period from 2000 to 2012,as well as the Payment History34from 1995 to 2011 evidencing full payment of real property taxes due on its land, whose assessed value was adjusted in 2005 toP8,697,870.00.Petitioner likewise confronts respondents with the Certification35dated 19 September 2011 issued by the Office of the City Treasurer of Caloocan, through its OIC Land Tax Division, respondent Yam, certifying that the real property taxes due on Lots 1-A and 13-B-1, with an assessed value ofP8,697,870.00, up to the 4th quarter of 2011, and previous years, have been duly paid by petitioner.The alleged delinquency of petitioner in its real property taxes and the basis for the auction sale stemmed from the supposed non-payment of real property taxes due on Lot 13-B-1, with an assessed value ofP4,866,350.00 covered by another tax declaration,38D12-109-00013-C under Property Index No. 113-12-109-01-014.Shortly before private respondent took over the property of petitioner in 2012, the Office of the City Assessor, through respondent Pulmano, issued yet another tax declaration, no. 12-109-00153-12-C under Property Index No. 113-12-109-01-013, this time covering only Lot No. 1-A, with an assessed value ofP3,831,520.00. This new issuance cancelled petitioners original Tax Declaration No. D12-109-00012-C under Property Index No. 113-12-109-01-013, which previously covered both Lots Nos. 1-A and 13-B-1.As petitioner duly points out,39a simple mathematical application would show that if the assessed values in the 2nd and 3rd tax declarations were added,P4,866,350.00 andP3,831,520.00, the same would amount toP8,697,870.00, the assessed value of the property as indicated in the original tax declaration.Therefore, if all the tax declarations issued by respondent Pulmano refer to one and the same property of petitioner, and the latter fully paid all its realty taxes due on the same, then it would follow that the finding of delinquency did not have any basis.G.R. No. 176317 July 23, 2014MANOLITO GIL Z. ZAFRA,Petitioner,vs.PEOPLE OF THE PHILIPPINES,Respondent.Facts:Appellant was the only Revenue Collection Agent of the Bureau of Internal Revenue (BIR), Revenue District 3, in San Fernando, La Union from 1993-1995. Among his duties was to receive tax payments for which BIR Form 25.24 or the revenue official receipts (ROR) were issued. The original of the ROR was then given to the taxpayer while a copy thereof was retained by the collection officer. On 06 July 1995, an audit team composed of Revenue Officers Helen D. Rosario, Maria Lourdes G.Morada, Marina B. Magluyan and Norma Duran, all from the central office of the BIR, was tasked to audit the cash and non-cash accountabilities of the appellant. A comparison of the entries in various documents revealed that the data pertaining to 18 RORs with the same serial number vary with respect to the name of the taxpayer, the kind of tax paid, the amount of tax and the date of payment. Thus, the audit team sent to appellant a demand letter requiring him to restitute the total amount of Php614,151.93. Appellant ignored the letter, thus, prompting the institution of the 18 cases for malversation of public funds through falsification of public document against him. Appellant denied that he committed the crimes charged. He averred that as Revenue Collection Officer of San Fernando, La Union, he never accepted payments from taxpayers nor issued the corresponding RORs. It was his subordinates, Andrew Aberin and Rebecca Supsupin, who collected the taxes and issued the corresponding RORs. RTC rendered its consolidated decision convicting the petitioner of 18 counts of malversation of public funds through falsification of public documents. The CA affirmed the decision of the RTC.Issues:WON RTC and the CA erroneously convicted him of several counts of malversation of public funds through falsification of public documents on the basis of the finding that he had been negligent in the performance of his duties as Revenue District Officer;18that the acts imputed to him did not constitute negligence; and that he could not be convicted of intentional malversation and malversation through negligence at the same time.Held:No. WHEREFORE, the Court AFFIRMS the decision promulgated on August 16, 2006 by the Court of Appeals subject to the modification of the penalties imposed as stated in this decision.Ratio:The particular pages of the Monthly Reports from which witness Magluyan based her examination to determine the discrepancies in the Official Receipts listed by the accused therein, bore only the typewritten name of the accused without any signature. However, prosecution witness Rebecca Rillorta showed that those individual pages were part of a number of pages of a report submitted for a particular month, and she showed that the last pages of the related reports were duly signed by the accused. In addition, the testimony of Maria Domagas establishes that the questionable receipts were within the series of receipts accountability of accused for a particular month. x x x. The testimony of State Auditor Domagas established the link of accused accountable receipts, with the receipts numbers reported in his Monthly Collection Report as well as to the receipts issued to the taxpayers. The findings of fact of the RTC were affirmed by the CA. Hence, the petitioner was correctly convicted of the crimes charged because such findings of fact by the trial court, being affirmed by the CA as the intermediate reviewing tribunal, are now binding and conclusive on the Court.

G.R. No. 205055 July 18, 2014COMMISSIONER OF INTERNAL REVENUE,Petitioner,vs.TEAM SUAL CORPORATION (formerly MIRANT SUAL CORPORATION),Respondent.Facts:TSC is a value-added tax (VAT) payer duly registered with the Bureau of Internal Revenue (BIR). TSC applied for the VAT zero-rating of its sale of electric power to NPC for the taxable year 2004. TSCs application was subsequently approved by the BIR. On 26 April 2004, 26 July 2004, 25 October 2004 and 25 January 2005, TSC filed its quarterly VAT returns for the four quarters of 2004 with the BIR, through the Electronic Filing and Payment Scheme (EFPS). On 21 December 2005, TSC filed an administrative claim for refund of its input VAT, which it incurred for the four quarters of 2004. On 24 April 2006, due to the BIRs inaction, TSC filed a petition for review with the Court of Tax Appeals (CTA). TSC prayed for the refund or issuance of tax credit certificate for its alleged unutilized input VAT for year 2004.The CTA Division ruled that TSC complied with the five requirements to be entitled to a refund or issuance of tax credit certificate on its input VAT. The CTA en banc affirmed the decision of the division. Issues:WON THE [CTA EB] GRAVELY ERRED IN DENYING DUE COURSE TO [CIR]S PETITION FOR REVIEW IN [CTA] EB NO. 768 AND IN AFFIRMING THE DECISION OF ITS SPECIAL FIRST DIVISION THAT [TSC] IS ENTITLED TO A REFUND OR TAX CREDIT CERTIFICATE IN THE AMOUNT OFP96,846,234.31 BECAUSE IT WAS ABLE TO SUBMIT THE LEGALLY REQUIRED DOCUMENTS IN ITS APPLICATION FOR REFUNDHeld:No. WHEREFORE, we DENY the petition for lack of merit. The Decision and Resolution of the Court of Tax Appeals, dated 27 July 2012 and 6 December 2012, respectively, are AFFIRMED.

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

G.R. No. 181836 July 9, 2014BANK OF THE PHILIPPINE ISLANDS,Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE,Respondent.Facts:On 19 May 1989, the Bureau ofInternal Revenue (BIR) issued Assessment No. FAS-5-85-89-0009885finding BPI liable for deficiency DST on its sales of foreign bills of exchange to the Central Bank. On 16 June 1989, BPI received the assessment notice and demand letter from the BIR.On 23 June 1989, BPI, through its counsel, filed a protest letter6requesting for the reinvestigation and/or reconsideration of the assessment for lack of legal and factual bases. In a letter dated 4 August 1998,7then Commissioner of Internal Revenue (CIR) Beethoven L. Rualo denied the "request for reconsideration." The CIR held that BPIs arguments were legally untenable. The CIR cited BIR Unnumbered Ruling dated 30 May 1977 and BIR Ruling No. 144-84 dated 3 September 1984, where the liability to pay DST was shifted to the other party, who was not exempt from the tax.BPI filed a petition for review before the CTA. The CTA ordered the cancellation of the assessed DST on BPI. The CTA ruled that neither BPI nor Central Bank, which was tax-exempt, could be liable for the payment of the assessed DST. The CTA reasoned out that before PD 1994 took effect in 1986, there was no law that shifted the liability to the other party, in case the party liable to pay the DST was tax exempt. The CA reversed the CTA decision, and adopted the arguments of the CIR and CTA Associate Justice Ramon O. De Veyra, in his dissent.On 12 February 2008, the CA denied the motion for reconsideration filed by BPI. Hence, BPI filed a petition for review before the Court.In a Resolution dated 5 August 2013,12the Court, through the Third Division, found that the assailed tax assessment may be invalidated because the statute of limitations on the collection of the alleged deficiency DST had already expired.Issues:The issue boils down to whether or not BIR has a right to collect the assessed DST from BPI.Held:We deny the right of the BIR to collect the assessed DST on the ground of prescription.Before 2004 or the year Republic Act No. 9282 took effect, the judicial action to collect internal revenue taxes fell under the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set in to bar the collection of the assessed DST.Ratio:In the present case, although there was no allegation as to when the assessment notice had been released, mailed or sent to BPI, still, the latest date that the BIR could have released, mailed or sent the assessment notice was on the date BPI received the same on 16 June 1989. Counting the three year prescriptive period from 16 June1989, the BIR had until 15 June 1992 to collect the assessed DST. But despite the lapse of 15 June 1992, the evidence established that there was no warrant of distraint or levy served on BPIs properties, or any judicial proceedings initiated by the BIR.To determine prescription, what is essential only is that the facts demonstrating the lapse of the prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegations of the plaintiffs complaint, or otherwise established by the evidence.To determine prescription, what is essential only is that the facts demonstrating the lapse of the prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegations of the plaintiffs complaint, or otherwise established by the evidence. Under the then applicable Section 319(c) [now, 222(c)] of the National Internal Revenue Code (NIRC) of 1977, as amended, any internal revenue tax which has been assessed within the period of limitation may be collected by distraint or levy, and/or court proceeding within three years following the assessment of the tax. The assessment of the tax is deemed made and the three-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to the taxpayer. [Bank of the Philippine Islands vs. Commissioner of Internal Revenue, 729 SCRA 375(2014)]

G.R. No. 197515 July 2, 2014COMMISSIONER OF INTERNAL REVENUE,Petitioner,vs.UNITED SALVAGE AND TOWAGE (PHILS.), INC.,Respondent.Facts:In the course of respondents operations, petitioner found respondent liable for deficiency income tax, withholding tax, value-added tax (VAT) and documentary stamp tax (DST) for taxable years 1992,1994, 1997 and 1998.4Particularly, petitioner, through BIR officials, issued demand letters with attached assessment notices for withholding tax on compensation (WTC) and expanded withholding tax (EWT) for taxable years 1992, 1994 and 1998. On February 21, 2003, USTP appealed by way of Petition for Review before the Court in action (which was thereafter raffled to the CTA-Special First Division) alleging, among others, that the Notices of Assessment are bereft of any facts, law, rules and regulations or jurisprudence; thus, the assessments are void and the right of the government to assess and collect deficiency taxes from it has prescribed on account of the failure to issue a valid notice of assessment within the applicable period. USTP moved to withdraw the aforesaid Petition because it availed of the benefits of the Tax Amnesty Program. The CTA-Special First Division held that the Preliminary Assessment Notices (PANs) for deficiency EWT for taxable years 1994 and 1998 were not formally offered; hence, pursuant to Section 34, Rule 132 of the Revised Rules of Court, the Court shall neither consider the same as evidence nor rule on their validity.12As regards the Final Assessment Notices (FANs) for deficiency EWT for taxable years 1994 and 1998, the CTA-Special First Division held that the same do not show the law and the facts on which the assessments were based.13Said assessments were, therefore, declared void for failure to comply with Section 228 of the 1997 National Internal Revenue Code (Tax Code). Nevertheless, the CTA-Special First Division declared that the right of petitioner to collect the deficiency EWT and WTC, respectively, for taxable year 1992 had already lapsed pursuant to Section 203 of the Tax Code.Issues:1. Whether or not the Court of Tax Appeals is governed strictly by the technical rules of evidence;2. Whether or not the Expanded Withholding Tax Assessments issued by petitioner against the respondent for taxable year 1994 was without any factual and legal basis; and3. Whether or not petitioners right to collect the creditable withholding tax and expanded withholding tax for taxable year 1992 has already prescribed.

Held:After careful review of the records and evidence presented before us, we find no basis to overturn the decision of the CTA En Banc.Hence, we agree with the CTA En Bancs observation that the 1994 and 1998 PANs for EWT deficiencies were not duly identified by testimony and were not incorporated in the records of the case, as required by jurisprudence.EWT assessment issued for taxable year 1994 has factual and legal basisWHEREFORE, the petition is DENIED. The June 27, 2011 Decision of the Court of Tax Appeals En Banc in C.T.A. EB No. 662 is hereby AFFIRMED.Ratio:The Court of Tax Appeals (CTA) shall have the power to promulgate rules and regulations for the conduct of its business, and as may be needed, for the uniformity of decisions within its jurisdiction.Under Section 8 of Republic Act (R.A.) No. 1125, the CTA is categorically described as a court of record. As such, it shall have the power to promulgate rules and regulations for the conduct of its business, and as may be needed, for the uniformity of decisions within its jurisdiction. Moreover, as cases filed before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Thus, no evidentiary value can be given the pieces of evidence submitted by the BIR, as the rules on documentary evidence require that these documents must be formally offered before the CTA. Pertinent is Section 34, Rule 132 of the Revised Rules on Evidence which reads: SEC. 34. Offer of evidence.The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified.Indeed, Section 228 of the Tax Code provides that the taxpayer shall be informed in writing of the law and the facts on which the assessment is made. Otherwise, the assessment is void. To implement the aforesaid provision, Revenue Regulation No. 12-99 was enacted by the BIR, of which Section 3.1.4 thereof reads: 3.1.4. Formal Letter of Demand and Assessment Notice. The use of the word shall in these legal provisions indicates the mandatory nature of the requirements laid down therein.The statute of limitations on assessment and collection of national internal revenue taxes was shortened from five (5) years to three (3) years by virtue of Batas Pambansa Blg. 700. Thus, petitioner has three (3) years from the date of actual filing of the tax return to assess a national internal revenue tax or to commence court proceedings for the collection thereof without an assessment. However, when it validly issues an assessment within the three (3)-year period, it has another three (3) years within which to collect the tax due by distraint, levy, or court proceeding. The assessment of the tax is deemed made and the three (3)-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent to the taxpayer.While taxes are the lifeblood of the government, the power to tax has its limits, in spite of all its plenitude.We ought to reiterate our earlier teachings that in balancing the scales between the power of the State to tax and its inherent right to prosecute perceived transgressors of the law on one side, and the constitutional rights of a citizen to due process of law and the equal protection of the laws on the other, the scales must tilt in favor of the individual, for a citizens right is amply protected by the Bill of Rights under the Constitution.

G.R. No. 161759 July 2, 2014COMMISSIONER OF CUSTOMS,Petitioner,vs.OILINK INTERNATIONAL CORPORATION,Respondent.Facts:URC and Oilink had interlocking directors when Oilink started its business.

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

209287, etc. Araullo v. Aquino, et.al. DAP CaseFacts:When President Benigno Aquino III took office, his administration noticed the sluggish growth of the economy. The World Bank advised that the economy needed a stimulus plan. Budget Secretary Florencio Butch Abad then came up with a program called the Disbursement Acceleration Program (DAP).The DAP was seen as a remedy to speed up the funding of government projects. DAP enables the Executive to realign funds from slow moving projects to priority projects instead of waiting for next years appropriation. So what happens under the DAP was that if a certain government project is being undertaken slowly by a certain executive agency, the funds allotted therefor will be withdrawn by the Executive. Once withdrawn, these funds are declared as savings by the Executive and said funds will then be reallotted to other priority projects. The DAP program did work to stimulate the economy as economic growth was in fact reported and portion of such growth was attributed to the DAP (as noted by the Supreme Court).Other sources of the DAP include the unprogrammed funds from the General Appropriations Act (GAA). Unprogrammed funds are standby appropriations made by Congress in the GAA.Meanwhile, in September 2013, Senator Jinggoy Estrada made an expos claiming that he, and other Senators, received Php50M from the President as an incentive for voting in favor of the impeachment of then Chief Justice Renato Corona. Secretary Abad claimed that the money was taken from the DAP but was disbursed upon the request of the Senators.This apparently opened a can of worms as it turns out that the DAP does not only realign funds within the Executive. It turns out that some non-Executive projects were also funded; to name a few: Php1.5B for the CPLA (Cordillera Peoples Liberation Army), Php1.8B for the MNLF (Moro National Liberation Front), P700M for the Quezon Province, P50-P100M for certain Senators each, P10B for Relocation Projects, etc.This prompted Maria Carolina Araullo, Chairperson of the Bagong Alyansang Makabayan, and several other concerned citizens to file various petitions with the Supreme Court questioning the validity of the DAP. Among their contentions was:DAP is unconstitutional because it violates the constitutional rule which provides that no money shall be paid out of the Treasury except in pursuance of an appropriation made by law.Secretary Abad argued that the DAP is based on certain laws particularly the GAA (savings and augmentation provisions thereof), Sec. 25(5), Art. VI of the Constitution (power of the President to augment), Secs. 38 and 49 of Executive Order 292 (power of the President to suspend expenditures and authority to use savings, respectively).Issues:I. Whether or not the DAP violates the principle no money shall be paid out of the Treasury except in pursuance of an appropriation made by law (Sec. 29(1), Art. VI, Constitution).II. Whether or not the DAP realignments/transfers are constitutional.III. Whether or not the sourcing of unprogrammed funds to the DAP is constitutional.IV. Whether or not the Doctrine of Operative Fact is applicableHeld and Ratio:I. No, the DAP did not violate Section 29(1), Art. VI of the Constitution. DAP was merely a program by the Executive and is not a fund nor is it an appropriation. It is a program for prioritizing government spending. As such, it did not violate the Constitutional provision cited in Section 29(1), Art. VI of the Constitution. In DAP no additional funds were withdrawn from the Treasury otherwise, an appropriation made by law would have been required. Funds, which were already appropriated for by the GAA, were merely being realigned via the DAP.II. No, the transfers made through the DAP were unconstitutional. It is true that the President (and even the heads of the other branches of the government) are allowed by the Constitution to make realignment of funds, however, such transfer or realignment should only be made within their respective offices. Thus, no cross-border transfers/augmentations may be allowed. But under the DAP, this was violated because funds appropriated by the GAA for the Executive were being transferred to the Legislative and other non-Executive agencies. (Third requisite, must be in their respective office.)Further, transfers within their respective offices also contemplate realignment of funds to an existing project in the GAA. Under the DAP, even though some projects were within the Executive, these projects are non-existent insofar as the GAA is concerned because no funds were appropriated to them in the GAA. Although some of these projects may be legitimate, they are still non-existent under the GAA because they were not provided for by the GAA. As such, transfer to such projects is unconstitutional and is without legal basis. (Second requisite, savings generated from the appropriations for their respective offices)On the issue of what are savingsThese DAP transfers are not savings contrary to what was being declared by the Executive. Under the definition of savings in the GAA, savings only occur, among other instances, when there is an excess in the funding of a certain project once it is completed, finally discontinued, or finally abandoned. The GAA does not refer to savings as funds withdrawn from a slow moving project. Thus, since the statutory definition of savings was not complied with under the DAP, there is no basis at all for the transfers. Further, savings should only be declared at the end of the fiscal year. But under the DAP, funds are already being withdrawn from certain projects in the middle of the year and then being declared as savings by the Executive particularly by the DBM. (Second requisite, savings generated from the appropriations for their respective offices)In addition, the court also ruled that there is no law pertaining to such transfer because the GAA were textually unfaithful to the Constitution for not carrying the phrase "for their respective offices" in 2011 and 2012. (First Requisite)IIINo. Unprogrammed funds from the GAA cannot be used as money source for the DAP because under the law, such funds may only be used if there is a certification from the National Treasurer to the effect that the revenue collections have exceeded the revenue targets. In this case, no such certification was secured before unprogrammed funds were used. Also, the unprogrammed funds, as standby appropriations, were to be released only when there were revenues in excess of what the programmed appropriations required. As such, the revenue targets should be considered as a whole, not individually; otherwise, we would be dealing with artificial revenue surpluses. Moreover, to release the unprogrammed funds simply because there was an excess revenue as to one source of revenue would be an unsound fiscal management measure because it would disregard the budget plan and foster budget deficits, in contravention of the Governments surplus budget policy.IV. Yes. The Doctrine of Operative Fact, which recognizes the legal effects of an act prior to it being declared as unconstitutional by the Supreme Court, is applicable. The DAP has definitely helped stimulate the economy. It has funded numerous projects. If the Executive is ordered to reverse all actions under the DAP, then it may cause more harm than good. The DAP effects can no longer be undone. The beneficiaries of the DAP cannot be asked to return what they received especially so that they relied on the validity of the DAP. However, the Doctrine of Operative Fact may not be applicable to the authors, implementers, and proponents of the DAP if it is so found in the appropriate tribunals (civil, criminal, or administrative) that they have not acted in good faith.

Take note:

Four phases comprise the Philippine budget process, specifically: (1) Budget Preparation; (2) Budget Legislation; (3) Budget Execution; and (4) Accountability The DAP comes into play in the Budget Execution phase. Appropriation comes in the Budget Legislation Phase. Requisites for the valid transfer of appropriated funds under Section25(5), Article VI of the 1987 Constitution (Realignment of Funds)The transfer of appropriated funds, to be valid under Section 25(5), supra, must be made upon a concurrence of the following requisites, namely:(1) There is a law authorizing the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of the Constitutional Commissions to transfer funds within their respective offices;(2) The funds to be transferred are savings generated from the appropriations for their respective offices; and (3) The purpose of the transfer is to augment an item in the general appropriations law for their respective offices.

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