tax2 digest compiled

8/17/2019 TAX2 Digest Compiled

1/51

1.

RAFAEL ARSENIO S. DIZON, in his capacity as the Judicial Administratr ! the Estate ! the deceased JOSE ". FERNANDEZ, petitioner,

vs.

#O$R% OF %A& A""EALS and #O''ISSIONER OF IN%ERNAL RE(EN$E,

respondents.

).R. N. 1*+**, April -+, ++/, NA#0$RA, J.

Facts

Jose P. Fernandez (Jose) died in November 7, 1987. Thereafter, a petition forthe probate of his wi was !edwith "T# of $ania. The probate %o&rt then appointedretired '&preme #o&rt J&sti%e rsenio P. izon (J&sti%e izon) and tt*. "afaersenio P. izon (petitioner) as 'pe%ia and ssistant 'pe%ia dministrator,respe%tive*, of the +state of Jose (+state). n estate ta ret&rn was !ed ater onwhi%h showed -+" estate ta iabiit*. /0" thereafter iss&ed a de!%ien%* estate taassessment, demandin pa*ment of P22.97 miion as de!%ien%* estate ta. Thiswas s&bse3&ent* red&%ed b* #T to P47.56 miion. The # armed the #Tsr&in.

The petitioner %aims that in as m&%h as the vaid %aims of %reditors aainst

the +state are in e%ess of the ross estate, no estate ta was d&e. n the otherhand, respondents ar&e that sin%e the %aims of the +states %reditors have been%ondoned, s&%h %aims ma* no oner be ded&%ted from the ross estate of thede%edent. Issue

hether or not the a%t&a %aims of %reditors ma* be f&* aowed asded&%tions from the ross estate of Jose despite the fa%t that the said %aims werered&%ed or %ondoned thro&h %ompromise areements entered into b* the +statewith its %reditors 0eld

2ES. Foowin the :' '&preme #o&rts r&in in Ithaca Trust Co. v. UnitedStates, the #o&rt hed that post;death deveopments are not materia in determininthe amo&nt of ded&%tion. This is be%a&se estate ta is a ta imposed on the a%t of transferrin propert* b* wi or intesta%* and, be%a&se the a%t on whi%h the ta isevied o%%&rs at a dis%rete time, i.e., the instan%e of death, the net va&e of the


2/51

propert* transferred sho&d be as%ertained, as near* as possibe, as of the thattime. This is the date3!3death 4aluatin rule.

The #o&rt, in adoptin the date;of;death va&ation prin%ipe, epained that<First. There is no aw, nor do we dis%ern an* eisative intent in o&r ta aws, whi%hdisreard the date;of;death va&ation prin%ipe and parti%&ar* provide that post;

death deveopments m&st be %onsidered in determinin the net va&e of the estate.0t bears emphasis that ta b&rdens are not to be imposed or pres&med to beimposed, be*ond what the stat&te epress* and %ear* imports, ta stat&tes bein%onstr&ed strictissimijuris aainst the overnment. 'e%ond. '&%h %onstr&%tion !ndsreevan%e and %onsisten%* in o&r "&es on 'pe%ia Pro%eedins wherein the term=%aims= re3&ired to be presented aainst a de%edent>s estate is enera* %onstr&edto mean debts or demands of a pe%&niar* nat&re whi%h %o&d have been enfor%edaainst the de%eased in his ifetime, or iabiit* %ontra%ted b* the de%eased beforehis death. %here!re, the claims e5istin6 at the time ! death are si6ni7cantt, and shuld 8e made the 8asis !, the determinatin ! all9a8ledeductins

.

).R. N. +:;1 N4em8er :, +1*'AR#ELO IN(ES%'EN% AND 'ANA)E'EN% #OR"ORA%ION,Et. Al. 4s. JOSE

%. 'AR#ELO, JR.

FA#%S

e%edent Jose, 'r. died intestate. ?e was s&rvived b* his fo&r %omp&sor* heirs< (1)+dward, (6) @eore, (4) ?een and (5) respondent Jose, Jr.petitioner $ar%eo0nvestment and $anaement #orporation ($0$#) !ed a Petition for the iss&an%eof Aetters of dministration of the estate of Jose, 'r. t !rst, ?een, aon with herbrother, Jose, Jr. separate* opposed $0$#s petitionB the two pra*ed for theirrespe%tive appointment as administrator. +dward opposed ?eens and Jose, Jr.srespe%tive petitions for iss&an%e of Aetters of dministration in their favor and+dward himsef pra*ed for his appointment as re&ar administrator.

Pendin the iss&an%e, Jose was appointed as spe%ia administrator. +vent&a*,+dward was appointed as the re&ar administrator of the estate.

The "T# approved the proCe%t partition of the heirs. The %o&rt deferred thedistrib&tion &nti the pa*ment of the estate ta.

hen +dward died Jose revived the intestate pro%eedin and moved for hisappointment as administrator.

"T# appointed Jose for the reason that there is sti a ne%essit* to appoint on sin%etaes d&e to the overnment remained to be &npaid.

ISS$E0s the appoint of a new administrator sti ne%essar*D


3/51

0ELD 2ES. No distrib&tion sha be aowed &nti pa*ment of the obiations abovementioned has been made or provided for, &ness the distrib&tees, or an* of them,ive a bond, in a s&m tobe !ed b* the %o&rt, %onditioned for the pa*ment of saidobiations.

the parties are de!nite* aware, the "T# ar%hived the intestate pro%eedinspendin the pa*ment of estate taes. 0t is apparent that the intestate pro%eedinsinvovin Jose, 'r.s estate sti re3&ires a re&ar administrator to !na* sette theestate and distrib&te remainin assets


4/51

E4 $ar%os ?eirs vs #.

674 '#" 57

@" No. 1688, J&ne G, 1997

FA#%S

/onbon $ar%os so&ht for the reversa of the r&in of the #o&rt of ppeas

to rant #0">s petition to ev* the properties of the ate Pres. $ar%os to %over the

pa*ment of his ta dein3&en%ies d&rin the period of his eie in the :'. The

$ar%os fami* was assessed b* the /0" after it faied to !e estate ta ret&rns.

?owever the assessment were not protested administrative* b* $rs. $ar%os and

the heirs of the ate president so that the* be%ame !na and &nappeaabe after the

period for !in of opposition has pres%ribed. $ar%os %ontends that the properties

%o&d not be evied to %over the ta d&es be%a&se the* are sti pendin probate

with the %o&rt, and settement of ta de!%ien%ies %o&d not be had, &ness there is

an order b* the probate %o&rt or &nti the probate pro%eedins are terminated.

Petitioner aso pointed o&t that app*in $emorand&m #ir%&ar No. 48;28, the

/0">s Noti%es of Aev* on the $ar%os properties were iss&ed be*ond the aowed

period, and are therefore n& and void.

ISS$E

re the %ontentions of /onbon $ar%os %orre%tD

0ELD

No. The de!%ien%* in%ome ta assessments and estate ta assessment are

aread* !na and &nappeaabe and the s&bse3&ent ev* of rea properties is a taremed* resorted to b* the overnment, san%tioned b* 'e%tion 614 and 618 of the

Nationa 0nterna "even&e #ode. This s&mmar* ta remed* is distin%t and separate

from the other ta remedies (s&%h as J&di%ia #ivi a%tions and #rimina a%tions), and

is not aHe%ted or pre%&ded b* the penden%* of an* other ta remedies instit&ted b*

the overnment.

The approva of the %o&rt, sittin in probate, or as a settement trib&na over

the de%eased>s estate is not a mandator* re3&irement in the %oe%tion of estate

taes. n the %ontrar*, &nder 'e%tion 87 of the N0"#, it is the probate or settement

%o&rt whi%h is bidden not to a&thorize the ee%&tor or C&di%ia administrator of the

de%edent>s estate to deiver an* distrib&tive share to an* part* interested in the

estate, &ness it is shown a #erti!%ation b* the #ommissioner of 0nterna "even&e

that the estate taes have been paid. This provision disproves the petitioner>s

%ontention that it is the probate %o&rt whi%h approves the assessment and

%oe%tion of the estate ta.


5/51


6/51


7/51

on s&%h representations. The* have disrearded their own re3&irements for the

reease of the deposit to persons %aimin to be heirs of a de%eased depositor. The*

reeased the pro%eeds of the s&bCe%t a%%o&nt witho&t havin presented the /0";

iss&ed %erti!%ate of pa*ment of, or e%eption from, estate ta. Taes are %reated

primari* to enerate reven&es for the maintenan%e of the overnment. ?owever,

this parti%&ar ta ma* aso serve as &ard aainst the reease of deposits topersons who have no s&%ient and vaid %aim over the deposits. /ased on the

ass&mption that on* those with s&%ient and vaid %aim to the deposit wi pa* the

taes for it, re3&irin the %erti!%ate from the /0" in%reases the %han%e that the

deposit wi be reeased on* to them.

0n their %omp&sor* %o&nter%aim, petitioners PN/ and &iar %aimed that $animbo

presented a %erti!%ate of pa*ment of estate ta. &rin tria, however, it t&rned o&t

that this %erti!%ate was instead an a&thorit* to a%%ept pa*ment, whi%h is not the

%erti!%ate re3&ired for the reease of banI deposits. 0t appears that $animbo was

not even re3&ired to s&bmit the /0" %erti!%ate . ?e, th&s, faied to present s&%h

%erti!%ate. Petitioners PN/ and &iar provided no satisfa%tor* epanation wh*ne #. 'antos deposit was reeased witho&t it.


8/51

EG.1

%0E ES%A%E OF 0ILARIO '. R$IZ, ED'OND R$IZ, E5ecutr vs. %0E #O$R%

OF A""EALS >Frmer Special Si5th Di4isin?, 'ARIA "ILAR R$IZ3'ON%ES,

'ARIA #A%0R2N R$IZ, #ANDI#E AL


9/51

epenses of administration, aowan%e to the widow, and estate ta have

been paidB or (6) before pa*ment of said obiations on* if the distrib&tees or

an* of them ives a bond in a s&m !ed b* the %o&rt %onditioned &pon the

pa*ment of said obiations within s&%h time as the %o&rt dire%ts, or when

provision is made to meet those obiations.

0n the %ase at bar, the probate %o&rt ordered the reease of the tites to the ae

erde propert* and the /&e "ide apartments to the private respondents after the

apse of si months from the date of !rst p&bi%ation of the noti%e to %reditors. The

3&estioned order speaIs of noti%e to %reditors, not pa*ment of debts and

obiations. ?iario "&iz aeed* eft no debts when he died b&t the taes on his

estate had not hitherto been paid, m&%h ess as%ertained. The estate ta is one of

those obiations that m&st be paid before distrib&tion of the estate. 0f not *et paid,

the r&e re3&ires that the distrib&tees post a bond or maIe s&%h provisions as to

meet the said ta obiation in proportion to their respe%tive shares in the

inheritan%e. Notab*, at the time the order was iss&ed the properties of the estate

had not *et been inventoried and appraised.

(4) N. The riht of an ee%&tor or administrator to the possession and

manaement of the rea and persona properties of the de%eased is not

abso&te and %an on* be eer%ised so on as it is ne%essar* for the pa*ment

of the debts and epenses of administration. s ee%&tor, he is a mere

tr&stee of his fathers estate. The f&nds of the estate in his hands are tr&st

f&nds and he is hed to the d&ties and responsibiities of a tr&stee of the

hihest order. ?e %annot &niatera* assin to himsef and possess a his

parents properties and the fr&its thereof witho&t !rst s&bmittin an inventor*

and appraisa of a rea and persona properties of the de%eased, renderin atr&e a%%o&nt of his administration, the epenses of administration, the

amo&nt of the obiations and estate ta, a of whi%h are s&bCe%t to a

determination b* the %o&rt as to their vera%it*, propriet* and C&stness.


10/51

EG.6

#O''ISSIONER OF IN%ERNAL RE(EN$E vs. #O$R% OF A""EALS, #O$R% OF

%A& A""EALS and JOSEFINA ". "AJONAR, as Administratri5 ! the Estate !

"edr ". "anar ().R. N. 1-+:, 'arch , +++) ()ONZA)A3RE2ES, J.)

FA#%S Private respondent Jose!na PaConar was the &ardian of the person of de%edent Pedro PaConar. The propert* of the de%edent was p&t b* the "T#&ma&ete, &nder the &ardianship of the Phiippine Nationa /anI via spe%iapro%eedin, wherein PG, was spent therein for pa*ment of attorne*>s fees.

hen the de%edent died, instead of !in an estate ta ret&rn, PN/ advised Jose!nato etra;C&di%ia* sette the estate of his brother. The de%edent>s estate was etra; C&di%ia* setted and the heirs paid an amo&nt of P2, 7G4 for the notarization of the deed of etra;C&di%ia settement of estate.

The private respondent paid the estate ta, however, the* were s&bse3&ent*

assessed of de!%ien%* taes be%a&se the amo&nt paid in the spe%ia pro%eedin(PG, ) and the notarization fee (P2, 7G4) %annot be %aimed as a ded&%tion tothe de%edent>s estate. Private respondent paid the said taes &nder protest. hiethe %ase is &nder review b* the /0", she !ed a %aim for ref&nd in the #T whi%hwas ranted.

ISS$E N the notaria fee paid for the etraC&di%ia settement and the attorne*>sfees in the &ardianship pro%eedins ma* be aowed as ded&%tions from the rossestate of de%edent in order to arrive at the va&e of the net estate.

0ELD K+'. The notaria fee for the etraC&di%ia settement and the attorne*>sfees in the &ardianship pro%eedins are aowabe ded&%tions from the ross estate

of Pedro PaConar.

ttorne*>s fees in order to be ded&%tibe from the ross estate m&st be essentia tothe %oe%tion of assets, pa*ment of debts or the distribution of the property to the

persons entitled to it . The servi%es for whi%h the fees are %hared m&st reate to theproper settement of the estate. 0n this %ase, the &ardianship pro%eedin wasne%essar* for the distrib&tion of the propert* of the ate Pedro PaConar to his rihtf&heirs.

0n this %ase, it is %ear that the etraC&di%ia settement was for the p&rpose of pa*ment of taes and the distrib&tion of the estate to the heirs. The ee%&tion of the etraC&di%ia settement ne%essitated the notarization of the same. 0t foows

then that the notaria fee of P2, 7G4. was in%&rred primari* to sette the estateof the de%eased Pedro PaConar. 'aid amo&nt sho&d then be %onsidered anadministration epenses a%t&a* and ne%essari* in%&rred in the %oe%tion of theassets of the estate, pa*ment of debts and distrib&tion of the remainder amonthose entited thereto. Th&s, the notaria fee of P2, 7G4 in%&rred for the+traC&di%ia 'ettement sho&d be aowed as a ded&%tion from the ross estate.


11/51

2.

).R. N. /+ 'arch , 1+

RO'ARI#O ). (I%$), petitioner,

vs.

%0E 0ONORA


12/51

%onC&a, it %annot be said that one spo&se %o&d have press&red the other in

pa%in his or her deposits in the mone* poo.

The %onve*an%e is not one of mortis %a&sa. Neither is the s&rvivorship areement a

donation inter vivos, for obvio&s reasons, be%a&se it was to taIe eHe%t after the

death of one part*. 'e%ond*, it is not a donation between the spo&ses be%a&se itinvoved no %onve*an%e of a spo&se>s own properties to the other.

/ein the separate propert* of "omeri%o it&, it forms no more part of the estate

of the de%eased.

7.

DEL"0ER %RADES #OR"ORA%ION, et al. v. IN%ER'EDIA%E A""ELLA%E#O$R%, et al.

).R. N. L3:;, : January 1//, %0IRD DI(ISION, >)utierre, Jr., J.?

FA#%S- e!n and Peaia Pa%he%o (the other petitioners), sibins and %o;owners of the

$ainta estate, ee%&ted a deed of e%hane in favor of epher Trades#orporation (T#), whereb* the former %onve*ed to the atter some ands of the

estate for 6,G shares of sto%I of T# with the amo&nt of P1.G miion.

- /efore the s&pposed transfer, one of the ots was eased b* the Pa%he%os to#onstr&%tion #omponents 0nternationa 0n%. (##00) with the proviso statin thatMd&rin the eisten%eLafter the term of this ease, the essor, sho&d he de%ide tose the propert* eased, sha !rst oHer the same to the essee and the atter hasthe priorit* to b&* &nder the same %onditions. Aater on, ##00 assined its rihtsand obiations &nder the ease to ?*dro Pipes Phis. 0n%. (?PP0), the privaterespondent, with the Pa%he%os %onsent. The ease and assinment wereannotated at the ba%I of the tite.

- n the ro&nd that it was not iven the 1st option to b&* the eased propert*, as

stated in the %ontra%t, ?PP0 !ed a %ompaint for the ots re%onve*an%e in itsfavor &nder simiar %onditions whereb* T# a%3&ired the same from the sibins. The #o&rt of First 0nstan%e r&ed in favor of ?PP0, de%arin its preferentiarihtLriht of 1st ref&sa as reards the s&bCe%t propert*. The 0ntermediateppeate #o&rt armed. The '&preme #o&rt initia* denied T#s petition b&t&pon the atters $otion for "e%onsideration, ave it d&e %o&rse.

ISS$E (on taation)0s the Mestate pannin s%heme between T# and the Pa%he%os vaidD


13/51


14/51

Petitioner oded a protest to the assessment and re3&ested the withdrawa thereof.

The protest and the $" presented to the #0" were denied. The petitioner appeaed

to the #T and %aimed that at the time of the donation, he was not the parish priest

in i%toriasB that there is no ea entit* or C&ridi%a person Inown as the =#athoi%

Parish Priest of i%torias,= and, therefore, he sho&d not be iabe for the donee>s ift

ta. 0t was aso asserted that the assessment of the ift ta, even aainst the"oman #athoi% #h&r%h, wo&d not be vaid, for s&%h wo&d be a %ear vioation of

the provisions of the #onstit&tion.

#T armed the de%ision of the #0" e%ept with reard to the imposition of the

%ompromise penat* in the amo&nt of P6.B The above C&dment is now before &s

on appea.

ISS$E

N petitioner sho&d be iabe for the assessed donee>s ift ta on the P1,.

donated for the %onstr&%tion of the i%torias Parish #h&r%h.

R$LIN)'e%tion 66 (4), rt. 0 of the #onstit&tion of the Phiippines, eempts from taation

%emeteries, churches and parsonaes or %onvents, app&rtenant thereto, and

a lands, buildings, and improvements &sed e%&sive* for reiio&s p&rposes. The

eemption is on* from the pa*ment of taes assessed on s&%h properties

en&merated, as propert* taes, as %ontra distin&ished from e%ise taes. 0n the

present %ase, what the #oe%tor assessed was a donee>s ift taB the assessment

was not on the properties themseves. 0t did not rest &p on enera ownershipB it

was an e%ise &pon the &se made of the properties, &pon the eer%ise of the

priviee of re%eivin the properties.

$anifest*, ift ta is not within the eemptin provisions of the se%tion C&st

mentioned. ift ta is not a propert* ta, b&t an e%ise ta imposed on the

transfer of propert* b* wa* of iftinter vivos, the imposition of whi%h on propert*

&sed e%&sive* for reiio&s p&rposes, does not %onstit&te an impairment of the

#onstit&tion. s we observed b* the earned respondent #o&rt, the phrase =eempt

from taation,= as empo*ed in the #onstit&tion sho&d not be interpreted to mean

eemption from a Iinds of taes. nd there bein no %ear, positive or epress

rant of s&%h priviee b* aw, in favor of petitioner, the eemption herein m&st be

denied.

0n !ndin that a ta iabiit* eists, is, who sho&d be %aed &pon to pa* the ift taD

Petitioner post&ates that he sho&d not be iabe, be%a&se at the time of the

donation he was not the priest of i%torias. e note the merit of the above %aim, it

appearin that the ?ead of s&%h io%ese is the rea part* in interest. The

assessment at bar had been proper* made and the imposition of the ta is not a

vioation of the %onstit&tiona provision eemptin %h&r%hes, parsonaes or


15/51


16/51

previo&s de%ision, is b&t an inno%&o&s errorB whether rem&nerator* or simpe, the

%onve*an%e remained a ift, taabe &nder the 0nterna "even&e #ode.

1.

e &na vs. C&de abrioF#T'<e A&na donated a portion of a 7G s3. m. ot to the A&zonian :niversit* Fo&ndation. The donation was embodied in a eed of onation 0ntervivos and was s&bCe%t to%ertain terms and %onditions. 0n %ase of vioation or non;%ompian%e, the propert*wo&d a&tomati%a* revert to the donor. hen the Fo&ndation faied to %omp* withthe %onditions, de A&na Mrevived the said donation b* ee%&tin a "eviva of onation 0ntervivos with the foowin terms and %onditions<

1) The onee sha %onstr&%t on the and and at its epense a #hape, N&rser*, and

inderarten '%hoo to be named after 't. eroni%a6) #onstr&%tion sha start immediate* and m&st be at east 7Q %ompeted three*ears from the date of the eed &ness the onor rants etensions4) &tomati% reversion in %ase of vioation

The Fo&ndation a%%epted and the donation was reistered and annotated in the T#T./* a eed of 'ereation, the fo&ndation was iss&ed a T#T for area the ot donatedwhie the remainin area was retained b* the e A&na.

The %hidren and on* heirs of the ate e A&na (died after the donation) !ed a%ompaint with the "T# for the %an%eation of the donation on the ro&nd that theterms were vioated. The Fo&ndation defended itsef b* sa*in that it had partia*

and s&bstantia* %ompied with the %onditions and that the donor ranted it aninde!nite etension of time to %ompete %onstr&%tion.

The "T# dismissed the petition on the ro&nd of pres%ription (for bein !ed after 5*ears). The heirs did not !e an $" and went straiht to the '#.

ISS$Ehether the a%tion pres%ribes in 5 *ears (based on art. 725 N##;C&di%ia de%ree of revo%ation of the donation) or in 1 *ears (based on art. 1155 Renfor%ement of awritten %ontra%t)

R$LIN) 1 *ears

The donation s&bCe%t of this %ase is one with an onero&s %a&se.

The same r&es app* &nder the New #ivi #ode as provided in rti%e 744 thereof whi%h provides<

onations with an onero&s %a&se sha be overned b* the r&es on %ontra%ts, andrem&nerator* donations b* the provisions of the present Tite as reards thatportion whi%h e%eeds the va&e of the b&rden imposed.


17/51

0t is tr&e that &nder rti%e 725 of the New #ivi #ode, a%tions for the revo%ation of adonation m&st be bro&ht within fo&r (5) *ears from the non;%ompian%e of the%onditions of the donation. ?owever, said arti%e does not app* to onero&sdonations in view of the spe%i!% provision of rti%e 744 providin that onero&sdonations are overned b* the r&es on %ontra%ts. The r&es on pres%ription and not

the r&es on donation appies in the %ase at bar.

11.

S"S. A)RI"INO )ES%O"A and ISA


18/51

@estopas. The "T# ordered the %an%eation of the ta de%arations in the name of

$er%edes ana;Piapi.

The # reversed the r&in of the "T#. ?en%e, this petition.

ISS$E hether or not the ta de%arations made b* $er%edes %an be %onsidered

as eviden%e of the intent of the donors to transfer ownership.

R$LIN) K+'

The rantin %a&se shows that ieo donated the properties o&t of ove andaHe%tion for the donee. This is a marI of a donation inter vivos. 'e%ond, the

reservation of ifetime &s&fr&%t indi%ates that the donor intended to transfer the

naIed ownership over the properties. Third, the donor reserved s&%ient properties

for his maintenan%e in a%%ordan%e with his standin in so%iet*, indi%atin that the

donor intended to part with the si par%es of and.Aast*, the donee a%%epted the

donation. 0n the %ase of !lejandro vs. "eralde#, $% SC! &'( )*+$$, we said that an

a%%eptan%e %a&se is a marI that the donation isinter vivos. %%eptan%e is a

re3&irement for donations inter vivos. onations mortis causa, bein in the form of

a wi, are not re3&ired to be a%%epted b* the donees d&rin the donors> ifetime.

?ere, the donation that was made was a donation inter vivos.

"etitiners a4er that 'ercedes ta5 declaratins in her name cannt 8e a

8asis in determinin6 the dnrs intent. %hey claim that it is easy t 6et

ta5 declaratins !rm the 64ernment ces such that ta5 declaratins

are nt cnsidered pr!s ! 9nership. 09e4er, unless pr4en

ther9ise, there is a presumptin ! re6ularity in the per!rmance !

cial duties.e 7nd that petitiners did nt 4ercme this presumptin

! re6ularity in the issuance ! the ta5 declaratins. e als nte that the

#urt ! Appeals did nt re!er t the ta5 declaratins as pr!s !

9nership 8ut nly as e4idence ! the intent 8y the dnr t trans!er

9nership.

16.


19/51

#O''ISSIONER OF IN%ERNAL RE(EN$E, petitioner,vs.


20/51

0nvoved in this petition is the in%ome of the petitioner for the *ear

1975, the ret&rns for whi%h were re3&ired to be !ed on or before pri

1G of the s&%%eedin *ear. The ret&rns for the *ear 1975 were d&*

!ed b* the petitioner, and assessment of taes d&e for s&%h *ear S

in%&din that on the transfer of properties on J&ne 61, 1975 S was

made on pri 14, 197G and a%Inoweded b* Aetter of #on!rmationNo. 111GG terminatin the eamination on this s&bCe%t. The

s&bse3&ent assessment of %tober 1, 198 modi!ed, b* that of

$ar%h 12, 1981, was made be*ond the period epress* set in 'e%tion

441 of the Nationa 0nterna "even&e #ode . . . .

6) N.

The fa%t that private respondent sod its rea propert* for a pri%e ess than its

de%ared fair marIet va&e did not b* itsef C&stif* a !ndin of fase ret&rn. 0ndeed,

private respondent de%ared the sae in its 1975 ret&rn s&bmitted to the /0". ithin

the !ve;*ear pres%riptive period, the /0" %o&d have iss&ed the 3&estioned

assessment, be%a&se the de%ared fair marIet va&e of said propert* was of p&bi%

re%ord. This it did not do, however, d&rin a those !ve *ears. $oreover, the /0"

faied to prove that respondent>s 1975 ret&rn had been !ed fra&d&ent*. +3&a*

sini!%ant was its fai&re to prove respondent>s intent to evade the pa*ment of the

%orre%t amo&nt of ta.

$oreover, even tho&h a donor>s ta, whi%h is de!ned as =a ta on the priviee of

transmittin one>s propert* or propert* rihts to another or others witho&t ade3&ate

and f& va&abe %onsideration,= 1: is diHerent from %apita ains ta, a ta on the

ain from the sae of the tapa*er>s propert* formin part of %apita assets, 1 the

ta ret&rn !ed b* private respondent to report its in%ome for the *ear 1975 was

s&%ient %ompian%e with the ea re3&irement to !e a ret&rn. 0n other words, the

fa%t that the sae transa%tion ma* have part* res&ted in a donation does not

%hane the fa%t that private respondent aread* reported its in%ome for 1975 b*

!in an in%ome ta ret&rn.

6'e%. 441(N0"#).Period of limitation upon assessment and collection. S +%ept as provided in the s&%%eedin

se%tion, interna;reven&e taes sha be assessed within !ve *ears after the ret&rn was !ed, and no pro%eedin in

%o&rt witho&t assessment for the %oe%tion of s&%h taes sha be be&n after epiration of s&%h period. For the

p&rposes of this se%tion, a ret&rn !ed before the ast da* pres%ribed b* aw for the !in thereof sha be %onsidered

as !ed on s&%h ast da*< Provided, That this imitation sha not app* to %ases aread* investiated prior to the

approva of this #ode.


21/51

0EREFORE, the Petition for "eview is DENIED and the assaied e%ision of the

#o&rt of ppeas is AFFIR'ED.

14.

#O''ISSIONER OF IN%ERNAL RE(EN$E vs. "AS#OR REAL%2 AND

DE(ELO"'EN% #OR"ORA%ION

).R. N. 1/-1;. June , 1, "AN)ANI


22/51

Private respondents then eevated the e%ision of the #0" dated $a* 17, 199G to

the #o&rt of Ta ppeas on a petition for review. The #0" !ed a $otion to ismiss

the petition on the ro&nd that the #T has no C&risdi%tion over the s&bCe%t matter

of the petition, as there was no forma assessment iss&ed aainst thepetitioners. The #T denied the said motion to dismiss and ordered the #0" to !e an

answer within thirt* (4) da*s from re%eipt of said reso&tion. The #0" re%eived the

reso&tion on Jan&ar* 41, 1992 b&t did not !e an answer nor did she move to

re%onsider the reso&tion. 0nstead, the #0" !ed this petition, aein as ro&nds

that< "espondent #o&rt of Ta ppeas a%ted with rave ab&se of dis%retion and

witho&t C&risdi%tion in %onsiderin the adavitLreport of the reven&e o%er and the

indorsement of said report to the se%retar* of C&sti%e as assessment whi%h ma* be

appeaed to the #o&rt of Ta ppeas and in %onsiderin the denia b* petitioner of

private respondents $otion for "e%onsideration as UaV !na de%ision whi%h ma* be

appeaed to the #o&rt of Ta ppeas.

The #o&rt of ppeas hed that the ta %o&rt %ommitted no rave ab&se of

dis%retion in r&in that the #rimina #ompaint for ta evasion !ed b* the

#ommissioner of 0nterna "even&e with the epartment of J&sti%e %onstit&ted an

assessment of the ta d&e, and that the said assessment %o&d be the s&bCe%t of a

protest. /* de!nition, an assessment is simp* the statement of the detais and the

amo&nt of ta d&e from a tapa*er. /ased on this de!nition, the detais of the ta

%ontained in the /0" eaminers Joint davit, whi%h was atta%hed to the %rimina

#ompaint, %onstit&ted an assessment. 'in%e the assaied rder of the #T wasmere* intero%&tor* and devoid of rave ab&se of dis%retion, a petition

for certiorari did not ie.

Issue

hether or not the %rimina %ompaint for ta evasion %an be %onstr&ed as an

assessment.

#ntentins

Petitioner ar&es that the !in of the %rimina %ompaint with the epartment of

J&sti%e %annot in an* wa* be %onstr&ed as a forma assessment of private

respondents ta iabiities. This position is based on 'e%tion 6G of the Nationa


23/51

0nterna "even&e #ode(N0"#), whi%h provides that remedies for the %oe%tion of

de!%ient taes ma* be b* either %ivi or %rimina a%tion. AiIewise, petitioner %ites

'e%tion 664(a) of the same #ode, whi%h states that in %ase of fai&re to !e a ret&rn,

the ta ma* be assessed or a pro%eedin in %o&rt ma* be be&n 0ithout

assessment .

"espondents, on the other hand, maintain that an assessment is not an a%tion

or pro%eedin for the %oe%tion of taes, b&t mere* a noti%e that the amo&nt stated

therein is d&e as ta and that the tapa*er is re3&ired to pa* the same. Th&s,

3&aif*in as an assessment was the /0" eaminers Joint davit, whi%h %ontained

the detais of the s&pposed taes d&e from respondent for taabe *ears endin

1987 and 1988, and whi%h was atta%hed to the ta evasion #ompaint !ed with the

J. #onse3&ent*, the denia b* the /0" of private respondents re3&est for

reinvestiation of the disp&ted assessment is proper* appeaabe to the #T.

Rulin6

e aree with petitioner. Neither the N0"# nor the reven&e re&ations

overnin the protest of assessments provide a spe%i!% de!nition or form of an

assessment. ?owever, the N0"# de!nes the spe%i!% f&n%tions and eHe%ts of an

assessment. To %onsider the adavit atta%hed to the #ompaint as a proper

assessment is to s&bvert the nat&re of an assessment and to set a bad pre%edent

that wi preC&di%e inno%ent tapa*ers.

n assessment m&st be sent to and re%eived b* a tapa*er, and m&st demand

pa*ment of the taes des%ribed therein within a spe%i!% period. Th&s, the N0"#

imposes a 6G per%ent penat*, in addition to the ta d&e, in %ase the tapa*er fais

to pa* the de!%ien%* ta within the time pres%ribed for its pa*ment in the noti%e of

assessment. AiIewise, an interest of 6 per%ent per ann&m, or s&%h hiher rate as

ma* be pres%ribed b* r&es and re&ations, is to be %oe%ted from the date

pres%ribed for its pa*ment &nti the f& pa*ment.

The iss&an%e of an assessment is vita in determinin the period of imitation

reardin its proper iss&an%e and the period within whi%h to protest it. 'e%tion 64

of the N0"# provides that interna reven&e taes m&st be assessed within three

*ears from the ast da* within whi%h to !e the ret&rn. 'e%tion 666, on the other

hand, spe%i!es a period of ten *ears in %ase a fra&d&ent ret&rn with intent to evade

was s&bmitted or in %ase of fai&re to !e a ret&rn. so, 'e%tion 668 of the same aw


24/51

states that said assessment ma* be protested on* within thirt* da*s from re%eipt

thereof. Ne%essari*, the tapa*er m&st be %ertain that a spe%i!% do%&ment

%onstit&tes an assessment. therwise, %onf&sion wo&d arise reardin the period

within whi%h to maIe an assessment or to protest the same, or whether interest and

penat* ma* a%%r&e thereon. 0t sho&d aso be stressed that the said do%&ment is a

noti%e d&* sent to the tapa*er. 0ndeed, an assessment is deemed made on* whenthe %oe%tor of interna reven&e reeases, mais or sends s&%h noti%e to the

tapa*er.

0n the present %ase, the reven&e o%ers davit mere* %ontained a

%omp&tation of respondents ta iabiit*. 0t did not state a demand or a period for

pa*ment. orse, it was addressed to the C&sti%e se%retar*, not to the tapa*ers.

The /0" eaminers Joint davit atta%hed to the #rimina #ompaint %ontained

some detais of the ta iabiities of private respondents does not ipso facto maIe it

an assessment. The p&rpose of the Joint davit was mere* to s&pport and

s&bstantiate the #rimina #ompaint for ta evasion. #ear*, it was not meant to be

a noti%e of the ta d&e and a demand to the private respondents for pa*ment

thereof. The fa%t that the #ompaint itsef was spe%i!%a* dire%ted and sent to the

epartment of J&sti%e and not to private respondents shows that the intent of the

%ommissioner was to !e a %rimina %ompaint for ta evasion, not to iss&e an

assessment. tho&h the reven&e o%ers re%ommended the iss&an%e of an

assessment, the %ommissioner opted instead to !e a %rimina %ase for taevasion. hat private respondents re%eived was a noti%e from the J that a

%rimina %ase for ta evasion had been !ed aainst them, not a noti%e that the

/&rea& of 0nterna "even&e had made an assessment.

(dd. 0nfo) so, ssessment Not Ne%essar* /efore Fiin of #rimina #ompaint.

The iss&an%e of an assessment m&st be distin&ished from the !in of a

%ompaint. /efore an assessment is iss&ed, there is, b* pra%ti%e, a pre;assessment

noti%e sent to the tapa*er. The tapa*er is then iven a %han%e to s&bmit position

papers and do%&ments to prove that the assessment is &nwarranted. 0f the

%ommissioner is &nsatis!ed, an assessment sined b* him or her is then sent to the

tapa*er informin the atter spe%i!%a* and %ear* that an assessment has been

made aainst him or her. 0n %ontrast, the %rimina %hare need not o thro&h a

these. The %rimina %hare is !ed dire%t* with the J. Thereafter, the tapa*er is

noti!ed that a %rimina %ase had been !ed aainst him, not that the %ommissioner


25/51

has iss&ed an assessment. 0t m&st be stressed that a %rimina %ompaint is instit&ted

not to demand pa*ment, b&t to penaize the tapa*er for vioation of the Ta #ode.

15.:0"0# P. :N@/, petitioner,vs.?N. 0#+NT+ N. #:'0, J"., in his %apa%it* as J&de

of the #o&rt of First 0nstan%e, /ran%h 1, 12T?J&di%ia istri%t, avao #it*, T?+#$$0''0N+" F 0NT+"NA "++N:+, and J+':' N. #+/+', in his%apa%it* as

'tate Prose%&tor, respondents.

Fa%ts<0n J&* 1975, &iri%o :nab !ed his in%ome ta ret&rn. ?e was s&bCe%ted to a

ta a&dit and the ta eaminer was %onvin%ed that :nab !ed a fra&d&ent ret&rn.?e was iss&ed an assessment demandin pa*ment of P15I in taes. t the sametime, the ta eaminer re%ommended the !in of %rimina %ases of ta evasionaainst :nab. $eanwhie, :nab !ed a protest with the #ommissionerof 0nterna "even&e (#0").

%tin on the re%ommendation of the ta eaminer, a state prose%&tor !ed 2informations aainst :nab for vario&s vioations of the Nationa 0nterna "even&e#ode. The informations were !ed with #o&rt of First 0nstan%e of avao presided b* J&de i%ente #&si, Jr. :nab !ed a motion to 3&ash the informations on the ro&ndthat his pendin protest with the #0" has not *et been a%ted &pon hen%e theassessment is not *et !na and ee%&tor* and therefore the tria %o&rt has no C&risdi%tion *et over the %rimina %ases

0s&&e<N :nab ma* be %hared for ta evasion even when there is a pendin protestwith the /0"

"&in< *es.

hat is invoved here is not the %oe%tion of taes where the assessment of the #ommissioner of 0nterna "even&e ma* be reviewed b* the #o&rt of Tappeas, b&t a %rimina prose%&tion for vioations of the Nationa 0nterna "even&e#ode whi%h is within the %onizan%e of %o&rts of !rst instan%e. hie there %an beno %ivi a%tion to enfor%e %oe%tion before the assessment pro%ed&res provided inthe #ode have been foowed, there is no re3&irement for the pre%ise %omp&tationand assessment of the ta before there %an be a %rimina prose%&tion &nder the#ode. The %rime is %ompete when the vioator has, as in this %ase, Inowin* andwif&* !ed fra&d&ent ret&rns with intent to evade and defeat a part or a of theta

n assessment of a de!%ien%* is not ne%essar* to a %rimina prose%&tion forwif& attempt to defeat and evade the in%ome ta. %rime is %ompete when the


26/51

vioator has Inowin* and wif&* !ed a fra&d&ent ret&rn with intent to evade anddefeat the ta. The perpetration of the %rime is ro&nded &pon Inowede on thepart of the tapa*er that he has made an ina%%&rate ret&rn, and the overnment>sfai&re to dis%over the error and prompt* to assess has no %onne%tions with the%ommission of the %rime1G

1217.

#O''ISSIONER OF IN%ERNAL RE(EN$E, Petitioner, 4s.%EA' @"0ILI""INESBO"ERA%IONS #OR"ORA%ION @!rmerly 'IRAN% >"0ILS? O"ERA%IONS

#OR"ORA%IONB, "espondent.

Fa%ts< "espondent entered into peratin and $anaement reements with $irantPabiao #orporation ($P#) and $irant '&a #orporation ($'#). Pa*ments re%eivedb* respondent from $P# and $'# reative to the said areements were aeed*s&bCe%ted to %reditabe withhodin ta.

n pri 1G, 66, respondent !ed its 61 in%ome ta ret&rn with the /0",reportin an in%ome ta overpa*ment in the amo&nt of P29,G26,516. arisin from&n&tiized %reditabe taes withhed d&rin the *ear. "espondent marIed theappropriate bo manifestin its intent to have theoverpa*ment ref&nded.

The #T division reasoned that respondent has indeed estabished its entitement toa ref&ndLta %redit of its e%ess %reditabe withhodin taes in %ompian%e with thefoowin basi% re3&irements


27/51

%aim for ref&nd or iss&an%e of ta %redit %erti!%ate in its favor both administrative*and C&di%ia*. Th&s, petitioners administrative %aim and petition for review !ed on19 $ar%h 64 and 67 $ar%h 64, respe%tive*, fe within the pres%riptive period.

AiIewise, respondent was abe to present vario&s %erti!%ates of %reditabe tawithhed at so&r%e from its pa*ors, $P# and $'#, for taabe *ear 61, showin

%reditabe withhodin taes in the areate amo&nt of P7,8G,771.56 (atho&hthe ref&nd %aim was on* P29,G26,516.).$oreover, as determined b* the #T inivision, respondent de%ared the in%ome reated to the %aimed %reditabewithhodin taes of P29,G26,516. on its ret&rn.

Aast*, in %ompian%e with 'e%tion 72 of the N0"# of 1997, as amended, respondentopted to be ref&nded of its &n&tiized ta %redit (as eviden%ed b* the == marI in theappropriate bo of its 61 in%ome ta ret&rn), and the same was not %arried overin its 66 in%ome ta ret&rnB therefore, the entire amo&nt of P29,G26,516. ma*be a proper s&bCe%t of a %aim for ref&ndLta %redit %erti!%ate.

0t is apt to restate here the hornbooI do%trine that the !ndins and %on%&sions of

the #T are a%%orded the hihest respe%t and wi not be iht* set aside. The #o&rt!nds no ab&sive or improvident eer%ise of a&thorit* on the part of the #T inivision. 'in%e there is no showin of ross error or ab&se on the part of the #T inivision, and its !ndins are s&pported b* s&bstantia eviden%e whi%h werethoro&h* %onsidered d&rin the tria, there is no %oent reason to dist&rb its!ndins and %on%&sions. Petition denied.

18.

#mmissiner ! Internal Re4enue 4s 'c)er6e Fd Industries, Inc.).R. N. 1*1;, Oct8er +, +1+

#AR"IO, J.

FA#%S"espondent $%@eore Food 0nd&stries, 0n%. !ed with the /&rea& of 0nterna"even&e (/0") its !na adC&stment in%ome ta ret&rn for the %aendar *ear endin41 e%ember 1997. The ret&rn indi%ated a ta iabiit* of PG,494,988 aainst a totapa*ment of P1,14,172 for the !rst three 3&arters, res&tin in a net overpa*mentof P5,742,188. "espondent %hose to %arr* it over to the s&%%eedin *ear as ta%redit, indi%atin in its 1997 !na ret&rn that it wished the amo&nt to be appied as%redit to net *ear. "espondent then !ed its !na adC&stment ret&rn for the %aendar*ear endin 41 e%ember 1998, indi%atin a ta iabiit* of PG,799,G2. 0nstead of app*in to this amo&nt its &n&sed ta %redit %arried over from 1997 (P5,742,188),as it was s&pposed to do, respondent mere* ded&%ted from its ta iabiit* the taeswithhed at so&r%e for 1998 (P617,179) and paid the baan%e of PG,G81,877."espondent sim&taneo&s* !ed with the /0" and the #o&rt of Ta ppeas (#T) a%aim for ref&nd of its overpa*ment in 1997 of P5,742,188. Petitioner #ommissionerof 0nterna "even&e (petitioner) opposed the s&it at the #T. The #T r&ed forrespondent and ordered petitioner to ref&nd the red&%ed amo&nt of P5,G98,712.98to a%%o&nt for two ta pa*ments aeed* withhed at so&r%e whi%h respondentfaied to s&bstantiate. The #o&rt of ppeas armed the #T and &phod theappi%abiit* of 'e%tion 29 of the 1977 N0"#. ?en%e, this petition.


28/51

ISS$Ehether r nt respndent is entitled t a ta5 re!und !r 4erpayment in1 a!ter it pted, 8ut !ailed, t credit such t its ta5 lia8ility in 1/

#ON%EN%IONS

#IR "espondent is pre%&ded from seeIin a ref&nd for its overpa*ment in 1997after respondent opted to %arr*;over and app* it to its f&t&re ta iabiit*, foowin'e%tion 72 of the 1997 N0"#. 'e%tion 72 appies to respondent be%a&se b* the timerespondent !ed its !na adC&stment ret&rn for 1997 on 1G pri 1998, the 1997N0"# was aread* in for%e, havin taIen eHe%t on 1 Jan&ar* 1998.%a5payer The ref&nd was proper be%a&se respondent %ompied with there3&irements of time* !in of the %aim and its s&bstantiation.

R$LIN) The respondent is not entited to a ref&nd &nder 'e%tion 72 of the 1997 N0"#, theaw in eHe%t at the time respondent made Inown to the /0" its preferen%e to %arr*over and app* its overpa*ment in 1997 to its ta iabiit* in 1998. 0n ie& of ref&nd,

respondents overpa*ment sho&d be appied to its ta iabiit* for the taabe *earsfoowin 1998 &nti it is f&* %redited. n%e the tapa*er opts to %arr*;over thee%ess in%ome ta aainst the taes d&e for the s&%%eedin taabe *ears, s&%hoption is irrevo%abe for the whoe amo&nt of the e%ess in%ome ta, th&s,prohibitin the tapa*er from app*in for a ref&nd for that same e%ess in%ome tain the net s&%%eedin taabe *ears. The &n&tiized e%ess ta %redits wi remainin the tapa*ers a%%o&nt and wi be %arried over and appied aainst thetapa*ers in%ome ta iabiities in the s&%%eedin taabe *ears &nti f&*&tiized.s respondent opted to %arr*;over and %redit its overpa*ment in 1997 to itsta iabiit* in 1998, 'e%tion 72 maIes respondents eer%ise of s&%h optionirrevo%abe, barrin it from ater swit%hin options to =Uapp*V for %ash ref&nd.=0nstead, respondents overpa*ment in 1997 wi be %arried over to the s&%%eedintaabe *ears &nti it has been f&* appied to respondents ta iabiities. ?en%e,&nder 'e%tion 72 of the 1997 N0"#, respondents %aim for ref&nd is &navaiin.?owever, respondent is entited to app* its &n&sed %reditabe overpa*ment in 1997to its ta iabiit* arisin after 1998 &nti s&%h has been f&* appied.

19.Lascna Land #mpany, Inc. 4. #mmissiner ! Internal Re4enue

@.". No. 1716G1B $ar%h G, 616< J&sti%e iosdado Perata

Statement ! Factsn $ar%h 67, 1998, the #ommissioner on 0nterna "even&e (#0") iss&ed

ssessment Noti%e aainst Aas%ona Aand #ompan*, 0n%. (Aas%ona) informin theatter of its aeed de!%ien%* in%ome ta for the *ear 1994 in the amo&nt of Php7G4,622.G2. Aas%ona initia* appeaed for the %an%eation and settin aside of thessessment Noti%e iss&ed. ?owever, the %er;in;#hare of the /0" %e in $aIatidenied its re3&est %onsiderin that the %ase was not eevated to the #o&rt of Tappeas (#T) as mandated b* 'e%tion 668 of the Nationa 0nterna "even&e #ode.(N0"#).

Statement ! the #ase


29/51

n pri 16, 1999, Aas%ona appeaed the de%ision before the #T. n Jan&ar*5, 6, the #T n&i!ed the s&bCe%t assessment. The #0" !ed a motion forre%onsideration, however, the same was denied for a%I of merit. issatis!ed, the#0" !ed an appea before the #o&rt of ppeas (#). 0n the disp&ted e%ision, the# ranted the #0"s petition and set aside the e%ision of the #T. Aas%ona movedfor re%onsideration b&t was denied for a%I of merit.

Issues(1) For the Tapa*er< N petitioner %an sti appea the assessment made b*

the #0" reardin its aeed de!%ien%* in%ome ta for the *ear 1994.(6) For the @overnment< N the s&bCe%t assessment has be%ome !na,

ee%&tor* and demandabe d&e to the fai&re of the petitioner to !e anappea.

Rulin6 The petition is meritorio&s.

(1) Kes. 'e%tion 668 of the N0"# is instr&%tiona as to the remedies of a tapa*er

in %ase of the ina%tion of the #0" on the protested assessment. The '&preme#o&rt hed that in %ase the #0" faied to a%t on the disp&ted assessmentwithin the 18;da* period from the date of s&bmission of do%&ments, atapa*er %an either< (a) !e a petition for review with the #T within 4 da*safter the epiration of the 18;da* periodB or (b) await the !na de%ision of the #0" on the disp&ted assessments and appea s&%h !na de%ision to the#T within 4 da*s after re%eipt of a %op* of s&%h de%ision.

(6) No. The s&bCe%t assessment has not *et be%ome !na, ee%&tor* anddemandabe. The #0" faied to inform Aas%ona of its de%ision when the attermoved for the %an%eation or settin aside of the assessment noti%e. The'&preme #o&rt hed that tapa*ers %o&d not be eft in 3&andar* b* itsina%tion on the protested assessment. 0t is imperative that tapa*ers areinformed of its a%tion in order that the tapa*er sho&d then at east be abeto taIe re%o&rse to the ta %o&rt at the opport&ne time.

6.

).R. N. L3-:1/1 Oct8er -, 1/ %EE0AN=EE, J.:

'ERAL#O SE#$RI%IES #OR"ORA%ION >n9 FIRS% "0ILI""INE 0OLDIN)S

#OR"ORA%ION?,petitioner,

vs.0ON. (I#%ORINO SA(ELLANO and AS$N#ION


30/51

+e%tri% #o. for the *ears 1926;1922, thereb* aeed* short%hanin theovernment of in%ome ta d&e from 7GQ of the said dividends.

#ommissioner of 0nterna "even&e %a&sed the investiation and r&ed that no

de!%ien%* %orporate in%ome ta was d&e sin%e &nder the prevaiin aw ('e%65(a),

N0"#) 3in the case of dividends received by a domestic or foreign resident

corporation liable to )corporate income ta/ under this Chapter . . . .only t0enty4ve

per centum thereof shall be returnable for the purposes of the ta/ imposed under

this section.=. ?e reCe%ted $aniao>s %ontention that $era%o is =not a domesti%

%orporation iabe to ta &nder this #hapter.=, and his %aim for informer>s reward on

a non;eistent de!%ien%*. This a%tion was s&stained b* the 'e%retar* of Finan%e.

$aniao !ed a Petition for $andam&s before #F0 $ania aainst #ommissioner and

$era%o to %ompe the former to impose the aeed de!%ien%* ta assessment andaward him the informers award &nder ".. 6648.

#ommisioner !ed $otion to ismiss, ar&in that sin%e in matters of iss&an%e and

non;iss&an%e of assessments, he is %othed &nder the N0"# and eistin r&es and

re&ations with dis%retionar* power in eva&atin the fa%ts of a %ase and sin%e

mandam&s wi not ie to %ompe the performan%e of a dis%retionar* power, he

%annot be %ompeed to impose the aeed ta de!%ien%* assessment aainst the

$era%o 'e%&rities #orporation. ?e f&rther ar&ed that mandam&s ma* not ie

aainst him for that wo&d be tantamo&nt to a &s&rpation of ee%&tive powers,

sin%e the %e of the #ommissioner of 0nterna "even&e is &ndeniab* &nder the

%ontro of the ee%&tive department.

$era%o 'e%&rities #orporation !ed its answer, ar&in that the petition states no

%a&se of a%tion, that the a%tion is premat&re, that mandam&s wi not ie to %ompe

the #ommissioner of 0nterna "even&e to maIe an assessment andLor eHe%t the

%oe%tion of taes &pon a tapa*er, that sin%e no taes have a%t&a* been

re%overed andLor %oe%ted, $aniao has no riht to re%over the reward pra*ed for,that the a%tion of petitioner had aread* pres%ribed and that respondent %o&rt has

no C&risdi%tion over the s&bCe%t matter as set forth in the petition, the same bein

%onizabe on* b* the #o&rt of Ta ppeas


31/51

J&de 'aveano ranted the petition !ed b* $aniao and denied a motions for

re%onsideration !ed therafter b* petitioners.

0'':+'<

#ommissioner of 0nterna "even&e< #F0 $ania J&de 'aveano has no C&risdi%tion

over the s&bCe%t matter and that the iss&an%e of a de!%ien%* assessment is his

preroative whi%h is not reviewabe b* $andam&s.

$era%o< $andam&s %annot %ompe the #ommissioner and thet $aniaos riht to

re%over has aread* pres%ribed.

$aniao< ?e sho&d be awarded an 0nformers reward as %ompeed b* the

$andam&s ranted b* #F0 J&de 'aveano.

?+A< P+T0T0N @"NT+ R $N$:' 0AA NT A0+ N '+AAN ?' N

J:"0'0#T0N

J&de 'aveano has no C&risdi%tion to taIe %onizan%e of the %ase be%a&se thes&bCe%t matter %ear* fas within the s%ope of %ases now e/clusively within the C&risdi%tion of the #o&rt of Ta ppeas. 'e%tion 7 of "ep&bi% %t No. 116G, ena%ted J&ne 12, 19G5, ranted to the #o&rt of Ta ppeas e/clusive appellate jurisdiction to review b* appea, amon others, de%isions of the #ommissioner of 0nterna "even&e in %ases invovin disp&ted assessments, ref&nds of internareven&e taes, fees or other %hares, penaties imposed in reation thereto, or othermatters arisin &nder the Nationa 0nterna "even&e #ode or other aw or part of awadministered b* the /&rea& of 0nterna "even&e. The 3&estion of whether or not toimpose a de!%ien%* ta assessment on $era%o 'e%&rities #orporation &ndo&bted*

%omes within the p&rview of the words =disp&ted assessments= or of =other mattersarisin &nder the Nationa 0nterna "even&e #ode. The determination of the%orre%tness or in%orre%tness of a ta assessment to whi%h the ta/payer is notareeabe, b&t fas within the C&risdi%tion of the #o&rt of Ta ppeas.

$andam&s is an improper remed*. 0t on* ies to enfor%e the performan%e of aministeria a%t or d&t* and not to %ontro the performan%e of a dis%retionar* power.


32/51

P&re* administrative and dis%retionar* f&n%tions ma* not be interfered with b* the%o&rts.

#ommissioner of 0nterna "even&e is %hared with the administration of reven&eaws, whi%h is the primar* responsibiit* of the ee%&tive bran%h of the overnment,mandam&s ma* not be iss&ed aainst the #ommissioner to %ompe him to impose

a ta assessment not fo&nd b* him to be d&e or proper for that wo&d betantamo&nt to a &s&rpation of ee%&tive f&n%tions

$aniao sho&d have appeaed to the #o&rt of Ta ppeas the r&in of #ommissioner of 0nterna "even&e within thirt* (4) da*s from re%eipt thereof p&rs&ant to 'e%tion 11 of "ep&bi% %t No. 116G. ?e faied to taIe s&%h an appea tothe ta %o&rt. The r&in is %ear* !na and no oner s&bCe%t to review b* the%o&rts.

'in%e no taes are to be %oe%ted, no informer>s reward is d&e to privaterespondents as the informer>s heirs. 0nformer>s reward is %ontinent &pon thepa*ment and %oe%tion of &npaid or de!%ien%* taes. n informer is entited b* wa*

of reward on* to a per%entae of the taes a%t&a* assessed and %oe%ted. 'in%eno assessment, m&%h ess an* %oe%tion, has been made in the instant %ase,respondent C&de>s writ for the #ommissioner to pa* respondents 6GQ informer>sreward is ross error and witho&t fa%t&a nor ea basis.

61.#RE


33/51

IssueMs(1) hether or not the imposition of the $#0T on domesti% %orporations is&n%onstit&tiona(6) hether or not the imposition of #T on in%ome from saes of rea properties%assi!ed as ordinar* assets &nder ""s 6;98, 2;61 and 7;64, is

&n%onstit&tiona.

0eld(1) N. The '# hed that $#0T is not vioative of d&e pro%ess. Therefore, theimposition of s&%h is not &n%onstit&tiona.

The $#0T is not a ta on %apita.The $#0T is imposed on ross in%ome whi%h isarrived at b* ded&%tin the %apita spent b* a %orporation in the sae of itsoods, i.e., the %ost of oods and other dire%t epenses from ross saes. #ear*,the %apita is not bein taed.F&rthermore, the $#0T is not an additiona taimposition. 0t is imposed in ie& of the norma net in%ome ta, and on* if the normain%ome ta is s&spi%io&s* ow. The $#0T mere* approimates the amo&nt of net

in%ome ta d&e from a %orporation, pein the rate at a ver* m&%h red&%ed 6Qand &ses as the base the %orporations ross in%ome.(6) N. The #T is %reditabe aainst the ta d&e from the seer of the propert* at the endof the taabe *ear. The seer wi be abe to %aim a ta ref&nd if its net in%ome isess than the taes withhed. Nothin is taIen that is not d&e so there is no%on!s%ation of propert* rep&nant to the %onstit&tiona &arantee of d&e pro%ess.$ore important*, the d&e pro%ess re3&irement appies to the power to ta.The #Tdoes not impose new taes nor does it in%rease taes. 0t reates entire* to themethod and time of pa*ment.

The tain power has the a&thorit* to maIe reasonabe %assi!%ations for p&rposes

of taation. 0ne3&aities whi%h res&t from a sinin o&t of one parti%&ar %ass for

taation, or eemption, infrine no %onstit&tiona imitation.The rea estate ind&str*

is, b* itsef, a %ass and %an be vaid* treated diHerent* from other b&siness

enterprises.

Petitioner, in insistin that its ind&str* sho&d be treated simiar* as man&fa%t&rin

enterprises, fais to reaize that what distin&ishes the rea estate b&siness from

other man&fa%t&rin enterprises, for p&rposes of the imposition of the #T, is nottheir prod&%tion pro%esses b&t the pri%es of their oods sod and the n&mber of

transa%tions invoved. The in%ome from the sae of a rea propert* is bier and its

fre3&en%* of transa%tion imited, maIin it ess %&mbersome for the parties to

%omp* with the withhodin ta s%heme.


34/51

66."0ILI""INE A'$SE'EN% AND )A'IN) #OR"ORA%ION >"A)#OR? 4s.


35/51

0n this %ase, P@#" faied to prove that it is sti eempt from the pa*ment of %orporate in%ome ta, %onsiderin that 'e%tion 1 of ".. No. 9447 amended 'e%tion67 (%) of the Nationa 0nterna "even&e #ode of 1997 b* omittin P@#" from theeemption. The eisative intent, as shown b* the dis%&ssions in the /i%amera#onferen%e $eetin, is to re3&ire "A)#OR t pay crprate incme ta5B hen%e,the omission or remova of P@#" from eemption from the pa*ment of %orporate

in%ome ta. 0t is a basi% pre%ept of stat&tor* %onstr&%tion that the epress mentionof one person, thin, a%t, or %onse3&en%e e%&des a others as epressed in thefamiiar maim epressio &ni&s est e%&sio ateri&s. Th&s, the epress mention of the @##s eempted from pa*ment of %orporate in%ome ta e%&des a others.Not bein e%epted, petitioner P@#" m&st be rearded as %omin within thep&rview of the enera r&e that )O##s shall pay crprate incme ta5,epressed in the maim< e%eptio !rmat re&am in %asib&s non e%eptis.

Petitioner>s eemption from T &nder 'e%tion 18 (/) (4) of ".. No. 8565 has been

thoro&h* and etensive* dis%&ssed in Commissioner of Internal evenue

v. !cesite )Philippines 6otel Corporation. The #o&rt r&ed that P@#" and %esitewere both eempt from pa*in T, th&s<

"A)#OR is e5empt !rm payment ! indirect ta5es. :nder the above provision

U'e%tion 14 (6) (b) of P.. 1829V, the term =#orporation= or operator refers to

P@#". tho&h the aw does not spe%i!%a* mention P@#">s eemption from

indire%t taes, P@#" is &ndo&bted* eempt from s&%h taes be%a&se the aw

eempts from taes persons or entities %ontra%tin with P@#" in %asino

operations. tho&h, diHerent* worded, the provision %ear* eempts P@#"

from indire%t taes. 0n fa%t, it oes one step f&rther b* rantin ta eempt stat&s to

persons deain with P@#" in %asino operations.

0ndeed, b* etendin the eemption to entities or individ&as deain with P@#",

the eisat&re %ear* ranted eemption aso from indire%t taes. 0t m&st be noted

that the indire%t ta of T, as in the instant %ase, %an be shifted or passed to the

b&*er, transferee, or essee of the oods, properties, or servi%es s&bCe%t to T.

Th&s, b* etendin the ta eemption to entities or individ&as deain with P@#"

in %asino operations, it is eemptin P@#" from bein iabe to indire%t taes.

64.%OS0I"0ILS.?, IN#. (S. #IR

FA#%S

Toshiba, a P+- reistered enterprise,!ed a Petition for "eview with the #Tand pra*ed for the iss&an%e of a Ta #redit #erti!%ate for the amo&nt representin


36/51

&n&tiized inp&t taes paid on its p&r%hase of taabe oods and servi%es for the 1st

and nd uarters ! 1. The #0" opposed. :pon advise from the #T, Toshibaand the #0" stip&ated, amon others, that Toshiba is Ma d&* reistered T entit*s&bCe%t to zero per%ent (Q) T on its eport saes.

The #T r&ed in favor of Toshiba. The #0" beated* raised in its $" that

bein a part of P+-, Toshiba is not s&bCe%t to T (i.e. T;eempt), and itstransa%tion is T;eempt. The $" was denied. The # ater reversed the r&in of the #T.

ISS$E

hether or not Toshiba isentited to the %reditLref&nd of its &n&tiized inp&t Tpa*ments.

R$LIN)

2es. Toshiba is entited to the %reditL ref&nd of its &n&tiized inp&t T pa*ments.

(A%e5empt transactininvoves oods or servi%es whi%h, b* their nat&re,are spe%i!%a* isted in and epress* eempted from the T &nder the Ta #ode,witho&t reard to the ta stat&s R T;eempt or not R of the part* to thetransa%tion.

(A% e5empt party, on the other hand, is a person or entit* ranted Teemption &nder the Ta #ode, a spe%ia aw or an internationa areement to whi%hthe Phiippines is a sinator*, and b* virt&e of whi%h its taabe transa%tionsbe%ome eempt from T.

At present,P+-;reistered enterprises (o%ated within +#-N+') are (A%3e5empt entities('e%. 8, " 7912, as amended)be%a&se of the !%tion that+#-N+' are forein territor*. The #rss


37/51

se%tion provides that those fain &nder Presidentia e%ree No. 22 (pre%&rsor of P+-) are not.

?en%e, Toshiba ma* rihtf&* eer%ise its option &nder the od r&e sin%e it is%aimin ref&nds for its eport saes for the 1st and 6nd 3&arters of 1997 (before%tober 1G, 1999). #onse3&ent*, a T;reistered seer of oods andLor servi%es

who made zero;rated saes %an %aim ta %redit or ref&nd of the inp&t T paid onits p&r%hases of oods, properties, or servi%es reative to s&%h zero;rated saes, ina%%ordan%e with 'e%tion 5.16;6 of "even&e "e&ations No. 7;9G.

ther iss&es< (#ivpro)

The CI did not timely raise before the CT! the issues on the 7!T4e/emptions of Toshiba and its e/port sales.

"&e 9, 'e%. 1 of the "&es of #o&rt provides< M'+#T0N 1. efenses andobCe%tions not peaded. R efenses and obCe%tions not peaded either in a motion todismiss or in the answer are deemed waived.

The #0" did not point o&t in his nswer, Pre;Tria /rief, or eviden%es (he evenwaived the s&bmission of a memorand&m) that Toshiba had no riht to the%reditLref&nd of its inp&t T pa*ments be%a&se the atter was T;eempt and itseport saes were T;eempt transa%tions.

The CI judicially admitted that Toshiba 0as 7!T4registered and its e/port sales0ere subject to 7!T at #ero percent )89 rate.

"&e 18, 'e%. 6 of the "&es of #o&rt provides< M'+#T0N 6. Nat&re andp&rpose. R The pre;tria is mandator*. The %o&rt sha %onsider< (d) Thepossibiit* of obtainin stip&ations or admissions of fa%ts and of do%&ments to avoid&nne%essar* proofB

The ar&ments of the #0" that Toshiba was T;eempt and the atterseport saes were T;eempt transa%tions are in%onsistent with the epi%itadmissions of the #0" in the Joint 'tip&ation of Fa%ts to the %ontrar*. Pre;tria is ananswer to the %arion %a for the speed* disposition of %ases. The admission havinbeen made in a stip&ation of fa%ts at pre;tria b* the parties, it m&st be treated as a C&di%ia admission and re3&ires no proof.

The CI cannot escape the binding e:ect of his judicial admissions.

There was no aeation (or proof in s&pport), either in the $" of the #T norin the Petition for "eview before the # that the "even&e ttorne* %ommitted amistaIe (m&%h ess a papabe mistaIe) in sinin the Joint 'tip&ation. There ispres&mption of re&arit* in the performan%e of d&ties of the "even&e ttorne*.

65.#O''ISSIONER OF IN%ERNAL RE(EN$E 4s.'INDANAO II )EO%0ER'AL "AR%NERS0I"".. 5o. *+*'+%, *( ;anuary &8*'< Sereno, C;


38/51

FA#%S $indanao 00, a partnership enaed in the b&siness of power eneration and sae

of ee%tri%it* to NP#", !ed its &arter* T "et&rns for the se%ond, thirdand fo&rth 3&arters of taabe *ear 65 on the foowin dates respe%tive* R 62 J&* 65, 66 %tober 65 and 6G Jan&ar* 6G. n 2 %tober 6G, $indanao00 !ed with /0" an appi%ation for the ref&nd or %redit of a%%&m&ated &n&tiized

%reditabe inp&t taes.

$indanao 00 beieved that a C&di%ia %aim m&st be !ed within the two;*earpres%riptive period provided &nder 'e%tion 116() and that s&%h time frame wasto be re%Ioned from the !in of its &arter* T "et&rns for the se%ond, third,and fo&rth 3&arters of taabe *ear 65. Th&s, on 61 J&* 62, $indanao 00,%aimin ina%tion on the part of the #0" and that the two;*ear pres%riptive periodwas abo&t to epire, !ed a Petition for "eview with the #T.

#0" %ontends that p&rs&ant to 'e%tion 116() of the 1997 Ta #ode, the#ommissioner of 0nterna "even&e (#0") had a period of 16 da*s, or &nti 4Febr&ar* 62, to a%t on the %aim. The administrative %aim, however, remained&nresoved on 4 Febr&ar* 62. ?en%e, the ina%tion of the #0" was a denia of its%aim, in whi%h %ase, the former wo&d have 4 da*s to !e an appea to the #T,that is, on G $ar%h 62. $indanao 00, however, did not !e an appea within the4;da* period.

/oth the #T 'e%ond ivision and #T +n /an% r&ed in favo&r of $indanao 00.?en%e, #0" !ed a petition &nder "&e 5G.

ISS$E>S?1. hether 'indana IIQs applicatin !r re!und 9as 9ithin the t93yearprescripti4e perid.

. hether the 1+ -+ day perid is applica8le.

R$LIN)1. 2ES. It is nly the administrati4e claim >7lin6 ! the re!und t the #IR?that must 8e 7led 9ithin the t93year prescripti4e perid. %he prperrecGnin6 date !r the t93year prescripti4e perid is the clse ! theta5a8le uarter 9hen the rele4ant sales 9ere made.

The ret&rns were !ed on 62 J&* 65, 66 %tober 65 and 6G Jan&ar* 6Gwith respe%tive two;*ear re%Ionin periods on 4 J&ne 65, 4 'eptember65 and 41 e%ember 65.

. 2ES. %he ta5payer can 7le an appeal in ne ! t9 9ays >a? 7le the

udicial claim 9ithin thirty days a!ter the #mmissiner denies the claim9ithin the 1+3day perid, r >8? 7le the udicial claim 9ithin thirty days!rm the e5piratin ! the 1+3day perid i! the #mmissiner des nt act9ithin the 1+3day perid. %he -+3day perid al9ays applies, 9hetherthere is a denial r inactin n the part ! the #IR. And, as a 6eneral rule,the -+3day perid t appeal is 8th mandatry and urisdictinal.


39/51


40/51

'+#. 17. Ta/ Treatment of =erchandi#e in the >one. (1) +%ept as otherwise

provided in this e%ree, forein and domesti% mer%handise, raw

materias, supplies, articles, euipment, machineries, spare parts and

9ares ! e4ery descriptin, e%ept those prohibited b* aw, bro&ht into the-one to be sod, stored, broIen &p, repa%Ied, assembed, instaed, sorted, %eaned,

raded, or otherwise pro%essed, manip&ated, man&fa%t&red, mied with forein or

domesti% mer%handise r used 9hether directly r indirectly in such acti4ity,

shall nt 8e su8ect t custms and internal re4enue la9s and re6ulatins

nr t lcal ta5 rdinances, the !ll9in6 pr4isins ! la9 t the cntrary

nt9ithstandin6.

The %ited provision %ertain* %overs petroe&m s&ppies &sed, directly rindirectly, b* Phiphos to fa%iitate its prod&%tion of fertiizers, s&bCe%t to theminima re3&irement that these s&ppies are bro&ht into the zone. The s&ppies arenot s&bCe%t to %&stoms and interna reven&e aws and re&ations, nor to o%a taordinan%es. 0t is %ear that 'e%tion 17(1) %onsiders s&%h s&ppies eempt even if the* are &sed indirectly, as the* had been in this %ase.

62.

'I#ROSOF% "0ILI""INES, IN#. v. #O''ISSIONER OF IN%ERNAL RE(EN$E

FA#%S$i%rosoft Phiippines, 0n%. ($i%rosoft) is a va&e;added ta (T) tapa*er. $i%rosoftrenders marIetin servi%es to aiated non;resident forein %orporations. Theservi%es are paid for in a%%eptabe forein %&rren%* and 3&aif* as zero;rated saesfor T p&rposes. $i%rosoft !ed an administrative %aim for ta %redit of T inp&ttaes. 0ts %aim for ta %redit was denied on the ro&nd that $i%rosoft>s o%iare%eipts do not bear the imprinted word zero;rated on its fa%e, th&s, the o%iare%eipts %annot be %onsidered as vaid eviden%e to prove zero;rated saes for Tp&rposes.

ISS$Ehether or not $i%rosoft is entited to a %aim for a ta %redit or ref&nd of T inp&ttaesD

R$LIN)N. The invoi%in re3&irements for a T;reistered tapa*er as provided in theN0"# and reven&e re&ations are %ear. T;reistered tapa*er is re3&ired to%omp* with a the T invoi%in re3&irements to be abe to !e a %aim for inp&t


41/51

taes on domesti% p&r%hases for oods or servi%es attrib&tabe to zero;ratedsaes. p&r%hases %overed b* in4ices ther than a (A% in4ice shall nt6i4e rise t any input ta5. $i%rosoft>s invoi%e, a%Iin the word zero;rated, is nota T invoi%e, and th&s %annot ive rise to an* inp&t ta.

67.

#O''ISSIONER OF IN%ERNAL RE(EN$E 4. AI#0I FOR)IN) #O'"AN2 OF ASIA,IN#.

FA#%Sn 'eptember 4, 65 i%hi Forin #ompan* !ed a %aim for ref&ndL%redit of inp&tT for the period J&* 1, 66 for its zero;rated saes with the #0". n the same date, it!ed a Petition for "eview with the #T for the ref&ndL%redit of the same inp&t T.

The #0" %aims that the administrative and the C&di%ia %aims were !ed be*ond the two;*ear period to %aim a ta ref&ndL%redit. 0t reasoned that sin%e the *ear 65 was a eap*ear, the !in of the %aim for ta ref&ndL%redit on 'eptember 4, 65 was be*ond the

two;*ear period, whi%h epired on 'eptember 69, 65. 0t iIewise p&ts in iss&e the fa%tthat the administrative %aim with the /0" and the C&di%ia %aim with the #T were !edon the same da*. ?e opines that the sim&taneo&s !in of the administrative and the C&di%ia %aims %ontravenes 'e%tion 669 of the N0"#, whi%h re3&ires the prior !in of anadministrative %aim. ?e insists that s&%h pro%ed&ra re3&irement is based on thedo%trine of eha&stion of administrative remedies and the fa%t that the #T is anappeate bod* eer%isin C&di%ia review over administrative a%tions of the #0".

i%hi Forin %ontends that the non;observan%e of the 16;da* period iven to the #0"to a%t on the %aim for ta ref&ndL%redit in 'e%tion 116() is not fata be%a&se what isimportant is that both %aims are !ed within the two;*ear pres%riptive period. 0f,however, the #0" taIes time in de%idin the %aim, and the period of two *ears is abo&tto end, the s&it or pro%eedin m&st be started in the #T before the end of the two;*earperiod witho&t awaitin the de%ision of the #0".

ISS$E1. hether or not the %aim for ref&ndL%redit has aread* pres%ribedD6. hether or not the immediate !in of the Petition for review with the # is fataD

R$LIN)1. N. The re%Ionin period for the start of the %o&ntin of the pres%riptive period is

9ithin t9 >? years a!ter the clse ! the ta5a8le uarter 9hen the sales9ere made.


42/51

months. Needess to state, &nder the dministrative #ode of 1987, the n&mber of da*s isirreevant.

There obvio&s* eists a manifest in%ompatibiit* in the manner of %omp&tin eaperiods &nder the #ivi #ode and the dministrative #ode of 1987. For this reason, we hodthat 'e%tion 41, #hapter 000, /ooI 0 of the dministrative #ode of 1987, bein the more

re%ent aw, overns the %omp&tation of ea periods. ?e/ posteriori derogat priori.

. 2es. 0t did not wait for the de%ision of the #0" or the apse of the 16;da* period. Forthis reason, we !nd the !in of the C&di%ia %aim with the #T premat&re. The #0" has16 da*s from the s&bmission of %ompete do%&ments in s&pport of the appi%ation.

The N0"#, whi%h aread* provides for a spe%i!% period within whi%h a tapa*er sho&dappea the de%ision or ina%tion of the #0". The N0"# envisions two s%enarios< (1) when ade%ision is iss&ed b* the #0" before the apse of the 16;da* periodB and (6) when node%ision is made after the 16;da* period. 0n both instan%es, the tapa*er has 4 da*swithin whi%h to !e an appea with the #T. s we see it then, the 16;da* period is%r&%ia in !in an appea with the #T. the premat&re !in of respondents %aim for

ref&ndL%redit of inp&t T before the #T warrants a dismissa inasm&%h as no C&risdi%tion was a%3&ired b* the #T.

68.

#mmissiner ! Internal Re4enue 4. Silicn "hilippines Inc.

FA#%Sn 2 $a* 1999, 'ii%on Phiippine !ed an appi%ation for Ta #reditL"ef&nd of inp&t T paid attrib&tabe to zero;rated saes for the se%ond 3&arter of 1998.sin%e no !na a%tion has been taIen b* the #0" on respondents administrative%aim for ref&nd, respondent !ed a Petition for "eview before the #T on 4 J&ne6.

The iss&e of C&risdi%tion was not raised b* an* part* b&t was dis%&ssed b* the '#mot& proprio.

ISS$Ehether or not the #T has a%3&ired C&risdi%tion over the %aim for ref&ndD

R$LIN)N. The pertinent provisions of aw provide< The #ommissioner sha rant a ref&nd or iss&e the ta %redit %erti!%ate for%reditabe inp&t taes within one h&ndred twent* (16) da*s from the date of s&bmission of %ompete do%&ments in s&pport of the appi%ation !ed.

0n %ase of f& or partia denia of the %aim for ta ref&nd or ta %redit, or the fai&reon the part of the #ommissioner to a%t on the appi%ation within the periodpres%ribed above, the tapa*er aHe%ted ma*, within thirt* (4) da*s from there%eipt of the de%ision den*in the %aim or after the epiration of the one h&ndredtwent*;da* period, appea the de%ision or the &na%ted %aim with the #o&rt of Tappeas.


43/51

Fai&re of respondent to observe the 4;da* period thro&h its beated !in of thePetition for "eview before the #T warrants a dismissa with preC&di%e for a%I of C&risdi%tion

69.

NI""ON E&"RESS >"0ILI""INES? #OR"ORA%ION 4. #O''ISSIONER OFIN%ERNAL RE(EN$E

FA#%SNippon +press on pri 65, 64, it !ed an administrative %aim for ref&ndrepresentin e%ess inp&t ta attrib&tabe to its eHe%tive* zero;rated saes in 61.Pendin review b* the /0", on pri 6G, 64, petitioner !ed a petition for reviewwith the #T, re3&estin for the iss&an%e of a ta %redit %erti!%ate. The #0" faied toimmediate* epress its obCe%tion to the premat&re !in of the petition for reviewbefore the #T.

0n its the #T +n /an% hed that the 16 da* period &nder 'e%tion 116() of the

N0"#, whi%h ranted the #0" the opport&nit* to a%t on the %aim for ref&nd, was C&risdi%tiona in nat&re s&%h that petitioners fai&re to observe the said periodbefore resortin to C&di%ia a%tion warranted the dismissa of its petition for reviewfor havin been premat&re* !ed.

ISS$Ehether or not the #T a%3&ired C&risdi%tion of the Petition for "eviewD

R$LIN)N. The provision of aw reveas that the tapa*er ma* appea the denia or theina%tion of the #0" on* within thirt* (4) da*s from re%eipt of the de%ision den*inthe %aim or the epiration of the 16da* period iven to the #0" to de%ide the

%aim. /e%a&se the aw is %ateori%a in its an&ae, there is no need for f&rtherinterpretation b* the %o&rts and non%ompian%e with the provision %annot be C&sti!ed.

The 16X4da* period is indeed mandator* and C&risdi%tiona. Th&s, fai&re toobserve the said period before !in a C&di%ia %aim with the #T wo&d not on*maIe s&%h petition premat&re, b&t wo&d aso res&t in the non a%3&isition b* the#T of C&risdi%tion to hear the said %ase.


44/51

/e%a&se the 16X4 da* period is C&risdi%tiona, the iss&e of whether petitioner%ompied with the said time frame ma* be broa%hed at an* stae, even on appea.e setted is the r&e that the 3&estion of C&risdi%tion over the s&bCe%t matter %anbe raised at an* time d&rin the pro%eedins. J&risdi%tion %annot be waived be%a&seit is %onferred b* aw and is not dependent on the %onsent or obCe%tion or the a%ts

or omissions of the parties or an* one of them. #onse3&ent*, the fa%t that the #0"faied to immediate* epress its obCe%tion to the premat&re !in of the petition forreview before the #T is of no moment.

4.

S'AR% #O''$NI#A%IONS, IN#. 4. '$NI#I"ALI%2 OF 'AL(AR,


45/51

tee%omm&ni%ations towers, the fees imposed in the rdinan%e are primari*re&ator* in nat&re, and not primari* reven&e raisin. hie the fees ma*%ontrib&te to the reven&es of the $&ni%ipait*, this eHe%t is mere* in%identa. Th&s,the fees imposed in the rdinan%e are not taes.

41.

#O''ISSIONER OF IN%ERNAL RE(EN$E 4. "RI'E%ON "RO"ER%2

FA#%SPrimetown Propert* appied for the ref&nd or %redit of in%ome ta respondent paid in1997. 0t epained that the in%rease in the %ost of abor and materias and di%&t*in obtainin !nan%in for proCe%ts and %oe%tin re%eivabes %a&sed the rea estateind&str* to sowdown. s a %onse3&en%e, whie b&siness was ood d&rin the !rst3&arter of 1997, respondent s&Hered osses. be%a&se respondent s&Hered osses, itwas not iabe for in%ome taes. Nevertheess, respondent paid its 3&arter*%orporate in%ome ta and remitted %reditabe withhodin ta from rea estate saesto the /0". reven&e o%er re3&ired respondent to s&bmit additiona do%&ments to

s&pport its %aim. "espondent %ompied b&t its %aim was not a%ted &pon. Th&s, onpri 15, 6, it !ed a petition for review in the #T.

The #T dismissed the petition as it was !ed be*ond the two *ear pres%riptiveperiod for !in a C&di%ia %aim for ta ref&nd or ta %redit. The #T fo&nd thatrespondent !ed its !na adC&sted ret&rn on pri 15, 1998. Th&s, its riht to %aim aref&nd or %redit %ommen%ed on that date.

The ta %o&rt appied rti%e 14 of the #ivi #ode whi%h states<rt. 14. hen the aw speaIs of *ears, months, da*s or nihts, it sha be&nderstood that *ears are of three h&ndred sit* !ve da*s ea%h Th&s, a%%ordin to the #T, the two *ear pres%riptive period &nder 'e%tion 669 of the N0"# for the !in of C&di%ia %aims was e3&ivaent to 74 da*s. /e%a&se the*ear 6 was a eap *ear, respondent>s petition, whi%h was !ed 741 da*s afterrespondent !ed its !na adC&sted ret&rn, was !ed be*ond the reementar* period.

ISS$Ehether or not the %aim for ref&nd has aread* pres%ribedD

R$LIN)N. the dministrative #ode of 1987 was ena%ted. 'e%tion 41, #hapter 000, /ooI 0thereof provides<'e%. 41. ?egal Periods. Kear sha be &nderstood to be tweve %aendar monthsYmonth of thirt* da*s, &ness it refers to a spe%i!% %aendar month in whi%h %ase itsha be %omp&ted a%%ordin to the n&mber of da*s the spe%i!% month %ontainsYda*. %aendar month is a month desinated in the %aendar witho&t reard to then&mber of da*s it ma* %ontain.

/oth rti%e 14 of the #ivi #ode and 'e%tion 41, #hapter 000, /ooI 0 of thedministrative #ode of 1987 dea with the same s&bCe%t matter the %omp&tation of ea periods. :nder the #ivi #ode, a *ear is e3&ivaent to 42G da*s whether it be a


46/51

re&ar *ear or a eap *ear. :nder the dministrative #ode of 1987, however, a *earis %omposed of 16 %aendar months. Needess to state, &nder the dministrative#ode of 1987, the n&mber of da*s is irreevant.

There obvio&s* eists a manifest in%ompatibiit* in the manner of %omp&tin eaperiods &nder the #ivi #ode and the dministrative #ode of 1987. For this reason,

we hod that 'e%tion 41, #hapter 000, /ooI 0 of the dministrative #ode of 1987,bein the more re%ent aw, overns the %omp&tation of ea periods. ?e/ posterioriderogat priori.

pp*in 'e%tion 41, #hapter 000, /ooI 0 of the dministrative #ode of 1987 to this%ase, the two *ear pres%riptive period (re%Ioned from the time respondent !ed its!na adC&sted ret&rn on pri 15, 1998) %onsisted of 65 %aendar monthsrespondent>s petition (!ed on pri 15, 6) was !ed on the ast da* of the 65th%aendar month from the da* respondent !ed its !na adC&sted ret&rn.

46.

#O''ISSIONER OF IN%ERNAL RE(EN$E v. #O$R% OF %A& A""EALS andA2ALA LAND, IN#.

FA#%S

*aa Aand 0n%. (A0) re%eived the #0">s Fina ssessment Noti%e whereb* it was

assessin A0 for aeed de!%ien%* va&e added ta (T) on its aeed in%ome

from %inema operations for the taabe *ear 64. A0 !ed its protest b&t was

denied b* the #0" whi%h ed it to !e a Petition for "eview with the #T. The #T

'e%ond ivision rendered its e%ision rantin A0s petition for review. The

assessment aainst A0 for de!%ien%* T for the %aendar *ear 64 was ordered

%an%eed and set aside. The #0"s motion for re%onsideration was denied,promptin him to !e an appea to the #T en ban%. The #T en ban% rendered its

e%ision armin the de%ision of the #T 'e%ond ivision. Feein arieved, the

#0" !ed a motion for re%onsideration, b&t this was denied b* the #T en ban% in its

"eso&tion dated $ar%h 6G, 69.

The #0" %aims that neither he nor his stat&tor* %o&nse, the %e of the 'oi%itor

@enera ('@), re%eived a %op* of the #T en ban%s reso&tion den*in his motion

for re%onsideration. 0t then %ame as a s&rprise to him when he re%eived a %op* of the #T en ban%s "eso&tion 69 whi%h provided that the #T e%ision had

be%ome !na and ee%&tor*. The #0" then !ed a $anifestation with the $otion to

"e%onsider "eso&tion rderin +ntr* of J&dment, 3&estionin the #Ts entr* of

C&dment.


47/51

The #0" then !ed on %tober 6, 69 with the #T en ban% a petition for

reief asIin that the entr* of C&dment in the %ase be re%aed. The #T en ban%

dismissed the petition for reief for havin been !ed o&t time

itho&t !in a motion for re%onsideration with the #T en ban%, the #0" !ed a

petition for %ertiorari.

ISS$E

hether or not the #T %ommitted rave ab&se of dis%retionD

R$LIN)

N. t the o&tset, a dismissa of the petition is warranted in view of the petitioners

fai&re to !e before the #T en ban% a motion for re%onsideration of the assaied

reso&tion. The setted r&e is that a motion for re%onsideration is a %ondition sine

3&a non for the !in of a petition for %ertiorari. hie the r&e is not abso&te and

admits of setted e%eptions, none of the e%eptions attend the present petition.

'e%tion 4, "&e 48 of the "&es of #o&rt provides<

'e%. 4. Time for !in petitionB %ontents and veri!%ation. R petition provided for in

either of the pre%edin se%tions of this "&e m&st be veri!ed, !ed within sit* (2)

da*s after the petitioner earns of the C&dment, !na order, or other pro%eedin to

be set aside, and not more than si (2) months after s&%h C&dment or !na order

was entered, or s&%h pro%eedin was taIenB and m&st be a%%ompanied with

adavits showin the fra&d, a%%ident, mistaIe, or e%&sabe neien%e reied &pon,

and the fa%ts %onstit&tin the petitioners ood and s&bstantia %a&se of a%tion or

defense, as the %ase ma* be.

/* the #0"s own eviden%e and admissions, parti%&ar* in the narration of fa%ts in

the petition for reief, the '@s etter and the adavit of merit atta%hed thereto, it

is evident that both the #0" and the '@ had Inown of the #Ts "eso&tion dated

$ar%h 6G, 69 on before &&st 4, 69.


48/51

44.

#O''ISSIONER OF IN%ERNAL RE(EN$E 4. 'E%RO S%AR S$"ERA'A, IN#.

FA#%S

The #0" assessed $etro 'tar for de!%ien%* va&e;added ta and withhodin ta forthe taabe *ear 1999. $etro 'tar denied ever havin re%eived the Preiminar*ssessment Noti%e (PN), th&s it was denied d&e pro%ess b&t the #0" ar&es that$etro 'tar, nonetheess re%eived the Fina ssessment Noti%e (FN) whi%h %ompiedwith d&e pro%ess.

ISS$Ehether or not the re%eipt of on* the FN %ompied with d&e pro%essD

R$LIN)N. #0" faied to dis%hare its d&t* and present an* eviden%e to show that $etro'tar indeed re%eived the PN.

hen the #ommissioner or his d&* a&thorized representative !nds that propertaes sho&d be assessed, he sha !rst notif* the tapa*er of his !ndins. Thetapa*ers sha be informed in writin of the aw and the fa%ts on whi%h theassessment is madeB otherwise, the assessment sha be void.

The aw imposes a s&bstantive, not mere* a forma, re3&irement. To pro%eedheedess* with ta %oe%tion witho&t !rst estabishin a vaid assessment isevident* vioative of the %ardina prin%ipe in administrative investiations ; thattapa*ers sho&d be abe to present their %ase and add&%e s&pportin eviden%e.

0t is %ear that the sendin of a PN to tapa*er to inform him of the assessmentmade is b&t part of the d&e pro%ess re3&irement in the iss&an%e of a de!%ien%* taassessment, the absen%e of whi%h renders n&ator* an* assessment made b* theta a&thorities. The &se of the word shall in des%ribes the mandator* nat&re of theservi%e of a PN. The pers&asiveness of the riht to d&e pro%ess rea%hes boths&bstantia and pro%ed&ra rihts and the fai&re of the #0" to stri%t* %omp* withthe re3&irements aid down b* aw and its own r&es is a denia of $etro 'tars rihtto d&e pro%ess. Th&s, for its fai&re to send the PN statin the fa%ts and the aw onwhi%h the assessment was made as re3&ired b* 'e%tion 668 of ".. No. 8565, theassessment made b* the #0" i

tax2 digest compiled

Documents