Case 1 - Commissioner of Internal Revenue v.

Metro Star Superama, Summary: involves a petition for review by the Commissioner of Internal
Inc. (G.R. No. 185371, 2010) Revenue (CIR) against the decision of the Court of Appeals, which
Issues: affirmed the dismissal of a complaint against L. M. Camus Engineering
Summary: It involves a petition for review filed by the Commissioner of 1. Whether the respondent complied with due process in issuing the
Corporation (LMCEC) for violations of the National Internal Revenue
Internal Revenue (CIR) against Metro Star Superama, Inc. The CIR deficiency tax assessment.
2. Whether the assessments issued were void for failure to state the law Code.
sought to reverse the decision of the Court of Tax Appeals (CTA) En Banc,
and facts upon which they are based.
which had affirmed the reversal of the CIR's assessment of deficiency Key Points of the Case:
3. Whether or not Metro Star, as a cinema operator, is subject to VAT on
value-added tax (VAT) and withholding tax against Metro Star. sales of services. 1. Background: The CIR filed a complaint against LMCEC for tax
4. Whether the assessment was based on the best evidence obtainable.
The Supreme Court ruled in favor of Metro Star, emphasizing that the CIR deficiencies for the years 1997, 1998, and 1999. The complaint
failed to prove that Metro Star received the Preliminary Assessment Court’s Decision: was dismissed by the lower court on the grounds that the tax
Notice (PAN) as required by law. Consequently, the assessment made by The Supreme Court upheld the CTA-En Banc and CTA-Second Division’s deficiencies had been settled and that there was no prior
the CIR was deemed void. The Court upheld Metro Star's right to due decisions that the CIR failed to prove Metro Star received the PAN, thus determination of fraud.
process, affirming that without proper notification, the tax assessment denying due process. The Court emphasized the mandatory nature of
serving a PAN as part of the due process requirement in issuing a 2. Supreme Court Ruling: The Supreme Court granted the
could not stand.
deficiency tax assessment. The lack of a PAN and the CIR’s failure to petition of the CIR, stating that the assessment notices and
This case highlights the importance of procedural due process in tax provide substantial evidence of its issuance and receipt rendered the formal letters of demand were valid and properly executed. The
assessments, particularly the necessity for the tax authority to provide assessment void. Consequently, the CIR’s petition was denied, and it was Court emphasized that LMCEC's arguments regarding
ordered to desist from collecting the taxed amounts from Metro Star.
adequate notice to the taxpayer before imposing any tax liabilities. The immunity from taxation were misplaced.
ruling reinforces the principle that tax assessments must be substantiated Doctrine: 3. Outcome: The Court directed the Secretary of Justice to file the
by proper documentation and compliance with legal requirements. The mandatory requirement of serving a Preliminary Assessment Notice
corresponding information against LMCEC for the violations of
(PAN) as part of the due process in the issuance of a deficiency tax
Facts: assessment was reiterated. The failure to comply with this requirement the tax code, thereby reinstating the complaint that had been
Metro Star Superama, Inc. (Metro Star), a domestic corporation engaged renders the assessment void. dismissed by the lower court.
in cinema/movie house operations, was subjected to a tax assessment for
deficiency value-added tax (VAT) and withholding tax for the taxable year Class Notes: This case highlights the importance of proper tax assessments and the
1999 amounting to PHP 292,874.16. The assessment originated from an Due Process in Tax Assessment: The taxpayer must be informed in obligations of corporations to comply with tax laws, as well as the
examination of Metro Star’s books by Revenue Officer Daisy G. writing of the law and facts on which the tax assessment is made. Failure procedural requirements for the CIR in enforcing tax liabilities. The ruling
Justiniana, initiated by a Letter of Authority issued on January 26, 2001. to comply with this requirement renders the assessment void. reinforces the principle that tax assessments must be adhered to unless
Despite several requests and a Subpoena Duces Tecum, Metro Star
failed to comply, leading to an investigation based on the best evidence successfully challenged in a manner consistent with legal standards.
Importance of PAN: A Preliminary Assessment Notice (PAN) is crucial in
obtainable and the subsequent issuance of a Preliminary 15-day Letter tax assessments for it constitutes the taxpayer’s opportunity to understand Facts:
received by Metro Star on November 9, 2001. and contest the assessment. Without the PAN being properly issued and
received, the assessment is legally ineffective. The Bureau of Internal Revenue (BIR) initiated a fraud investigation on L.
Upon failure to settle the alleged deficiency, a Formal Letter of Demand M. Camus Engineering Corporation (LMCEC) for the taxable years 1997,
was sent on April 3, 2002, followed by a Final Notice of Seizure on May Burden of Proof: When a taxpayer denies receipt of an assessment or 1998, and 1999 based on information from an “informer” about substantial
12, 2003. A Warrant of Distraint and/or Levy was also issued demanding notice from the BIR, the burden shifts to the BIR to prove that such notice income underdeclaration. Despite a subpoena, LMCEC failed to comply,
payment. Metro Star filed a Motion for Reconsideration with the was indeed received by the taxpayer. leading to a criminal complaint for violation of Section 266 of the National
Commissioner of Internal Revenue (CIR) on July 30, 2004, which was Internal Revenue Code (NIRC). The investigation revealed undeclared
denied. They then petitioned for review with the Court of Tax Appeals incomes for the said years leading to a deficiency tax assessment of
(CTA) Second Division claiming a lack of due process for not receiving a Case 2 - The case "Commissioner of Internal Revenue v. Gonzalez, P430,958,005.90. Despite the assessment notices and the subsequent
Preliminary Assessment Notice (PAN). et al." (G.R. No. 177279, October 13, 2010) formal letter of demand, LMCEC failed to pay, prompting the BIR to refer
the case for preliminary investigation.

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 emphasized that the two-year period for filing a claim for refund
LMCEC countered the BIR’s actions, contending the invalidity of the Requirements for a Valid Tax Assessment: Must inform the taxpayer begins from the date of filing the adjusted final tax return, not
assessments, having availed of the Bureau’s Tax Amnesty Programs, and in writing of the law, rules, and facts on which the assessment is based from the payment date.
arguing the BIR’s actions as harassment. Despite these claims, the BIR (Section 228, NIRC).
pressed on with charges for violations of Sections 254 (Attempt to Evade Legal Principles:
or Defeat Tax) and 255 (Willful Failure to Pay Tax) of the NIRC. Their Principle against Estoppel on Government: The government is not
appeal to the Department of Justice (DOJ) led the Secretary of Justice to estopped by the mistakes or errors of its officials in the administration of • The case highlighted the importance of the doctrine of
dismiss the BIR’s complaint, citing insufficient evidence of fraud among taxes. exhaustion of administrative remedies, clarifying that a taxpayer
other reasons. The BIR’s motion for reconsideration was denied, may seek judicial recourse if the administrative claim is not
prompting an appeal to the Court of Appeals (CA), which upheld the DOJ’s Tax Amnesty vs. Finality of Assessments: Tax amnesty programs do
acted upon within the statutory period.
decision. This brought the case to the Supreme Court (SC) upon the BIR’s not preclude the BIR from assessing or collecting deficiency taxes
further appeal. discovered to be due to fraud.
• The Court reiterated that the CTA has exclusive appellate
Issues: jurisdiction over tax refund claims, and if the CIR fails to act, it
1. Whether LMCEC and its corporate officers can be prosecuted for Case 3 - Commissioner of Internal Revenue v. Univation Motor is treated as a denial, allowing the taxpayer to proceed to court.
violation of Sections 254 and 255 of the NIRC. Philippines, Inc. (G.R. No. 231581)
2. The validity of the Final Assessment Notices issued to LMCEC and their Conclusion: The Supreme Court affirmed the CTA's ruling, directing the
finality. Case Overview: The case revolves around a petition for review filed by CIR to issue a Tax Credit Certificate to Univation Motor Philippines for the
3. The Secretary of Justice’s authority to review and dismiss the criminal the Commissioner of Internal Revenue (CIR) against Univation Motor amount of P12,729,617.90, representing its unutilized or excess
complaint based on alleged tax evasion. Philippines, Inc. (formerly Nissan Motor Philippines, Inc.) concerning a creditable withholding tax for the taxable year 2010. The decision
claim for a tax credit certificate for excess creditable income tax. The CIR underscores the procedural rights of taxpayers in claiming refunds and
Court’s Decision:
contested the decision of the Court of Tax Appeals (CTA) which had the obligations of the CIR in processing such claims.
The Supreme Court granted the BIR’s petition, reversing the CA’s
decision, and directed the Secretary of Justice to order the filing of the partially granted Univation's claim.
proper information against LMCEC and its officers for violations of
Key Issues:
Sections 254 and 255 of the NIRC. The SC established that prior Case 4 - Aces Philippines Cellular Satellite Corporation v. The
determinations and assessments showed substantial underdeclaration of 1. Premature Filing: The CIR argued that Univation prematurely Commissioner of Internal Revenue (G.R. No. 226680)
income by LMCEC, validating the BIR’s assessments and actions. It was
filed its judicial claim with the CTA without waiting for the CIR to
held that the failure of LMCEC to contest these assessments in Facts: Aces Philippines Cellular Satellite Corporation (Aces Philippines)
accordance with the NIRC rendered them final and executory. act on its administrative claim.
contested the decision of the Commissioner of Internal Revenue (CIR)
2. Insufficient Documentary Proof: The CIR contended that regarding a deficiency final withholding tax for the taxable year 2006. The
Doctrine:
1. Tax Assessments’ Presumption of Correctness – Tax assessments Univation failed to substantiate its claim with adequate tax authorities determined that satellite airtime fee payments made to
by examiners are presumed correct unless proven otherwise. documentation as required by law. Aces Bermuda constituted income sourced within the Philippines, thus
subject to Philippine taxation. Aces Philippines argued that these
2. Final and Executory Assessments – A taxpayer’s failure to file a Court Findings: payments were derived from sources outside the Philippines and
petition for review within the statutory period renders an assessment final, therefore not taxable.
executory, and uncontestable. • The CTA found that Univation complied with the necessary
requirements for claiming a tax credit and had filed both its Issue: The primary issue was whether the satellite airtime fee payments
3. Non-Application of Estoppel against the Government – The administrative and judicial claims within the prescribed two-year to Aces Bermuda were income from sources within the Philippines,
government can never be in estoppel, particularly in matters of taxation. period. making them subject to final withholding tax.
Class Notes: • The Supreme Court upheld the CTA's decision, affirming that Ruling: The Supreme Court upheld the findings of the Court of Tax
Elements of Tax Evasion (Section 254, NIRC): Willful attempt to evade Univation's claims were timely and substantiated. The Court Appeals (CTA) that the satellite airtime fees were indeed Philippine-
or defeat tax; failure to pay the correct tax amount.

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sourced income. The Court reasoned that the income-generating activity 1. Whether the CTA En Banc committed reversible error regarding Issue: The primary issue was whether a final tax assessment is
occurred when the satellite signals were received by the gateways located ATC's tax liability. necessary for imposing civil liability for unpaid taxes within a criminal case
in the Philippines, marking the completion of the service provided by Aces for tax law violations.
2. The legality of the simultaneous imposition of deficiency and
Bermuda. The Court emphasized that the interdependence of the satellite,
delinquency interests. Ruling: The Supreme Court ruled that a formal assessment is not a
control center, and gateways established a continuous connection that
prerequisite for the imposition of civil liability for unpaid taxes in a criminal
justified the income's classification as sourced within the Philippines. 3. The validity of the compromise penalty imposed on ATC.
case. The Court emphasized that under Republic Act No. 9282, the filing
The Court also addressed the imposition of deficiency and delinquency Ruling: The Supreme Court upheld the CTA's findings, affirming the use of a criminal action for tax violations automatically includes the civil action
interests, affirming that both could be applied simultaneously under the of the effective tax rate of 19.88% for computing ATC's tax liability, as the for the recovery of civil liability for taxes. Therefore, the CTA's refusal to
previous tax code provisions. However, it noted that subsequent CIR failed to provide evidence that all employees were subject to the determine Tiotangco's civil liability based on the lack of a formal
amendments under the Tax Reform for Acceleration and Inclusion maximum tax rate of 32%. The Court emphasized that the effective rate assessment was incorrect.
(TRAIN) Law would change this practice moving forward. was appropriate given the varied compensation levels among employees.
The Court remanded the case to the CTA to determine Tiotangco's civil
Conclusion: The Supreme Court dismissed Aces Philippines' petition, Regarding the compromise penalty, the Court ruled that it should not be liability for taxes and penalties for the taxable years in question, clarifying
affirming the CIR's assessment of deficiency final withholding tax and the imposed since ATC did not agree to any compromise, aligning with the that the government must prove both the guilt of the accused and the civil
associated penalties. The decision underscored the importance of the precedent set in San Miguel Corp. v. Commissioner of Internal Revenue liability for taxes by competent evidence, independent of a formal
nexus between the income-generating activity and Philippine territory in where mutual agreement is essential for a compromise penalty. assessment.
determining tax liability for foreign corporations.
The Court also confirmed the legality of simultaneously imposing both Conclusion: The Supreme Court's decision underscores the principle
The ruling highlights the complexities of taxation in the context of deficiency and delinquency interests at a rate of 20% per annum, that in tax-related criminal cases, the civil liability for unpaid taxes can be
international telecommunications and the significance of where the consistent with the provisions of the National Internal Revenue Code established without a prior formal assessment, thereby streamlining the
income-generating activities are deemed to occur, particularly in relation (NIRC) prior to amendments under the TRAIN Law. However, it noted that process for tax collection in conjunction with criminal prosecutions. The
to the physical presence of infrastructure within the Philippines. the imposition of these interests would be subject to the new provisions case was remanded for further proceedings to ascertain the civil liabilities
post-TRAIN Law for any future liabilities. of Tiotangco.

Conclusion: The Supreme Court denied the CIR's petition and partially
Case 5 - Asian Transmission Corporation v. Commissioner of
granted ATC's petition, remanding the case to the CTA for further
Internal Revenue, G.R. No. 242489-247397 (2023) Case 7 - Manila Peninsula Hotel, Inc. v. Commissioner of Internal
proceedings to verify ATC's claim of payment amounting to PHP
Revenue (G.R. No. 229338)
Facts: Asian Transmission Corporation (ATC) and the Commissioner of 7,331,429.28 and to determine any remaining tax liabilities. The decision
Internal Revenue (CIR) were involved in a dispute regarding tax underscores the importance of proper tax assessment procedures and the Facts: Manila Peninsula Hotel, Inc. (Manila Peninsula) filed a petition
assessments for the year 2001. The Bureau of Internal Revenue (BIR) necessity of mutual consent in compromise agreements. against the Commissioner of Internal Revenue (CIR) for a tax refund claim
assessed ATC for unaccounted compensation amounting to PHP regarding Value-Added Tax (VAT) paid on services provided to Delta Air
Case 6 - People of the Philippines v. Tiotangco, G.R. No. 264192
23,966,941.48, which was later reduced by the Court of Tax Appeals Lines. Manila Peninsula argued that these services should be zero-rated
(2023)
(CTA) En Banc to PHP 16,096,409.13, applying an effective tax rate of under Section 108(B)(4) of the National Internal Revenue Code (NIRC) as
19.88%. The CTA also canceled a compromise penalty of PHP 50,000 Facts: Rebecca S. Tiotangco was charged with violations of the National they were rendered to a person engaged in international air transport
imposed by the CIR. Both parties filed petitions for review on certiorari to Internal Revenue Code for failing to supply correct information in her operations.
the Supreme Court. income tax returns for the taxable years 2008 and 2010. The Court of Tax
Issue: The primary issue was whether the services provided by Manila
Appeals (CTA) found her guilty but did not impose civil liability for unpaid
Issues: Peninsula to Delta Air's flight crew during layovers qualified for VAT zero-
taxes due to the absence of a formal tax assessment from the Bureau of
rating under the NIRC, and whether the additional conditions imposed by
Internal Revenue (BIR).
the BIR through Revenue Memorandum Circulars were valid.

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Ruling: The Supreme Court ruled in favor of Manila Peninsula, stating They later paid the taxes under protest and filed a claim for refund, which Ruling: The Supreme Court affirmed the CTA's decision, ruling that the
that the additional conditions imposed by the BIR in Revenue the Court of Tax Appeals (CTA) granted. respondent was indeed entitled to the benefits of the Tax Amnesty
Memorandum Circulars No. 46-2008 and No. 31-2011 were invalid as Program. The Court emphasized that the finality of a tax assessment does
Issue:
they exceeded the statutory requirements set forth in the NIRC. The Court not disqualify a taxpayer from availing of the tax amnesty, provided they
Can a taxpayer who failed to appeal a tax assessment within the
emphasized that the services rendered to Delta Air's flight crew were comply with the requirements set forth in the law. The Court noted that a
prescribed period still sue for a refund on the ground of illegality?
directly related to international air transport operations and thus qualified tax amnesty serves as a general pardon for tax liabilities, allowing
for zero-rating. Ruling: taxpayers to settle their dues without penalties.
The Supreme Court reversed the CTA's decision. It held that the failure to
The Court also noted that the services provided were essential for the The Court highlighted that the respondent had complied with all necessary
appeal the assessment within the reglementary period rendered the
crew's rest and recuperation, which directly impacted the safety and requirements for the tax amnesty, including the filing of relevant
assessment final, executory, and demandable. Consequently, the
efficiency of international air transport operations. Consequently, the documents and payment of the amnesty tax. Consequently, the Court
taxpayer lost the right to dispute the validity of the assessment or claim a
Court reversed the decisions of the Court of Tax Appeals and remanded ruled that the respondent was immune from the payment of taxes and
refund based on its alleged illegality.
the case for the determination of the exact refundable amount due to penalties related to the deficiency tax assessment.
Manila Peninsula. Doctrine:
Conclusion: The Supreme Court denied the CIR's petition, affirming the
Once a tax assessment becomes final due to the taxpayer's failure to
Conclusion: The ruling clarified that services rendered to flight crew CTA's ruling that the respondent was entitled to the immunities and
appeal within the prescribed period, the taxpayer is barred from disputing
members during layovers are integral to international air transport privileges granted under the Tax Amnesty Law, thereby setting aside the
its validity or seeking a refund. The finality of the assessment precludes
operations and should be subject to VAT at 0%. The case underscores deficiency tax assessments against it. The decision underscores the
reopening the issue through other remedies.
the importance of adhering to statutory provisions without imposing principle that compliance with the tax amnesty requirements can
additional requirements that are not legislated. Disposition: extinguish tax liabilities, even in the face of prior assessments.
The Supreme Court reversed the CTA's decision and denied the refund
claim.
Commissioner of Internal Revenue v. Jose Concepcion, G.R. No. L- United International Pictures AB v. Commissioner of Internal
23912 (1968) Revenue, G.R. No. 168331 (2012)
Commissioner of Internal Revenue v. Philippine Aluminum Wheels,
Case Title: Commissioner of Internal Revenue v. Jose Concepcion, et Case Title: United International Pictures AB v. Commissioner of Internal
Inc., G.R. No. 216161 (2017)
al. Revenue
G.R. No.: L-23912 Facts: The case revolves around a petition for review filed by the G.R. No.: 168331
Date: March 15, 1968 Commissioner of Internal Revenue (CIR) against Philippine Aluminum Date: October 11, 2012
Wheels, Inc. (respondent). The CIR contested the cancellation and Division: Third Division
Facts:
withdrawal of deficiency tax assessments by the Court of Tax Appeals Ponente: Justice Peralta
The Commissioner of Internal Revenue (CIR) assessed estate and
(CTA). The respondent, engaged in manufacturing automotive parts,
inheritance taxes on shares of stock owned by the deceased Mary H. Facts:
received a Final Assessment Notice (FAN) for deficiency taxes for the
Mitchell-Roberts and her husband, Jack F. Mitchell-Roberts, as joint
taxable year 2001. The respondent sought reconsideration, but the BIR United International Pictures AB (UIP) filed its Corporation Annual Income
tenants with rights of survivorship. The respondents, Jose Concepcion
maintained that the assessment had become final and executory due to Tax Returns for 1998 and 1999, reflecting excess income tax payments.
(ancillary administrator) and Jack F. Mitchell-Roberts, argued that under
the respondent's failure to appeal within the prescribed period. For 1998, UIP opted to carry over the excess tax credit to the succeeding
English law, no transmission of property occurred upon the wife’s death,
taxable year. For 1999, UIP indicated its option for a refund of the excess
as ownership vested in the husband. The respondents failed to appeal the Issue: The primary issue was whether the respondent was entitled to the
tax credit and filed an administrative claim for refund with the Bureau of
assessment within the reglementary period, making the assessment final. benefits of the Tax Amnesty Program under Republic Act No. 9480,
Internal Revenue (BIR). When the BIR failed to act, UIP elevated the
despite the finality of the tax assessment.
matter to the Court of Tax Appeals (CTA).

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The CTA partially granted UIP's claim for 1999 but denied the refund for is irrevocable for the taxable period, and taxpayers must present clear reinforcing the principle that taxpayers are entitled to refunds when they
1998, citing Section 76 of the National Internal Revenue Code (NIRC) of and consistent evidence to support claims for tax refunds. meet the legal criteria.
1997, which makes the option to carry over irrevocable. The Court of
This case highlights the procedural and substantive aspects of tax refund
Appeals (CA) reversed the CTA's decision for 1999, denying the refund
claims in the Philippines, emphasizing the need for clear evidence of
due to insufficient evidence. Commissioner of Internal Revenue v. Mirant (Philippines)
compliance with tax laws and regulations.
Operations Corporation (G.R. No. 171742, June 15, 2011)
Issues:
Summary: These consolidated petitions involve Mirant (Philippines)
1. Whether UIP is barred from claiming a refund for its 1998
Operations Corporation's claim for tax refund of overpaid income tax for
excess tax credit after opting to carry it over.
fiscal years 1999 and 2000. The Commissioner of Internal Revenue seeks
2. Whether UIP sufficiently proved its entitlement to a refund for a reversal of the Court of Tax Appeals' decision granting partial refund to
1999. Mirant. The court ruled in favor of Mirant, stating that the company is
entitled to the refund of its unutilized creditable withholding taxes for the
Ruling: Lim, Sr. v. Court of Appeals, et al. (G.R. No. L-48134-37, October 18,
taxable year 2000. The Court found that Mirant complied with all the
requirements for the refund and affirmed the findings and conclusions of 1990)
The Supreme Court denied UIP's petition and affirmed the CA's decision.
the Court of Tax Appeals.
Summary: Emilio E. Lim, Sr. and Antonia Sun Lim were convicted of
1. Irrevocability of Carry-Over Option (1998):
Facts: This case involves consolidated petitions regarding Mirant filing false income tax returns and refusing to pay deficiency taxes
The Court held that under Section 76 of the NIRC, once a
(Philippines) Operations Corporation's claim for a tax refund of overpaid for the years 1958 and 1959. The Court of Appeals affirmed the trial
taxpayer opts to carry over excess tax credits, the option
income tax for the fiscal years 1999 and 2000. The Commissioner of court's decision, although Emilio E. Lim, Sr. died 23 days after the decision
becomes irrevocable for that taxable period. UIP's choice to
Internal Revenue (CIR) sought to reverse the decision of the Court of Tax was rendered. The petitioners argued that the offenses charged had
carry over its 1998 excess tax credit precluded it from later
Appeals (CTA) that granted Mirant a partial refund of unutilized creditable already prescribed, but the Supreme Court ruled that they were not time-
claiming a refund for the same amount. The Court emphasized
withholding taxes for the taxable year 2000. barred. The Court also determined that the trial court did not have
that the irrevocability rule prevents taxpayers from flip-flopping
jurisdiction to order payment of the unpaid taxes. The fine imposed on the
on their options, ensuring clarity and consistency in tax
Issues: The primary issue was whether Mirant had established its deceased petitioner was deemed extinguished. Therefore, the decision of
administration.
entitlement to the refund of the unutilized creditable withholding taxes, as the Court of Appeals was modified.
2. Insufficient Evidence for Refund (1999): claimed.
Facts: Emilio E. Lim, Sr. and Antonia Sun Lim were charged with filing
UIP failed to reconcile discrepancies between its income tax
Ruling: The Supreme Court ruled in favor of Mirant, affirming the CTA's false income tax returns and refusing to pay deficiency taxes for the years
return and the certificate of creditable tax withheld. The Court
decision. The Court found that Mirant had complied with all necessary 1958 and 1959. Following a raid by the National Bureau of Investigation,
ruled that the amount of income payments in the tax return must
requirements for the refund. It was established that the income from which the Bureau of Internal Revenue (BIR) conducted an investigation and
correspond to the certificate of withholding to establish
the creditable withholding taxes were paid was duly declared in Mirant's found that the Lim couple had filed fraudulent returns. The trial court
entitlement to a refund. The discrepancy cast doubt on UIP's
Income Tax Returns. The CIR's contention that Mirant failed to prove this convicted them, and the Court of Appeals affirmed the decision.
claim, and the lack of sufficient proof was fatal to its case.
was dismissed, as the Court found sufficient evidence supporting Mirant's
claims. Issues:
Disposition:
Conclusion: The Court ordered the CIR to refund Mirant the amount of 1. Whether the offenses charged had already prescribed.
The petition was denied, and the CA's decision dismissing UIP's claim for
a tax refund was affirmed. P38,620,427.00, representing the unutilized creditable withholding taxes
2. Whether the trial court had jurisdiction to order the payment of
for the taxable year 2000. The decision underscored the importance of
unpaid taxes as part of the criminal sentence.
Key Legal Principle: proper documentation and compliance with tax refund requirements,
Under Section 76 of the NIRC, the option to carry over excess tax credits

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Ruling: The Supreme Court ruled that the offenses were not time-barred, Ruling: assessment, asserting that IPC's activities were academic and not for
as the prescriptive period for tax violations begins from the date of the final The Supreme Court ruled in favor of the Republic, stating that the action profit.
assessment notice, which was served on July 3, 1968. The Court clarified to enforce the bond was not barred by prescription. The court held that
The Court of Tax Appeals (CTA) ruled in favor of Ateneo, canceling the
that the trial court lacked jurisdiction to impose payment of the unpaid the bond constituted a principal obligation, and the failure of the Collector
tax assessment. The Court of Appeals (CA) affirmed the CTA's decision.
taxes in the criminal case, as the relevant provisions of the Tax Code did to sign it did not invalidate the bond, as his acceptance of the bond implied
The CIR elevated the case to the Supreme Court.
not allow for such a penalty prior to the amendment introduced by approval. The defendants were ordered to pay the Republic the total
Presidential Decree No. 69. amount owed, including interest.

Conclusion: The Supreme Court modified the decision of the Court of Conclusion: Issues:
Appeals, affirming the conviction of Antonia Sun Lim while extinguishing The decision affirmed the validity of the bond and the Republic's right to
the fine imposed on Emilio E. Lim, Sr. due to his death. The ruling recover the owed taxes, emphasizing that the obligation under the bond 1. Whether Ateneo, through IPC, qualifies as an independent
emphasized the distinction between criminal liability and civil obligations remained enforceable despite the defendants' claims of expiration and contractor under Section 205 of the Tax Code.
regarding tax payments, highlighting that criminal convictions do not invalidity.
2. Whether Ateneo is subject to the 3% contractor's tax.
automatically entail the payment of taxes owed
This case illustrates the principles of tax liability and the enforceability of
Case Title: Republic of the Philippines v. Araneta, et al. surety bonds in the context of tax obligations. The ruling underscores the
G.R. No.: L-14142 importance of the bond as a separate obligation that can be enforced Ruling:
Date: May 30, 1961 independently of the underlying tax liability.
The Supreme Court ruled in favor of Ateneo and denied the CIR's petition.
Citation: 112 Phil. 69
The decision of the Court of Appeals was affirmed in full.
Summary: The Republic of the Philippines filed a case against J.
Commissioner of Internal Revenue v. Court of Appeals, G.R. No.
Amado Araneta and J. Amado Araneta & Company, Inc., and the
115349, April 18, 1997
Manila Surety & Fidelity Company, Inc., to recover taxes owed. The Reasoning:
defendants argued that the claim had expired and that the bond Case Title: Commissioner of Internal Revenue v. Court of Appeals,
guaranteeing payment was not valid. The court ruled in favor of the 1. Definition of Independent Contractor:
Court of Tax Appeals, and Ateneo de Manila University
Republic, stating that the action to enforce the bond was not barred by The Court held that Ateneo, through IPC, does not qualify as
G.R. No.: 115349
prescription. The defendants were ordered to pay the Republic, and the an independent contractor. IPC's research activities were
Date: April 18, 1997
surety was ordered to reimburse the amount paid. The judgment was conducted in pursuit of Ateneo's academic and public service
Division: Third Division
affirmed with this modification. commitments, not for profit. The evidence showed that IPC
operated at a loss for over 30 years, indicating that its motive
Facts: was education, not profit.
The Republic of the Philippines filed a case against J. Amado Araneta, J. Facts:
Amado Araneta & Company, Inc., and the Manila Surety & Fidelity 2. Tax Exemption:
The Ateneo de Manila University, a non-stock, non-profit educational
Company, Inc. to recover taxes owed from 1946 to 1948. The defendants Ateneo is a non-stock, non-profit educational institution. The
institution, operates the Institute of Philippine Culture (IPC), which
contended that the claim had expired due to the statute of limitations and sponsorships received by IPC for its research projects were
conducts research on Philippine society and culture. The Commissioner
argued that the bond guaranteeing payment was invalid. incidental to its academic purpose and did not constitute a
of Internal Revenue (CIR) assessed Ateneo for a deficiency contractor's
business activity. The Court emphasized that Ateneo's
Issue: tax amounting to P46,516.41, arguing that IPC's research activities made
research activities were aligned with its educational mission
Whether the action to enforce the bond was barred by prescription and Ateneo an independent contractor subject to the 3% contractor's tax under
and not for the sale of services for a fee.
whether the bond was valid despite the Collector of Internal Revenue's Section 205 of the National Internal Revenue Code. Ateneo contested the
failure to sign it.

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 3. Burden of Proof: method to determine the understated income and found evidence of
The CIR failed to provide sufficient evidence to prove that consistent underdeclaration of income and unexplained acquisition of
Facts: The case involves a petition filed by the Commissioner of Internal
Ateneo was engaged in profit-oriented activities. On the properties. The Court upheld the decision of the tax court, ruling in favor
Revenue (CIR) against General Foods (Phils.), Inc. concerning the
contrary, Ateneo demonstrated that its research activities were of the government and ordering Perez to pay the deficiency taxes and
assessment of deficiency taxes. General Foods claimed a deduction for
integral to its educational objectives. surcharges. The Court also declared the use of summary distraint to
media advertising expenses amounting to P9,461,246 for their product
enforce the taxpayer's liability as improper and void.
"Tang." The CIR disallowed 50% of this deduction, leading to an
assessment of deficiency income taxes. Facts: Eugenio Perez appealed a decision from the Court of Tax Appeals
Key Points:
(CTA) regarding his deficiency income taxes and surcharges for the years
Issue: The primary issue was whether the advertising expense claimed
• Ateneo's IPC is not an independent contractor as its research 1946 to 1950. The CTA employed the "net worth" method to assess
by General Foods was an ordinary and necessary business expense
activities are academic and non-profit in nature. Perez's income, concluding that he had consistently underreported his
deductible under the National Internal Revenue Code (NIRC) or a capital
income and had unexplained acquisitions of properties.
• The 3% contractor's tax under Section 205 of the Tax Code expenditure meant to create goodwill.
does not apply to Ateneo's IPC. Issues:
Ruling: The Supreme Court ruled in favor of the CIR, stating that the
• The Court underscored the principle that tax exemptions for advertising expense was not an ordinary and necessary expense but 1. Whether the Collector of Internal Revenue had the authority to
educational institutions are grounded in their public service and rather a capital expenditure. The Court emphasized that such investigate Perez's income tax returns for the years in question
educational commitments. expenditures are typically incurred to create or maintain goodwill, which and enforce collection through summary distraint and levy after
should be amortized over time rather than deducted in full in the year the three-year period.
incurred.
2. The validity of the "net worth" method used to compute the
Disposition: Legal Principles: income tax.

The petition was DENIED, and the decision of the Court of Appeals was 1. Ordinary and Necessary Expenses: For an expense to be 3. The legality of the 50% surcharge imposed on Perez.
AFFIRMED. deductible, it must be both ordinary and necessary, as per
Ruling: The Supreme Court upheld the CTA's decision, affirming the use
Section 34 (A) (1) of the NIRC.
of the "net worth" method as valid under the National Internal Revenue
2. Capital Expenditures: Expenses aimed at creating goodwill Code. The Court ruled that the Collector's actions were justified, despite
CIR v. General Foods (G.R. No. 143672, April 24, 2003)
are considered capital expenditures and should be spread over the three-year prescriptive period for summary distraint and levy, as the
a reasonable period. appeal vested jurisdiction in the CTA to review the tax liability.

Summary: The Commissioner of Internal Revenue filed a petition Conclusion: The Supreme Court granted the CIR's petition, ordering The Court also found that the substantial underreporting of income and
against General Foods (Phils.), Inc. regarding the assessment of General Foods to pay the assessed deficiency income tax, including the intentional overstatement of deductions warranted the imposition of
deficiency taxes. The Court of Appeals reversed the decision of the surcharges and interest, thus reinforcing the distinction between ordinary the 50% surcharge for fraud. The findings of the CTA were supported by
Court of Tax Appeals, allowing General Foods to claim a deduction for business expenses and capital expenditures. evidence of consistent underreporting and unexplained wealth, leading to
excessive media advertising expenses for their product "Tang." However, the conclusion that the taxpayer had unreported income.
the Supreme Court granted the Commissioner's petition, ruling that the
Conclusion: The Supreme Court affirmed the CTA's ruling, requiring
advertising expense was not an ordinary and necessary expense, but Perez v. Court of Tax Appeals, G.R. No. L-10507 (1958)
Perez to pay the assessed deficiency taxes and surcharges, while
rather a capital expenditure meant to create goodwill for the company.
Summary: This is a case where Eugenio Perez appealed a decision declaring the use of summary distraint for certain years as improper and
Therefore, General Foods was ordered to pay the deficiency income tax,
by the Court of Tax Appeals regarding deficiency income taxes and void. The decision emphasized the validity of the "net worth" method in
surcharge for late payment, and annual interest.
surcharges for the years 1946-1950. The Court used the "net worth"

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determining tax liabilities and the burden of proof resting on the taxpayer Reasoning:
to explain discrepancies in reported income. The Supreme Court held that the CTA's jurisdiction is limited to appellate
review of decisions by the Collector of Internal Revenue, as provided
under Republic Act No. 1125. The CTA may issue writs of prohibition or
Case Title: Collector of Internal Revenue v. J.C. Yuseco and the Court injunction only as ancillary to its appellate jurisdiction in cases properly
of Tax Appeals appealed to it. The law does not grant the CTA original jurisdiction to
entertain independent actions for prohibition. Consequently, the CTA's
G.R. No.: L-12518 decision was annulled, and the warrant of distraint and levy was upheld.
Date: Disposition:
October 28, 1961 The Supreme Court annulled and set aside the CTA's judgment, ruling
that the CTA acted beyond its jurisdiction in entertaining the independent
Summary: The Collector of Internal Revenue filed a petition to set
special civil action for prohibition.
aside the judgment of the Court of Tax Appeals, which declared a
warrant of distraint and levy issued by the respondent as null and Key Legal Principle:
void. The Court of Tax Appeals had jurisdiction to review decisions of The Court of Tax Appeals has no original jurisdiction to issue writs of
the Collector of Internal Revenue, but the petitioner argues that the prohibition or injunction independently; such writs may only be issued in
respondent taxpayer cannot bring an independent special civil action for aid of its appellate jurisdiction in cases properly appealed to it under
prohibition without appealing the decision of the Collector of Internal Republic Act No. 1125.
Revenue. The Court of Tax Appeals was found to have the power to
issue writs of prohibition and injunction only in aid of its appellate
jurisdiction, and not with original jurisdiction. Therefore, the judgment
under review was annulled and set aside.

Facts:
The Collector of Internal Revenue issued a warrant of distraint and levy
against J.C. Yuseco to collect unpaid income taxes for the years 1945 and
1946. Yuseco filed a petition for prohibition with the Court of Tax Appeals
(CTA), seeking to nullify the warrant. The CTA ruled in favor of Yuseco,
declaring the warrant null and void, and enjoined the Collector from further
collection efforts. The Collector appealed, arguing that the CTA lacked
jurisdiction to entertain an independent special civil action for prohibition.

Issue:
Does the Court of Tax Appeals have original jurisdiction to entertain an
independent special civil action for prohibition against the Collector of
Internal Revenue?

Ruling:
No, the Court of Tax Appeals does not have original jurisdiction to
entertain an independent special civil action for prohibition.

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