Professional Documents
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LBP VS CACAYURAN
FACTS: Through Resolutions, the Sangguniang Bayan authorized its thenMayor Eufranio Eriguel to enter into a P4M and P28-loans with LBP to construct
10 kiosks at the Public Plaza and for the construction of a commercial center
within the premises of the Public Plaza. To secure the Loans, the Municipality
used as collateral, among others, a 2,323.75-square meter lot situated at the
south eastern portion of the Public Plaza.
A group of residents, led by Cacayuran, opposed the redevelopment of the
Public Plaza and the funding therefor thru the Subject Loans, claiming that these
were highly irregular, violative of the law, and detrimental to public interests, and
will result to wanton desecration of the [Public Plaza]. Invoking his right as a
taxpayer, he filed a Complaint against LBP and various officers of the
Municipality assailing the validity of the aforesaid loan agreements and praying
that the commercialization of the Public Plaza be enjoined.
LBP asserted that Cacayuran did not have any cause of action since he
was not privy to the loan agreements entered into by LBP and the Municipality.
During the pendency of the proceedings, the construction of the Agoo
Peoples Center was completed. Later on, the Sangguniang Bayan passed a
Municipal Ordinance declaring the area where such building stood as
patrimonial property of the Municipality.
RTC declared the Subject Loans null and void because the resolutions
approving the procurement of the same were passed in a highly irregular
manner and thus, ultra vires. Thus, the Municipality was not bound by the
Subject Loans and that the municipal officers should, instead, be held personally
liable for the same. Since the Plaza Lot is a property for public use, it cannot be
used as collateral for the Subject Loans.
Aggrieved, LBP and the municipal officers appealed to the CA. The CA
affirmed with modification the RTCs decision excluding Vice Mayor Eslao from
any personal liability arising from the Subject Loans. It held that, considering that
the issue at hand involved public interest of transcendental importance and the
Resolutions invalidly passed due to SBs noncompliance with LGC. The Plaza
Lot, which served as collateral for the Subject Loans, is property of public
dominion and thus, cannot be appropriated either by the State or by private
persons; and (4) the Subject Loans are ultra vires because they were transacted
without proper authority and their collateralization constituted improper
disbursement of public funds.
Dissatisfied, Land Bank filed the instant petition.
Thus the LBP, with the intervention of the Municipality as an indispensable
Subject Loans was not contained as it need not be contained in the form of
an ordinance, the said loans and even the Redevelopment Plan itself were not
approved pursuant to any law or ordinance but through mere resolutions.
[The distinction between ordinances and resolutions is well-perceived.
While ordinances are laws and possess a general and permanent character,
resolutions are merely declarations of the sentiment or opinion of a lawmaking
body on a specific matter and are temporary in nature. As opposed to
ordinances, "no rights can be conferred by and be inferred from a resolution." In
this accord, it cannot be denied that the SB violated Section 444(b)(1)(vi) of the
LGC altogether.]
Noticeably, the passage of the Subject Resolutions was also tainted with
other irregularities, such as (1) the SBs failure to submit the Subject Resolutions
to the Sangguniang Panlalawigan of La Union for its review contrary to Section
56 of the LGC; and (2) the lack of publication and posting in contravention of
Section 59 of the LGC. In fine, Land Bank cannot rely on the Subject
Resolutions as basis to validate the Subject Loans.
not comply with the formal requirements of a written contract e.g., the Statute of
Frauds.]
Subject Loans belong to the first class of ultra vires acts deemed as
void.
Records disclose that the said loans were executed by the Municipality for
the purpose of funding the conversion of the Agoo Plaza into a commercial
center pursuant to the Redevelopment Plan. However, the conversion of the
said plaza is beyond the Municipalitys jurisdiction considering the propertys
nature as one for public use and thereby, forming part of the public dominion.
Accordingly, it cannot be the object of appropriation either by the State or by
private persons. Nor can it be the subject of lease or any other contractual
undertaking.
Article 1409(1) of the Civil Code provides that a contract whose purpose is
contrary to law, morals, good customs, public order or public policy is considered
void and as such, creates no rights or obligations or any juridical relations.
Consequently, given the unlawful purpose behind the Subject Loans which is to
fund the commercialization of the Agoo Plaza pursuant to the Redevelopment
Plan, they are considered as ultra vires in the primary sense thus, rendering
them void and in effect, non-binding on the Municipality.
At this juncture, it is equally observed that the land on which the Agoo Plaza
is situated cannot be converted into patrimonial property absent any express
grant by the national government. As public land used for public use, the
foregoing lot rightfully belongs to and is subject to the administration and control
of the Republic of the Philippines. Hence, without the said grant, the Municipality
has no right to claim it as patrimonial property.
Nevertheless, while the Subject Loans cannot bind the Municipality for
being ultra vires, the officers who authorized the passage of the Subject
Resolutions are personally liable. Case law states that public officials can be
held personally accountable for acts claimed to have been performed in
connection with official duties where they have acted ultra vires, 55 as in this
case.
had the option of using either the Itemized or OSD method in preparing their
quarterly ITRs, provided only one method shall be applied in preparing the
annual ITR.
During the first three (3) quarters of the taxable year 2009, respondent
used the itemized method of deduction in determining its income tax payable in
accordance with Section 7 of RR No. 16-2008.
On February 24, 2010, BIR issued RR No. 02-2010 and RMC No. 016-1014
on February 26, 2010, amending Section 6 and 7 of RR No. 16-2008 and
applying it to the taxable year 2009.
On April 12, 2010 COL filed its Annual ITR for taxable year 2009 using the
OSD and paid the corresponding income tax due. On April 15, 2010, COL paid
under protest an additional income tax amounting to Php 8,960,245.00 in order
to avoid the imposition of interests, penalties, surcharges, and other increments
should respondent require COL to use the itemized method of deduction for its
Annual ITR.
On October 11, 2011, COL filed an application for the refund of and/or the
issuance of TCCs for the excess income tax paid during the taxable year 2009
amounting to Php 8,960,245.00.
In view of petitioner's inaction on the claim and the lapse of the prescriptive
period on filing a judicial claim, respondent filed on April 03, 2012 its Petition for
Review with the CTA. CTA Third Division rendered its Decision granting
respondent's petition, and directing the issuance of a TCC in its favor.
Petitioner filed a Motion for Reconsideration with the CTA Third Division
which was denied for lack of Merit. Thus, this petition.
Petitioner argues that RR No. 02-2010 was rendered strictly as an
interpretative ruling. She maintains that her interpretation of Section 34(L) of the
NIRC, through RR No. 02-2010, cannot be considered as retroactive, and as
such, was rendered strictly as an interpretative ruling, and not as subordinate
legislation designed to implement a primary legislation by providing details
thereof.
ISSUE:
1. WON the CTA-3D erred in ordering a tax credit certificate in favor of
respondent representing the additional income tax paid under protest
NO. Since petitioner has failed to show the existence of any of the
exceptions enumerated in Section 246 of the NIRC of 1997 against respondent,
and this Court sees none, RR No. 02-2010 cannot be given retroactive
application. Correspondingly, RR No. 16-2008 may still be made as a basis for
the application for the claim for refund of respondent.
2. CIR VS COL FINANCIAL
FACTS:
On November 26, 2008, the BIR issued RR No. 16-2008 where taxpayers
Substantial justice dictates that the government should not keep money that
does not belong to it at the expense of citizens. Respondent sufficiently proved
that there was indeed an erroneous or illegally collected tax and thus, entitled to
TCC.
2. WON the RR No. 02-2010 supported by RMC No. 016-1014 is valid on
retroactive application
NO. Respondent is correct in saying that the test on whether or not a
revocation, modification, or reversal of a tax regulation can be given retroactive
effect is not whether the ruling partakes of the nature of an interpretative or
substantial legislation, but rather the effect on the taxpayers. If the taxpayers are
prejudiced because a new interpretation of the regulation removes a benefit
provided by a previous interpretation, then the new interpretation is retroactive.
Section 246 of the NIRC is clear on its prohibition against retroactive rulings.
One must take into account that prior to the issuance of RR No. 02-2010,
petitioner issued RR No. 16-2008 on November 26, 2008 which was, at the time
of filing by the respondent of its quarterly income tax returns for the first 3
quarters of 2009, the controlling regulation.
Upon petitioner's issuance of RR No. 02-2010 on February 18, 2010 and as
clarified by RMC No. 16-2010 later on, all these modified the rules prescribed by
RR No. 16-2008. Under RR No. 02-2010 and RMC No. 16-2010, BIR curtailed
the taxpayer's option to choose the deduction method from quarter to quarter,
which was previously allowed under RR No. 16-2008. The BIR now required
taxpayers to choose the deduction method during its first quarterly filing, by
indicating on the form whether it will opt for the itemized or OSD deduction. The
choice of deduction method during the first quarter obligates the taxpayer to use
the same method throughout the taxable year, as well as in preparation of the
annual ITR.
Having lost this option upon the issuance of RR No. 02-2010, the same
should not be given retroactive application for being prejudicial to the rights of
the taxpayers, including herein respondent.
3. CIR VS PUREGOLD
FACTS:
Puregold is engaged in the sale of various consumer goods exclusively
within the Clark Special Economic Zone (CSEZ), and operates its store under
the authority and jurisdiction of Clark Development Corporation (CDC) and
CSEZ.
As an enterprise located within CSEZ and registered with the CDC,
Puregold had been issued Certificate of Tax Exemption which enumerated the
tax incentives granted to it, including tax and duty-free importation of goods.
Thus, in accordance with the tax exemption certificates granted to respondent
Puregold, it filed its Annual Income Tax Returns and paid the five percent (5%)
preferential tax, in lieu of all other national and local taxes for the period of
January 1998 to May 2004.
On July 25, 2005, in Coconut Oil Refiners v. Torres, however, the SC
annulled the adverted Sec. 5 of EO 80, in effect withdrawing the preferential tax
treatment enjoyed by all businesses located in the CSEZ.
On November 7, 2005, then BIR Deputy Commissioner for Special
Concems/OIC-Large Taxpayers Service Kim Jacinto-Henares issued a PAN
regarding unpaid VAT and excise tax on wines, liquors and tobacco products
imported by Puregold from January 1998 to May 2004 which the latter protested.
Pending the resolution of Puregold's protest, Congress enacted RA 9399
specifically to grant a tax amnesty to business enterprises affected by this
Court's rulings in John Hay People's Coalition v. Lim and Coconut Oil Refiners.
Under RA 9399, availment of the tax amnesty relieves the qualified taxpayers of
any civil, criminal and/or administrative liabilities arising from, or incident to,
nonpayment of taxes, duties and other charges..
On July 27, 2007, Puregold availed itself of the tax amnesty under RA 9399,
filing for the purpose the necessary requirements and paying the amnesty tax.
Nonetheless, on October 26, 2007, Puregold received a formal letter of demand
from the BIR for the payment of P2,780,610,174.51 supposedly representing
deficiency VAT and excise taxes on its importations of alcohol and tobacco
products from January 1998 to May 2004.
Clearly, the only exclusions that RA 9399 and its implementing rules
mention are those taxes on goods that are taken out of the special economic
zone. Yet, the petitioner herself admits that the assessment against Puregold
does not involve such goods, but only those that were imported by Puregold into
the CSEZ.
The CTA Second Division ruled that Puregold is entitled to tax amnesty,
which was affirmed by the CTA En Banc.
ISSUE: HELD:
However, on January 1, 1997, R.A. No. 8240 took effect causing a shift from the
ad valorem tax (AVT) system to the specific tax system. As a result of such shift,
the cigarette brands were subjected to specific tax under Section 145 of the Tax
Code of 1997.
To implement the provisions for a 12% increase of excise tax on cigars and
cigarettes packed by machines by January 1, 2000, the Secretary of Finance,
upon recommendation of the respondent CIR, issued RR No. 17-99 which
provides that the new specific tax rate for any existing brand of cigars, cigarettes
packed by machine, distilled spirits, wines and fermented liquor shall not be
lower than the excise tax that is actually being paid prior to January 1, 2000.
On 31 March 2005, petitioner filed a claim for tax credit or refund under the
1997 NIRC for erroneously or illegally collected specific taxes covering the
period June to December 31, 2004 in the total amount of Php219,566,450.00.
On November 14, 2005, petitioner filed a Petition for Review which was
raffled to the Former First Division of this Court. Respondent in his Answer
raised among others, as a Special and Affirmative Defense, that the amount
being claimed by petitioner as alleged overpaid excise tax for the period
covering 1 June to 31 December 2004, is not properly documented.
After trial on the merits, the Former CTA First Division ruled that RR 17-99
is contrary to law and that there is insufficiency of evidence on the claim for
refund.
Petitioner filed its motion for reconsideration which was denied by the
Former First Division. Petitioner elevated its claim to the CTA En Banc, but was
rebuffed after the tax tribunal found no cause to reverse the findings and
conclusions of the CTA Division.
Petitioner claims that it paid a total amount of P219,566,450.00 in overpaid
excise taxes. For petitioner, considering that the CTA found RR 17-99 to be
contrary to law, there should be no obstacle to the refund of the total amount
excess excise taxes it had paid.
ISSUE: HELD:
WON petitioner is entitled to the refund of alleged excess excise tax paid
NO. The CTA committed no reversible error in denying petitioners claim for
tax refund for insufficient evidence because petitioner relied heavily on
photocopied documents to prove its claim. In this case, petitioner did not even
attempt to provide a plausible reason as to why the original copies of the
documents presented could not be produced before the CTA or any reason that
the application of any of the exceptions could be justified. Although petitioner
presented a witness to prove its claim, it appears that this witness was not even
a signatory to any of the disputed documentary evidence.
Petitioner failed to offer any proof or tender of excluded evidence. It utterly
failed to not only comply with the basic procedural requirement of presenting
only the original copies of its documentary evidence, but also to adhere to the
requirement to properly make its offer of proof or tender of excluded evidence
for the proper consideration of the appellate tribunal.
Even if the Court would consider petitioners otherwise excluded evidence,
the same would still fail to sufficiently prove the petitioners entitlement to its
claim for refund. It is petitioners burden to prove the allegations made in its
claim for refund. For a claim for refund to be granted, the manner in proving it
must be in accordance with the prescribed rules of evidence. It would have been
erroneous had the CTA En Banc relied on petitioner's own Excise Tax Refund
Computation Summary or the unsatisfactory explanation of its lone witness to
justify its claim for tax refund. The failure of petitioner to prove its claim in
accordance with the settled evidentiary rules merits its dismissal.
Claims for tax refunds are in the nature of tax exemptions which result in
loss of revenue for the government. Upon the person claiming an exemption
from tax payments rests the burden of justifying the exemption by words too
plain to be mistaken and too categorical to be misinterpreted; it is never
presumed nor be allowed solely on the ground of equity. In addition, one who
claims that he is entitled to a tax refund must not only claim that the transaction
subject of tax is clearly and unequivocally not subject to tax - the amount of the
claim must still be proven in the normal course, in accordance with the
prescribed rules on evidence.
After all, taxes are the lifeblood of the nation.
5. CHEVRON VS CIR
FACTS:
Chevron sold and delivered petroleum products to CDC in the period from
August-December 2007. Chevron did not pass on to CDC the excise taxes paid
on the importation of the petroleum products sold to CDC in taxable year 2007;
hence, on June 26, 2009, it filed an administrative claim for tax refund or
issuance of tax credit certificate in the amount of P6,542,400.00. Considering
that respondent CIR did not act on the administrative claim for tax refund or tax
credit, Chevron elevated its claim to the CTA by petition for review on June 29,
2009.
The CTA First Division denied Chevrons judicial claim for tax refund or tax
credit and Motion for Reconsideration. Chevron appealed to the CTA En Banc
which affirmed the ruling of the CTA First Division, stating that there was nothing
in Section 135(c) of the NIRC that explicitly exempted Chevron as the seller of
the imported petroleum products from the payment of the excise taxes; and
holding that because it did not fall under any of the categories exempted from
paying excise tax, Chevron was not entitled to the tax refund or tax credit.
Chevron sought reconsideration, but the CTA En Banc denied its motion.
Chevron appealed to SC (Second Division) but denied the petition for
review on certiorari for failure to show any reversible error on the part of the CTA
En Banc.
Hence, Chevron has filed the Motion for Reconsideration, submitting that it
was entitled to the tax refund or tax credit because ruling promulgated on April
25, 2012 in Pilipinas Shell, on which the CTA En Banc had based its denial of
the claim of Chevron, was meanwhile reconsidered by the Courts First Division
on February 19, 2014.
ISSUE: HELD:
WON Chevron was entitled to the tax refund or the tax credit for the excise
taxes paid on the importation of petroleum products that it had sold to
CDC in 2007, a tax-exempt entity under Section 135(c) of the NIRC
YES. Excise tax on petroleum products is essentially a tax on property, the
direct liability for which pertains to the statutory taxpayer. Any excise tax paid by
the statutory taxpayer on petroleum products sold to any of the entities or
agencies named in Section 135 of the NIRC exempt from excise tax is deemed
illegal or erroneous, and should be credited or refunded to the ayor pursuant to
Section 204 of the NIRC. This is because the exemption granted under Section
135 of the NIRC must be construed in favor of the property itself, that is, the
petroleum products.
Accordingly, the excise taxes that Chevron paid on its importation of
petroleum products subsequently sold to CDC were illegal and erroneous, and
should be credited or refunded to Chevron in accordance with Section 204 of the
NIRC.
Chevron, being the statutory taxpayer, paid the excise taxes on its
importation of the petroleum products.
Pursuant to Section 135(c) of the NIRC, petroleum products sold to entities
that are by law exempt from direct and indirect taxes are exempt from excise
tax. The phrase which are by law exempt from direct and indirect taxes
describes the entities to whom the petroleum products must be sold in order to
render the exemption operative. Section 135(c) should thus be construed as an
exemption in favor of the petroleum products on which the excise tax was levied
in the first place. The exemption cannot be granted to the buyers that is, the
entities that are by law exempt from direct and indirect taxes because they are
not under any legal duty to pay the excise tax.
Inasmuch as its liability for the payment of the excise taxes accrued
immediately upon importation and prior to the removal of the petroleum products
from the customs house, Chevron was bound to pay, and actually paid such
taxes. But the status of the petroleum products as exempt from the excise taxes
would be confirmed only upon their sale to CDC in 2007. Before then, Chevron
did not have any legal basis to claim the tax refund or the tax credit as to the
petroleum products.
Consequently, the payment of the excise taxes by Chevron upon its
importation of petroleum products was deemed illegal and erroneous upon the
sale of the petroleum products to CDC. Section 204 of the NIRC explicitly
allowed Chevron as the statutory taxpayer to claim the refund or the credit of the
excise taxes thereby paid.
extension of time to assess failed to strictly comply and conform with the
provisions of RMO 20-90 and thus, were invalid, it necessarily follows that the
subsequent waivers did not in any way cure these defects. Neither did it extend
the prescriptive period to assess.
ISSUE: HELD:
WON CIR's right to assess SCB for deficiency taxes has already
prescribed
YES. CIR's right to assess for deficiency taxes has already prescribed
under Section 203 of the NIRC of 1997, as amended, for failure to comply with
the requirements set forth in RMO No. 20-90 pertaining to the proper and valid
execution of a waiver of the Statute of Limitations, and in accordance with
existing jurisprudential pronouncements.
CIR only had three years, counted from the date of actual filing of the return
or from the last date prescribed by law for the filing of such return, whichever
comes later, to assess a national internal revenue tax or to begin a court
proceeding for the collection thereof without an assessment. The extension of
the original three-year prescriptive period by the execution of a valid waiver,
where the taxpayer and the CIR may stipulate to extend the period of
assessment by a written agreement executed prior to the lapse of the period
prescribed by law, and by subsequent written agreements before the expiration
of the period previously agreed upon.
In delineation of the same sense about the waiver of the Statute of
Limitations, RMO No. 20-90 and Revenue Delegation Authority Order (RDAO)
No. 05-01 were issued on 4 April 1990 and 2 August 2001, respectively. The
said revenue orders outline the procedure for the proper execution of a waiver.
The provisions of the RMO and RDAO explicitly show their mandatory nature,
requiring strict compliance. Hence, failure to comply with any of the requisites
renders a waiver defective and ineffectual.
Applying the rules and rulings, the waivers in question were defective and
did not validly extend the original three-year prescriptive period. The subject
waivers of the Statute of Limitations were in clear violation of RMO No. 20-90:
1) This case involves assessment amounting to more than P1,000,000.00.
For this, RMO No. 20-90 requires the Commissioner of Internal Revenue to sign
for the BIR.1avvphi1 A perusal of the First and Second Waivers of the Statute of
Limitations shows that they were signed by Assistant Commissioner-Large
Taxpayers Service Virginia L. Trinidad and Assistant Commissioner-Large
Taxpayers Service Edwin R. Abella respectively, and not by the Commissioner of
Internal Revenue;
Dissatisfied, the BOC filed a motion for reconsideration which was denied
by the public respondent, the Acting Secretary of Justice Agnes VST
Devanadera, in a Resolution dated December 28, 2009.
On March 11, 2010, the BOC filed a petition for certiorari with the CA.
In the Resolution dated March 26, 2010, the CA dismissed outright the
petition due to procedural defects. In the Resolution dated August 4, 2010, the
CA denied the private respondents' motion for reconsideration of the March 26,
2010 Resolution.
Aggrieved, the BOC filed the instant petition for review on certiorari.
ISSUE: HELD:
The power of the CTA includes that of determining whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the RTC in issuing an interlocutory order in cases falling within the
exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by
constitutional mandate, is vested with jurisdiction to issue writs of certiorari in
these cases.
Indeed, in order for any appellate court to effectively exercise its appellate
jurisdiction, it must have the authority to issue, among others, a writ of certiorari.
In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can
reasonably be assumed that the law intended to transfer also such power as is
deemed necessary, if not indispensable, in aid of such appellate jurisdiction.
There is no perceivable reason why the transfer should only be considered as
partial, not total.
BOC filed a collection suit for unpaid taxes and customs duties amounting
to P46,844,385.00 against Mitsubishi Motors Philippines Corporation before the
RTC-Manila. BOC alleged that from 1997-1998, petitioner was able to secure
tax credit certificates (TCCs) from various transportation companies; after which,
it made several importations and utilized said TCCs for the payment of various
customs duties and taxes in the aggregate amount of P46,844,385.00.
Since a post-audit investigation of the Department of Finance revealed that
the TCCs were fraudulently secured with the use of fake commercial and bank
documents, BOC demanded payment by MItsubishi of its unsettled tax and
customs duties, but did not pay.
Mitsubishi countered that it acquired the TCCs from their original holders in
good faith and that they were authentic, and thus, their remittance to respondent
should be considered as proper settlement of the taxes and customs duties it
incurred in connection with the importations.
RTC granted petitioners Demurrer to Plaintiffs Evidence, and accordingly,
dismissed respondents collection case on the ground of insufficiency of
evidence;finding that respondent had not shown any proof or substantial
evidence, clear and convincing, of fraud or conspiracy on the part of petitioner in
the procurement of the TCCs. BOC appealed to CA which referred the records
of the collection case to the CTA for proper disposition on the ground that it did
not have jurisdiction.
Aggrieved, Mitsubushi filed a motion for reconsideration arguing that since
the CA does not have jurisdiction over BOCs appeal, it cannot perform any
action on it except to order its dismissal. Said motion was denied, hence, this
petition.
ISSUE: HELD:
WON the CA correctly referred the records of the collection case to the