other fuel products to other BOT-registered

FIRST DIVISION entities engaged in the export of their own

manufactured goods (BOI export
[ G.R. No. 197945, July 09, 2018 ] [6]
entities). These BOT-registered export entities
COMMISSIONER OF INTERNAL REVENUE, used Tax Credit Certificates (TCCs) originally
PETITIONER, vs. PILIPINAS SHELL PETROLEUM issued in their name to pay for these purchases.
CORPORATION, RESPONDENT.
To proceed with this mode of payment, the BOT-
[G.R. Nos. 204119-20] registered export entities executed Deeds of
Assignment in favor of respondents, transferring
COMMISSIONER OF INTERNAL REVENUE, the TCCs to the latter. Subsequently, the
PETITIONER, VS. PILIPINAS SHELL PETROLEUM Department of Finance (DOF), through its One
CORPORATION AND PETRON CORPORATION, Stop Shop Inter-Agency Tax Credit and Duty
RESPONDENTS. Drawback Center (DOF Center), approved the
Deeds of Assignment.[7]
DECISION
Thereafter, respondents sought the DOF
LEONARDO-DE CASTRO,* J.: Center's permission to use the assigned TCCs in
Before the Court are consolidated petitions for settling respondents' own excise tax liabilities.
review on certiorari under Rule 45 of the Rules of The DOF Center issued Tax Debit Memoranda
Court, as amended, filed by petitioner (DOF TDMs) addressed to the Collection
Commissioner of Internal Revenue (CIR): Program Division of the Bureau of Internal
Revenue (BIR),[8] allowing respondents to do so.
1. G.R. No. 197945 assailing the
Decision[1] dated February 22, 2011 and Thus, to pay for their excise tax liabilities from
Resolution[2] dated July 27, 2011 of the 1992 to 1997 (Covered Years),[9] respondents
Court of Tax Appeals (CTA) in CTA En presented the DOF TDMs to the BIR. The BIR
Banc Case No. 535; and accepted the TDMs and issued the following: (a)
2. G.R. Nos. 204119-20 assailing the TDMs signed by the BIR Assistant Commissioner
Decision[3] dated March 21, 2012 and for Collection Service[10] (BIR TDMs); (b)
Resolution[4] dated October 10, 2012 of Authorities to Accept Payment for Excise Taxes
the Court of Appeals in CA-G.R. SP Nos. (ATAPETs) signed by the BIR Regional District
55329-30. Officer; and (c) corresponding instructions to
BIR's authorized agent banks to accept
Respondents Pilipinas Shell Petroleum respondents' payments in the form of BIR
Corporation (Shell) and Petron Corporation TDMs.[11]
(Petron) are domestic corporations engaged in
the production of petroleum products and are Three significant incidents arising from the
duly registered with the Board of Investments foregoing antecedents resulted in the filing of
(BOI) under the Omnibus Investments Code of several petitions before this Court, viz.:
1987.[5]
Resultant Petition/s
Significant Incidents
On different occasions during 1988 to 1996, before the Court
respondents separately sold bunker oil and
(a) 1998 Collection G.R. Nos. 204119-20 Our records show that for the years x x x, you
Letters issued by the (one of the pr sent have been paying part of your excise tax
BIR against petitions) liabilities in the form of Tax Credit Certificate
respondents (TCC) which bear the name of a company other
than yours in violation of Rule IX of the Rules and
(b) 1999 Assessments Pilipinas Shell Regulations issued by the Board of Investments
issued by the BIR Petroleum Corporation to implement P.D. No. 1789 and B.P.
against respondents v. Commissioner of 391. Accordingly, your payment through the
Internal Revenue, G.R. aforesaid TCC's are considered invalid and
No. 172598, December therefore, you are hereby requested to paythe
21, 2007 (2007 Shell amount of x x x inclusive of delinquency for late
Case) payments as of even date, covering the years
heretofore mentioned within thirty days (30)
Petron Corporation v. from receipt hereof, lest we will be constrained
Commissioner of to resort to administrative and legal remedies
Internal Revenue, G.R. available in accordance with law. (Emphasis
No. 180385, July 28, supplied.)
2010 (2010 Petron
Case) Respondents separately filed their
administrative protests[14] against the 1998
(c) 2002 Collection G.R. No. 197945 (one of Collection Letters, but the BIR denied[15] said
Letter issued by the BIR the present petitions) protests. The BIR maintained that the transfers
against respondent of the TCCs from the BOI-registered export
Shell entities to respondents and the use of the same
TCCs by respondents to pay for their self-
Said incidents and petitions are discussed in
assessed specific tax liabilities were invalid, and
detail below.
reiterated its demand that respondents pay their
delinquent taxes.
A. 1998 Collection Letters
(G.R. Nos. 204119-20)
This prompted respondent Petron to file a
Petition for Review[16] before the CTA docketed
In its collection letters[12] dated April 22, 1998
as CTA Case No. 5657.
(1998 Collection Letters) addressed to
respondents' respective presidents, the
As for respondent Shell, it first requested for
BIR[13] pointed out that respondents partly paid
reconsideration of the denial of its protest by the
for their excise tax liabilities during the Covered
BIR.[17] However, while said request for
Years using TCCs issued in the names of other
reconsideration was pending, the BIR issued a
companies; invalidated respondents' tax
Warrant of Garnishment[18] against respondent
payments using said TCCs; and requested
Shell. Taking this as a denial of its request for
respondent Shell and respondent Petron to pay
reconsideration, respondent Shell likewise filed
their delinquent tax liabilities amounting to
a Petition for Review[19] before the CTA docketed
P1,705,028,008.06 and P1,107,542,547.08,
as CTA Case No. 5728.
respectively. The 1998 Collection Letters
similarly read:
In their respective petitions before the CTA,
respondents raised similar arguments against
petitioner, to wit: (a) The collection of tax (Tax Code). The CTA also noted that the BIR
without prior assessment was a denial of the might have purposely avoided the issuance of a
taxpayer's right to due process; (b) The use of for;mal assessment because its right to assess
TCCs as payment of excise tax liabilities was majority of respondents' alleged delinquent
valid; (c) Since the BIR approved the transfers taxes had already prescribed.
and subsequent use of the TCCs, it was estopped
from questioning the validity thereof; and (d) Petitioner's motions for reconsideration of the
The BIR's right to collect the alleged delinquent above-mentioned decisions were denied by the
taxes had already prescribed. CTA.[23] Thus, petitioner CIR sought recourse
before the Court of Appeals[24] through the
The CTA granted respondents' petitions in consolidated petitions docketed as CA-G.R. SP
separate Decisions both dated July 23, 1999, Nos. 55329-30.
decreeing as follows:
However, the Court of Appeals dismissed the
CTA Case No. 5657
petitions and found the transfer and utilization
of the subject TCCs were valid, in accordance
WHEREFORE, in view of the foregoing, the with the 2007 Shell Case.[25] The appellate court
instant Petition for Review is hereby GRANTED. eventually denied petitioner's motion for
The collection of the alleged delinquent excise reconsideration.
taxes in the amount of P1,107,542,547.08 is
hereby CANCELLED AND SET ASIDE for being Undaunted, petitioner CIR filed the present
contrary to law. Accordingly, [herein petitioner petition docketed as G.R. Nos. 204119-20.
and BIR Regional Director of Makati, Region No.
8] are ENJOINED from collecting the said amount B. 1999 Assessments (The 2007 Shell
of taxes against [herein respondent Petron].[20] Case and 2010 Petron Case)

CTA Case No. 5728 During the pendency of the consolidated

petitions in CA-G.R. SP Nos. 55329-30 before the
IN LIGHT OF ALL THE FOREGOING, the instant Court of Appeals, the DOF Center conducted
petition for review is GRANTED. The collection separate post-audit procedures[26] on all of the
letter issued by [herein petitioner] dated April TCCs acquired and used by respondents during
22, 1998 is considered withdrawn and he is the Covered Years, requiring them to submit
ENJOINED from any attempts to collect from documents to support their acquisition of the
[herein respondent Shell] the specific tax, TCCs from the BOI-registered export entities. As
surcharge and interest subject of this petition.[21] a result of its post-audit procedures, the DOF
Center cancelled the first batch of the
In both Decisions, the CTA upheld the validity of transferred TCCs[27] used by respondent Shell
the TCC transfers from the BOI-registered export and Petron, with aggregate amount of
entities to respondents, the latter having P830,560,791.00 and P284,390,845.00,
complied with the requirements of respectively.
transferability. The CTA further ruled that the
BIR's attempt to collect taxes without an Following the cancellation of the TCCs, petitioner
assessment was a denial of due process and a issued separate assessment letters to
violation of Section 228[22] of the National respondents in November 1999 (1999
Internal Revenue Code of the Philippines of 1997
Assessments) for the payment of deficiency faith and for value, and respondent Shell's right
excise taxes, surcharges, and interest for the to due process.
Covered Years, which were also covered by the
1998 Collection Letters. Respondents filed their The 2007 Shell Case became final and executory
respective administrative protests against said on March 17, 2008.[29]
assessments. While petitioner denied
respondent Shell's protest, he did not act upon B.2 The 2010 Petron Case
that of respondent Petron.
Considering petitioner's inaction on its protest,
B.1 The 2007 Shell Case respondent Petron likewise filed a petition for
review with the CTA, docketed as CTA Case No.
Respondent Shell raised petitioner's denial of its 6136, to challenge the assessment. In a Decision
protest through a petition for review before the dated August 23, 2006, the CTA Division denied
CTA, docketed as CTA Case No. 6003. The CTA the petition and ordered respondent Petron to
Division rendered a Decision dated August 2, pay petitioner deficiency excise taxes,
2004 granting said petition and cancelled and set surcharges, and interest. Said judgment was
aside the assessment against respondent Shell; subsequently affirmed by the CTA En Banc in. its
but then the CTA en banc, in its Decision dated Decision dated October 30, 2007. This prompted
April 28, 2006, set aside the CTA Division's respondent Petron to seek relief from this Court
judgment and ordered respondent Shell to pay through a petition for review, docketed as G.R.
petitioner deficiency excise tax, surcharges, and No. 180385, the 2010 Petron Case.[30]
interest. Hence, respondent Shell filed a petition
for review before this Court docketed as G.R. No. Citing the 2007 Shell Case, the Court similarly
172598, the 2007 Shell Case. cancelled the 1999 assessment against
respondent Petron and decided the 2010 Petron
In its Decision in the 2007 Shell Case, the Court Case as follows:
cancelled the 1999 assessment against
WHEREFORE, premises considered, the petition
respondent Shell and disposed thus:
is GRANTED and the October 30, 2007 CTA En
WHEREFORE, the petition is GRANTED. The April Banc Decision in CTA EB No. 238 is, accordingly,
28, 2006 CTA En Banc Decision in CTA EB No. 64 REVERSED and SET ASIDE. In lieu thereof,
is hereby REVERSED and SET ASIDE, and the another is entered invalidating respondent's
August 2, 2004 CTA Decision in CTA Case No. Assessment of petitioner's deficiency excise
6003 disallowing the assessment is hereby taxes for the years 1995 to 1997 for lack of legal
REINSTATED. The assessment of respondent for bases. No pronouncement as to costs.[31]
deficiency excise taxes against petitioner for
Entry of Judgment[32] was made in the 2010
1992 and 1994 to 1997 inclusive contained in the
Petron Case on November 2, 2010.
April 22, 1998 letter of respondent is cancelled
and declared without force and effect for lack of
C. 2002 Collection Letter
legal basis. No pronouncement as to costs.[28]
(G.R. No. 197945)
In nullifying petitioner's assessments, the Court
upheld the TCCs' validity, respondent Shell's Meanwhile, during the pendency of respondent
qualifications as transferees of said TCCs, Shell's CTA Case No. 6003 (which was eventually
respondent Shell's status as a transferee in good elevated to this Court in the 2007 Shell Case), the
BIR requested respondent Shell to pay its DOF Executive Committee Resolution No. 03-05-
purported excise tax liabilities amounting to 99 referred to in the aforequoted Collection
P234,555,275.48, in a collection letter[33] dated Letter prescribed the guidelines and procedures
June 17, 2002 (2002 Collection Letter), which for the cancellation, recall, and recovery of
read: fraudulently-issued TCCs.

Collection Letter
Respondent Shell filed on July 11, 2002 its
administrative protest[34] to the 2002 Collection
x x x x Letter. However, without resolving said protest,
petitioner[35] issued a Warrant of Distraint
Our records show that a letter dated January 30, and/or Levy dated September 12, 2002 for the
2002 was served to you by our Collection satisfaction of the following alleged tax
Service, for the collection of cancelled Tax Credit delinquency of respondent Shell:
Certificates and Tax Debit Memos which were
WHEREAS, THERE IS DUE FROM:
used to pay your 1995 to 1998 excise tax
liabilities. Said cancellation was embodied in
PILIPINAS SHELL PETROLEUM CORP. x x x x
EXCOM Resolution No. 03-05-99 of the Tax &
Duty Drawback Center of the Department of
The sum of TWO HUNDRED THIRTY[-]FOUR
Finance. Upon verification by this Office,
MILLION FIVE HUNDRED FIFTY[-]FIVE
however, some of these TCCs/TDMs were
THOUSAND TWO HUNDRED TWENTY[-]FIVE
already included in the tax case previously filed
PESOS AND 48 CENTAVOS as Internal Revenue
in [the] Court of Tax Appeals. Accordingly, the
Taxes shown hereunder, plus all increments
collectible amount has been reduced from
incident to delinquency.
P691,508,005.82 to P234,555,275.48, the
summary of which is hereto attached for your Assessment
: Unnumbered
ready reference. Notice No.
P Date Issued : January 30, 2002
Basic
87,893,876.00
Tax Type : Excise Tax
Surcharge21,973,469.00
Period Various Dates (December 18, 1995
Interest 124,687,930.48 :
Covered to July 03, 1997)
P
TOTAL Amount : P234,555,275.48
234,555,275.48

In view thereof, you are hereby requested to WHEREAS, the said taxpayer failed and refused
pay the aforesaid tax liability/ties within ten and still fails and refuses to pay the same
(10) days from receipt hereof thru any notwithstanding demands made by this
authorized agent bank x x x Should you fail to do Office.[36]
so, this Office, much to our regret, will be Aggrieved, respondent Shell filed a petition for
constrained to enforce the collection of the said review[37] before the CTA docketed as CTA Case
amount thru the summary administrative No. 6547, arguing that: (a) the issuance of the
remedies provided by law, without any further 2002 Collection Letter and Warrant of Distraint
notice. (Emphasis supplied.) and/or Levy and enforcement of DOF Center's
Executive Committee Resolution No. 03-05-99 duly applied against any outstanding tax liability
violated its right to due process; (b) The DOF of an innocent transferee for value.
Center did not have authority to cancel the TCCs;
(c) The TCCs' transfers and utilizations were valid In this regard, the CTA En Banc found that
and legal; (d) It was an innocent purchaser for respondent Shell did not participate in any fraud
value; (e) The HIR was estopped from attending the issuance of the TCCs, as well as its
invalidating the transfer and utilization of the subsequent transfers. Thus, respondent Shell is
TCCs; and (f) The HIR's right to collect had an innocent transferee in good faith and for
already prescribed. value and could not be prejudiced by fraud
attending the TCCs' procurement.
The CTA Second Division ruled in favor of
respondent Shell in its Decision[38] dated April 30, In the absence of fraud, petitioner could only
2009: reassess Shell for deficiency tax within the three-
year prescriptive period under Section 203 of the
WHEREFORE, premises considered, the instant
Tax Code, not the 10-year period under Section
Petition for Review is hereby GRANTED. The
222(a) of the same Code. Further, petitioner
Collection Letters and Warrant of Distraint
violated respondent Shell's right to due process
and/or Levy are CANCELLED and declared
when he issued the 2002 Collection Letter
without force and effect for lack of legal basis.[39]
without a Notice of Informal Conference (NIC) or
After the CTA Division denied[40] his motion for a Preliminary Assessment Notice as required by
reconsideration, petitioner elevated the case to Revenue Regulations No. (RR) 12-99.
the CTA En Banc via a petition for
review[41] docketed as CTA EB No. 535. The CIR moved for reconsideration but was
denied.
In its Decision dated February 22, 2011, the
CTA En Banc denied the petition and affirmed Hence, petitioner now comes before this Court
the judgment of the CTA Division. citing in the petitions at bar the following errors
allegedly committed by the courts a quo in G.R.
The CTA En Banc resolved the issues relying on Nos. 204119-20 and G.R. No. 197945:
the 2007 Shell Case. Pursuant to this ruling, the
G.R. Nos. 204119-20
real issue is not whether the BOI-registered
export entities validly procured the TCCs from
the DOF Center, but whether respondent Shell The Court of Appeals erred:
fraudulently obtained the TCCs from said BOI-
I.
registered export entities.

The CTA En Banc brushed aside petitioner's IN NOT HOLDING THAT RESPONDENTS SHELL
argument that respondent Shell was aware that AND PETRON WERE NOT QUALIFIED
the transferred TCCs were subject to post-audit TRANSFEREES OF THE TAX CREDIT CERTIFICATES
procedures. It explained that the TCCs were valid (TCCs) SINCE THEY WERE NOT SUPPLIERS OF
and effective upon issuance and were not DOMESTIC CAPITAL EQUIPMENT OR OF RAW
subject to post-audit procedures as a suspensive MATERIAL AND/OR COMPONENTS TO THEIR
condition. Further, the TCCs could no longer be TRANSFERORS.
cancelled once these had been fully utilized or
II.
IN NOT HOLDING THAT SINCE RESPONDENTS VI. THE CTA EN BANC COMMITTED A GRIEVOUS
WERE NOT QUALIFIED TRANSFEREES OF THE ERROR IN DECLARING THAT THE PERIOD TO
TCCs, THE SAME COULD NOT BE VALIDLY USED COLLECT RESPONDENT'S UNPAID EXCISE TAXES
IN PAYING THEIR EXCISE TAX LIABILITIES. HAS ALREADY PRESCRIBED.

III.
VII. THE CTA EN BANC COMMITTED A GRIEVOUS
ERROR IN RULING THAT,RESPONDENT IS NOT
IN NOT HOLDING THAT GOVERNMENT IS NOT LIABLE TO PAY SURCHARGES AND INTERESTS.[43]
ESTOPPED FROM COLLECTING TAXES DUE TO
The Ruling of the Court
THE MISTAKES OF ITS AGENTS.

IV.
The petitions are without merit.

IN NOT HOLDING THAT SHELL WAS ACCORDED The issues concerning the transferred TCCs'
DUE PROCESS IN PETITIONER'S ATTEMPT TO validity, respondents' qualifications as
COLLECT ITS EXCISE TAX LIABILITIES.[42] transferees of said TCCs, and the respondents'
valid use of the TCCs to pay for their excise tax
G.R. No. 197945 liabilities for the Covered Years had been finally
settled in the 2007 Shell Case and 2010 Petron
I. The CTA EN BANC COMMITTED GRIEVOUS Case and are already barred from being re-
ERROR IN NOT RULING ON THE VALIDITY OF THE litigated herein by the doctrine of res judicata in
TCCs AND ITS CONSEQUENT EFFECTS ON THE the concept of conclusiveness of judgment.
RIGHTS AND OBLIGATIONS ASSUMED BY
RESPONDENT. While the present petitions, on one hand, and
the 2007 Shell Case and 2010 Petron Case, on
II. THE CTA EN BANC COMMITTED GRIEVOUS the other hand, involve identical parties and
ERROR IN HOLDING THAT RESPONDENT IS AN originate from the same factual antecedents,
INNOCENT TRANSFEREE OF THE DISPUTED TCCs there are also substantial distinctions between
IN GOOD FAITH. these cases, for which reason, the Court cannot
simply dismiss the former on account of the
III. THE CTA EN BANC COMMITTED GRIEVOUS latter based on the doctrine of res judicata in the
ERROR IN RULING THAT RESPONDENT IS NOT concept of "barby prior judgment."
LIABLE TO PAY EXCISE TAXES.
The 2007 Shell Case and 2010 Petron Case were
IV. THE CTA EN BANC COMMITTED GRIEVOUS assessment cases. These initiated from
ERROR IN HOLDING THAT THE GOVERNMENT IS respondents' protests of the 1999
ESTOPPED FROM NULLIFYING THE TCCs, AND Assessments issued by petitioner CIR against
DECLARING THEIR USE, TRANSFER AND them for deficiency excise taxes, surcharges, and
UTILIZATION AS FRAUDULENT. interest, following cancellation of the
transferred TCCs and the corresponding TDMs
V. THE CTA EN BANC COMMITTED GRIEVOUS which respondents used to pay for said excise
ERROR IN RULING THAT RESPONDENT WAS taxes. Said cases were primarily concerned with
DENIED DUE PROCESS. the legality and propriety of petitioner's issuance
of the 1999 Assessments against respondents.
x x x x
In contrast, the consolidated petitions now
before the Court arose from respondents' (b) In other cases, the judgment or final order is,
protests of petitioner's 1998 and 2002 with respect to the matter directly adjudged or
Collection Letters for essentially the same excise as to any other matter that could have been
tax deficiencies covered by the 1999 raised in relation thereto, conclusive between
the parties and their successors-in interest by
Assessments, but apparently issued and pursued title subsequent to the commencement of the
by the petitioner and BIR separately from and action or special proceeding, litigating for the
concurrently with the assessment cases. At the same thing and under the same title and in the
crux of these cases is petitioner's right to collect same capacity; and
the deficiency excise taxes from respondents.
(c) In any other litigation between the same
In the instant petitions, petitioner asserts his parties or their successors-in-interest, that only
right to collect as excise tax deficiencies the is deemed. to have been adjudged in a former
excise tax liabilities which respondents had judgment or final order which appears upon its
previously settled using the transferred TCCs, face to have been so adjudged, or which was
impugning the TCCs' validity on account of fraud actually and necessarily included therein or
as well as respondents' qualifications as necessary thereto.
transferees of said TCCs. However, respondents
It must be pointed out at this point that, contrary
already raised the same arguments and the
to the insistence of the Caloses, the doctrine
Court definitively ruled thereon in its final and
of res judicata applies to both judicial and quasi-
executory decisions in the 2007 Shell
judiCial proceedings. The doctrine actually
Case and2010 Petron Case.
embraces two (2) concepts: the first is "bar by
prior judgment" under paragraph (b) of Rule 39,
The re-litigation of these issues in the present
Section 47, and the second is "conclusiveness of
petitions, when said issues had already been
judgment" under paragraph (c) thereof. In the
settled with finality in the 2007 Shell
present case, the second concept -
Case and 2010 Petron Case, is precluded by res
conclusiveness of judgment- applies. The said
judicata in the concept of "conclusiveness of
concept is explained in this manner:
judgment."
[A] fact or question which was in issue in a
[44]
In Ocho v. Calos, the Court extensively former suit and was there judicially passed
explained the doctrine of res judicata in the upon and determined by a court of competent
concept of "conclusiveness of judgment," thus: jurisdiction, is conclusively settled by the
judgment therein as far as the parties to that
The doctrine of res judicata as embodied in
action and persons in privity with them are
Section 47, Rule 39 of the Rules of Court states:
concerned and cannot be again litigated in any
SECTION 47. Effect of judgments or final orders. - future action between such parties or their
The effect of a judgment or final order rendered privies, in the same court or any other court of
by a court of the Philippines, having jurisdiction concurrent jurisdiction on either the same or
to pronom:tce the judgment or final order, may different cause of action, while the judgment
be as follows: remains unreversed by proper authority. It has
been held that in order. that a judgment in one of the former trial shows that the judgment
action can be conclusive as to a particular matter could not have been rendered without deciding
in another action between the same parties or the particular matter, it will be considered as
their privies, it is essential that the issue be having settled that matter as to all future actions
identical. If a particular point or question is in between the parties, and if a judgment
issue in the second action, and the judgment will necessarily presupposes certain premises, they
depend on the determination of that particular are as conclusive as the judgment itself. Reasons
point or question, a former judgment between for the rule are that a judgment is an
the same parties or their privies will be final and adjudication on all the matters which are
conclusive in the second if that same point or essential to support it, and that every
question was in issue and adjudicated in the first proposition assumed or decided by the court
suit. x x x. leading up to the final conclusion upon which
such conclusion is based is as effectually passed
Although the action instituted by the Caloses in
upon as the ultimate question which is solved.
Adm. Case No. 006-90 (Anomalies/Irregularities
in OLT Transfer Action and Other Related
xxxx
Activities) is different from the action in Adm.
Case No. (X)-014 (Annulment of Deeds of As held in Legarda vs. Savellano:
Assignment, Emancipation Patents and Transfer
x x x It is a general rule common to all civilized
Certificate of Titles, Retention and Recovery of
system of jurisprudence, that the solemn and
Possession and Ownership), the concept of
deliberate sentence of the law, pronounced by
conclusiveness of judgment still applies because
its appointed organs, upon a disputed fact or a
under this principle "the identity of causes of
state of facts, should be regarded as a final and
action is not required but merely identity of
conclusive determination of the question
issues."
litigated, and should forever set the controversy
at rest. Indeed, it has been well said that this
[Simply] put, conclusiveness of judgment bars
maxim is more than a mere rule of law; more
the relitigation of particular facts or issues in
even than an important principle of public policy;
another litigation between the same parties on
and that it is not too much to say that it is a
a different claim or cause of action. In Lopez vs.
fundamental concept in the organization of
Reyes, we expounded on the concept of
every jural system. Public policy and sound
conclusiveness of judgment as follows:
practice demand that, at the risk of occasional
The general rule precluding the relitigation of errors, judgments of courts should become final
material facts or questions which were in issue at some definite date fixed by law. The very
and adjudicated in former action are commonly object for which courts were constituted was to
applied to all matters essentially connected with put an end to controversies.
the subject matter of litigation. Thus it extends
The findings of the Hearing Officer in Adm. Case
to questions necessarily involved in an issue, and
No. 006-90, which had long attained finality, that
necessarily adjudicated, or necessarily implied in
petitioner is not the owner of other agricultural
the final judgment, although no specific finding
lands foreclosed any inquiry on the same issue
may have been made in reference thereto, and
involving the same parties and property. The CA
although such matters were directly referred to
thus erred in still making a finding that petitioner
in the pleadings and were not actually or
is not qualified to be a farmer-beneficiary
formally presented. Under this rule, if the record
because he owns other agricultural lands. applied to the prejudice of an innocent
(Emphases supplied, citations omitted.) transferee in good faith and for value.

In the 2007 Shell Case, the Court affirmed the

And finally, the Court found in the 2007 Shell
validity of the TCCs, the transfer of the TCCs to
Case that respondent Shell's right to due process
respondent Shell, and the use of the transfe ed
was violated. Petitioner did not issue a Notice of
TCCs by respondent Shell to partly pay for its
Informal Conference (NIC) and Preliminary
excise tax liabilities for the Covered Years. The
Assessment Notice (PAN) to respondent Shell, in
Court ratiocinated as follows: First, the results of
violation of the formal assessment procedure
postaudit procedures conducted in connection
required by Revenue Regulations No. (RR) 12-
with the TCCs should not operate as a suspensive
99.[46] Petitioner merely relied on the DOF
condition to the TCCs' validity. Second, while it
Center's findings supporting the cancellation of
was one of the conditions appearing on the face
respondent Shell's TCCs. Thus, the Court voided
of the TCCs, the post-audit contemplated therein
the assessment dated November 15, 1999 issued
did not pertain to the TCCs' genuineness or
by the CIR against herein respondent Shell.
validity, but to computational discrepancies that
might have resulted from their utilization and
On the other hand, the Court resolved the 2010
transfer. Third, the DOF Center or DOF could not
Petron Case in accordance with its ruling in
compel respondent Shell to submit sales
the 2007 Shell Case, reiterating that: First, the
documents for the purported post-audit. As a
subject TCCs' validity and effectivity should be
BOI-registered enterprise, respondent Shell was
immediate and should not be dependent on the
a qualified transferee of the subject TCCs,
outcome of a post-audit as a suspensive
pursuant to existing rules and
[45]
condition. Second, respondent Petron could not
regulations. Fourth, respondent Shell was a
be prejudiced by fraud alleged to have attended
transferee in good faith and for value as it
such issuance as it was not privy to the issuance
secured the necessary approvals from various
of the subject TCCs and it had already used said
government agencies before it used and applied
TCCs in settling its tax liabilities. Third,
the transferred TCCs against its tax liabilities and
respondent Petron was also an innocent
it did not participate in the perpetuation of
transferee in good faith and for value because it
fraudulent acts in the procurement of the said
was a qualified transferee of the TCCs based on
TCCs. As a transferee in good faith, respondent
existing rules and regulations and the TCCs'
Shell could not be prejudiced with a re-
transfers were approved by the appropriate
assessment of excise tax liabilities it had already
government agencies. And fourth, while the
settled when due using the subject TCCs nor by
government cannot be estopped from collecting
any fraud attending the procurement of the
taxes by the mistake, negligence, or omission of
subject TCCs.Fifth, while the DOF Center was
its agents, the rights of a transferee in good faith
authorized to cancel TCCs it might have
and for value should be protected.
erroneously issued, it could no longer exercise
such authority after the subject TCCs have
The Court's aforementioned findings in the 2007
already been utilized and accepted as payment
Shell Case and 2010 Petron Case are conclusive
for respondent Shell's excise tax liabilities. What
and binding upon this Court in the petitions at
had been used up, debited, and cancelled could
bar. Res judicata by conclusiveness of judgment
no longer be voided and cancelled anew. While
bars the Court from relitigating the issues on the
the State was not estopped by the neglect or
TCCs' validity and respondents' qualifications as
omission of its agents, this principle could not be
transferees in these cases. As a result of such the distraint and/or levy of taxpayer's
findings in the 2007 Shell Case and 2010 Petron property;[52] and/or (b) judicial remedies, such
Case, then respondents could not have had as the filing of a criminal or civil action against
excise tax deficiencies for the Covered Years as the erring taxpayer.[53]
they had validly paid for and settled their excise
tax liabilities using the transferred TCCs. Verily, pursuant to the lifeblood doctrine, the
Court has allowed tax authorities ample
In any case, the present petitions are dismissed discretion to avail themselves of the most
as petitioner violated respondents' right to due expeditious way to collect the taxes,[54] including
process for failing to observe the prescribed summary processes, with as little interference as
procedure for collection of unpaid taxes possible.[55] However, the Court, at the same
through summary administrative remedies. time, has not hesitated to strike down these
processes in cases wherein tax authorities
The Court dismisses the present petitions for it disregarded due process.[56] The BIR's power to
cannot allow petitioner to collect any excise tax collect taxes must yield to the fundamental rule
deficiency from respondents by mere issuance of that no person shall be deprived of his/her
the 1998 and 2002 Collection Letters. Petitioner property without due process of law.[57] The rule
had failed to comply with the prescribed is that taxes must be collected reasonably and
procedure for collection of unpaid taxes through in accordance with the prescribed procedure.[58]
summary administrative remedies and, thus,
violated respondents' right to due process. In the normal course of tax administration and
enforcement, the BIR must first make
That taxation is an essential attribute of an assessment then enforce the collection of
sovereignty and the lifeblood of every nation are the amounts so assessed. "An assessment is not
doctrines well-entrenched in our jurisdiction. an action or proceeding for the collection of
Taxes are the government's primary means to taxes. x x x It is a step preliminary, but
generate funds needed to fulfill its mandate of essential to warrant distraint, if still feasible,
promoting the general welfare and well-being of and, also, to establish a cause for judicial
the people[47] and so should be collected without action."[59] The BIR may summarily enforce
unnecessary hindrance.[48] collection only when it has accorded the
taxpayer administrative due process, which
While taxation per se is generally legislative in vitally includes the issuance of a valid
nature, collection of tax is administrative in assessment.[60] A valid assessment sufficiently
character.[49] Thus, Congress delegated the informs the taxpayer in writing of the legal and
assessment and collection of all national internal factual bases of the said assessment, thereby
revenue taxes, fees, and charges to the allowing the taxpayer to effectively protest the
BIR.[50] And as the BIR's chief, the CIR has the assessment and adduce supporting evidence in
power to make assessments and prescribe its behalf.
additional requirements for tax administration
and enforcement.[51] In Commissioner of Internal Revenue v.
Reyes[61] (Reyes Case), the petitioner issued an
The Tax Code provides two types of remedies to assessment notice and a demand letter for
enforce the collection of unpaid taxes, to wit: alleged deficiency estate tax against the
(a) summary administrative remedies, such as taxpayer estate. The assessment notice and
demand letter. simply notified the taxpayer lifeblood of the government, their assessment
estate of petitioner's findings, without stating and collection "should be made in accordance
the factual and legal bases for said assessment. with law as any arbitrariness will negate the very
The Court, absent a valid assessment, refused to reason for government itself."[62] (Emphasis
accord validity and effect to petitioner's supplied.)
collection efforts - which involved, among other
The Court similarly found that there was no valid
things, the successive issuances of a collection
assessment in Commissioner of Internal Revenue
letter, a final notice before seizure, and a
v. BASF Coating + Inks Phils., Inc.[63] (BASF
warrant of distraint and/or levy against the
Coating Case) as the assessment notice therein
taxpayer estate - and declared that:
was sent to the taxpayer company's former
x x x [P]etitioner violated the cardinal rule in address. Without a valid assessment, the Court
administrative law that the taxpayer be pronounced that petitioner's issuance of a First
accorded due process. Not only was the law here Notice Before Issuance of Warrant of Distraint
disregarded, but no valid notice was sent, either. and Levy to be in violation of the taxpayer
A void assessment bears no valid fruit. company's right to due process and effectively
blocked any further efforts by petitioner to
The law imposes a substantive, not merely a collect by virtue thereof. The Court ratiocinated
formal, requirement. To proceed heedlessly that:
with tax collection without first establishing a
It might not also be amiss to point out that
valid assessment is evidently violative of the
petitioner's issuance of the First Notice Before
cardinal principle in administrative
Issuance of Warrant of Distraint and Levy
investigations: that taxpayers should be able to
violated respondent's right to due process
present their case and adduce supporting
because no valid notice of assessment was sent
evidence. In the instant case, respondent has
to it. An invalid assessment bears no valid fruit.
not been informed of the basis of the estate tax
The law imposes a substantive, not merely a
liability. Without complying with the
formal, requirement. To proceed heedlessly with
unequivocal mandate of first informing the
tax collection without first establishing a valid
taxpayer of the government's claim, there can be
assessment is evidently violative of the cardinal
no deprivation of property, because no effective
principle in administrative investigations: that
protest can be made. The haphazard shot at
taxpayers should be able to present their case
slapping an assessment, supposedly based on
and adduce supporting evidence. In the instant
estate taxation's general provisions that are
case, respondent has not properly been
expected to be known by the taxpayer, is utter
informed of the basis of its tax liabilities. Without
chicanery.
complying with the unequivocal mandate of first
informing the taxpayer of the government's
Even a cursory review of the preliminary
claim, there can be no deprivation of property,
assessment notice, as well as the demand letter
because no effective protest can be made.
sent, reveals the lack of basis for - not to mention
the insufficiency of - the gross figures and details
x x x x
of the itemized deductions indicated in the
notice and the letter. This Court cannot
It is an elementary rule enshrined in the 1987
countenance an assessment based on estimates
Constitution that no person shall be deprived of
that appear to have been arbitrarily or
property without due process of law. In
capriciously arrived at. Although taxes are the
balancing the scales between the power of the Center's findings; and (c) the BIR never issued
State to tax and its inherent right to prosecute any preliminary assessment notice prior to the
perceived transgressors of the law on one side, issuance of the collection letters. Second,
and the constitutional rights of a citizen to due although the 1998 and 2002 Collection Letters
process of law and the equal protection of the and the 1999 Assessments against respondents
laws on the other, the scales must tilt in favor of were for the same excise taxes for the Covered
the individual, for a citizen's right is amply Years, the former were evidently not based on
protected by the Bill of Rights under the the latter. The 1998 Collection Letters against
Constitution.[64] respondents were issued prior to the 1999
Assessments; while the 2002 Collection Letter
It is worthy to note that in the Reyes Case and
against respondent Shell was issued even while
BASF Coating Case, there were assessments
respondent Shell's protest of the 1999
actually issued against the taxpayers therein,
Assessment was still pending before the CTA.
except that said assessments were adjudged
And third, assuming arguendo that the 1998 and
invalid for different reasons (i.e., for failing to
2002 Collection Letters were intended to
state the factual and legal bases for the
implement the 1999 Assessments against
assessment in the Reyes Case and for sending
respondents, the 1999 Assessments were
the assessment to the wrong address in the BASF
already nullified in the 2007 Shell Case and 2010
Coating Case). In the instant cases, petitioner did
Petron Case.
not issue at all an assessment against
respondents prior to his issuance of the 1998
Absent a previously issued assessment
and 2002 Collection Letters. Thus, there is even
supporting the 1998 and 2002 Collection Letters,
more reason for the Court to bar petitioner's
it is clear that petitioner's attempts to collect
attempts to collect the alleged deficiency excise
through said collection letters as well as the
taxes through any summary administrative
subsequent Warrants of Garnishment and
remedy.
Distraint and/or Levy are void and ineffectual. If
an invalid assessment bears no valid fruit, with
In the present case, it is clear from the wording
more reason will no such fruit arise if there was
of the 1998 and 2002 Collection Letters that
no assessment in the first place.
petitioner intended to pursue, through said
collection letters, summary administrative
The period for petitioner to collect the alleged
remedies for the collection of respondents'
deficiency excise taxes from respondents
alleged excise tax deficiencies for the Covered
through judicial remedies had already
Years. In fact, in the respondent Shell's case, the
prescribed.
collection letters were already followed by the
BIR's issuance of Warrants of Garnishment and
After establishing that petitioner could not
Distraint and/or Levy against it.
collect respondents' alleged deficiency excise
taxes for the covered years through summary
That the BIR proceeded with the collection of
administrative remedies without a valid
respondents' alleged unpaid taxes without a
assessment, the Court next determines whether
previous valid assessment is evident from the
petitioner could still resort to judicial remedies
following: First, petitioner admitted in CTA Case
to enforce collection.
Nos. 5728[65] and 6547 that: (a) the collections
letters were not tax assessment notices; (b) the
The Court answers in the negative as the period
letters were issued solely based on the DOF
for collection o£ the respondents' alleged assessment after such time, the tax may be
deficiency excise taxes for the Covered Years assessed at any time prior to the expiration of
through judicial remedies had already the period agreed upon. The period so agreed
prescribed. upon may be extended by subsequent
agreements in writing made before the
The alleged deficiency excise taxes petitioner expiration of the period previously agreed upon.
seeks to collect from respondents in the cases at
bar pertain to the Covered Years, i.e., 1992 to (c) Where the assessment of any internal
1997, during which, the National Internal revenue tax has been made within the period of
Revenue Code of the Philippines of 1977[66](1977 limitation above-prescribed, such tax may be
NIRC) was the governing law. Pertinent collected by distraint or levy or by a proceeding
provisions of the 1977 NIRC read: in court, but only if began (1) within five years
after assessment of the tax, or (2) prior to the
Sec. 318. Period of Limitation Upon Assessment
expiration of any period for collection agreed
and Collection. - Except as provided in the
upon in writing by the Commissioner and the
succeeding section, internal-revenue taxes shall
taxpayer before the expiration of such five-year
be assessed within five years after the return
period. The period so agreed upon may be
was filed, and no proceeding in court without
extended by subsequent agreements in writing
assessment for the collection of such taxes shall
made before the expiration of the period
be begun after the expiration of such period.
previously agreed upon.
For the purposes of this section, a return filed
before the last day prescribed by law for the Under Section 318 of the 1977 NIRC, petitioner
filing thereof shall be considered as filed on such had five years[67] from the time respondents filed
last day: Provided, That this limitation shall not their excise tax returns in question to: (a) issue
apply to cases already investigated prior to the an assessment; and/or (b) file a court action for
approval of this Code. (Emphasis Supplied) collection without an assessment. In the
petitions at bar, respondents filed their returns
Sec. 319. Exceptions as to period of limitation of for the Covered Years from 1992 to 1997, and
assessment and collection of taxes. - (a) In the the five-year prescriptive period under Section
case of a false or fraudulent return with intent to 319 of the 1977 NIRC would have prescribed
evade tax or of a failure to file a return, the tax accordingly from 1997 to 2002.
may be assessed, or a proceeding in court for
the collection of such tax may be begun without As the Court has explicitly found herein as well
assessment, at any time within ten years after as in the 2007 Shell Case and 2010 Petron Case,
the discovery of the falsity, fraud, or petitioner failed to issue any valid assessment
omission: Provided, That in a fraud assessment against respondents for the latter's alleged
which has become final and executory, the fact deficiency excise taxes for the Covered Years.
of fraud shall be judicially taken cognizance of in Without a valid assessment, the five-year
the civil or criminal action for the collection prescriptive period to assess continued to run
thereof. and had, in fact, expired in these cases.
Irrefragably, petitioner is already barred by
(b) Where before the expiration of the time prescription from issuing an assessment against
prescribed in the preceding section for the respondents for deficiency excise taxes for the
assessment of the tax, both the Commissioner Covered Years. Resultantly, this also bars
and the taxpayer have consented in writing to its petitioner from undertaking any summary
administrative remedies, i.e., distraint and/or deemed the filing of such pleadings as effective
levy, against respondents for collection of the tax collection suits so as to stop the running of
same taxes. the prescriptive period in cases where: (a) the
CIR issued an assessment and the taxpayer
Unlike summary administrative remedies, the appealed the same to the CTA;[73] (b) the CIR filed
government's power to enforce the collection the answer praying for the payment of tax within
through judicial action is not conditioned upon five years after the issuance of the
a previous valid assessment. Sections 318 and assessment;[74] and (c) at the time of its filing,
319(a) of the 1977 NIRC expressly allowed the jurisdiction over judicial actions for collection of
institution of court proceedings for collection of internal revenue taxes was vested in the CTA,
taxes without assessment within five years from not in the regular courts.[75]
the filing of the tax return and 10 years from the
discovery of falsity, fraud, or omission, However, judging by the foregoing conditions,
respectively.[68] even petitioner's Answers in CTA Case Nos. 5657,
5728, and 6547 cannot be deemed judicial
A judicial action for the collection of a tax is actions for collection of tax. First, CTA Case Nos.
begun: (a) by the filing of a complaint with the 5657, 5728, and 6547 were not appeals of
court of competent jurisdiction, or (b) where the assessments. Respondents went before the CTA
assessment is appealed to the Court of Tax to challenge the 1998 and 2002 Collection
Appeals, by filing an answer to the taxpayer's Letters, which, by petitioner's own admission,
petition for review wherein payment of the tax are not assessments. Second, by the time
is prayed for.[69] petitioner filed. his Answers before the CTA on
August 6, 1998, March 2, 1999, and November
From respondents' filing of their excise tax 29, 2002, his power to collect alleged deficiency
returns in the years 1992 to 1997 until the lapse excise taxes, the returns for which were filed
of the five-year prescriptive period under from 1992 to 1997, had already partially
Section 318 of the 1977 NIRC in the years 1997 prescribed, particularly those pertaining to the
to 2002, petitioner did not institute any judicial earlier portion of the Covered Years. Third, at the
action for collection of tax as aforedescribed. time petitioner filed his Answers before the CTA,
Instead, petitioner relied solely on summary the jurisdiction over judicial actions for
administrative remedies by issuing the collection collection of internal revenue taxes was vested
letters and warrants of garnishment and in the regular courts, not the CTA.[76] Original
distraint and/or levy without prior assessment jurisdiction over collection cases[77] was
against respondents. Sifting through records, it transferred to the CTA only on April 23, 2004,
can be said that petitioner's earliest attempts upon the effectivity of Republic Act No. 9282.[78]
to judicially enforce collection of respondents'
alleged deficiency excise taxes were Without either a formal tax collection suit filed
his Answers to respondents' Petitions for before the court of competent jurisdiction or
Review filed before the CTA in Case Nos. 5657, an answer deemed as a judicial action for
5728, and 6547 on August 6, 1998,[70] March 2, collection of tax within the prescribed five-year
1999,[71] and November 29, period under Section 318 of the 1977 NIRC,
[72]
2002, respectively. petitioner's power to institute a court
proceeding for the collection of respondents'
Verily, in a long line of jurisprudence, the Court alleged deficiency excise taxes without an
assessment had already prescribed in 1997 to taxes.
2002.
In sum, petitioner's attempts to collect the
The Court's ruling remains the same even if the alleged deficiency excise taxes from respondents
10-year prescriptive period under Section 319(a) are void and ineffectual because (a) the Issues
of the 1977 NIRC, in case of falsity, fraud, or regarding the transferred TCCs' validity,
omission in the taxpayer's return, is applied to respondents' qualifications as transferees of said
the present cases. TCCs, and respondents' use of the TCCs to pay for
their excise tax liabilities for the Covered Years,
Even if the Court concedes, for the sake of had already been settled with finality in the 2007
argument, that respondents' returns for the Shell Case and 2010 Petron Case, and could no
Covered Years were false or fraudulent, Section longer be re-litigated on the ground of res
319(a) of the 1977 NIRC similarly required judicata in the concept of conclusiveness of
petitioner to (a) issue an assessment; and/or (b) judgment; (b) petitioner's resort to summary
file a court action for collection without an administrative remedies without a valid
assessment, but within 10 years after the assessment was not in accordance with the
discovery of the falsity, fraud, or omission in the prescribed procedure and was in violation of
taxpayer's return. As early as the 1998 Collection respondents' right to substantive due process;
Letters, petitioner could already be charged with and (c) none of petitioner's collection efforts
knowledge of the alleged falsity or fraud in constitute a valid institution of a judicial remedy
respondents' excise tax returns, which precisely for collection of taxes without an assessment,
led petitioner to invalidate respondents' and any such judicial remedy is now barred by
payments using the transferred TCCs and to prescription.
demand payment of deficiency excise taxes
through said letters. The 10-year prescriptive WHEREFORE, premises considered, the
period under Section 319(a) of the 1977 NIRC Court DENIES the petition of the Commissioner
wholly expired in 2008 without petitioner issuing of Internal Revenue in G.R. No. 197945
a valid assessment or instituting judicial action and AFFIRMS the Decision dated February 22,
for collection. 2011 and Resolution dated July 27, 2011 of the
Court of Tax Appeals en banc in CTA En
The Court cannot countenance the tax Banc Case No. 535.
authorities' non-performance of their duties in
the present cases. The law provides for a statute The Court likewise DENIES the petition of the
of limitations on the assessment and collection Commissioner of Internal Revenue in G.R. Nos.
of internal revenue taxes in order to safeguard 204119-20 andAFFIRMS the Decision dated
the interest of the taxpayer against March 21, 2012 and Resolution dated October
unreasonable investigation.[79] 10, 2012 of the Court of Appeals in CA-G.R. SP
Nos. 55329-30.
While taxes are the lifeblood of the nation, the
Court cannot allow tax authorities indefinite SO ORDERED.
periods to assess and/or collect alleged unpaid
taxes. Certainly, it is an injustice to leave any Peralta,** Del Castillo, Tijam,
taxpayer in perpetual uncertainty whether he and Gesmundo,*** JJ., concur.
will be made liable for deficiency or delinquent
*
Per Special Order No. 2559 dated May 11, 2018.
[10]
See Joint Stipulation of Facts and Issues in
**
Per Raffle dated February 26, 2018. CTA Case No. 5728; rollo (G.R. Nos. 204119-20),
p. 579, and Amended Joint Stipulation of Facts
***
Per Special Order No. 2560 dated May 11, and Issues in CTA Case No. 6547; rollo (G.R. No.
2018. 197945), p. 882. See also petitioner's
Memorandum dated April 27, 2015; rollo (G.R.
[1]
Rollo (G.R. No. 197945), pp. 62-109; penned No. 197945), pp. 931, 934.
by Associate Justice Cielito N. Mindaro-Grulla
[11]
with Presiding Justice Ernesto D. Acosta and See Amended Joint Stipulation of Facts and
Associate Justices Juanito C. Castañeda, Jr., Issues in CTA Case No. 6547; rollo (G.R. No.
Lovell R. Bautista, Erlinda P. Uy, Caesar A. 197945), p. 883.
Casanova, Olga Palanca-Enriquez, Esperanza R.
[12]
Fabon-Victorino and Amelia R. Cotangco- Rollo (G.R. Nos. 204119-20), pp. 141, 269.
Manalastas concurring.
[13]
Through its Revenue District Officer Ruperto
[2]
Id. at 110-117. P. Somera.

[3] [14]
Rollo (G.R. Nos. 204119-20), pp. 52-68; Rollo (G.R. Nos. 2041 19-20), pp. 152-156,
penned by Associate Justice Ramon A. Cruz with 289-301, and 302-307.
Associate Justices Rosalinda Asuncion-Vicente
[15]
and Antonio L. Villamor concurring. Id. at 161, 308-318.

[4] [16]
Id. at 70-71. Id. at 247-266.

[5] [17]
Executive Order No. 226 dated July 16, 1987. Id. at 161-165.

[6] [18]
Rollo (G.R.. Nos. 204119-20), p. 213. Signed by BIR Regional Director Antonio I.
Ortega and received by Shell on July 17, 1998.
[7]
The DOF Center was created pursuant to (Id. at 166.)
Administrative Order No. 266 dated February 7,
[19]
1992, in relation to EO 226, to centralize tax Id. at 113-140.
credit availment processing. It is composed of
[20]
representatives from the DOF, the BOI, the Id. at 477.
Bureau of Customs, and the Bureau of Internal
[21]
Revenue. Id. at 109.

[8] [22]
See Joint Stipulation of Facts and Issues in CTA As amended by the Tax Reform Act of 1997,
Case No. 5728; rollo (G.R. Nos. 204119-20), pp. Republic Act No. 8424 (December 11, 1997).
579-580.
[23]
In Resolutions dated September 7,
[9]
Inclusive of the years 1992, 1994 to 1997 for 1999. Rollo (G.R. Nos. 204119-20), p. 112 and
respondent Shell and 1993 to 1997 for 246.
respondent Petron.
[24] [37]
Prior to the effectivity of Republic Act No. Id. at 681-730.
9282, a CTA decision is appealable to the Court
[38]
of Appeals. After its enactment, the CTA became Id. at 174-216.
an appellate court of equal rank to the Court of
[39]
Appeals. Thus, a decision of a CTA Division is Id. at 215.
appealable to the CTA En Banc.
[40]
In a Resolution dated August 18, 2009. (Id. at
[25]
Pilipinas Shell Petroleum Corp. v. 239-242.)
Commissioner of Internal Revenue, 565 Phil. 613
[41]
(2007). Id. at 243-301.

[26] [42]
In letters dated August 31, 1999 and Rollo (G.R. Nos. 204119-20), pp. 24-25.
September 1, 1999 [Rollo (G.R. No. 197945), pp.
[43]
732-734]. Rollo (G.R. No. 197945), pp. 25-26.

[27] [44]
In a letter addressed to respondent Shell 399 Phil. 205, 215-218 (2000).
dated November 3, 1999 [Rollo (G.R. No.
[45]
197945), pp. 736-742] and a letter addressed to October 5, 1982 Memorandum of Agreement
respondent Petron dated October 24, 1999. between DOF and BOI, and the rules
implementing the Omnibus Investments Code of
[28]
Pilipinas Shell Petroleum Corp. v. 1987.
Commissioner of Internal Revenue, supra note 25
[46]
at 657. Dated September 6, 1999. Subject:
Implementing the Provisions of the National
[29]
As per Entry of Judgment, Supreme Court of Internal Revenue Code of 1997 Governing the
the Philippines Second Division. Rules on Assessment of National Internal
Revenue Taxes, Civil Penalties and Interest and
[30]
Petron Corporation v. Commissioner of the Extra-judicial Settlement of a Taxpayer's
Internal Revenue, 640 Phil. 163 (2010). Criminal Violation of the Code Through Payment
of a Suggested Compromise Penalty.
[31]
Id. at 188.
[47]
See Philippine Bank of Communications v.
[32]
Supreme Court of the Philippines, First Commissioner of Internal Revenue, 361 Phil. 916,
Division. 927 (1999); Commissioner of Internal Revenue v.
Bank of the Philippine Islands, 549 Phil. 886, 903
[33]
Rollo (G.R. No. 197945), p. 765. (2007).

[34] [48]
Id. at 767-773. Commissioner of Internal Revenue v. Algue,
Inc., 241 Phil. 829, 830 (1988).
[35]
Through BIR Assistant Commissioner Edwin R.
[49]
Abella. De Leon, Hector S., Fundamentals of
Taxation (2004 Ed.), p. 7.
[36]
Rollo (G.R. No. 197945), p. 731.
[50]
Section 2 of the Tax Code provides, "Powers
and Duties of the Bureau of Internal Revenue. - Also see Commissioner of Internal Revenue v.
The Bureau of Internal Revenue shall be under Metro Star Superama, Inc., id. at 187.
the supervision and control of the Department of
[58]
Finance and its powers and duties shall See Commissioner of Internal Revenue v. BASF
comprehend the assessment and collection of all Coating + INKS Phils., Inc., supra note 56 at 772
national internal revenue taxes, fees, and citing Commissioner of Internal Revenue v.
charges, and the enforcement of all forfeitures, Algue, Inc., supra note 48 at 836.
penalties, and fines connected therewith,
[59]
including the execution of judgments in all cases Alhambra Cigar & Cigarette Manufacturing
decided in its favor by the Court of Tax Appeals Co. v. Collector of Internal Revenue, 105 Phil.
and the ordinary courts. The Bureau shall give 1337 (1959), as quoted in Republic v. De Yu, 119
effect to and administer the supervisory and Phil. 1013, 1017 (1964).
police powers conferred to it by this Code or
[60]
other laws." This section amended Section 3 of Commissioner of Internal Revenue v. BASF
the National Internal Revenue Code of the Coating + INKS Phils., Inc., supra note 56.
Philippines of 1977. Also see Remedies of the Bureau in the Audit
Process and Collection of Delinquent
[51]
Section 6, Tax Code. Accounts, https://www.bir.gov.ph/index.php/ta
xpayer-bill-of-rights.html#remedies-of-the-
[52]
See Section 207, Tax Code. Formerly Sections bureau-in-theaudit-process-and-collection-of-
304 and 310 of the National Internal Revenue delinquent-accounts. (Last visited January 11,
Code of the Philippines of 1977. 2018.)

[53] [61]
See Sections 203 and 220, Tax Code. Formerly Supra note 56.
Sections 318 and 319 of the National Internal
[62]
Revenue Code of the Philippines of 1977. Id. at 189-190.

[54] [63]
Commissioner of Internal Revenue v. Pineda, Supra note 56.
128 Phil. 146, 150 (1967).
[64]
Id. at 771-772.
[55]
Philippine Bank of Communications v.
[65]
Commissioner of Internal Revenue, supra note 47 Rollo (G.R. Nos. 204119-20), p. 580.
at 927.
[66]
Section 318 of the National Internal Revenue
[56]
See Commissioner of Internal Revenue v. Code of 1977 (Presidential Decree No. 1158,
Metro Star Superama, Inc., 652 Phil. 172, 188 [June 3, 1977]) was previously Section 331 of the
(2010), Commissioner of Internal Revenue v. National Internal Revenue Code of 1939
Algue, Inc., supra note 48 at 836; Commissioner (Commonwealth Act No. 466, [June 15, 1939]).
of Internal Revenue v. Reyes, 516 Phil. 176, 190
[67]
(2006); Commissioner of Internal Revenue v. Section 318 was amended by Republic Act
BASF Coating + INKS Phils., Inc., 748 Phil. 760, No. 8424, shortening the prescriptive period to
772 (2014). assess and collect national internal revenue
taxes from five to three years, to quote:
[57]
See Article III, Section 1, 1987 Constitution. "SECTION 203. Period of Limitation Upon
 [74]
Assessment and Collection. - Except as provided Bank of the Philippine Islands v. Commissioner
in Section 222, internal revenue taxes shall be of Internal Revenue, 510 Phil. 1 (2005).
assessed within three (3) years after the last day
[75]
prescribed by law for the filing of the return, and China Banking Corporation v. Commissioner
no proceeding in court without assessment for of Internal Revenue, 753 Phil. 58 (2015).
the collection of such taxes shall be begun after
[76]
the expiration of such period: Provided, That in a Bank of the Philippine Islands v. Commissioner
case where a return is filed beyond the period of internal Revenue, supra note 74.
prescribed by law, the three (3)-year period shall
[77]
be counted from the day the return was filed. For In which the principal amount involved is one
purposes of this Section, a return filed before the million pesos or more.
last day prescribed by law for the filing thereof
[78]
shall be considered as filed on such last day." Entitled, "An Act Expanding the Jurisdiction of
(Emphasis supplied.) the Court of Tax Appeals (CTA), Elevating Its Rank
to the Level of a Collegiate Court with Special
[68]
In case an assessment had been timely Jurisdiction and Enlarging Its Membership,
issued, Section 319(c) of the 1977 NIRC provided: Amending for the Purpose Certain Sections of
"Where the assessment of any internal revenue Republic Act No. 1125, as Amended, Otherwise
tax has been made within the period of Known as the Law Creating the Court of Tax
limitation aboveprescribed, such tax may be Appeals, and for Other Purposes."
collected by distraint or levy or by a proceeding
[79]
in court, but only if began (1) within five years Philippine Journalists, Inc. v. Commissioner of
after assessment of the tax, or (2) prior to the Internal Revenue, 488 Phil. 218, 229-230 (2004).
expiration of any period for collection agreed
upon in writing by the Commissioner and the
taxpayer before the expiration of such five-year
period. x x x"

[69]
Palanca v. Commissioner of Internal Revenue,
114 Phil. 203, 207 (1962).

[70]
Rollo (G.R. Nos. 204119-20), p. 199.

[71]
Id. at 72.

[72]
Rollo (G.R. No. 197945), p. 181.

[73]
See Philippine National Oil Company v. Court
of Appeals, 496 Phil. 506 (2005); Fernandez
Hermanos, Inc. v. Commissioner of Internal
Revenue, 140 Phil. 31, 47 (1969); Palanca v.
Commissioner of Internal Revenue, supra note
69.