Philippine Bank of Communication vs CIR FACTS:

Petitioner, Philippine Bank of Communications (PBCom), filed its quarterly income tax returns for the first and second quarters of 1985, reported profits, and paid the total income tax of P5,016,954.00 by applying PBCom's tax credit memos for P3,401,701.00 and P1,615,253.00, respectively. Subsequently, however, PBCom suffered net loss of P25,317,228.00, thereby showing no income tax liability in its Annual Income Tax Returns for the year-ended December 31, 1985. For the succeeding year, ending December 31, 1986, the petitioner likewise reported a net loss of P14,129,602.00, and thus declared no tax payable for the year. But during these two years, PBCom earned rental income from leased properties. The lessees withheld and remitted to the BIR withholding creditable taxes of P282,795.50 in 1985 and P234,077.69 in 1986. On August 7, 1987, petitioner requested the Commissioner of Internal Revenue, among others, for a tax credit of P5,016,954.00 representing the overpayment of taxes in the first and second quarters of 1985. Thereafter, on July 25, 1988, petitioner filed a claim for refund of creditable taxes withheld by their lessees from property rentals in 1985 for P282,795.50 and in 1986 for P234,077.69. Pending the investigation of the respondent Commissioner of Internal Revenue, petitioner instituted a Petition for Review on November 18, 1988 before the Court of Tax Appeals (CTA). The petition was docketed as CTA Case No. 4309 entitled: "Philippine Bank of Communications vs. Commissioner of Internal Revenue." The CTA decided in favor of the BIR on the ground that the Petition was filed out of time as the same was filed beyond the two-year reglementary period. A motion for Reconsideration was denied and the appeal to Court of Appeals was likewise denied. Thus, this appeal to Supreme Court. Issues: a) Whether or not Revenue Regulations No. 7-85 which alters the reglementary period from two (2) years to ten (10) years is valid. b) Whether or not the petition for tax refund had already prescribed.

Ruling:

a. RR 7-85 altering the 2-year prescriptive period imposed by law to 10-year prescriptive period is invalid.

Administrative issuances are merely interpretations and not expansions of the provisions of law, thus, in case of inconsistency, the law prevails over them. Administrative agencies have no legislative power. When the Acting Commissioner of Internal Revenue issued RMC 7-85, changing the prescriptive period of two years to ten years on claims of excess quarterly income tax payments, such circular created a clear inconsistency with the provision of Sec. 230 of 1977 NIRC. In so doing, the BIR did not simply interpret the law; rather it legislated guidelines contrary to the statute passed by Congress. It bears repeating that Revenue memorandum-circulars are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued from time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive officers, whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement. Further, fundamental is the rule that the State cannot be put in estoppel by the mistakes or errors of its officials or agents. As pointed out by the respondent courts, the nullification of RMC No. 7-85 issued by the Acting Commissioner of Internal Revenue is an administrative interpretation which is not in harmony with Sec. 230 of 1977 NIRC, for being contrary to the express provision of a statute. Hence, his interpretation could not be given weight for to do so would, in effect, amend the statute.

b. By implication of the above, claim for refund had already prescribed. Since the petition had been filed beyond the prescriptive period, the same has already prescribed. The fact that the final adjusted return show an excess tax credit does not automatically entitle taxpayer claim for refund without any express intent. WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals appealed from is AFFIRMED, with COSTS against the petitioner.

Luzon Stevedoring vs CTA

FACTS: Petitioner Luzon Stevedoring Co. seeks to secure a tax refund from the Commissioner of Internal Revenue for its payment of compensating tax in importing engine parts and other equipment for the repair and maintenance of its tugboats. It contends that tugboats are included in the term cargo vessel under the tax exemption provisions of Section 190 of the Revenue Code, as amended by Republic Act 3176; that the law treats a tugboat towing a barge loaded with cargoes for loading and unloading to constitute a single vessel. Thus, the engines, spare parts and equipment imported by it to repair and maintain its tugboats are exempt from compensating tax. ISSUE: Whether or not petitioner's tugboats are considered "cargo vessels" subject to compensating tax exemption under the law? HELD: No, the instant petition is without merit. The law, specifically the amendatory provisions of Republic Act 3176, limits tax exemption from the compensating tax to imported items to be used by the importer himself as operator of passenger or cargo vessel or both, whether coastwise or oceangoing, including engines and spare parts of said vessel. Here, the petitioners "tugboats" are not "cargo vessels" because they are mainly employed for towing and pulling purposes, not in carrying or transporting passengers or cargoes. In fact, a tugboat is defined as a strongly built, powerful steam or power vessel, used for towing and, now, also used for attendance on vessel. The Court reiterates that "as the power of taxation is a high prerogative of sovereignty, the relinquishment is never presumed and any reduction or diminution thereof with respect to its mode or its rate, must be strictly construed, and the same must be couched in clear and unmistakable terms in order that it may be applied." The general rule is that any claim for exemption from the tax statute should be strictly construed against the taxpayer. The petition is dismissed.

NPC vs Province of Albay Facts:

The respondents caused the publication of a notice of auction sale involving the properties of NAPOCOR and the Philippine Geothermal Inc. consisting of buildings, machines, and similar improvements standing on their offices at Tiwi, Albay. The amounts to be realized from this advertised auction sale are supposed to be applied to the tax delinquencies claimed for real property taxes. NAPOCOR opposed the sale, invoking the resolution of the Fiscal Incentives Review Board (FIRB), which granted tax exemption to petitioner. Under Executive Order no. 776, the law creating FIRB, it has the power to, among other things, recommend to the President of the Philippines and for reasons of compatibility with the declared economic policy, the withdrawal, modification, revocation or suspension of the enforceability of any of the abovestated statutory subsidies or tax exemption grants, except those granted by the Constitution. After the FIRBs resolution granting tax exemptions to NAPOCOR has been made, Executive Order no. 93, which authorizes FIRB to, among others, restore tax and/or duty exemptions withdrawn hereunder in whole or in part and impose conditions for the restoration of tax and/or duty exemption. This was thereafter invoked by petitioner corporation in their opposition to the sale in issue. On March 10, 1989, the Court resolved to issue a temporary restraining order directing the Albay provincial government "to CEASE AND DESIST from selling and disposing of the NAPOCOR properties subject matter of thispetition. It appears, however, that "the temporary restraining order failed to reach respondents before the scheduled bidding. Hence, the respondents proceeded with the bidding wherein the Province of Albay was the highest bidder.

Issue: Whether or not petitioner NAPOCOR is exempt from paying real property tax.

Held: It is to be pointed out that under Presidential Decree No. 776, the power of the FIRB was merely to "recommend to the President of the Philippines and for reasons of compatibility with the declared economic policy, the withdrawal, modification, revocation or suspension of the enforceability of any of the above-cited statutory subsidies or tax exemption grants, except those granted by the Constitution." It has no authority to impose taxes or revoke existing ones, which, after all, under the Constitution, only the legislature may accomplish. The fact that under Executive Order No. 93, the FIRB has been given the prerogative to "restore tax and/or duty exemptions withdrawn hereunder in whole or in part," and "impose conditions for ... tax and/or duty exemption" is of no moment. These provisions are prospective in character and cannot affect the Board's past acts. As a rule finally, claims of tax exemption are construed strongly against the claimant. They must also be shown to exist clearly and categorically, and supported by clear legal provisions. WHEREFORE, the petition is DENIED. No costs. The auction sale of the petitioner's properties to answer for real estate taxes accumulated between June 11, 1984 through March 10, 1987 is hereby declared valid.