JOSELITO M. LIZARONDO v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC JOSELITO M. LIZARONDO, CTA EB NO. 2993 P e titio ner, (CTA Case No. 11297) - versus - P resen t: RINGPIS-LIBAN, Acting P.J., MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CU I-DAVID, FERRER-FLORES, and ANGELES, Jl. COMMISSIONER OF INTERNAL Promulgated: REVENUE, NOV 2 1~=@-j--�--y;..-. � ~- ? Respondent. '6D X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - DECISION RINGPIS-LIBAN, ,L: The Case Before the Court is a Petition for Review praying for (a) the reversal of the Resolution1 dated May 24, 2024 and Resolution2 dated August 20, 2024 ("Assailed Resolutions") of the Court of Tax Appeals First Division ("First Division") dismissing the case for lack o f jurisdiction, and (b) the remand of the case to the court a q11o for the determination of Petitioner's entitlement to his claim for refund of erroneous capital gains tax ("CGT") payment. I T he P artiey Promulgated by Presiding Just ice Roman G. Del Rosario, Associate Justice Jean Marie A. Bacorro-Villena, and Associate Justice Lanee S. Cui- David. Docket, pp. 504-5 12. 2 Promulgated by Presiding Justice Roman G. Del Rosario, Associate Justice Jean Marie A. Bacorro-Yillena, and Associate Justice Lanee S. Cui- David. Docket, pp. 548-551.

DECISION CTA EB No. 2993 (CTA Case No. 11297) Petitioner is Elipino, of legal age, with residence at 175 A J\Iabini St. Barangay Pinagbakahan, Malolos City, Bulacan.3 Respondent is charged with the assessment and collection of all national internal revenue taxes, fees and charges, and enforcement of all forfeitures, penalties and fines connected therewith. He may be served with summons and other court processes at the Bureau of Internal Revenue ("BIR") Revenue Region No. 5 - Caloocan City Regional Office Bldg. General Concepcion St. Caloocan Cin�" The Facts The facts as stipulated by the parties during the proceedings in the First Division are as follows: "1. Petitioner was the President and CEO and owner of 2,059,999 common shares in SwipeWallet Inc. ('Swipe'), a Philippines '>vith address at Unit 808, One Park Drive Building, 9th corporation duly organized under the laws of the Republic of the ;\venue Corner 11th Drive, Bonifacio Global City, Taguig. 2. On 26 Januaty 2022, Petitioner entered into a Share Purchase ~\greement ('SP :\') with Binance Capital J\Ianagement Co. Ltd. ('Binance') represented by a Mr. Changpeng Zhao. Under the SP,\, Binancc agreed to purchase all of Petitioner's share in Swipe. 3. For the sale of Petitioner's shares of stock in Swipe, the parties agreed to a purchase price of up to Forty j\Iillion USD (USD 40,000,000) (Section 3.1 of the SPA), to be paid to Petitioner in four (4) tranches (Section 3.2 of the SPA) upon the fulfillment of certain conditions and/or obligations set forth in the SPA (Section 4 of the SPA). 4. Petitioner received the first and second tranche of payments, i.e. the aggregate of20,000,000 Binance USD, equivalent to Twenty j\Iillion USD (USD 20,000,000), on the following dates: In Binance USD 3 j\Iarch 2022 1,000 4 J\Iarch 2022 9,999,000 3 Rollo, Petition for Review, Parties, p. 2. 4 Id., Petition for Review, Parties, p. 3.

DECISION 1,000 9,999,000 CTA EB No. 2993 (CTA Case No. 11297) 20,000,000 4 l\Iav 2022 6 Mav 2022 Total 5. On 12 July 2022, Petitioner and Binance executed, in counterparts, Deeds of Absolute Sale ('DQ,\S') to document the sale of Petitioner's 2,059,999 common shares of stock in Swipe Binance. 6. On 14 July 2022, Petitioner and Binance executed a Letter of ~-\mendment to the SPA dated 26 January 2022. Under this letter of amendment, the parties agreed to: a. Proceed to Closing; b. \Vaive the Closing Conditions Precedent set out in Sections 4.2(e), 4.2(t) and 4.2(g) of the SPA as a condition for the payment of the Second Tranche Pa.vment' c. .Amend Section 4.5 of the SPA to include the Closing Conditions Precedent in the requirements for the payment of the Third Tranche Payment; d. Insert the words 'or BUSD' (Binance USD) immediately after the words 'other available funds' in the lead-in paragraph to Section 3.2 of the SP""� 7. On 23 July 2022, Petitioner received from Binance Three i\Iillion Binance USD (3,000,000 Binancc USD), e(]Uivalcnt to Three f-Iillion USD (USD 3,000,000). 8. On 27 July 2022, within the deadline for filing the CGT Return, i.e. thirty (30 days) after each sale and which in this case is within thirty (30) days from the execution of the DO,\.S on 12 July 2022, Petitioner filed a CCT Return (BIR Form No. 1707) with Respondent at Revenue District Office ('liDO') No. 25A - \Vest Bulacan as a result of the sale transaction. Since the purchase price was in USD currency, Petitioner converted the purchase price into Philippine Pesos (Php) using the prevailing conversion rate provided in the Bangko Sentral ng Pilipinas (BSP) Reference Exchange Rate Bulletin on 12 July 2022, the date the Deed of ~�\.bsolute Sale was executed. 9. Subsequently, on 29 July 2022, Petitioner paid Respondent Three Hundred Thirty-Five Million Three Hundred Seventy-Three Thousand Pesos (Php 335,373,000), representing the CGT due on the transfer of shares, computed as follow;t.

DECISION CTA EB No. 2.993 (CTA Case No. 112.97) PARTICULARS AMOUNT IN PESO Selling Price 2,23 7,880,000 Less: Acquisition Cost 2,059,999 Gain 2,235,820,001 Computation of Tax i\Iultiplied bv: CGT Rate 15% CGT Due: 33::>,373,000 10. On 2 ~\ugust 2022, Respondent BIR issued electronic Certificate Authorizing Registration ('eC\R') No. eCP201300066189 for the sale/transfer of shares from Petitioner to Binance. 11. On 6 September 2022, Petitioner and Binance executed another Letter of 1\mendment to the SP"\ dated 26 January 2022. Under this letter of amendment, the parties agreed to restructure the third tranche payment by splitting it into two tranches, i.e. the third tranche payment, subject to the fulfillment of the conditions in Section 4.4 (a) and Section 4.4 (c) of the SFc\, shall be paid in two (2) tranches, a tranche payment of Six Million USD (USD 6,000,000) and Four Million USD (USD 4,000,000). 12. Petitioner received the third tranche of payment of 10,000,000 Binance USD, equivalent to USD 10,000,000, on the following dates: 17 September 2022 In Binance USD 19 September 2022 100 Total 5,999,900 6,000,000 25 October 2022 In Binance USD 25 October 2022 100 Total 3,999,900 4,000,000 13. On 29 November 2022, to comply with Post-Closing Obligations II provided under Section 4.4 of the SP1\, Petitioner provided Binance an action plan relating to Swipe and its business and the full details of Swipe's token allocation. ~

DECISION CTA EB No. 2993 (CTA Case No. 11297) 14. Binance did not approve such token allocation and the said action plan. In view thereof, Post-Closing Obligations II in the SPc\ was deemed not complied with by Petitioner. 15. Following the non-compliance of the Post-Closing Obligations II, Binance and Petitioner came to an agreement to reduce the purchase price from Forty 1\lillion USD (USD 40,000,000) to Thirty Seven Million USD (USD 37,000,000). 16. On 1 December 2022, due to the non-compliance of Petitioner with Post-Closing Obligations II of the Original SPc\, Petitioner and Binance executed another Letter of "-\mendment to the SP_-\ dated 26 January 2022. Under this letter of amendment, the parties mutually agreed, after negotiations, to reduce the Purchase Price to Thirty Seven ivlillion USD (USD 37,000,000). 17. On 8 December 2022, Petitioner received from Binance, a total of Four Million Binance USD (4,000,000 Binance USD), equivalent to F�our 1\Iillion USD (USD 4,000,000), the breakdown of which is shown below: 8 December 2022 In Binance USD Total 1000 3,999,000 4,000,000 18. The aggregate of the aforementioned Four Million Binance USD (4,000,000 Binance USD) together with the Three i\Iillion Binance USD (3,000,000 Binance USD) which was received by the Petitioner on 23 July 2022, i.e. Seven i\Iillion Binance (USD USD 7,000,000) and is equivalent to Seven Million USD (USD 7,000,0000) represents the fourth and final tranche of payment. 19. In summary, the total consideration received by Petitioner as payment for the sale of all his shares of stock in Swipe to Binancc is Thirty Seven J'vlillion Binancc USD (37,000,000 Binance USD), i.e. equivalent to Thirty Seven Million USD (USD 37,000,000). 20. To document the reduction in the purchase price pursuant to the Third Letter ofAmendment, on 29 December 2022 and 17 January 2023, Petitioner and Binance, respectively, executed an "-\mended DOc\S in counterparts. The said ,-\mended DO,-\S reflected the amended purchase price of Thirty Seven Million USD USD 37,000,007

DECISION CTA EB No. 2993 (CTA Case No. 11297) 21. On 17 January 2023, Binance issued a Board Resolution confirming the following: a. The authority of the Binance's officers, directors, and representatives to take any and all actions necessary to complete the acqmsltlon of Petitioner's shares in Swipe\'Vallet Inc.; and b. c\uthority of ;\Jr. Changpcng Zhao to negotiate, settle, approve, and execute for and on behalf of Binance any other agreement, document or deed considered necessarv or desirable in connection with or incidental to the transaction or any amendments thereto. 22. In view of the reduction of the purchase price, Petitioner, through its external consultant, Isla Lipana & Co., filed an 1\pplication for Refund of Erroneously Paid Capital Gains Tax with BIR RDO No. 25"'\-West Bulacan on 8 February 2023. 23. In its application, Petitioner presented the follmving computation with regard to the actual amount of CGT paid, and the amount of the overpaid CGT: ! PARTICULARS AMOUNT IN PESO ! Selling Price per Amended DO,\S 2,070,039,000.00 i Less: Acquisition Cost 2,059,999.00 � Gain 2,067,979,001.00 . Computation of Tax � Multiplied bv: CGT Rate 15% CGT Due 310,196,850.15 335,373,000.00 1 (25,176,149.85) Less: CGT Paid Erroneously Paid/ Overpaid CGT In determining the overpayment, the BSP rate of exchange of PHP 55.947 to USD 1 which was prevailing on the date of signing the DOAS on 12 July 2022 was also used as the basis. 24. On 23 ;\lay 2023, Petitioner received a letter from BIR RDO No. 25A- West Bulacan dated 22 February 2023, informing him that the refund application was forwarded to the Legal Division of BIR Revenue Region No. 5 Caloocan City to seek the latter's opinion on the validity of the refund. ~

DECISION CTA EB No. 2993 (CTA Case No. 11297) 25. On 4 July 2023, Petitioner filed a Supplemental Letter to BIR Revenue Region No. 5 Caloocan City to provide clarifications, additional information and documents to support the claim for refund of Petitioner's overpaid CGT. 26. On 3 October 2023, Petitioner received a letter from Respondent dated 12 September 2023 denying his application for refund of erroneously paid CGT."5 On October 27, 2023, Petitioner filed a Petition for Review" which was eventually raffled to the First Division. The Ruling ofthe First Division On May 24, 2024, the First Division promulgated the Resolution dated J\Iay 24, 2024 granting Respondent's J\Iotion to Dismiss incotporated in his [\nswer, the dispositive portion of which reads: "WHEREFORE, premises considered, respondent's Motion to Dismiss incorporated in his Answer flied on January 12, 2024, is GRANTED. The Petition for Review filed on October 27, 2023 is DISMISSED for lack of jurisdiction. SO ORDERED."' ~\ggrievcd, Petitioner filed a "J\Iotion for Reconsideration (Re: Resolution dated 24 Mtl)' 2024)"8 on June 10, 2024, which the First Division denied in the Resolution dated August 20, 2024, to wit: "WHEREFORE, premises considered, Petitioner's Motion for Reconsideration (Re: Resolution dated 24 May 2024) is DENIED for lack of merit. SO ORDERED."9 The Proceedings in the Court ofTax Appeals En Bane _/-/ 5 Docket, Joint Stipulation of Facts and Issues, Stipulation of Facts, pp. 485-490. 6 Jd., pp. 7-31. 7 Id., Resolution dated May 24, 2024, p. 512. 8 Id., pp. 513-527. 9 Jd., Resolution dated August 20, 2024, pp. 550-551.

DECISION CTA EB No. 2993 (CTA Case No. 11297) On September 13, 2024, the instant "Petition for Review (Re: Resolution dated 20 "-\ugust 2024)"10 was flied. On November 12, 2024, the Court issued a Minute Resolution11 directing Petitioner to submit the Affidavit of Service of the petition, within five (5) days from notice. On November 21,2024, Petitioner filed its "Compliance with Submission (Re: Notice dated 11 November 2024)" 1", with attached Affidavit of Service. On January 07, 2025, a ""Iinute Resolution 13 was issued: 1) Noting the Compliance with Submission (Re: Notice dated 11 November 2024)"; and 2) directing Respondent to file his comment on the "Petition for Review (Rc: Resolution dated 20 i\ugust 2024)" "vithin ten (1 0) days from notice. On January 23, 2025, Respondent flied his "Comment/Opposition (Re: Petition for Review En Banc)" 14 Thus, on Pebruary 05, 2025, a i\Iinute Resolution was issued submitting the instant case for decision. Assignment of Error Petitioner raises a single ground in support of its petition- the Honorable Court of Tax _\ppeals ("CTA") First Division erred in dismissing Petitioner's claim for refund of his erroneously paid CGT, in the aggregate amount of Php25, 176,149.85, on the ground of lack of jurisdiction. 15 The Arguments of the Parties Petitioner avers that jurisdiction on judicial claims for refund under Section 229 of the National Internal Revenue Code ("NIRC") of 1997, as amended, is not predicated on either the denial or inaction of Respondent on the administrative claim. i\ccording to Petitioner, a filed administrative claim for refund is sufficient for the CTA Division to acquire jurisdictio~ 10 Rollo, pp. 1-22. Record shows that Petitioner received the Resolution dated August 20, 2024 on August 29, 2024; Docket, p. 547. 11 Id., p. 44. 12 ld., pp. 45-49. 13 ld., p. 51. 14 ld., pp. 52-55. 15 Jd., Petition for Review, Assignment of Errors [sic], p. 8.

DECISION CIA EB No. 2993 (CIA Case No. 11297) Petitioner maintains that he validly filed his administrative claim with BIR Revenue District Office ("RDO") No. 25c\-West Bulacan, and both his administrative and judicial claims were filed within the two-year prescriptive period. c\lso, Petitioner asserts that there is no law or jurisprudence which supports the position that the exhaustion of an administrative claim for tax refund is a condition precedent that must be completely acted upon by the BIR before a judicial claim for refund may be filed by the taxpayer. c\dditionally, Petitioner alleges that the case of Commissioner of Intema! Revenue JJ. CanierAir ConditioniNg Phi!ippims, I11c. 16 ("CIR v. Cam'el') is not confined to refund claims where the two-year prescriptive period to file a judicial claim is about to expire, but to all refund claims falling under Section 229 in relation to Section 204 of the NIRC of 1997, as amended. Lastly, Petitioner points out that Revenue t-.Icmorandum Order ("l~l\IO") No. 30-2018 and Revenue J\Iemorandum Circular ("RMC") No. 17-2018 merely provided the guidelines for the processing of administrative claims for erroneously paid taxes and are insufficient to address the silence of Sections 204 and 229 of the Tax Code as to the requirement of the action or denial of the Commissioner oflnternal Revenue ("CIR"), before a judicial claim is filed before the CL\. Division. On the other hand, Respondent contends that the petltlon is a mere rehash of the previous allegations raised before the CL\. First Division. According to Respondent, there arc no new matters or material allegations raised before the CL\ Ell Balle. Respondent manifests that for lack of jurisdiction, the CTA En Bane has no other option but to dismiss the case and that it cannot rule on the merits of the case. The Ruling of the Court TiinelinessofPeddon The Court in Division issued the Resolution denying Petitioner's "Motion for Reconsideration (Re: Resol!ttioll dated 24 May 2024)" on c\ugust 20, 2024. Petitioner received said Resolution on "\.ugust 29, 2024. 1' Pursuant to Rule 4, ,/V 16 G.R. No. 226592, July 27, 2021. 17 Docket, p. 547.

DECISION CTA EB No. 2993 (CTA Case No. 11297) Section 2(a)(1) 18 in relation to Rule 8, Section 3(b) 19 of the Revised Rules of the Court of Tax Appeals"" (RlZCL\.), Petitioner had fifteen (1 5) days from date of receipt of the resolution or until September 13, 2024 \vithin which to file his petition for review. On September 13, 2024, Petitioner timely flied the present "Petition for Review (Re: Resolution dated 20 c\.ugust 2024)". Hence, the Court En Bane validly acquired jurisdiction. \\fe now proceed to the merits of the case. Provisions governmg the refund of erroneously or ilfegalfycolfectedt~es The crux of the controversy is whether or not the CfA First Division has jurisdiction over Petitioner's claim for refund of its alleged erroneously paid CGT. The tax credit or refund of erroneously or illegally collected taxes by the BIR is governed by Sections 204(C) and 229 of the NIRC of 1997, as amended by Republic .-\ct ("IL\.") No. 1096321 and IL-\. No. 11 534""� This was the applicable Tax Code then prevailing at the time when Petitioner's claim was filed, before the further amendment of the Code by R.A No. 1197~ 18 Sec. 2. Cases within the jurisdiction of the Court en bane.- The Court en bane shall exercise exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: XXX XXX XXX (1) Cases arising from administrative agencies - Bureau of Internal Revenue, Bureau of Customs, Department of Finance, Department of Trade and Industry, Department of Agriculture; x x x 19 Sec. 3. Who may appeal,� period to file petition. - x x x (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. (Rules of Court, Rule 42, sec. 1a) 20 A.M. No. 05-11-07-CTA, November 22, 2005. 21 Also known as the Tax Reform for Acceleration and Inclusion (TRAIN) Law, December 19, 2017. 22 Also known as the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE Law, March 26, 2021. 23 Also known as the Ease of Paying Taxes Act, January 05, 2024.

DECISION CTA EB No. 2993 (CTA Case No. 11297) The provisions read as follows: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may- XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for usc and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Pr01;ided, bowez1e1; That a return filed showing an overpayment shall be considered as a written claim for credit or refund. "-\ Tax Credit Certificate validly issued under the provisions of tlus Code may be applied against any internal revenue tax, excluding witl1holding taxes, for winch the taxpayer is directly liable. Any recp.1est for conversion into refund of unutilized tax credits may be allowed, subject to the provisions of Section 230 of this Code: Provided, That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: PrrJllided.jintbe1; That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made. The Commissioner shall subn1it to the Chairmen of the Comn1ittee on \](Jays and ?\Jeans of both the Senate and House of Representatives, every six (6) months, a report on the exercise of his powers under this Section, stating therein the following facts and information, among others: names and addresses of taxpayers whose cases have been the subject of abatement or compromise; amount involved; amount compron1ised or abated; and reasons for the exercise of power: Pro!Jided, That the said report shall be presented to the Oversight Committee in Congress that shall be ~

DECISION CTA EB No. 2993 (CTA Case No. 11297) constituted to determine that said powers arc reasonably exercised and that the Government is not unduly deprived of revenues."24 "SEC. 229. Recovery of Tax Erroneously or Illegally Collected - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected. or of any penalty claimed to have been collected without authority. or of any sum alleged to have been excessively or in any manner wrongfullv collected. until a claim for refund or credit has been duly flied with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Prot;ided, howetm; That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid."25 Based on the foregoing provisions, erroneously or illegally assessed or collected taxes may be credited or refunded provided that: 1) the taxpayer flies an administrative claim for refund with the BIR within two (2) years after the payment of the tax; 2) the filing of a judicial claim for refund is preceded by the filing of an administrative claim for refund; and, 3) the filing of a judicial claim for refund is also made within two (2) years after the payment of the tax. Thus, for the judicial claim for refund to prosper, Petitioner must prove these three (3) jurisdictional requisites. In the case at bar, both Petitioner's administrative and judicial claims were filed within the two-year reglcmentary period. 1\Ioreover, the judicial claim was made after the filing of the administrative claim, as shown below: 2-year prescriptive period Administrative Claim Payment Date END Judicial Claim (START) 24 Emphasis and underscoring supplied. 25 Emphasis and underscoring supplied.

DECISION CTA EB No. 2993 (CTA Case No. 11297) I CGT July 29, 2022"6 I July 29, 20241 February 08, 2023" 1 I October 27, 2023"8 1 "�\s such, Petitioner was able to prove the three (3) requisites under Sections 204 and 229 of the NIRC of 1997, as amended. The court a quo however dismissed the original Petition for Review on the ground that the CIH. has yet to render a decision on Petitioner's claim for refund. Since the letter dated 12 September 2023 denying Petitioner's application for refund of erroneously paid C:GT was issued by Revenue District Officer Ranchez, and not the CIR or the Assistant Commissioner of Internal Revenue (/1.CIH.) of the Assessment Service, the Court in Division ruled that this decision is not the decision referred to in Section 7(a)(1) of R.A. No. 1125, as amended, that is appealable to the C:T"-\. We do not agree with the interpretation of the CTc\ fiirst Division. It is a basic rule of interpretation that words and phrases used in the statute, in the absence of a clear legislative intent to the contrary, should be given their plain, ordinary and common usage or meaning."9 The "plain meaning rule" or verba legis in statutory construction is that if the statute is clear, plain and free from ambiguity, it must be giVen its literal meaning and applied without interpretation. This rule derived from the maxim Index animi sem1o est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intention or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by usc of such words as arc found in the statute. T/erba !egiJ 11011 est reredendum, or from the words of a statute there should be no departure 30 Sections 204(C) and 229 ofNIRC of 1997, as amended, provides in clear, unambiguous, and unequivocal terms that the only requirement to claim a tax credit or refund of erroneously paid taxes is to file the refund claim with the BIR and the CT-\ within two (2) years from the date of payment. Simply stated, the law fixed the same period of two (2) years for filing a claim for refund with the BIR and for filing a suit with the C L\, and if both acts fall within this period, then there is no legal impediment to the claim. In C1R v. Carrie;~ the Supreme Court held: ~ 26 Docket, Joint Stipulation of Facts and Issues, Stipulation of Facts, par. 9, p. 487. 27 Id., Joint Stipulation of Facts and Issues, Stipulation of Facts, par. 22, p. 489. 28 Id, pp. 7-31. 29 Commissioner of Internal Revenue v. The Court of Appeals, Et. AI., G.R. No. 107135, February 23, 1999. 30 Republic of the Philippines v. Carlito Lacap, G.R. No. 1582S3, March 02, 2007.

DECISION ITA EB No. 2993 (ITA Case No. 11297) "Consequently, from the plain language of the law, it does not matter how far apart the administrative and judicial claims were filed, or whether the Commissioner of Internal Revenue was actually able to mle on the administrative claim, so long as both claims were filed within the two-year prescriptive period."31 The doctrine in CJR v. Cam'erwas then reiterated in Commissiomr ofInternal Revmm v. Estate ofi\lr. CbadeJ� A1af71in Ro!Jtzg12. In fact, in i\ia11ila Peniwula Hotel, Inc. !J. CommissiomrofiHtemal Re?Jem;e33, the Supreme Court clarified that a "decision" or "inaction deemed denial" is not required to seek judicial recourse for a claim for refund under Section 229 of the NIRC of 1997, as amended. Thus, the rule is this. Before the amendment of the Tax Code by R.A. No. 119763", there is no need for the BIR to act unfavorably on the claim for refund of erroneous taxes before the CT"-\ may acquire jurisdiction because of the positive requirement of Section 229 and the doctrine that delay of tl1e BIR in rendering a decision does not extend the peremptory period fixed by the Tax Code. There is also no prohibition that the claim for refund be ftled at the earliest instance to give the BIR an opportunity to mlc on it and the C:T1\ to review the ruling on appeal. It follows therefore that it is also not necessary for the BIR to act favorably on the claim for refund of erroneous taxes before the CL\ may acquire jurisdiction. We recognize that the relevant provisiOns of the NIRC of 1997, as amended, for the period under review in the instant case, on the filing of administrative and judicial claims for erroneously paid taxes under Sections 204(C) and 229 arc not ideal and confusing, as opposed to the provisions on refund of excessive input VAT under Section 112. Unfortunately, this can only be addressed not by judicial pronouncement but by appropriate legislation. That being the reason, IL'\. 1\:o. 11976 was subsequently passed into law in 2024, enacting that no judicial suit or proceeding shall be filed with the CTA unless there is a full or partial denial of the claim for refund or credit by the BIR or there is a failure on the part of the BIR to act on the claim within the one hundred eighty (180)-day peri/ 31 Emphasis and underscoring supplied. 32 G.R. No. 262092, October 09, 2024. 33 G.R. No. 229338, April 17, 2024. 34 Also known as the Ease of Paying Taxes Act, January 05, 2024. 35 As amended by R.A. No. 11976 or Ease of Paying Taxes Act, Sections 204(C) and 229 presently reads: "SEC. 204. Authority oF the Commissioner to Compromise, Abate and ReFund or Credit Taxes. - The Commissioner may-

DECISION CTA EB No. 2.993 (CTA Case No. 112.97) Considering all these pronouncements, the CL\ First Division has jurisdiction to take cognizance of the "Petition for Review" flied before it. WHEREFORE, premises considered, the instant "Petition for Review" is GRANTED. The Resolutions dated i\Iay 24, 2024 and August 20,2024 issued by the Court of Tax c\ppeals First Division are REVERSED and SET ASIDE. /" XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two {2.) years after the payment of the tax or penalty as provided under Section 229 of this Code: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund: Provided, further, That the Commissioner shall process and decide the refund under this provision within one hundred eighty (180) days from date of submission of complete documents in support of the application filed: Provided, furthermore, That should the Commissioner deny, in full or in part, the claim for refund, the Commissioner shall state the legal and/or factual basis for the denial: Provided, finally, That failure on the part of any official, agent, or employee of the Bureau of Internal Revenue to process and decide on the application within the one hundred eighty (180)-day period shall be punishable under Section 2.69 of this Code. A Tax Credit Certificate validly issued under the provisions of this Code may be applied against any internal revenue tax, excluding withholding taxes, for which the taxpayer is directly liable. Any request for conversion into refund of unutilized tax credits may be allowed, subject to the provisions of Section 2.30 of this Code: Provided, That the original copy of the Tax Credit Certificate showing a creditable balance is surrendered to the appropriate revenue officer for verification and cancellation: Provided, further, That in no case shall a tax refund be given resulting from availment of incentives granted pursuant to special laws for which no actual payment was made. XXX XXX XXX." "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed unless there is a full or partial denial of the claim for refund or credit by the Commissioner or there is a failure on the part of the Commissioner to act on the claim within the one hundred eighty (180)-day period under Section 2.04 of this Code: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid. In case of full or partial denial of the claim for tax refund, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred eighty (180)-day period, appeal the decision with the Court of Tax Appeals."

DECISION CTA EB No. 2993 (CTA Case No. 11297) Page16of17 Accordingly, kt this case be remanded to the Court in Division for the continuation of judicial proceedings and determination of the refundable amount. SO ORDERED. ~'~ ?'--.._ WE CONCUR: MA. BELEN M. RINGPIS-LIBAN 1\ssociate Justice ~ ;:~-.,.....1....._____ CATHERINE T. MANAHAN 1\ssociate Justice (Witb o cmri11g Opi11io11) JEAN MARl A. ACORRO-VILLENA /\.ssociate Justice MARIARO ~ ~ F ~ -F~~J.O MARIAN-ltV F. R.�lvES-FAJARDO "-\ssociate Justice LAN~k~~u~A~U'IJ-nDAiVID "\ssociate Justice co~~"'"JSNG:F~~Es "-\ssociate Justice

DECISION CTA EB No. 2993 (CTA Case No. 11297) HENRY $GELES }~ossoCiate Jusuce CERTIFICATION Pursuant to c\rticle VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ~. "l4--'��... 7 .....__ MA. BELEN M. RINGPIS-LIBAN i\cting Presiding Justice

� REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS Quezon City ENBANC JOSELITO M. LIZARONDO, CTA EB No. 2993 Petitioner, (CTA Case No. 11297) -versus- Present: RINGPIS-LIBAN, Acting P.f., MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, FERRER-FLORES, and ANGELES, Jl. COMMISSIONER OF INTERNAL REVENUE, lN?rUAwYu1lg: a1tel,.Ud;.25 ~/J Respondent. ~ -~~)- X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --X ~ .�.$1)~~ � CONCURRING OPINION BACORRO-VILLENA, L_: Previously, I concurred in the assailed Resolutions dated 24 May 20241 and 20 August 20242 (assailed Resolutions) both issued by the Court's First Division that dismissed the present case on the ground that respondent Commissioner of Internal Revenue (CIR/ respondent) had yet to render a decision on petitioner Joselito M. Lizarondo's (Lizarondo's/ petitioner's) claim for refund since the Letter dated 12 September 20233 (Denial Letter) denying petitioner's application for refund of erroneously paid capital gains tax (CGT) was issued by Revenue District Officer (RDOr) Raymund V. Ranchez (Ranchez), and not the CIR or the Assistant CIR (ACIR) of the Assessment Service. As such, I then opined that the denial was not appealable before this Court.O Division Docket, pp. 504-512 . ld., pp. 548-55 1. Annex V, id., pp. 162- 163 ; cf Par. 26, Stipulation of Facts, Joint Stipulation of Facts and Issues (JSFI), id., p. 490.

CONCURRING OPINION CTA EB No.z.2_21 (CTA Case No. 11297) joselito M. Lizarondo v. Commissioner of Internal Revenue Page 2 of3 X-------------------------------------------X After a second hard look, I am constrained to vacate my prior position and agree with the present ponencia of my esteemed colleague, Associate Justice Ma. Belen M. Ringpis-Liban, finding that the Court has jurisdiction over the present action. The recent case of Manila Peninsula Hotel, Inc. v. Commissioner of Internal Revenue4 (Manila Peninsula) is instructive: On the other hand, Section 204 refers to the CIR's administrative authority to credit or refund erroneously paid or illegally collected taxes. Under this provision, an administrative claim for refund or credit must be filed within two years from payment of the tax. Section 229, in turn, requires two conditions for filing judicial claims: (1) an administrative claim must be filed first; and (2) the judicial claim must be filed within two years after payment of the tax sought to be refunded. Reading the two provisions together, both administrative and judicial claims must be filed within the two-year period counted from the payment of the tax. Hence, when taxpayers amend their return and make an adjusted payment, the prescriptive period for the adjusted amount is reckoned from the later date. Here, it is undisputed that petitioner paid the alleged erroneous CGT on 29 July 2022s, and filed the administrative and judicial claims on o8 February 20236 and 27 October 20237, respectively. He appealed before the Court's First Division the supposed denial of his claim for refund. Thus, the two (2) conditions laid down in Manila Peninsula were sufficiently satisfied. However, I wish to emphasize that the phrase a "decision" or "inaction deemed denial" is not required to seek: judicial recourse in Manila Peninsula should not be mechanically applied to mean that the doctrine of exhaustion of administrative remedies finds no application under Section 2298 of the National Internal Revenue Code (NIRC) of1997, as amended. 9 The doctrine of exhaustion of administrative remedies is grounded in both practical and legal considerations. Availing of administrative remedies often entails lesser expenses and provides for a speedier disposition of controversies.10 Courts, for reasons of comity and convenience, generally refrain from intervening until the system of administrative redress has been/ G.R. No. 229338, 17 April 2024 [Date Uploaded: 05 ,June 2024]: Emphasis in the original text and supplied. Par. 9. supra at note 3. p. 487 Par. 22. id., p. 489. Petition for Rcvi..::�w. id .. pp. 7-33 SEC. 229. Rec01wy of Tax Erroneom�(r or 11/egal(v Collecterl Prior to the amendments brought by Republic Act (RA) No. 11976. otherwise known as the "Ease of Paying Taxes Act." (EOPT Law) A1anila Peninsula llolel. Inc. v. Commissioner of flllernal Revenue, supra at note 4.

CONCURRING OPINION CTA EB No.~ (CTA Case No. 11297) jose!ito M. Lizarondo v. Commissioner of Internal Revenue Page 3 of3 x-------------------------------------------x completed, thereby affording the administrative agency every opportunity to correct its error and dispose of the case at its level.u Thus, the aforementioned phrase must be read within its factual confines-specifically, in cases of imminent risk of prescription or manifest urgency, as illustrated in Commissioner of Internal Revenue v. Carrier Air Conditioning Philippines, Inc.'2 (Carrier Air) and Commissioner of Internal Revenue v. Estate ofMr. Charles Marvin Romig'3 (Estate of Romig). It should not be construed as abolishing the doctrine of exhaustion altogether. The rule is not absolute and must yield to the doctrine of exhaustion of administrative remedies where there is no risk of prescription, and the administrative agency is afforded a reasonable opportunity to act on the claim. Otherwise, the requirement of filing an administrative claim before seeking judicial recourse would be rendered nugatory. In the present case, it was shown that respondent acted upon the claim for refund, as evidenced by the Denial Letter. In fact, the same is acknowledged by respondent as his or her act in the Joint Stipulation of Facts and Issues (JSFI).'4 While the denial was not issued by the ClR or the ACIR, it nonetheless constituted an official act of respondent on the administrative claim. Petitioner, faced with the impending expiration of the two (2)-year prescriptive period, was justified in promptly seeking judicial recourse to protect his right to recover the taxes he allegedly erroneously paid. Accordingly, I vote to GRANT the Petition for Review filed on 13 September 2024, REVERSE AND SET ASIDE the Resolutions dated 24 May 2024 and 20 August 2024 of the First Division in CTA Case No. 11297 and REMAND the case to the First Division for further proceedings on the merits, specifically to determine the refundable amount, if any, in favor of petitioner Joselito M. Lizarondo. JEAN MARl " !d. " G.R. No. 226592, 27 July 2021. Expiration of the 2-year period from payment 10 December 2011 and 12 January 2012 29 November 201 I Date of administrative claim: 09 December 2011 Date of judicial claim: 30 June 2017 28 June 2017 at 8:00 a.m. Li G.R. No. 262092. 09 October 2024. 28 June 2017 at 4:47p.m. Expiration of the 2-year period from payment: Date of administrative claim: Date of judicial claim: Par. 26, supra at note 3, p. 490.