MARIA DONA ALIBOSO, JOY ARCINUE, MARY ABIGAIL BACUD, BERNADETTE BIGASIN, MA. PATRICIA LIM, KRISTINE LEA MERCADO, KATHLEEN OSIAS, RAQUEL BERNADETTE VELASQUEZ, JAMILA YASMINA ACHANZAR, SARAH SENAS, THELMA ABIVA, ARNOLD AGUILA, FRANCOISE MARIE ALONZO-CALALAY, KAREN ANDES, LEAH ARBOLEDA, ROSALYN ARIATE, DONATILA BALAGTAS, GLENDA BALATBAT, FATIMA BAUTISTA, MELCHOR BUREROS, PATRICIA CALCETAS, CATHERINE CLARIN, KATHERINE MITZI CO, MA. CRISTINA CONCEPCION, MILETT CONCEPCION MARTIN ERICSSON CRUEL, CAROLINE VALENTINA CRUZ, LESLIE CRUZ MA. CELINA CRUZ, MARIA SIMONETTE DAQUIS, EDWIN DAVID, CELEDONIA DE F

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION ********* MARIA DONA ALIBOSO, JOY CTA Case No. 9087 ARCINUE, MARY ABIGAIL BACUD, BERNADETTE BIGASIN, MA. Members: PATRICIA LIM, KRISTINE LEA MERCADO, KATHLEEN OSIAS, DEL ROSARIO, P.J. , Chairperson , RAQUEL BERNADETTE VELASQUEZ, UY, and JAMILA YASMINA ACHANZAR, MINDARO-GRULLA, JJ. SARAH SENAS, THELMA ABIVA, ARNOLD AGUILA, FRANCOISE MARIE ALONZO-CALALAY, KAREN Promulgated: ANDES, LEAH ARBOLEDA, ROSALYN 19~ � /f;CY:; tJ- ,..._ ARIATE, DONATILA BALAGTAS, GLENDA BALATBAT, FATIMA BAUTISTA, MELCHOR BUREROS, PATRICIA CALCETAS, CATHERINE CLARIN , KATHERINE MITZI CO, MA. CRISTINA CONCEPCION, MILETT CONCEPCION, MARTIN ERICSSON CRUEL, CAROLINE VALENTINA CRUZ, LESLIE CRUZ MA. CELINA CRUZ, MARIA SIMONETTE DAQUIS, EDWIN DAVID, CELEDONIA DE FELIPE, FATIMA CHRISTINE DE RAMOS, MELANIE DELA CRUZ, ALELI DELA ROSA, AGNES DIAMANTE, SHIELA DIMAL, MARIE KRISTINE ESTRELLA, SHERYL EVANGELISTA, JANE FANTILANAN, ANGELICA LUZ FERNANDO, ERICKA JOY GAJETE, KRISTINE GALANG, JEMINETTE GATCHALIAN, DOROTHY GERONIMO, PAUL ANTHONY GOKIOCO, LANI GOMEZ, GLEN GONZAGA, GEMMALINE GONZALES, MELANI GONZALES, JHONA GUILLEM, PAMELA GUTIERREZ, DIANA MARIE HERNANDEZ, MA. KRISTINA HIDALGO, IRIS EVADIE ~

DECISION CTA Case No. 9087 Page 2 of25 JIMENEZ, LORETA JOVELLANOS, ELIZABETH JUAN, ANGELICA KARUNUNGAN, NORLYN LAGSIT, CARLY JAMES LAPING, NORMAN LU, JOAN REINA LUNA, MANNY MABALOT, AUGUSTUS MAGNO, ELVIRA MARTINEZ, ILUMINADA MENDOZA, DAISY MENDOZA, MARIE MINA, MARIE CHRISTINE MONTOYA, THERESA MORA, JANET MUTYANGPILI, JOCELYN NARCISO, JULIET NECIA, CLAIRE ANN ODSINADA, EMMANUEL ONG, WEMA PACANO, MA. VICTORIA PANTALEON, NAJA PENAS, CHRISTY PLANCO, FARAHTONI PLANCO, MA. THERESA PRADO, KAREN QUIETA, ELAINE QUINTO, ANGELITO RABE, MARY GRACE RAMOS, ARNEL REYES, �MA. ELENA ROCES, CHRISTIAN ROMAGOS, MA. LUALHATI RUEDA, CLARK SALAS, MARIA CLARISSA SAMSON, MARCELLA ANN SANTOS, JOAQUIN SARDONA JR., ROWENA SARMIENTO, MA. CORAZON SISON, MA. RITA STA. CRUZ, LEA BENETA SUMULONG, PRECIOUSA SUNGA, SHERYL TAMAYO, JENNIFER TANTAMCO, ALDOUS MOSES TIRONA, MA. ELOISA TUASON, MARIA CECILIA VILLANUEVA, EDNA VILLAREAL, CHARINA VILLARINO, ROWENA VINAN, BRYAN VISAYA, DULCINEA JOY YRAITA, JULIE YU, FLORDELIZA ZACARIAS, Petitioners, -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. ~

DECISION CTA Case No. 9087 Page 3 of25 x------------------------------------------------x DECISION UY, J.: This Petition for Review filed by petitioners on July 10, 2015 involves claims for the refund of their alleged income tax payments in the aggregate amount of P58,892,068.16 for taxable years 2012 and 2013, the details of which are as follows: Petitioners Alleged Alleged income Total claims income tax tax paid for 2013 Maria Dona D. Aliboso paid for 2012 p 449,632.61 Joy I. Arcinue p 213,653.61 p 235,979.00 655,135.36 Mary Abigail C. Bacud 327,567.68 538,096.16 Bernadette B. Bigasin 327,567.68 270,169.00 267,927.16 567,231.00 1,138,805.00 Ma. Patricia A. Lim 571,574.00 414,921.00 834,107.00 Kristine Leah A. Mercado 419,186.00 313,356.00 867,308.42 553,952.42 447,643.00 808,935.89 Kathleen C. Aton-Osias 361,292.89 340,709.00 669,254.55 Raquel Bernadette P. Velasquez 328,545.55 147,394.00 278,143.88 Jamila Yasmina R. Achanzar 130,749.88 202,098.00 397,236.07 Sarah C. Senas 195,138.07 294,028.00 588,164.54 Thelma Gail G. Abiva 294,136.54 187,634.47 Arnold L. Aguila 187,634.47 144,870.00 259,960.98 Franchoise Marie B. Alonzo-Calalay 115,090.98 401,108.00 799,001.35 Karen K. Andes 397,893.35 237,029.00 470,630.00 Leah P. Arboleda 233,601.00 295,938.22 Rosaly P. Ariate-Jimenez 295,938.22 256,810.00 792,952.34 Donatila T. Balagtas 792,952.34 227,764.00 509,041.63 Glenda C. Balatbat 252,231.63 258,092.00 450,867.94 Fatima Mabor Bautista 223,103.94 779,718.00 504,925.32 Melchor R. Bureros 246,833.32 194,590.00 Patricia P. Calcetas 786,591.93 1,566,309.93 Catherine E. Clarin 187,970.47 293,383.00 382,560.47 Katherine Mitzi H. Co 136,487.94 381,711.00 136,487.94 Ma. Cristina N. Concepcion 298,199.64 380,514.00 298,199.64 Milett G. Concepcion 384,323.16 677,706.16 Martin Ericson S. Cruel 397,977.88 363,781.00 779,688.88 Caroline Valentina G. Patacsii-Cruz 365,695.87 197,715.00 746,209.87 260,014.11 323,180.00 260,014.11 Leslie A. Cruz 363,248.50 479,626.00 727,029.50 186,157.08 243,268.00 383,872.08 Ma. Celina S. Cruz 286,330.33 609,510.33 Maria Simonette R. Daquis 646,931.75 Edwin E. David 232,256.00 1,126,557.75 Celedonia G. De Felipe 475,524.00 Fatima Christine N. De Ramos- 452,909.30 458,848.00 Blanco 105,128.65 64,681.00 911,757.30 Melanie M. DelaCruz 169,809.65 Aleli D. DelaRosa ~

DECISION 207,075.18 444,266.00 207,075.18 CTA Case No. 9087 451,418.90 895,684.90 Page 4 of25 129,038.47 148,517.00 129,038.47 138,962.55 287,479.55 Agnes V. Diamante 136,410.82 178,244.00 136,410.82 Shiela S. Dimal 169,938.50 253,648.00 169,938.50 Marie Kristine S. Estrella 173,527.81 200,284.00 351,771.81 Sheryl A. Evangelista 230,718.09 432,538.00 484,366.09 Jane I. Fantilanan 229,452.23 259,047.00 429,736.23 Angelica Luz B. Fernando 433,174.50 392,099.00 865,712.50 Ericka Joy Mangalile-Gajete 246,760.31 293,986.00 505,807.31 Kristine L. Galang 414,667.40 329,785.00 806,766.40 Marie Jeminette F. Gatchalian 275,524.31 283,443.00 569,510.31 Dorothy C. Geronimo 331,384.81 661 '169.81 Paul Anthony F. Gokioco 290,486.34 265,788.00 573,929.34 Lani R. Gomez Glen De Leon Gonzaga 89,348.31 693,843.00 89,348.31 Gemmaline D. Gonzalez 301,460.12 336,256.48 301,460.12 Melani A. Gonzales 244,251.66 160,094.00 510,039.66 Jhona G. Guillen 398,457.28 206,380.00 398,457.28 Pamela P. Gutierrez 199,224.00 199,224.00 Diana Marie T. Hernandez 663,678.73 514,158.00 1,357,521.73 Ma. Kristina C. Hidalgo 157,620.23 168,449.00 493,876.71 Iris Evadie C. Jimenez 152,093.17 215,029.00 312,187.17 Loretta C. Jovellanos 203,181.24 339,547.00 409,561.24 Elizabeth C. Juan 176,140.68 707,789.00 176,140.68 Angelica C. Karunungan 508,377.48 1 ,022,535.48 Norlyn G. Lagsit 240,875.33 255,319.50 Daryl James A. Laping 86,870.50 348,516.00 642,649.91 Norman T. Lu 427,620.91 371 '150.00 671,119.43 Joan Reina M. Luna 331,572.43 1 ,406,184.60 Manny C. Mabalot 698,395.60 216,459.00 490,590.31 Augustus A. Magno 490,590.31 227,103.00 469,739.65 Elvira S. Martinez 228,864.32 165,819.00 686,184.13 Maria lluminada R. Mendoza 337,668.13 192,150.00 713,892.75 Daisy B. Isidro-Mendoza 342,742.75 282,207.00 389,934.94 Marie Vic E. Mina 389,934.94 429,649.19 Marie Christine G. Montoya 213,190.19 264,287.00 448,596.00 Theresa R. Mora 221,493.00 156,836.00 331,348.02 Janet R. Mutyangpili 165,529.02 379,504.36 Jocelyn M. Narciso 187,354.36 148,326.00 516,941.41 Juliet L. Necia 234,734.41 181,755.00 Claire Ann F. Odsinada 181,755.00 201,943.00 542,870.58 Emmanuel I. Ong 278,583.58 275,963.00 298,449.78 Wema G. Pacano 141,613.78 180,638.00 175,690.76 Ma. Victoria Isabel G. Pantaleon 175,690.76 261,259.00 240,248.95 Naja P. Penas 240,248.95 367,745.38 Christy C. Planco 367,745.38 290,694.01 Farahtoni G. Planco 142,368.01 144,972.48 Ma. Theresa D. Prado 144,972.48 401,743.87 Karen I. Quieta 199,800.87 436,166.93 Elaine Estolano Quinto 160,203.93 357,641.49 Angelita R. Rabe 177,003.49 511,302.48 Mary Grace M. Ramos 250,043.48 190,893.97 Arne! F. Reyes 190,893.97 292,252,1�_ Ma. Elena S. Roces 292,252.16 Christian Paolo E. Ramagos Maria Lualhati A. Rueda f

DECISION CTA Case No. 9087 Page 5 of25 Clark P. Salas 215,105.59 197,939.00 413,044.59 Maria Clarissa T. Samson 685,179.72 342,959.72 342,220.00 338,486.74 Marcella Anne L. Santos 261,145.55 168,455.74 170,031.00 1,047,491.51 Joaquin S. Sardona, Jr. 670,251.18 Rowena P. Sarmiento 261,145.55 780,595.05 Ma. Corazon Cecilia M. Sison 1,529,956.45 Ma. Rita S. Sta. Cruz 531,203.51 516,288.00 796,125.57 Lea Benita R. Sumulong 639,332.03 349,511.18 320,740.00 233,202.72 Preciosa L. Sunga 654,630.83 386,801.05 393,794.00 732,408.04 Sheryl G. Tamayo 268,174.50 Jennifer Barrientos Tantamco 759,841.45 770,115.00 743,181.01 Aldous Moses B. Tirona 209,481.50 399,217.57 396,908.00 1,483,352.95 Ma. Eloisa L. Tuason 270,450.09 309,278.03 330,054.00 550,378.32 Maria Cecilia Ylagan-Villanueva 533,907.69 Edna M. Villareal 233,202.72 695,451.14 Charina J. Villarino Rowena S. Vinan 326,864.83 327,766.00 p 58,892,068.16 Bryan H. Visaya Dulcinea Joy R. Yraita 366,158.04 366,250.00 Julie G. Yu Flordeliza A. Zacarias 268,174.50 400,820.01 342,361.00 77,073.50 132,408.00 752,901.95 730,451.00 126,565.09 143,885.00 275,401.32 274,977.00 272,256.69 261,651.00 399,602.14 295,849.00 Total claims of petitioners THE FACTS The following petitioners are employees of the Asian Development Bank (ADB) for the whole year of 2012, to wit: Arnold L. Aguila; Rosaly P. Ariate-Jimenez; Donatila T. Balagtas; Katherine Mitzi H. Co; Ma. Cristina N. Concepcion; Leslie A. Cruz; Agnes V. Diamante; Marie Kristine S. Estrella; Jane I. Fantilanan; Angelica Luz B. Fernando; Jhona G. Guillen; Pamela P. Gutierrez; Ma. Kristina C. Hidalgo; Iris Evadie C. Jimenez; Daryl James A. Laping; Maria lluminada R. Mendoza; Theresa R. Mora; Wema G. Pacano; Christy C. Planco; Farahtoni G. Planco; Ma. Theresa D. Prado; Elaine Estolano Quinto; Christian Paolo E. Ramagos; Maria Lualhati A. Rueda; Joaquin S. Sardona, Jr.; Jennifer Barrientos Tantamco; and Maria Cecilia Ylagan-Villanueva. 1 1 E"Px-h6i1bi-t3s0""P, -"6P1--621"-'3"5P"-,6"1P--4681"-'3"6P"-,61"-P9-"6'1"-P4-26"1, -1"6P"-'6"1P-4-631",-1"7P"-'6"1P-4-651",-2"0P"-'6"1P-4-671"-,2"8P"-' 61-53", "P-61-61", "P-61-65", "P-61-72", "P-61-76", "P-61-77", "P-61-78", "P-61- 80", "P-61-85", "P-61-86", "P-61-90", "P-61-98", "P-61-102", Docket- Vol. IV, pp. 1866, 1912, 1873, 1880, 1881, 1884, 1892, 1894, 1899, 1900, 1906, 1907, 1909, 1911, 1917, 1925, 1929, 1936, 1940 to 1942, 1944, 1949, 1950, 1954, 1962, and 1966, respectively. ~

DECISION CTA Case No. 9087 Page 6 of25 The rest of the petitioners, however, are employees of the ADB for the period January 1, 2012 to December 31, 2013.2 The ADB was established pursuant to the Agreement Establishing The Asian Development Bank, signed on December 4, 1965 by member-countries, one of which is the Philippines. Respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR), vested with authority to administer all laws pertaining to internal revenue taxes, with principal office at the 5th Floor, BIR National Office Building, Agham Road, Diliman, Quezon City. 3 On April 12, 2013, respondent issued Revenue Memorandum Circular (RMC) No. 31-2013.4 This BIR issuance provides, among others, that only the officers and staff of the ADB who are not Philippine nationals shall be exempt from Philippine income tax. 5 Believing RMC No. 31-2013 to be issued ultra vires, two Filipino ADB employees, on their own, and on behalf of the other Filipino employees of the ADB, questioned its legality in the Regional Trial Court (RTC) of Mandaluyong City in February 2014 and sought that it be invalidated.6 In Erwin Salaveria and Portia Gonzales vs. Commissioner of Internal Revenue (Civil Case No. MC14-8775, RTC - Mandaluyong, 2 E"Pxh-6ib1i-t1s9""P, -"6P1-"6'1"-P2-16"1-to1""'P"-P6-16-12-73"", t"oP"-P61-6-219-8"", '""PP--6611--3110""ttoo ""PP--6611--3145"",' "P-61-18" to "P-61-37" to "P-61-41", "P-61-44", "P-61-46", "P-61-49" to "P-61-52", "P-61-54" to "P-61-60", "P- 61-62" to "P-61-64", "P-61-66" to "P-61-71", "P-61-73" to "P-61-75", "P-61-79", "P- 61-81" to "P-61-84", "P-61-87" to "P-61-89", "P-61-91" to "P-61-97", "P-61-99" to "P-61-101", "P-61-103" to "P-61-109, "Docket- Vol. IV, pp. 1864 to 1865, 1867 to 1872, 1874 to 1879, 1882 to 1883, 1885 to 1891, 1893, 1895 to 1898, 1901 to 1905, 1908, 1910, 1913 to 1916, 1918 to 1924, 1926 to 1928, 1930 to 1935, 1937 to 1939, 1943, 1945 to 1948, 1951 to 1953, 1955 to 1961, 1963 to 1965, and 1967 to 1973, respectively. 3 Pars. 1 and 2, Joint Stipulation of Facts and Issues (JSFI), Docket- Vol. I, p. 643. 4 SUBJECT: Guidelines on the Taxation of Compensation Income of Philippine Nationals and Alien Individuals Employed by Foreign Governments/Embassies/Diplomatic Missions and International Organizations Situated in the Philippines 5 Par. 11, Petition for Review, vis-a-vis Par. 5, Answer, Docket- Vol. I, pp. 23 to 24, and 296; and Par. 4, JSFI, Docket- Vol. I, p. 643 6 Par. 16, Petition for Review, vis-a-vis Par. 7, Answer, Docket- Vol. I, pp. 27, and 297. ttl

DECISION CTA Case No. 9087 Page 7 of25 Branch 213), or the action to nullify the RMC, the RTC on September 30, 2014, disposed as follows: "WHEREFORE, premises considered, judgment is hereby rendered as follows: a) declaring Section 2 (d) (1) of Revenue Memorandum Circular (RMC) 31-2013 as void for being issued without legal basis, in excess of authority and/or without due process of law; and b) declaring Section 2 (d) (1) of RMC No. 31-2013 as void in the absence of legislation and/or regulation to the contrary". 7 Respondent moved to reconsider the above Decision, but the RTC denied the motion in its Order dated January 9, 2015.8 Thereafter, respondent appealed the RTC Decision to the Court of Appeals docketed as CA-G.R. CV No. 104374. On July 3, 2015, the Court of Appeals promulgated a Resolution dismissing the appeal because respondent improperly elevated the RTC case by ordinary appeal instead of a petition for review on certiorari before the Supreme Court.9 Respondent then filed a petition for review on certiorari before the Supreme Court, questioning the dismissal of the Court of Appeals. The case is still pending resolution by the High Court. 10 Prior to the filing of the instant Petition for Review, petitioners filed a claim for refund of the subject income taxes with respondent, and the latter failed to act thereon. 11 On July 10, 2015, petitioners filed the instant Petition for Review. 7 Par. 17, Petition for Review, vis-a-vis Par. 7, Answer, Docket- Vol. I, pp. 28, and 297; and Exhibit "P-55", Docket- Vol. IV, pp. 1820 to 1851. 8 Par. 18, Petition for Review, vis-a-vis Par. 5, Answer, Docket- Vol. I, pp. 28, and 297. 9 Par. 19, Petition for Review, vis-a-vis Par. 5, Answer, Docket- Vol. I, pp. 28, and 297; and Exhibits "P-56" and "P-56-1", Docket- Vol. IV, pp. 1852 to 1863. 10 Petitioner's Memorandum with Manifestation, Docket- Vol. IV, p. 2083. 11 Par. 5, Pre-Trial Order dated July 1, 2016, Docket- Vol. I, pp. 652 to 664. ~

DECISION CTA Case No. 9087 Page 8 of25 Respondent filed his Answer on September 30, 2015, 12 interposing the following special and affirmative defenses, to wit: (1) this Court has no jurisdiction to entertain the instant Petition for Review; (2) herein petitioners failed to file the instant claim for refund and Petition for Review within the two-year prescriptive period provided under Section 229 of the National Internal Revenue Code (NIRC); (3) granting, without admitting, that this Court has jurisdiction, the alleged decision of the RTC - Branch 213 from which petitioner based his claim for refund is void; (4) the same was issued by a regular court that has no jurisdiction to take cognizance of the case relating to the validity of RMC No. 31-2013; and (5) the power to rule on the validity of revenue issuances administered by the BIR are within the jurisdiction of this Court, and not the regular courts. After the pre-trial conference held on May 5, 2016, the parties filed their Joint Stipulation of Facts and Issues (JSFI) on June 6, 2016. 13 In the Resolution dated June 10, 2016, 14 the Court approved the parties' JSFI and terminated the pre-trial. The Court then issued a Pre-Trial Order on July 1, 2016. 15 During trial, petitioners presented their documentary evidence, and the testimony of their witnesses, namely, Attys. Esther R. Ibanez, 16 and Peter Paul S. Romero. 17 On March 27, 2017, petitioners filed their Formal Offer of Evidence18 offering Exhibits "P-1" to "P-58" ' "CPo-6m0m" etont"/PO-b6j1e"c'tiionnclsusiovne of submarkings. Respondent filed his Petitioner's Formal Offer of Evidence on April 20, 2017. 19 12 Docket- Vol. I, pp. 296 to 306. 13 Docket- Vol. I, pp. 643 to 646. 14 Docket- Vo1. I, p. 649. 15 Docket- Vol. I, pp. 652 to 664. 16 Exhibit "P-1" (Judicial Affidavit ofAtty. Esther R. Ibanez), Docket- Vol. I, pp. 395 to 405, and 514 to ; Minutes of the hearing held on, and Order dated, August 23, 2016, Docket - Vol. II, pp. 943 to 946; Exhibit "P-16" (Supplemental Judicial Affidavit of Atty. Esther R. Ibanez), Docket- Vol. II, pp. 672 to 682; and Minutes of the hearing held on, and Order dated, August 23, 2016, Docket- Vol. II, pp. 943 to 946. 17 Exhibit "P-57" (Judicial Affidavit of Peter Paul S. Romero), Docket - Vol. III, pp. 1229 to 1233; Minutes of the hearing held on, and Order dated, October 11, 2016, Docket- Vol. III, pp. 1424 to 1430; Exhibit "P-60" (Supplemental Judicial Affidavit of Peter PaulS. Romero), Docket- Vol. III, pp. 1483 to 1486; and Minutes of the hearing held on, and Order dated, January 24, 2017, Docket- Vol. III, pp. 1597 to 1602. 18 Docket- Vol. IV, pp. 1638 to 1693. 19 Docket- Vol. IV. Pp. 1979 to 2036. ~

DECISION CTA Case No. 9087 Page 9 of25 In the Resolution dated September 13, 2017, 20 the Court admitted all of the said Exhibits, except for the following: 1. Exhibits "P-19-1", "P-19-2" ' "P-19-3"' "P-23-7" ' "P-34" ' "P-34- 1", "P-36", "P-42-2", "P-48-3"' "P-54", "P-54-1", "P-54-2"' "P- 54-3" , "P-54-4" ' "P-54-5" , "P-55" and "P-58" ' for failure to present their originals for comparison; 2. Exhibits "P-54-6" and "P-54-7", for failure to present their originals for comparison and for failure to identify the exhibits; and 3. Exhibits "P-61-79" and "P-61-80", for failure of the exhibits formally offered to correspond with the documents actually marked. On September 20, 2017, respondent filed a Motion to Dismiss, 21 praying for the dismissal of the instant Petition for Review for this Court's lack of jurisdiction over the subject matter. On the other hand, petitioners filed a Motion for Partial Reconsideration on October 3, 2017, 22 praying for the reconsideration of this Court's Resolution dated September 13, 2017, and for the issuance of a Resolution admitting in evidence Exhibits "P-23-7", "P- 34" , "P-34-1" ' "P-55" ' "P-58" ' "P-61-79" and "P-61-80" . In the Resolution dated December 27, 2017, 23 the Court denied respondent's Motion to Dismiss for lack of merit; while partially granting petitioners' Motion for Partial Reconsideration, and thereby admitting Exhibits P-55", "P-58", "P-61-79" and "P-61-80". During the supposed initial presentation of respondent's evidence on March 20, 201824, respondent's counsel manifested that he will no longer present evidence for the respondent because there is no Revenue Officer's Report as regards the refund claim of petitioners in this case. Upon his motion, he was granted ten (10) days from the said date to file respondent's Memorandum. On the 20 Docket- Vol. IV, pp. 2042 to 2046. 21 Docket- Vol. IV, pp. 2047 to 2057. 22 Docket- Vol. IV, pp. 2058 to 2063. 23 Docket- Vol. IV, pp. 2071 to 2075. 24 Order dated March 20, 2018, Docket- Vol. IV, pp. 2090 to 2091. ~

DECISION CTA Case No. 9087 Page 10 of25 other hand, the Court noted the filing of petitioner's Memorandum with Manifestation25 on January 15, 2018. Upon the filing of respondent's Memorandum on March 26, 2018, 26 the instant case was submitted for decision on April4, 2018. 27 Hence, this Decision. THE ISSUES The parties submitted the following issue for this Court's resolution, to wit: "WHETHER OR NOT PETITIONERS ARE ENTITLED TO CLAIM REFUND FOR INCOME TAXES PAID IN TAXABLE YEARS 2012 AND 2013 ALLEGED TO BE ERRONEOUSLY AND/OR ILLEGALLY PAID".28 Petitioners' arguments: Petitioners argue that their income tax payments were made erroneously and/or illegally collected by respondent by virtue of the latter's failure to recognize the tax-exempt status granted by treaty to ADB employees. They emphasize that this Court is not being asked to rule on the legality of BIR RMC No. 31-2013 as the court of law that has jurisdiction over such question is the RTC. According to petitioners, since the legal basis for collecting the income tax has been voided by a court of law, it follows that the actual collection of the tax is illegal and/or erroneous and necessarily, the taxes paid must be returned to the petitioners. Moreover, petitioners contend that payment by them of income tax is an aberration introduced by BIR RMC No. 31-2013; and that it is only proper that taxes paid by petitioners pursuant to the RMC should be returned to them. 25 Docket,- Vol.. IV, pp. 2076 to 2085. 26 Docket- Vol. IV, pp. 2093 to 2102. 27 Docket- Vol. IV, p. 2104. 28 Issue, JSFI, Docket- Vol. I, p. 644. ~

DECISION CTA Case No. 9087 Page 11 of25 Lastly, petitioners aver that this Court may allow the claim for refund, notwithstanding the petition in the Supreme Court filed by respondent involving the validity of BIR RMC No. 31-2013. Respondent's counter-arguments: Respondent contends that petitioners are not entitled to the refund of their income tax payments in the aggregate amount of P58,892,068.16 for taxable years 2012 and 2013 for failure to substantiate their claim. Allegedly, petitioners are Filipino citizens and under the employ of the ADB; that there is no doubt that petitioners are liable for income tax on the compensation income they have earned on account of such employment; and that petitioners cannot claim that the coverage of Article XII of "Headquarters Agreement" only concern the privileges and immunities of the higher officials of the ADB because such contention is utterly misplaced. In addition, respondent points out that RMC No. 31-2013 is only a clarification of existing policies etched in Philippine law; and that the alleged subsequent practice of non-taxability of ADB employees, which is contrary to existing law, cannot in any way displace what the law had provided from the start. Finally, respondent asserts that the claims for refund of petitioners do not have a factual and legal basis; and that the amount of P58,892,068.16, representing income tax payment for taxable years 2012 and 2013 were paid in accordance with existing law, hence, the same cannot be considered as having been erroneously paid. THE COURT'S RULING The instant Petition for Review is bereft of merit. Section 229 of the NIRC of 1997 provides as follows: "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 ~

DECISION CTA Case No. 9087 Page 12 of25 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 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 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: 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." The foregoing provisions allow recovery of taxes erroneously or illegally collected. An "erroneous or illegal tax" is defined as one levied without statutory authority, or upon property not subject to taxation or by some officer having no authority to levy the tax, or one which is some other similar respect is illegal.29 Furthermore, in Commissioner of Internal Revenue vs. Acosta,30 the Supreme Court stated the requirements of the above- quoted Section 229, to wit: "Noteworthy, the requirements under Section 23031 for refund claims are as follows: 1. A written claim for refund or tax credit must be filed by the taxpayer with the Commissioner; 2. The claim for refund must be a categorical demand for reimbursement; 3. The claim for refund or tax credit must be filed, or the suit or proceeding therefor must be commenced in court within two (2) years from date of payment of the tax or penalty 29 Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April25, 2012, citing BLACK'S LAW DICTIONARY, Fifth Edition, p. 486. 3o G.R. No. 154068, August 3, 2007. 31 Now Section 229 ofthe NIRC of 1997. ~

DECISION CTA Case No. 9087 Page 13 of25 regardless of any supervening cause. (Emphasis ours.) In our view, the law is clear. A claimant must first file a written claim for refund, categorically demanding recovery of overpaid taxes with the CIR, before resorting to an action in court. This obviously is intended, first, to afford the CIR an opportunity to correct the action of subordinate officers; and second, to notify the government that such taxes have been questioned, and the notice should then be borne in mind in estimating the revenue available for expenditure." Based on the foregoing jurisprudential pronouncements, the refund claimant must show that: (1) a written claim for refund or tax credit has been filed with respondent; (2) such claim must be a categorical demand for reimbursement; and (3) the same claim was filed, or the suit or proceeding therefor must have commenced in court, within two (2) years from date of payment of the tax or penalty, regardless of any supervening cause. Before determining whether the alleged income tax payments are erroneous or illegal, We shall primarily ascertain whether petitioners have shown compliance with the requirements of Section 229 of the NIRC of 1997. Petitioner failed to show compliance with the requirements of Section 229 of the NIRC of 1997. During the proceedings in this case, petitioners attempted to offer in evidence the supposed administrative claims they filed with respondent, marked as Exhibits "P-54", and "P-54-1" to "P-54-7''.32 In the Resolution dated September 13, 2017, 33 however, the Court denied, inter alia, the admission thereof, for failure to present their originals for comparison. While petitioners filed a Motion for Partial Reconsideration of the said Resolution regarding the denial of admission of certain 32 Petitioners' Formal Offer ofEvidence, Docket- Vol. IV, pp. 1638 to 1693. 33 Docket- Vol. IV, pp. 2042 to 2046. ~

DECISION CTA Case No. 9087 Page 14 of25 Exhibits, 34 they did not pray for the reconsideration on the denial of admission of said Exhibits "P-54", and "P-54-1" to "P-54-7. In fact, petitioners aver in the said Motion the following statements, to wit: "10. Likewise, petitioners will no longer ask for the reconsideration of the denial of Exhibits P-54 to P-54-7 considering that the respondents admitted to the filing of an administrative claim for refund with the Commissioner of Internal Revenue prior to the filing of the petition with this Honorable Court. This was stated in page 2 of the Pre-Trial Order dated July 1, 2016, citing Par. 1, Respondent's 'Comment/Reply (to the Request for Admission)' filed on March 10, 2016, p. 367, CTA Docket, to wit: 'xxx 5. The petitioners, prior to filing the instant petition, filed a claim for refund of the subject income taxes with respondent Commissioner of Internal Revenue and, as of this date, respondent has not approved the refund."' It was error on the part of petitioners to merely rely on the said admission of respondent as to the filing of their administrative claims. This is so because while the said admission may fulfill the first requirement of Section 229 of the NIRC of 1997, it does not necessarily satisfy the second and third requirements of the said provision. To repeat, the said second requirement is that the refund claim must be a categorical demand for reimbursement. Without the subject administrative claims being admitted in evidence, this Court cannot ascertain whether the claims for refund were indeed categorical demands for reimbursement. Thus, We rule that petitioners failed to prove compliance with the second requirement. In the same vein, respondent's admission of the fact of filing of the administrative claims does not by itself prove as to when the same were filed. Hence, this Court cannot likewise determine for certain whether the said administrative claims were filed within the two(2)-year period from the alleged date of payment of the subject 34 Docket- Vol. IV, pp. 2058 to 2063. ~

DECISION CTA Case No. 9087 Page 15 of25 taxes. Such being the case, there is likewise no showing that petitioners complied with the third requirement of Section 229 of the NIRC of 1997. With the foregoing findings alone, this Court is justified in denying the instant Petition for Review. Nevertheless, even granting that all of the requirements of Section 229 of the NIRC of 1997 have been complied with in this case, We find that the subject income tax payments are not erroneous or illegal, and thus, are not refundable. The Decision of the RTC of Mandaluyong, Branch 213 in Civil Case No. MC14-8775 is invalid and therefore, not a binding precedent in this case Petitioners stresses that since the legal basis for collecting the income tax, i.e., RMC No. 31-2013, has been voided by a court of law, it follows that the actual collection of the tax is illegal and/or erroneous and necessarily, the taxes paid must be returned to the petitioners. The reasoning of petitioners is specious. In Banco De Oro, eta/. vs. Republic of the Phils., et.a/., 35 the Supreme Court held: "The Court of Tax Appeals has undoubted jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund. It is only in the lawful exercise of its power to pass upon all matters brought before it, as sanctioned by Section 7 of Republic Act No. 1125, as amended. This Court, however, declares that the Court of Tax Appeals may likewise take cognizance of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance 35 G.R. No. 198756, August 16,2016. r

DECISION CTA Case No. 9087 Page 16 of25 (revenue orders, revenue memorandum circulars, rulings). Section 7 of Republic Act No. 1125, as amended, is explicit that, except for local taxes, appeals from the decisions of quasi-judicial agencies (Commissioner of Internal Revenue, Commissioner of Customs, Secretary of Finance, Central Board of Assessment Appeals, Secretary of Trade and Industry) on tax-related problems must be brought exclusively to the Court of Tax Appeals. In other words, within the judicial system, the law intends the Court of Tax Appeals to have exclusive jurisdiction to resolve all tax problems. Petitions for writs of certiorari against the acts and omissions of the said quasi-judicial agencies should, thus, be filed before the Court of Tax Appeal. Republic Act No. 9282, a special and later law than Batas Pambansa Big. 129 provides an exception to the original jurisdiction of the Regional Trial Courts over actions questioning the constitutionality or validity of tax laws or regulations. Except for local tax cases, actions directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance may be filed directly before the Court of Tax Appeals. Furthermore, with respect to administrative issuances (revenue orders, revenue memorandum circulars, or rulings), these are issued by the Commissioner under its power to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws. Tax rulings, on the other hand, are official positions of the Bureau on inquiries of taxpayers who request clarification on certain provisions of the National Internal Revenue Code, other tax laws, or their implementing regulations. Hence, the determination of the validity of these issuances clearly falls within the exclusive appellate jurisdiction of the Court of Tax Appeals under Section 7(1) of Republic Act No. 1125, as amended, subject to prior review by the Secretary of Finance, as required under ~

DECISION CTA Case No. 9087 Page 17 of25 Republic Act No. 8424." (Emphases and underscoring supplied) Based on the foregoing, the determination of the validity of administrative issuances issued by the BIR, such as the RMC No. 31- 2013, falls within the exclusive appellate jurisdiction of this Court, not the RTC. Thus, the RTC of Mandaluyong, Branch 213, is not vested with jurisdiction to declare the invalidity of RMC No. 31-2013. A judgement rendered by a court without jurisdiction is null and void and may be attacked anytime. It creates no rights and produces no effect. It remains a basic fact in law that the choice of the proper forum is crucial, as the decision of a court or tribunal without jurisdiction is a total nullity. A void judgment for want of jurisdiction is no judgment at all. All acts performed pursuant to it and all claims emanating from it have no legal effect. 36 Simply put, a void judgment or order has no legal and binding effect. It does not divest rights and no rights can obtained under it; all proceedings founded upon a void judgment are equally worthless. 37 Correspondingly, the Decision dated September 30, 2014 of RTC of Mandaluyong, Branch 213, is a nullity. It did not have any legal and binding effect. Thus, it did not divest rights, and no rights can be obtained thereunder. RMC No. 31-2013 is not the legal basis for collecting the subject income tax but the National Internal Revenue Code of 1997 To reiterate, an "erroneous or illegal tax" is defined as one levied without statutory authority, 38 or upon property not subject to taxation or by some officer having no authority to levy the tax, or one which is some other similar respect is illegal. 39 In this case, the subject income tax payments were levied with statutory authority. 36 Bilag, et al. vs. Ay-ay, et al., G.R. No. 189950, April24, 2017. 37 Go vs. Echavez, G.R. No. 174542, August 3, 2015. 38 Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 161997, October 25, 2005. 39 Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April25, 2012. ~

DECISION CTA Case No. 9087 Page 18 of25 At the outset, it must be stressed that without doubt, the State's inherent power to tax is vested exclusively in the Legislature.40 As a corollary, the Supreme Court has since ruled that the power to tax includes the power to grant tax exemptions.41 Thus, the imposition of taxes, as well as the grant and withdrawal of tax exemptions, shall only be valid pursuant to a legislative enactment.42 Pursuant to Section 23(A) of the NIRC of 1997, all of a resident citizen's income is subject to tax, to wit: "SEC. 23. General Principles of Income Taxation in the Philippines. - Except when otherwise provided in this Code: (A) A citizen of the Philippines residing therein is taxable on all income derived from sources within or without the Philippines;" (Emphasis supplied) In addition and in relation to the above provision, Sections 24, 31 and 32(A)(1) of the NIRC of 1997, as amended by R.A. 9504 read: "SEC. 24. Income Tax Rates. - (A) Rates of Income Tax on Individual Citizen and Individual Resident Alien of the Philippines. - (1) An income tax is hereby imposed: (a) On the taxable income defined in Section 31 of this Code, other than income subject to tax under Subsections (8), (C) and (D) of this Section, derived for each taxable year from all sources within and without the Philippines by every individual citizen of the Philippines residing therein; XXX XXX XXX �4 Film Development Council of the Philippines vs. Colon Heritage Realty Corporation, G.R. No. 203754, June 16,2015. 41 Refer to Quezon City vs ABS-CBN Broadcasting Corporation, G.R. No. 166408, October 6, 2008. 42 Secretary ofFinance Cesar B. Purisima, et al. vs. Representative Carmela F Lazatin, et al., G.R. No. 210588, November 29,2016. ~

DECISION CTA Case No. 9087 Page 19 of25 The tax shall be computed in accordance with and at the rates established in the following schedule: Not over P1 0,000 ............................. . 5% Over P1 0,000 but not over P30,000..... . P500+10% of the excess over P10,000 Over P30,000 but not over P70,000... ... P2,500+15% Over P70,000 but not over P140,000..... of the excess over P30,000 P8,500+20% of the excess over P70,000 Over P140,000 but not over P250,000... P22,500+25% of the excess over P140,000 Over P250,000 but not over P500,000... P50,000+30% of the excess over P250,000 Over P500,000... ... ... ... ... ... ... ... ... ... ... P125,000+32% of the excess over P500,000 XXX XXX xxx." (Emphases supplied) Moreover, Sec. 31 and 32 of the NIRC of 1997 define what are taxable income and gross income, respectively, to wit: "SEC. 31. Taxable Income Defined. - The term 'taxable income' means the pertinent items of gross income specified in this Code, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by this Code or other special laws." (Emphasis supplied) "SEC. 32. Gross Income. - (A) General Definition. - Except when otherwise provided in this Title, gross income means all income ~

DECISION CTA Case No. 9087 Page 19 of25 The tax shall be computed in accordance with and at the rates established in the following schedule: Not over P1 0,000 ............................. . 5% Over P1 0,000 but not over P30,000 ..... . P500+10% of the excess over P10,000 Over P30,000 but not over P70,000...... P2,500+15% Over P70,000 but not over P140,000... .. of the excess over P30,000 P8,500+20% of the excess over P70,000 Over P140,000 but not over P250,000... P22,500+25% of the excess over P140,000 Over P250,000 but not over PSOO,OOO... P50,000+30% of the excess over P250,000 Over PSOO,OOO... ... ... ... ... ... ... ... ... ... ... P125,000+32% of the excess over PSOO,OOO XXX XXX xxx." (Emphases supplied) Moreover, Sec. 31 and 32 of the NIRC of 1997 define what are taxable income and gross income, respectively, to wit: "SEC. 31. Taxable Income Defined. - The term 'taxable income' means the pertinent items of gross income specified in this Code, less the deductions and/or personal and additional exemptions, if any, authorized for such types of income by this Code or other special laws." (Emphasis supplied) "SEC. 32. Gross Income. - (A) General Definition. - Except when otherwise provided in this Title, gross income means all income ~

DECISION CTA Case No. 9087 Page 20 of25 derived from whatever source, including (but not limited to) the following items: (1) Compensation for services in whatever form paid, including, but not limited to fees, salaries, wages, commissions, and similar items;" (Emphases supplied) Based on the foregoing provisions, it is clear that the compensation income of a Philippine national or a citizen of the Philippines, who are residing therein, from all sources within and without the Philippines, is subject to income tax. Correspondingly, it was error for petitioners to assume that RMC No. 31-2013 is the legal basis for collecting the subject income tax. The imposition of income tax on the compensation of Philippine nationals or citizens of the Philippines, who are residing therein, has been in Our statute books, from the time the RP-ADB Agreement was entered into. Petitioners likewise aver that the income tax-exempt status of ADS employees under the RP-ADB Agreement43 enjoyed by them for close to five (5) decades already, was only "disturbed" with the issuance of respondent's RMC No. 31-2013. We disagree. At the time the RP-ADB Agreement was entered into by the Philippine Government, i.e., on December 22, 1966, the law then in force was the NIRC of 1939.44 This law had the following provisions to the effect of imposing tax on the income of Philippine nationals or citizens, to wit: 43 Formally known as the "Agreement Between the Asian Development Bank and the Government of the Republic of the Philippines Regarding the Headquarters of the Asian Development Bank". 44 Commonwealth Act No. 466. ~

DECISION CTA Case No. 9087 Page 21 of25 "SECTION 21. Rates of Tax on Citizens or Residents. - There shall be levied, assessed, collected, and paid annually upon the entire net income received in the preceding taxable year of the Philippines, a tax equal to the sum of the following: XXX XXX xxx." (Emphasis and underscoring supplied) "SECTION 28. Meaning of Net Income. - 'Net income' means the gross income computed under section 29 less the deductions allowed by section 30." (Emphasis supplied) "SECTION 29. Gross Income. - (a) General Definition. - {Gross income' includes gains, profits, and unicorn derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, xxx, and income derived from any source whatever." (Emphasis supplied) Even the NIRC of 1977,45 the tax code after the NIRC of 1939, had the following taxing provisions on the income of Philippine nationals or citizens, to wit: "SECTION 21. Rates of tax on citizens or Residents. - A tax is hereby imposed upon the taxable net income received during each taxable year from all sources by every individual, whether a citizen of the Philippines residing therein or alien residing in the Philippines determined in accordance with the following schedule: xxx XXX XXX xxx." (Emphasis and underscoring supplied) "SECTION 28. Meaning of net income. - 'Net income' means the gross income computed under section twenty-nine, less the deductions allowed by section thirty." (Emphasis supplied) 45 Presidential Decree No. 1158. ~

DECISION CTA Case No. 9087 Page 22 of25 "SECTION 29. Gross Income. - (a) General Definition. - 'Gross income' includes gains, profits, and unicorn derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, xxx, and income derived from any source whatever." (Emphasis supplied) In view of the foregoing, it cannot be denied that the Philippine Legislature has exercised, and have been exercising, its power to tax the income of Philippine nationals or citizens, at the time the RP-ADB Agreement, up to the present time. Thus, We find no basis in declaring that, at any one time, salaries and emoluments of ADS's officers and staff, who are Philippine nationals or citizens, were ever exempted from income tax. Furthermore, in arguing that officers and staff of ADS, who are Philippine nationals or citizens, are exempt from income taxation, petitioners cannot find solace on Section 45(b) of the RP-ADB Agreement. In fact, it is very clear that while the said provision grants tax exemption on the salaries and emoluments paid by the ADB to its officers and staff, it qualifies that the Philippine government has the power to tax ADS's officers and staff, who are Philippine nationals or citizens. Section 45(b) of the RP-ADS Agreement provides as follows: "Section 45 Officers and staff of the Bank, including for the purposes of this Article experts and consultants performing missions for the Bank, shall enjoy the following privileges and immunities: XXX XXX XXX (b) Exemption from taxation on or in respect of the salaries and emoluments paid by the Bank subject to the power of the Government to tax its nationals;" (Emphases and underscoring supplied) Considering the earlier quoted Sections 23(A), 24, 31, and 32(A)(1) of the NIRC of 1997-the law in force for taxable years 2012 and 2013-vis-a-vis the foregoing provision of the RP-ADB Agreement, it cannot be said that it is RMC No. 31-2013 which ~

DECISION CTA Case No. 9087 Page 23 of25 imposed income tax on the salaries and emoluments of officers and staff of ADB, who are Philippine nationals or citizens. To repeat, even without the issuance of RMC No. 31-2013, the taxability of the said salaries and emoluments remains, by virtue of the said provisions of the NIRC of 1997 and the RP-ADB Agreement. Furthermore, it must be clarified that Section 2(d)(1) of RMC No. 31-2013 is not violative of Section 45(b) of the RP-ADB Agreement. On the contrary, the said Section 2(d)(1) of RMC No. 31- 2013 upholds the said Section 45(b) of the RP-ADB Agreement, when the former declared that tlonly officers and staff of the ADB who are not Philippine nationals shall be exempt from Philippine income tax." Relative thereto, it must be noted that Section 32(8) of the NIRC of 1997 recognizes the treaty obligations entered into by the Government which grants income tax exemptions, to wit: "SEC. 32. Gross Income. - XXX XXX XXX (B) Exclusions from Gross Income.- The following items shall not be included in gross income and shall be exempt from taxation under this Title: XXX XXX XXX (5) Income Exempt under Treaty. - Income of any kind, to the extent required by any treaty obligation binding upon the Government of the Philippines." (Emphases and underscoring supplied) It is worthy of note that like the provisions imposing tax on the income of Philippine nationals or citizens, the foregoing provision has been in Our statute books since the enactment of the NIRC of 1939,46 and thus, is already in existence when the RP-ADB Agreement has been entered into by the Philippine Government. The same provision was also re-enacted in the NIRC of 197747-the precursor of the NIRC of 1997. Thus, there is no indication that the Philippine Government violated the RP-ADB Agreement, insofar as the 46 Section 29(b)(6), Commonwealth Act No. 466. 47 Section 29(b), Presidential Decree No. 1158. ~

DECISION CTA Case No. 9087 Page 24 of25 imposition of tax on the salaries and emoluments paid by the ADB to its officers and employees, who are Philippine nationals or citizens, is concerned. Applying Section 32(8) of the NIRC of 1997 to the instant case, only those income which are clearly covered by the tax exemption granted Section 45(b) of the RP-ADB Agreement must be recognized by the Philippine Government. Any item of income, beyond the scope of the said granted tax exemption, must already be subject to income taxation, specifically, the salaries and emoluments of officers and staff of ADB, who are Philippine nationals or citizens. Long settled is the rule that the power of taxation is a high prerogative of sovereignty. Its relinquishment is never presumed.48 An intention on the part of the legislature to grant an exemption from the taxing power of the state will never be implied from language which will admit of any other reasonable construction.49 Thus, despite the natural reluctance to surrender part of one's hard earned income to the taxing authorities, every person who is able to must contribute his share in the running of the government. 50 A tax exemption cannot arise from vague inference. 51 Tax exemptions must be clear and unequivocal. A taxpayer claiming a tax exemption must point to a specific provision of law conferring on the taxpayer, in clear and plain terms, exemption from a common burden. Any doubt whether a tax exemption exists is resolved against the taxpayer. 52 Tax refunds, like tax exemptions, are construed strictly against the taxpayer and liberally in favor of the taxing authority, and the taxpayer bears the burden of establishing the factual basis of his claim for a refund. 53 48 Luzon Stevedoring Corporation vs. Court of Tax Appeals, et al., G.R. No. L-30232, July 29, 1988. �49 Lung Center ofthe Philippines vs. Quezon City, et al., G.R. No. 144104, June 29,2004. 5 Commissioner ofInternal Revenue vs. Algue, Inc., et al., G.R. No. L-28896, February 17,1988. 51 Digital Telecommunications Phils., Inc. vs. City Government ofBatangas, et al., G.R. No, 156040, December 11, 2008 52 Supra. 53 Philippine Long Distance Telephone Company vs. Commissioner ofInternal Revenue, G.R. No. 157264, January 31, 2008. (VJ

DECISION CTA Case No. 9087 Page 25 of25 In this case, however, petitioners failed to establish the factual basis of their claims for a refund for taxable years 2012 and 2013. Specifically, petitioners failed to show that they are not Philippine nationals or citizens, so as to entitle them to the tax exemption granted under Section 45(b) of the RP-ADB Agreement. Thus, petitioners' claim for refund must perforce fail. WHEREFORE, in light of the foregoing considerations, the instant Petition for Review is DENIED for lack of merit. SO ORDERED. "" ER~P.UY Assoc1ate Justice WE CONCUR: Presiding Justice r.WITo ~ ,�.t- ~. M~~ _c~ N. MINDARO-GRULLA Associate Justice CERTIFICATION Pursuant to Article 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. Presiding Justice Chairperson, Special 1st Division

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION MARIA DONA ALIBOSO, CTA CASE NO. 9087 JOY ARCINUE, MARY ABIGAIL BACUD, MA. Members: PATRICIA LIM, KRISTINE DEL ROSARIO, PJ., Chairperson, LEA MERCADO, KATHLEEN UY, and, OSIAS, RAQUEL MINDARO-GRULLA, JJ. BERNADETTE VELASQUEZ, JAMILA YASMINA ACHANZAR, SARAH SENAS, THELMA ABIVA, ARNOLD AGUILA, FRANCOISE MARIE ALONZO-CALALAY, KAREN ANDES, LEAH ARBOLEDA, ROSALYN ARIATE, DONATILA BALAGTAS, GLENDA BALATBAT, FATIMA BAUTISTA, MELCHOR BUREROS, PATRICIA CALCETAS, CATHERINE CLARIN, KATHERINE MITZI CO, MA. CHRISTINA CONCEPCION, MILLET CONCEPCION, MARTIN ERICSSON CRUEL, CAROLINE VALENTINA CRUZ, LESLIE CRUZ, MA. CELINA CRUZ, MARIA SIMONETTE DAQUIS, EDWIN DAVID, CELEDONIA DE FELIPE, FATIMA CHRISTINE DE RAMOS, MELANIE DELA CRUZ, ALELI DELA ROSA, AGNES DIAMANTE, SHIELA DIMAL, MARIE KRISTINE ESTRELLA, SHERYL EVANGELISTA, JANE FANTILANAN, ANGELICA LUZ FERNANDO, ERICKA JOY GAJETE, KRISTINE C!l/

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 GALANG, JEMINETTE GATCHALIAN, DOROTHY GERONIMO, PAUL ANTHONY GOKIOCO, LANI GOMEZ, GLEN GONZAGA, GEMMALINE GONZALEZ, MELANI GONZALEZ, JHONE GUILLEM, PAMELA GUTIERREZ, DIANA MARIE HERNANDEZ, MA. KRISTINA HIDALGO, IRIS EVADIE JIMENEZ, LORETA JOVELLANOS, ELIZABETH JUAN, ANGELICA KARUNUNGAN, NORLYN LAGSIT, DARYL JAMES LAPING, NORMAN LU, JOAN REINA LUNA, MANNY MANALOT, AUGUSTUS MAGNO, ELVIRA MARTINEZ, ILUMINADA MENDOZA, DAISY MENDOZA, MARIE MINA, MARIE CHRISTINE MONTOYA, THERESA MORA, JANET MUTYANGPILI, JOCELYN NARCISO, JULIET NECIA, CLAIRE ANNE ODSINADA, EMMANUEL ONG, WEMA PACANO, MA. VICTORIA PANTALEON, NAJA PENAS, CHRISTY PLANCO, FARAHTONI PLANCO, MA. THERESA PRADO, KAREN QUIETA, ELAINE QUINTO, ANGELITO RABE, MARY GRACE RAMOS, ARNEL REYES, MA. ELENA ROCES, CHRISTINA ROMAGOS, MA. LUALHATI RUEDA,CLARK SALAS, MARIA CLARISSA SAMSON, MARCELLA ANN SANTOS, JOAQUIN SARDONA JR., ROWENA SARMIENTO, MA. C!f

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 CORAZON SISON, MA. RITA STA. CRUZ, LEA BENETA SUMULONG, PRECIOUSA SUNGA, SHERYL TAMAYO, JENNIFER TANTAMCO, ALDOUS MOSES TIRONA, MA. ELOISA TUASON, MARIA CECILIA VILLANUEVA, EDNA VILLAREAL, CHARINA VILLARINO, ROWENA VINAN, BRYAN VISAYA, DULCINEA JOY YRAITA, JULIE YU, FLORDELIZA ZACARIAS, Petitioners, -versus- COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SEPARATE CONCURRING OPINIO DEL ROSARIO, PJ.: I concur with the ponencia in denying for lack of merit the Petition for Review filed on July 10, 2015. I wish to stress, however, that contrary to the ponencia's conclusion, the parties' admission, as contained in paragraph II (A)(S) of the Pre-Trial Order, to the effect that petitioners filed claims for refund with the Commissioner of Internal Revenue (CIR) prior to the filing of the Petition for Review with the Court of Tax Appeals (CTA), indubitably confirms the timeliness and sufficiency as to form of the administrative claims. While judicial admission requires no further proof, they are binding upon the parties making the same. On this~

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 score, the pronouncement in Oscar Constantino vs. Heirs of Pedro Constantino1 is enlightening, viz.: "Judicial admissions are legally binding on the party making the admissions. Pre-trial admission in civil cases is one of the instances of judicial admissions explicitly provided for under Section 7, Rule 18 of the Rules of Court, which mandates that the contents of the pre-trial order shall control the subsequent course of the action, thereby, defining and limiting the issues to be tried. In Bayas, et. a/. v. Sandiganbayan, et. a/., this Court emphasized that: Once the stipulations are reduced into writing and signed by the parties and their counsels, they become binding on the parties who made them. They become judicial admissions of the fact or facts stipulated. Even if placed at a disadvantageous position, a party may not be allowed to rescind them unilaterally, it must assume the consequences of the disadvantage. (Highlighting ours) Moreover, in Alfelor v. Halasan, this Court declared that: A party who judicially admits a fact cannot later challenge the fact as judicial admissions are a waiver of proof; production of evidence is dispensed with. A judicial admission also removes an admitted fact from the field of controversy. Consequently, an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent therewith should be ignored, whether objection is interposed by the party or not. The allegations, statements or admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a position contrary of or inconsistent with what was pleaded. (Citations omitted) Xxx. (Additional boldfacing supplied; citations omitted) In the present case, records disclose that petitioners paid their income taxes for 2012 on July 12, 2013 and for 2013 on various dates from February 5, 2014 to April 15, 2014. 2 Pursuant to Section 112 (C) of the National Internal Revenue Code (NIRC) of 1997, they have two- years from their payment of income taxes to file an administrative claim for refund, to wit(.,"'] 1 G.R. No. 181508, October 2, 2013. 2 Paragraph 6, Petition for Review, CTA Docket Vol. I, pp. 19-21; Exhibits P-3 to P-53, inclusive of sub-markings.

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 PetitionerITaxpayer Date of Last day to file Date of Payment of Last day to file 2013 Income Tax administrative and I Payment of administrative judicial claims for I April 14, 2014 refund for 2013 I 2012 Income and judicial Income Tax I Tax claims for April 14, 2016 1 Maria Dona Aliboso refund for 2012 Income Tax July 12, 2013 July 12,2015 2 Joy Arcinue July 12, 2013 July 12, 2015 April15, 2014 April15, 2016 July 12, 2015 April 10, 2014 Apri110, 2016 3 Mary Abigail Bacud July 12, 2013 July 12, 2015 April10, 2014 April10, 2016 July 12, 2015 March 24, 2014 March 24, 2016 4 Bernadette Bigasin July 12, 2013 July 12, 2015 April10, 2014 April10, 2016 July 12, 2015 March 21, 2014 March 21, 2016 5 Ma. Patricia Lim July 12, 2013 July 12, 2015 April10, 2014 April 10, 2016 6 Kristine Lea Mercado July 12, 2013 7 Kathleen Osias July_ 12, 2013 8 Raquel Bernadette July 12, 2013 Velas_guez I 9 Jamila Yasmina July 12,2013 July 12, 2015 April10, 2014 Apri110, 2016 I Achanzar I 10 Sarah Senas July 12, 2013 July 12, 2015 April 4, 2014 April4, 2016 July 12, 2015 April 10, 2014 ' 11 Thelma Abiva July 12, 2013 July 12, 2015 July 12, 2015 March 20, 2014 Apri110, 2016 12 Arnold Aguila July 12, 2013 13 Francoise Marie July 12, 2013 March 20, 2016 Alonzo-Calalay 14 Karen Andes July 12, 2013 July 12, 2015 March 21, 2014 March 21, 2016 July12, 2015 A_Qril 4, 2014 AQril 4, 2016 15 Leah Arboleda July_ 12, 2013 July 12, 2015 July 12, 2015 April 11, 2014 16 Rosalyn Ariate July 12, 2013 July 12, 2015 April4, 2014 July 12, 2015 March 22, 2014 17 Donatila Balagtas July 12, 2013 July 12, 2015 March 21, 2014 July 12, 2015 April 8, 2014 18 Glenda Balatbat July 12, 2013 July 12, 2015 April11, 2016 July 12, 2015 April 4, 2016 19 Fatima Bautista July 12, 2013 July 12, 2015 March 22, 2016 March 21, 2016 20 Melchor Bureros July_ 12, 2013 April 8, 2016 21 Patricia Calcetas July 12, 2013 22 Catherine Clarin July 12, 2013 23 Katherine Mitzi Co. July 12, 2013 24 Ma. Cristina July 12, 2013 Concepcion 25 Millet Concepcion July 12, 2013 July 12, 2015 March 27, 2014 March 27, 2016 July 12, 2015 A_Qril14, 2014 April14, 2016 26 Martin Ericsson Cruel July 12, 2013 July 12, 2015 April 8, 2014 April 8, 2016 July 12, 2015 27 Caroline Valentina Cruz July 12, 2013 July 12, 2015 April 8, 2014 April 8, 2016 July 12, 2015 March 21, 2014 March 21, 2016 28 Leslie Cruz July 12,2013 July 12, 2015 April 8, 2014 April 8, 2016 July 12, 2015 March 21, 2014 March 21, 2016 29 Ma. Celina Cruz July 12, 2013 July 12, 2015 April1, 2014 April1, 2016 30 Maria Simonette Daquis July 12, 2013 March 5, 2016 April 8, 2016 31 Edwin David July 12, 2013 March 21, 2016 32 Celedonia De Felipe July 12, 2013 Apri111, 2016 33 Fatima Christine De July 12, 2013 April 9, 2016 Ramos April11, 2016 April 10, 2016 34 Melanie Dela Cruz July 12, 2013 July 12, 2015 March 5, 2014 April11, 2016 July 12, 2015 April 8, 2014 April 7, 2016 35 Aleli Dela Rosa July 12, 2013 July 12, 2015 March 21, 2016 July 12, 2015 March 21, 2014 April 8, 2016 36 Agnes Diamante July 12, 2013 July 12, 2015 March 21, 2016 - July 12, 2015 April 11, 2014 March 21, 2016 37 Shiela Dimal July_ 12, 2013 July 12,2015 July 12, 2015 Apri19, 2014 April10, 2016 38 Marie Kristine Estrella July 12, 2013 July 12, 2015 April11, 2014 July 12, 2015 April10, 2014 April11, 2016 39 Sheryl Evangelista July 12, 2013 July 12, 2015 ~ril 11, 2014 July 12, 2015 April 7, 2014 ~ 40 Jane Fantilanan July 12, 2013 July 12, 2015 March 21, 2014 July 12, 2015 April 8, 2014 41 Angelica Luz Fernando July 12, 2013 July 12, 2015 March 21, 2014 July 12, 2015 March 21, 2014 42 Ericka Joy Gajete July 12, 2013 July 12, 2015 July 12, 2015 April10, 2014 43 Kristine Galang July 12, 2013 July 12, 2015 July 12, 2015 April 11, 2014 44 Jeminette Gatchalian July 12, 2013 July 12, 2015 July 12, 2015 45 Dorothy Geronimo July 12, 2013 July 12, 2015 46 Paul Anthony Gokioco July 12,2013 47 Lani Gomez July 12,2013 48 Glen Gonzaga July 12, 2013 49 Gemmaline Gonzalez July 12, 2013 50 Melani Gonzalez July 12, 2013 51 Jhona Guillem July 12, 2013 52 Pamela Gutierrez July 12, 2013 53 Diana Marie Hernandez July 12, 2013 54 Ma. Kristina Hidalgo July 12, 2013 55 Iris Evadie Jimenez July 12, 2013 56 Loreta Jovellanos July 12, 2013

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 57 Elizabeth Juan July 12,2013 July 12, 2015 Februa_ry_5, 2014 February 5, 2016 July 12, 2015 March 31, 2014 March 31,2016 58 Angelica Karunungan July 12, 2013 July 12, 2015 April14, 2014 April14, 2016 July 12, 2015 59 Norlyn Lagsit July 12, 2013 July 12, 2015 April10, 2014 July 12, 2015 March 21, 2014 60 Daryl James Laping July 12, 2013 July 12,2015 April 7, 2014 Jul}'_ 12, 2015 March 31, 2014 61 Norman Lu July 12,2013 July 12, 2015 March 20, 2014 April10, 2016 July 12, 2015 March 21, 2016 62 Joan Reina Luna July 12, 2013 July 12, 2015 March 14, 2014 April?, 2016 July 12, 2015 April 11, 2014 March 31,2016 63 Manny Mabalot July 12, 2013 July 12, 2015 April4, 2014 March 20, 2016 64 Augustus Magno July 12,2013 65 Elvira Martinez July 12, 2013 66 lluminada Mendoza July 12, 2013 67 Daisy Mendoza July 12, 2013 March 14, 2016 April11, 2016 68 Marie Mina July 12,2013 April 4, 2016 69 Marie Christine July 12, 2013 I Montoya 70 Theresa Mora July 12, 2013 July 12, 2015 July 12, 2015 71 Janet Mutyangpili July 12, 2013 Jul~ 12, 2015 April 14, 2014 April14, 2016 July 12, 2015 72 Jocelyn Narciso July 12,2013 July 12, 2015 April 11, 2014 I July 12, 2015 April11, 2014 73 Juliet Necia July 12, 2013 July 12, 2015 April 14, 2014 April11, 2016 I July 12, 2015 74 Claire Anne Odsinada July 12, 2013 July 12, 2015 March 20, 2014 April11, 2016 July 12, 2015 March 14, 2014 75 Emmanuel Ong July 12, 2013 July 12, 2015 Apri114, 2016 i July 12, 2015 March 20, 2014 76 Wema Pacano July 12,2013 July 12, 2015 I July 12, 2015 April 7, 2014 77 Ma. Victoria Pantaleon July 12, 2013 July 12, 2015 April 8, 2014 March 20, 2016 July 12, 2015 April2, 2014 March 14, 2016 I 78 Naja Penas July 12, 2013 July 12, 2015 ApJil2, 2014 July 12, 2015 I 79 Christy Planco July 12, 2013 July 12, 2015 Apri110, 2014 July 12, 2015 April1, 2014 80 Farahtoni Planco July 12, 2013 July 12, 2015 ARril7, 2014 Jul~ 12, 2015 81 Ma.Theresa Prado July 12, 2013 July 12, 2015 March 20, 2014 July 12, 2015 March 21, 2014 82 Karen Quieta July 12, 2013 July 12, 2015 Ar>ril 3, 2014 March 20, 2016 ' July 12, 2015 April1, 2014 83 Elaine Quinto July 12, 2013 July 12, 2015 Apri115, 2014 April 7, 2016 July 12, 2015 April 7, 2014 April 8, 2016 84 Angelito Rabe July 12, 2013 July 12, 2015 April 2, 2016 July 12, 2015 March 21, 2014 April 2, 2016 85 Mary Grace Ramos July 12,2013 July 12, 2015 April 11, 2014 July 12, 2015 86 Arne! Reyes July 12, 2013 July 12, 2015 April 8, 2014 July 12, 2015 April2, 2014 87 Ma.Eiena Roces July 12, 2013 July 12, 2015 April 20, 2014 July 12, 2015 April 11, 2014 88 Christian Romagos July 12, 2013 July 12, 2015 March 21, 2014 July 12, 2015 March 21, 2014 89 Ma. Lualhati Rueda July 12,2013 July 12, 2015 March 31, 2014 July 12, 2015 90 Clark Salas July 12, 2013 July 12, 2015 April 10, 2016 April1, 2016 91 Maria Clarissa Samson July 12, 2013 April 7, 2016 92 Marcella Ann Santos July 12, 2013 March 20, 2016 March 21, 2016 93 Joaquin Sardona, Jr. July 12, 2013 Ap!i13, 2016 April 1, 2016 94 Rowena Sarmiento July 12, 2013 April 15, 2016 April 7, 2016 95 Ma. Corazon Sison July 12, 2013 March 21, 2016 96 Ma. Rita Cruz July 12, 2013 April11, 2016 97 Lea Beneta Sumulong July 12, 2013 April 8, 2016 April 2, 2016 98 Preciousa Sunga July 12,2013 April 20, 2016 April11, 2016 99 Sheryl Tamayo July 12, 2013 March 21, 2016 March 21, 2016 100 Jennifer Tantamco July 12, 2013 March 31, 2016 101 Aldous Moses Tirona July 12,2013 102 Ma. Eloisa Tuason July 12, 2013 103 Maria Cecilia Villanueva July 12, 2013 104 Edna Villareal July 12, 2013 105 Charino Villarino July 12, 2013 106 Rowena Vinan July 12, 2013 107 Bryan Viaya July 12, 2013 108 Dulcinea Joy Yraita July 12, 2013 109 Julie Yu July 12, 2013 110 Flordeliza Zacarias July 12, 2013 Based on the foregoing tabulation, the claims for refund for income taxes paid in 2012 must be filed on or before July 12, 2015 while the claims for refund for income taxes paid in 2013 must be filed on or before February 5, 2016 to April 15, 2016, depending on the date of the payment. As aforementioned, respondent admitted that petitioners filed their administrative claims for refund prior to the filing of the presen\tj

SEPARATE CONCURRING OPINION CTA CASE NO. 9087 Petition on July 10, 2015, meaning the administrative claims were filed at the latest on July 10, 2015 (right before the Petition was filed before the Court), which is within the two-year period reckoned from the payment of their income taxes. Moreover, the sufficiency of the administrative claims as to their form is likewise necessarily deemed admitted. Notwithstanding the foregoing, I share the view that petitioners' payment of income taxes is not illegal or erroneous as extensively discussed in the ponencia, thus, their claim for refund must perforce be denied. All told, I CONCUR in the result. Presiding Justice