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FIRST DIVISION

NOTICE
Sirs/Mesdames:

Please take notice that the Court, First Division, issued a

Resolution dated June 16, 2021 which reads as follows :

"G.R. No. 191587 (Commissioner of Internal Revenue,

•'i'!·••·
Petitioner, v. Pacific Plans, Inc., Respondent.) - This Petition for • ' !

Review on Certiorari' under Rule 45 seeks to reverse and set aside

the Decision2 dated 06 January 20 10 and the Resolution3 dated 12
March 2010 of the Comi of Tax Appeals (CTA) En Banc in C.T.A.
E.B. No. 502. The CTA En Banc affinned the Decision4 dated 09
February 2009 and Resolution5 dated 11 June 2009 of the CTA --• l ~

Division in C.T.A. Case No. 7537, which cancelled the assessment

notices regarding the late payment of withholding taxes for the
months of March and April 2005 by respondent Pacific Plans, Inc.
(PPI).

Antecedents

Respondent PPI, a duly registered withholding agent of the

Bureau of Internal Revenue (BIR), is a pre-need company that sells
traditional open-ended educational plans. PPI was supposed to remit
to the BIR creditable withholding taxes in the amount of P954, 798.02
for the month of March 2005, which became due on 15 April 2005,
and the amount of P952,377.71 for the month of April 2005, which
became due on 16 May 2005. However, due to liquidity problems and
...... ).

- over - eight (8) pages ...

238

1
Rollo, pp. I0-30.
Id. at 32-49; penned by Associate Justice Lovell R. Bautista and concurred in by Associate
Justices Ernesto D. Acosta, Juanita C. Castaneda, Jr., Erlinda P. Uy, Caesar A. Casanova, and
Olga Palanca-Enriquez of the En Banc, Court of Tax Appeals, Quezon City.
3
Id. at 51-54.
4
Id. at 150-173; penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Associate Justices Juanita C. Castaneda, Jr., and Erlinda P. Uy of the Second Division, Court of
Tax Appeals, Quezon City.
5
Id. at 174-176. \ .•,.

~ ~ · ~.. ,,';, 'f I'

RESOLUTION 2 G.R. No. 191587
June 16, 2021

foreseeing the impossibility of meeting its obligations to its

planholders as they fall due, PPI filed, on 07 April 2005, a petition for
corporate rehabilitation entitled "In the Matter of Petition for
Corporate Rehabilitation with Prayer for Suspension of Payments of
Pacific Plans, Inc." before the Regional Trial Court of Makati (Makati
RTC), which was docketed as Special Proceedings No. M-6059.

The Makati RTC issued a Stay Order6 dated 12 April 2005,

directing as follows:

a) a stay in the enforcement of all claims, whether for money or

otherwise, against petitioner PPI, its guarantors and sureties
not solidarily liable with it;

b) prohibiting PPI from making any payment of its liabilities as

of the filing of the instant petition. PPI, however, is allowed to
disburse the amount of at least P34 l Million as tuition fee
support to its availing planholders who agree to such support,
and provided that such disbursement shall not entail any
disposition of the covering assets (NAPOCOR bonds) in the
Trust Fund; hence, availing planholders who agree to the
proposed tuition fee support are directed to coordinate with
PPI;

c) prohibiting PPI from selling, encumbering, transferring or

disposing in any manner any of its properties except in the
ordinary course of business;

d) prohibiting PPI's suppliers of goods and services from

withholding supply of goods and services as long as PPI
makes payments for the goods and services supplied after the
issuance of this Stay Order; and

e) directing the payment in full of all administrative expenses

7
incurred after the issuance of this Stay Order.

In the same order, the Makati RTC also appointed Mr. Mamerto
A. Marcelo, Jr., a certified public accountant, as the rehabilitation
receiver of PPL Marcelo was tasked to closely oversee and monitor
PPI's operations during the pendency of the rehabilitation
proceedings.

Consequently, PPI sent a letter dated 15 April 2005 to the BIR

Large Taxpayers Service, which was received on 18 April 2005,
informing it of the Stay Order dated 12 April 2005. On 10 May 2005,

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238

6 Id. at 323-327.
7
Id. at 326.

- ~
RESOLUTION 3 G.R. No.191587
June 16, 2021

•'.,'
PPI received from the BIR a Collection Letter dated 03 March 2005
for unsettled withholding tax due for the month of March 2005 in the
amount of Pl,237,300.64, inclusive of surcharge, interest, and
compromise penalty. In reply, PPI filed with the BIR a letter dated 16
May 2005, explaining that it is in the process of getting clearance
from the court-appointed rehabilitation receiver for the payment of the . • ' ".1--i_.... •.... . ,

withholding tax for the months of March and April 2005. The letter
also requested for the waiver of surcharges and interest on the
withholding tax due.

On 18 May 2005, after getting clearance from the rehabilitation •-,•~- -i-. •

receiver, PPI immediately paid the withholding taxes due for the
months of March and April 2005, in the amounts of P954,798.02 and
P952,377.71, respectively. Despite said payment, BIR sent a Final
Notice of Seizure to PPI, dated 16 June 2005, imposing surcharge,
interest, and compromise penalty in the amount of P282,502.62 for ............~'14.

the late payment of withholding tax for the month of March 2005 .
Moreover, on 10 October 2005, PPI received a Collection Letter from
BIR, imposing surcharge, interest, and compromise penalty in the
amount of P259,665.85 for the late payment of withholding tax for the
month of April 2005. In both instances, PPI requested BIR to
reconsider the imposition of the penalty charges.

PPI then filed an Application for Abatement of Tax/Penalties

for the late payment of withholding tax for the months of March and
April 2005 on 06 October 2005 and 28 December 2005, respectively.
On 17 March 2006, pending the decision of BIR on PPI's Application
for Abatement, PPI received Assessment Notices Nos. QA-06-000122
and QA-06-000123 , issued on 20 January 2006, imposing surcharge,
interest, and compromise penalties in the amounts of P275,964.35 and
P259,l 38.13 for the late payment of creditable withholding taxes for
the months of March and April 2005, respectively.

On 04 April 2006, PPI filed a letter protesting the assessment.

When the BIR failed to act on the protest, PPI filed on 30 October
2006 a petition for review before the CTA.

Ruling of the Court of Tax Appeals Division

On 09 February 2009, the CTA Division promulgated its

Decision, the dispositive portion of which reads: • ·._~ 0;,,. .

WHEREFORE, premises considered, the present Petition

For Review is hereby GRANTED . Accordingly, Assessment
Notices Nos. QA-06-000122 and QA-06-000123, representing
surcharges, interests and compromise penalties for the late

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238
 RESOLUTION 4 G.R. No. 191587
June 16, 202 1

payment of withholding taxes for the months of March and April

2005, in the amounts of P-275,964.35 and P-259,138. 13,
respectively, are hereby ordered CANCELLED and SET ASIDE.

SO ORDERED. 8

The CTA Division held that PPI should not be held liable for
surcharge and interest on the late payment of its creditable
withholding tax in view of the Stay Order issued by the RTC Makati.
It noted that the Stay Order, which prohibited the enforcement of all
claims against PPI and also prohibited PPI from making any payments
of its liabilities, was issued and received by PPI on 12 April 2005,
before the due dates for the payment of its creditable withholding
taxes for the months of March and April 2005.

Considering that the Stay Order does not make any distinction
as to the claims enjoined and the liabilities prohibited from payment,
the CTA Division maintained that such order is a justifiable reason for
PPI not to pay the creditable withholding taxes due on 15 April 2005
and 15 May 2005 . The CTA Division opined that it was only prudent
for PPI to seek clearance first from the court-appointed rehabilitation
receiver before effecting any payment of the said creditable
withholding taxes. Moreover, it ruled that there is no basis for the
imposition of the P20,000.00 compromise penalty since there is no
showing that PPI consented thereto.

Petitioner Commissioner of Internal Revenue (CIR) moved for

reconsideration, which the CTA Division denied in its Resolution
dated 11 June 2009.9

Ruling of the CTA En Banc -..,,. .. ·""·

The CTA En Banc affirmed the decision and resolution of the

CTA Division, ruling that the payment of withholding taxes falls
under the category of claim and liability, considering that it is for
pecuniary considerations, and is thus covered in the Stay Order. Since
PPI was legally restrained by the Stay Order, the CTA En Banc held
that it should not be liable for civil penalties on its late payment of
creditable withholding taxes for the months of March and April 2005.

The CTA En Banc found untenable the CIR' s argument that

PPI, as a withholding agent of the BIR, is under obligation to collect
and remit the money it withheld in trust for the government and that

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238 '. c.i.'..• -~

8
Id at 172.
9
Id. at. 174-176.
RESOLUTION 5 G.R. No. 191587
June 16, 2021

such obligation to pay the withholding taxes is not covered by the

Stay Order. The CTA En Banc cited this Court's decision in Abrera v.
Barza, 10 where it was held that "even if the relationship is one of trust,
there is no provision in the Interim Rules that a claim arising from a .:·.• '. •

trust relationship is excluded from the Stay Order." 11

The CIR filed a motion for reconsideration, which was denied

by the CTA En Banc in its Resolution dated 12 March 2010. 12

Issue

The lone issue for Court's resolution is whether PPI is liable for
surcharge, interest, and compromise penalties for the late payments of
its creditable withholding taxes for the months of March and April
2005.

Ruling of the Court

The petition is denied for mootness.

A moot and academic case is one that ceases to present a

justiciable controversy by virtue of supervening events, so that a
declaration thereon will be of no practical use or value. 13

The Court notes that on 21 September 2020, PPI submitted to

the Court a ce1iified true copy of the BIR Termination Letter dated 9
March 20 11, 14 pertaining to Assessment Nos. QA-06-000122 and QA-
06-000123, issued on 20 January 2006, imposing surcharge, interest,
and compromise penalties in the amounts of P275,964.35 and
P259, l 38.13.

The BIR Termination Letter states:

TERMINATION LETTER
(ABATEMENT PROGRAM UNDER RR 3-2007)

Case No. TL-121 -11-0000040

March 9, 2011

PACIFIC PLANS, INC.

2/F Grepalife Bldg., 221 Sen. Gil Puyat Ave., Makati City

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238
..,. ..-·:~ \·~
rn 6 15Phil.595(2009),G.R.No. 171681 , II September2009[PerPeralta].
11
Rollo, p. 46.
12
JdatS l -54.
13 Dangerous Drugs Boardv. Matibag, G.R. No. 2 1001 3, 22 January 2020 [Per J. Caguioa].
14 Attached as Annex A of PPI 's Compliance dated 18 September 2020.
 RESOLUTION 6 G.R. No. 191587
June 16, 2021

Sir/Madam:

This refers to your availment of the ONE TIME

ADMINISTRATIVE ABATEMENT of Surcharge &
Compromise Penalties pursuant to the provisions of Section 204 of
the Tax Code, as amended and implemented by Revenue
Regulations No. 3-2007 Section 2(n) dated January 16, 2007,
bearing on your internal revenue tax liabilities, to wit:

NAME OF TAXPAYER PACIFIC PLANS, INC.

TIN 000-799-984
ADDRESS 2/F Grepalife Bldg., 221 Sen. Gil
Puyat Ave., Makati City

DETAILS OF ASSESSMENT:
Assessment Tax Return Surcharge Interest Compromise Total Remarks
No. Type Period (paid
updated
amount of
interest)
QA-06- WE 03/31/ 238,699.51 17,264.84 20,000.00 275,964.35 23,803.11
000122 2005
dated ' ·'>'.. •'•.·,
01/20/2006
QA-06- 04/30/ 238,094.43 1,043.70 20,000.00 259,138.13 1,57 1.42
000123 2005
dated
01/20/2006
Total 476,793.94 18,308.54 40,000.00 535,102.48 25,374.53

In this connection, we are pleased to inform you that in

view of your availment of the aforesaid benefits granted under the
special provisions of Section 204 of the National Internal Revenue
Code (NIRC), as amended, and its implementing rules and
regulations, and the payment of the total amount of Twenty Five
,. 1 .. ,
Thousand Three Hundred Seventy Four Pesos and 53/100
(P25,374.53), representing ONE HUNDRED PERCENT (100%)
of the updated interest assessed under this ABATEMENT
PROGRAM, the tax liability stated above is hereby CLOSED and
TERMINATED.

Very truly yours,

KIM S. JACINTO-HENARES
Commissioner of Internal Revenue
~•;·.-..· .. '

By: (signed)
ZENAIDA G. GARCIA
Assistant Commissioner
Large Taxpayers Service 15

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238

15 Id. Emphasis in the original.

-· .. ,
..,,-➔
 RESOLUTION 7 G.R. No. 191587
June 16, 2021

To recall, PPI filed with the BIR Application for Abatement of

Tax/Penalties for the late payment of withholding tax for the months
of March and April 2005 on 06 October 2005 and 28 December 2005,
respectively. The Abatement Applications were made pursuant to
Section 204 of the National Internal Revenue Code, as amended, and
implemented by Revenue Regulations No. 3-2007 (RR No. 3-2007). 16
Section 4 of RR No. 3-2007, which reads:

SECTION 4. WHO MAY AVAIL - Any person/taxpayer,

natural or juridical, may settle thru the abatement program any
delinquent account or disputed assessment where the Assessment
Notice has been released as of November 30, 2006, by paying an
amount equal to One Hundred Percent (100%) or more of the
Basic Tax assessed with the Accredited Agent Bank (AAB) of the
Revenue District Office (RDO)/ Large Taxpayers Service
(LTS)/Large Taxpayers District Office (LTDO) that has
jurisdiction over the taxpayer. In the absence of an AAB, payment
may be made with the Revenue Collection Officer/Deputized
Treasurer of the RDO that has jurisdiction over the taxpayer. After
payment of the basic tax,1 7 the assessment for
penalties/surcharge and interest shall be cancelled by the
.-.,_,11\ •.
concerned BIR Office following existing rules and procedures.
Thereafter, the docket of the case shall be forwarded to the
Office of the Commissioner, thru the Deputy Commissioner for
Operations Group, for issuance of Termination Letter.

This Abatement Program shall include taxpayers who have

already paid any portion of the increments (surcharge, interest,
etc.) on their tax liabilities, provided, they will waive any claim for
refund of paid amount in excess of 100% of the basic tax paid.

Taxpayers with existing tax case(s) on which the

Presidential Commission on Good Government has/have an
interest are not covered by this Program. (Emphasis supplied)

Clearly, the BIR acted favorably on PPI' s Application for

Abatement of Tax/Penalties for the late payment of withholding tax
for the months of March and April 2005. As stated in the Termination
Letter, upon payment by PPI of P25,374.53 representing 100% of the
updated interest assessed under the Abatement Program, PPI' s tax
liability is deemed closed and terminated. In other words, the
assessment for penalties/surcharge and interest issued against PPI,
which is the subject of this case, was already cancelled.

- over -
238

16 Regulations Providing for the Policies, Guidelines and Procedures in the Implementation of the
Expanded One-Time Administrative Abatement o f a ll Penalties/Surcharges a nd Interest on
Delinquent Accounts a nd Assessments.
17
Under Section 3(c) (5 ) of RR No. 3-2007, " Bas ic Tax Assessed" may refer to " (d]e ticiency
interest, if the assessme nt issued was for penalties only ( interest and surcharge)."
 • ••. ~ ••• • , ~ . i

RESOLUTION 8 G.R. No. 191587

June 16, 202 1

WHEREFORE, the petition 1s hereby DENIED for being

•··:' ·:::,...
moot and academic.

SO ORDERED."

By authority of the Court:

Divisio

by:

MARIA TERESA B. SIBULO

Deputy Division Clerk of Court
238

T he Solic itor General Court of Tax Appeals

134 Amorsolo Street, Legaspi Village National Government Center
1229 Makati C ity Dilima n, 11 0 1 Q uezon C ity ... . ~ ; ,•,~-i. . •

(CTA EB No. 502)

LITIGATION DIVISION (CTA Case No. 7537)
BUREAU OF INTERNAL REVENUE
Room 703, BIR National Office Building Atty. R ita Linda V . Jimeno
Agham Road, Diliman Counsel for Respondent
I IO I Q uezon C ity 37th Floor, Rufino Pacific Tower
Corner V.A. Rufino Street, Legaspi Village . '\'._'.;:·;.,,.

1229 Makati C ity

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