G.R. No. L-25501 and G.R. No. L-25507. July 29, 1977.
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. PHILIPPINE POWER AND DEVELOPMENT CO., INC, and THE COURT OF TAX APPEALS, respondents.

PHILIPPINE POWER AND DEVELOPMENT CO., INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent.

FACTS

The Court of Tax Appeals (CTA) rendered a decision on October 31, 1965, in CTA Case No. 1152, ordering Philippine Power and Development Co., Inc. (PPDC) to pay a deficiency franchise tax for the period from October 1, 1955, to June 30, 1960, in the amount of P138,175.52. Both the Commissioner of Internal Revenue (CIR) and PPDC appealed this decision to the Supreme Court, docketed as G.R. No. L-25501 and G.R. No. L-25507, respectively.
Subsequently, PPDC availed itself of the tax amnesty privileges under Letter of Instructions No. 308. In a letter dated December 17, 1976, the CIR informed PPDC that its offer to settle its tax liability was accepted, requiring payment of 30% of the P133,175.52 deficiency (amounting to P33,952.66) for full settlement. PPDC then applied its existing tax credit of P79,229.06 against this amount, and the CIR issued a corresponding Tax Debit Memo on January 17, 1977, effectively extinguishing the liability.

ISSUE

Whether the pending appeals before the Supreme Court have been rendered moot and academic due to the full settlement of the tax liability under a tax amnesty program.

RULING

Yes, the appeals are dismissed for being moot and academic. The core legal principle applied is that a case becomes moot when there is no longer any actual controversy between the parties or no useful purpose can be served by a judicial pronouncement. Here, the joint manifestation of the parties established that the deficiency franchise tax assessment, which was the sole subject of the appeals, had been fully settled and extinguished through the application of PPDC’s tax credit against the compromised amount agreed upon under LOI No. 308.
The Court’s ruling is grounded in judicial practicality and the recognition of supervening events that remove the adversarial character of a litigation. Since the CIR, as the taxing authority, had formally accepted the compromise payment and issued the Tax Debit Memo, the government’s claim was deemed satisfied. Consequently, any decision from the Supreme Court on the merits of the tax assessment would be an exercise in futility, as it would no longer provide any effective relief to either party. The voluntary agreement and compliance under the amnesty program constituted a supervening event that resolved the substantive dispute, leaving no live issue for judicial resolution. Therefore, granting the parties’ joint prayer, the Court dismissed both appeals without costs.