G.R. No. 140164 - Reyes vs. Reyes

The case involves the deficiency franchise tax assessment for the period from October 1, 1955 to June 30, 1960.
The Court of Tax Appeals (CTA) rendered a decision on October 31, 1965, in CTA Case No. 1152, mandating the payment of P133,175.52, with an additional surcharge of 25% for delinquency if unpaid within 30 days once the decision became final.

The Commissioner of Internal Revenue and the Philippine Power and Development Co., Inc. subsequently appealed the CTA decision to the Supreme Court.
Two appeals were docketed: G.R. No. L-25501 (Commissioner as petitioner) and G.R. No. L-25507 (Philippine Power and Development Co., Inc. as petitioner).

On July 14, 1977, the parties and their counsels filed a Joint Manifestation and Motion indicating a settlement and requesting dismissal of the appeals without costs.
In the joint filing, it was acknowledged that:

The Philippine Power and Development Co., Inc. had availed itself of the privileges provided under Letter of Instructions No. 308.
A letter dated December 17, 1976, from the Commissioner of Internal Revenue increased the offer from 15% to 30% of the assessed deficiency (i.e., P33,952.66) as full and final settlement of the tax liability.
The taxpayer had applied a tax credit amounting to P79,229.06 against the stipulated tax liability.
A Tax Debit Memo was issued on January 17, 1977, reflecting the application of the tax credit against the assessed deficiency.

The application of the tax credit effectively covered and exceeded the tax liability as settled through the revised offer.
As a consequence, the issues on appeal were rendered moot and academic.
Accordingly, both parties jointly requested the dismissal of the appeals without imposing costs.

Whether the controversy is still ripe for judicial resolution given that the parties have effectively settled the tax liability through the application of a tax credit.
Whether the joint manifestation and motion for dismissal, based on the full and final settlement of the tax liability, suffice to render the pending appeals moot.
What is the legal effect of applying the tax credit against a tax deficiency determined in the CTA decision?
Whether it is procedurally and substantively appropriate for the Supreme Court to dismiss the appeals without costs in view of the mutual settlement.