Case digests
On
CTA En banc Jurisprudence
(March 2015-April 2016)
Submitted to:
Atty. Anthony Dy
Submitted by:
3C- SY: 2016-2017
December 5, 2016
Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue CTA EB No: 1045, March 30, 2015
Uy, J.:
FACTS:
A partnership between Marubeni Pacific Energy Holdings Corporation and Marubeni Pacific II was created and duly registered with SEC addressed in Barangay Ilomvis Kidapawan City. It is primarily engaged in the development, financing, construction, ownership, operation, maintenance and transfer of geothermal electrical generation plant at Mindanao Geothermal Reservation, North Cotabato. Such is claiming against respondent appointed Commissioner of BIR on the aspect of approving for refund or tax credit .Petitioner sent its Income Tax return for calendar ending December 31. 2007. From the partnership, a merger with Axia Power Holdings Philippines Corporation with APHPC as the surviving entity. This lead to a belief that petitioner is allowed to avail for a refund or an issuance of a tax credit certificate of its excess or unutilized creditable withholding tax. The total amount prayed for was P22,867, 594 as tax credit.
ISSUE:
Whether or not the assigned errors on the prescription for the carrying over of excess income taxes, failure to prove withholding and income were included in the annual income tax return and the failed reconciled income tax in 2007 against the creditable withholding taxes?
HELD:
The Court ruled in the negative. According to section 76 of the NIRC a taxpayers has the option to file a claim for refund or to carry over its excess income tax payments. The option to carry is however irrevocable. As such, it can no longer seek refund of the unutilized excess income tax payments. The taxpayer’s option is to apply the unutilized excess income tax payments as a tax credit to the succeeding taxable years. It is clear that what is rendered imprescriptibly is not the claiming of refund but the carrying over of the amount of tax credit in subsequent taxable years. Where however the corporation permanently ceases its operations before full utilization, the tax credits are no longer veiled with irrevocability. Ultimately, what is lacking is the shortened period of the Income tax Return wherein it is shown that the cessation has occurred wherein the excess credits remained unutilized. Failure to do such destabilizes the claim for refund hence the petitioners claim must ultimately fail. Every minute aspect must be duly proven and absent such leads to denial of the claim.
National Power Corporation vs. The Central Board of Assessment Appeals CTA EB No: 1025, March 23, 2015
Cotangco-Manalastas, J.: FACTS:
Petitioner is a government owned and controlled corporation created by RA 6395 and respondent Central Board of Assessment Appeals is a quasi judicial body created under the Local Government Code to decide real property assessment cases brought from the Local Board of Assessment Appeals. On October 21 1996 a notice was received regarding a revision of the real property assessment making the machineries, buildings and other improvements amounting to market values of 1.5Billion each for blocks A and B with a total of 3Billion Php. From such market values, tax was paid under protest in the amount of 8Million pesos to the provincial treasurer. Petitioner claims that it is not barred by prescription in contesting the assessed taxes hence the appeal to the CBAA. The CBAA ordered that prescription has in fact set in and the petitioners are barred.
ISSUE:
Whether or not the CBAA in its dismissal, erred procedurally? HELD:
No, the CBAA’s decision is impressed with merit. Under the Rules of Procedure for real property, the payment under protest is a condition sine qua non in claiming against an assessment. Such was done by the petitioner within the prescribed 30 days. However, the National Power Corporation was unable to perfect an appeal in the period prescribed by law to the CBAA from the LBAA. As such, from an infirmity procedurally made where jurisdiction is to be acquired, the Court dismisses the case at bar. Failure to appeal in due course results in the dismissal in the case at bar.
Next Mobile, Inc vs. Commissioner of Internal Revenue CTA EB No: 1059, March 16, 2015
Uy, J.:
FACTS:
The case is a n appeal on a denied petition by Next Mobile regarding deficiency taxes leading and ordering petitioner to pay deficiency VAT the amount of 1,590,390.97 Php for the taxable year of 2005. Next Mobile is a domestic corporation located in Sampaloc Manila. On January 14, 2009, respondent BIR issued a Formal letter of demand with a final assessment notice. The BIR thereby reduced the VAT payable to 2,785,754.67 Php which necessitated a petition for review on the part of Next Mobile. It was investigated upon wherein the Special third division ruled in favor of the respondent CIR as there was an undeclared 15M worth in gross receipts. This was not controverted by Next Mobile through sufficient evidence. The only argument is that there is already enough input VAT to which the deficiency may be credited against. However, again, there is no presentation of evidence to support Next Mobile’s contentions.
ISSUE:
Whether or not the CTA erred in ruling that the deficiency VAT assessment was filed within the prescriptive period and that usage of unutilized VAT input is unavailable to offset? HELD:
The court ruled that the petition lacks merit. The contention of the petitioners that only 3 years is available for the tax assessment to be made is erroneous. Generally there is only 3 years available for assessment however when there is deceit and fraud, the prescriptive period extends to a total of 10 years. It was proven and found out that the gross receipts were fraudulently undeclared. The absence of any controverting evidence allows the prescriptive period to remain at 10 years. The court also ruled that petitioner’s argument in unutilized input tax is available for Next Mobile is untenable. Firstly, evidence must be procured ie an invoice or official receipt to substantiate the claim of excess and unutilized input, Such was absent in the case. Furthermore, such contention is irrelevant to the case at bar since the presence or absence of unutilized input VAT is not a ground for the nullification of the subject deficiency tax assessment. As such, the petition must fail.
Avon Products Manufacturing Inc. vs. Commissioner of Internal Revenue CTA EB No: 1059, March 16, 2015
Uy, J.:
FACTS:
Petitioner is filing for the review of the case decided by the court of tax appeals in division for the deficiency excise tax assessment issued by respondent with a total shortage of 21,163.49 liters relating to deliveries of denatured ethyl alcohol from January to December 2008. The modified amount is at 628,984 Php with an included surcharge of 125,796 Php based on delinquency interest. The petitioner as a manufacturer of perfumes, toilet waters, splash colognes and body sprays use denatured ethyl alcohol which is acquired from 2 local suppliers named Kool Company and Far East Alcohol Corporation. The bureau issued an order allowing Avon products to acquire such products through licensed suppliers only. A preliminary assesement notice was given as well as the Final assessment notice. This reflected that deficiency excise tax was to be acquired by the bureau because according to the BIR permit, excess from the volume declared would be taxed and assessed.
ISSUE:
Whether or not the subject denatured ethyl alcohol is subject to excise tax? HELD:
The petition of Avon Products Manufacturing is denied. The court said that Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof from whatever source by whatever process produced and shall include whisky, brandy, rum, gin and vodka along with other similar products. Based on the foregoing and other technicalities, it is clear that excise tax is impossible in the substance known as ethyl alcohol. However the item in contemplation is that of denatured ethyl alcohol where different amounts may lead to tax exemption. In the presentation of evidence, there is inability to persuade the court that the denatured alcohol in question is fit for oral intake. As such, the claim for exemption becomes more doubtful. Again, every minute aspect must be determined and proved by clear and convincing evidence. Since the petitioner failed to substantiate its claim that the subject denatured ethyl alcohol is subject to an exemption on excise tax, the assessment made by the BIR is binding.
Commissioner of Internal Revenue vs Systems Technology Institute Inc CTA EB No: 1050, March 24, 2015
Ringpis-Liban, J.:
FACTS:
The case is a petition to resolve taxation assessments of deficiency on income tax, value added tax and expanded withholding tax on the ground of prescription. Petitioner is the duly appointed Commissioner of Internal Revenue in exercise of the powers vested by law including the power to decide disputed assessments and cancel tax liabilities among others. Respondent on the other hand is a recognized and organized corporation under the Philippine Laws. STI’s Amiel Sangalang signed a waiver of defense of prescription where the assessment and collection of taxes of Fiscal Year 2003 shall not come later than December 31, 2006. Such period was extended until March 31, 2007 and lastly until June 30 same year. On June 28, a FAN was received in the amount of 161,835,737.98 Php. The lower court ruled that the filing of a request for reinvestigation may suspend the running of the prescriptive period. However the protest was filed beyond the 3 year prescriptive period, specifically on July 25, 2007.
ISSUE:
Whether or not the petitioner’s deficiency tax assessments against the respondent were made within the period prescribed by law?
HELD:
The court ruled that the time to assess has prescribed. It is unnatural that petitioner contends the existence of fraud in its motion for reconsideration. Such matter must be raised before a decision is rendered. This is in purview of the petitioner’s push to use Section 222 of the NIRC to render the prescriptive period to extend to 10 years other than the general rule of 3 years. The contentions raised are untenable as per the court and is not substantiated by the evidence presented. Also, the liability of the withholding agent could have been avoided had the government agency faithfully fulfilled its duties on time. Furthermore, the waivers executed were not done within the prescribed requirements under the law hence held to be invalid. Waivers do not bar the right to invoke prescription. As such, the invalid waiver does not interrupt the running of the prescriptive period. Wherefore the court ruled that prescription has set forth and the claim by the Bureau lacks merit.
Phil. Gold Processing & Refining Corp vs. Commissioner of Internal Revenue CTA EB Case No. 1121, March 31, 2015
Casanova, J.: FACTS:
Petitioner Phil. Gold Processing and Refining Corporation filed with the BIR its Quarterly VAT Returns for the 4th quarter of FY ending June 30, 2009 to the 2nd quarter of FY ending June 30, 2010. It subsequently filed with BIR an administrative claim for refund of its alleged unutilized input VAT attributable to its zero-rated sales. On August 25-26, 2011, it also filed before the CTA a judicial claim for refund of its purported unutilized input VAT attributable to its zero-rated sales for the 4th quarter of
FY ending June 30, 2009 and for the 1st and 2nd quarters of FY ending June 30,
2010.
Respondent raised the following defenses: that the amount allegedly representing unutilized or unapplied creditable input tax was not properly documented; that petitioner has not complied with Section 112 of the NIRC with respect to the periods for claiming tax refund/credit; and that petitioner has not submitted complete documents for its administrative claim. During trial, petitioner presented and formally offered its pieces of testimonial and documentary evidence. On the other hand, respondent manifested that there is no Report of Investigation with regard to petitioner's administrative claim and that she is submitting the case for decision.
However, petitioner filed its Motion to Re-open the Division cases praying that the proceedings of the cases be re-opened and that it be allowed to submit the additional documents for its claims for refund but it was denied on the grounds that petitioner did not allege that the documents were not available during trial and neither did it claim any mistake/inadvertence to its omission to present the saiddocuments, nor alleged any intention to correct evidence previously offered. Special Third Division ruled against petitioner on the ground of prescription and denied petitioner's claim for failure to meet the invoicing requirements for zero-rated export sales. Hence, the case.
ISSUE:
Whether or not petitioner failed to prove its claims for refund/tax credit through proper documentation.
HELD:
YES. It must be stressed that tax refunds partake of the nature of tax exemptions, which are construed strictissimi juris against the taxpayer, thus, evidence in support of a claim must likewise be strictissimi scrutinized and duly proven. The taxpayer has the burden to present convincing evidence to substantiate a claim for refund. Even if the taxpayer's application for zero-rating has been approved by the Commissioner of Internal Revenue, it must still comply with the invoicing and accounting requirements mandated by Sections 113 and 237 of the NIRC of 1997, as amended, and Section 4.108-1 of RR No. 7-95.
In the case at bar, it is well-settled that petitioner's failure to comply with the invoicing requirements such as the imprinting of the word 'zero-rated' on its invoices is fatal to its claim for refund of input VAT on zero-rated sales. Petitioner also failed to show that the provisional invoices it submitted were duly registered with the BIR as mandated under Sections 237 and 238 of the NIRC. Hence, petitioner is not entitled to any refund for non-compliance under the law.
Brixton Investment Corp vs. Commissioner of Internal Revenue CTA EB Case No. 1099, April 06, 2015
Ringpis-Liban, J.: FACTS:
On January 27, 2011, Brixton received from BIR Regional Director Misajon a Formal Letter of Demand (FLD) for alleged deficiency income tax, value-added tax, and penalty for non-maintenance of books of accounts and other accounting records. With the FLD were three assessment notices. Brixton flied a protest against the FLD and its enclosed Assessment Notices. Respondent wrote Brixton that its protest had been forwarded to Revenue District Office for appropriate action. However, the RDO remained with its decision. Brixton filed its petition for review, which was heard by the Court’s Second Division. promulgated its decision dismissing Brixton's petition for lack of jurisdiction. It is Brixton's thesis that its petition was not prematurely filed because what it appealed to the CTA was a decision of the respondent on the disputed assessments, which decision is within the statutory jurisdiction of this Court to review. Hence, the instant petition.
ISSUE:
Whether or not there was lack of jurisdiction in dismissing the petitioner’s action
HELD:
YES. The laws applicable to the case is Section 228 of the NIRC in relation to Section 7(1) of R.A. No. 1125 which states that the protest should be filed within 30 days after receipt of the assessment. Within 60 days from the filing of the protest, all relevant supporting documents shall have been submitted. The CIR or his duly authorized representative has 180 days to render a decision on the protest. If an adverse decision is rendered within those 180 days, the taxpayer may appeal the decision to the CTA within 30 days from receipt of the decision. If no decision is rendered within the 180-day period, the taxpayer has 30 days from the lapse thereof, within which to appeal the inaction to the CTA. Thus, from the viewpoint of the CTA, the appeal must be filed with it within 30 days from the taxpayer's receipt of the decision, or within 30 days from the lapse of the 180-day period during which no decision was made by the CIR or his duly authorized representative.
In the instant case, although signed by a Regional Director, who is recognized as a duly authorized representative of the CIR, neither of the above-cited FLD and Assessment Notices comprises a decision appealable to the CTA. Indeed, Brixton contradicted its insistence that these are decisions, by protesting them administratively as assessments, instead of filing an appeal against them with the CTA within 30 days from its receipt of these documents. In addition, none of the BIR documents that Brixton alleges to bespeak a decision of the CIR on the disputed assessments made use of the terms "decision," "final decision," or "appeal." It is here that Brixton's contentions fall short, for the Court finds nothing in these documents that unmistakably presents a final determination on the disputed assessments. Hence, the Court found that there was no decision on disputed assessment rendered by the CIR or her authorized representative against Brixton, at the time of the filing of the petition that could assume jurisdiction. Nor had the "inaction" of the CIR, if the aborted resolution of Brixton's protest can be termed as such, ripened into the
180-day inaction contemplated under Section 228 of the NIRC, which could have given the petitioner 30 days from the lapse thereof within which to file an appeal with this tribunal. Consequently, by operation of Section 228 of the NIRC, the disputed assessments, as revised, became final, executory, and demandable.
Commissioner of Internal Revenue vs. Philippine Airlines CTA EB Case No. 1127, April 07, 2015
Uy, J.: FACTS:
In CTA Case No. 5824, former CTA rendered a decision denying PAL's claim for refund in the amount ofPhp731, 190.45 representing alleged erroneously withheld and/orcollected 20% final withholding tax on interest income from bankdeposits for the period from January 1997 to November 1997. An appeal was filed reversing the decision of said case directing the CIR to refund PAL’s claims or, in the alternative, to allow the petitioner a tax credit for the same amount. On November 22, 2006, the decision became final and executory.
In CTA Case No. 8677, on July 26, 2013, with the intent to enforce judgment in the above-stated case, PAL filed a petition for revival of judgment. However, CIR counter-argued that executions of judgment in tax cases do not involve enforcement by independent action after the lapse of the period to execute the same as what is explicitly provided under Section 7 of the RRCTA is execution of judgment within the five-year period. PAL asserts that Section 7, Rule 14 of the Revised Rules of the Court of Tax Appeals makes no mention of limiting the period for execution of judgment to a mere five years. Instead, as laid down in Section 3, Rule 1 of the Revised Rules of the CTA, the Rules of Court shall apply suppletorily to the rules of the CTA, making Section 6, Rule 39 of the Rules of Court, in relation to Article 1144 of the Civil Code, is applicable.Hence, the case.
ISSUE:
Whether or not the petition of revival of judgment is proper. HELD:
YES. With regard to Section 3, Rule 1 of the Revised Rules of the CTA in connection with the execution of a judgment through an independent action in Section 6, Rule 39 of the Rules of Court, it states that an action to revive judgment only requires proof of a final judgment which has not prescribed and has remained unexecuted after the lapse of five years but not more than ten years from its finality. After all, an action to revive judgment is not meant to retry the case all over again. Its cause of action is the judgment itself and not the merits of the original action. The doctrine of laches is based upon grounds of public policy and equity. It is invoked to discourage stale claims but is entirely addressed to the sound discretion of the court. Since it is an equitable doctrine, its application is likewise controlled by reasonable considerations.
In the case at bench, less than seven years has lapsed between the time that the "Entry of Judgment" was made on November 22, 2006 to July 26, 2013, when PAL filed its "Petition for Revival of Judgment" before the CTA. Hence, laches cannot be said to have set in, as respondent was able to exercise its right to execute the judgment by way of an independent action, within the prescriptive period set by law.
Commissioner of Internal Revenue vs. CE Casecnan Water & Energy Co. CTA EB Case No. 1158, April 07, 2015
Cotangco-Manalastas, J.: FACTS:
Respondent is a domestic corporation, registered as VAT taxpayer with BIR engaged in the business of power generation in Central Luzon for the conversion into electricity of water provided for and under contract with the National Irrigation Administration, provided that, in no event it shall engage in the general supply or distribution of electricity, in retail trade or in the business of a public utility, or furnish electricity to end-users or consumers, or provide a public service or engage in industries or activities reserved by the Constitution or by law to corporations.
On November 9, 2011, respondent filed with the Large Taxpayers Excise Audit Division I of the BIR an administrative claim for refund or issuance of TCC of its unutilized input VAT for the 1st to 4th quarters of 2010. On November 18, 2011,
respondent filed with the BIR LTEAD I a copy of a certification issued by the Department of Finance stating that respondent had not filed a similar claim for refund covering the period concerned. Due to the inaction of petitioner in deciding the administrative claim for refund or issuance of TCC beyond the 120-day period provided for by Section 112(C) of the NIRC, respondent filed a Petition for Review on March 27, 2012 before the Court in Division. During trial, only respondent presented its documentary and testimonial evidence while petitioner manifested that she would not present evidence. The 1ST Division found that respondent has sufficiently proven
itsentitlement to a refund or issuance ofTCC as to the amount ofP15,729,679.92, representing the unutilized input VAT incurred for the four quarters of taxable year 2010 attributable to its zero-rated sales of generated power to NIA. Hence, the case at bar.
ISSUE:
Whether or not the claim of refund alleged by the respondent was properly founded by the Court.
HELD:
YES. Revenue Memorandum Circular No. 029-09 is explicit that if the taxpayer failed to present accounting books and records for audit/verification and additional documents to explain discrepancies/findings, it is incumbent upon the BIR to notify the taxpayer.
In the present case, there is nothing on record which would show that a written notice was sent by BIR to petitioner for purposes of informing petitioner that the submitted documents are incomplete or that petitioner is required to submit additional documents. Also, the Court did not state that the entire input VAT is attributable to petitioner's zero-rated sales during the covered period. In fact, of the total substantiated input VAT of P35,162,953.78, the Court determined that only P15,791,375.69 is attributable to zero-rated sales. It deducted the net amount of P61,695.77 as petitioner's net output VAT payable. Thus, the refundable amount was reduced to P15, 729,679.92. Hence, there was no error in finding the refund claimed by the respondent.
National Power Corp. vs. Province of Nueva Vizcaya CTA EB Case No. 1069, April 07, 2015
Uy, J.: FACTS:
On November 21, 2007, petitioner National Power Corporation received an Assessment Letter from respondent Martinez, the Provincial Treasurer of Nueva Vizcaya, demanding payment of local franchise tax for the years 2002 to 2006 in the aggregate amount of P8,776,271.35 pursuant to Tax Ordinance No. 2003-01 of the Province of Nueva Vizcaya which demanded local franchise tax is based on the payment made by NUVELCO to petitioner. Petitioner filed a protest letter assailing the assessment of local franchise tax on the ground that with the effectivity of the EPIRA, petitioner is now considered only as a generation company as its transmission and sub-transmission functions have been transferred to TRANSCO, thus, it is no longer required to secure a franchise and consequently, cannot be burdened with the payment of the local franchise tax.
Respondents counter-argue that pursuant to law, ordinance and jurisprudence, petitioner is clearly liable to pay franchise tax to the Province of Nueva Vizcaya. According to respondents, EPIRA Law never repealed petitioner's corporate powers under its franchise and as long as it exercises its rights and privileges bestowed by its charter, aside from performing missionary electrification function through SPUG, it is considered a business enjoying a franchise that comes within the ambit of Sections 137 and 192 of the LGC. RTC and CTA Division ruled in favor of respondents. Hence, the instant case.
ISSUE:
Whether or not NPC is liable for the payment of franchise tax. HELD:
NO. Upon the enactment and effectivity of Republic Act 9136 or EPIRA on June 26, 2001, National Transmission Company (TRANSCO) shall assume the electrical transmission function of NPC and have the power and functionshereinafter granted. The TRANSCO shall assume the authorityand responsibility of NPC for the planning, construction andcentralized operation and maintenance of its high voltagetransmission facilities, including grid interconnections andancillary services. The requisites to be covered by local franchise tax are: (1) that petitioner has a 'franchise' in thesense of a secondary or special franchise; and (2) that it is exercisingits right or privileges under this franchise within the territory of thelocal government unit concerned.
Applying the law in the case, with regard to the first requisite, considering that petitioner'sfranchise has already been transferred to TRANSCO,petitioner can no longer be considered as having a monopoly in thegeneration and distribution of electricity. As for the secondrequisite, it cannot be said that petitioner is able to exercise its rightor privileges under its franchise within the province of Nueva Vizcaya,since in the first place, petitioner has no franchise to speak of.Plainly, petitioner can no longer be said to be a "business enjoying afranchise" in Nueva Vizcaya as the phrase is used under Section137 of the Local Government
Code.Thus, petitioneris not the proper party subject to the local franchise tax foroperating that business. Rather, said tax is alreadycollectible from PSALM Corp. and/or TRANSCO, on the basisof the EPIRA.
Commissioner of Internal Revenue v. Sonoma Services CTA EB Case No. 1163 ; April 21, 2015
Cotangco- Manalastas, J.: FACTS:
On April 15, 2010, petitioner filed its Annual Income Tax Return (ITR) for CY 2009 through the Electronic Filing and Payment System (EFPS) with EFPS Reference No. 121000003720677. In the said ITR, petitioner reported gross revenues in the amount of P44,641,000.00, taxable income of P3,319,677.00, income tax liability of P995,903.10, and income tax credits in the total amount of P6,307,844.60. After deducting petitioner's income tax liability for CY 2009 from its income tax credits for CY 2009, petitioner had a tax overpayment of P5,311,941.50. Petitioner opted to claim a refund by shading the appropriate box in the ITR.
On June 24, 2010, petitioner filed its administrative claim for refund of excess and unutilized CWT for CY 2009 amounting to P4,045,410.00 with ROO No. 50.
Respondent failed to act on petitioner's administrative claim, prompting petitioner to file the instant claim before this Court on April 11, 2012.
Trial ensued, after which, the CTA Division promulgated its Decision, dated November 27, 2013, which granted respondent Sonoma's claim for refund.
Petitioner CIR argues that the evidence presented by respondent Sonoma Services, i.e. certificates of creditable tax withheld accomplished by its withholding agents, does not constitute conclusive evidence of payment and remittances to the Bureau of Internal Revenue (BIR) of the withheld taxes on respondent's income. ISSUE:
Whether the Honorable First Division of the CTA erred in granting respondent's Petition for Review and ordering the refund of the amount of P4,045,410.00 representing its excess and unutilized creditable withholding taxes for the calendar year 2009?
HELD:
No, the Honorable First Division of the CTA did not erred in granting respondent's Petition for Review and ordering the refund of the amount of P4,045,410.00 representing its excess and unutilized creditable withholding taxes for the calendar year 2009.
The presentation of a certification from [petitioner]'s Revenue Accounting Division is not required before a taxpayer will be entitled to a claim of tax refund or issuance of a tax credit certificate. Furthermore, [respondent] has no control on the remittance of taxes withheld from its income by the withholding agents or payors; thus, the Certificates of Creditable Tax Withheld at Source issued by the latter are prima facie proof of actual payment by [respondent].
In the case Commissioner of Internal Revenue v. Asian Transmission Corporation, the Supreme Court reiterated the ruling of this Court En Bane, to wit:
xxx proof of actual remittance by the respondent is not needed in order to prove withholding and remittance of taxes to petitioner. Section 2.58.3(8) of Revenue Regulation No. 2-98 clearly provides that proof
of remittance is the responsibility of the withholding agent and not of the taxpayer- refund claimant.
Total (Philippines) Corporation v Commissioner of Internal Revenue CTA EB Case No. 1154; April 21,2015
Castaneda, Jr.J.: FACTS:
Petitioner Total Philippines is licensed by the SEC to acquire, assemble, install, construct, equip, repair, remodel, maintain, develop, operate, hold, own, lease and otherwise deal with oil terminals and service station networks; to develop and operate a wholesale distribution network and carry out the purchase, acquisition, including importation, if appropriate, storage, marketing, distribution, transport, use, wholesale, exportation, refinement, treatment, distillation and manufacture of, and generally deal in, Fuel Oils, Gas Oils, Gasolines, Lubricants and, subject to market conditions, Bitumens, Solvents and Kerosenes and, subject to the written agreement of the stockholders any and all kinds of oil and oil products, such as Jet Fuel and liquefied petroleum gas.
On the belief that it has unutilized input tax for the first, second, third, and fourth quarters of 2007, petitioner filed its administrative claims for refund with the Large Taxpayer Audit and Investigation Division II of the BIR.
According to the respondent Commissioner of Internal Revenue, the petition for review we're prematurely filed; petitioner should give respondent 120 days to process its claim for refund. It can appeal to this Honorable Court only after the expiration of the 120-day period granted by law or within thirty days from the decision of respondent denying its claim for refund.
Petitioner did not submit complete documents in support of its administrative claim for refund in CTA Case Nos. 7898 and 8008 and therefore the 120-day period commenced to run on the date of filing of the administrative claims in said cases. ISSUE:
Whether or not the Honorable Special First Division erred in disregarding petitioner’s sales in 2007 in the amount of P1,091,958,783.59 as zero-rated sales, the same having been actually exported or sold to entities registered with PEZA/CDC/BOI.
HELD:
No, the Honorable Special First Division erred in disregarding petitioner’s sales in 2007 in the amount of P1,091,958,783.59 as zero-rated sales, the same having been actually exported or sold to entities registered with PEZA/CDC/BOI.
Based on the findings of the Court a quo, out of the alleged zero-rated sales of Pl,091,958,783.59, only the amount o f P74,460,845.27 was considered while the remainder was disregarded for lack of sufficient evidence to prove that it pertained to zero-rated sales. Petitioner failed to prove that the sales were made to entities duly registered with Philippine Economic Zone Authority (PEZA), Clark Development Corporation (CDC), or Board o f Investment (BOI).
As correctly found by the Court a quo, some Certifications/Certificate of Registration failed to indicate the effectivity dates or period of coverageof the registration. The period of coverage will aid the court in ascertaining whether or not the sales for taxable year 2007 were made to duly registered PEZA/CDC/BOI entities.
Only the Certifications which are indicative of the fact that the named entities therein are duly registered with the PEZA or BOI or CDC, as the case may be, and only during the effectivity thereof, which must be within the year 2007, shall be considered valid for purposes of determining petitioner's zero-rated sales for the year 2007.
Chevron Holdings Inc. v Commissioner of Internal Revenue CTA EB Case No. 1146; April 14, 2015
Casanova, J.: FACTS:
Petitioner filed an administrative claim for refund of its purported unutilized input VAT for the four quarters of taxable year 2008 on March 5, 2010 and was later amended on March 31, 2010. Due to inaction of respondent on the administrative claim for refund, petitioner filed the instant Petition for Review with this Court on March 31, 2010.
According to the respondent CIR, the claim for refund in the amount of One Hundred Seventy Seven Million Three Hundred Thirty Seven Thousand Four Hundred Ninety Two Pesos and 52/100 (P1 77,337,492.52) allegedly representing accumulated and unutilized VAT input taxes paid by it for the taxable year 2008 is not properly documented.Likewise, for a judicial claim to prosper, the party must not only prove that it is a VAT-registered entity, it must substantiate the input VAT paid by purchase invoices or official receipts. Such that failure to comply with the requirements for a valid request for refund including the requirement for a valid sales invoice is fatal to the claim for refund.
ISSUE:
Whether or not the Court erred in denying Chevron Holdings' accumulated "input tax carry-over of Php196,500,668.53" from previous taxable quarters on [the] ground that it failed to substantiate the same.
HELD:
No, the Court did noterred in denying Chevron Holdings' accumulated "input tax carry-over of Php196,500,668.53" from previous taxable quarters on [the] ground that it failed to substantiate the same.
In claiming excess unutilized input tax from zero-rated or effectively zero-rated transactions, it is the excess over the output taxes which should be refunded to the taxpayer or credited against other internal revenue tax. Hence, it is important for the taxpayer to prove that it has enough prior year’s excess input tax credits to cover its output tax liability for the current taxable year.
The 'prior year's excess input tax credits' may be proved by following the substantiation requirements under Section 4.110-8 of Revenue Regulations No. 16-2005, otherwise known as the 'Consolidated Value-Added Tax Regulations of 2005'. Mere declaration of the amount of P196,500,668.53 as 'Input Tax Carried Over from Previous Quarter' in petitioner's Quarterly VAT Return for taxable year 2008 will not suffice.
In this case, petitioner failed to present and offer in evidence any VAT invoice or official receipt to support the 'Input Tax Carried Over from Previous Quarter' which petitioner seeks to be credited or charged against its output Vat liability for taxable year 2008. Hence, the input tax carry-over of P196,500,668.53 cannot be validly
applied against petitioner's output tax for the year 2008 pursuant to Section 110 of the NIRC of 1997, as amended.
Coca-Cola Bottlers Phils. V. Commissioner of Internal Revenue CTA EB Case No. 1061; April 10, 2015
Bautista, J.: FACTS:
On October 21, 2009, petitioner filed its administrative claim for refund for its alleged erroneous overpayment of VAT for the quarter ending September 30,2007 in the amount of P60,420,422.20.
Petitioner, likewise, filed with respondent its claim for refund/ tax credit on January 20, 2010, for its alleged erroneous overpayment of VAT for the quarter ending December 31, 2007 in the amount of P112,341,092.68.
Thereafter, the instant Petitions for Review were filed on October 23,2009 and January 22,2010.
Respondent CIR humbly manifests that the Honorable Court is bereft of jurisdiction to hear and try the case considering that petitioner's administrative claim for refund was already belatedly filed on October 21, 2009. It bears stressing that the claim for refund arose from the alleged erroneous VAT payments for the quarter ending September 30, 2007. Ergo, by express provision of law, petitioner is given a period of two (2) years from the date or payment of erroneously or illegally collected taxes or until September 30, 2009 within which to file a written claim for refund. However, in the case at hand, petitioner filed the administrative claim for refund only on October 21, 2009 which was already a month beyond the deadline period set on September 30, 2009 in total disregard of the provision of law.
It is likewise noteworthy of emphasis that the Petition for Review was filed by petitioner before the Court of Tax Appeals on October 23, 2009 or exactly two (2) days after the filing of the administrative claim for refund with respondent giving the latter no ample opportunity to decide and act on the matter. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund.
ISSUE:
Whether or not petitioner is entitled to tax refund or issuance of tax credit certificate in the aggregate amount of Php172,761,514.88 allegedly representing erroneous payment of output VAT for the third and fourth quarters of taxable year 2007.
HELD:
No, petitioner is not entitled to tax refund or issuance of tax credit certificate in the aggregate amount of Php172,761,514.88 allegedly representing erroneous payment of output VAT for the third and fourth quarters of taxable year 2007.
Notwithstanding the timeliness of the filing of petitioner's administrative and judicial claims under Section 229, it should not be forgotten that Sections 204 and 229 must be read together with the provision of Section 4.110-8 of Revenue Regulations No. 16-2005.
In order for input taxes to be available as tax credits, they must be substantiated and reported in the VAT returns of the taxpayer.
Here, the Court-commissioned Independent CPA (ICPA) found that out of petitioner's alleged unclaimed input tax credits for the third and fourth quarters of 2007 in the respective amounts of P60,420,422.20 and P112,341,092.68, totaling P172,761,514.88, only the input taxes of P19,342,803.07 and P34,440,405.24 for the third and fourth quarters of 2007, respectively, totaling P53,783,208.31 were properly supported by VAT official receipts.
In the present case, as found by the Court in Division, petitioner is claiming an input VAT for the third and fourth quarters of 2007 amounting to Php60,420,422.20 and Php112,341,092.68 respectively or a total amount of Php172,761,514.88, which were undeclared in the returns.
Applying the foregoing, the claimed input taxes for the said quarters cannot be credited against the output taxes as the said input taxes were not declared in the return.
Furthermore, based on the report of the Independent Certified Public Accountant (ICPA),20 " it was found out that out of petitioner's alleged unclaimed input tax credits for the third and fourth quarters of 2007 in the respective amounts of Php60,420,422.20 and Php112,341,092.68 or totaling to Php172,761,514.88 only the input taxes of Php19,342,803.07 and Php34,440,405.24 for the third and fourth quarters of 2007, respectively or totaling Php53,783,208.31 were properly supported by VAT official receipts."
National Transmission Corporation v. Municipality of Labrador CTA EB Case No. 1034; April 7,2015
Bautista,J.: FACTS:
On January 10, 2011, Transco was served at its principal office a Notice of Assessment for Local Business Tax, Surcharge and Monthly Interests for the Taxable Year 2009 in the amount of P39,688,904.09, inclusive ofsurcharge and monthly interest.
According to plaintiff, defendant did not file any protest either personally, by registered mail or by any other manner. Thus, for failure to protest, the Notice of Assessment has become 'final and executory.
As a result, on April 5, 2011, plaintiff filed the instant Complaint, praying that defendant Transco be ordered to pay its local business tax for calendar year 2009 in the amount of P41,065,397.87 as of April2011 plus monthly interest of P458,831.27 for not more than 36 months from February 2009 to the Office of the Municipal Treasurer of the Municipality of Labrador, Pangasinan.
ISSUE:
Assuming that Transco received the 2009 assessment notice, whether in the interest of substantial justice, the protests it filed for other assessments may be considered for the 2009 assessment.
HELD:
No, the protests it filed for other assessments may not be considered for the 2009 assessment.
A taxpayer who disagrees with the assessment made by the local treasurer should file a written protest within sixty (60) days from receipt of the subject assessment with the local treasurer contesting the assessment. Failure to do so is crucial and will render the assessment final and executory.
In the present case, the subject of the assessment is for the year 2009. However, petitioner filed a protest on assessment notices for the years 2006, 2007, and 2008. No protest was filed on the assessment notice for the year 2009. Therefore, the assessment has become final and executory.
Thus, after determining that the notice of assessment for the year 2009 was received by petitioner and that it failed to file a protest against said assessment, the Court En Bane agrees with the Court in Division's conclusion that the assessment on the local business tax for the year 2009 has become final and executory.
Commissioner of Internal Revenue V. Power Sector Assessments and Liabilities Management (PSALM) Corp.
CTA EB No: 1088, May 04, 2015 Casanova, J:
FACTS:
On October 8, 2009, PSALM Corp. was issued a Preliminary Assessment Notice (PAN) with Details of Discrepancies assessing petitioner for deficiencies for the taxable year ending December 31, 2006. FLDs and FANs were subsequently issued holding PSALM liable for P315,472,516.55. Petitioner filed a protest. Since no decision was issued in relation to said protest, PSALM filed a Petition for Review before the CTA Special Third Division. The CTA Special Third Division partially granted PSALM’s petition. Both parties submitted their respective Motions for Reconsideration; however, both were denied. Hence, this consolidated petition for review filed by both parties before the CTA En Banc.
ISSUE:
Whether or not the CTA Third Division erred in partially granting PSALM’s petition?
HELD:
No. The CTA held that after thorough evaluation and consideration of the parties’ arguments as well as the records of the case, both petitions are without merit. The arguments raised by both parties in their respective Petition for Review are mere reiterations of their arguments in their respective Motion for Partial Reconsideration. Thus, the CTA En Banc finds no new matters which have not yet been considered and passed upon by the CTA Special Third Division in its Resolution.
Crescent Park 14-678 Property Holdings, Inc. V. Commissioner of Internal Revenue
CTA EB No: 1068, May 04, 2015 Bautista, J.:
FACTS:
On August 3, 2009, petitioner purchased four parcels of land. As such, petitioner incurred a value-added tax on the said sale. Also on the same day, petitioner entered into a Land Lease Agreement of the same four parcels of land, the purpose of which was for the building and/or maintaining a PEZA-registered IT building or facility. On March 31, 2011, petitioner applied for tax credits/refunds for the alleged unutilized input tax that petitioner incurred from the purchase of the four parcels of land. On August 25, 2011, petitioner filed a Petition for Review with the CTA. The CTA denied the petition for lack of merit. A subsequent Motion for Reconsideration was likewise denied. Hence, this petition to the CTA En Banc.
ISSUE:
Whether or not petitioner is entitled to a claim for refund of excess input taxes?
HELD:
No. The CTA En Banc ruled that while petitioner is VAT-registered, records show that the execution of the Deed of Absolute Sale of Land and the effectivity of both the Land Lease Agreement and the Amended and Restated Land Lease Agreement were made when petitioner was not a VAT-registered entity. Moreover, petitioner paid the alleged input tax also when it was non VAT-registered. Thus, being a non-VAT taxpayer, petitioner cannot now claim that it incurred input taxes. The CTA En Banc affirms the ruling of the CTA Second Division.
Commissioner of Internal Revenue V. Pilipinas Shell Petroleum Corp. CTA EB No: 1215, April 28, 2015
Del Rosario, J.: FACTS:
Pilipinas Shell Petroleum Corp. (PSPC) filed a formal claim for refund or tax credit with the BIR on July 4, 2008 seeking the recovery of excise taxes paid on Jet A-1 fuel sold to tax exempt international air carriers. Since respondent PSPC’s claim remained pending, respondent filed a Petition for Review with the CTA on February 12, 2009. The Court in Division partially granted PSPC’s petition and ordered the CIR to refund or issue a tax credit certificate in favor or respondent. Petitioner’s Motion for Reconsideration was denied. Hence, this petition to the CTA En Banc. ISSUE:
Whether or not the PSPC is entitled to tax refunds/credits HELD:
Yes. The CTA En Banc held that the Court in Division correctly applied the Supreme Court’s categorical pronouncement in CIR vs. Pilipinas Shell Petroleum Corp. which states that “in fulfillment of international agreement and practice to exempt aviation fuel from excise tax and other impositions, Section 135(a) prohibits the passing of the excise tax to international carriers who buys petroleum products from local manufacturers/sellers xxx respondent as the statutory taxpayer who is directly liable to pay the excise tax on its petroleum products is thus entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, the latter having been granted exemption from the payment of said tax under Section 135(a) of the NIRC”.
WNS Global Services Philippines, Inc. V. Commissioner of Internal Revenue CTA EB No: 1188, April 28, 2015
Castaneda, Jr. , J.: FACTS:
On July 31, 2010, petitioner entered into a service contract with WNS Global Services Limited and WNS North America Inc. under which it shall provide IT-enabled services to them. For the second to the fourth quarter of fiscal year ended March 31, 2009, all of petitioner’s sales of services were to WNS UK and WNS North America. Allegedly such sales were paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP. These sales were zero-rated pursuant to Section 108(B)(2) of the Tax Code. Within the same period, petitioner allegedly incurred and paid input VAT which remained unutilized on account of its zero-rated sales. On September 3, 2010, petitioner filed an administrative claim for refund or issuance of tax credit for the said unutilized input VAT. Since respondent did not act on the claim, petitioner filed a Petition for Review with the CTA. The Court in Division denied the petition. Hence, this petition to the CTA En Banc.
ISSUE:
Whether or not petitioner is entitled to tax refund/credit? HELD:
No. The Court En Banc held that the SEC Certificated of Non-Registration which petitioner heavily relied on do not prove that corporations/partnerships are non-resident corporations doing business outside the Philippines. In the same vein, service agreements only indicate the names of petitioner’s customers to whom petitioner renders services but the same do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. Based on the foregoing, petitioner is not able to satisfy all the requisites in order for its services to be considered as VAT zero-rated under Section 108(B)(2) of the Tax Code. The following requisites are:
1. The services must be other than processing, manufacturing or repacking of goods;
2. The payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and,
3. The recipient of such services is doing business outside the Philippines. Thus, the CTA En Banc ruled that the Court in Division did not err in denying petitioner’s claim for tax refund or tax credit.
Commissioner of Internal Revenue V. Sarangani Resources Corp. CTA EB No: 1098, April 28, 2015
Cotangco-Manalastas, J.: FACTS:
On November 12, 2008, Sarangani Resources Corp. received a copy of the Preliminary Assessment Notice (PAN) holding it liable for a deficiency on income and value-added taxes amounting to P3,049,115.31. A FLD and FAN was subsequently issued. On December 22, 2008, petitioner received another FLD and FAN for its tax deficiencies amounting to P1,664,546.43. Petitioner protested said assessments. The Regional Director partially granted the protest. A letter requesting for reconsideration of the RD’s decision was filed by petitioner; however, due to the inaction of the CIR, a Petition for Review was filed. The Court in Division affirmed the liabilities of respondent with some modifications. Hence, this petition with the CTA En Banc.
ISSUE:
Whether or not respondent is liable for deficiency VAT assessment? HELD:
Yes. The CTA En Banc held that respondent Sarangani Resources erred in counting the new 180-day period within which to file an appeal. Considering that the 180-day period expired on September 15, 2009, respondent had thirty days, or until October 15, 2009 to appeal to the CTA. Records show that respondent filed the Petition only on May 13, 2010, or 210 days beyond the last day to file the petition for review. Since the Petition for Review with the CTA was filed way beyond the 30-day reglementary period, the CTA Special First Division had no jurisdiction to entertain the Petition for Review, and should thus have been dismissed for lack of jurisdiction. The other issues were not discussed by the CTA En Banc for being moot based on the foregoing.
People of the Philippines v. Italcar Philippines, Inc. CTA EB CRIM. NO. 029
Ringpis-Laban, J.: FACTS:
Three separate informations were filed against Italcar Philippines, a domestic corporation, Fernando Francisco and Antonino Caringal, the Managing Director and/ or President and the Fiscal Controller and/ or Finance Officer, respectively, of ITALCAR Pilipinas, Inc. (ITALCAR) and that at the time required by law, rules and regulations to pay taxes for the said corporation, failed and refused to pay the Excise Tax Deficiency, Withholding Tax Deficiency and Value-Added Tax deficiency of ITALCAR for the taxable year of 1999.
Caringal died on May 13, 2011 due to Cardio Pulmonary Arrest Acute Myocardial Infraction-Hypertensive Cardiovascular Disease. Francisco filed a Demurrer to Evidence. Thus, the three criminal cases were dismissed.
On October 31, 2013, the prosecution filed a Motion for Partial Reconsideration of the Civil Aspect of the Case but it was dismissed by the Court in division. Thus this petition for review before the Court En Banc.
ISSUE:
Whether or not the BIR's assessment for deficiency taxes is void? HELD:
Yes. Both accused Francisco and Caringal were already dead prior to the filing of the instant Petition for Review. Caringal died on May 13, 2011, when these cases were still pending trial, while Francisco died on December 12, 2013, after the Court in Division issued a Resolution granting his Demurrer to Evidence. The criminal cases against Caringal including his civil liability were ordered dismissed in the Resolution of the Court in Division dated September 2, 2011. Death extinguishes the criminal liability of an accused, this is clear in Section 1, Article 89 of the Revised Penal Code. The criminal cases against Francisco including his civil liability were dismissed by the Court in Division in its March 3, 2014 Resolution. The Court En Banc will treat the instant cases as an action to recover the civil liability of the corporation alone (ITALCAR) on the deficiency taxes for the year 1999.
Upon review of the records, it was found that the formal letter of demand (FLD) dated May 7, 2003 was received by the accused on May 19, 2003, hence, the BIR's right to assess accused ITALCAR for deficiency taxes has prescribed. It is noted that both the PAN and FLD did not impose a 50°/o penalty. Under the circumstances, there is no fraud assessment, thus, the presumption is that the 3-year prescriptive period applies.
For failure to comply with the 3-year period of assessment, the assessment, therefore, is void.
Edmundo Ongsiako, Jr. and H. Tambunting Pawnshop, Inc. v. People of the Philippines
CTA EB Crim. No.031 Castaneda, Jr., J.: FACTS:
In the Letter of Authority dated September 2000, the Bureau of Internal Revenue (BIR) authorized Revenue Officers to examine the books of accounts and other accounting records of H. Tambunting Pawnshop, Inc. (HTPI) concerning revenue taxes for taxable year 1999.
The Commissioner of Internal Revenue issued a Pre-Assessment Notice (PAN) dated October 21, 2002 finding HTPI liable for 1999 deficiency documentary stamp tax (DST) and value added tax (VAT) in the amounts of P2,577,462.45 and P2,737,369.60, respectively, exclusive of compromise penalty.
HTPI through its previous counsel Siguion, Reyna, Montecillo and Ongsiako replied to the PAN in the letter dated November 18, 2002. Unconvinced with HTPI's explanation, through Final Assessment Notice (FAN) dated January 24, 2003 with attached final letter of demand, Regional Director ordered the payment of 1999 deficiency DST and VATexclusive of compromise penalties.
The Court in Division issued a Decision dated February 26, 2014, found accused criminally liable under Section 255 in relation to Sections 253 (d) and 256 of the 1997 NIRC, as amended, and with HTPI civilly liable for 1999 deficiency DST in the amount of P2,610,478.21, inclusive of surcharge and interest, plus delinquency interest among others. Furthermore, the Court in Division pointed out that since the accused wilfully and knowingly assented to the non-payment of the 1999 eficiency DST of HTPI, and without formally protesting against or appealing the same, despite due assessment, he and the corporate taxpayer should be held solidarily liable for the civil liability of the remaining tax due.
ISSUE:
Whether or not the petitioner is liable? HELD:
Although HTPI is the corporate taxpayer, the accused has assented to patently unlawful acts under Section 31 of the Corporation Code of the Philippines by admitting that he deliberately refused to pay the DST due of HTPI for taxable year 1999 despite assessment. This acknowledgment on the part of the accused validates the piercing the veil of corporate fiction resulting to his solidary liability with HTPI on the DST due.
In the event there is a finding by the respondent or any of her authorized representatives of any deficiency or delinquent internal revenue taxes due against the taxpayer, a PAN shall be issued. Should the taxpayer fail to respond to the PAN, a FAN shall be issued and the aggrieved taxpayer is given thirty (30) days from receipt of the assessment notice to file a protest. Within sixty (60) days from filing of the protest, all relevant supporting documents should be submitted. The denial of the protest or the inaction on the protest within 180 days from submission of documents
allows the taxpayer thirty (30) days from receipt of the adverse ruling or upon the lapse of the 180-day period within which to appeal to the Court of Tax Appeals.
In the instant case, petitioners refused to avail of the proper remedies allowed by law in contesting an assessment. Petitioners' obstinacy in complying with the procedures mandated by law resulted in the assessment becoming final and collectible.
Coca-Cola Bottlers Philippines v. Commissioner of Internal Revenue CTA EB No. 1178
CASTANEDA, JR., J.: FACTS:
Petitioner Coca-Cola filed its Monthly VAT Declarations for the months of October 2008 and November 2008 on November 24, 2008 and December 24, 2008, respectively. On January 26, 2009, petitioner filed its Quarterly VAT Return for the quarter ended December 31, 2008. Subsequently, on May 27, 2009, Zenaida G. Garcia, OIC-ACIR, Large Taxpayers Service of the BIR, issued a Letter of Authority authorizing certain Revenue Officers to examine the books of accounts and other accounting records of petitioner for the period January 1, 2008 to December 31, 2008.
During the quarter ended December 31, 2008, due to inadvertence of petitioner's employees, there was an instance when details of official receipts from the suppliers/service providers of petitioner were not uploaded in its computerized accounting system. Petitioner believes that the effect thereof is that there was an erroneous overpayment of VAT for the said quarter in the amount of P111,177,395.70.
Petitioner considered amending its Quarterly VAT Return for the quarter ended December 31, 2008, and its Monthly VAT Declarations for October and November 2008 to correct the supposed over/erroneous payment and filed refund claim or tax credit but was allegedly prevented from doing so in view of the said Letter of Authority issued by the BIR against petitioner.
The Court in Division denied the Petition for Review. It ruled that neither Section 112 nor Section 229 of the 1997 NIRC, as amended, is applicable. Hence, petitioner is disqualified to the refund claim or tax credit. Dissatisfied, petitioner moved for the reconsideration of the Decision dated December 6, 2013 which the Court in the Resolution dated April 29, 2014 denied for lack of merit.
ISSUE:
Whether or not petitioner is entitled to a tax refund or tax credit? HELD:
NO. Amendment or modification of the tax return is prohibited by law upon the issuance of the LOA. This is to prevent situations where the government is at the losing end in allowing refund or tax credit when eventually it is found that the taxpayer has an existing similar tax liability for the same covered period.
Considering that petitioner has undeclared input taxes for the 4th quarter of 2008, it should have immediately modified its return prior to the receipt of the Letter of Authority (LOA) pursuant to Section 6(A) of the 1997 NIRC, as amended; properly declared input tax for the covered period, respectively; and carried over the substantiated claimed input taxes of P111,177,395.70 to the succeeding year.
Should Section 229 serve as basis of petitioner's refund claim in the event of undeclaration of input taxes, this will render nugatory the provision of Section 6(A) of the 1997 NIRC, as amended.
Commissioner of Internal Revenue V. Dakudao & Sons, Inc. CTA EB CASE NO. 1150
Mindaro-Grulla, J.: FACTS:
Respondents owned two (2) parcels of land located in Davao City. After Metro South Davao Property Corporation incorporation, there were still 15,000 unsubscribed shares remaining, which respondent bought. As consideration for said subscription, petitioner executed a Deed of Assignment in favour of MSDPC on April 30, 2011, assigning all its rights and interest over the two (2) parcels of land in favor of MSDPC.
On December 20, 2011, petitioner paid the BIR the amount of P112,140,000.00 for the VAT of said transfer. However, respondents alleged that since the transfer of the subject parcels of land was made in exchange for shares of stock to a controlled corporation, its payment of VAT was erroneous and/or excessive. Thus, on May 2, 2012, petitioner filed an administrative claim for VAT refund with the BIR Revenue Region. Upon its approval, herein petitioner appeals before the court.
ISSUE:
Whether or not the transaction is an exempt transaction for VAT? HELD:
YES. The case shows that the transfer by a real estate dealer on one hand to another real estate dealer where the transferor gains control of the transferee corporation shall not be subject to output VAT. Putting the Revenue Regulations into context, the respective Articles of Incorporation of respondent Dakudao and of MSDPC indicate the purpose for which they were incorporated; viz., the construction, development, improvement of all properties, including but not limited to real estate. A "Real Estate Dealer," meanwhile, includes any person engaged in the business of buying, developing, selling, exchanging real properties as principal and holding himself out as a full or part-time dealer in real estate. Thus, based on the Articles of Incorporation and the definition of "Real Estate Dealer" as provided for under RR No. 16-2005, both respondent and MSDPC are considered as real estate dealers.
It bears stressing that respondent Dakudao subscribed 4,964,000 shares of capital stock of MSDPC (or 75°/o of the total subscribed capital stock,) and as payment of the subscription, Dakudao assigned two parcels of land to MSDPC. The assignment resulted to respondent having controlling interest over MSDPC. As such, pursuant to Section 4.106-8 (b) of Revenue Regulations 16-2005, as amended by RR No. 04-2007, the transfer of the lands in exchange for MSDPC's shares of stock is not subject to VAT.
Commissioner of Internal Revenue v. LAWL PTE, LTD. CTA EB No. 1118
Uy, J.: FACTS:
Respondent Lawl Pte Ltd. is a corporation duly organized and existing under the laws of Singapore, with principal office at One Marina Boulevard #28-00, Singapore. It does not engage in trade or business in the Philippines. Respondent owns a total of 236,000 Maynilad, a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, shares registered in its own name or through its nominees, with a par value of P1 ,000.00 per share. On February 9, 2009, respondent executed a Deed of Absolute Sale involving said shares in favor of Metro Pacific Investments Corp. (MPIC), a corporation organized and existing under the laws of the Philippines, for the price of P2,029,212,960.00.
On March 6, 2009, respondent filed with the BIR Revenue District Office (ROO) No. 39 a capital gains tax (CGT) return for the sale of its shares, indicating that it is availing of the tax exemption under the Philippines-Singapore Tax Treaty. Likewise, respondent applied for tax treaty relief with the International Tax Affairs Division (ITAD) of the BIR on March 25, 2009.
Petitioner, on the other hand, issued BIR Ruling No. ITAD 102-11 dated April 4, 2011, denying respondent's application for tax treaty relief for lack of legal basis. Consequently, respondent filed a letter requesting a review of the said BIR Ruling with the Secretary of Finance on May 18, 2011. And the same was elevated before the courts where the ruling was in favor of the respondents. Hence, this petition. ISSUE:
Whether or not respondents are exempted from tax for the sale of its shares in a domestic corporation?
HELD:
Yes. Petitioner fails to make any specific discussion to support her argument, that respondent failed to prove that the application of Article 13 of the Philippines-Singapore Tax Treaty would justify its claim for refund, and neglects to point out the supposed error in the findings of fact of the Court in Division or in its interpretation and application of the provisions of the law or the said tax treaty. The Court will not belabor to reiterate them in this Decision. As between a well-discussed ruling of the Court in Division and a very general and perfunctory statement made by petitioner against the said ruling, the former must perforce prevail. After all, the Court in Division's findings are always presumed correct.
Furthermore, the wrongfully paid tax may be refunded. Jurisprudence would reveal that nowhere was it stated or implied that refund claims may only be granted when the taxpayer pays under a mistake of fact. At most, what can be taken from the said pronouncement is that a tax payment under a mistake of fact is just an example of an “erroneous payment".
In this case, there is wrongful payment because what was paid is not legally due. In other words, the CGT and interest that were paid by petitioner is "one levied without statutory authority". Thus, while a CGT may be imposed on the sale by respondent of its shares of stock in Maynilad under the Section 28(8)(5)(c) of the NIRC of 1997, Article 13 of the Philippines-Singapore Tax Treaty provides for a tax exemption. Needless to state, when a tax is paid and there exists a tax exemption, such tax payment is deemed as a wrongful payment because what was paid is not legally due.
Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue CTA EB No. 1078, July 27, 2015
Cotangco – Manalastas, J.: FACTS:
Petitioner is a corporation organized and existing under the laws of the Philippines. It is engaged, among others, in the business of manufacturing, processing, treating and refining petroleum for the purpose of producing marketable products and by-products and the subsequent sale thereof. Petitioner also imports finished Jet A-1 fuel. On February 18, 2010, petitioner filed a claim for refund or tax credit with the Large Taxpayers Audit and Investigation Division II of the BIR, seeking the recovery of excise taxes paid on Jet A-1 fuel sold to tax-exempt international air carriers for the period covering March 18 to April 20, 2008 in the aggregate amount of P59,277,091.31. Due to respondent's inaction on petitioner's administrative claim for refund of excise taxes paid on Jet A- 1 fuel sold to tax-exempt international air carriers for the period beginning March 18 to April 20, 2008, petitioner filed the instant Petition for Review before this Court on March 29, 2010. On July 11, 2013, the Division promulgated its Decision, dismissing petitioner's claim for refund or tax credit. Petitioner submitted a motion for reconsideration but was denied.
ISSUE:
Whether or not petitioner is entitled to refund? HELD:
Section 135 of the NIRC of 1997 states:
"SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. – Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines; Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner;
(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and
(c) Entities which are by law exempt from direct and indirect taxes."
Based on the foregoing, petroleum products sold to international air carriers, whether of Philippine or foreign registry, are exempt from excise taxes provided that: (a) the petroleum products are consumed outside the Philippines; (b) such petroleum products be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; and (c) in the case of foreign
international carriers, their country of registry exempts from excise or similar taxes petroleum products sold to Philippine carriers.
As ascertained by the Court-commissioned Independent Certified Public Accountant, Mr. Benjamin P. Valdez of Punongbayan & Araullo, and further verified by this Court, it was found that of the total claim for refund or tax credit of P59,277,091.32, only the amount of P50,797,156.29, 28 was properly supported by relevant documents. On the other hand, the claim in the amount of P8,479,935.03 should be denied. Respondent Commissioner of Internal Revenue is ordered to refund or to issue a tax credit certificate in the reduced amount of P50,797,156.29 to petitioner Pilipinas Shell Petroleum Corporation.
