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COMPIL TION OF SUPREME COURT DECISIONS
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Prepared by : ATTY. RESCI ANGELLI RIZADA, RNAteneo de Davao University
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TAXATION LAW
• G.R. No. 182399. March 12, 2014 CSGarment, Inc. Vs. Commissioner ofInternal Revenue
• The threshold question before thisCourt is whether or not CSGarment is already immune frompaying the deficiency taxes statedin the 1998 tax assessments of theCIR, as modified by the CTA.
Tax amnesty refers to the articulation ofthe absolute waiver by a sovereign of itsright to collect taxes and power to imposepenalties on persons or entities guilty of
violating a tax law. Tax amnesty aims togrant a general reprieve to tax evaderswho wish to come clean by giving them anopportunity to straighten out theirrecords.
In 2007, Congress enacted R.A. 9480,which granted a tax amnesty covering “all
national internal revenue taxes for thetaxable year 2005 and prior years, with orwithout assessments duly issued therefor,that have remained unpaid as ofDecember 31, 2005.” These national
internal revenue taxes include (a) incometax; (b) VAT; (c) estate tax; (d) excisetax; (e) donor’s tax; (f) documentarystamp tax; (g) capital gains tax; and (h)other percentage taxes.
Pursuant to Section 6 of the 2007 TaxAmnesty Law, those who availedthemselves of the benefits of the lawbecame “immune from the payment of
taxes, as well as additions thereto, andthe appurtenant civil, criminal or
administrative penalties under theNational Internal Revenue Code of 1997,as amended, arising from the failure topay any and all internal revenue taxes fortaxable year 2005 and prior years.”
Amnesty taxpayers may immediately
enjoy the privileges and immunitiesunder the 2007 Tax Amnesty Law, as
soon as they fulfill the suspensive
conditions imposed therein
A careful scrutiny of the 2007 TaxAmnesty Law would tell us that the law
contains two types of conditions – onesuspensive, the other
resolutory. Borrowing from the conceptsunder our Civil Code, a condition may beclassified as suspensive when thefulfillment of the condition results in theacquisition of rights. On the other hand, acondition may be considered resolutorywhen the fulfillment of the conditionresults in the extinguishment of rights. Inthe context of tax amnesty, the rightsreferred to are those arising out of theprivileges and immunities granted underthe applicable tax amnesty law.
CS Garment has complied with all of thedocumentary requirements of the lawConsequently, and contrary to theassertion of the OSG, no furtherassessment by the BIR is necessary. CSGarment is now entitled to invoke theimmunities and privileges under Section 6of the law.
Similarly, we reject the contention of OSGthat the BIR was given a one-year periodto contest the correctness of the SALNfiled by CS Garment, thus makingpetitioner’s motion premature. Neither the2007 Tax Amnesty Law nor Department ofFinance (DOF) Order No. 29-07 (TaxAmnesty Law IRR) imposes a waitingperiod of one year before the applicantcan enjoy the benefits of the Tax AmnestyLaw. It can be surmised from the citedprovisions that the law intended the
immediate enjoyment of the immunitiesand privileges of tax amnesty uponfulfilment of the requirements. Further, areading of Sections 4 and 6 of the 2007Tax Amnesty Law shows that Congresshas adopted a “no questions asked”policy, so long as all the requirements ofthe law and the rules are satisfied. Theone-year period referred to in the lawshould thus be considered only as a
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prescriptive period within which thirdparties, meaning “parties other than the
BIR or its agents,” can question the SALN
– not as a waiting period during which the
BIR may contest the SALN and thetaxpayer prevented from enjoying theimmunities and privileges under the law.
This clarification, however, does not meanthat the amnesty taxpayers would goscot-free in case they substantiallyunderstate the amounts of their net worthin their SALN. The 2007 Tax Amnesty Lawimposes a resolutory condition insofar asthe enjoyment of immunities andprivileges under the law is concerned.Pursuant to Section 4 of the law, thirdparties may initiate proceedingscontesting the declared amount of networth of the amnesty taxpayer within oneyear following the date of the filing of thetax amnesty return and the SALN. Section6 then states that “All these immunities
and privileges shall not apply x x x wherethe amount of networth as of December31, 2005 is proven to be understated tothe extent of thirty percent (30%) ormore, in accordance with the provisions ofSection 3 hereof.” Accordingly, Section 10
provides that amnesty taxpayers whowillfully understate their net worth shallbe (a) liable for perjury under the RevisedPenal Code; and (b) subject to immediatetax fraud investigation in order to collectall taxes due and to criminally prosecutethose found to have willfully evaded lawfultaxes due.
Nevertheless, in this case we note that theOSG has already indicated that the CIRhad not filed a case relative to the taxamnesty
application of CS Garment, from the timethe documents were filed in March 2008.Neither did the OSG mention that a thirdparty had initiated proceedingschallenging the declared amount of networth of the amnesty taxpayer within theone-year period.
Taxpayers with pending tax cases are still qualified to avail themselves ofthe tax amnesty program.
We cull from the aforementionedprovisions that neither the law nor theimplementing rules state that a courtruling that has not attained finality wouldpreclude the availment of the benefits ofthe Tax Amnesty Law. Both R.A. 9480 andDOF Order No. 29-07 are quite precise indeclaring that “[t]ax cases subject of
final and executory judgment by thecourts” are the ones excepted from thebenefits of the law.
While tax amnesty, similar to a taxexemption, must be construed strictlyagainst the taxpayer and liberally in favorof the taxing authority, it is also a well-settled doctrine that the rule-makingpower of administrative agencies cannotbe extended to amend or expandstatutory requirements or to embracematters not originally encompassed by thelaw. Administrative regulations shouldalways be in accord with the provisions ofthe statute they seek to carry into effect,and any resulting inconsistency shall be
resolved in favor of the basic law. We thusdefinitively declare that the exception “[i]ssues and cases which were ruled by
any court (even without finality) in favorof the BIR prior to amnesty availment ofthe taxpayer” under BIR RMC 19-2008 isinvalid, as the exception goes beyond thescope of the provisions of the 2007 TaxAmnesty Law.
Considering the completion of theaforementioned requirements, we findthat petitioner has successfully availeditself of the tax amnesty benefits grantedunder the Tax Amnesty Law. Thereforewe no longer see any need to furtherdiscuss the issue of the deficiency taxassessments. CS Garment is now deemedto have been absolved of its obligationsand is already immune from the paymentof taxes – including the assesseddeficiency in the payment of VAT, DST,
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and income tax as affirmed by the CTA enbanc – as well as of the additions thereto(e.g., interests and surcharges).Furthermore, the tax amnesty benefits
include immunity from “the appurtenantcivil, criminal, or administrative penaltiesunder the NIRC of 1997, as amended,arising from the failure to pay any and allinternal revenue taxes for taxable year2005 and prior years.”
• G.R. No. 169778. March 12, 2014
Commissioner of Internal Revenue Vs.Silicon Philippines, Inc. (formerly IntelPhilippines Manufacturing, Inc.)• To obviate the possibility that its
decision inay be rendered void, theCourt can, by its own initiative,rule on the question ofjurisdiction,although not raised by the parties.As a corollary thereto, to inquireinto the existence o f jurisdictionover the subject matter is theprimary concern o f a court, forthereon would depend the validityof its entire proceedings.
•
The core issue for the Court’s resolution iswhether or not respondent is entitled to
its claim for refund or issuance of a taxcredit certificate in its favor in the amountof P21,338,910.44 representing itsunutilized creditable input taxes for theperiod covering 1 April 1998 to 30 June1998 (second quarter), pursuant to theapplicable provisions of the NIRC of 1997,as amended.
Pertinent to the instant case, it is worthmentioning that Section 112 of the NIRCof 1997, as amended, was already theapplicable law at the time that respondentfiled its administrative and judicial claims,Based on the foregoing provisions, prior toseeking judicial recourse before the CTA, aVAT-registered person may apply for theissuance of a tax credit certificate orrefund of creditable input tax attributableto zero- rated or effectively zero-ratedsales within two (2) years after the closeof taxable quarter when the sales or
purchases were made.
Additionally, further reading of theprovisions of Section 112 shows that
under paragraph (D) thereof, theCommissioner of Internal Revenue isgiven a 120-day period, fromsubmission of complete documents in
support of the administrative claim
within which to act on claims forefund/applications for issuance of the taxcredit certificate. Upon denial of the claimor application, or upon expiration of the120-day period, the taxpayer only has
30 days within which to appeal saidadverse decision or unacted claimbefore the CTA.
a taxpayer-claimant only had a limitedperiod of thirty (30) days from theexpiration of the 120-day period ofinaction of the Commissioner of InternaRevenue to file its judicial claim with thisCourt. Failure to do so, the judicial claimshall prescribe or be considered as filedout of time.
Applying the foregoing discussion in thecase at bench, although respondent has
indeed complied with the required two-year period within which to file arefund/tax credit claim with the BIR byfiling its administrative claim on 6 May1999 (within the period from the close ofthe subject second quarter of taxable year1998 when the relevant sales orpurchases were made), it appearshowever, that respondent’s corresponding
judicial claim filed with the CTA on 30June 2000 was filed beyond the 30- dayperiod,
Since respondent’s judicial claim for theaforementioned quarter was filed beforethe CTA only on 30 June 2000, which wasway beyond the mandatory 120+30 daysto seek judicial recourse, such non-compliance with the said mandatoryperiod of thirty (30) days is fatal to itsrefund claim on the ground of
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prescription.
As regards the prints on the supportingreceipts or invoices, it is worth mentioning
that the High Court already ruled on thesignificance of imprinting the word “zero-rated” for zero-rated sales covered by itsreceipts or invoices,
Clearly, the foregoing pronouncementaffirms that absence or non- printing ofthe word “zero-rated” in respondent’sinvoices is fatal to its claim for the refundand/or tax credit representing itsunutilized input VAT attributable to itszero-rated sales.
On the other hand, while this Courtconsiders the importance of imprinting theword "zero-rated" in said invoices, thesame does not apply to the phrase "BIRauthority to print." In Intel TechnologyPhilippines, Inc. v. CommissionerofInternal Revenue, the Court ruled thatthere is no law or BIR rule or regulationrequiring the taxpayer-claimant'sauthority from the BIR to print its salesinvoices (BIR authority to print) to bereflected or indicated therein. It stressed
"that while entities engaged in businessare required to secure from the BIR anauthority to print receipts or invoices and
to issue duly registered receipts orinvoices, it is not required that the BIRauthority to print be reflected or indicatedtherein."
All told, the CTA has no jurisdiction overrespondent's judicial appeal consideringthat its Petition for Review was filed
beyond the mandatory 30-day periodpursuant to Section 112(D) of the NIRC of1997, as amended. Consequently,respondent's instant claim for refund mustbe denied.
• G.R. No. 179260. April 2, 2014
Commissioner of Internal Revenue Vs.Team (Philippines) Operations Corporation(formerly Mirant Phils., OperationCorporation)
ISSUE: claim for refund in the amount ofP69,562,412.00 representing unutilizedtax credits for taxable period ending 31December 2001.
In Banco Filipino Savings and MortgageBank v. Court of Appeals,
this Court had previously articulated thatthere are three essential conditions for thegrant of a claim for refund of creditablewithholding income tax, to wit: (1) theclaim is filed with the Commissioner ofInternal Revenue within the two-yearperiod from the date of payment of thetax; (2) it is shown on the return of therecipient that the income paymentreceived was declared as part of the grossincome; and (3) the fact of withholding isestablished by a copy of a statement dulyissued by the payor to the payee showingthe amount paid and the amount of thetax withheld therefrom.
In addition to the abovementionedrequisites, the NIRC of 1997, as amended,likewise provides for the strict observanceof the concept of the irrevocability rule,that says: Once the option to carry-
over and apply the excess quarterlyincome tax against income tax due for
the taxable quarters of thesucceeding taxable years has been
made, such option shall be consideredirrevocable for that taxable period
and no application for cash refund orissuance of a tax credit certificate
shall be allowed therefor. (Emphasissupplied)
Applying the foregoing discussion to the
present case, we find that respondent hadindeed complied with the abovementionedrequirements.
Here, it is undisputed that the claim forrefund was filed within the two-yearprescriptive period prescribed underSection 229 of the NIRC of 1997, asamended. Respondent filed its income taxreturn for taxable year 2001 on 15 Apri
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2002. Counting from said date, it indeedhad until 14 April 2004 within which to fileits claim for refund or issuance of taxcredit certificate in its favor both
administratively and judicially. Thus,petitioner’s administrative claim andpetition for review filed on 19 March 2003and 27 March 2003, respectively, fellwithin the abovementioned prescriptiveperiod.
• G.R. No. 197561. April 7, 2014 Coca-ColaBottlers Philippines, Inc. Vs. City ofManila, et al.ISSUE: the controversy boils down to thepropriety of the issuance of the writ ofexecution of the judgment orderingrespondents either to refund or credit thetax assessed
After careful consideration of the facts andlaws obtaining in this case, we find thatthe issuance of the Writ of Execution wassuperfluous, given the clear directive ofthe RTC-Manila in its Decision datedSeptember 28, 2001. We do not, however,agree with respondents’ view that
Administrative Circular No. 10-2000 isapplicable to the instant case for reasonsdiscussed hereinbelow.
In its first assigned error, petitionerargues that the writ of execution issued bythe Branch Clerk of Court does not involvethe levy or garnishment of funds andproperty used or being used for publicpurpose given that the writ was issued “For: Special Judgment.” Thus,Administrative Circular No. 10-2000 hasno relevance in the instant case.
In its Decision dated September 28, 2001,
the RTC-Manila directs respondents toeither refund or credit the tax underSection 21 of the Revenue Code of Manila,which was improperly assessed butnevertheless paid for by petitioner on thefirst quarter of year 2000 in the amount ofP3,036,887.33. The judgment does notactually involve a monetary award or asettlement of claim against the
government.
Under the first option, any tax on incomethat is paid in excess of the amount due
the government may be refundedprovided that a taxpayer properly appliesfor the refund. On the other hand, thesecond option works by applying therefundable amount against the taxliabilities of the petitioner in thesucceeding taxable years.
Hence, instead of moving for the issuanceof a writ of execution relative to theaforesaid Decision, petitioner should havemerely requested for the approval of theCity of Manila in implementing the taxrefund or tax credit, whichever isappropriate. In other words, no writ wasnecessary to cause the execution thereof,since the implementation of the tax refundwill effectively be a return of funds by theCity of Manila in favor of petitioner while atax credit will merely serve as a deductionof petitioner’s tax liabilities in the future.
In fact, Section 252 (c) of the LocaGovernment Code of the Philippines isvery clear that “[i]n the event that the
protest is finally decided in favor of thetaxpayer, the amount or portion of the taxprotested shall be refunded to theprotestant, or applied as tax credit againsthis existing or future tax liability.” It wasnot necessary for petitioner to move forthe issuance of the writ of executionbecause the remedy has already beenprovided by law.
the issuance of the Writ of Executionrelative thereto was superfluous, because
the judgment of the RTC-Manila canneither be considered a judgment for aspecific sum of money susceptible ofexecution by levy or garnishment underSection 9, Rule 39 of the Rules of Courtnor a special judgment under Section 11,Rule 39 thereof.
• G.R. No. 180654. April 21, 2014 NationaPower Corporation Vs. ProvinciaGovernment of Bataan, et al.
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• This case is about the distinctionbetween an action contesting alocal tax assessment and an actionseeking to enjoin the local
government from enforcing a taxassessment against a person whoclaims that the taxable businessdoes not belong to him.
The above created the TRANSCO andtransferred to it the NPC’s electricaltransmission function with effect on June26, 2001. The NPC, therefore, ceased tooperate that business in Bataan byoperation of law. Since the local franchisetax is imposed on the privilege ofoperating a franchise, not a tax on theownership of the transmission facilities, itis clear that such tax is not a liability ofthe NPC.
Nor could the Province levy on thetransmission facilities to satisfy the taxassessment against the NPC since, asSection 8 above further provides, thelatter ceased to own those facilities sixmonths from the effectivity of the EPIRA.Those facilities have since belonged toTRANSCO.
Section 49 above created the PowerSector Assets and Liabilities ManagementCorporation (PSALM Corp.) andtransferred to it all of the NPC's"generation assets" which would includethe Bataan Thermal Plant. Clearly, theNPC had ceased running its former powertransmission and distribution business inBataan by operation of law from June 26,2001. It is, therefore, not the proper partysubject to the local franchise tax foroperating that business. Parenthetically,Section 49 also transferred "all existing xxx liabilities" of the NPC to PSALM Corp.,presumably including its unpaid liabilityfor local franchise tax from January 1 toJune 25, 2001. Consequently, such tax iscollectible solely from PSALM Corp.
An indispensable party is one who has aninterest in the controversy or subject
matter and in whose absence there cannotbe a determination between the partiesalready before the court which is effectivecomplete or equitable. Here, since the
subject properties belong to PSALM Corpand TRANSCO, they are certainlyindispensable parties to the case thatmust be necessarily included before it mayproperly go forward. For this reason, theproceedings below that held the NPC liablefor the local franchise tax is a nullity. Itdid not matter where the RTC Decisionwas appealed, whether before the CA orthe CTA.
Here, since the subject properties belongto PSALM Corp. and TRANSCO, they arecertainly indispensable parties to the casethat must be necessarily included before itmay properly go forward. For this reason,the proceedings below that held the NPCliable for the local franchise tax is anullity. It did not matter where the RTCDecision was appealed, whether beforethe CA or the CTA.
• G.R. No. 185432. June 4, 2014• As earlier stated, the proper
interpretation of the above-quotedprovision was finally settled in the
San Roque case23 by this Courtsitting En Banc. The relevantportions of the discussion pertinentto the focal issue in the presentcase are quoted hereunder asfollows:chanroblesvirtuallawlibrary
• • To repeat, a claim for tax refund or
credit, like a claim for tax refundexemption, is construed strictlyagainst the taxpayer. One of theconditions for a judicial claim ofrefund or credit under the VATSystem is compliance with the120+30 day mandatory and
jurisdictional periods. Thus,strict compliance with the120+30 day periods is
necessary for such a claim to
prosper, whether before,during, or after the effectivityof the Atlas doctrine, except for
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the period from the issuance ofBIR Ruling No. DA-489-03 on
10 December 2003 to 6 October
2010 when the Aichi doctrine
was adopted, which againreinstated the 120+30 day
periods as mandatory and jurisdictional.24 (Emphasissupplied)ChanRoblesVirtualawlibrary
• • In Mindanao II Geothermal
Partnership v. Commissioner ofInternal Revenue, ,25 the SecondDivision of this Court, in applyingtherein the ruling in the San Roque case, provided a Summary of Rules
on Prescriptive Periods InvolvingVAT as a guide for all partiesconcerned, towit:chanroblesvirtuallawlibrary
•
• We summarize the rules on thedetermination of the prescriptiveperiod for filing a tax refund orcredit of unutilized input VAT
as provided in Section 112 ofthe 1997 Tax Code, asfollows:chanroblesvirtuallawlibrary
•
• (1) An administrative claim mustbe filed with the CIR within twoyears after the close of the taxablequarter when the zero-rated oreffectively zero-rated sales weremade.
•
• (2) The CIR has 120 days from thedate of submission of completedocuments in support of theadministrative claim within whichto decide whether to grant a refund
or issue a tax creditcertificate. The 120-day periodmay extend beyond the two-yearperiod from the filing of theadministrative claim if the claim isfiled in the later part of the two-year period. If the 120-dayperiod expires without any
decision from the CIR, then theadministrative claim may be
considered to be denied byinaction.
•
• (3) A judicial claim must be
filed with the CTA within 30days from the receipt of the
CIR’s decision denying theadministrative claim or fromthe expiration of the 120-day
period without any action from
the CIR. •
• (4) All taxpayers, however, canrely on BIR Ruling No. DA-489-
03 from the time of its issuance
on 10 December 2003 up to itsreversal by this Court in Aich
on 6 October 2010, as anexception to the mandatory and jurisdictional 120+30 dayperiods.26 (Emphasissupplied)ChanRoblesVirtualawlibrary
•
• Certainly, it is evident from theforegoing jurisprudentiapronouncements that a taxpayer-claimant only had a limited periodof thirty (30) days from the
expiration of the 120-day period ofinaction of the Commissioner ofInternal Revenue (CIR) to file its
judicial claim with the CTA, withthe exception of claims madeduring the effectivity of BIR RulingNo. DA-489-03 (from 10 December2003 to 5 October 2010).27 Failureto do so, the judicial claim shalprescribe or be considered as filedout of time.
• • Applying the foregoing discussion
in the case at bench, although itappears that petitioner has indeedcomplied with the required two-year period within which to file arefund/tax credit claim with theBIR by filing its administrativeclaims on 24 February 2003 and 25March 2004 (within the period fromthe close of the taxable quartersfor the years 2002 and 2003
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respectively, when the relevantsales or purchases were made),this Court finds that petitioner’scorresponding judicial claim insofar
as to the four quarters of taxableyear 2002 was filed beyond the 30-day period, detailed hereunder asfollows:chanroblesvirtuallawlibrary
•
Taxableyear
(close oftaxabl equarters)
Filingdate oftheadministrativeclaim(withinthe 2-year period)
Lastday ofthe120-day periodunderSectio
n112(D )fromthedateofsubmi ssionofcompl ete
documentsinsupport ofitsapplic ation
Last
dayofthe
30-day period to judic iallyappealsaidinact
ion
Filingdat
e ofthe
Peti tion
forRevi ew
Taxableyear20021st
Quarter(31March2002)2ndQuarter(30June
24February200328
24June2003
24July
200
3
30Mar
ch
2004
2002)3rdQuarter
(30September2002)4thQuarter(31December2002)Taxableyear20031stQuarter(31March2003)2ndQuarter(30
June2003)3rdQuarter(30September2003)4thQuarter(31
December2003)
25March200429
23July2004
22
Aug
ust200
4
30
Mar
ch200
4
•
• • Section 112(D) specifically states
that in case of failure on the part ofthe respondent to act on theapplication within the 120-dayperiod prescribed by law, petitioner
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only has thirty (30) days after theexpiration of the 120-day period toappeal the unacted claim with theCTA. Since petitioner’s judicial
claim for the aforementionedquarters for taxable year 2002 wasfiled before the CTA only on 30March 2004,30 which was waybeyond the mandatory 120+30days to seek judicial recourse, suchnon-compliance with themandatory period of thirty (30)days is fatal to its refund claim onthe ground of prescription.
Parenthetically, even if it is shown that petitioner did not strictly comply with the
mandatory 120+30 day prescriptive periods35 under Section 112 of the NIRC of1997, as amended, its administrativeclaim covering taxable year 2003 fallswithin the effectivity of BIR Ruling No. DA-489-03 (10 December 2003 to 5 October2010), being an exceptionthereto. Hence, there is no more need for petitioner to wait for the 120-day periodto expire before it can file its appropriate judicial claim before the CTA. Accordingly,the CTA indeed acquired jurisdiction over
petitioner’s refund claim for taxable year2003. • Visayas Geothermal Power Company Vs.
Commissioner of Internal Revenue
G.R. No. 197525. June 4, 2014• It has been definitively settled in
the recent En Banc case of CIR v.San Roque Power Corporation (SanRoque),12 that it is Section 112 ofthe NIRC which applies to claimsfor tax credit certificates and taxrefunds arising from sales of VAT-registered persons that are zero-
rated or effectively zero-rated,which are, simply put, claims forunutilized creditable input VAT.
•
• Thus, under Section 112(A), thetaxpayer may, within 2 years afterthe close of the taxable quarterwhen the sales were made, via anadministrative claim with the CIR,apply for the issuance of a tax
credit certificate or refund ofcreditable input tax due or paidattributable to such sales. UnderSection 112(D), the CIR must then
act on the claim within 120 daysfrom the submission of thetaxpayer’s complete documents. Incase of (a) a full or partial deniaby the CIR of the claim, or (b) theCIR’s failure to act on the claim
within 120 days, the taxpayer mayfile a judicial claim via an appeawith the CTA of the CIR decision orunacted claim, within 30 days (a)from receipt of the decision; or (b)after the expiration of the 120-dayperiod.
•
• The 2-year period underSection 229 does not apply toappeals before the CTA in
relation to claims for a refund
or tax credit for unutilizedcreditable input VAT. Section229 pertains to the recovery oftaxes erroneously, illegally, orexcessively collected.13San Roquestressed that “input VAT is not
‘excessively’ collected as
understood under Section 229because, at the time the input VATis collected, the amount paid iscorrect and proper.” 14 It istherefore, Section 112 whichapplies specifically with regard toclaiming a refund or tax credit forunutilized creditable inputVAT.15cralawred
There is, however, an exception to themandatory and jurisdictional nature of the120+30 day period. The Court in SanRoque noted that BIR Ruling No. DA-489-
03, dated December 10, 2003, expresslystated that the “taxpayer-claimant neednot wait for the lapse of the 120-dayperiod before it could seek judicial reliefwith the CTA by way of Petition forReview.” 21 This BIR Ruling was recognizedas a general interpretative rule issued bythe CIR under Section 422 of the NIRCand, thus, applicable to all taxpayersSince the CIR has exclusive and origina
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jurisdiction to interpret tax laws, it washeld that taxpayers acting in good faithshould not be made to suffer for adheringto such interpretations. Section 24623 of
the Tax Code, in consonance withequitable estoppel, expressly providesthat a reversal of a BIR regulation orruling cannot adversely prejudice ataxpayer who in good faith relied on theBIR regulation or ruling prior to itsreversal. Hence, taxpayers can rely on BIRRuling No. DA-489-03 from the time of itsissuance on December 10, 2003 up to itsreversal by this Court in Aichi on October6, 2010, where it was held that the120+30 day period was mandatory and
jurisdictional.
• Accordingly, the general rule isthat the 120+30 day period ismandatory and jurisdictional fromthe effectivity of the 1997 NIRC onJanuary 1, 1998, up to the present.As an exception, judicial claimsfiled from December 10, 2003 toOctober 6, 201024need not wait forthe exhaustion of the 120-dayperiod.
• A review of the facts of the present
case reveals that petitioner VGPCtimely filed its administrative claimwith the CIR on December 6, 2006,and later, its judicial claim with theCTA on January 3, 2007. The
judicial claim was clearly filedwithin the period of exception andwas, therefore, not premature andshould not have been dismissed bythe CTA En Banc.
Atlas doctrine has no relevanceto the 120+30 day period forfiling judicial claim
Although the core issue of prematurity offiling has already been resolved, the Courtdeems it proper to discuss the petitioner’sargument that the doctrine in Atlas, whichallegedly upheld the primacy of the 2-yearprescriptive period under Section 229,should prevail over the ruling in Aichi regarding the mandatory and jurisdictionalnature of the 120+30 day period in
Section 112.
In this regard, it was thoroughly explainedin San Roque that the Atlas doctrine only
pertains to the reckoning point of the 2-year prescriptive period from the date ofpayment of the output VAT under Section229, and has no relevance to the 120+30day period under Section 112, towit:ChanRoblesVirtualawlibrary
The Atlas doctrine, which held that claimsfor refund or credit of input VAT mustcomply with the two-year prescriptiveperiod under Section 229, should beeffective only from its promulgationon 8 June 2007 until its abandonment
on 12 September 2008 in Mirant . The Atlas doctrine was limited to the reckoningof the two-year prescriptive period fromthe date of payment of the output VATPrior to the Atlas doctrine, the two-yearprescriptive period for claiming refund orcredit of input VAT should be governed bySection 112(A) following the verba legisrule. The Mirant ruling, which abandonedthe Atlas doctrine, adopted the verba legisrule, thus applying Section 112(A) incomputing the two-year prescriptive
period in claiming refund or credit of inputVAT.
The Atlas doctrine has no relevance to the120+30 day periods under Section 112(C)because the application of the 120+30day periods was not in issue in Atlas. Theapplication of the 120+30 day periods wasfirst raised in Aichi , which adopted theverba legis rule in holding that the120+30 day periods are mandatory and
jurisdictional. The language of Section112(C) is plain, clear, and unambiguous
When Section 112(C) states that “theCommissioner shall grant a refund orissue the tax credit within one hundredtwenty (120) days from the date ofsubmission of complete documents,” thelaw clearly gives the Commissioner 120days within which to decide the taxpayer’sclaim. Resort to the courts prior to theexpiration of the 120-day period is apatent violation of the doctrine of
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exhaustion of administrative remedies, aground for dismissing the judicial suit dueto prematurity. Philippine jurisprudence isawash with cases affirming and reiterating
the doctrine of exhaustion ofadministrative remedies. Such doctrine isbasic and elementary.25cralawred
[Underscoring supplied]
Thus, Atlas is only relevant in determiningwhen to file an administrative claim withthe CIR for refund or credit of unutilizedcreditable input VAT, and not fordetermining when to file a judicial claimwith the CTA. From June 8, 2007 toSeptember 12, 2008, the 2-year
prescriptive period to file administrativeclaims should be counted from the date ofpayment of the output VAT tax. Beforeand after said period, the 2-yearprescriptive period is counted from theclose of the taxable quarter when thesales were made, in accordance withSection 112(A). In either case, themandatory and jurisdictional 120+30 dayperiod must be complied with for the filingof the judicial claim with the CTA, exceptfor the period provided under BIR Ruling
No. DA-489-03, as previously discussed.The Court further noted that Atlas wasdecided in relation to the 1977 Tax Codewhich had not yet provided for the 30-dayperiod for the taxpayer to appeal to theCTA from the decision or inaction of theCIR over claims for unutilized input VAT.Clearly then, the Atlas doctrine cannot beinvoked to disregard compliance with the120+30 day mandatory and jurisdictionalperiod.26 Aichi not applied prospectively
Petitioner VGPC also argues that Aichi should be applied prospectively and,therefore, should not be applied to thepresent case. This position cannot begiven consideration.
Article 8 of the Civil Code provides that judicial decisions applying or interpretingthe law shall form part of the legal system
of the Philippines and shall have the forceof law. The interpretation placed upon alaw by a competent court establishes thecontemporaneous legislative intent of the
law. Thus, such interpretation constitutesa part of the law as of the date the statuteis enacted. It is only when a prior ruling ofthe Court is overruled, and a differentview adopted, that the new doctrine mayhave to be applied prospectively in favorof parties who have relied on the olddoctrine and have acted in goodfaith.28cralawred
Considering that the nature of the 120+30day period was first settled in Aichi, theinterpretation by the Court of its being
mandatory and jurisdictional in natureretroacts to the date the NIRC wasenacted. It cannot be appliedprospectively as no old doctrine wasoverturned.
The petitioner cannot rely either on thealleged jurisprudence prevailing at thetime it filed its judicial claim. The Courtnotes that the jurisprudence relied uponby the petitioner consists of CTA cases. Itis elementary that CTA decisions do not
constitute precedent and do not bind thisCourt or the public. Only decisions of thisCourt constitute binding precedentsforming part of the Philippine legasystem.29cralawred
As regards the cases30 which were laterdecided allegedly in contravention of Aichi,it is of note that all of them were decidedby Divisions of this Court, and not by theCourt En Banc. Any doctrine or principle oflaw laid down by the Court, eitherrendered En Banc or in Division, may be
overturned or reversed only by the Courtsitting En Banc .31 Thus, the cases cited bythe petitioner could not have overturnedthe doctrine laid down in Aichi.CIR not estopped
The petitioner’s argument that the CIR
should have been estopped fromquestioning the jurisdiction of the CTAafter actively participating in the
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proceedings before the CTA SecondDivision deserves scant consideration.
It is a well-settled rule that the
government cannot be estopped by themistakes, errors or omissions of itsagents.32 It has been specifically held thatestoppel does not apply to thegovernment, especially on matters oftaxation. Taxes are the nation’s lifeblood
through which government agenciescontinue to operate and with which theState discharges its functions for thewelfare of its constituents.33 Thus, thegovernment cannot be estopped fromcollecting taxes by the mistake,negligence, or omission of its agents.
Upon taxation depends the ability of thegovernment to serve the people for whosebenefit taxes are collected. To safeguardsuch interest, neglect or omission ofgovernment officials entrusted with thecollection of taxes should not be allowedto bring harm or detriment to thepeople.34cralawred Rules on claims for refund or tax credit ofunutilized input VAT
For clarity and guidance, the Court deems
it proper to outline the rules laid down inSan Roque with regard to claims forrefund or tax credit of unutilized creditableinput VAT. They are asfollows:ChanRoblesVirtualawlibrary
• When to file an administrative claimwith the CIR:
General rule – Section 112(A)and Mirant Within 2 yearsfrom the close of thetaxable quarter when thesales were made.
Exception – Atlas Within 2years from the date ofpayment of the output VAT,if the administrative claimwas filed from June 8, 2007(promulgation of Atlas) toSeptember 12, 2008(promulgation of Mirant ).
•
• When to file a judicial claim with theCTA:
General rule – Section 112(D);not Section 229
Within 30 days from thefull or partial deniaof the administrativeclaim by the CIR; or
Within 30 days from theexpiration of the120-day periodprovided to the CIRto decide on theclaim. This ismandatory and
jurisdictionalbeginning January 11998 (effectivity of1997 NIRC).
Exception – BIR Ruling No. DA-489-03 The judicial claim need not await theexpiration of the 120-day period, if suchwas filed from December 10, 2003(issuance of BIR Ruling No. DA-489-03) toOctober 6, 2010 (promulgation of Aichi ).
• Commissioner of Internal Revenue Vs. The
Insular Life Assurance Co., Ltd. G.RNo. 197192. June 4, 2014
“Time and again, the Court has held thatit is a very desirable and necessary
judicial practice that when a court has laiddown a principle of law as applicable to acertain state of facts, it will adhere to thatprinciple and apply it to all future cases inwhich the facts are substantially thesame. Stare decisis et non quietamovere. Stand by the decisions anddisturb not what is settled. Stare decisissimply means that for the sake ofcertainty, a conclusion reached in onecase should be applied to those that followif the facts are substantially the same,even though the parties may bedifferent. It proceeds from the firstprinciple of justice that, absent anypowerful countervailing considerations,like cases ought to be decidedalike. Thus, where the same questionsrelating to the same event have been putforward by the parties similarly situated as
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in a previous case litigated and decided bya competent court, the rule of staredecisis is a bar to any attempt to relitigatethe same issue.” 1cralawred
Issue
WHETHER OR NOT THE CTA EN BANCERRED IN RULING THAT RESPONDENT ISA COOPERATIVE AND [IS] THUS[,]EXEMPT FROM DOCUMENTARY STAMPTAX.8
Ruling
The Court has pronounced in Republic ofthe Philippines v. Sunlife AssuranceCompany of Canada9 that “[u]nder the
Tax Code although respondent is acooperative, registration with the CDA isnot necessary in order for it to be exemptfrom the payment of both percentagetaxes on insurance premiums, underSection 121; and documentary stamptaxes on policies of insurance or annuitiesit grants, under Section 199.” 10cralawred
A perusal of Section 3(e) of R.A. No. 6939evidently shows that it is merely astatement of one of the powers exercised
by CDA. Neither Section 3(e) of R.A. No.6939 nor any other provision in theaforementioned statute imposesregistration with the CDA as a conditionprecedent to claiming DSTexemption. Even then, R.A. No. 6939 isinapplicable to the case at bar, as will bediscussed shortly.
The NIRC of 1997 defined a cooperativecompany or association as “conducted bythe members thereof with the moneycollected from among themselves and
solely for their own protection and not forprofit.” 15 Consequently, as long as theserequisites are satisfied, a company orassociation is deemed a cooperativeinsofar as taxation is concerned. In thiscase, the respondent has sufficientlyestablished that it conforms with theelements of a cooperative as defined inthe NIRC of 1997 in that it is managed bymembers, operated with money collected
from the members and has for its mainpurpose the mutual protection ofmembers for profit.16cralawred
The Court presented three justifications inSunlife why registration with the CDA isnot necessary for cooperatives to claimexemption from DST.
First , the NIRC of 1997 does not requireregistration with the CDA. No taxprovision requires a mutual life insurancecompany to register with that agency inorder to enjoy exemption from bothpercentage and DST. Although a provisionof Section 8 of the Revenue MemorandumCircular (RMC) No. 48-91 requires the
submission of the Certificate ofRegistration with the CDA before theissuance of a tax exemption certificate,that provision cannot prevail over theclear absence of an equivalentrequirement under the TaxCode.17cralawred
The respondent correctly pointed out thatin other provisions of the NIRCregistration with the CDA is expresslyrequired in order to avail of certain tax
exemptions or preferential tax treatment18
- a requirement which is noticeably absentin Section 199 of the NIRC. Quoted beloware examples of cooperatives which areexpressly mandated by law to beregistered with the CDA before theirtransactions could be considered asexempted from value added tax:Chan
This absence of the registrationrequirement under Section 199 clearlymanifests the intention of the Legislativebranch of the government to do away with
registration before the CDA for acooperative to benefit from the DSTexemption under this particular section.
Second , the provisions of the CooperativeCode of the Philippines do notapply.19 The history of the CooperativeCode was amply discussed in Sunlifewhere it was noted that cooperativesunder the old law, Presidential Decree
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(P.D.) No. 17520 “referred only to anorganization composed primarily of smallproducers and consumers who voluntarily
joined to form a business enterprise that
they themselves owned, controlled, andpatronized. The Bureau of CooperativesDevelopment — under the Department ofLocal Government and CommunityDevelopment (later Ministry ofAgriculture) — had the authority toregister, regulate and supervise only thefollowing cooperatives: (1) barrio associations involved in the issuance ofcertificates of land transfer; (2) local orprimary cooperatives composed of naturalpersons and/or barrio associations; (3)federations composed of cooperatives that
may or may not perform businessactivities; and (4) unions of cooperativesthat did not perform any businessactivities. Respondent does not fall underany of the abovementioned types ofcooperatives required to be registeredunder [P.D. No.] 175.” 21cralawred
Thus, when the subsequent law, R.A. No.6939, concerning cooperatives wasenacted, the respondent was not coveredby said law and was not required to be
registered, “The distinguishing feature of a
cooperative enterprise is the mutuality ofcooperation among its member-policyholders united for that purpose. Solong as respondent meets this essentialfeature, it does not even have to use andcarry the name of a cooperative tooperate its mutual life insurance business.Gratia argumenti that registration ismandatory, it cannot deprive respondentof its tax exemption privilege merely
because it failed to register. The nature ofits operations is clear; its purpose well-defined. Exemption when granted cannotprevail over administrativeconvenience.” 23cralawred
Third, the Insurance Code does notrequire registration with the CDA. “The
provisions of this Code primarily governinsurance contracts; only if a particular
matter in question is not specificallyprovided for shall the provisions of theCivil Code on contracts and special lawsgovern.” 24cralawred
There being no cogent reason for theCourt to deviate from its ruling in Sunlifethe Court holds that the respondent, beinga cooperative company not mandated bylaw to be registered with the CDA, cannotbe required under RMC No. 48-91, a merecircular, to be registered prior to availingof DST exemption.
“While administrative agencies, such asthe Bureau of Internal Revenue, mayissue regulations to implement statutes,
they are without authority to limit thescope of the statute to less than what itprovides, or extend or expand the statutebeyond its terms, or in any way modifyexplicit provisions of the law. Indeed, aquasi-judicial body or an administrativeagency for that matter cannot amend anact of Congress. Hence, in case of adiscrepancy between the basic law and aninterpretative or administrative ruling, thebasic law prevails.” 25cralawr
• The Hong Kong and Shanghai Banking
Corporation Limited-PhilippineBranches Vs. Commssioner of Interna
Revenue/The Hong Kong andShanghai Banking CorporationLimited-Philippine Branches Vs
Commissioner of Internal Revenue
G.R. Nos. 166018/167728. June 4, 2014• The Court agrees with the CTA that
the DST under Section 181 of theTax Code is levied on theacceptance or payment of “a bill ofexchange purporting to be drawnin a foreign country but payable inthe Philippines” and that “a bill ofexchange is an unconditional orderin writing addressed by one personto another, signed by the persongiving it, requiring the person towhom it is addressed to pay ondemand or at a fixed ordeterminable future time a sumcertain in money to order or tobearer.” A bill of exchange is one
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of two general forms of negotiableinstruments under the NegotiableInstruments Law.15cralawred
•
• The Court further agrees with theCTA that the electronic messages
of HSBC’s investor-clientscontaining instructions to debittheir respective local or foreigncurrency accounts in thePhilippines and pay a certainnamed recipient also residing in thePhilippines is not the transactioncontemplated under Section 181 ofthe Tax Code as such instructionsare “parallel to an automatic banktransfer of local funds from a
savings account to a checkingaccount maintained by a depositorin one bank.” The Court favorablyadopts the finding of the CTA thatthe electronic messages “cannot beconsidered negotiable instrumentsas they lack the feature ofnegotiability, which, is the ability tobe transferred” and that the said
electronic messages are “merememoranda” of the transaction
consisting of the “actual debiting of
the [investor-client-]payor’s localor foreign currency account in thePhilippines” and “entered as suchin the books of account of the localbank,” HSBC.16cralawred
•
• More fundamentally, theinstructions given throughelectronic messages that aresubjected to DST in these casesare not negotiable instruments asthey do not comply with therequisites of negotiability under
Section 1 of the NegotiableInstruments Law, whichprovides:chanRoblesvirtualLawlibrary
• • Sec. 1. Form of negotiable
instruments.– An instrument to benegotiable must conform to thefollowingrequirements:chanRoblesvirtualLaw
library •
• (a) It must be in writing andsigned by the maker or drawer;
• • (b) Must contain an unconditiona
promise or order to pay a sumcertain in money;
•
• (c) Must be payable on demandor at a fixed or determinable futuretime;
•
• (d) Must be payable to order or tobearer; and
•
• (e) Where the instrument is
addressed to a drawee, he must benamed or otherwise indicatedtherein with reasonable certainty.
•
• The electronic messages are notsigned by the investor-clients assupposed drawers of a bill ofexchange; they do not contain anunconditional order to pay a sumcertain in money as the payment issupposed to come from a specificfund or account of the investor-
clients; and, they are not payableto order or bearer but to aspecifically designated thirdparty. Thus, the electronicmessages are not bills ofexchange. As there was no bill oexchange or order for the paymentdrawn abroad and made payablehere in the Philippines, there couldhave been no acceptance orpayment that will trigger theimposition of the DST underSection 181 of the Tax Code.
DST is an excise tax on the exercise of aright or privilege to transfer obligations,rights or properties incidentthereto.23 Under Section 173 of the 1997Tax Code, the persons primarily liable forthe payment of the DST are those (1)making, (2) signing, (3) issuing, (4)accepting, or (5) transferring the taxabledocuments, instruments orpapers.24cralawred
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In general, DST is levied on the exerciseby persons of certain privileges conferredby law for the creation, revision, or
termination of specific legal relationshipsthrough the execution of specificinstruments. Examples of such privileges,the exercise of which, as effected throughthe issuance of particular documents, aresubject to the payment of DST are leasesof lands, mortgages, pledges and trusts,and conveyances of realproperty.25cralawred
As stated above, Section 230 of the 1977Tax Code, as amended, now Section 181of the 1997 Tax Code, levies DST on
either (a) the acceptance or (b) thepayment of a foreign bill of exchange ororder for the payment of money that wasdrawn abroad but payable in thePhilippines. In other words, it levies DSTas an excise tax on the privilege of thedrawee to accept or pay a bill of exchangeor order for the payment of money, whichhas been drawn abroad but payable in thePhilippines, and on the correspondingprivilege of the drawer to have acceptanceof or payment for the bill of exchange or
order for the payment of money which ithas drawn abroad but payable in thePhilippines.
Acceptance applies only to bills ofexchange.26 Acceptance of a bill ofexchange has a very definite meaning inlaw.27 In particular, Section 132 of theNegotiable Instruments Lawprovides:chanRoblesvirtualLawlibrary
Sec. 132. Acceptance; how made, by andso forth. – The acceptance of a bill [of
exchange28] is the signification by thedrawee of his assent to the order of thedrawer. The acceptance must be in writingand signed by the drawee. It must notexpress that the drawee will perform hispromise by any other means than thepayment of money.
Under the law, therefore, what is acceptedis a bill of exchange, and the acceptance
of a bill of exchange is both themanifestation of the drawee’s consent to
the drawer’s order to pay money and theexpression of the drawee’s promise to
pay. It is “the act by which the draweemanifests his consent to comply with therequest contained in the bill of exchangedirected to him and it contemplates anengagement or promise to pay.” 29 Oncethe drawee accepts, he becomes anacceptor.30 As acceptor, he engages topay the bill of exchange according to thetenor of his acceptance.31cralawred
Acceptance is made upon presentment ofthe bill of exchange, or within 24 hoursafter such presentment.32 Presentment
for acceptance is the production orexhibition of the bill of exchange to thedrawee for the purpose of obtaining hisacceptance.33cralawred
Presentment for acceptance is necessaryonly in the instances where the lawrequires it.34 In the instances wherepresentment for acceptance is notnecessary, the holder of the bill ofexchange can proceed directly topresentment for payment.
Presentment for payment is thepresentation of the instrument to theperson primarily liable for the purpose ofdemanding and obtaining paymentthereof.35cralawred
Thus, whether it be presentment foracceptance or presentment for payment,the negotiable instrument has to beproduced and shown to the drawee foracceptance or to the acceptor forpayment.
Revenue Regulations No. 26 recognizesthat the acceptance or payment (of bills ofexchange or orders for the payment ofmoney that have been drawn abroad butpayable in the Philippines) that issubjected to DST under Section 181 of the1997 Tax Code is done after presentmentfor acceptance or presentment forpayment, respectively. In other words
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the acceptance or payment of the subjectbill of exchange or order for the paymentof money is done when there ispresentment either for acceptance or for
payment of the bill of exchange or orderfor the payment of money.
Applying the above concepts to the mattersubjected to DST in these cases, theelectronic messages received by HSBCfrom its investor-clients abroad instructingthe former to debit the latter’s local and foreign currency accounts and to pay thepurchase price of shares of stock orinvestment in securities do not properlyqualify as either presentment foracceptance or presentment for
payment. There being neitherpresentment for acceptance norpresentment for payment, then there wasno acceptance or payment that could havebeen subjected to DST to speak of.
• Indeed, there had been noacceptance of a bill of exchange ororder for the payment of money onthe part of HSBC. To reiterate,there was no bill of exchange ororder for the payment drawn
abroad and made payable here inthe Philippines. Thus, there was noacceptance as the electronicmessages did not constitute thewritten and signed manifestation ofHSBC to a drawer’s order to pay
money. As HSBC could not havebeen an acceptor, then it could nothave made any payment of a bill ofexchange or order for the paymentof money drawn abroad butpayable here in the Philippines. Inother words, HSBC could not have
been held liable for DST underSection 230 of the 1977 Tax Code,as amended, and Section 181 ofthe 1997 Tax Code as it is not “aperson making, signing, issuing,accepting, or, transferring” thetaxable instruments under the saidprovision. Thus, HSBC erroneouslypaid DST on the said electronicmessages for which it is entitled to
a tax refund.• Commissioner of Internal Revenue Vs.
Manila Electric Company G.R. No181459. June 9, 2014
• The sole issue presented before usis whether or not respondent
MERALCO is entitled to a taxrefund/credit relative to itspayment of final withholding taxeson interest payments made toNORD/LB from January 1999 toSeptember 2003.
•
First , as correctly decided by the CTA EnBanc , the certification issued by theEmbassy of the Federal Republic ofGermany, dated March 27, 2002, explicitlystates that NORD/LB is owned by theState of Lower Saxony, Saxony-Anhaltand Mecklenburg-Western Pomerania, andserves as a regional bank for the saidstates which offers support in the publicsector financing,
the interest income remitted byrespondent MERALCO to NORD/LBSingapore Branch is not subject toPhilippine income tax, and accordingly,not subject to ten percent (10%)
withholding tax. Contrary to petitioner’sview, therefore, the same constitutes acompelling basis for establishing the tax-exempt status of NORD/LB,Based on the foregoing, we are of theconsidered view that respondentMERALCO has shown clear and convincingevidence that NORD/LB is ownedcontrolled or enjoying refinancing from theFederal Republic of Germany, a foreigngovernment, pursuant to Section32(B)(7)(a) of the Tax Code, as amended,which providesthat:chanRoblesvirtualLawlibrary
Section 32. Gross Income. –
x x x x.
(B) Exclusions from Gross Income. - Thefollowing items shall not be included ingross income and shall be exempt fromtaxation under this
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title:ChanRoblesVirtualawlibrary x x x x
(7) Miscellaneous Items. -
(a) Income Derived by ForeignGovernment . - Income derived frominvestments in the Philippines inloans, stocks, bonds or other domesticsecurities, or from interest on deposits inbanks in the Philippines by (i) foreigngovernments, (ii) financing institutionsowned, controlled, or enjoyingrefinancing from foreign
governments, and (iii) international orregional financial institutions establishedby foreign governments.
x x x x.32
Notwithstanding the foregoing, however,we uphold the ruling of the CTA En Banc that the claim for tax refund in theaggregate amount of Thirty-Nine MillionThree Hundred Fifty-Nine Thousand TwoHundred Fifty-Four Pesos and Seventy-Nine Centavos (P39,359,254.79)pertaining to the period from January1999 to July 2002 must fail since the
same has already prescribed underSection 229 of the Tax Code,
As can be gleaned from the foregoing, theprescriptive period provided is mandatoryregardless of any supervening cause thatmay arise after payment. It should bepointed out further that while theprescriptive period of two (2) yearscommences to run from the time that therefund is ascertained, the proprietythereof is determined by law (in this case,from the date of payment of tax), and not
upon the discovery by the taxpayer of theerroneous or excessive payment of taxes.The issuance by the BIR of the Rulingdeclaring the tax-exempt status ofNORD/LB, if at all, is merely confirmatoryin nature. As aptly held by the CTA-FirstDivision, there is no basis that the subjectexemption was provided and ascertainedonly through BIR Ruling No. DA-342-2003, since said ruling is not the operative
act from which an entitlement of refund isdetermined.34 In other words, the BIR istasked only to confirm what is providedunder the Tax Code on the matter of tax
exemptions as well as the period withinwhich to file a claim for refund.
In this regard, petitioner is misguidedwhen it relied upon the six (6)-yearprescriptive period for initiating an actionon the ground of quasi-contract or solutioindebiti under Article 1145 of the NewCivil Code. There is solutio indebiti where(1) payment is made when there exists nobinding relation between the payor, whohas no duty to pay, and the person whoreceived the payment; and (2) the
payment is made through mistake, andnot through liberality or some othercause.35 Here, there is a binding relationbetween petitioner as the taxing authorityin this jurisdiction and respondentMERALCO which is bound under the law toact as a withholding agent of NORD/LBSingapore Branch, the taxpayer. Hencethe first element of solutio indebiti islacking. Moreover, such legal precept isinapplicable to the present case since theTax Code, a special law, explicitly provides
for a mandatory period for claiming arefund for taxes erroneously paid.
Tax refunds are based on the generapremise that taxes have either beenerroneously or excessively paid. Thoughthe Tax Code recognizes the right oftaxpayers to request the return of suchexcess/erroneous payments from thegovernment, they must do so within aprescribed period. Further, “a taxpayermust prove not only his entitlement to arefund, but also his compliance with the
procedural due process as non-observanceof the prescriptive periods within which tofile the administrative and the judiciaclaims would result in the denial of hisclaim.” 36cralawred
In the case at bar, respondent MERALCOhad ample opportunity to verify on thetax-exempt status of NORD/LB forpurposes of claiming tax refund. Even
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assuming that respondent MERALCO couldnot have emphatically known the status ofNORD/LB, its supposition of the same wasalready confirmed by the BIR Ruling which
was issued on October 7, 2003.Nevertheless, it only filed its claim for taxrefund on July 13, 2004, or ten (10)months from the issuance of the aforesaidRuling. We agree with the CTA-FirstDivision, therefore, that respondentMERALCO’s claim for refund in the amountof Two Hundred Twenty-Four MillionSeven Hundred Sixty Thousand NineHundred Twenty-Six Pesos and Sixty-FiveCentavos (P224,760,926.65) representingerroneously paid and remitted finalincome taxes for the period January 1999
to July 2002 should be denied on theground of prescription.
• Commissioner of Internal Revenue Vs.
Minadanao II Geothermal Partnership G.R. No. 189440. June 18, 2014Notwithstanding the timely filing of therespondent’s administrative claim, we are
constrained to order the dismissal of therespondent’s judicial claim for tax refundor tax credit for having been filed beyondthe mandatory and jurisdictional periodsprovided in Section 112(C) of the
NIRC. Section 112(C) expressly grantsthe taxpayer a 30-day period to appeal tothe CTA the decision or inaction of theCommissioner of Internal Revenue (CIR).
This law is clear, plain, andunequivocal. Following the well-settledverba legis doctrine, this law should beapplied exactly as worded since it is clear,plain, and unequivocal. As this law states,the taxpayer may, if he wishes, appeal thedecision of the CIR to the CTA within 30days from receipt of the CIR’s decision, or
if the CIR does not act on the taxpayer’sclaim within the 120-day period, thetaxpayer may appeal to the CTA within 30days from the expiration of the 120-dayperiod.
Thus, as long as the administrative claimis filed within the two-year prescriptiveperiod under Section 112(A) of the NIRC,the 30-day prescriptive period under
Section 112(C) can extend beyond twoyears after the close of the taxablequarter where the sales were made.
In the present case, the respondent filedits administrative claim on May 30,2003. The petitioner CIR therefore hadonly until September 27, 2003 to decidethe claim, and following the petitioner’sinaction, the respondent had until October27, 2003, the last day of the 30-dayperiod to file its judicial claim. Howeverthe respondent filed its judicial claim withthe CTA only on March 31, 2004 or 155days late. Clearly, the respondent’s
judicial claim has prescribed and the CTAdid not acquire jurisdiction over the
claim. Well to remember, the right toappeal to the CTA from a decision or “deemed a denial” decision of the CIR ismerely a statutory privilege, not aconstitutional right. The exercise of suchstatutory privilege requires strictcompliance with the conditions attachedby the statute for its exercise.22 Therespondent failed to comply with thestatutory conditions and must thus bearthe consequences. Further, well settled isthe rule that tax refunds or credits, just
like tax exemptions, are strictly construedagainst the taxpayer.23 The burden is onthe taxpayer to show that he has strictlycomplied with the conditions for the grantof the tax refund orcredit.cra1awlaw1ibrary
• Taganito Mining Corporation VsCommissioner of Internal Revenue
G.R. No. 197591. June 18, 2014• Reconciling the pronouncements in
the Aichi and San Roque cases, therule must therefore be that duringthe period December 10, 2003
(when BIR Ruling No. DA-489-03was issued) to October 6, 2010(when the Aichi case waspromulgated), taxpayers-claimantsneed not observe the 120-dayperiod before it could file a judiciaclaim for refund of excess inputVAT before the CTA. Before andafter the aforementioned period(i.e., December 10, 2003 to
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October 6, 2010), the observanceof the 120-day period is mandatoryand jurisdictional to the filing ofsuch claim.
• • In this case, records disclose that
Taganito filed its administrativeand judicial claims for refund onDecember 28, 2005 and March 31,2006, respectively – or during theperiod when BIR Ruling No. DA-489-03 was in place. As such, itneed not have waited for theexpiration of the 120-day periodbefore filing its judicial claim forrefund before the CTA. In view ofthe foregoing, the CTA En Banc ,
thus, erred in dismissing Taganito’sclaim on the ground ofprematurity.
•
• However, as adverted to earlier,Taganito did not appeal the CTADivision’s partial denial of its claim
for refund on the ground that itfailed to provide sufficient evidencethat its suppliers did not avail ofthe benefits of zero-rating. It iswell-settled that a party who does
not appeal from a judgment can nolonger seek modification orreversal of the same.26 For thisreason, Taganito may no longerquestion the propriety andcorrectness of the said partialdisallowance as it had lapsed intofinality and may no longer bemodified. In fine, Taganito is onlyentitled to the partial refund of itsunutilized input VAT in the amountof P537,645.43, as was originallygranted to it by the CTA Division
and hereinupheld.cra1awlaw1ibrary
• San Roque Power Corporation Vs.Commissioner of Internal Revenue
G.R. No. 205543. June 30, 2014At the crux of the controversy are theprescriptive periods for the filing ofadministrative and judicial claims forrefund or tax credit of creditable input
taxes under Section 112 of the NIRC of1997,
Because San Roque filed C.T.A. Case Nos
7744 and 7802 beyond the 30-daymandatory period under Section 112(C) ofthe NIRC of 1997, as amended, the CTAFirst Division did not acquire jurisdictionover said cases and correctly dismissedthe same.
Unable to contest the belated filing of its judicial claims, San Roque argues againstthe supposedly retroactive application of Aichi and the strict observance of the120+30 day periods.
As the CTA en banc held, Aichi was notapplied retroactively to San Roque in theinstant case. The 120+30 day periodshave already been prescribed underSection 112(C) of the NIRC of 1997, asamended, when San Roque filed itsadministrative and judicial claims forrefund or tax credit of its creditable inputtaxes for the four quarters of 2006. TheCourt highlights the pronouncement inSan Roque (2013) that strict compliancewith the 120+30 day periods is necessary
for the judicial claim to prosper, exceptfor the period from the issuance ofBIR Ruling No. DA-489-03 on
December 10, 2003 to October 6,2010 when Aichi was promulgated, whichagain reinstated the 120+30 day periodsas mandatory and jurisdictional.22
It is still necessary for the Court to explainherein how BIR Ruling No. DA-489-03 isan exception to the strict observance ofthe 120+30 day periods for judiciaclaims. BIR Ruling No. DA-489-03
affected only the 120-day period as theBIR held therein that “a taxpayer-claimantneed not wait for the lapse of the 120-dayperiod before it could seek judicial reliefwith the CTA by way of Petition forReview. Neither is it required that theCommissioner should first act on the claimof a particular taxpayer before the CTAmay acquire jurisdiction, particularly if theclaim is about to prescribe.”
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Consequently, BIR Ruling No. DA-489-03may only be invoked by taxpayers whorelied on the same and prematurelyfiled their judicial claims before the
expiration of the 120-day period for theCIR to act on their administrative claims,provided that the taxpayers filed such
judicial claims from December 10, 2003 toOctober 6, 2010. BIR Ruling No. DA-489-03 did not touch upon the 30-dayprescriptive period for filing an appeal withthe CTA and cannot be cited by taxpayers,such as San Roque, who belatedly filed their judicial claims more than 30 daysafter receipt of the adverse decision of theCIR on their administrative claims or thelapse of 120 days without the CIR acting
on their administrative claims.• Commissioner of Internal Revenue Vs.
United Salvage and Towage (Phils.),
Inc G.R. No. 197515. July 2, 2014• Under Section 828 of Republic Act
(R.A.) No. 1125, the CTA iscategorically described as a courtof record.29 As such, it shall havethe power to promulgate rules andregulations for the conduct of itsbusiness, and as may be needed,for the uniformity of decisions
within its jurisdiction.30
Moreover,as cases filed before it are litigated de novo, party-litigants shall proveevery minute aspect of theircases.31 Thus, no evidentiary valuecan be given the pieces of evidencesubmitted by the BIR, as the ruleson documentary evidence requirethat these documents must beformally offered before theCTA.32 Pertinent is Section 34,Rule 132 of the Revised Rules onEvidence which
reads:chanroblesvirtuallawlibrary •
• SEC. 34. Offer of evidence. – Thecourt shall consider no evidencewhich has not been formallyoffered. The purpose for which theevidence is offered must bespecified.
• • Although in a long line of cases, we
have relaxed the foregoing ruleand allowed evidence not formallyoffered to be admitted andconsidered by the trial court, we
exercised extreme caution inapplying the exceptions to the rule,The evidence may, therefore, be admittedprovided the following requirements arepresent: (1) the same must have beenduly identified by testimony dulyrecorded; and (2) the same must havebeen incorporated in the records of thecase. Being an exception, the same mayonly be applied when there is strictcompliance with the requisites mentionedabove; otherwise, the general rule inSection 34 of Rule 132 of the Rules of
Court should prevail.35
In the case at bar, petitioner categoricallyadmitted that it failed to formally offer thePANs as evidence. Worse, it advanced no
justifiable reason for such fataomission. Instead, it merely alleged thatthe existence and due execution of thePANs were duly tackled by petitioner’s
witnesses. We hold that such is notsufficient to seek exception from thegeneral rule requiring a formal offer of
evidence, since no evidence of positiveidentification of such PANs by petitioner’switnesses was presented. Hence, weagree with the CTA En Banc’s observationthat the 1994 and 1998 PANs for EWTdeficiencies were not duly identified bytestimony and were not incorporated inthe records of the case, as required by
jurisprudence.
While we concur with petitioner that theCTA is not governed strictly by technicarules of evidence, as rules of procedure
are not ends in themselves but areprimarily intended as tools in theadministration of justice,36 thepresentation of PANs as evidence of thetaxpayer’s liability is not mere proceduratechnicality. It is a means by which ataxpayer is informed of his liability fordeficiency taxes. It serves as basis for thetaxpayer to answer the notices, presenthis case and adduce supporting
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evidence.37 More so, the same is the onlymeans by which the CTA may ascertainand verify the truth of respondent'sclaims. We are, therefore, constrained to
apply our ruling in Heirs of Pedro Pasag v.Spouses Parocha,38viz .:
x x x. A formal offer is necessarybecause judges are mandated to rest
their findings of facts and their
judgment only and strictly upon theevidence offered by the parties at the
trial . Its function is to enable the trial judge to know the purpose or purposes forwhich the proponent is presenting theevidence. On the other hand, this allowsopposing parties to examine the
evidence and object to itsadmissibility . Moreover, it facilitatesreview as the appellate court will not berequired to review documents not previously scrutinized by the trial court. Indeed, Section 228 of the Tax Codeprovides that the taxpayer shall beinformed in writing of the law and thefacts on which the assessment is made.Otherwise, the assessment is void.
It is clear from the foregoing that a
taxpayer must be informed in writing ofthe legal and factual bases of the taxassessment made against him. The use ofthe word “shall” in these legal provisionsindicates the mandatory nature of therequirements laid down therein.
In the present case, a mere perusal of theFAN for the deficiency EWT for taxableyear 1994will show that other than atabulation of the alleged deficiency taxesdue, no further detail regarding theassessment was provided by petitioner.
Only the resulting interest, surcharge andpenalty were anchored with legal basis.45 Petitioner should have at least attached adetailed notice of discrepancy or stated anexplanation why the amount ofP48,461.76 is collectible againstrespondent46 and how the same wasarrived at. Any short-cuts to theprescribed content of the assessment orthe process thereof should not be
countenanced.
Applying the aforequoted rulings to thecase at bar, it is clear that the assailed
deficiency tax assessment for the EWT in1994disregarded the provisions of Section228 of the Tax Code, as amended, as welas Section 3.1.4 of Revenue RegulationsNo. 12-99 by not providing the legal andfactual bases of the assessment. Hencethe formal letter of demand and the noticeof assessment issued relative thereto arevoid.
In any case, we find no basis inpetitioner’s claim that Revenue RegulationNo. 12-99 is not applicable at the time the
PAN and FAN for the deficiency EWT fortaxable year 1994 were issuedConsidering that such regulation merelyimplements the law, and does not createor take away vested rights, the same maybe applied retroactively,Indubitably, the disputed assessments fortaxable year 1994 should have alreadycomplied with the requirements laid downunder Revenue Regulation No. 12-99Having failed so, the same produces nolegal effect.
The statute of limitations on assessmentand collection of national internal revenuetaxes was shortened from five (5) years tothree (3) years by virtue of BatasPambansa Blg. 700.55 Thus, petitioner hasthree (3) years from the date of actuafiling of the tax return to assess a nationainternal revenue tax or to commencecourt proceedings for the collectionthereof without an assessment.56
However, when it validly issues anassessment within the three (3)-yearperiod, it has another three (3) years
within which to collect the tax due bydistraint, levy, or court proceeding.57 Theassessment of the tax is deemed madeand the three (3)-year period forcollection of the assessed tax begins torun on the date the assessment notice hadbeen released, mailed or sent to thetaxpayer.58
• Commissioner of Customs Vs. OilinkInternational Corporation G.R. No
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