A JUDGMENT OF ACQUITTAL MAY BE ASSAILED ONLY BY A PETITION FOR CERTIORARI

Petitioner People of the Philippines filed a Petition for Certiorari assailing the Respondent Regional Trial Court (RTC) Branch 220-Quezon City Decision acquitting the Private Respondent Oscar Garcia for failure of the Prosecution to prove his guilt beyond reasonable doubt for the crime charged of deliberate attempt to evade or defeat payment of tax by willfully failing to declare his total income and deliberately failing to file his Income Tax Returns (ITR). The Petitioner argues that a Petition for Certiorari is the proper remedy because the Respondent Trial Court committed grave abuse of discretion when it completely disregarded the evidence presented by the Petitioner and the existence of the elements of the offense charged against the Private Respondent. In ruling, the Court finds that the Court of Tax Appeals (CTA) has jurisdiction over the Petition. A judgment of acquittal may be assailed only by a Petition for Certiorari. In a criminal case, a judgment of acquittal by the lower court is final and unappealable and an appeal would violate the Accused’s right against double jeopardy. However, a judgment of acquittal may be assailed when there has been deprivation of due process or when there has been grave abuse of discretion under exceptional circumstances through a Petition for Certiorari under Rule 65 of the Rules of Court. In this case, the Court finds no violation of the Petitioner’s right to due process, and there was no grave abuse of discretion by the Respondent. Thus, the Petition for Certiorari is DENIED. [PEOPLE OF THE PHILIPPINES VS. REGIONAL TRIAL COURT BRANCH 220 QUEZON CITY AND OSCAR GARCIA Y ITCHON, CTA SCA CASE NO. 0021, MARCH 17, 2025]

[THE EXECUTION OF VALID WAIVERS EFFECTIVELY EXTENDS THE PERIOD TO ASSESS DEFICIENCY TAXES] [DUE PROCESS INCLUDES PROVIDING THE TAXPAYER WITH FACTUAL & LEGAL BASES FOR THE ASSESSED DEFICIENCY TAXES, OTHERWISE, THE ASSESSMENT IS VOID]

Petitioner DMCI Masbate Power Corporation filed a Petition for Review assailing the validity of the Respondent Commissioner of Internal Revenue (CIR’s) Formal Letter of Demand (FLD) and Final Decision on Disputed Assessment (FDDA). The Petitioner seeks to invalidate the assessments, alleging that the FLD and FDDA set out an indefinite amount of deficiency tax due, that the Waivers executed by the Petitioner are not valid, and therefore, the government’s right to assess has already prescribed, and that the assessments failed to state factual or legal bases. On the other hand, the Respondent counters that the FLD and the FDDA contained a definite due date for the payment of the deficiency tax liabilities, that the period to assess was extended due to the validly executed Waivers, and that the assessments have legal and factual bases. In ruling, the Court held that the Waivers executed by the Petitioners are valid. It states that the exception to the 3-year period to assess provided under the Tax Code is when the parties agree in writing to allow the tax authorities to extend their audit investigation and issue an assessment beyond the deadline. In the case at bar, the Petitioners were questioning the validity of the Waivers based on technicalities, but the Waivers were worded pro forma and there was no objection or revision when the documents were drafted and signed. Therefore, the execution of valid Waivers effectively extends the assessment period. However, despite valid Waivers, the Court held that the Petitioners were not accorded due process upon service of the FLD/FAN. First, the FLD/FAN was served upon the Petitioners past the deadline for payment indicated therein. This irregularity in the service of FLD/FAN deprives the Petitioner of a reasonable period to pay the tax liability. Moreover, the Respondents did not give due consideration to the Petitioner’s arguments as provided in their reply to the Preliminary Assessment Notice (PAN). The Respondent is duty-bound to consider the defenses provided by the Petitioner in its reply to PAN and to provide clear reasons for its decision, citing the applicable factual and legal bases for its conclusions. Failure to do so would render the assessment VOID. Thus, the Petition is GRANTED. [DMCI MASBATE POWER CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10424, MARCH 13, 2025]

[RENEWABLE ENERGY DEVELOPERS ARE ENTITLED TO ZERO-RATED VAT ON ITS PURCHASES OF LOCAL SUPPLY OF GOODS, PROPERTIES & SERVICES NEEDED FOR THE DEVELOPMENT, CONSTRUCTION & INSTALLATION OF PLANT FACILITIES] [VAT ZERO-RATING APPLIES TO THE WHOLE PROCESS OF EXPLORING & DEVELOPING RENEWABLE ENERGY SOURCES UP TO ITS CONVERSION INTO POWER, INCLUDING BUT NOT LIMITED TO THE SERVICES PERFORMED BY SUBCONTRACTORS AND/OR CONTRACTORS] [FOR PURPOSES OF ENTITLEMENT TO THE INCENTIVES & PRIVILEGES, RE DEVELOPERS SHALL REGISTER WITH THE DOE, THROUGH THE RENEWABLE ENERGY MANAGEMENT BUREAU (REMB) & BOI]

Petitioner Air Drilling Associates PTE LTD filed a Petition for Review challenging the Respondent Commissioner of Internal Revenue's (CIR) total denial of its administrative claim for refund or issuance of Tax Credit Certificate (TCC) in the amount of Php 13,071,974.37, representing excess and unutilized input Value-Added Tax (VAT) on purchases of goods and services attributable to zero-rated sales for the Calendar Year (CY) 2020. The Petitioner argued that its excess and unutilized input VAT being claimed for refund are all attributable to its zero-rated sales of services to Energy Development Corporation (EDC) and Philippine Geothermal Production Company Inc. (PGPC), which are RE Developers and entitled to zero-rated. Contrarily, the Respondent countered that the Petitioner is not entitled to the subject refund claim as it failed to submit complete documents, specifically for failure to attach its DOE Certificate of Accreditation. In addition, the invoices that the ICPA examined must not be given probative value as these are mere photocopies, in violation of Section 2, Rule 13 of the RRCTA. In ruling, the Supreme Court, citing the case of CIR vs. Deutsche Knowledge Services Pte. Ltd., laid down the requisites for the entitlement to tax refund or credit of excess input VAT attributable to zero-rated sales, to wit: (1) the taxpayer must be VAT-registered; (2) it must be engaged in sales which are zero-rated or effectively zero-rated; (3) the claim must be filed within two (2) years after the close of the taxable quarter when such sales were made; and (4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax. Moreover, Section 15(g) of Republic Act No. 9513, or the Renewable Energy Act of 2008, and Section 13(G)(b)(c), Rule 5 of Department Circular No. DC2009-05-0008 grants RE Developers zero-rated VAT on its purchases of local supply of goods, properties, and services needed for the development, construction, and installation of plant facilities. In the case at bar, to prove its entitlement, the Petitioner presented the DOE and BOI Registration Certificates of its customers-EDC and PGPC. Based on the information provided, it was determined that the Petitioner failed to establish that some of EDC's projects were registered with the BOI. Nevertheless, the Petitioner, being neither an RE entity nor purporting to be one but acting solely as a subcontractor of RE entities, need not furnish the qualifications required of an RE entity. Instead, to avail itself of the zero-rating on purchases, it suffices for the Petitioner, as a supplier of services to RE entities, to show that the RE entity to which it rendered services possesses the required DOE and BOI certifications which, in this case, were filed and proven during trial. Based on the foregoing, the Court found that the Petitioner complied with the requisites as required by law. The Petition was PARTIALLY GRANTED, and the Respondent was ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE on the Petitioner’s unutilized excess input VAT for the 2^nd to 4^TH quarters of CY 2020. [AIR DRILLING ASSOCIATES PTE LTD VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10957, MARCH 7, 2025]

PRELIMINARY INVESTIGATION DOES NOT TOLL THE PRESCRIPTION PERIOD FOR TAX OFFENSES

Petitioner People of the Philippines charged Respondents PGU General Merchandise, Inc., Fook Seong Yong, and Rochelle Francisco with willful failure to pay deficiency Income Tax under Section 255 of the Tax Code. The case arose from the Commissioner of Internal Revenue (CIR)’s Final Assessment Notice (FAN) dated August 7, 2015, which became final and demandable by September 2015. Information was filed in Court on August 10, 2023, nearly eight (8) years later. The CTA 1^st Division dismissed the case due to prescription, citing the five-year prescriptive period under Section 281 of the Tax Code. Petitioner’s Motion for Reconsideration was denied, prompting a Petition for Review before the CTA En Banc, arguing that the complaint for preliminary investigation filed on September 27, 2018, interrupted the prescriptive period. Petitioner contended that a preliminary investigation tolls prescription, citing People vs. Mateo A. Lee, Jr., where the Supreme Court ruled that such filings suspend the prescriptive period. Since the Complaint was filed within five (5) years of the offense, the Petitioner maintained that the August 2023 Information was not time-barred. In response, the Respondents maintained that the criminal case had already prescribed on September 7, 2020, since the alleged offense occurred in September 2015, and the Tax Code grants only five (5) years for prosecution. They argued that a preliminary investigation does not interrupt the running of the prescriptive period under Section 281 of the Tax Code. Citing established jurisprudence, only the filing of Information in court interrupts the prescription of a criminal action. In ruling, Section 281 of the Tax Code explicitly provides that prescription begins to run from the commission of the offense and is interrupted only by proceedings instituted against the guilty persons- which the court interpreted as judicial proceedings (i.e., filing of Information in court), not a preliminary investigation. In Lim v. Court of Appeals, the filing of a complaint for preliminary investigation does not interrupt prescription in tax-related offenses. Allowing preliminary investigation to toll prescription would lead to an illogical situation where the act that initiates the running of prescription simultaneously suspends it, rendering the five-year limit meaningless. Additionally, the Revised Rules of the Court of Tax Appeals explicitly state that the filing of Information in court interrupts prescription, further supporting the Respondents’ position. Since the Petitioner failed to file the Information within the five-year prescriptive period, the offense of willful failure to pay tax had already prescribed on September 7, 2020. Consequently, the CTA En Banc DENIED the Petition for lack of merit. [PEOPLE OF THE PHILIPPINES VS. PGU GENERAL MERCHANDISE, INC., CTA EN BANC CRIMINAL CASE NO. 145, MARCH 5, 2025]