IF THE TAXPAYER DENIES RECEIPT OF AN ASSESSMENT FROM THE BIR, THE LATTER HAS TO PROVE THAT SUCH ASSESSMENT WAS INDEED RECEIVED BY THE FORMER

Petitioner 10 K South Concrete Mix Specialist Inc. filed a Petition for Review seeking for the cancellation of the assessment issued by the Respondent Commissioner of Internal Revenue (CIR). Several issues were raised but the Court instead resolved the issue of whether the Petitioner has received the assessment notice. Petitioner stresses that it never received, either personally or through registered mail, the Formal Letter of Demand/Formal Assessment Notice (FLD/FAN). On the other hand, Respondent contends that the FLD/FAN was served to the Petitioner through registered mail. As held by the Supreme Court in CIR vs. T Shuttle Services, Inc., a mailed letter is deemed received by the addressee in the ordinary course of mail. However, this is merely a disputable presumption, subject to controversion. If the taxpayer denies receipt of an assessment from the BIR, the latter must prove that such assessment was indeed received by the former. In the present case, while Respondent was able to present Postmaster Certification relative to the alleged mailing of the FLD to Petitioner, Respondent failed to prove that the document which was mailed to Petitioner was the FLD/FAN. Likewise, there was no evidence to attest to the fact that it was Petitioner’s duly authorized representative who received such document supposedly containing the FLD. Consequently, for having failed to comply with the due process requirements set forth in Section 288 of the 1997 Tax Code, and Revenue Regulations No. 12-99, as amended, the assessment should be CANCELLED. [10K SOUTH CONCRETE MIX SPECIAL INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9730, NOVEMBER 18, 2021]

MOA IS NOT SUFFICIENT TO AUTHORIZE RO TO CONDUCT TAX INVESTIGATION

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse the earlier decision of the Court in Division cancelling the assessment against the Respondent Loyola Plans Consolidated, Inc. Petitioner argues that the Revenue Officers (ROs) assigned to continue the audit of Respondent's books were duly authorized. The factual antecedents of the case reveal that the tax examination conducted by Petitioner was preceded by the issuance of Letter of Authority (LOA) authorizing ROs Gomez, Yumang, and Group Supervisor San Diego of Large Taxpayer (LT) District Office-Makati to examine Respondent's books of accounts. However, prior to the issuance of the assessment, a Memorandum of Assignment (MOA) signed by OIC-Chief of LT Division was issued to RO Urbano and GS Bennett for the continuation of the audit and to replace the previously assigned RO Gomez. In ruling, the Court referred to Section 6 of the 1997 Tax Code which clearly states that, unless the CIR or his duly authorized representative so authorizes (through an LOA), an examination of the taxpayer cannot ordinarily be undertaken. The Court further cited numerous Court cases which provide that the issuance of an MOA for the continuation of the tax examination by another set of ROs will not cure the lack of authority by the latter ROs in the absence of an LOA. Thus, the subsequent notices resulting from such audit as result of an unauthorized tax examination were NULL AND VOID. [COMMISSIONER OF INTERNAL REVENUE VS. LOYOLA PLANS CONSOLIDATED, INC., CTA EN BANC CASE NO. 2324, NOVEMBER 11, 2021]

EXCISE TAXES PAID DURING 5-YEAR RECOVERY PERIOD NOT RECOVERED WOULD MERELY FORM PART OF THE GOVERNMENT'S SHARE

Petitioner OceanaGold (Philippines), Inc., a mining service contractor of the Republic of the Philippines, filed a consolidated Petition for Review seeking for the refund or issuance of a Tax Credit Certificate (TCC) for excise taxes covering the 1^st and 2^nd quarters of taxable year 2017. Petitioner claimed that the excise taxes were paid during the five-year recovery period under the Financial or Technical Assistance Agreement (FTAA). Further, it assailed the validity of BIR Ruling No. 10-2007 which confirmed its exemption from payment of such; and that Revenue Memorandum Circular (RMC) No. 17-2013 which reversed this exemption is invalid for allegedly being issued without notice and hearing. On the other hand, Respondent Commissioner of Internal Revenue (CIR) raised that the Court is devoid of authority to rule on the attack on validity of RMC No. 17-2013; and that it should have been first elevated to the Secretary of Finance. In ruling, the Court held that it is an appeal from Respondent’s inaction on Petitioner’s administrative claim for refund or TCC for erroneously or illegally collected excise taxes under Section 229 of the 1997 Tax Code that were filed within the two-year period from the date of payment; thus, it has jurisdiction over the present Petition. Based on the FTAA, Petitioner had three (3) years from the approval of its Partial Declaration of Mining Feasibility (PDMF) on October 11, 2005 or until October 11, 2008 to develop and construct mining production facilities and another three (3) years thereafter for the commencement of commercial production or up to the 4^th quarter of 2011. Following this timeline, recovery period would have ended in the 4^th quarter of 2016. The subject payments for excise taxes were made in 2017, and Petitioner failed to submit to the Court supporting documents such as notice/s to the government of the delay. Additionally, even if the Petitioner presented evidence, excise taxes made within the recovery period not recovered would merely form part of the government’s share. Thus, the Court found no erroneous or illegal collection of excise taxes refundable; therefore, Petition was DENIED for lack of merit. [OCEANAGOLD (PHILIPPINES), INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NOS. 10021 & 10061, NOVEMBER 10, 2021]

[CREDITABLE INPUT TAXES WHICH CANNOT BE DIRECTLY OR ENTIRELY ATTRIBUTABLE TO ANY SALE TRANSACTION SHALL BE ALLOCATED PROPORTIONALLY ON THE BASIS OF THE VOLUME OF SALES] [THERE IS NOTHING IN SECTION 110(A) OF THE 1997 TAX CODE, AS AMENDED, WHICH STATES THAT ONLY THOSE INPUT TAXES FROM PURCHASES OF GOODS THAT FORM PART OF THE FINISHED PRODUCT OF THE TAXPAYER OR MUST BE DIRECTLY USED IN THE CHAIN OF THE PRODUCTION SHALL BE CONSIDERED AS CREDITABLE]

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review assailing the Decision of the Court of Tax Appeals (CTA) 3^rd Division granting partial refund or issuance of Tax Credit Certificate (TCC) representing unutilized input Value Added Tax in favor of Respondent Lepanto Consolidated Mining Company. Petitioner contends that Respondent was not able to prove its entitlement since no attributability was established between the input VAT generated from its purchases vis-a-vis its zero-rated sales. Petitioner claims that input taxes to be refundable, the same must come from purchases of goods that form part of the finished product or the purchases must be directly used in the chain of the production. In ruling, the Court held that Section 112 of the 1997 Tax Code does not absolutely require that input taxes subject of refund be directly attributable to zero-rated sales. Creditable input taxes which cannot be directly or entirely attributable to any sale transaction shall be allocated proportionally based on the volume of sales. Further, there is nothing in Section 110(A) of the 1997 Tax Code which states that only those input taxes from purchases of goods that form part of the finished product of the taxpayer or must be directly used in the chain of the production shall be considered as creditable. Evidently, contrary to the Petitioner’s allegation, attribution of the input VAT to the zero-rated sales need not always be direct, and there is no legal basis to limit the source of creditable input tax. Thus, the Petition was DENIED for lack of merit and the assailed Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. LEPANTO CONSOLIDATED MINING COMPANY, CTA EN BANC CASE NO. 2389, NOVEMBER 9, 2021]