[WHERE AN ASSESSMENT IS TO BE PROTESTED OR DISPUTED, THE TAXPAYER MAY PROCEED WITH OR WITHOUT PAYMENT, OR WITH PAYMENT, OF THE ASSESSED TAX] [THE POWER OF AN LGU TO IMPOSE OR LEVY TAXES CANNOT GO BEYOND THE LIMITATIONS SET FORTH BY THE PROVISIONS OF THE LGC OF 1991]

Petitioner City of Makati filed a Petition for Review seeking reconsideration on the earlier decision of the Court of Tax Appeals (CTA) granting Respondent DMCI Holdings, Inc.’s Petition to cancel the assessed deficiency local business tax on management fees for 2010, and the investment income and revenues from the defined benefit plan of employees for 2010 to 2012. Petitioner argued that the Respondent failed to adhere to the requirements of the law on payment under protest, thus, the assessment should be upheld. In ruling, the Court revisited the provisions of Section 7B.14 (c) of the Revised Makati Revenue Code (RMRC) and noted that the taxpayer must pay first the assessed tax for the protest to be entertained. Accordingly, such provision contradicts Section 195 of the Local Government Code (LGC) which only provides that the taxpayer can file the protest within sixty (60) days from the receipt of the assessment. Ordinances should not contravene the existing statutes enacted by the Congress. Local Government Unit (LGU)’s power to tax is not inherent, therefore, subject to statutory guidelines and limitations. On the merits of the assessment, Respondent being a Holding Company and not a non-bank or financial intermediary, should not be assessed citing Section 3A.02(h) which provides that banks and other financial institutions are subject to a rate of twenty percent (20%) of one percent (1%) of the gross receipts. Based on the foregoing, the Court stressed that the Respondent has the right to immediately protest the assessment and disregard the payment of the assessed tax. Thus, the Petition was DENIED. [CITY OF MAKATI VS. DMCI HOLDINGS, INC., CTA AC N0. 234, FEBRUARY 10, 2022]

MOA IS VALID AS LONG AS IT IS ISSUED AND SIGNED BY THE PROPER OFFICIAL

Petitioner Commission on Internal Revenue (CIR) filed a Petition for Review seeking to reverse the earlier decision and resolution of the Court of Tax Appeals (CTA) division cancelling the assessment issued to the Respondent First Philippine Power System, Inc. Petitioner argued that the Court erred in ruling on the invalidity of the assessment due to lack of authority on the part of the Revenue Officer (RO), which was not part of the Respondent’s counter. Petitioner asserted that it is a clear violation of his right to procedural and substantive due process as he was neither heard nor given the opportunity to be heard on this issue. In ruling, the Court cited several Supreme Court cases to discuss the authority and power of the CTA over issues which are necessary to achieve an orderly disposition of the case. Likewise, a Letter of Authority (LOA) is necessary for it gives the RO the power or authority in assessing the books and accounts of the taxpayer. More so, Memorandum of Assignment (MOA) is acceptable if and only if it is signed by an authorized person who may be the Regional Director or the Assistant Commissioner/Head Revenue Executive Assistant in the Large Taxpayers Service. In the case at bar, the MOA was signed by an unauthorized person leading to the DENIAL of the Petition. Consequently, the Petitioner was ENJOINED and PROHIBITED from collecting against Respondent the amounts representing the assessment. [COMMISSIONER OF INTERNAL REVENUE VS. FIRST PHILIPPINE POWER SYSTEMS, INC., CTA EB CASE NO. 2243, FEBRUARY 3, 2022]

FAILURE TO COMPLY WITH MANDATORY INVOICING REQUIREMENTS RESULTS IN DISALLOWANCES OF CLAIM FOR AN INPUT VAT REFUND

Petitioner Calamba Premier Realty Corporation filed a Petition for Review seeking to reverse the earlier Decision and Resolution of the Court of Tax Appeals (CTA) 1^st Division denying its claim for input VAT refund arising from its zero-rated sales for the taxable year 2014. Petitioner argued that it should be entitled to input VAT refund since it has complied with the requirements. Scrutiny of the pertinent documents and previous findings related to the Petitioner’s zero-rated sales, to which it attributes the refundable input VAT, resulted in the disallowances of the same due to various reasons. As previously ruled by the CTA, Petitioner failed to substantiate that its loan transaction to SEMPHIL is subject to a zero-rated due to its failure to comply with the mandatory invoicing requirements for the lease of properties pursuant to Sections 113(A)(2) and 237 of the 1997 Tax Code. Since the Petitioner only provided its quarterly VAT returns as evidence and has not found any convincing proof to document the zero-rated receipts, the claim should be disallowed. Exempting provision shall be construed in favor of the taxing authority, thus, refund of taxes is strictly against the taxpayer. Consequently, the Petition was DENIED. [CALAMBA PREMIER REALTY CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EB CASE NO. 2312, FEBRUARY 3, 2022]

AN LOA THAT REMAINS UNSERVED 30 DAYS AFTER ITS ISSUANCE DATE SHALL BE INVALID, UNLESS REVALIDATED

Petitioner Vanguard Logistics Services Phils., Inc. filed a Petition for Review seeking the nullification of the Formal Letter of Demand (FLD) issued by Respondent Commissioner of Internal Revenue (CIR) in connection with the former’s alleged deficiency internal revenue tax assessment for the taxable year 2014. Petitioner posited that the Letter of Authority (LOA) received by them is not timely served, and there was likewise no basis for Revenue District Office (RDO) No. 33 (Ermita-Intramuros-Malate-Port Area) and Revenue Region (RR) No. 6 to further investigate and issue the Preliminary Assessment Notice (PAN) and FLD since they already lost the jurisdiction over the case by virtue of its transfer of registration to RDO No. 51 (Pasay City). Citing a previous Supreme Court case, the Court ruled that pursuant to the provisions of Revenue Audit Memorandum Order (RAMO) No. 1-00, a previously issued Letter of Authority (LOA) that remains unserved for more than thirty (30) days after its issuance date shall be invalid, unless revalidated. In the instant case, Petitioner received the LOA sixty (60) days after its issuance date sans any revalidation. Consequently, the subject LOA became void and without effect; thus, any investigation conducted pursuant thereto is unauthorized and a nullity. In view of the foregoing, the Petition was DENIED, and the FLD and assessment notices were CANCELLED and SET ASIDE. [VANGUARD LOGISTICS SERVICES PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10155, JANUARY 27, 2022]

VALID EXCESS INPUT TAXES MUST BE MORE THAN ENOUGH TO COVER OUTPUT VAT LIABILITY FOR INPUT VAT REFUND TO PROSPER

Petitioner Maersk Global Services Centres (Philippines), Ltd. filed a Petition for Review seeking refund of the alleged unutilized input value-added tax (VAT) on its zero-rated sales for calendar year 2017 in the amount of Php 37,943,875.08. Petitioner claimed that it has complied with the necessary requirements to qualify for the input VAT refund. On the other hand, Respondent, Commissioner of Internal Revenue (CIR) claimed otherwise asserting that the Petitioner failed to prove that the recipient of service is doing business outside the Philippines. In ruling, a perusal of the documents showed that the input taxes subject of the claim was carried over to the succeeding 1st quarter taxable year 2018 in the amount Php 37,943,875.08. At the same time, the said amount was also deducted as "VAT Refund/TCC Claimed” on the quarterly VAT return for the 1st quarter of 2018, which would prevent the carry-over or application of the claimed input VAT in the succeeding taxable periods. Nonetheless, Petitioner has proven that its valid excess input taxes amounting to Php 35,236,379.03 is more than enough to cover its output VAT liability of Php 114,696.43. Hence, the excess input taxes in the amount of Php 35,236,379.03 remained unutilized.  Thus, the Petition was PARTIALLY GRANTED resulting in reduced amount of input VAT qualified for refund or issuance of tax credit certificate in the amount of Php 35,236,379.03 [MAERSK GLOBAL SERVICES CENTRES (PHILIPPINES) LTD., VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10022, JANUARY 26, 2022]

FAILURE TO SUBMIT SUPPORTING DOCUMENTS AT THE ADMINISTRATIVE LEVEL IS NOT FATAL IN THE CLAIM OF REFUND AT CTA LEVEL IF EVIDENCE IS ADMITTED

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse the earlier Decision and Resolution of the Court of Tax Appeals (CTA) 2^nd Division partially granting the refund in favor of the Respondent Pilipinas Kyohritsu, Inc. relative to its unutilized input VAT attributable to zero-rated sales for the 3rd quarter of 2015. The sole issue to be resolved is whether the Respondent is entitled to the partial grant of its claim for a refund. Petitioner claimed that Respondent failed to prove its entitlement due to lack of proper documentation submitted at the administrative level. After going over the records of the case, the Court held that non-submission of complete supporting documents at the administrative level is not fatal to the claimant’s judicial claim, nor is it the condition precedent to a judicial claim. A taxpayer may present additional documents before the CTA to substantiate its claim for a refund, albeit the same were not presented at the administrative level. Neither in Section 112 of the 1997 Tax Code nor Revenue Memorandum Order No. 53-98 provide that failure to submit all documents enumerated therein would automatically result in the dismissal of the taxpayer's claim for refund. Contrary to the claim of the Petitioner, the CTA may consider all pieces of exhibits formally offered before it during the trial, which were admitted in evidence to determine the entitlement of Respondent to a claim for refund. Hence, Respondent’s failure to submit complete supporting documents at the administrative level does not deprive the CTA of taking cognizance of its judicial claim nor result in the automatic denial of the claim for refund. Based on the foregoing, the Petition was DENIED, and the earlier Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. PILIPINAS KYOHRITSU, INC., CTA EB CASE NO. 2334, JANUARY 20, 2022]