BOTH THE ADMINISTRATIVE & JUDICIAL CLAIMS FOR REFUND SHOULD BE FILED WITHIN THE 2-YEAR PRESCRIPTIVE PERIOD; THE LATTER CAN BE FILED EVEN WITHOUT WAITING FOR THE RESOLUTION OF THE FORMER

Petitioner Aecom Philippines Consultants Corporation filed a Petition for Review seeking refund of its excess and unutilized creditable withholding taxes (CWT) covering the fiscal year ended September 30, 2016. In the resolution of this case, the discussion centered on the exercise of the administrative remedies accorded to Petitioner. Pursuant to Section 204 (C) of the 1997 Tax Code, no credit or refund of taxes or penalties shall be allowed unless the taxpayer files with the Commissioner of Internal Revenue (CIR) a claim for credit or refund within two (2) years after the payment of the tax. Meanwhile, Section 229 of the Tax Code provides that in any case, no suit or proceeding shall be filed after the expiration of two (2) years from the payment of the tax. Both the administrative and judicial claims for refund should be filed within the 2-year prescriptive period, and the claimant is allowed to file the latter even without waiting for the resolution of the former to prevent the forfeiture of its claim through prescription. In relation to this, the Supreme Court ruled in a prevailing case that the 2-year period for claiming a refund shall be reckoned from the date of filing of final adjusted return or the annual income tax return (ITR) since it is only the time when the taxpayer would know whether a tax is still due, or a refund can be claimed based on the adjusted and audited figures. Examination of the chronology of events showed that Petitioner filed its administrative and judicial claims on January 15 and January 16, 2019, respectively, or just one (1) day apart. The Court deemed the Petitioner’s actions as disregard of the rule of requiring the exhaustion of administrative remedies for it did not afford the Respondent CIR ample time to decide the administrative claim for refund considering that such claim had voluminous supporting documents. Furthermore, in the recent case of Chin vs. Maersk-Filipinas Crewing, Inc., et al., the Supreme Court cautioned that every opportunity must be given to the agency to resolve the matter and to exhaust all opportunities for a resolution under the given remedy before elevating the case to the courts of justice. Petitioner clearly failed to exhaust the administrative remedies available to it, hence, the Petition was DENIED for lack of merit. [AECOM PHILIPPINES CONSULTANTS CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10008, DECEMBER 7, 2021]

FAILURE TO INDICATE DEFINITE DATE TO SETTLE IN THE ASSESSMENT NOTICE RESULTS IN AN INVALID ASSESSMENT

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse the Decision and Resolution rendered by the Court of Tax Appeals (CTA) First Division cancelling the assessment issued to Respondent Universal Robina Corporation representing alleged deficiency improperly accumulated earnings tax (IAET). Petitioner claimed that its basic right to fair play and due process was violated when the Court in Division ruled on the issue on the lack of definite amount of tax liabilities and failure to state the due date of payment of such, which was not raised as an issue in the pleadings or during trial. In reply, the Court En Banc clarified that its authority is not limited to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case as provided under Section 1, Rule 14 of the Revised Rules of the Court of Tax Appeals (RRCTA). Accordingly, the Court in Division was correct in delving into such matter as it was deemed necessary with respect to the determination of the validity of the assessment issued to Respondent. Moreover, records showed that the issue on the validity of the Final Letter of Demand (FLD) and the assessment notices were taken up during trial as the parties agreed to resolve whether Respondent is liable for deficiency IAET. Hence, the Petitioner cannot claim that its right to due process has been violated. Perusal of the FLD further showed that it did not state a due date for the payment of taxes. In fact, the assessment notice indicated “remains unaccomplished” where a due date should have been stated. Thus, the assessment is invalid and as such, it shall bear no valid fruit. Consequently, the Petition was DENIED, and the assailed Decision and Resolution were AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. UNIVERSAL ROBINA CORPORATION, CTA EN BANC CASE NO. 2280, DECEMBER 7, 2021] 

WHEN THE 120-DAY PERIOD LAPSES & THERE IS INACTION, THE INACTION IS THE DECISON ITSELF

Petitioner Riofil Corporation filed a Petition for Review seeking refund of its unutilized and unapplied input value-added tax (VAT) for the taxable year 2011. Petitioner contended that it timely filed its administrative and judicial claims for refund. Upon filing of an application for refund, the taxpayer-claimant must submit the required documents within 30 days. For additional documents, the taxpayer-claimant is also given 30 days from the request. From thereon, Commissioner of Internal Revenue (CIR) is given 120 days to decide on the claim. To recall the chronology of events, the 1^st Letter of Authority (LOA) was issued on February 24, 2012; while the 2^nd was received on September 6, 2012. Given the timeline, the Petitioner had until March 25, 2012 and October 6, 2012, respectively, to submit the required documents. It submitted only on April 11, 2012, and additional documents for both the 1^st and 2^nd administrative claims only on June 26, 2013 and October 18, 2013 – which were both past the deadline. Therefrom, Respondent CIR had until July 23, 2012 and February 3, 2013, respectively, to decide on the case. After which, Petitioner had until August 12, 2012 and March 5, 2013, respectively, to file its judicial claim. However, it was belatedly filed on April 6, 2016; hence, the denial of its administrative claim has become final. In ruling, the Court reiterated its stand in Rohm Apollo Semiconductor Philippines vs. CIR that when the 120-day period lapsed and there is inaction, the decision is the inaction itself. Despite receiving letters from Revenue Officer (RO) and Group Supervisor (GS) partially granting its claim, such is already considered denied due to inaction. Additionally, they are not authorized to do the same. Based on the foregoing, the Petitioner failed to timely file its judicial claim; therefore, the Petition was DENIED, and earlier Decision and Resolution were AFFIRMED. [RIOFIL CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2220, DECEMBER 2, 2021]

ASSESSMENT HAS BECOME FINAL & EXECUTORY FOR FAILURE TO FILE VALID PROTEST LETTER

Petitioner HR Mall Inc. filed a Petition for Review seeking nullity of the assessment issued by the Respondent Commissioner of Internal Revenue (CIR). Petitioner claims that the period to assess for all its internal revenue taxes for the most part of the taxable year 2014 has already prescribed rendering the assessment null and void. In addition, there is no valid Letter of Authority (LOA). On the other hand, Respondent contends that since the subject Final Assessment Notice (FAN) has already become final, executory, and demandable, the Court no longer has jurisdiction to entertain the instant Petition and that the LOA was validly issued to Petitioner. In ruling, the Court held that the subject warrant of distraint and/or levy is valid since the Petitioner failed to file a valid protest against the FAN due to lack of statement as to the type of protest the Petitioner has filed. Based on the foregoing, the subject tax assessment has become final, executory, and demandable. Thus, the Petition was DENIED for lack of merit. [HR MALL, INC. VS. COMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 9981, NOVEMBER 12, 2021]

[LOA IS NOT A GENERAL AUTHORITY TO ANY RO, BUT A SPECIAL AUTHORITY GRANTED TO A PARTICULAR RO] [CIVIL LIABILITY EX DELICTO IS ONLY DEEMED EXTINGUISHED WHEN THERE IS A FINDING IN A FINAL JUDGMENT IN THE CRIMINAL ACTION THAT THE ACT OR OMISSION FROM WHICH THE CIVIL LIABILITY MAY ARISE DID NOT EXIST]

Petitioner People of the Philippines, represented by complainant Bureau of Internal Revenue (BIR) filed a Petition for Review assailing the Court’s earlier decision acquitting Respondent Vivetech Corporation for failure to establish Accused’s guilt beyond reasonable doubt. The issue is whether the Court in Division erred in not imposing the civil liability of the Accused, due to alleged void tax assessments opining that there was no letter of authority (LOA) issued by the BIR Regional Director authorizing the Revenue Officer (RO) to conduct an examination. In ruling, the Court held that BIR failed to prove that the RO was authorized to conduct audit. Perusal of records showed that the new RO who conducted the audit is not named in any of the LOAs issued. The result of the absence of an LOA is a nullity of the examination and assessment due to violation of the taxpayer's right to due process. Moreover, Petitioner cannot enforce the civil liability arising from the assessment in the present case. Under the jurisprudence, the civil liability deemed instituted with the criminal action is only the civil liability ex delicto. It does not include civil liability arising from a different source of obligation such as those arising from law. The criminal action and the corresponding civil action for the recovery of civil liability for taxes and penalties shall be deemed jointly instituted in the same proceeding. Hence, Petitioner cannot insist that Respondents should be held liable for their alleged assessments, the same having arisen from a different source of obligation and not from the crimes as charged. In the present case, Respondents were charged for violation of Section 255 in relation to Sections 253(d) and 256 of the Tax Code, which has the following elements: (1) Accused are required under the Tax Code or its rules and regulations to pay any tax; (2) Accused failed to pay the required tax at the time required by law or rules and regulations; and (3) Accused's failure to pay the required tax at the time required by law or rules and regulations is willful. The Court found that Prosecution failed to establish the existence of the second and third elements of the crime charged on the ground that the assessments issued are void for lack of authority of the RO conducting the audit and, thus, the obligation to pay did not arise. Clearly, the acquittal was based on the finding that Respondents did not commit the crime charged. Thus, the civil liability based on delict is deemed extinguished. Consequently, Respondents cannot be made liable and therefore, are also absolved from paying the civil liability ex delicto. Therefore, the Petition was DENIED. [PEOPLE OF THE PHILIPPINES VS. VIVETECH CORPORATION/REYES-FAJARDO, JJ EDWIN B. LUMAGUE (PRESIDENT) AND ROEDEL R. LUMAGUE (TREASURER), CTA EN BANC CRIMINAL CASE NO. 082, NOVEMBER 5, 2021]