[THE PRINCIPLE OF ESTOPPEL MAY APPLY IF THE TAXPAYER FAILS TO OBJECT TO THE PROPRIETY OF THE SERVICE OF THE LETTER OF AUTHORITIES & ASSESSMENT NOTICES AT THE EARLIEST OPPORTUNITY] [TAXPAYER’S FAILURE TO EXERCISE ITS RIGHT TO REFUSE THE SERVICE OF AN ALLEGEDLY DEFECTIVE LETTER OF AUTHORITY SHOWS THAT THEY HAD ACQUIESCED TO THE TAX AUTHORITIES' INVESTIGATION] [TAXPAYER'S FAILURE TO TIMELY RAISE THE ISSUE OF IMPROPER SERVICE AT THE ADMINISTRATIVE LEVEL IS FATAL TO ITS CLAIM]

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review challenging the earlier Decision of the Court of Tax Appeals (CTA), and that a new ruling be issued ordering the Respondent Joselito B. Yap to pay the assessed deficiency taxes for the taxable years (TYs) 2011, 2012, and 2013. The Petitioner argued that the issue of improper service of Letter of Authorities (LOAs) and assessment notices was never raised at the administrative level despite the ample remedies provided by the Tax Code. Moreover, the Respondent cannot assail the position he previously accepted at the administrative level since it explicitly acknowledged receipt of the assessment notices in its Legal Petition Notices (LPNs) and did not challenge the authority of the persons who received the BIR notices on his behalf. On the other hand, the Respondent countered that it is the Petitioner who is guilty of laches as it did not specifically object to the admissibility of the LOAs for their stated purposes. In addition, the Respondent asserted that the Petitioner disregarded his own rules on service of notices. In ruling, under Section 8 of the Republic Act (R.A.) No. 1125, or An Act Creating the CTA, the CTA is described as a court of record, hence, it may give credence to all evidence, including those that may not have been submitted to the CIR as the case is being essentially decided in the first instance. However, upon a judicious review of the records, the Court found that the Respondent explicitly and repeatedly admitted in his LPNs filed with the BIR to having received the assessment notices. These admissions confirm that the Respondent received the same as required, relieving the Petitioner of any obligation to prove the fact of receipt. Furthermore, the Respondent is estopped from questioning the propriety of the service of the LOAs and assessment notices citing the case of Factory Automation and Instrumentation Corp. vs. CIR. By failing to raise any objection to its service at the earliest possible opportunity (or at least at the administrative level), the Respondent is deemed estopped from assailing the same before the Court. Consequently, the Petition was GRANTED, and the assailed Decision and Resolution were REVERSED and SET ASIDE. The case was REMANDED to the Court in Division to determine the Respondent's deficiency tax liabilities. [COMMISSIONER OF INTERNAL REVENUE VS. JOSELITO B. YAP, CTA EN BANC CASE NO. 2792, FEBRUARY 11, 2025]

[DIRECT ATTRIBUTABILITY IS NOT REQUIRED FOR INPUT TAX TO BE CREDITABLE OR REFUNDABLE UNDER THE PROVISIONS OF THE TAX CODE] [IF THERE HAVE BEEN ALTERATIONS & THEY WERE NOT COUNTERSIGNED BEFORE THE ADMINISTRATIVE CLAIM FOR REFUND WAS FILED, THE COURT HAS NO OTHER RECOURSE BUT TO DISALLOW THE INPUT VAT] [PEZA CERTIFICATES CONTAINED IN THE BIR RECORDS ARE CONSIDERED AS PUBLIC RECORDS & SHALL SERVE AS A DOCUMENTARY EVIDENCE THAT THE COMPANIES WERE PEZA-REGISTERED; THUS, ENJOY VAT-ZERO RATING ON PURCHASES MADE FROM LOCAL SUPPLIERS]

Petitioner Philippine Mining Service Corporation filed a Motion for Partial Reconsideration challenging the earlier Decision which partially granted the Petitioner’s claim for a Value-Added Tax (VAT) refund for calendar year (CY) 2019. The Petitioner argued that it had zero-rated sales to companies registered with the Philippine Economic Zone Authority (PEZA), with documentary evidence, particularly the PEZA Letter and Certificates, and, thus, enjoy a VAT-zero rating on purchases made from local suppliers. In addition, the Petitioner posited that the disallowed input VAT due to alleged alterations should not affect the validity of the claim of refund and insisted that as long as the pertinent details are present in the invoice, the VAT amount shall be allowed as an input tax credit. Contrarily, the Respondent contended that the Petitioner's application for refund must be denied for failure to substantiate its claim both in fact and in law, and for failure to establish direct attributability between input tax on purchases vis-a-vis its zero-rated sales. In ruling, the Supreme Court, citing the case of CIR vs. Taganito HPAL Nickel Corporation, held that direct attributability is not required for refund cases under Section 112 of the National Internal Revenue Code (NIRC) of 1997. However, as for the Petitioner's contention of the alterations, the court maintained that what was previously disallowed were altered invoices that were without any countersignatures. Nonetheless, the Court determined that the submitted certified true copies of PEZA Certificates by the Petitioner are the exact replicate of the said certificates in the BIR record. Hence, the Court was constrained to conclude that the Petitioner's sales were indeed made to PEZA-registered entities and that these are considered zero-rated transactions as a result of the said entities' tax benefits pursuant to Section 106 (A)(2)(a)(5) of the NIRC of 1997, as amended. Further, the VAT zero-rated sales invoices, as presented by the Petitioner, revealed that they are compliant with the invoicing requirements prescribed under Section 113(A) of the NIRC of 1997.  In view of this, the Petitioner’s Motion was PARTIALLY GRANTED, and the Respondent was ORDERED TO PARTIALLY REFUND or ISSUE A TAX CREDIT CERTIFICATE. [PHILIPPINE MINING SERVICE CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10494, FEBRUARY 4, 2025]