THE BIR IS BOUND TO WAIT FOR THE EXPIRATION OF THE 15-DAY PERIOD, RECKONED FROM THE DATE OF RECEIPT OF PAN, BEFORE FAN CAN BE ISSUED

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review praying for the reversal of the Court 3^rd Division’s earlier Decision and Resolution which cancelled the assessment issued against the Respondent The Orchard Golf and Country Club. Petitioner argued that the Respondent’s right to due process was not violated since it was given the opportunity to refute the Preliminary Assessment Notice (PAN). On the other hand, the Respondent countered that the Petitioner violated its right to due process when the Formal Letter of Demand/Formal Assessment Notice (FLD/FAN) was issued barely two (2) days from the Respondent’s receipt of the PAN, and before the lapse of the 15-day period to respond to the PAN. In ruling, the Court held that the Petitioner is bound to wait for the expiration of the 15-day period, reckoned from the date of receipt of the PAN, before the FLD/FAN can be issued. The fact that the Respondent was able to protest the FLD/FAN and that its request for reinvestigation was allegedly granted, does not cure the violation of its due process at the PAN level. The Court finds no reason to reverse nor modify the assailed Decision and Resolution. [COMMISSIONER OF INTERNAL REVENUE VS. THE ORCHARD GOLF & COUNTRY CLUB, INC., CTA EN BANC CASE NO. 2335, APRIL 25, 2022]

[ISSUANCE OF CERTIFICATE OF TAX DELINQUENCIES & ACCEPTANCE PAYMENT FORMS DEPENDS ON TAXPAYER’S COMPLIANCE WITH THE EXISTING LAW, RULES & REGULATIONS ON TAX AMNESTY] [PETITION FOR MANDAMUS MAY NOT LIE IF DOCUMENTS TO SUPPORT THE AVAILMENT OF TAX AMNESTY IS DISCRETIONARY]

Petitioners Mega Ricton Commercial and Industrial Corporation, Faith in God RPM Professional and Technical Corporation, and Mayel V. Villceran filed a Petition for Mandamus against Respondent Bureau of Internal Revenue.  Petitioners claimed that they have a legal right to be issued their respective Certificates of Tax Delinquencies (CTD) and Acceptance Payment Forms (APF) because they are qualified to avail of the tax amnesty under Republic Act (R.A.) No. 11213 or the Tax Amnesty Act. However, Respondent refused to issue the subject documents because Petitioners were not qualified under Revenue Memorandum Circular (RMC) No. 57-2019. In ruling, Revenue Regulations No. 4-2019, which is the Implementing Rules and Regulations of R.A. No. 11213, provides the documentary requirements that should be submitted by applicants: (1) Tax Amnesty Return (TAR); (2) APF; and (3) CTD. Contrary to Petitioners' claim that they are qualified to avail of the Tax Amnesty, no TARs were presented as evidence, while the remaining documentary requirements, i.e., CTDs and APFs, are precisely the subject matter of this Petition. Thus, Petitioner failed to comply with the requirements. The Court also held that the issuance of the subject CTD and APF is a discretionary function of Respondent and not a ministerial one. However, such discretion is guided by the provisions of the law, rules, and regulations. Consequently, the Petition was DENIED for lack of merit. [MEGA RICTON COMMERCIAL & INDUSTRIAL CORPORATION, FAITH IN GOD RPM PROFESSIONAL & TECHNICAL CORPORATION & MAYEL V. VILLACERAN VS. BUREAU OF INTERNAL REVENUE, CTA CASE NO. 10398, APRIL 13, 2022]

FOR AN INTERNATIONAL CARRIER TO BE EXCUSED FROM IMPOSITION OF PHILIPPINE INCOME TAX ON ITS GROSS PHILIPPINE BILLINGS, TAX LAW OF THE INTERNATIONAL CARRIER’S HOME COUNTRY SHOULD EXEMPT CARRIERS OF PHILIPPINE ORIGIN FROM SUCH COUNTRY’S INCOME TAXES, NO OTHER CONDITIONS

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking the nullification of the CTA 1^st Division’s earlier Decision and Resolution granting Respondent Gulf Air Company Philippine Branch’s claim for refund. Petitioner averred that under the Agreement, Respondent, as the operating carrier, operates the flights while Philippine Airlines, Inc. (PAL), as the marketing carrier, is only given the right to sell tickets for certain Gulf Air flights. As such, PAL is not operating in Bahrain, the home country of Respondent. It follows, therefore, that the Respondent cannot claim an exemption from payment of Gross Philippine Billings Tax. Petitioner also stressed that Respondent failed to show that Philippine carriers are actually enjoying the income tax exemption in the home country of Respondent. On the other hand, the Respondent countered that proof of actual enjoyment by Philippine carriers of the income tax exemption in the home of the international carrier is not required. In ruling, a plain reading of Republic Act (R.A.) No. 10378, or the “Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers,” shows that for purposes of availing the exemption from income tax under the Rule on Reciprocity, it is sufficient that the international carrier's home country grants an income tax exemption to Philippine carriers. The Court found the Petitioner’s interpretation of the law as groundless for it essentially required that a Philippine carrier be actually operating in the home country of the international carrier, absence of which deprives the latter the privilege of tax exemption in the Philippines. The sole requirement for an international carrier to be excused from imposition of Philippine income tax on its Gross Philippine Billings is that the tax law of the international carrier’s home country exempts carriers of Philippine origin from such country’s income taxes. The Respondent was able to demonstrate that it is entitled to a refund of income taxes on Gross Philippine Billings that were incorrectly paid. Consequently, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. GULF AIR COMPANY PHILIPPINE BRANCH, CTA EN BANC CASE NO. 2439, APRIL 12, 2022]

[PROOF OF TAXPAYERS'S PRIOR PAYMENT OF THE 3% FRANCHISE TAX BASED ON ITS GROSS RECEIPTS DERIVED FROM ITS OPERATION UNDER ITS FRANCHISE IS REQUIRED TO REAP THE BENEFITS OF THE NATIONAL & LOCAL TAX EXEMPTION] [FRANCHISE TAX IS IN LIEU OF NATIONAL & LOCAL TAX INCLUDING CONTRACTORS TAX]

Petitioner National Grid Corporation of the Philippines filed a Petition for Review challenging the earlier Decision and Resolution of Court in Division sustaining Respondent City Treasurer of Tacloban’s deficiency contractor’s tax assessment. Petitioner argued that the payment of the 3% Franchise Tax is not a pre-requisite for the enjoyment of the tax-exempt privileges under Republic Act (R.A.) No. 9511 or the Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity. Petitioner further asserted that by its presentation of the BIR Certification dated September 4, 2018, it had satisfactorily proved that it paid its Franchise Taxes for the year 2009. In ruling, the Court held that payment of the 3% Franchise Tax is the operative act to claim exemption from real property tax under Section 9 of R.A. No. 9511. Failure to prove such prior payment of the required 3% Franchise Tax would lead to Petitioner’s non-entitlement to its national and local tax exemption. Consequently, the Petition was DENIED. [NATIONAL GRID CORPORATION OF THE PHILIPPINES VS. THE CITY OF TACLOBAN & ZOSIMA A. CORDANO, IN HER CAPACITY AS CITY TREASURER OF TACLOBAN, CTA EN BANC CASE NO. 2133, MARCH 31, 2022]