Dear Clients & Friends, We are sending the following relevant tax updates for this week, for your reference and information: | I. TAX AND BUSINESS-RELATED NEWS [SEPTEMBER 28-OCTOBER 6] II. SUPREME COURT (SC) CASES DIGEST | | | I. TAX AND BUSINESS-RELATED NEWS | PAL secures US court nod to access $505 million financing BSP seeks law vs coin hoarding after seizure of P50-M worth of loose change in QC BOC take in September hit record high of P 59.9B SSS resumes pensioners’ confirmation requirement Palace says to decide soonest on calls to defer SSS contribution hike Unemployed Filipinos increase to 3.88 million in August Gradual policy adjustments by BSP likely to start next year: former official Some private hospitals mull PhilHealth non-renewal as unpaid claims hit P21.1 billion Online maternity benefit applications hit 17,000 —SSS Business, labor groups urge Malacañang to release EO deferring SSS contribution hike BSP warns public vs 'pasalo-benta' auto loan scams The 10 biggest Filipino YouTubers in terms of subscriber count
| PAL secures US court nod to access $505 million financing [ABS-CBN News, October 5, 2021] Philippine Airlines has received a US court approval to access $505 million in debtor-in-possession financing, it said Friday. BSP seeks law vs coin hoarding after seizure of P50-M worth of loose change in QC [ABS-CBN News, October 3, 2021] The Bangko Sentral ng Pilipinas (BSP) on Sunday called for a law against hoarding of extremely large volume of coins after some P50 million worth of loose change were found in Quezon City last week. BOC take in September hit record high of P 59.9B [Philippine Daily Inquirer, October 2, 2021] Despite a prolonged pandemic, imports recovery amid a further reopening of the economy allowed the Bureau of Customs (BOC) to collect a record P59.9 billion in duties and other taxes in September. SSS resumes pensioners’ confirmation requirement [Manila Bulletin, October 1, 2021] State-run Social Security System (SSS) has resumed the implementation of the annual confirmation requirement for pensioners, but it will no longer require personal appearance at the pension fund. Palace says to decide soonest on calls to defer SSS contribution hike [ABS-CBN News, September 30, 2021] Malacañang said on Thursday it would decide as soon as possible on calls to hold off an increase in the rate of contributions to the Social Security System. | Unemployed Filipinos increase to 3.88 million in August [Philippine Daily Inquirer, September 30, 2021] The number of unemployed Filipinos increased to 3.88 million in August, according to the Labor Force Survey of the Philippine Statistics Authority (PSA) released Thursday. Gradual policy adjustments by BSP likely to start next year: former official [ABS-CBN News, September 30, 2021] The Bangko Sentral ng Pilipinas is likely to start raising interest rates next year, anchored mainly to the inflation dynamics, former BSP Deputy Governor Diwa Guinigundo said Thursday. Some private hospitals mull PhilHealth non-renewal as unpaid claims hit P21.1 billion [ABS-CBN News, September 29, 2021] Patients in some private hospitals may soon need to pay upfront for admission to several private hospitals after these medical centers said they are looking to not renew their accreditation from the Philippine Health Insurance Corp (PhilHealth). Online maternity benefit applications hit 17,000 —SSS [Manila Bulletin, September 29, 2021] State-run Social Security System (SSS) received more than 17,000 online maternity benefit applications one month after its initial implementation. Business, labor groups urge Malacañang to release EO deferring SSS contribution hike [ABS-CBN News, September 29, 2021] Some of the country’s largest business and labor groups urged Malacanang on Wednesday to issue an executive order deferring the implementation of the hike in Social Security System contributions. BSP warns public vs 'pasalo-benta' auto loan scams [ABS-CBN New, September 29, 2021] Vulnerable car buyers and sellers should be wary of auto loan "pasalo-benta" or assume balance scams, the Bangko Sentral ng Pilipinas said Wednesday. The 10 biggest Filipino YouTubers in terms of subscriber count [Rappler, September 28, 2021] In this list, we put the spotlight solely on vloggers, the YouTube natives who made a name for themselves primarily on YouTube or maybe through other online means and have been able to build a sizable subscriber base. | | A. NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP) IS EXEMPT FROM REAL PROPERTY TAX DUE TO EXPRESS GRANT IN FRANCHISE BUT SUBJECT TO CENTRAL BOARD OF ASSESSMENT APPEALS (CBAA) DETERMINATION ON THE ACTUAL USE OF THE PROPERTY B. TAX CERTIFICATES ARE VITAL TO THE CLAIM FOR EXCESS OR UNUTILIZED CREDITABLE WITHHOLDING TAX (CWT); EVIDENCE OF ACTUAL REMITTANCE IS UNNECESSARY IN REFUND CASES C. AN ARGUMENT NOT AVERRED IN THE PLEADINGS NOR RAISED DURING THE TRIAL IN THE LOWER COURT CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL D. TIMELINESS IN FILING JUDICIAL CLAIM FOR REFUND E. REQUISITES FOR A VAILD WAIVER OF STATUTE OF LIMITATION; AVAILMENT OF THE TAX AMNESTY EXONERATES TAXPAYERS FROM LIABILITY F. NON-SUBMISSION OF SUPPORTING DOCUMENTS AT THE ADMINISTRATIVE LEVEL IS NOT FATAL TO THE CLAIM FOR REFUND BECAUSE JUDICIAL CLAIMS ARE LITIGATED DE NOVO; THE TAXPAYER-CLAIMANT NEED NOT WAIT FOR THE COMMISSIONER OF INTERNAL REVENUE (CIR’S) ACTION OR REQUEST TO SUBSTANTIATE THE REFUND CLAIM BY SUBMITTING NECESSARY DOCUMENTS G. PRESIDENTIAL DECREE (PD) NO. 242 AS AMENDED BY EXECUTIVE ORDER (EO) NO. 292 OR INSTITUTING THE ADMINISTRATIVE CODE OF 1987 EXPRESSLY EXEMPTS LOCAL GOVERNMENTS FROM THE COVERAGE OF ADMINISTRATIVE SETTLEMENT OR ADJUDICATION OF DISPUTES; AUTHORITY TO EXERCISE EITHER ORIGINAL OR APPELLATE JURISDICTION OVER LOCAL TAX CASES IS DEPENDENT ON THE AMOUNT OF THE CLAIM; LOCAL TREASURER OR HIS DULY AUTHORIZED REPRESENTATIVE CAN ISSUE NOTICE OF ASSESSMENT STATING THE NATURE OF THE TAX, FEE, OR CHARGE, AMOUNT OF DEFICIENCY, SURCHARGES, INTERESTS AND PENALTIES IF HE FINDS THAT THEY HAVE NOT BEEN CORRECTLY PAID H. COURT OF TAX APPEALS (CTA) HAS EXCLUSIVE APPELLATE JURISDICTION OVER DECISIONS OF THE COMMISSIONER OF INTERNAL REVENUE (CIR) ON CASES INVOLVING DISPUTED ASSESSMENTS, REFUNDS, FEES OR OTHER CHARGES, PENALTIES IN RELATION THERETO, OR OTHER MATTERS ARISING UNDER THE TAX CODE OR OTHER LAWS ADMINISTERED BY THE BIR I. IN ORDER TO BE NOT IN DEFAULT, IT MUST BE SHOWN THAT THE FAILURE TO FILE ANSWER WAS DUE TO FRAUD, ACCIDENT, MISTAKE, OR EXCUSABLE NEGLIGENCE J. SECTION 229 OF THE TAX CODE IS INAPPLICABLE TO CLAIMS FOR THE RECOVERY OF UNUTILIZED INPUT VAT; UNDER THE VAT SYSTEM, THERE IS NO INSTANCE WHERE THE INPUT VAT PAID IS COLLECTED "EXCESSIVELY" OR MORE THAN WHAT IS LEGALLY DUE K. A NEW LETTER OF AUTHORITY (LOA) RE-ASSIGNING THE AUDIT TO A NEW REVENUE OFFICER (RO) MUST BE SIGNED BY THE COMMISSIONER OF INTERNAL REVENUE (CIR) HIMSELF OR BY HIS AUTHORIZED REPRESENTATIVES TO BE VALID; GAMING REVENUES OF A PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) LICENSEE IS EXEMPT FROM INCOME TAX AFTER PAYMENT OF THE 5% FRANCHISE TAX L. LACK OF AUTHORITY OF THE REVENUE OFFICER (RO) TO CONDUCT THE AUDIT WILL RENDER THE ASSESSMENT NULL AND VOID | NGCP IS EXEMPT FROM REAL PROPERTY TAX DUE TO EXPRESS GRANT IN FRANCHISE BUT SUBJECT TO CBAA DETERMINATION ON THE ACTUAL USE OF THE PROPERTY Petitioner National Grid Corporation of the Philippines filed a Petition for Review on Certiorari seeking to reverse the earlier decision of the Court of Tax Appeals (CTA) En Banc holding it liable to real property tax. Petitioner argued that under Republic Act (R.A.) No. 9511 or “An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity through High Voltage Back-Bone System of Interconnected Transmission Lines, Substations, and Related Facilities”, it is only liable to pay 3% Franchise Tax and no other, whether the tax or taxes are levied by the local or national authority. On the other hand, Private Respondent City Assessor of Cabanatuan maintains that the properties in question are subject to real property tax since R.A. 9511 does not expressly exempt Petitioner from paying local taxes, and Congress did not give any express grant to it. In ruling, the Supreme Court held that all laws granting tax exemption are strictly construed against the taxpayers since it restricts the collection of taxes necessary for the existence of the government. Consequently, Petitioner’s franchise constitutes an express and categorical statement on its exemption from real property taxes on properties it actually and directly uses for its electric power transmission. However, records are lacking any information regarding the nature and actual use of these properties. Thus, the Court REMANDED the case to the Central Board of Assessment Appeals to determine its actual use and nature for the purpose, to resolve the merits of the Petitioner’s claim for exemption from real property taxes. Consequently, the Petition was PARTIALLY GRANTED, and the earlier decision was SET ASIDE. [NATIONAL GRID CORPORATION OF THE PHILIPPINES VS. CENTRAL BOARD OF ASSESSMENT APPEALS, ET AL., G.R. NOS 218289-90, JUNE 23, 2021, UPLOADED SEPTEMBER 23, 2021] | [TAX CERTIFICATES ARE VITAL TO THE CLAIM FOR EXCESS OR UNUTILIZED CWT] [EVIDENCE OF ACTUAL REMITTANCE IS UNNECESSARY IN REFUND CASES] Petitioner Commissioner of Internal Revenue filed a Petition for Review on Certiorari seeking to reverse the earlier decision of the Court of Tax Appeals (CTA) En Banc holding that Respondent Ayala Corporation was entitled to the issuance of Tax Credit Certificate (TCC) in the amount of Php 127,292,477.20, representing its excess or unutilized creditable withholding tax certificate (CWT) for the calendar years 2012 and 2013. In ruling, proof of actual remittance is not necessary for the Respondent’s claim to prosper. The Respondent shall only present the withholding tax certificates issued by the corresponding withholding agents since the latter shall be responsible for the withholding and remitting such taxes. Thus, the Court resolved to AFFIRM the earlier decision. [COMMISSIONER OF INTERNAL REVENUE VS. AYALA CORPORATION, G.R. NO. 256539, JULY 28, 2021, UPLOADED SEPTEMBER 22, 2021] | AN ARGUMENT NOT AVERRED IN THE PLEADINGS NOR RAISED DURING THE TRIAL IN THE LOWER COURT CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL Petitioner 8199 Convenience Corporation filed a Petition for Review on Certiorari seeking to reverse the earlier decision and resolution of the Court of Tax Appeals (CTA) En Banc upholding the income tax and value-added tax (VAT) assessment issued by Respondent Commissioner of Internal Revenue (CIR) based on the application of “best-evidence obtainable rule”. It was reiterated that according to the Rules of Court, an argument belatedly raised for the first time is not allowed considering that the same could have been raised in previous pleadings or during a trial facilitated by the lower court. Further, the CTA En Banc already provided a leeway in the application of technicalities in pursuit of substantial justice, and still found that the assessments are validly issued with no defects. Having not found any convincing proof that the CTA En Banc erred in the previous decision, the Court resolved to uphold the tax assessments issued against Petitioner. Consequently, the Petition was DENIED. [8199 CONVENIENCE CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 256566, JULY 28, 2021, UPLOADED SEPTEMBER 22, 2021] | TIMELINESS IN FILING JUDICIAL CLAIM FOR REFUND Petitioner Energy Development Corporation filed a Petition for Review on Certiorari assailing the earlier decision and resolution of the Court of Tax Appeals (CTA) En Banc dismissing its judicial claim for tax credit or refund of its unutilized input VAT. In the earlier motion, Respondent Commissioner of Internal Revenue (CIR) asserted that Petitioner failed to comply with the prescriptive periods under Section 112(C) of the Tax Code. Respondent alleged that Petitioner did not wait for: (a) the CIR’s action on its administrative claim for input VAT tax credit or refund before appealing to the CTA within 30 days, and (b) in the alternative of the CIR’s inaction, reckon the 30-day period to appeal from the expiration of 120 days from the date of the submission of complete documents to support the administrative claim under Section 112(A). Petitioner countered that the Aichi case, which reinstated the 120+30-day periods as mandatory and jurisdictional, cannot be applied retroactively. The bone of contention here stemmed in the applicability, or inapplicability, of the Aichi case. However, it must be pointed out that the touchstone of Petitioner's cassus belli is found on Section 112 (C) of the Tax Code. Contrary to the argument of Petitioner, the Aichi case is definitive on the nature of the prescriptive periods for the filing of claims for input VAT tax credit or refund under the then Section 112(A) and (C) of the Tax Code. As held in the Aichi case, there is nothing in Section 112 of the Tax Code which sanctions the simultaneous filing of administrative and judicial claims, and the filing of the judicial claim prior to the action of the CIR or the lapse of the 120-day period within which the CIR is required to act on the administrative claim. Section 112(A) simply cannot be invoked as the prescriptive period for both administrative and judicial claims of input VAT tax refund or credit with the CIR. The taxpayer claiming input VAT tax credit or refund should not ignore subsection (C) on judicial claims. However, given the difficult question of law and conflicting rulings by the Court, Petitioner and taxpayers alike have hedged their actions in the filing of simultaneous administrative and judicial claims or the filing of premature judicial claims on an incorrect interpretation of Section 112 (A) and (C) of the Tax Code. The Court ruled in San Roque case that all taxpayers can rely on BIR Ruling No. DA-489-03 dated December 10, 2003, issued by the CIR from the time of its issuance up to its reversal in the Aichi case on October 6, 2010. The said BIR Ruling expressly states that the “taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review.” In ruling, the Court held that BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003, up to its reversal by this Court in the Aichi case on October 6, 2010, where this Court held that the 120+30-day periods are mandatory and jurisdictional. Clearly, from the foregoing, Petitioner did not comply with Section 112 (C) of the Tax Code relative to the filing of its judicial claim before the CTA. Thus, even without harping on the applicability of the Aichi case, Petitioner's premature judicial claim has no leg to stand on. However, applying the exception molded in the San Roque case, the Petition before the CTA should be reinstated since the filing of its administrative and judicial claims fell within the stated period. Thus, the Petition was GRANTED, and the earlier Decision and Resolution of the CTA En Banc were REVERSED and SET ASIDE. Consequently, the Petition for Review before the CTA 2nd Division was REINSTATED. [ENERGY DEVELOPMENT CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 203367, MARCH 17, 2021, UPLOADED SEPTEMBER 21, 2021] | [REQUISITES FOR A VAILD WAIVER OF STATUTE OF LIMITATION] [AVAILMENT OF THE TAX AMNESTY EXONERATES TAXPAYERS FROM LIABILITY] Petitioner La Flor Isabela, Inc. filed a Petition for Review on Certiorari seeking to reverse the Court of Tax Appeals (CTA) En Banc decisions and resolutions upholding the assessment issued by the Respondent Commissioner of Internal Revenue. Petitioner argued that the waivers executed were null and void, thus, did not toll the running of the prescriptive period. In ruling, the Court held that under Revenue Memorandum Order (RMO) No. 20-90, a valid Waiver of Statute of Limitations must be: (a) in writing; (b) agreed to by both by the Commissioner and the taxpayer; (c) before the expiration of the ordinary prescriptive periods for assessment and collection; and (d) for a definite period beyond ordinary prescriptive period for assessment and collection. Upon scrutiny, the Court noted that the Waivers did not strictly comply with the provisions of RMO No. 20-90, thus, the period of the Respondent to assess or collect the alleged deficiency tax was not extended. Consequently, the issuance of the Formal Letter of Demand against the Petitioner is null and void on the ground of prescription. Further, Petitioner availed the Tax amnesty under Republic Act (R.A.) No. 9480, otherwise known as “The Tax Amnesty Act of 2005.” Considering Petitioner’s compliance with the requirements under R.A. No. 9480 as implemented by Department of Finance Department Order No. 20-97, it is now deemed absolved of its obligations and is already immune from the payment of the taxes as well as additions, civil, criminal, and administrative penalties. Thus, Petition was GRANTED, and the earlier decision was REVERSED and SET ASIDE. [LA FLOR DELA ISABELA INC VS. COMMISSIONER OF INTERNAL REVENUE, G.R NO. 202105, APRIL 28, 2021, UPLOADED SEPTEMBER 21, 2021] | [NON-SUBMISSION OF SUPPORTING DOCUMENTS AT THE ADMINISTRATIVE LEVEL IS NOT FATAL TO THE CLAIM FOR REFUND BECAUSE JUDICIAL CLAIMS ARE LITIGATED DE NOVO] [THE TAXPAYER-CLAIMANT NEED NOT WAIT FOR THE CIR’S ACTION OR REQUEST TO SUBSTANTIATE THE REFUND CLAIM BY SUBMITTING NECESSARY DOCUMENTS] Petitioner Commissioner of Internal Revenue (CIR) filed for a Petition for Review on Certiorari assailing the grant of refund to Respondent Nanox Philippines, Inc. on its erroneously paid final withholding tax (FWT), raising for the first time the issue of lack of jurisdiction. Petitioner argued that Respondent failed to exhaust all administrative remedies available. It is only at the judicial stage that the Respondent submitted pieces of evidence to establish its entitlement to refund, but not at the administrative level. Further, Respondent cannot submit for the first time before the Court of Tax Appeals (CTA) pieces of evidence to support its entitlement for refund. In ruling, the Supreme Court held that Respondent did not violate the rule on exhaustion of administrative remedies when it immediately instituted a judicial action without the necessary documents submitted at the administrative level. Additionally, Petitioner did not request supporting documents from Respondent; rather, it simply did not act on the claim. In CIR vs. Univation Motor Philippines, Inc, Sections 204(c) and 229 of the Tax Code only require that an administrative claim be priorly filed, that is, to give the BIR at the administrative level an opportunity to act on said claim. Petitioner was mistaken that documents submitted at the administrative level cannot be presented in support of the judicial claim. However, the CTA may consider evidence that was not presented to the BIR, and the taxpayer-claimant may present new and additional evidence to the CTA to support its case. Thus, regardless of whether evidence was presented at the administrative level, all evidence submitted and formally offered by Respondent before the CTA can be considered and be given credence in determining the propriety of the tax refund. Consequently, the Court resolved to DENY the Petition. [COMMISSIONER OF INTERNAL REVENUE VS. NANOX PHILIPPINES, INC., G.R. NO. 230416, MAY 5, 2021, UPLOADED JULY 30, 2021] | [PD NO. 242 AS AMENDED BY EO NO. 292 INSTITUTING THE ADMINISTRATIVE CODE OF 1987 EXPRESSLY EXEMPTS LOCAL GOVERNMENTS FROM THE COVERAGE OF ADMINISTRATIVE SETTLEMENT OR ADJUDICATION OF DISPUTES] [AUTHORITY TO EXERCISE EITHER ORIGINAL OR APPELLATE JURISDICTION OVER LOCAL TAX CASES IS DEPENDENT ON THE AMOUNT OF THE CLAIM] [LOCAL TREASURER OR HIS DULY AUTHORIZED REPRESENTATIVE CAN ISSUE NOTICE OF ASSESSMENT STATING THE NATURE OF THE TAX, FEE, OR CHARGE, AMOUNT OF DEFICIENCY, SURCHARGES, INTERESTS AND PENALTIES IF HE FINDS THAT THEY HAVE NOT BEEN CORRECTLY PAID] Petitioner Quezon City, represented by its Mayor, Hon. Herbert M. Bautista, and Ms. Ruby Rosa G. Gueverra, in her capacity as Officer-in-Charge-City Treasurer's Office issued a Letter of Assessment to Respondent National Transmission Corporation (TRANSCO), for payment of Php 375,394,968.75 as additional business tax including surcharges and penalties for taxable years 2001-2003. Respondent protested arguing that it is exempt from business taxes for being a government instrumentality performing governmental functions, which the Quezon City Treasurer denied. Respondent further escalated its protest to the Regional Trial Court (RTC) but was dismissed for failure to exhaust administrative remedies with the Department of Justice (DOJ) pursuant to Presidential Decree (P.D.) No. 242. On Petition for Review filed with the Court of Tax Appeals (CTA), the decision of the RTC was reversed, and the decision was later affirmed by CTA En Banc. On the latest Petition, Petitioner seeks the reversal of the assailed disposition of the CTA En Banc. In ruling, the Court held, quoting P.D. 242, now embodied in Chapter 14, Book IV of Executive Order (EO) 292 or Administrative Code of 1987: “This Chapter shall, however, not apply to disputes involving the Congress, the Supreme Court, the Constitutional Commissions, and local governments.”. It is to be recalled that the Petitioner is a local government unit (LGU). To further specify competent court having jurisdiction over the case, China Banking Corporation vs. City of Manila provides that cases where the amount sought to be refunded is below the jurisdictional amount of the RTC, the Metropolitan, Municipal, and Municipal Circuit Trial Courts have authority to rule. Since the claim is within the jurisdictional amount, the RTC is a competent court which has jurisdiction over the complaint. Therefore, Petition was DENIED. [QUEZON CITY, REPRESENTED BY ITS MAYOR, HON. HERBERT M. BAUTISTA AND MS. RUBY ROSA G. GUEVERRA, IN HER CAPACITY AS OFFICER-IN-CHARGE-CITY TREASURER'S OFFICE VS. NATIONAL TRANSMISSION COMMISSION, G.R. NO. 246817, MAY 12, 2021, UPLOADED JULY 12, 2021] | [CTA HAS EXCLUSIVE APPELLATE JURISDICTION OVER DECISIONS OF THE CIR ON CASES INVOLVING DISPUTED ASSESSMENTS, REFUNDS, FEES OR OTHER CHARGES, PENALTIES IN RELATION THERETO, OR OTHER MATTERS ARISING UNDER THE TAX CODE OR OTHER LAWS ADMINISTERED BY THE BIR] Petitioner Golden Donuts, Inc. filed a Petition for Review on Certiorari, assailing the earlier Decision and Resolution of the Court of Tax Appeals (CTA) dismissing the Petition for Review earlier filed due to lack of jurisdiction. In 2008, Respondent Commissioner of Internal Revenue (CIR) issued a Letter of Authority (LOA) covering taxable year 2007, and Petitioner subsequently paid the recomputed deficiency taxes in 2012. However, in 2017, Petitioner received another LOA covering the same taxable year 2007. Petitioner questioned the legality of the issuance of the 2017 LOA. The CTA En Banc agreed with the CTA in Division that the issuance of an LOA and Subpoena Duces Tecum (SDT) does not fall under the matters within which the CTA may take cognizance prior to the issuance of a final assessment, hence, this Petition. In ruling, the Court held that the Petition is meritorious. In De Jesus v. Court of Appeals, the Court said that a court may issue a Writ of Certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review, by appeal or writ of error, the final orders, or decisions of the lower court. Following the ruling of the Court in City of Manila, the CTA may take cognizance of a Petition for Certiorari to determine whether there is grave abuse of discretion amounting to lack or excess of jurisdiction committed by the BIR in issuing the 2017 LOA against Petitioner as well as the SDT, considering that a previous investigation of the same taxable year 2007 was already conducted pursuant to the 2008 LOA, and Petitioner has already settled its tax liabilities arising out of said investigation. Nonetheless, in accordance with the liberal spirit pervading the Rules of Court, the interest of substantial justice and considering that the Petition for Review was filed within the 30-day reglementary period, which is within the 60-day reglementary period to file a Petition for Certiorari under Rule 65 of the Rules of Court, and because of the significance of the issue on jurisdiction, the Court deems it proper and justified to relax the rules and, thus, treat the Petition for Review as Petition for Certiorari. Therefore, the case was REMANDED to the CTA in Division. [GOLDEN DONUTS, INC. V. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 252816, FEBRUARY 3, 2021, UPLOADED JUNE 18, 2021] | IN ORDER TO BE NOT IN DEFAULT, IT MUST BE SHOWN THAT THE FAILURE TO FILE ANSWER WAS DUE TO FRAUD, ACCIDENT, MISTAKE, OR EXCUSABLE NEGLIGENCE Petitioner Commissioner of Internal Revenue filed a Petition for Certiorari seeking to reverse the earlier resolution of the Court of Tax Appeals (CTA) 3rd Division denying the Motion for Reconsideration and affirming the earlier denial of Motion to Lift Order of Default and Admit Attached Answer. In the earlier case, Respondent AZ Contracting System Service, Inc. filed a Petition for Review seeking refund of excess and unutilized creditable withholding taxes due to inaction of the Petition. The CTA issued Summons, directing Petitioner to submit his Answer within 15 days from receipt thereof. However, Petitioner, failed to file an Answer. As such, Respondent filed a Motion to Declare in Default and the same was granted. Petitioner then filed a Motion to Lift Order of Default and Admit Attached Answer alleging that the BIR Records was only forwarded to the Litigation Division on a later date, despite several follow-up requests, and that these records are vital to prepare his Answer meritoriously and intelligently. The CTA denied Petitioner’s Motion and held that Petitioner failed to show that his failure to file an Answer was due to excusable negligence and that he has a meritorious defense. The CTA underscored that the grounds raised by Petitioner did not prevent him from asking for additional time to file an Answer or to file an Opposition to Motion to Declare in Default. Dissatisfied, Petitioner then again filed a Motion for Reconsideration and maintained that he had no intention to file his Answer belatedly nor to violate the court’s directive. The CTA considered said motion as a second Motion for Reconsideration, which is expressly prohibited under Section 2, Rule 52 of the Rules of Court since it essentially prays for reconsideration of the resolution declaring Petitioner in default. Petitioner filed the present Petition for Certiorari claiming that he has no other plain, speedy, and adequate remedy in the ordinary course of law to seek the reversal or nullification of the assailed Resolution which will promptly and immediately relieve Petitioner from its injurious effects. In ruling, the Revised Rules of the CTA does not prohibit the filing of a Motion for Reconsideration of any decision, resolution, or order of the Court. What the said CTA Rules prohibit, as well as Section 2, Rule 52 of the Rules of Court, which is suppletory to the CTA Rules, is the filing a second Motion for Reconsideration of a decision, final resolution, or order. Moreover, the Supreme Court found that all the elements for a valid declaration of default are present in the instant case. Thus, the CTA was correct in granting Private Respondent’s Motion and declaring Petitioner in default. The CTA also correctly denied the Motion to Lift Order of Default since the reasons of the Petitioner are not excusable to merit the lifting of an order of default. It was within the CTA’s discretion to deny the Motion to Lift the Order of Default. Thus, the Petition was DISMISSED, and the earlier resolution was AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. THE THIRD DIVISION OF THE COURT OF TAX APPEALS AND AZ CONTRACTING SYSTEM SERVICE, INC., G.R. NO. 238093, JANUARY 26, 2021, UPLOADED JUNE 18, 2021] | [SECTION 229 OF THE TAX CODE IS INAPPLICABLE TO CLAIMS FOR THE RECOVERY OF UNUTILIZED INPUT VAT] [UNDER THE VAT SYSTEM, THERE IS NO INSTANCE WHERE THE INPUT VAT PAID IS COLLECTED "EXCESSIVELY" OR MORE THAN WHAT IS LEGALLY DUE] Petitioner Coca-Cola Bottlers Philippines, Inc. filed a Petition for Review on Certiorari seeking to reverse the earlier decision and resolution of the Court of Tax Appeals (CTA) En Banc affirming the denial of the CTA Special 2nd Division of Petitioner’s claim for refund or issuance of Tax Credit Certificate (TCC) allegedly representing over/erroneous payment of output VAT. Petitioner averred that due to inadvertence, several purchases of services with input taxes that have been paid were not declared in its Quarterly VAT Returns. Thus, the same were not charged to the output tax payable. Petitioner argued that this resulted in the alleged over/erroneously paid output tax. However, because of the issuance of a Letter of Authority, Petitioner could no longer amend its VAT Returns to include these taxes when the error was discovered. Hence, Petitioner resorted to filing claims for refund. CTA in Division ruled that only input taxes which are substantiated and declared in the Petitioner’s Quarterly VAT Return can be credited against the output tax for the same taxable year. Applying the foregoing, the claimed input taxes for the subject quarters cannot be credited against Petitioner's output taxes since said input taxes were not declared in the return. Further, the independent CPA determined that the amount of Petitioner’s input tax payments is insufficient to cover the alleged output tax in the periods in issue. Therefore, Petitioner could not have possibly made excessive output VAT payments. Likewise, the CTA En Banc emphasized that for Section 229 to apply, there must be an excessive wrongful payment because what is paid, or part of it, is not legally due. In ruling, the Supreme Court found no cogent reason to reverse or modify the findings of the CTA. Section 229 of the Tax Code is inapplicable to claims for the recovery of unutilized input VAT. Input VAT is not “excessively” collected as contemplated in Section 229 because at the time the input VAT is collected, the amount paid is correct and proper. Moreover, suppose said input VAT is in fact "excessively" collected as understood under Section 229, in that case, it is the person legally liable to pay the input VAT, and not the person to whom the tax is passed on and who is applying the input VAT as credit for his own output VAT, who can file the judicial claim for refund or credit outside the VAT system. Even assuming, for argument's sake, that Petitioner's application for refund or issuance of tax credit has any legal basis, said claim must still fail in view of Petitioner's failure to substantiate the same properly. Actions for tax refund or credit, as in the instant case, are in the nature of a claim for exemption. As such, the law is not only construed in strictissimi juris against the taxpayer; the pieces of evidence presented entitling a taxpayer to an exemption must also be strictissimi scrutinized and duly proven. Consequently, the Petition was DENIED, and the earlier Decision and Resolution were AFFIRMED. [COCA-COLA BOTTLERS PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, G.R. NO. 221694, JANUARY 19, 2021, UPLOADED JUNE 11, 2021] | [A NEW LOA RE-ASSIGNING THE AUDIT TO A NEW RO MUST BE SIGNED BY THE CIR HIMSELF OR BY HIS AUTHORIZED REPRESENTATIVES TO BE VALID] [GAMING REVENUES OF A PAGCOR LICENSEE IS EXEMPT FROM INCOME TAX AFTER PAYMENT OF THE 5% FRANCHISE TAX] Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review assailing the earlier decision and resolution of the Court of Tax Appeals (CTA) En Banc cancelling the assessment issued against the Travellers International Hotel Group, Inc. due to absence of authority to conduct audit. In ruling, the Supreme Court held that unless authorized by the CIR or by his duly authorized representatives, through a Letter of Authority (LOA), an examination of the taxpayer cannot ordinarily be taken. Upon perusal of documents, the alleged new LOA re-assigning the audit to a new RO was not signed by the CIR nor his duly authorized representatives. Consequently, the RO has no authority to examine the Respondent’s books of accounts, which makes the resulting assessment void. However, even if the authority was valid, Respondent’s gaming revenues as a PAGCOR licensee are exempt from income tax after payment of the 5% Franchise Tax as it was held in the case of Bloomberry Resorts and Hotels, Inc vs. Bureau of Internal Revenue. Thus, the Court resolved to DENY the Petition. [COMMISSIONER OF INTERNAL REVENUE VS. TRAVELLERS INTERNATIONAL HOTEL GROUP INC, G.R NO. 255487, MAY 3, 2021, UPLOADED JUNE 8, 2021] | LACK OF AUTHORITY OF THE RO TO CONDUCT THE AUDIT WILL RENDER THE ASSESSMENT NULL AND VOID Petitioner Commissioner of Internal Revenue filed a Petition for Review on Certiorari assailing the earlier decision and resolution of the Court of Tax Appeals (CTA) En Banc cancelling the assessment issued against the Respondent Trinity Franchising and Management Corporation finding that the BIR Revenue Officer (RO) who recommended the issuance of deficiency tax assessments was without authority to do so in the absence of a validly signed Letter of Authority (LOA) in its favor. In ruling, the Supreme Court held that CTA En Banc correctly held that the deficiency tax assessments were invalid due to the RO’s lack of authority to conduct an audit. The new LOA re-assigning the audit to RO Pedrosa was neither signed by Petitioner nor his duly authorized representatives as identified in the Tax Code and in prevailing BIR regulations. Thus, RO Pedrosa did not have the authority to examine Respondent's books of accounts and tax records and recommended the issuance of tax assessments. Consequently, the Petitioner failed to show any reversible error committed by the CTA En Banc. Thus, the Court resolved to DENY the Petition. [COMMISSIONER OF INTERNAL REVENUE VS. TRINITY FRANCHISING AND MANAGEMENT CORPORATION, G.R. NO. 255094, APRIL 26, 2021, UPLOADED MAY 19, 2021] | Thank you and best regards, WILLIE B. SANTIAGO Lawyer & Certified Public Accountant Tax & Corporate Services Division TL : (+632) 8 894-5892 Loc. 703 Website: www.dmdcpa.com.ph Don Jacinto Building De la Rosa corner Salcedo Streets Legaspi Village, Makati City 1229 Philippines | |
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