collated business tax

7/31/2019 Collated Business Tax

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Silkair Singapore LTD vs CIR

Amirah

CIR v Aegis People Support Inc

Aneka

CIR vsKeichin-EverettForwarding Co Inc

Ben

San Roquevs CIR

SAN ROQUE V. CIR

Facts:San Roque is a corporation engaged in operating power-generating plants and undercontract with the Govt. of the Phils. It allegedly had unutilized input VAT credits in2007. On May 28, 2008, it filed an administrative claim for refund of unutilized input

VAT for the 1st and 2nd quarters of 2007 (first claim), and another admin claim forunutilized VAT credit for the 3rd and 4th quarters on March 30, 2009 ( second claim)

with the CIR. In view of CIRs inaction and to suspend the running of 2-yearprescriptive period, it filed a judicial claim with the CTA on March 13, 2009 for thefirst claim and on June 26, 2009 for the second claim.HeldThe 30-day period within which to file an appeal with the CTA as provided in Sec112 of NIRC is jurisdictional and failure to comply therewith would bar the appeal

and deprive the CTA of its jurisdiction. Such period is not merely directory butmandatory and it is beyond the power of the courts to extend the same. This rule

applies to cases of tax refund or issuance of tax credit certificate where the taxpayermay, within 30 days upon receipt of decision denying the claim or after expiration of120 days, appeal the decision or the unacted claim with the CTA.Both administrative claims were filed on time. However, the judicial claim for thefirst claim was filed out of time or 140 days after the filing of admin claim beyondthe 120-day period. On the other hand, the second judicial claim was prematurelyfiled, or on ly after 88 days from filing of the administrative claim.

SEA LION FISHING CORPORATION VS. PEOPLE OF THE PHILIPPINESFacts:The Captain, crew and fishermen aboard F/V Sea Lion were arrested for illegalfishing in Mangsee Island in Balabac, Palawan. Various charges were filed againstthem but the Provincial Prosecutor found probable cause only against the Chinese

fishermen and recommended the vessel and all the fishing gadgets, paraphernaliaand equipment (which were previously confiscated) released upon proper showingof evidence of its ownership of the aforesaid vessel by Sea Lion Fishing Corp (which

claims to be its owner).The RTC found the fishermen guilty and the confiscated vessel and equipment wereplaced under the [temporary] custody of the Philippine Coast Guard. Sea LionsMotion for Reconsideration was denied. It then filed a petition for Certiorari andMandamus with the CA, but the same was also denied. Thus, Sea Lion filed aPetition for Review on Certiorariwith the SC raising the sole issue of whether the

confiscation of F/V Sea Lion was valid.Held:

The confiscation of the vessel and equipment allegedly used in the commission ofthe crime can be confiscated, regardless of ownership. When these are claimed by athird-party not liable to the offense, such third-party must first establish its

ownership over the same.

On Remedy:

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CIR vs PL Management

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CIR v. PL Management2011Facts:1. PL earned P24M in 1997 from UMPC, where UMPC withheld P1.2M. In1998 PL filed a lost for its 1997 earnings and signified that it had a creditablewithholding tax of P1,200,000.00 for 1997 to be as tax credit in 1998.

2. In 1999 filed for a loss of P2.7M so it as not able to claim the P1.2M credit.3. On April 12, 2000, the respondent filed with CIR a claim for the refund ofthe P1.2M refund.4. CIR did not act so PL filed cases with CTA, which later denied claim of PLsaying the refund claim was filed out of time. Tax payment on nApril 13, 1998,claim of refund is on April 14, 2000, beyond the two year allowed.5. Appeal with the CA was for PL, the CA saying that the prescriptive period Isnot jurisdictional and might be suspended for reasons of equity.Issue: Whether the two-yr prescriptive period for tax claim is non-jurisdictional andcan be suspended for equityHeld: No. PL already chose to carry over the excess, refund cant be availed.

The Court of Appeals mistakenly understood the phrase "for that taxable period" asa prescriptive period for the irrevocability rule. There is a misplaced application ofthe CIR v. BPI case. The evident intent of the legislature, in adding the lastsentence to Section 76 of the NIRC of 1997, is to keep the taxpayer from flip-flopping on its options, and avoid confusion and complication as regards saidtaxpayer's excess tax credit. The interpretation of the Court of Appeals only delaysthe flip-flopping to the end of each succeeding taxable period.The irrevocability rule:Section 76 of the NIRC of 1997 provides:Section 76. Final Adjustment Return. - Every corporation liable to tax under Section27 shall file a final adjustment return covering the total taxable income for thepreceding calendar or fiscal year. If the sum of the quarterly tax payments madeduring the said taxable year is not equal to the total tax due on the entire taxable

income of that year the corporation shall either:(A) Pay the balance of tax still due; or(B) Carry over the excess credit; or(C) Be credited or refunded with the excess amount paid, as the case may be.

In case the corporation is entitled to a refund of the excess estimated quarterlyincome taxes paid, the refundable amount shown on its final adjustment returnmay be credited against the estimated quarterly income tax liabilities for thetaxable quarters of the succeeding taxable years. Once the option to carry-overand apply the excess quarterly income tax against income tax due for the taxablequarters of the succeeding taxable years has been made, such option shall beconsidered irrevocable for that taxable period and no application for tax refund or

issuance of a tax credit certificate shall be allowed therefor. The options arealternative.The amount being claimed as a refund would remain in the account of the taxpayeruntil utilized in succeeding taxable years, as provided in Section 76 of the NIRC of1997. It is worthy to note that unlike the option for refund of excess income tax,which prescribes after two years from the filing of the FAR, there is no prescriptiveperiod for the carrying over of the same. PL already chose to carry over the excesstax paid, refund cant be availed.Commissioner of Internal Revenue v. Asiatrust Development Bank, Inc., CTAEB No. 614; Asiatrust DevelopmentBank v. Commissioner of InternalRevenue, CTA EB No. 677, November 18, 2011)

Facts:Taxpayer filed a Petition for Review before the CTA in Division for failure of the CIRto act on its protest within the prescribed period. Both the CIR and the taxpayerfiled Motions for Partial Reconsideration assailing the decision of the Court inDivision partially granting the petition. The Court in Division denied theCommissioner of Internal Revenues plea for reconsideration for lack of merit,while it partially granted that of the taxpayer. The Court in Division substantiallymodified its former decision prompting the taxpayer to file another Motion forPartial Reconsideration of the amended decision which was denied by the Court.The CIR did not file the same motion but instead filed a Petition for Review beforethe Court of Tax Appeals EnBanc.Issue: W/N the appeal may be filed with the CTA en banc.

Held: Before an appeal may be filed with the Court of Tax Appeals (CTA) EnBanc by aggrieved party, it must be preceded by the filing of a motion forreconsideration or new trial with the Division that rendered the questioneddecision.

CIR VS Mirant

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CIR v. MirantGR No. 17616515 June 2011

Facts:

Mirant entered into Operating and Management Agreements with Mirant PagbilaoCorporation (formerly Southern Energy Quezon, Inc.) and Mirant Sual Corporation(formerly Southern Energy Pangasinan, Inc.) to provide these companies withmaintenance and management services in connection with the operation,construction and commissioning of coal-fired power stations situated in Pagbilao,Quezon, and Sual, Pangasinan respectively.

On September 20, 2001, Mirant wrote the BIR a letter claiming a refund of87,345,116.00 representing overpaid income tax.

CTA 1st Division: Partially granted Mirants claim for refund but the amount wasreduced to P38 million which constitutes the duly substantiated unutilizedcreditable withholding taxes.

Issue: WON Mirant is entitled to a tax refund or to the issuance of a tax creditcertificate and, if it is, then what is the amount to which it is entitled. YES but it therefund is limited to the substantiated claim.

Ratio:

1. Once a corporation exercises the option to carry-over and apply the excessquarterly income tax against the tax due for the taxable quarters of the succeedingtaxable years, such option is irrevocable for that taxable period. Having chosen tocarry-over the excess quarterly income tax, the corporation cannot thereafterchoose to apply for a cash refund or for the issuance of a tax credit certificate forthe amount representing such overpayment.

2. Mirant complied with all the requirements for the refund of its unutilized

creditable withholding taxes for taxable year 2000.The requisites for claiming a tax credit or a refund of creditable withholding tax:1) The claim must be filed with the CIR within the two-year period fromthe date of payment of the tax;2) It must be shown on the return that the income received was declaredas part of the gross income; and

3) The fact of withholding must be established by a copy of a statementduly issued by the payor to the payee showing the amount paid and theamount of the tax withheld.

Held:Mirant complied with all the legal requirements and it is entitled, as itopted, to a refund of its excess creditable withholding tax for the

taxable year 2000 in the amount of38,620,427.00.

Manila North TollwaysCorp v CIR

elie

CIR VS FarEastBank

CIR v. Far East,March 2010.Facts:

1. Far East filed Corporate Annual Income Tax Return for 1994 for CorporateBanking Unit and Foreign Currency Deposit Unit with reflected refundable incometax of P12M.2. The P12M refund was carried over and applied for the 1995 income tax return.3. In 1995, Far East claimed that it overpaid tax payments by P17M. P13M is beingsought for refund and chose that the remaining will be carried over.4. Far East then claimed for the refund of the P13.6M, which the CIR did not actupon.5. Far East filed a claim for refund. CTA denied claim for refund.6. CA reversed the CTA ruling that Far East duly proved that the income derivedfrom rentals and sale of real property upon which the taxes were withheld wereincluded in the return as part of the gross income.Issue: W/N respondent is entitled to the refund.

Held: NO. The burden of proof for the claim is with the claimant which it failed toestablish.

A taxpayer claiming for a tax credit or refund of creditable withholding tax mustcomply with the following requisites:

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1) The claim must be filed with the CIR within the two-year period from the date ofpayment of the tax;2) It must be shown on the return that the income received was declared as part ofthe gross income; and3) The fact of withholding must be established by a copy of a statement duly

issued by the payor to the payee showing the amount paid and the amount of thetax withheld.Moreover, the fact that the petitioner failed to present any evidence or to refute theevidence presented by respondent does not ipso facto entitle the respondent to atax refund. It is not the duty of the government to disprove a taxpayer s claim forrefund. Rather, the burden of establishing the factual basis of a claim for a refundrests on the taxpayer.And while the petitioner has the power to make an examination of the returnsand to assess the correct amount of tax, his failure to exercise such powersdoes not create a presumption in favor of the correctness of the returns. Thetaxpayer must still present substantial evidence to prove his claim forrefund. As we have said, there is no automatic grant of a tax refund.

Mermac Inc v CIR

Mermac Inc v CIR (June 28, 2010)Facts: MERMAC wanted to avail of the refund or issuance of tax credit certificateof excess or unapplied creditable withholding tax (CWT) under Section 204 of theTax Code. Section 2.58.3 (B) of the RR 2-98 requires that such taxpayer claimingrefund of excess CWT must show on the return that the income payment subjectedto withholding tax was declared part of its gross income, and establish fact ofwithholding by submitting a copy of the withholding tax statement (BIR Form 2307)issued by the payor/buyer.

In the instant case, the payee/seller took charge of deducting the amount ofwithholding tax from the payment received, remitting the same to the BIR. To provefact of withholding of CWT, the taxpayer/refund claimant (MERMAC) presentedBIR Form 1606 (withholding tax remittance return), which it filed relative to the saleof its real property. Due to CIRs inaction on its claim for refund amounting to2,010,452.00, it filed a Petition for Review w/ the CTA 2 nd Division, which partially

granted MERMACs claim for refund but only as to the amount of 92, 899.80 . Itfiled a Petition for Review with the CTA En Banc.

Issue: WON BIR Form 1606 suffices to establish fact of withholdingHeld: No. It does not suffice because it did not emanate from the payor.

A claim for refund of excess creditable withholding taxes in accordance with settledjurisprudence, must comply w/ the following requisites:1) Claim for refund filed within 2-year prescriptive period under Sec. 204 (C) inrelation to Section 229 of the NIRC2) It is shown on the return of the recipient that the income payment receivedwas declared as part of gross income3) Fact of withholding established by a copy of a statement duly issued by payor(withholding agent) to the payee, showing the amount paid and amount of taxwithheldPetitioner complied with the first two requisites, but failed to comply with the third. Itis the BIR Form No. 2307 issued by the income payor, the duly constitutedwithholding agent, which establishes the fact of withholding. The BIR Form

1606 (withholding tax remittance form) should come from the payor and not thepayee since the payor is in a better position to state that the withholding of tax wasin fact made, being the duly constituted withholding agent.

To be entitled to a refund or issuance of tax credit certificate of excess/unappliedcreditable withholding tax, the fact of withholding, among others, must beestablished. The document, which may be accepted as evidence to establish factof withholding, must (1) emanate from the payor itself, and not merely from thepayee, and must (2) indicate the name of the payor, the (3) income payment basisof the tax withheld, the (4) amount of tax withheld, and the (5) nature of the taxpaid.Hence, for purposes of entitlement to refund or excess creditable withholding tax,the only acceptable evidence is BIR Form No. 2307 to establish fact of withholding.

The provisions of the law must be applied accordingly, and industry practice, i.e.for real estate companies to remit on behalf of clients (mostly individual buyers) thecreditable withholding tax due on its income from the sale of property, does not

justify non-compliance with the law.Dispositive: petition denied

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Maunsell v Phils Inc v CIR

Maunsell claims that in 2006, it accumulated creditable withholding taxesamounting to P3,839,671.31. In its AMENDED income tax return for 2006, it chosethe option "To be issued a Tax Credit Certificate" forits overpaid taxes.

On July 13, 2007 it filed on administrative claim for the issuance of a taxcredit certificate with the BIR. Since, BIR did not act on the claim, the companyfiled a petition before the CTA on January 15, 2009.

Issue : Whetherornot Petitioner's right to claim for issuance of tax creditcertificate of the overpaid income taxes for FY 2006 is substantiated withsupporting documents? No

1. Maunsell failed to offer evidence of its filing of ORIGINAL income taxreturn for 2006.

Sec. 229 provides that in any case no such suit or proceedingshall be filed after the expiration of 2 years from the date ofpayment of

the tax or penalty regardless of any supervening cause. In PAL vs. CIR,it was held that the counting should be made from the date offiling oftheoriginal final adjustment return and not from the date of filing of theamended return.

The original return is important in order for CTA to ascertainwhether the filing of the administrative and judicial claims for refund orissuance of a tax credit certificate were made within the two-yearreglementary period.Absent such document, it has no way ofdeterminingwhether the claim was timely filed.

2. Moreover, the original return is necessary for the CTA to verify ifpetitioner's original option was to be issued a tax credit certificate for theunapplied creditable taxes withheld since once the option to carry-over

and apply the excess quarterly income tax against income tax due for thetaxable quarters of the succeeding taxable years has been made, suchoption shall be considered irrevocable for that taxable period.

Under Section 76, if quarterly tax payments made during thesaid taxable year is not equal to the total tax due the corporation has anoption to

(A) Pay the balance oftax still due; or(B) Carry-overthe excess credit; or

(C) Be credited orrefunded with the excess amount paid.

Thus, if petitioner has originally chosen the option "to becarried-over as tax credit next year/quarter", it will be precludedfrom claiming the issuance of a tax credit certificate for the saidexcess payment.

CIR v PNB

FACTS: PNB submitted its Annual ITR (covering the year 2003) before the CIR in April

2004 where it reflected the amount of P33M, representing its unused and unutilized income

tax. PNBs ITR was amended on October 25, 2004, where the amount was increased to P

40.114M, and on November 8, 2004, where the amount was again increased to P 40.165M.

On February 17, 2005, petitioner filed its administrative claim for refund. However, on

March 29, 2005, PNB again filed its amended Annual ITR which showed the amount of P

45.456M as overpayment. On the same date, PNB filed its amended administrative claim for

refund or issuance of tax credit certificate, thus superseding its earlier administrative claim

for refund of its alleged unutilized creditable withholding taxes for the taxable year 2003 in

the amount of P40.25 M, claiming that it carried over the amount of P 4.93 M as prior years

credit.

As respondent has not acted on petitioners claim, PNB filed a Petition for Review before the

CTA for the refund or i ssuance of tax credit certificate representing its unused and unutilized

creditable withholding taxes for the calendar year 2003 pursuant to Sec. 76 and 229 of the

NIRC.

The CTA Division granted PNBs petition, but only to the extent of P39.3M.Both appealed.

PNB wanted to have a refund amounting to P 40.25M. CIR, in its petition, raised the

argument that PNB is not entitled to the refund of its excess creditable withholding tax

credits because it failed to sufficiently prove that it did not carry-over and apply its 2003

excess tax credits against its quarterly income tax liabilities for the succeeding years. CIR

alleged that PNB's failure to formally offer as evidence its quarterly income tax returns for

the taxable year 2004 is fatal to its claim forrefund.

ISSUES:

1. W/N The presentation of the quarterly income tax returns is a legal requisite for the claim

for refund of excess creditable withholding tax credits.

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HELD: NO. The presentation of the quarterly income tax returns of PNB forthe first, second

and third quarters of the taxable year 2004 is not a legal requisite for the claim for refund of

excess creditable withholding tax credits for the taxable year 2003.

The NIRC of 1997 did not require the presentation of the quarterly income tax returns to

prove the claim for refund of creditable withholding taxes. According to Sec. 76, a corporate

taxpayer who is entitled to a tax credit or refund of the excess estimated quarterly income

taxes paid has two options: (1) to carry-over the excess credits to the succeeding taxableyears; (2) to apply for the issuance of a tax credit certificate or to claim a cash refund.

Furthermore, Section 2.58 of BIR Revenue Regulations No. 2-98, as amended, set forth the

requisites for the entitlement to a refund of excess creditable withholding tax credits:

1. That the claim for refund was filed within the two-year prescriptive

period as provided under Section 204 (c) in relation to Section 229 of the

NIRC of 1997;

2. That the fact of withholding is established by a copy of a statement

duly issued by the payor (withholding agent) to the payee, showing the

amount paid and the amount of tax withheld therefrom ; and

3. That the income upon which the taxes were withheld were included in

the return of the recipient.

Nowhere in the law or in its implementing rules and regulations is it indicated that the

presentation of quarterly tax returns for the succeeding taxable years is a requisite to establish

the entitlement to the refund of excess creditable withholding tax credits.

As regards PNBs claim, the CTA found that PNB failed to prove and substantiate each and

every component of the Total Tax Credits/ Payments reflected on its final adjustment return.

In order to establish the factual basis of its claim for refund, petitioner must substantiate its

prior year's excess tax credits to overcome the burden of proof required.

StablewoodPhils v CIR

Facts:Stablewood is the successor-in-interest of Orca Plant which was dissolved byoperation of law by virtue of its merger with Rolls-Royce Power Ventures(Philippines), Inc. and Orca Energy, Inc.In 2006, Orca Plant filed its 2005 Annual ITR through the Electronic Payment andFiling System (EFPS) indicating that its creditable withholding tax (CWT) is to be

refunded. On that same year, a claim for refund was filed by Orca through SGV &Co. Due to the inaction of the BIR, a Petition for Review was filed with the CTA.CTA denied the refund claim because Orca carried-over its excess tax credits of2005 inclusive of the claimed amount as Prior years Excess Credits in itsQuarterly ITRs for the first three quarters of taxable year 2006. Orcas originaloption to refund the said amount was thus negated by its very act of carrying oversaid excess amount to the succeeding taxable quarters of 2006.

Orca filed a petition for review with the CTA En Banc. It argued that the CTA has nobasis to conclude that it exercised its option to carry-over because the quarterly taxreturns were not final.Ruling of the CTA En Banc :Sec. 76 of the NIRC Once the option to carry-over and apply the excessquarterly income tax against income tax due for the taxable quarters of thesucceeding taxable years had been made, such option shall be consideredirrevocable for that taxable period and no application for cash refund or issuance ofa tax credit certificate shall be allowed therefore.

St. Paul College of San Rafael vs CIR

maybel

CIR v KepcoIlijanCorp

ACTS:

Kepco Ilijan Corporation (Petitioner) is a domestic corporation engaged in the production

and sale of electricity as an Independent Power Producer (IPP), whose produced electricity is

sold solely to NPC.

For the first three quarters of taxable year 2005 and for October 2005, petitioner filed its

Quarterly and Monthly VAT Returns showing that it incurred expenses representing

importation and domestic purchases of goods and services, for which petitioner also incurred

input VAT.

Petitioner filed an administrative claim for refund with the BIR representing input VAT

allegedly incurred by petitioner from importations and domestic purchases of capital

goods/equipment and services preparatory to its production and eventual sale of electricity to

NPC.

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Due to respondent's inaction and in order to suspend the running of the two-year prescriptive

period under the National Internal Revenue Code (NIRC), petitioner filed the present Petition

for Review on April 24, 2007.

HELD:

The administrative claim for refund or issuance of tax credit certificate of unutilized input

VAT attributable to zero-rated sales is governed by Section 112 (A) of the 1997 NIRC. Basedon Section 112 (A) the application for refund of unutilized input VAT attributable to zero-

rated sales may be made only within two (2) years after the close of the taxable quarter when

the sales were made.

This period, however, refers solely to applications for refund/credit filed with the

Commissioner of Internal Revenue (CIR) and not to appeals made to the CTA. The period

within which to file judicial claims is found under Section 112 (0)10 of the 1997 NIRC.

Accordingly, judicial claim for refund should be filed within thirty (30) days from receipt of

the decision of the CIR or upon the expiration of the one hundred twenty (120) days in case

of inaction of the CIR. The observance of these periods is mandatory and non-compliance

therewith would result in the denial of the claim.

Applying the same to the present case, the administrative claim for refund filed byrespondent covering the first to third quarters of 2005 was filed on October 28. 2005 and for

the month of October 2005, the administrative claim was filed on December 7, 2005.

It is clear that the administrative claims were filed within the two-yearprescriptive period. However, despite the timely filing of the administrativeclaims, this Court is constrained to deny respondent's refund claim on theground that its judicial claim was filed out of time. Records show thatrespondent filed its Petition for Review on April 24, 2007, way beyond the 30-day period from the lapse of the 120-day period for the CIR to decide theclaim.

RP rep by COC v NPC Alliance

Republic of the Philippines v. NPC Alliance Corporation, CTA EBNo. 679, October 25, 2011Decision or order which is appealable to the Court of Tax Appeals EnBanc is that which has resolved the case with finality, and which, ineffect, terminates or finally disposes of a case, as it leaves nothing to bedone by the court as the case has finally been decided on the merits.

The Commissioner of Customs filed a Petition for Review before theCourt of Tax Appeals En Banc assailing the Resolution of a division of the

Court denying the Bureau of Customs Motion for Reconsideration, whichallowed the posting of a bond. The Court held that the petition wasprematurely filed before the Court of Tax Appeals En Banc for beinginterlocutory as it still leaves something to be done by the court a quo andthe same may not be subject of review under the Revised Rules of the Courtof Tax Appeals. In fact, Section 1, Rule 41 of the 1997 Rules of CivilProcedure, as amended, which applies suppletorily to proceeding before the

Court of Tax Appeals, expressly provides that no appeal may be taken froman interlocutory order. The proper procedure that petitioner should havetaken in this case was to await for the final termination of the proceedingsbefore the Court in Division, prior to the filing of the instant petition forreview, because it is a well-settled rule that only final orders or judgments onthe merits may be the subject of appeal.

City of Makati v CIR

tope

Festo Holdings Inc v CIR

Amirah

PNB v CIR

Aneka

DNATA V CIR

Dnata was issued a formal assessment notice on sept 12, 2007 for P8.3 million indeficiency income tax, value-added tax, withholding tax on compensation, andexpanded withholding tax for 2003. On Oct 18 2007, Dnata filed a letter of protestassailing the validity of the FAN, and praying for its cancellation and withdrawal.On March 18, 2008, the CIR issued a final decision denying Dnata's protest, on theground that it failed to submit proof/documents necessary for the cancellation and

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withdrawal of the FAN within the 60 days reglementary period from the filing of theprotest. Dnata then filed a petition for review with the CTA through registered mail.Dnata raised the issue of the BIR's failure to inform them of the need for additionalsupporting documents.Issue: Whether or not the petition was perfected on time

Held: NORatio: Dnata filed the petition through registered mail on the next working day afterthe deadline, which was a Saturday. But it did not pay the docket fees throughpostal money order; instead, it paid the docket fees on the day the registered mailwas received by the Court, or May 5, 2008. While petitioner was deemed to havefiled its petition for review on time, it failed to perfect its appeal for non-payment ofthe corresponding docket and other lawful fees at the same time that it filed itsinitiatory pleading as required in Sec 1, Rule 42 of the Rules of Civil Procedure.Basic is the rule that docket and other lawful fees must be paid within the period fortaking an appeal, and that where the filing of the initiatory pleading is notaccompanied by payment of the docket fees, the court may allow payment of the

fee within a reasonable time but in no case beyond the applicable prescriptive orreglementary period.The payment of the docket fees within the prescribed period is mandatory for theperfection of the appeal. Without payment, the appellate court does not acquire

jurisdiction on the subject matter of the action and the decision sought to beappealed from becomes final and executory.In the case of Villena v Rupisan, the Supreme Court went further to say that theappellate court acquires jurisdiction on the subject matter of the action only uponpayment of the correct amount of docket fees regardless of the date of filing of thecase. While it is true that petitioner subsequent to the filing of its petition for reviewpaid the required docket and other fees, the same did not cure the defect as thepayment was effected beyond the reglementary period for perfecting an appeal.The payment of appellate docket fees is not a mere technicality of law orprocedure but an essential requirement for the perfection of an appeal. It is

jurisdictional, an issue that may be raised even for the first time on appeal. Thelack of it will render the proceedings conducted null and void.The strict application of the jurisdictional nature of the rule on payment of appellatedocket fees may be mitigated under exceptional and meritorious circumstances to

better serve the interest of justice. However, there is no showing of any satisfactoryreason to justify relaxation of what otherwise should be a stringent application ofthe rule.

For failure to pay the corresponding docket fees on time, petitioneralso failed to seasonably perfect its appeal, divesting the CTA of jurisdictionor authority to take cognizance of the instant Petition for Review. As

provided in Section 228 of the NIRC, for failure to perfect an appeal on time,the decision rendered by CIR has become final, executory and demandable

Sea Lion Fishing Corp v People

bles

CIR v AsiatrustDevt Bank

Taxpayer filed a Petition for Review before the CTA in Division for failure of the CIR

to act on its protest within the prescribed period. Both the CIR and the taxpayerfiled Motions for Partial Reconsideration assailing the decision of the Court in

Division partially granting the petition. The Court in Division denied the

Commissioner of Internal Revenues plea for reconsideration for lack of merit, while

it partially granted that of the taxpayer. The Court in Division substantially modified

its former decision prompting the taxpayer to file another Motion for Partial

Reconsideration of the amended decision which was denied by the Court. The CIR

did not file the same motion but instead filed a Petition for Review before the Court

of Tax Appeals En

Banc.

W/N the appeal may be f iled with the CTA en banc.

LuzonHydroCorp v CIR

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Luzon Hydro Corporation (LHC) v. CIRCTA Case No. 7810January 6, 2012

Facts:LHC is duly registered as a VAT taxpayer. A Power Purchase Agreement (PPA)

with the Napocor was entered into by The Consortium of Northern Mini HydroCorp.; Ever Electrical Manufacturing Inc.; Aboitiz Equity Ventures Inc; PacificHydro Limited. The PPP was for the development of Bakun hydroelectric facilities.

LHC filed administrative claim with BIR for refund of its unutilized VAT from June toSeptember 2006 in the amount of P4,151,852.39.

CTA 3rd Division: Dismissed the claim for having been filed beyond the 30-dayperiod for claiming refund.Issue: WON the administrative and judicial claim were filed within the reglementaryperiod allowed by law. The administrative claim was filed within thereglementary period of 2 years from the close of the taxable quarter, the

judicial claim was filed beyond the period mandated under Section 112 (C).

Note: This case only discussed procedural issues as regards the mandatory periodfor the filing of a motion for reconsideration which is 15 days.

When a judgment becomes final and executory, it becomes immutable andunalterable and any amendment or alteration which substantially affects a final andexecutor judgment, is null and void for lack of jurisdiction, including the entireproceedings held for that purpose.

Held: The assailed decision was received by LHC on November 26, 2010 andpetitioner had 15 days or until December 11, 2010 to file its Motion forReconsideration. However, petitioner filed its motion only on December 22, 2010 ornine days after the lapse of the prescribed period.

Note: The more detailed discussion is in the 2008 case of CIR v. Mirant.

CIR v. Mirant Pagbilao Corporation (MPC)12 September 2008GR No. 172129

SC Decision:

The claim for refund of creditable Value Added Tax input taxes in the amount ofPhp4,151,852.39 for the months of June to September 2006 must be strictlyconstrued and petitioner has the burden of proving that the requirements were metor complied with especially the requirement that petitioner's administrative and

judicial claims for tax refund was filed within two (2) years after the close of thetaxable quarter when the sales were made in accordance with Sections 112 (A)and (D). Take note that the reckoning of the 2-year period for filing/claiming

refund or issuance of TCC is from the close of the quarter when such saleswere made and compliance with the "120-30 day period" under Section 112(C) is crucial in filing a judicial claim.

When petitioner filed its administrative claim for tax refund on 30 April 2007,respondent had 120 days within which to decide on petitioner's claim for taxrefund. And in case of full or partial denial of the claim or failure of respondent toact on the application within the 120 day period, petitioner has 30 days to appealthe decision or inaction with the Court of Tax Appeals. Thus, respondent had torender a decision within 120 days from 30 April 2007 or until 27 August 2007.However, petitioner filed the instant petition for review with the Court of Tax

Appeals only on 18 July 2008, almost a year after the lapse of the period allowedby law to file the judicial claim for tax refund with the Court of Tax Appeals. Clearly,the instant petition for review was filed out of time.

Under Sec. 105 of the NIRC, creditable input VAT is an indirect tax which can beshifted or passed on to the buyer, transferee, or lessee of the goods, properties, orservices of the taxpayer. The fact that the subsequent sale or transaction involvesa wholly-tax exempt client, resulting in a zero-rated or effectively zero-ratedtransaction, does not, standing alone, deprive the taxpayer of its right to a refundfor any unutilized creditable input VAT, albeit the erroneous, illegal, or wrongfulpayment angle does not enter the equation.

Held: While the administrative claim was filed within the reglementary periodof 2 years from the close of the taxable quarter, the judicial claim was filedbeyond the period mandated under Section 112 (C) thus, the Court isconstrained to DENY the petitioner's claim for refund or issuance of TCC.

UnionCementCorp v CIR

elie

La FlorDelaIsabela v CTA

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Facts:

La Flor is a domestic corporation.

In 2000 the letter of authority for assessment for taxable year 1999 was issued by the BIR.

From 2002 to 2005, La Flor executed five Waivers to extend BIRs period to assess the taxes.

The Formal Letter of Demand (FDL) for the tax deficiency was received by La Flor before

the expiration of the 5th waiver in 2005.

La Flor immediately filed a protest against the FDL. It also filed a supplemental protest lessthan two weeks after.

After 2 years, June 2007, La Flor received a Final Decision on Disputed Assessments

(FDDA) indicating its deficiency taxes in the total amount of P10,460,217.23.

On October 2007, petitioner filed an application for tax amnesty. Ten days later it also filed

an application for compromise agreement pursuant to Section 204 of the Tax Code.

La Flor received an undated Warrant of Distraint and/or Levy (WDL) issued by BIR.

Issue:

WON La Flor can still validly assail the assessment.

Held:

NO.

If a protest is not acted upon by respondent within 180 days from submission of supporting

documents, the taxpayer adversely affected by such inaction may appeal to the CTA within

30 days from the lapse of the 180-day period. La Flor should have appealed to the CTAwhen it did not receive action on its protest immediately.

To reiterate, the failure of a taxpayer to file a petition for review withthe Court of Tax Appeals within the statutory period rendered the disputedassessment final, executory and demandable, thereby precluding the saidtaxpayer from interposing the defenses of legality or validity of theassessment and prescription of the Government's right to assess. Indeed,any objection against the assessment should have been pursued followingthe avenue paved in Section 229 (now Section 228) of the NIRC on protestson assessments of internal revenue taxes.

Fax N Parcel v CIR

Fax N Parcel v CIR (Nov. 22, 2011)Facts: Fax N Parcel is contesting the assessments issued by the CIR fordeficiency income tax and VAT for the 4th quarter of 2002. In March 2005, the CIRhad issued against petitioner a Preliminary Assessment Notice (PAN), withattached details of discrepancies for unreported income from understatement ofsales during the 4th quarter of 2002. In April, the CIR issued a Formal Assessment

Notice (FAN), prompting petitioner to file a Protest Letter in July, which the CIRfailed to act on, hence this petition for review.Issue: WON the assessment for alleged undeclared income from petitionersunreported sales for the 4th quarter of 2002 based on the BIRs computer-generated Quarterly Report on third party Information on Purchases is valid

Held: No.

When servedwith subpoena duces tecum and ad tesfificandum, 11 of the 15alleged purchasers of petitioner, through their duly authorized officers orrepresentatives, either controverted or denied respondents allegations. Thequarterly report of the BIR also showed considerable discrepancies. As admittedby the respondents own witness, the summary lists of purchases received by theBIR were not verified with other externally sourced data to check the integrity of theinformation gathered. The Integrated Tax System of the BIR can only check orvalidate the format and possible viruses in the computer program, not the contentor substance of the encoded summary lists of purchases.While assessments have the presumption of correctness and regularity in its favor,it is also equally true that assessments should not be based on mere

presumptions, no matter how reasonable or logical the presumption might be(citing CIR v. Hantex Trading, March 31, 2005). Assessments lack sufficiency inevidence when it is based on the BIRs computer-generated third party informationwhich was not verified with other externally sourced data; esp. when third partiescontrovert the allegations.Finally, imputation of fraud against petitioner adding 50% surcharge to its allegedincome and VAT liabilities is erroneous since the claimed fraudulent intent wasmerely deduced from the fact that there was an under-declaration of sales/incomefor the 4thquarter of 2002, which respondent failed to establish. Fraud cannot bepresumed but must be proved.Dispositive: petition granted

Hermano (San) Miguel .... VS CIR

Hermano (San Miguel) vs. CIR (C.T.A. CASE NO. 8194 January 9, 2012)

Hermano is seeking the cancellation of Final Assessment Notice (FAN)issued by the BIR for VAT deficiency amounting to P2,607,933.07, arising from its

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sale of pharmacy items to its in-patients, in line with its rendering of hospitalservices.

Hermano grounds are:1. The FAN is void for they merely showed a mathematical computation of

petitioner's tax liability without stating the factual and legal bases of thesame

2. CIR failed to take into consideration that its sales ofpharmacy items to itsin-patients are exempt from VAT pursuant to Section 109(L).

Ruling:

3. FAN is not void based in the first ground.Section 228 provides that in the assessment, The taxpayers shall

be informed in writing of the law and the facts on which theassessment is made; otherwise, the assessment shall be void toensure that taxpayers are duly apprised of the basis of the taxassessments against them.

Here, in the "Details of Discrepancies", attached to the

assessment, the details contained therein showed that the factual basisfor assessing petitioner for deficiency VAT was the discrepancy fromRELIEF and Third-Party Matching. In a long line of cases, the SC hasruled that the requirement of the law to inform the taxpayer of the basis ofthe assessment does not necessarily mean that it be a full narration of thefacts and laws on which the assessment is based. Here, Hermano wasable to intelligently make its protest by stating that its sales ofpharmaceutical items in favor of its in-patients are exempt from VAT. Thiscircumstance proves that petitioner was sufficiently informed of the factsand the law as to why the assessment has been issued against it.

4. However, the assessment of VAT deficiency was incorrect.As held in Perpetual Succour Hospitalvs. CIRand St. Luke's

Medical Centerv. CTA & CIR, hospital services includes not only theservices of the doctors, nurses and allied medical personnel, but alsothe necessary laboratory services, and making available the medicines,drugs and pharmaceutical items that are necessary in the diagnosis,treatment and care of patients. Sale of drugs or pharmaceutical items toinpatients of the hospital are, therefore, considered part of the hospitalservices covered by Section 109 (/)of theNIRC of 1997, as amended.

Laurence Lee v LuangvsSixtoEsquivias

Petitioner owned a Unioil gas station. He sent a letter dated June 21, 2005 to the BIR to

inform said office that his business operations would cease by the middle of the year 2005

and that taxes were to be incurred only up to June 30, 2005. Said letter was also meant to

inform the BIR of the cessation of reportorial requirements that must be complied with by the

taxpayer pursuant to the operation of a business entity. Petitioner filed his second (2nd)quarter VAT return on July 26, 2005.

Petitioner received a copy of a Formal Letter of Demand and a FAN on November 5, 2008

for alleged deficiency VAT, deficiency income tax, and compromise penalties for the year

2005 amounting to P 7.7M. Petitioner filed a Protest to the FAN, but there was no response

from the CIR. Petitioner thus filed a Petition for Review before the CTA, claiming that after

the issuance of the Letter Notice (LN) dated April 30, 2007, there is no evidence that a

Preliminary Assessment Notice (PAN) was served upon petitioner pursuant to RR No. 12-99

and as such, petitioner believes that the deficiency VAT and income tax assessments issued

against him must be considered void for being violative of the due process.

On the other hand, respondent argues that the absence of a PAN may not invalidate the

assessment, and that what is essential is that petitioner was able to file his protest to the

FAN/Formal Letter of Demand within thirty (30) days from receipt of the same.

W/N the absence of a Preliminary Assessment Notice violates invalidates an assessment.

HELD: YES. Section 228 of the Tax Code requires that the taxpayer must firstbe informed that he is liable for deficiency taxes through the sending of aPAN. He must be informed of the facts and the law upon which theassessment is made. The law imposes a substantive, not merely a formal,requirement. The sending of a PAN to taxpayer to inform him of theassessment made is but part of the 'due process requirement in the issuanceof a deficiency tax assessment,' the absence of which renders nugatory anyassessment made by the tax authorities. The use of the word 'shall' insubsection 3.1.2 of Revenue Regulations 12-99 describes the mandatorynature of the service of a PAN. The persuasiveness of the right to dueprocess reaches both substantial and procedural rights and the failure of theCIR to strictly comply with the requirements laid down by law and its ownrules is a denial of petitioner's right to due process.

Cargill Phils v CIR

Facts:

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In Sept 9, 2008, Cargill received a Preliminary Assessment Notice (PAN)assessing deficiency VAT and compromise penalty for the period covering Sept2005 to Aug 2005. Soon after, Cargill also received a Final Assessment Notice(FAN) together with an Audit Result / Assessment Notice. It was found liable of VATin the amount of Php5.4M++. Cargill filed a protest but the same was not actedupon. Thus, it filed a Petition for Review with the CTA.Cargill argues that it was denied due process and that the assessment period has

lapsed.In its answer, the CIR said that Cargill the assessment was proper because it failedto respond to the PAN with the 15-day allowable period.Ruling of the CTA:

1. The CIR has substantially complied with the requirements of due process

because Cargill was given the opportunity to refute the PAN and was able

to exercise its option to protest the FAN.

2. However, the period to assess has prescribed assessments should be

served to the taxpayer within a three-years period counted from the day

the return was filed. Therefore, the assessments served on Sept 9, 2008

for the periods of Sept 2004 to May 2005 is barred by prescription. (See

table below)

RCBC v CIR

maybel

Edison Cogeneration Corp v CIR

neil

International Exchange Bank v CIR

Petitioner, a banking institution duly organized and existing under thelaws of the Philippines, was on April 13, 1999 served Letter of Authorityby the Commissioner of Internal Revenue directing the examination by a"Special Team created pursuant to RSO 797-98" of petitioners books ofaccounts and other accounting records for the year 1997 and "unverifiedprior years." An examination of said documents was in fact conducted.

Petitioner subsequently received on November 16, 1999 a "Notice toTaxpayer" from the Assistant Commissioner, Enforcement Service of theBureau of Internal Revenue, notifying it of the results of the examinationconducted by the Special Team regarding its tax liabilities, whichamounted to P465,158,118.31 for 1996 and P17,033,311,974.23 for1997, and requesting it to appear for an informal conference to presentits side. On January 6, 2000, petitioner was personally served with an

undated Pre-Assessment Notice (PAN) assessing it of deficiency on itspurchases of securities from the Bangko Sentral ng Pilipinas orGovernment Securities Purchased-Reverse Repurchase Agreement(RRPA) and its FSD for the taxable years 1996 and 1997. On January 12,2000, petitioner received a Formal Assessment Notice (FAN) fordeficiency DST on its RRPA and FSD, including surcharges, in theamounts of P25,180,492.15 for 1996 and P75,383,751.55 for 1997, andan accompanying demand letter requesting payment thereof within 30days.Acting on the FAN, petitioner filed on February 11, 2000 a protest letteralleging that the assessments should be reconsidered on the groundsthat: (1) the assessments are null and void for having been issuedwithout any authority and due process, and were made beyond theprescribed period for making assessments; (2) there is no law imposing

DST on RRPA, and assuming that DST was payable, it is the BangkoSentral ng Pilipinas which is liable therefor; (3) there is no law imposingDST on its FSD; and (4) assuming the deficiency assessments for DSTwere proper, the imposition of surcharges was patently without legalauthority.Petitioner argued that its FSD is not subject to DST since it was not oneof the documents enumerated either under the 1977 Tax Code (TaxCode) or the 1997 National Internal Revenue Code (NIRC). Respondenton the other hand argued that petitioner should be liable not only forDST on its FSD but also on its RRPA.The First Division of the CTA and the CTA En Banc upheld the propriety ofthe DST.ISSUE: WON a Savings Account-Fixed Savings Deposit (FSD) evidencedby a passbook issued by petitioner subject to documentary stamp tax

(DST) for the years 1996 and 1997HELD: NORATIO:

The applicable provision is Section 180 of the Tax Code, as amended byR.A. 7660, which reads:

Sec. 180. Stamp tax on all loan agreements, promissory notes, bills ofexchange, drafts, instruments and securities issued by the government

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or any of its instrumentalities, certificates of deposit bearing interest andothers not payable on sight or demand. - On all loan agreements signedabroad wherein the object of the contract is located or used in thePhilippines; bills of exchange (between points within the Philippines),drafts, instruments and securities issued by the Government or any of itsinstrumentalities or certificates of deposits drawing interest,ororders for the payment of any sum of money otherwise than at sight or

on demand , or on all promissory notes, whether negotiable or non-negotiable, except bank notes issued for circulation, and on eachrenewal of any such note, there shall be collected a documentary stamptax of Thirty centavos (P0.30) on each two hundred pesos, or fractionalpart thereof, of the face value of any such agreement, bill of exchange,draft, certificate of deposit, or note: Provided, That only onedocumentary stamp tax shall be imposed on either loan agreement, orpromissory notes issued to secure such loan, whichever will yield ahigher tax: Provided, however, That loan agreements or promissorynotes the aggregate of which does not exceed Two hundred fiftythousand pesos (P250,000) executed by an individual for his purchaseon installment for his personal use or that of his family and not forbusiness, resale, barter or hire of a house, lot, motor vehicle, applianceor furniture shall be exempt from the payment of the documentary

stamp tax provided under this section.As correctly found by the CTA En Banc, a passbook representing aninterest earning deposit account issued by a bank qualifies as acertificate of deposit drawing interest.A document to be deemed a certificate of deposit requires no specificform as long as there is some written memorandum that the bankaccepted a deposit of a sum of money from a depositor. What isimportant and controlling is the nature or meaning conveyed by thepassbook and not the particular label or nomenclature attached to it,inasmuch as substance, not form, is paramount.Contrary to petitioners claim, not all certificates of deposit arenegotiable. A certificate of deposit may or may not be negotiable asgathered from the use of the conjunction or, instead of and, in itsdefinition. A certificate of deposit may be payable to the depositor, to

the order of the depositor, or to some other person or his order.In any event, the negotiable character of any and all documents underSection 180 is immaterial for purposes of imposing DST.Orders for the payment of sum of money payable at sight or on demandare of course explicitly exempted from the payment of DST. Thus, aregular savings account with a passbook which is withdrawable at any

time is not subject to DST, unlike a time deposit which is payable on afixed maturity date.As for petitioners argument that its FSD is similar to a regular savingsdeposit because it is evidenced by a passbook, and that based on thelegislative deliberations on the bill which was to become R.A. 9243 whichamended Section 180 of the NIRC (which is to a large extent the same asSection 180 of the Tax Code, as amended by R.A. 7660), Congress

admitted that deposits evidenced by passbooks which have featuresakin to time deposits are not subject to DST, the same does not lie.

The FSD, like a time deposit, provides for a higher interest rate whenthe deposit is not withdrawn within the required fixed period; otherwise, itearns interest pertaining to a regular savings deposit. Having a fixed termand the reduction of interest rates in case of pre-termination are essentialfeatures of a time deposit.

People v Katherine M Lim

tope

People v Gloria Kintanar

Aneka

14

collated business tax

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