vat cases recit

8/20/2019 VAT Cases Recit

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ATLAS CONSOLIDATED MINING AND DEVELOPMENTCORPORATION, petitioner,vs.COMMISSIONER OF INTERNAL REVENUE, respondent.

Before this Court are the consolidated cases involving the unsuccessfulclaims of herein petitioner Atlas Consolidated Mining and DevelopmentCorporation (petitioner corporation) for the refund/credit of the input Value

Added Ta (VAT) on its purchases of capital goods and on its !ero"ratedsales in the taa#le $uarters of the %ears &'' and &'', the denial of *hich #% the Court of Ta Appeals (CTA), *as affirmed #% the Court of

Appeals.

+etitioner corporation is engaged in the #usiness of mining, production, andsale of various mineral products, such as gold, p%rite, and copper concentrates. t is a VAT"registered tapa%er. t *as initiall% issued VAT-egistration o. "A"0"1, dated & 2anuar% &'33, #ut it had toregister ane* *ith the appropriate revenue district office (-D4) of theBureau of nternal -evenue (B-) *hen it moved its principal place of #usiness, and it *as re"issued VAT -egistration o. ""10, dated &5

August &''.&

G.R. No. 141104

+etitioner corporation filed *ith the B- its VAT -eturn for the first $uarter of &''. t alleged that it li6e*ise filed *ith the B- the correspondingapplication for the refund/credit of its input VAT on its purchases of capitalgoods and on its !ero"rated sales in the amount of +0,,10.. 7henits application for refund/credit remained unresolved #% the B-, petitioner corporation filed on April &''1 its +etition for -evie* *ith the CTA,doc6eted as CTA Case o. 5&. Asserting that it *as a 8!ero"rated VATperson,8 it pra%ed that the CTA order herein respondent Commissioner of

nternal -evenue (respondent Commissioner) to refund/credit petitioner corporation *ith the amount of +0,,10., representing the input VATit had paid for the first $uarter of &''. The respondent Commissioner opposed and sought the dismissal of the petition for revie* of petitioner corporation for failure to state a cause of action. After due trial, the CTApromulgated its Decision1 on 1 ovem#er &''9 *ith the follo*ingdisposition :


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WHEREFORE, in vie* of the foregoing, the instant claim for refund ishere#% DENIED on the ground of prescription, insufficienc% of evidenceand failure to compl% *ith ;ection of the Ta Code, as amended.

Accordingl%, the petition at #ar is here#% DISMISSED for lac6 of merit.

The CTA denied the motion for reconsideration of petitioner corporation in a-esolution5 dated &5 April &''3.

7hen the case *as elevated to the Court of Appeals as CA" C4?-T 4@ A++>A; >-->D A@@-M< T=> ->?->M>T4@ ->V>?> ->


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T=> C4?-T 4@ A++>A; >-->D 4T 4-D>-< CTA T4 A47T=> ->"4+>< 4@ T=> CA;> @4- +>TT4>- T4 +->;>T

ADDT4A >VD>C>.3

G.R. No. 148763 (2nd case)


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7hen the B- failed to act on its applications for refund/credit, petitioner corporation filed *ith the CTA the follo*ing petitions for revie* :

Date @iled

+eriod Covered

CTA Case o.

2ul% &''

nd uarter, &''

13&

' 4cto#er &''

rd uarter, &''

135'

&1 2anuar% &''

1th uarter, &''

1'11

*hich *ere eventuall% consolidated. The respondent Commissioner contested the foregoing +etitions and pra%ed for the dismissal thereof. TheCTA ruled in favor of respondent Commissioner and in its Decision, ' dated 4cto#er &''9, dismissed the +etitions mainl% on the ground that theprescriptive periods for filing the same had epired. n a -esolution,& dated&5 2anuar% &''3, the CTA denied the motion for reconsideration of petitioner corporation since the latter presented no ne* matter not alread%discussed in the courtIs prior Decision. n the same -esolution, the CTAalso denied the alternative pra%er of petitioner corporation for a ne* trialsince it did not fall under an% of the grounds cited under ;ection &, -ule 9of the -evised -ules of Court, and it *as not supported #% affidavits of merits re$uired #% ;ection of the same -ule.

+etitioner corporation appealed its case to the Court of Appeals, *here it*as doc6eted as CA"


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Court of Appeals rendered its Decision,&& finding that although petitioner corporation timel% filed its +etitions for -evie* *ith the CTA, it still failed tosu#stantiate its claims for the refund/credit of its input VAT for the last three$uarters of &''. n its -esolution,& dated 9 2une &, the appellatecourt denied the motion for reconsideration of petitioner corporation, findingno cogent reason to reverse its previous Decision.

Aggrieved, petitioner corporation filed *ith this Court another +etition for -evie* on Certiorari under -ule 15 of the -evised -ules of Court,doc6eted as T=>- 4- 4T T=> C4?-T 4@ A++>A; >-->D =4D<

T=AT +>TT4>-I; CAM ; BA-->D ?D>- ->V>?>->


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Prescription

The prescriptive period for filing an application for ta refund/credit of inputVAT on !ero"rated sales made in &'' and &'' *as governed #% ;ection&0(#) and (c) of the Ta Code of &'99, as amended, *hich provided that :

;>C. &0. Refunds or tax credits of input tax. : .

(#) Zero-rated or effectively zero-rated sales. : An% person, ecept thosecovered #% paragraph (a) a#ove, *hose sales are !ero"rated ma%, +ithint+% ea! a&te! the cl%e %& the #$a!te! +hen $ch ale +e!e -a.e,appl% for the issuance of a ta credit certificate or refund of the input taesattri#uta#le to such sales to the etent that such input ta has not #eenapplied against output ta.

(e) Period within which refund of input taxes may be made by theCommissioner. : The Commissioner shall refund input taes *ithin 0 da%sfrom the date the application for refund *as filed *ith him or his dul%authori!ed representative. o refund of input taes shall #e allo*ed unlessthe VAT"registered person files an application for refund *ithin the periodprescri#ed in paragraphs (a), (#) and (c) as the case ma% #e.

B% a plain reading of the foregoing provision, the t+%/ea! p!ec!ipti0epe!i%. &%! &ilin1 the applicati%n &%! !e&$n.2c!e.it %& inp$t VAT %n 3e!%/!ate. ale hall "e .ete!-ine. &!%- the cl%e %& the #$a!te! +hen$ch ale +e!e -a.e*

+etitioner contends, ho*ever, that the said t*o"%ear prescriptive periodshould #e counted, not from the close of the $uarter *hen the !ero"ratedsales *ere made, #ut from the date of filing of the $uarterl% VAT return andpa%ment of the ta due da%s thereafter, in accordance *ith ;ection&&(#) of the Ta Code of &'99, as amended, $uoted as follo*s :

;>C. &&. Return and payment of value-added tax. : .

(#) Time for filing of return and payment of tax. : The return shall #e filedand the ta paid *ithin da%s follo*ing the end of each $uarter specificall% prescri#ed for a VAT"registered person under regulations to #epromulgated #% the ;ecretar% of @inanceK Provided however That an%


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person *hose registration is cancelled in accordance *ith paragraph (e) of ;ection &9 shall file a return *ithin da%s from the cancellation of suchregistration.

t is alread% *ell"settled that the t*o"%ear prescriptive period for instituting asuit or proceeding for recover% of corporate income ta erroneousl% or illegall% paid under ;ection & of the Ta Code of &'99, as amended,+a t% "e c%$nte. &!%- the &ilin1 %& the &inal a.4$t-ent !et$!n* ThisCourt alread% set out in !CCR! "nvestments Corporation v. Court of

!ppeals&1 the rationale for such a rule, thus :

Clearl%, there is the need to file a return first #efore a claim for refund canprosper inasmuch as the respondent Commissioner #% his o*n rules andregulations mandates that the corporate tapa%er opting to as6 for a refund

must sho* in its final adJustment return the income it received from allsources and the amount of *ithholding taes remitted #% its *ithholdingagents to the Bureau of nternal -evenue. The petitioner corporation filedits final adJustment return for its &'3& taa#le %ear on April &5, &'3. n our -esolution dated April &, &'3' in the case of Commissioner of "nternal Revenue v. !sia !ustralia #xpress $td. (


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its final adJustment return on April &5, &'3.

n another case, Commissioner of "nternal Revenue v. T%& 'ales "nc. ,&5

this Court further epounded on the same matter :

A re"eamination of the aforesaid minute resolution of the Court in thePacific Procon case is *arranted under the circumstances to la% do*n acategorical pronouncement on the $uestion as to *hen the t*o"%ear prescriptive period in cases of $uarterl% corporate income ta commencesto run. A full"#lo*n decision in this regard is rendered more imperative inthe light of the reversal #% the Court of Ta Appeals in the instant case of itsprevious ruling in the Pacific Procon case.

;ection ' (no* ;ection ) of the ational nternal -evenue Code

should #e interpreted in relation to the other provisions of the Ta Code inorder to give effect the legislative intent and to avoid an application of thela* *hich ma% lead to inconvenience and a#surdit%. n the case of Peoplevs. Rivera (5' +hil. 0 &'E), this Court stated that statutes shouldreceive a sensi#le construction, such as *ill give effect to the legislativeintention and so as to avoid an unJust or an a#surd conclusion."(T#RPR#T!T") T!$"' "( !%*"+,"' '#%P#R R"#(! #'T ,T #/"T!T,R "(C)(/#("#(' #T !*',R,% . 7here there is am#iguit%,such interpretation as *ill avoid inconvenience and a#surdit% is to #eadopted. @urthermore, courts must give effect to the general legislative

intent that can #e discovered from or is unraveled #% the four corners of thestatute, and in order to discover said intent, the *hole statute, and not onl%a particular provision thereof, should #e considered. (%anila $odge (o.012 et al. vs. Court of !ppeals et al. 9 ;C-A &0 &'90) >ver% section,provision or clause of the statute must #e epounded #% reference to eachother in order to arrive at the effect contemplated #% the legislature. Theintention of the legislator must #e ascertained from the *hole tet of the la*and ever% part of the act is to #e ta6en into vie*. (Chartered *an3 vs."mperial , 13 +hil. '& &'&EL $opez vs. #l 4oger ilipino, 19 +hil. 1', cited

in !boitiz 'hipping Corporation vs. City of Cebu, & ;C-A 11' &'05E).

Thus, in resolving the instant case, it is necessar% that *e consider not onl%;ection ' (no* ;ection ) of the ational nternal -evenue Code #utalso the other provisions of the Ta Code, particularl% ;ections 31, 35 (no*#oth incorporated as ;ection 03), ;ection 30 (no* ;ection 9) and ;ection39 (no* ;ection 0') on uarterl% Corporate ncome Ta +a%ment and


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;ection & (no* ;ection ) on 6eeping of #oo6s of accounts. All theseprovisions of the Ta Code should #e harmoni!ed *ith each other.

Therefore, the filing of a $uarterl% income ta returns re$uired in ;ection 35(no* ;ection 03) and implemented per B- @orm &9" and pa%ment of $uarterl% income ta should onl% #e considered mere installments of theannual ta due. These $uarterl% ta pa%ments *hich are computed #asedon the cumulative figures of gross receipts and deductions in order to arriveat a net taa#le income, should #e treated as advances or portions of theannual income ta due, to #e adJusted at the end of the calendar or fiscal%ear. This is reinforced #% ;ection 39 (no* ;ection 0') *hich provides for the filing of adJustment returns and final pa%ment of income ta.

C%ne#$entl, the t+%/ea! p!ec!ipti0e pe!i%. p!%0i.e. in Secti%n5(5 6n%+ Secti%n 57)8 %& the Tax C%.e h%$l. "e c%-p$te. &!%- theti-e %& &ilin1 the A.4$t-ent Ret$!n %! Ann$al Inc%-e Tax Ret$!n an.&inal pa-ent %& inc%-e tax*

n the case of Collector of "nternal Revenue vs. !ntonio Prieto ( ;C-A&9 &'0&E), this Court held that *hen a ta is paid in installments, theprescriptive period of t*o %ears provided in ;ection 0 (;ection ') of the ational nternal -evenue Code should #e counted from the date of thefinal pa%ment. This ruling is reiterated in Commissioner of "nternal Revenue

vs. Carlos Palanca (&3 ;C-A 1'0 &'00E), *herein this Court stated that*here the ta account *as paid on installment, the computation of the t*o"%ear prescriptive period under ;ection 0 (;ection ') of the Ta Code,should #e from the date of the last installment.

n the instant case, TMF ;ales, nc. filed a suit for a refund on March &1,&'31. ;ince the t*o"%ear prescriptive period should #e counted from thefiling of the AdJustment -eturn on April &5,&'3, TMF ;ales, nc. is not %et#arred #% prescription.

The ver% same reasons set forth in the afore"cited cases concerning thet*o"%ear prescriptive period for claims for refund of illegall% or erroneousl%collected income ta ma% also appl% to the +etitions at #ar involving thesame prescriptive period for claims for refund/credit of input VAT on !ero"rated sales.

t is true that unli6e corporate income ta, *hich is reported and paid on


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installment ever% $uarter, #ut is eventuall% su#Jected to a final adJustmentat the end of the taa#le %ear, VAT is computed and paid on a purel%$uarterl% #asis *ithout need for a final adJustment at the end of the taa#le%ear. H%+e0e!, it i al% e#$all t!$e that $ntil an. $nle the VAT/!e1ite!e. taxpae! p!epa!e an. $"-it t% the 9IR it #$a!te!l VAT!et$!n, the!e i n% +a %& :n%+in1 +ith ce!taint 4$t h%+ -$ch inp$tVAT'; the taxpae! -a appl a1aint it %$tp$t VAT


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F%! the &%!e1%in1 !ea%n, it i -%!e p!actical an. !ea%na"le t%c%$nt the t+%/ea! p!ec!ipti0e pe!i%. &%! &ilin1 a clai- &%! !e&$n.2c!e.it %& inp$t VAT %n 3e!%/!ate. ale &!%- the .ate %& &ilin1 %& the !et$!n an. pa-ent %& the tax .$e +hich, acc%!.in1 t% the la+then exitin1, h%$l. "e -a.e +ithin 5) .a &!%- the en. %& each#$a!te!* =aving esta#lished thus, the relevant dates in the instant casesare summari!ed and reproduced #elo* :

+eriod Covered

Date of @iling(-eturn */ B-)

Date of @iling(Application */ B-)

Date of @iling (Case */ CTA)

nd uarter(2une), &''

2ul% &''

& August &''

2ul% &''

rd uarter(;ep), &''

&3 4cto#er &''

& ovem#er &''

' 4cto#er &''

1th uarter(Dec), &''

2anuar% &''&

&' @e#ruar% &''&

&1 2anuar% &''

&st uarter(Mar), &''


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April &''

""

April &''1

&!%- cl%e %& the #$a!te! +he!e ale +e!e -a.e 0 &!%- ti-e %& &ilin1%& the &inal !et$!n

The a#ove ta#le readil% sho*s that the administrative and Judicial claims of petitioner corporation for refund of its input VAT on its !ero"rated sales for the last three $uarters of &'' *ere all filed *ithin the prescriptive period.

=o*ever, the same cannot #e said for the claim of petitioner corporation for refund of its input VAT on its !ero"rated sales for the first $uarter of &''.>ven though it ma% seem that petitioner corporation filed in time its Judicialclaim *ith the CTA, there is no sho*ing that it had previousl% filed anadministrative claim *ith the B-. ;ection &0(e) of the Ta Code of &'99,as amended, eplicitl% provided that no refund of input VAT shall #e allo*edunless the VAT"registered tapa%er filed an application for refund *ithrespondent Commissioner *ithin the t*o"%ear prescriptive period. Theapplication of petitioner corporation for refund/credit of its input VAT for thefirst $uarter of &'' *as not onl% unsigned #% its supposed authori!edrepresentative, Ma. +a! -. ;emilla, Manager"@inance and Treasur%, #ut it

*as not dated, stamped, and initialed #% the B- official *ho purportedl%received the same. The CTA, in its Decision,&' dated 1 ovem#er &''9, inCTA Case o. 5&, made the follo*ing o#servations :

This Court, li6e*ise, reJects an% pro#ative value of the Application for TaCredit/-efund of VAT +aid (B- @orm o. 55) >hi#it 8BIE formall%offered in evidence #% the petitioner on account of the fact that it does not#ear the B- stamp sho*ing the date *hen such application *as filedtogether *ith the signature or initial of the receiving officer of respondentIsBureau. 7orse still, it does not sho* the date of application and the

signature of a certain Ma. +a! -. ;emilla indicated in the form *ho appearsto #e petitionerIs authori!ed filer.

A revie* of the records reveal that the original of the aforecited application*as lost during the time petitioner transferred its office (T;, p. 0, =earingof Decem#er ', &''1). Attempt *as made to prove that petitioner eertedefforts to recover the original cop%, #ut to no avail. Despite this, ho*ever,


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7e o#serve that petitioner completel% failed to esta#lish the missing datesand signatures a#ovementioned. 4n this score, said application has nopro#ative value in demonstrating the fact of its filing *ithin t*o %ears after the filing of the VAT return for the $uarterE *hen petitionerIs sales of goods*ere made as prescri#ed under ;ection &0(#) of the Ta Code. 7e#elieve thus that petitioner failed to file an application for refund in due formand *ithin the legal period set #% la* at the administrative level. =ence, thecase at #ar has failed to satisf% the re$uirement on the prior filing of anapplication for refund *ith the respondent #efore the commencement of a

Judicial claim for refund, as prescri#ed under ;ection of the Ta Code.This fact constitutes another one of the man% reasons for not grantingpetitionerIs Judicial claim.

As pointed out #% the CTA, in serious dou#t is not onl% the fact of *hether

petitioner corporation timel% filed its administrative claim for refund of itsinput VAT for the first $uarter of &'', #ut also *hether petitioner corporation actuall% filed such administrative claim in the first place. @or failing to prove that it had earlier filed *ith the B- an application for refund/credit of its input VAT for the first $uarter of &'', *ithin the periodprescri#ed #% la*, then the case instituted #% petitioner corporation *ith theCTA for the refund/credit of the ver% same ta cannot prosper.

Revenue Regulations No. 288 and t!e 70" e#port re$uire%ent

?nder ;ection &(a) of the Ta Code of &'99, as amended, a & VAT*as imposed on the gross selling price or gross value in mone% of goodssold, #artered or echanged. Het, the same provision su#Jected thefollo*ing sales made #% VAT"registered persons to VAT :

(&) >port salesL and

() ;ales to persons or entities *hose eemption under special la*s or international agreements to *hich the +hilippines is a signator% effectivel%su#Jects such sales to !ero"rate.

8>port ;ales8 means the sale and shipment or eportation of goods fromthe +hilippines to a foreign countr%, irrespective of an% shippingarrangement that ma% #e agreed upon *hich ma% influence or determinethe transfer of o*nership of the goods so eported, or foreign currenc%denominated sales. 8@oreign currenc% denominated sales8, means sales tononresidents of goods assem#led or manufactured in the +hilippines, for


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deliver% to residents in the +hilippines and paid for in converti#le foreigncurrenc% remitted through the #an6ing s%stem in the +hilippines.

These are termed !ero"rated sales. A !ero"rated sale is still considered ataa#le transaction for VAT purposes, although the VAT rate applied is .

A sale #% a VAT"registered tapa%er of goods and/or services taed at shall not result in an% output VAT, *hile the input VAT on its purchases of goods or services related to such !ero"rated sale shall #e availa#le as tacredit or refund.

+etitioner corporation $uestions the validit% of -evenue -egulations o. "33 averring that the said regulations imposed additional re$uirements, notfound in the la* itself, for the !ero"rating of its sales to +hilippine ;meltingand -efining Corporation (+A;A-) and +hilippine +hosphate, nc.

(+=+=4;), #oth of *hich are registered not onl% *ith the B4, #ut also*ith the then >port +rocessing Gone Authorit% (>+GA).&

The contentious provisions of -evenue -egulations o. "33 read :

;>C. . Zero-rating . : (a) ;ales of ra* materials to B4"registeredeporters. : ;ales of ra* materials to eport"oriented B4"registeredenterprises *hose eport sales, under rules and regulations of the Board of nvestments, eceed sevent% percent (9) of total annual production,shall #e su#Ject to !ero"rate under the follo*ing conditionsK

8(&) The seller shall file an application *ith the B-, ATT.K Division,appl%ing for !ero"rating for each and ever% separate #u%er, in accordance*ith ;ection 3(d) of -evenue -egulations o. 5"39. The application should#e accompanied *ith a favora#le recommendation from the Board of nvestments.8

8() The ra* materials sold are to #e used eclusivel% #% the #u%er in themanufacture, processing or repac6ing of his o*n registered eport productL

8() The *ords 8Gero"-ated ;ales8 shall #e prominentl% indicated in thesales invoice. The eporter (#u%er) can no longer claim from the Bureau of nternal -evenue or an% other government office ta credits on their !ero"rated purchasesL

(#) ;ales of ra* materials to foreign #u%er. : ;ales of ra* materials to anonresident foreign #u%er for deliver% to a resident local eport"oriented


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B4"registered enterprise to #e used in manufacturing, processing or repac6ing of the said #u%erIs goods and paid for in foreign currenc%,in*ardl% remitted in accordance *ith Central Ban6 rules and regulationsshall #e su#Ject to !ero"rate.

t is the position of the respondent Commissioner, affirmed #% the CTA andthe Court of Appeals, that ;ection of -evenue -egulations o. "33should #e applied in the cases at #arL and to #e entitled to the !ero"ratingof its sales to +A;A- and +=+=4;, petitioner corporation, as a VAT"registered seller, must #e a#le to prove not onl% that +A;A- and+=+=4; are B4"registered corporations, #ut also that more than 9of the total annual production of these corporations are actuall% eported.-evenue -egulations o. "33 merel% echoed the re$uirement imposed #%the B4 on eport"oriented corporations registered *ith it.

7hile this Court is not prepared to stri6e do*n the validit% of -evenue-egulations o. "33, it finds that its application must #e limited and placedin the proper contet. ote that ;ection of -evenue -egulations o. "33referred onl% to the !ero"rated sales of ra* materials to eport"orientedB4"registered enterprises *hose eport sales, under B4 rules andregulations, should eceed sevent% percent (9) of their total annualproduction.

;ection of -evenue -egulations o. "33, should not have #een applied

to the !ero"rating of the sales made #% petitioner corporation to +A;A- and+=+=4;. At the onset, it must #e emphasi!ed that +A;A- and+=+=4;, in addition to #eing registered *ith the B4, *ere alsoregistered *ith the >+GA and located *ithin an eport"processing !one.+etitioner corporation does not claim that its sales to +A;A- and+=+=4; are !ero"rated on the #asis that said sales *ere made toeport"oriented B4"registered corporations, #ut rather, on the #asis thatthe sales *ere made to >+GA"registered enterprises operating *ithineport processing !ones. Although sales to eport"oriented B4"registered

enterprises and sales to >+GA"registered enterprises located *ithin eportprocessing !ones *ere #oth deemed eport sales, *hich, under ;ection&(a) of the Ta Code of &'99, as amended, shall #e su#Ject to VATdistinction must #e made #et*een these t*o t%pes of sales #ecause eachma% have different su#stantiation re$uirements.

The Ta Code of &'99, as amended, gave a limited definition of eport


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sales, to *itK 8The sale and shipment or eportation of goods from the+hilippines to a foreign countr%, irrespective of an% shipping arrangementthat ma% #e agreed upon *hich ma% influence or determine the transfer of o*nership of the goods so eported, or foreign currenc% denominatedsales.8 >ecutive 4rder o. 0, other*ise 6no*n as the 4mni#usnvestments Code of &'39 " *hich, in the %ears concerned (i.e., &'' and&''), governed enterprises registered *ith #oth the B4 and >+GA,provided a more comprehensive definition of eport sales, as $uoted#elo*K

8A-T. . 8>port sales8 shall mean the +hilippine port @.4.B. value,determined from invoices, #ills of lading, in*ard letters of credit, landingcertificates, and other commercial documents, of eport products eporteddirectl% #% a registered eport producer or the net selling price of eport

product sold #% a registered eport producer or to an eport trader thatsu#se$uentl% eports the sameK +rovided, That sales of eport products toanother producer or to an eport trader shall onl% #e deemed eport sales*hen actuall% eported #% the latter, as evidenced #% landing certificates of similar commercial documentsK +rovided, further, That *ithout actualeportation the follo*ing shall #e considered constructivel% eported for purposes of this provisionK (&) sales to #onded manufacturing *arehousesof eport"oriented manufacturersL () sales to eport processing !onesL ()sales to registered eport traders operating #onded trading *arehousessuppl%ing ra* materials used in the manufacture of eport products under guidelines to #e set #% the Board in consultation *ith the Bureau of nternal-evenue and the Bureau of CustomsL (1) sales to foreign militar% #ases,diplomatic missions and other agencies and/or instrumentalities granted taimmunities, of locall% manufactured, assem#led or repac6ed products*hether paid for in foreign currenc% or notK +rovided, further, That eportsales of registered eport trader ma% include commission incomeL and+rovided, finall%, That eportation of goods on consignment shall not #edeemed eport sales until the eport products consigned are in fact sold #%the consignee.

;ales of locall% manufactured or assem#led goods for household andpersonal use to @ilipinos a#road and other non"residents of the +hilippinesas *ell as returning 4verseas @ilipinos under the nternal >port +rogramof the government and paid for in converti#le foreign currenc% in*ardl%remitted through the +hilippine #an6ing s%stems shall also #e consideredeport sales. (?nderscoring ours.)


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The afore"cited provision of the 4mni#us nvestments Code of &'39recogni!es as eport sales the sales of eport products to another producer or to an eport trader, provided that the eport products are actuall%eported. @or purposes of VAT !ero"rating, such producer or eport trader must #e registered *ith the B4 and is re$uired to actuall% eport morethan 9 of its annual production.

7ithout actual eportation, Article of the 4mni#us nvestments Code of &'39 also considers constructive eportation as eport sales. Among other t%pes of constructive eportation specificall% identified #% the said provisionare sales to eport processing !ones. ;ales to eport processing !ones aresu#Jected to special ta treatment. Article 99 of the same Code esta#lishesthe ta treatment of goods or merchandise #rought into the eportprocessing !ones. 4f particular relevance herein is paragraph , *hich

provides that 8Merchandise purchased #% a registered !one enterprise fromthe customs territor% and su#se$uentl% #rought into the !one, shall #econsidered as eport sales and the eporter thereof shall #e entitled to the#enefits allo*ed #% la* for such transaction.8

;uch ta treatment of goods #rought into the eport processing !ones areonl% consistent *ith the Destination +rinciple and Cross Border Doctrine to*hich the +hilippine VAT s%stem adheres. According to the Destination+rinciple, goods and services are taed onl% in the countr% *here theseare consumed. n connection *ith the said principle, the Cross Border

Doctrine mandates that no VAT shall #e imposed to form part of the costof the goods destined for consumption outside the territorial #order of thetaing authorit%. =ence, actual eport of goods and services from the+hilippines to a foreign countr% must #e free of VAT, *hile those destinedfor use or consumption *ithin the +hilippines shall #e imposed *ith &VAT.1 >port processing !ones5 are to #e managed as a separatecustoms territor% from the rest of the +hilippines and, thus, for tapurposes, are effectivel% considered as foreign territor%. @or this reason,sales #% persons from the +hilippine customs territor% to those inside the

eport processing !ones are alread% taed as eports.

+lainl%, sales to enterprises operating *ithin the eport processing !onesare eport sales, *hich, under the Ta Code of &'99, as amended, *eresu#Ject to VAT. t is on this ground that petitioner corporation is claimingrefund/credit of the input VAT on its !ero"rated sales to +A;A- and+=+=4;.


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The distinction made #% this Court in the preceding paragraphs #et*eenthe !ero"rated sales to eport"oriented B4"registered enterprises and!ero"rated sales to >+GA"registered enterprises operating *ithin eportprocessing !ones is actuall% supported #% su#se$uent development in tala*s and regulations. n -evenue -egulations o. 9"'5, the ConsolidatedVAT -egulations, as amended,0 the B- defined *ith more precision *hatare !ero"rated eport sales :

(&) The sale and actual shipment of goods from the +hilippines to a foreigncountr%, irrespective of an% shipping arrangement that ma% #e agreed upon*hich ma% influence or determine the transfer of o*nership of the goods soeported paid for in accepta#le foreign currenc% or its e$uivalent in goodsor services, and accounted for in accordance *ith the rules and regulationsof the *ang3o 'entral ng Pilipinas (B;+)6

() The sale of ra* materials or pac6aging materials to a non"resident#u%er for deliver% to a resident local eport"oriented enterprise to #e usedin manufacturing, processing, pac6ing or repac6ing in the +hilippines of thesaid #u%erIs goods and paid for in accepta#le foreign currenc% andaccounted for in accordance *ith the rules and regulations of the *ang3o'entral ng Pilipinas (B;+)6

() The sale of ra* materials or pac6aging materials to an eport"orientedenterprise *hose eport sales eceed sevent% percent (9) of total

annual productionL

An% enterprise *hose eport sales eceed 9 of the total annualproduction of the preceding taa#le %ear shall #e considered an eport"oriented enterprise upon accreditation as such under the provisions of the>port Development Act (-.A. 9311) and its implementing rules andregulationsL

(1) ;ale of gold to the *ang3o 'entral ng Pilipinas (B;+)L and

(5) Those considered eport sales under Articles and 99 of >ecutive4rder o. 0, other*ise 6no*n as the 4mni#us nvestments Code of &'39, and other special la*s, e.g. -epu#lic Act o. 99, other*ise 6no*nas the Bases Conversion and Development Act of &''.

The Ta Code of &''9, as amended,9 later adopted the foregoing definitionof eport sales, *hich are su#Ject to VAT.


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This Court then reiterates its conclusion that ;ection of -evenue-egulations o. "33, *hich applied to !ero"rated eport sales to eport"oriented B4"registered enterprises, should not #e applied to theapplications for refund/credit of input VAT filed #% petitioner corporationsince it #ased its applications on the !ero"rating of eport sales toenterprises registered *ith the >+GA and located *ithin eport processing!ones.

&u''icienc o' evidence

There can #e no dispute that the tapa%er"claimant has the #urden of proving the legal and factual #ases of its claim for ta credit or refund, #utonce it has su#mitted all the re$uired documents, it is the function of theB- to assess these documents *ith purposeful dispatch. 3 t therefore falls

upon herein petitioner corporation to first esta#lish that its sales $ualif% for VAT !ero"rating under the eisting la*s (legal #asis), and then to presentsufficient evidence that said sales *ere actuall% made and resulted inrefunda#le or credita#le input VAT in the amount #eing claimed (factual#asis).

t *ould initiall% appear that the applications for refund/credit filed #%petitioner corporation cover onl% input VAT on its purportedl% !ero"ratedsales to +A;A- and +=+=4;L ho*ever, a more thorough perusal of itsapplications, VAT returns, pleadings, and other records of these cases

*ould reveal that it is also claiming refund/credit of its input VAT onpurchases of capital goods and sales of gold to the Central Ban6 of the+hilippines (CB+).

This Court finds that the claims for refund/credit of input VAT of petitioner corporation have sufficient legal #ases.

As has #een etensivel% discussed herein, ;ection &0(#)(), in relation to;ection &(a)() of the Ta Code of &'99, as amended, allo*ed therefund/credit of input VAT on eport sales to enterprises operating *ithineport processing !ones and registered *ith the >+GA, since such eportsales *ere deemed to #e effectivel% !ero"rated sales.' The fact that+A;A- and +=+=4;, to *hom petitioner corporation sold its products,*ere operating inside an eport processing !one and dul% registered *ith>+GA, *as never raised as an issue herein. Moreover, the same fact *asalread% Judiciall% recogni!ed in the case !tlas Consolidated %ining 7


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evelopment Corporation v. Commissioner of "nternal Revenue. ;ection&0(c) of the same Code li6e*ise permitted a VAT"registered tapa%er toappl% for refund/credit of the input VAT paid on capital goods imported or locall% purchased to the etent that such input VAT has not #een appliedagainst its output VAT. Mean*hile, the effective !ero"rating of sales of goldto the CB+ from &'3' to &''&& *as alread% affirmed #% this Court inCommissioner of "nternal Revenue v. *enguet Corporation, *herein itruled that :

At the time *hen the su#Ject transactions *ere consummated, theprevailing B- regulations relied upon #% respondent ordained that goldsales to the Central Ban6 *ere !ero"rated. The B- interpreted ;ec. & of the -C in relation to ;ec. of >.4. o. 53& s. &'3 *hich prescri#ed thatgold sold to the Central Ban6 shall #e considered eport and therefore shall

#e su#Ject to the eport and premium duties. n coming out *ith thisinterpretation, the B- also considered ;ec. &0' of Central Ban6 Circular o. '0 *hich states that all sales of gold to the Central Ban6 areconsidered constructive eports. .

This Court no* comes to the $uestion of *hether petitioner corporation hassufficientl% esta#lished the factual #ases for its applications for refund/creditof input VAT. t is in this regard that petitioner corporation has failed, #oth inthe administrative and Judicial level.

Applications for refund/credit of input VAT *ith the B- must compl% *iththe appropriate revenue regulations. As this Court has alread% ruled,-evenue -egulations o. "33 is not relevant to the applications for refund/credit of input VAT filed #% petitioner corporationL nonetheless, thesaid applications must have #een in accordance *ith -evenue -egulationso. "33, amending ;ection &0 of -evenue -egulations o. 5"39, *hichprovided as follo*s :

;>CT4 &0. -efunds or ta credits of input ta. :

(c) Claims for tax credits8refunds. : Application for Ta Credit/-efund of Value"Added Ta +aid (B- @orm o. 55) shall #e filed *ith the -evenueDistrict 4ffice of the cit% or municipalit% *here the principal place of #usiness of the applicant is located or directl% *ith the Commissioner,

AttentionK VAT Division.


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A photocop% of the purchase invoice or receipt evidencing the value addedta paid shall #e su#mitted together *ith the application. The original cop%of the said invoice/receipt, ho*ever, shall #e presented for cancellationprior to the issuance of the Ta Credit Certificate or refund. n addition, thefollo*ing documents shall #e attached *henever applica#leK

8. >ffectivel% !ero"rated sale of goods and services.

8i) photo cop% of approved application for !ero"rate if filing for the first time.

8ii) sales invoice or receipt sho*ing name of the person or entit% to *homthe sale of goods or services *ere delivered, date of deliver%, amount of consideration, and description of goods or services delivered.

8iii) evidence of actual receipt of goods or services.

81. +urchase of capital goods.

8i) original cop% of invoice or receipt sho*ing the date of purchase,purchase price, amount of value"added ta paid and description of thecapital e$uipment locall% purchased.

8ii) *ith respect to capital e$uipment imported, the photo cop% of importentr% document for internal revenue ta purposes and the confirmationreceipt issued #% the Bureau of Customs for the pa%ment of the value"added ta.

85. n applica#le cases,

*here the applicantIs !ero"rated transactions are regulated #% certaingovernment agencies, a statement therefrom sho*ing the amount anddescription of sale of goods and services, name of persons or entities

(ecept in case of eports) to *hom the goods or services *ere sold, anddate of transaction shall also #e su#mitted.

n all cases, the amount of refund or ta credit that ma% #e granted shall #elimited to the amount of the value"added ta (VAT) paid directl% and entirel%attri#uta#le to the !ero"rated transaction during the period covered #% theapplication for credit or refund.


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7here the applicant is engaged in !ero"rated and other taa#le andeempt sales of goods and services, and the VAT paid (inputs) onpurchases of goods and services cannot #e directl% attri#uted to an% of theaforementioned transactions, the follo*ing formula shall #e used todetermine the credita#le or refunda#le input ta for !ero"rated saleK

Amount of Gero"rated ;aleTotal ;ales

FTotal Amount of nput Taes

Amount Credita#le/-efunda#le

n case the application for refund/credit of input VAT *as denied or remained unacted upon #% the B-, and #efore the lapse of the t*o"%ear prescriptive period, the tapa%er"applicant ma% alread% file a +etition for -evie* #efore the CTA. f the tapa%erIs claim is supported #% voluminousdocuments, such as receipts, invoices, vouchers or long accounts, their presentation #efore the CTA shall #e governed #% CTA Circular o. &"'5,as amended, reproduced in full #elo* :

n the interest of speed% administration of Justice, the Court here#%promulgates the follo*ing rules governing the presentation of voluminous

documents and/or long accounts, such as receipts, invoices and vouchers,as evidence to esta#lish certain facts pursuant to ;ection (c), -ule & of the -ules of Court and the doctrine enunciated in Compania %aritima vs.

!llied ree 9or3ers ,nion :00 'CR! ;


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Court relative to such summar% and certification pursuant to -ule of the-ules of Court.

. The method of individual presentation of each and ever% receipt, invoiceor account for mar6ing, identification and comparison *ith the originalsthereof need not #e done #efore the Court or Cler6 of Court an%more after the introduction of the summar% and C+A certification. t is enough that thereceipts, invoices, vouchers or other documents covering the said accountsor pa%ments to #e introduced in evidence must #e pre"mar6ed #% the part%concerned and su#mitted to the Court in order to #e made accessi#le to theadverse part% *ho desires to chec6 and verif% the correctness of thesummar% and C+A certification. i6e*ise, the originals of the voluminousreceipts, invoices or accounts must #e read% for verification andcomparison in case dou#t on the authenticit% thereof is raised during the

hearing or resolution of the formal offer of evidence.

;ince CTA Cases o. 13&, 135', 1'11, and 5&,1 *ere still pending#efore the CTA *hen the said Circular *as issued, then petitioner corporation must have complied there*ith during the course of the trial of the said cases.

n Commissioner of "nternal Revenue v. %anila %ining Corporation,5 thisCourt denied the claim of therein respondent, Manila Mining Corporation,for refund of the input VAT on its supposed !ero"rated sales of gold to the

CB+ #ecause it *as una#le to su#stantiate its claim. n the same case, thisCourt emphasi!ed the importance of compl%ing *ith the su#stantiationre$uirements for claiming refund/credit of input VAT on !ero"rated sales, to*it :

@or a Judicial claim for refund to prosper, ho*ever, respondent must notonl% prove that it is a VAT registered entit% and that it filed its claims *ithinthe prescriptive period. "t must sustantiate the input /!T paid by

purchase invoices or o''icial receipts.

This respondent failed to do.

-evenue -egulations o. "33 amending -evenue -egulations o. 5"39provides the re$uirements in claiming ta credits/refunds.


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?nder ;ection 3 of -A&&5, the CTA is descri#ed as a court of record. Ascases filed #efore it are litigated de novo, part% litigants should prove ever%minute aspect of their cases. o evidentiar% value can #e given thepurchase invoices or receipts su#mitted to the B- as the rules ondocumentar% evidence re$uire that these documents must #e formall%offered #efore the CTA.

This Court thus notes *ith approval the follo*ing findings of the CTAK

;Eale of gold to the Central Ban6 should not #e su#Ject to the &VAT"output ta #ut this does not ipso fact mean that the sellerE is entitled tothe amount of refund sought as it is re>uired by law to present evidenceshowing the input taxes it paid during the year in >uestion. 7hat is #eingclaimed in the instant petition is the refund of the input taes paid #% the

herein petitioner on its purchase of goods and services. =ence, it isnecessary for the Petitioner to show proof that it had indeed paid the input taxes during the year 2??2. "n the case at bar Petitioner failed to dischargethis duty. "t did not adduce in evidence the sales invoice receipts or other documents showing the input value added tax on the purchase of goodsand services.

'ection @ of Republic !ct 22;A :!n !ct Creating the Court of Tax !ppeals=

provides categorically that t!e *ourt o' +a# ,ppeals s!all e a court o' record and as suc! it is re$uired to conduct a 'or%al trial (trial denovo) -!ere t!e parties %ust present t!eir evidence accordingl if they desire the Court to ta3e such evidence into consideration. (>mphasisand italics supplied)

A 8sales or commercial invoice8 is a *ritten account of goods sold or services rendered indicating the prices charged therefor or a list #%*hatever name it is 6no*n *hich is used in the ordinar% course of #usinessevidencing sale and transfer or agreement to sell or transfer goods andservices.

A 8receipt8 on the other hand is a *ritten ac6no*ledgment of the fact of pa%ment in mone% or other settlement #et*een seller and #u%er of goods,de#tor or creditor, or person rendering services and client or customer.

These sales invoices or receipts issued #% the supplier are necessar% to


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su#stantiate the actual amount or $uantit% of goods sold and their sellingprice, and ta6en collectivel% are the #est means to prove the input VATpa%ments.0

Although the foregoing decision focused onl% on the proof re$uired for theapplicant for refund/credit to esta#lish the input VAT pa%ments it had madeon its purchases from suppliers, -evenue -egulations o. "33 alsore$uired it to present evidence proving actual !ero"rated VAT sales to$ualified #u%ers, such as (&) photocop% of the approved application for !ero"rate if filing for the first timeL () sales invoice or receipt sho*ing thename of the person or entit% to *hom the goods or services *ere delivered,date of deliver%, amount of consideration, and description of goods or services deliveredL and () the evidence of actual receipt of goods or services.

Also *orth noting in the same decision is the *eight given #% this Court tothe certification #% the independent certified pu#lic accountant (C+A), thus

:

-espondent contends, ho*ever, that the certification of the independentC+A attesting to the correctness of the contents of the summar% of suppliersI invoices or receipts *hich *ere eamined, evaluated and audited#% said C+A in accordance *ith CTA Circular o. &"'5 as amended #% CTACircular o. &"'9 should su#stantiate its claims.

There is nothing, ho*ever, in CTA Circular o. &"'5, as amended #% CTACircular o. &"'9, *hich either epressl% or impliedl% suggests thatsummaries and schedules of input VAT pa%ments, even if certified #% anindependent C+A, suffice as evidence of input VAT pa%ments.

The circular, in the interest of speed% administration of Justice, *aspromulgated to avoid the time"consuming procedure of presenting,

identif%ing and mar6ing of documents #efore the Court. t does not relieverespondent of its imperative tas6 of pre-mar3ing photocopies of salesreceipts and invoices and submitting the same to the court after theindependent C+A shall have eamined and compared them *ith theoriginals. 7ithout presenting these pre"mar6ed documents as evidence :from *hich the summar% and schedules *ere #ased, the court cannotverif% the authenticit% and veracit% of the independent auditorIs conclusions.


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There is, moreover, a need to su#Ject these invoices or receipts toeamination #% the CTA in order to confirm *hether the% are VAT invoices.?nder ;ection & of -evenue -egulation, o. 5"39, all purchases covered#% invoices other than a VAT invoice shall not #e entitled to a refund of input VAT.

7hile the CTA is not governed strictl% #% technical rules of evidence, asrules of procedure are not ends in themselves #ut are primaril% intended astools in the administration of Justice, the presentation of the purchasereceipts and/or invoices is not mere procedural technicalit% *hich ma% #edisregarded considering that it is the onl% means #% *hich the CTA ma%ascertain and verif% the truth of the respondentIs claims.

The records further sho* that respondent misera#l% failed to su#stantiateits claims for input VAT refund for the first semester of 2??2. >cept for thesummar% and schedules of input VAT pa%ments prepared #% respondentitself, no other evidence *as adduced in support of its claim.

As for respondentIs claim for input VAT refund for the second semester of 2??2, it emplo%ed the services of 2oa$uin Cunanan N Co. on account of *hich it (2oa$uin Cunanan N Co.) eecuted a certification thatK

7e have eamined the information sho*n #elo* concerning the input tapa%ments made #% the Ma6ati 4ffice of Manila Mining Corporation for theperiod from 2ul% & to Decem#er &, &''&. 4ur eamination includedinspection of the pertinent suppliersI invoices and official receipts and suchother auditing procedures as *e considered necessar% in thecircumstances.

As the certification merel% stated that it used 8auditing proceduresconsidered necessar%8 and not auditing procedures *hich are inaccordance *ith generall% accepted auditing principles and standards, and

that the eamination *as made on 8input ta pa%ments #% the ManilaMining Corporation,8 *ithout specif%ing that the said input ta pa%ments areattri#uta#le to the sales of gold to the Central Ban6, this Court cannot rel%thereon and regard it as sufficient proof of the respondentIs input VATpa%ments for the second semester.9

As for the +etition in


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corporation on its !ero"rated sales in the first $uarter of &'', this Courtalread% found that the petitioner corporation failed to compl% *ith ;ection&0(#) of the Ta Code of &'99, as amended, imposing the t*o"%ear prescriptive period for the filing of the application for refund/credit thereof.This #ars the grant of the application for refund/credit, *hether administrativel% or Judiciall%, #% epress mandate of ;ection &0(e) of thesame Code.


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etc.

8e) original or attested copies of invoice or receipt on capital e$uipmentlocall% purchasedL and

8f) photocop% of import entr% document and confirmation receipt onimported capital e$uipment.

8There is the need to eamine the sales invoices or receipts in order toascertain the actual amount or $uantit% of goods sold and their sellingprice. 7ithout them, this Court cannot verif% the correctness of petitionerIsclaim inasmuch as the regulations re$uire that the input taes #eing soughtfor refund should #e limited to the portion that is directl% and entirel%attri#uta#le to the particular !ero"rated transaction. n this instance, the

#est evidence of such transaction are the said sales invoices or receipts.

8Also, even if sales invoices are produced, there is the further need tosu#mit evidence that such goods *ere actuall% received #% the #u%er, inthis case, #% CB+, +hilphEos and +A;A-.

8astl%, this Court cannot determine *hether there *ere actual local andimported purchase of capital goods as *ell as domestic purchase of non"

capital goods *ithout the re$uired purchase invoice or receipt, as the casema% #e, and confirmation receipts.

8There is, thus, the imperative need to su#mit #efore this Court the originalor attested photocopies of petitionerIs invoices or receipts, confirmationreceipts and import entr% documents in order that a full ascertainment of the claimed amount ma% #e achieved.

8+etitioner should have ta6en the foresight to introduce in evidence all of the missing documentsa#ovementioned. Cases filed #efore this Court are

litigated de novo. This means that part% litigants should endeavor to proveat the first instance ever% minute aspect of their cases strictl% inaccordance *ith the -ules of Court, most especiall% on documentar%evidence.8 (pp. 9"1, -ollo)

Ta refunds are in the nature of ta eemptions. t is regarded as inderogation of the sovereign authorit%, and should #e construed in


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strictissimi Buris against the person or entit% claiming the eemption. Thetapa%er *ho claims for eemption must Justif% his claim #% the clearestgrant of organic or statute la* and should not #e permitted to stand onvague implications (Asiatic +etroleum Co. v. lanes, 1' +hil. 100L orthern+hil. To#acco Corp. v. Mun. of Agoo, a ?nion, & ;C-A 1L -eagan v.Commissioner, ;C-A '03L Asturias ;ugar Central, nc. v. Commissioner of Customs, ' ;C-A 0&9L Davao ight and +o*er Co., nc. v.Commissioner of Customs, 11 ;C-A &).

There is no cogent reason to fault the CTAIs conclusion that the ;


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"'3 pursuant to ;ec. 15 of the ational nternal -evenue Code, *hichrecogni!ed his po*er to 8promulgate all needful rules and regulations for the effective enforcement of the provisions of this Code.8 Thus, it isincum#ent upon a tapa%er intending to file a claim for refund of input VATsor the issuance of a ta credit certificate *ith the B- to prove sales tosuch #u%ers as re$uired #% -evenue -egulations o. "'3. ogicall%, thesame evidence should #e presented in support of an action to recover taes *hich have #een paid.

either has herein petitioner corporationE presented sales invoices or receipts sho*ing sales of gold, copper concentrates, and p%rite to the CB+,+A;A-E, and +=+=4;E, respectivel%, and the dates and amounts of thesame, nor an% evidence of actual receipt #% the said #u%ers of the mineralproducts. t merel% presented receipts of purchases from suppliers on

*hich input VATs *ere allegedl% paid. Thus, the Court of Ta Appealscorrectl% denied the claims for refund of input VATs or the issuance of tacredit certificates of petitioner corporationE. ;ignificantl%, in the resolution,dated 9 2une , this Court directed the parties to file memorandadiscussing, among others, the su#mission of proof for 8its petitionerIsEsales of gold, copper concentrates, and p%rite to #u%ers.8 evertheless, theparties, including the petitioner, failed to address this issue, there#%necessitating the affirmance of the ruling of the Court of Ta Appeals on thispoint.'

This Court is, therefore, #ound #% the foregoing facts, as found #% theappellate court, for *ell"settled is the general rule that the Jurisdiction of thisCourt in cases #rought #efore it from the Court of Appeals, #% *a% of a+etition for -evie* on Certiorari under -ule 15 of the -evised -ules of Court, is limited to revie*ing or revising errors of la*L findings of fact of thelatter are conclusive.1 This Court is not a trier of facts. t is not its functionto revie*, eamine and evaluate or *eigh the pro#ative value of theevidence presented.1&

The distinction #et*een a $uestion of la* and a $uestion of fact is clear"cut. t has #een held that 8tEhere is a $uestion of la* in a given case *henthe dou#t or difference arises as to *hat the la* is on a certain state of factsL there is a $uestion of fact *hen the dou#t or difference arises as tothe truth or falsehood of alleged facts.81

7hether petitioner corporation actuall% made !ero"rated salesL *hether it


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(a) @raud, accident, mista6e or ecusa#le negligence *hich ordinar%prudence could not have guarded against and #% reason of *hich suchaggrieved part% has pro#a#l% #een impaired in his rightsL or

(#) e*l% discovered evidence, *hich he could not, *ith reasona#lediligence, have discovered and produced at the trial, and *hich if presented*ould pro#a#l% alter the result.

7ithin the same period, the aggrieved part% ma% also move forereconsideration upon the grounds that the damages a*arded areecessive, that the evidence is insufficient to Justif% the decision or finalorder, or that the decision or final order is contrar% to la*.

n


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the facts relating to such negligence or mista6e. =ence, it can #e said thatthe motion of petitioner corporation for the re"opening of its cases and/or holding of ne* trial *as in su#stantial compliance *ith the formalre$uirements of the revised -ules of Court.

>ven so, this Court finds no sufficient ground for granting the motion of petitioner corporation for the re"opening of its cases and/or holding of ne*trial.

n


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as to the #ases of the claims of petitioner corporation for refund/credit of input VAT in CTA Case o. 5'0 and in the +etitions at #ar, then, there areresulting variances as to the evidence re$uired to support them.

Moreover, the ver% same -esolution, dated 2ul% &''3, in CTA Case o.5'0, invo6ed #% petitioner corporation, emphasi!es that the decision of the CTA to allo* petitioner corporation to present evidence 8is applica#le

pro hac vice or in this occasion onl% as it is the finding of the CTAE thatpetitioner corporationE has esta#lished a fe* of the aforementionedmaterial points regarding the possi#le eistence of the eport documentstogether *ith the prior and succeeding returns for the $uarters involved, 8 >mphasis supplied.E Therefore, the CTA, in the present cases, cannot#e #ound #% its ruling in CTA Case o. 5'0, *hen these cases do notinvolve the eact same circumstances that compelled it to grant the motion

of petitioner corporation for re"opening of CTA Case o. 5'0.

@inall%, assuming for the sa6e of argument that the non"presentation of there$uired documents *as due to the fault of the counsel of petitioner corporation, this Court finds that it does not constitute ecusa#lenegligence or mista6e *hich *ould *arrant the re"opening of the casesand/or holding of ne* trial.

?nder ;ection &, -ule 9 of the -evised -ules of Court, the 8negligence8must #e ecusa#le and generall% imputa#le to the part% #ecause if it is

imputa#le to the counsel, it is #inding on the client. To follo* a contrar% ruleand allo* a part% to diso*n his counselIs conduct *ould render proceedings indefinite, tentative, and su#Ject to re"opening #% the meresu#terfuge of replacing the counsel. 7hat the aggrieved litigant should dois see6 administrative sanctions against the erring counsel and not as6 for the reversal of the courtIs ruling.1'

As elucidated #% this Court in another case,5 the general rule is that theclient is #ound #% the action of his counsel in the conduct of his case andhe cannot therefore complain that the result of the litigation might have#een other*ise had his counsel proceeded differentl%. t has #een held timeand again that #lunders and mista6es made in the conduct of theproceedings in the trial court as a result of the ignorance, ineperience or incompetence of counsel do not $ualif% as a ground for ne* trial. f such*ere to #e admitted as valid reasons for re"opening cases, there *ouldnever #e an end to litigation so long as a ne* counsel could #e emplo%ed


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to allege and sho* that the prior counsel had not #een sufficientl% diligent,eperienced or learned.

Moreover, negligence, to #e 8ecusa#le,8 must #e one *hich ordinar%diligence and prudence could not have guarded against.5& -evenue-egulations o. "33, *hich *as issued on &5 @e#ruar% &'33, had #een ineffect more than t*o %ears prior to the filing #% petitioner corporation of itsearliest application for refund/credit of input VAT involved herein on &

August &''. CTA Circular o. &"'5 *as issued onl% on 5 2anuar% &''5,after petitioner corporation had filed its +etitions #efore the CTA, #ut stillduring the pendenc% of the cases of petitioner corporation #efore the tacourt. The counsel of petitioner corporation does not allege ignorance of the foregoing administrative regulation and ta court circular, onl% that heno longer deemed it necessar% to present the documents re$uired therein

#ecause of the presentation of alleged unre#utted evidence of the !ero"rated sales of petitioner corporation. t *as a Judgment call made #% thecounsel as to *hich evidence to present in support of his clientIs cause,later proved to #e un*ise, #ut not necessaril% negligent.

either is there an% merit in the contention of petitioner corporation that thenon"presentation of the re$uired documentar% evidence *as due to theecusa#le mista6e of its counsel, a ground under ;ection &, -ule 9 of therevised -ules of Court for the grant of a ne* trial. 8Mista6e,8 as it is referredto in the said rule, must #e a mista6e of fact, not of la*, *hich relates to the

case.5 n the present case, the supposed mista6e made #% the counsel of petitioner corporation is one of la*, for it *as grounded on his interpretationand evaluation that -evenue -egulations o. "33 and CTA Circular o. &"'5, as amended, did not appl% to his clientIs cases and that there *as noneed to compl% *ith the documentar% re$uirements set forth therein. Andalthough the counsel of petitioner corporation advocated an erroneouslegal position, the effects thereof, *hich did not amount to a deprivation of his clientIs right to #e heard, must #ind petitioner corporation. The $uestionis not *hether petitioner corporation succeeded in esta#lishing its interests,

#ut *hether it had the opportunit% to present its side.5

Besides, litigation is a not a 8trial and error8 proceeding. A part% *ho movesfor a ne* trial on the ground of mista6e must sho* that ordinar% prudencecould not have guarded against it. A ne* trial is not a refuge for theo#stinate.514rdinar% prudence in these cases *ould have dictated thepresentation of all availa#le evidence that *ould have supported the claims


36/59

for refund/credit of input VAT of petitioner corporation. 7ithout sound legal#asis, counsel for petitioner corporation concluded that -evenue-egulations o. "33, and later on, CTA Circular o. &"'5, as amended,did not appl% to its clientIs claims. The o#stinac% of petitioner corporationand its counsel is demonstrated in their failure, na%, refusal, to compl% *iththe appropriate administrative regulations and ta court circular in pursuingthe claims for refund/credit, no* su#Ject of +GA"registered enterprises operating *ithin economicprocessing !ones *ere effectivel% !ero"rated and *ere not covered #%-evenue -egulations o. "33, it still denies the claims of petitioner corporation for refund of its input VAT on its purchases of capital goods andeffectivel% !ero"rated sales during the second, third, and fourth $uarters of &'' and the first $uarter of &'', for not #eing esta#lished andsu#stantiated #% appropriate and sufficient evidence. +etitioner corporation

is also not entitled to the re"opening of its cases and/or holding of ne* trialsince the non"presentation of the re$uired documentar% evidence #eforethe B- and the CTA #% its counsel does not constitute ecusa#lenegligence or mista6e as contemplated in ;ection &, -ule 9 of the revised-ules of Court.

WHEREFORE, premises considered, the instant +etitions for -evie* are


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here#% DENIED, and the Decisions, dated 0 2ul% &''' and &5 ;eptem#er , of the Court of Appeals in CA"B-?A-H &5, &0

ESTATE OF THE LATE ?ULIANA DIE@ VDA* DE GA9RIEL, petitioner,vs.COMMISSIONER OF INTERNAL REVENUE, respondent.

D > C ; 4

NARES/SANTIAGO, /.B WHEN ASSESSMENT IS MADE

During the lifetime of the decedent, 2uliana Vda. De


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to the decedent 8c/o +hilippine Trust Compan%, ;ta. Cru!, Manila8 *hich*as the address stated in her &'93 ncome Ta -eturn. o response *asmade #% +hiltrust.

The B- *as still not informed that the decedent had actuall% passeda*a%.

The court a $uo appointed Antonio Am#rosio as the Commissioner and Auditor Ta Consultant of the >state of the decedent.

4n 2une &3, &'31, respondent C- issued *arrants of distraint and lev% toenforce collection of the decedentOs deficienc% income ta lia#ilit%, *hich*ere served upon her heir, @rancisco


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During the lifetime of the decedent Juliana vda. De Gabriel, her businessaffairs were managed by the Philippine Trust Company (PhilTrust.The decedent died on !pril ", #$%$ but two days after her death, PhilTrustfiled her income ta& return for #$%' not indicating that the decedent haddied.The )* conducted an administrative investigation of the decedent+s ta&liability and found a deficiency income ta& for the year #$$% in the amountof P"#',"".$".

Thus, in -ovember #', #$', the )* sent by registered mail ademand letter and assessment notice addressed to the decedent c/oPhilTrust, 0ta. Cru1, 2anila, which was the address stated in her #$%'income ta& return.3n June #', #$'4, respondent Commissioner of )nternal *evenue issued

warrants of distraint and levy to enforce the collection of decedent+s

deficiency income ta& liability and serve the same upon her heir, 5ranciscoGabriel.3n -ovember , #$'4, Commissioner filed a motion to allow his claim

with probate court for the deficiency ta&.The Court denied )*+s claim against the estate on the ground that no

proper notice of the ta& assessment was made on the proper party.3n appeal, the C! held that )*+s service on PhilTrust of the notice ofassessment was binding on the estate as PhilTrust failed in its legal duty toinform the respondent of antecedent+s death.

Conse6uently, as the estate failed to 6uestion the assessment within

the statutory period of thirty days, the assessment became final, e&ecutory,and incontestable.

;;?>

&. 7hether or not the Court of Appeals erred in holding that the service of deficienc% ta assessment against 2uliana Die! Vda. de stateL

. 7hether or not the Court of Appeals erred in holding that the deficienc%ta assessment and final demand *as alread% final, eecutor% andincontesta#le.

=>D

The resolution of this case hinges on the legal relationship #et*een


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+hiltrust and the decedent, and #% etension the petitioner >state.;u#sumed under this primar% issue is the su#"issue of *hether or notservice on +hiltrust of the demand letter and Assessment otice o.A-D"93"3"5& *as valid service on petitioner, and the issue of *hether +hiltrustOs inaction thereon could #ind petitioner. f #oth su#"issuesare ans*ered in the affirmative, respondentOs contention as to the finalit% of

Assessment otice o. A-D"93"3"5& must #e ans*ered in theaffirmative. This is #ecause ;ection &'"A of the -C of &'99 provides aclear "da% period *ithin *hich to protest an assessment. @ailure to filesuch a protest *ithin said period means that the assessment ipso Jure#ecomes final and unappeala#le, as a conse$uence of *hich legalproceedings ma% then #e initiated for collection thereof.

7e find in favor of the petitioner.

The first point to #e considered is that the relationship #et*een thedecedent and +hiltrust *as one of agenc%, *hich is a personal relationship#et*een agent and principal. ?nder Article &'&' () of the Civil Code,death of the agent or principal automaticall% terminates the agenc%. n thisinstance, the death of the decedent on April , &'9' automaticall% severedthe legal relationship #et*een her and +hiltrust, and such could not #erevived #% the mere fact that +hiltrust continued to act as her agent *hen,on April 5, &'9', it filed her ncome Ta -eturn for the %ear &'93.

;ince the relationship #et*een +hiltrust and the decedent *asautomaticall% severed at the moment of the Tapa%erOs death, none of +hiltrustOs acts or omissions could #ind the estate of the Tapa%er. ;erviceon +hiltrust of the demand letter and Assessment otice o. A-D"93"3"5& *as improperl% done.

t must #e noted that +hiltrust *as never appointed as the administrator of the >state of the decedent, and, indeed, that the court a $uo t*ice reJected+hiltrustOs motion to #e thus appointed. As of ovem#er &3, &'3, the dateof the demand letter and Assessment otice, the legal relationship #et*eenthe decedent and +hiltrust had alread% #een non"eistent for three %ears.

-espondent claims that ;ection &1 of the ational nternal -evenue Codeof &'99 imposed the legal o#ligation on +hiltrust to inform respondent of the decedentOs death. The said ;ection readsK

;>C. &1. (otice of death to be filed . : n all cases of transfers su#Ject to


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ta or *here, though eempt from ta, the gross value of the estateeceeds three thousand pesos, the eecutor, administrator, or an% of thelegal heirs, as the case ma% #e, *ithin t*o months after the decedentOsdeath, or *ithin a li6e period after $ualif%ing as such eecutor or administrator, shall give *ritten notice thereof to the Commissioner of nternal -evenue.

The foregoing provision falls in Title , Chapter of the ational nternal-evenue Code of &'99, or the chapter on >state Ta, and pertains to 8allcases of transfers su#Ject to ta8 or *here the 8gross value of the estateeceeds three thousand pesos8. t has a#solutel% no applica#ilit% to a casefor deficienc% income ta, such as the case at #ar. t further lac6sapplica#ilit% since +hiltrust *as never the eecutor, administrator of thedecedentOs estate, and, as such, never had the legal o#ligation, #ased on

the a#ove provision, to inform respondent of her death.

Although the administrator of the estate ma% have #een remiss in his legalo#ligation to inform respondent of the decedentOs death, the conse$uencesthereof, as provided in ;ection &&' of the ational nternal -evenue Codeof &'99, merel% refer to the imposition of certain penal sanctions on theadministrator. These do not include the indefinite tolling of the prescriptiveperiod for ma6ing deficienc% ta assessments, or the *aiver of the noticere$uirement for such assessments.

Thus, as of ovem#er &3, &'3, the date of the demand letter and Assessment otice o. A-D"93"3"5&, there *as a#solutel% no legalo#ligation on the part of +hiltrust to either (&) respond to the demand letter and assessment notice, () inform respondent of the decedentOs death, or () inform petitioner that it had received said demand letter andassessment notice. This lac6 of legal o#ligation *as implicitl% recogni!ed#% the Court of Appeals, *hich, in fact, rendered its assailed decision ongrounds of 8e$uit%8.&9

;ince there *as never an% valid notice of this assessment, it could nothave #ecome final, eecutor% and incontesta#le, and, for failure to ma6ethe assessment *ithin the five"%ear period provided in ;ection &3 of theational nternal -evenue Code of &'99, respondentOs claim against thepetitioner >state is #arred. ;aid ;ection &3 readsK

;>C. &3. Period of limitation upon assessment and collection. : >cept as


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provided in the succeeding section, internal revenue taes shall #eassessed *ithin five %ears after the return *as filed, and no proceeding incourt *ithout assessment for the collection of such taes shall #e #egunafter the epiration of such period. @or the purpose of this section, a returnfiled #efore the last da% prescri#ed #% la* for the filing thereof shall #econsidered as filed on such last da%K +rovided, That this limitation shall notappl% to cases alread% investigated prior to the approval of this Code.

-espondent argues that an assessment is deemed made for the purposeof giving effect to such assessment *hen the notice is released, mailed or sent to the tapa%er to effectuate the assessment, and there is no legalre$uirement that the tapa%er actuall% receive said notice *ithin the five"%ear period.&3 t must #e noted, ho*ever, that the foregoing rule re$uiresthat the notice #e sent to the tapa%er, and not merel% to a disinterested

part%. Although there is no specific re$uirement that the tapa%er shouldreceive the notice *ithin the said period, due process re$uires at the ver%least that such notice actuall% #e received. n Commissioner of nternal-evenue v. +ascor -ealt% and Development Corporation,&' *e hadoccasion to sa%K

An assessment contains not onl% a computation of ta lia#ilities, #ut also ademand for pa%ment *ithin a prescri#ed period. t also signals the time*hen penalties and interests #egin to accrue against the tapa%er. Toena#le the tapa%er to determine his remedies thereon, due process

re$uires that it must #e served on and received #% the tapa%er.

n -epu#lic v. De le -ama, *e clarified that, *hen an estate is under administration, notice must #e sent to the administrator of the estate, sinceit is the said administrator, as representative of the estate, *ho has thelegal o#ligation to pa% and discharge all de#ts of the estate and to performall orders of the court. n that case, legal notice of the assessment *as sentto t*o heirs, neither one of *hom had an% authorit% to represent the estate.7e saidK

The notice *as not sent to the tapa%er for the purpose of giving effect tothe assessment, and said notice could not produce an% effect. n the caseof Bautista and Corrales Tan v. Collector of nternal -evenue P this Courthad occasion to state that 8the assessment is deemed made *hen thenotice to this effect is released, mailed or sent to the tapa%er for thepurpose of giving effect to said assessment.8 t appearing that the person


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lia#le for the pa%ment of the ta did not receive the assessment, theassessment could not #ecome final and eecutor%. (Citations omitted,emphasis supplied.)

n this case, the assessment *as served not even on an heir of the >state,#ut on a completel% disinterested third part%. This improper service *asclearl% not #inding on the petitioner.

B% arguing that (&) the demand letter and assessment notice *ere servedon +hiltrust, () +hiltrust *as remiss in its o#ligation to respond to thedemand letter and assessment notice, () +hiltrust *as remiss in itso#ligation to inform respondent of the decedentOs death, and (1) theassessment notice is therefore #inding on the >state, respondent is arguingin circles. The most crucial point to #e remem#ered is that +hiltrust had

a#solutel% no legal relationship to the deceased, or to her >state. There*as therefore no assessment served on the >state as to the allegedunderpa%ment of ta. A#sent this assessment, no proceedings could #einitiated in court for the collection of said ta, & and respondentOs claim for collection, filed *ith the pro#ate court onl% on ovem#er , &'31, *as#arred for having #een made #e%ond the five"%ear prescriptive period set#% la*.

WHEREFORE, the petition is D. The Decision of the Court of Appeals in CA"


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- versus -

SONY PHILIPPINES, INC.,

Respondent.

G.R. No. 178697

Present:

CARPIO, J ., Chairperson,

LEONARDO-DE CASTRO,*

PERALTA,

ABAD, and

MENDOA, JJ.

Pro!u"#ated:

Nove!$er %&, '(%(

TAX AUDIT (LETTER OF AUTHORITY)

THE FACTS:

On Nove!$er '), %**+, te CIR issued Letter o Autorit No. ((((%*&/) (LOA19734) autori0in# 1ertain revenue oi1ers to e2a!ine Sons $oo3s o a11ounts

and oter a11ountin# re1ords re#ardin# revenue ta2es or !" #"$%o& 1997 '&

*"$%+%"& #$%o$ "'$-.

A pre"i!inar assess!ent or %**& dei1ien1 ta2es and pena"ties 4as issued $

te CIR 4i1 Son protested.

Tereater, a1tin# on te protest, te CIR issued ina" assess!ent noti1es, te


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or!a" "etter o de!and and te detai"s o dis1repan1ies or 4i1 u"ti!ate"

a!ounted to a #rand tota" o Pp %5.+ !i""ion.

Son protested tis 1ontestin# tat te $asis used $ te CIR to asses te said

dei1ien1ies 4ere re1ords 1overin# te period o 6anuar %**+ trou# Mar1 %**+

4i1 4as a period not 1overed under te LOA issued. Te CIR insists tat te

prase in te LOA 7te period %**& and unveriied prior ears7 sou"d $e

understood to !ean te is1a" ear endin# Mar1 /%, %**+.

ISS8E: 9ON te CIR is 1orre1t in usin# te said period as $asis or dei1ien1

ta2es pursuant to te LOA

;ELD: NO

Court said tat $ased on Se1tion %/ o te Ta2 Code, a Letter o Autorit or LOA

is te autorit #iven to te appropriate revenue oi1er assi#ned to peror!assess!ent un1tions.

It e!po4ers or ena$"es said revenue oi1er to e2a!ine te $oo3s o a11ount and

oter a11ountin# re1ords o a ta2paer or te purpose o 1o""e1tin# te 1orre1t

a!ount o ta2.

C"ear", tere !ust $e a #rant o autorit $eore an revenue oi1er 1an 1ondu1t

an e2a!ination or assess!ent. E


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On tis point a"one, te dei1ien1 >AT assess!ent sou"d ave $een disa""o4ed.

Be tat as it !a, te CIRs ar#u!ent, tat Sons advertisin# e2pense 1ou"d not $e

1onsidered as an input >AT 1redit $e1ause te sa!e 4as eventua"" rei!$ursed $

Son Internationa" Sin#apore (SIS), is a"so erroneous.

Te CIR 1ontends tat sin1e Sons advertisin# e2pense 4as rei!$ursed $ SIS, te

or!er never in1urred an advertisin# e2pense. As a resu"t, Son is not entit"ed to a

ta2 1redit. At !ost, te CIR 1ontinues, te said advertisin# e2pense sou"d $e or

te a11ount o SIS, and not Son.?%&@

Te Court is not persuaded. As apt" ound $ te CTA-=irst Division and "ater

air!ed $ te CTA-EB, Sons dei1ien1 >AT assess!ent ste!!ed ro! te

CIRs disa""o4an1e o te input >AT 1redits tat sou"d ave $een rea"i0ed ro! te

advertisin# e2pense o te "atter.?%+@ It is evident under Se1tion %%(?%*@ o te

%**& Ta2 Code tat an advertisin# e2pense du" 1overed $ a >AT invoi1e is a"e#iti!ate $usiness e2pense. Tis is 1onir!ed $ no "ess tan CIRs o4n 4itness,

Revenue Oi1er Antonio A"uAT. To $e#in 4it, te

said su$sid ter!ed $ te CIR as rei!$urse!ent 4as not even e21"usive"

ear!ar3ed or Sons advertisin# e2pense or it 4as $ut an assistan1e or aid in vie4


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o Sons dire or adverse e1ono!i1 1onditions, and 4as on" eAT !a $e "evied. Certain", tere 4as no su1 sa"e, $arter or e21an#e in te

su$sid #iven $ SIS to Son. It 4as $ut a do"e out $ SIS and not in pa!ent or

#oods or properties so"d, $artered or e21an#ed $ Son.

In te 1ase o CIR v. Court of Appeas (CA),?'/@ te Court ad te o11asion to ru"e

tat servi1es rendered or a ee even on rei!$urse!ent-on-1ost $asis on" and

4itout rea"i0in# proit are a"so su$e1t to >AT. Te 1ase, o4ever, is not

app"i1a$"e to te present 1ase. In tat 1ase, COMASERCO rendered servi1e to its

ai"iates and, in turn, te ai"iates paid te or!er rei!$urse!ent-on-1ost 4i1

!eans tat it 4as paid te 1ost or e2pense tat it in1urred a"tou# 4itout proit.

Tis is not true in te present 1ase. Son did not render an servi1e to SIS at a"".

Te servi1es rendered $ te advertisin# 1o!panies, paid or $ Son usin# SIS

do"e-out, 4ere or Son and not SIS. SIS ust #ave assistan1e to Son in te

a!ount e


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On te oter and, te app"i1ation o te ive per1ent 5 rate $ te CTA-=irst

Division is $ased on Se1tion %# o Revenue Re#u"ations No. F-+5 4i1

provides:

(g !mounts paid to certain roBers and !gents. 3n grosspayments to customs, insurance, real estate and commercial

broBers and agents of professional entertainers five percentum (A.8:

In denin# te ver sa!e ar#u!ent o te CIR in its !otion or re1onsideration,

te CTA-=irst Division, e"d:

& & &, commission e&pense is indeed sub=ect to #@A

withholding ta& but payments made to broBer is sub=ect toA withholding ta& pursuant to 0ection #(g of *evenue*egulations -o. 9


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ro! 6anuar to Mar1 %**+, is not va"id and !ust $e disa""o4ed.

=ina"", te Court no4 pro1eeds to te tird #round re"ied upon $ te CIR.

Te CIR initia"" assessed Son to $e "ia$"e or pena"ties or $e"ated re!ittan1e o

its =9T on roa"ties i as o De1e!$er %**&H and ii or te period ro! 6anuar

to Mar1 %**+. A#ain, te Court a#rees 4it te CTA-=irst Division 4en it

upe"d te CIR 4it respe1t to te roa"ties or De1e!$er %**& $ut 1an1e""ed tat

ro! 6anuar to Mar1 %**+.

Te CIR insists tat under Se1tion /?'+@ o Revenue Re#u"ations No. 5-+' and

Se1tions '.5&.) and '.5+A'a?'*@ o Revenue Re#u"ations No. '-*+, Son

sou"d a"so $e !ade "ia$"e or te =9T on roa"ties ro! 6anuar to Mar1 o

%**+. At te sa!e ti!e, it do4np"as te re"evan1e o te Manua1turin# Li1ense

A#ree!ent MLA $et4een Son and Son-6apan, parti1u"ar" in te pa!ent o

roa"ties.

Te a$ove revenue re#u"ations provide te !anner o 4ito"din# re!ittan1e as

4e"" as te pa!ent o ina" ta2 on roa"t. Based on te sa!e, Son is re


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as 4e"" as $ te end o 6une %**+. Given tis, te =9Ts sou"d ave $een paid or

re!itted $ Son to te CIR on 6anuar %(, %**+ and 6u" %(, %**+. Tus, it 4as

1orre1t or te CTA-=irst Division and te CTA-EB in ru"in# tat te =9T or te

roa"t ro! 6anuar to Mar1 %**+ 4as seasona$" i"ed. A"tou# te roa"t

ro! 6anuar to Mar1 %**+ 4as 4e"" 4itin te se!i-annua" period endin# 6une

/(, 4i1 !eant tat te roa"t !a $e paa$"e unti" Au#ust %**+ pursuant to te

MLA, te =9T or said roa"t ad to $e paid on or $eore 6u" %(, %**+ or %(

das ro! its a11rua" at te end o 6une %**+. Tus, 4en Son re!itted te sa!e

on 6u" +, %**+, it 4as not et "ate.

In vie4 o te ore#oin#, te Court inds no reason to distur$ te indin#s o te

CTA-EB.

3HEREFORE, te petition is DENIED.

AZCUNA, J .:COMMISSIONER'S ACTION EQUIVALENT TO DENIAL

OF PROTEST

On March 17, 1988, petitioner received from the Bureau of Internal Revenue (BIR)

deficiency tax assessments for the taxable year 1984 in the total amount

ofP8,644,998.71, broken down as follows:

T o t a l -------- P8,644,998.71

Petitioner filed its protest against the tax assessments and requested areconsideration or cancellation of the same in a letter to the BIR Commissioner

dated April 12, 1988.

Acting in behalf of the BIR Commissioner, then Chief of the BIR Accounts

Receivable and Billing Division, Mr. Severino B. Buot, reiterated the tax


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assessments while denying petitioners request for reinvestigation in a letter [1]

dated January 24, 1991, thus:

Note: Your request for re-investigation has been denied for failure

to submit the necessary supporting papers as per endorsementletter from the office of the Special Operation Service dated 12-

12-90.

Said letter likewise requested petitioner to pay the total amount of P8,644,998.71

within ten (10) days from receipt thereof, otherwise the case shall be referred to the

Collection Enforcement Division of the BIR National Office for the issuance of a

warrant of distraint and levy without further notice.

Upon petitioners failure to pay the subject tax assessments within the prescribed

period, the Assistant Commissioner for Collection, acting for the Commissioner of

Internal Revenue, issued the corresponding warrants of distraint and/or levy and

garnishment. These were served on petitioner on October 10, 1991 and October 17,

1991, respectively.[2]

On November 8, 1991, petitioner filed a Petition for Review with the Court of Tax

Appeals (CTA) to contest the issuance of the warrants to enforce the collection of

the tax assessments. This was docketed as CTA Case No. 4668.The CTA dismissed the petition for lack of jurisdiction in a decision dated

September 16, 1994, declaring that said petition was filed beyond the thirty (30)-

day period reckoned from the time when the demand letter of January 24, 1991 by

the Chief of the BIR Accounts Receivable and Billing Division was presumably

received by petitioner, i.e., within a reasonable time from said date in the regular

course of mail pursuant to Section 2(v) of Rule 131 of the Rules of Court.[3]

The decision cited Surigao Electric Co., Inc. v. Court of Tax Appeals[4] wherein

this Court considered a mere demand letter sent to the taxpayer after his protest of the assessment notice as the final decision of the Commissioner of Internal

Revenue on the protest. Hence, the filing of the petition on November 8, 1991 was

held clearly beyond the reglementary period.[5]

The court a quo likewise stated that the finality of the denial of the protest by

petitioner against the tax deficiency assessments was bolstered by the subsequent


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issuance of the warrants of distraint and/or levy and garnishment to enforce the

collection of the deficiency taxes. The issuance was not barred by prescription

because the mere filing of the letter of protest by petitioner which was given due

course by the Bureau of Internal Revenue suspended the running of the

prescription period as expressly provided under the then Section 224 of the TaxCode:

SEC. 224. Suspension of Running of the Statute of

Limitations. The running of the Statute of Limitations provided

in Section 203 and 223 on the making of assessment and the

beginning of distraint or levy or a proceeding in court for

collection, in respect of any deficiency, shall be suspended for the

period during which the Commissioner is prohibited from making

the assessment or beginning distraint or levy or a proceeding incourt and for sixty (60) days thereafter; when the taxpayer

requests for a reinvestigation which is granted by the

Commissioner; when the taxpayer cannot be located in the

address given by him in the return files upon which a tax is being

assessed or collected: Provided,That if the taxpayer inform the

Commissioner of any change of address, the running of the statute

of limitations will not be suspended; when the warrant of distraint

and levy is duly served upon the taxpayer, his authorized

representative, or a member of his household with sufficientdiscretion, and no property could located; and when the taxpayer

is out of the Philippines. [6] (Underscoring supplied.)

Petitioner filed a Motion for Reconsideration arguing that the demand letter of

January 24, 1991 cannot be considered as the final decision of the Commissioner

of Internal Revenue on its protest because the same was signed by a mere

subordinate and not by the Commissioner himself.[7]

With the denial of its motion for reconsideration, petitioner consequently filed a

Petition for Review with the Court of Appeals contending that there was no final

decision to speak of because the Commissioner had yet to make a personal

determination as regards the merits of petitioners case.[8]

The Court of Appeals denied the petition in a decision dated October 31, 2000, the


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dispositive portion of which reads:

WHEREFORE, the petition is DISMISSED for lack of merit.

SO ORDERED.

Petitioners Motion for Reconsideration was likewise denied in a resolution dated

May 3, 2001.

Hence, this petition with the following assignment of errors:[9]

ITHE HONORABLE RESPONDENT CA ERRED IN FINDING

THAT THE DEMAND LETTER ISSUED BY THE (THEN)

ACCOUNTS RECEIVABLE/BILLING DIVISION OF THE BIR

NATIONAL OFFICE WAS THE FINAL DECISION OF THE

RESPONDENT CIR ON THE DISPUTED ASSESSMENTS,

AND HENCE CONSTITUTED THE DECISION

APPEALABLE TO THE HONORABLE RESPONDENT CTA;

AND,

II

THE HONORABLE RESPONDENT CA ERRED IN

DECLARING THAT THE DENIAL OF THE PROTEST OF

THE SUBJECT ALLEGED DEFICIENCY TAX

ASSESSMENTS HAD LONG BECOME FINAL AND

EXECUTORY FOR FAILURE OF THE PETITIONER TO

INSTITUTE THE APPEAL FROM THE DEMAND LETTER

OF THE CHIEF

vat cases recit

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