TAX Final

Case digests On CTA En banc Jurisprudence (March 2015-April 2016) Submitted to: Atty. Anthony Dy

Submitted by: 3C- SY: 2016-2017 December 5, 2016

Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue CTA EB No: 1045, March 30, 2015 Uy, J.:

FACTS: A partnership between Marubeni Pacific Energy Holdings Corporation and Marubeni Pacific II was created and duly registered with SEC addressed in Barangay Ilomvis Kidapawan City. It is primarily engaged in the development, financing, construction, ownership, operation, maintenance and transfer of geothermal electrical generation plant at Mindanao Geothermal Reservation, North Cotabato. Such is claiming against respondent appointed Commissioner of BIR on the aspect of approving for refund or tax credit .Petitioner sent its Income Tax return for calendar ending December 31. 2007. From the partnership, a merger with Axia Power Holdings Philippines Corporation with APHPC as the surviving entity. This lead to a belief that petitioner is allowed to avail for a refund or an issuance of a tax credit certificate of its excess or unutilized creditable withholding tax. The total amount prayed for was P22,867, 594 as tax credit. ISSUE: Whether or not the assigned errors on the prescription for the carrying over of excess income taxes, failure to prove withholding and income were included in the annual income tax return and the failed reconciled income tax in 2007 against the creditable withholding taxes? HELD: The Court ruled in the negative. According to section 76 of the NIRC a taxpayers has the option to file a claim for refund or to carry over its excess income tax payments. The option to carry is however irrevocable. As such, it can no longer seek refund of the unutilized excess income tax payments. The taxpayer’s option is to apply the unutilized excess income tax payments as a tax credit to the succeeding taxable years. It is clear that what is rendered imprescriptibly is not the claiming of refund but the carrying over of the amount of tax credit in subsequent taxable years. Where however the corporation permanently ceases its operations before full utilization, the tax credits are no longer veiled with irrevocability. Ultimately, what is lacking is the shortened period of the Income tax Return wherein it is shown that the cessation has occurred wherein the excess credits remained unutilized. Failure to do such destabilizes the claim for refund hence the petitioners claim must ultimately fail. Every minute aspect must be duly proven and absent such leads to denial of the claim.

National Power Corporation vs. The Central Board of Assessment Appeals CTA EB No: 1025, March 23, 2015 Cotangco-Manalastas, J.: FACTS: Petitioner is a government owned and controlled corporation created by RA 6395 and respondent Central Board of Assessment Appeals is a quasi judicial body created under the Local Government Code to decide real property assessment cases brought from the Local Board of Assessment Appeals. On October 21 1996 a notice was received regarding a revision of the real property assessment making the machineries, buildings and other improvements amounting to market values of 1.5Billion each for blocks A and B with a total of 3Billion Php. From such market values, tax was paid under protest in the amount of 8Million pesos to the provincial treasurer. Petitioner claims that it is not barred by prescription in contesting the assessed taxes hence the appeal to the CBAA. The CBAA ordered that prescription has in fact set in and the petitioners are barred. ISSUE: Whether or not the CBAA in its dismissal, erred procedurally? HELD: No, the CBAA’s decision is impressed with merit. Under the Rules of Procedure for real property, the payment under protest is a condition sine qua non in claiming against an assessment. Such was done by the petitioner within the prescribed 30 days. However, the National Power Corporation was unable to perfect an appeal in the period prescribed by law to the CBAA from the LBAA. As such, from an infirmity procedurally made where jurisdiction is to be acquired, the Court dismisses the case at bar. Failure to appeal in due course results in the dismissal in the case at bar.

Next Mobile, Inc vs. Commissioner of Internal Revenue CTA EB No: 1059, March 16, 2015 Uy, J.:

FACTS: The case is a n appeal on a denied petition by Next Mobile regarding deficiency taxes leading and ordering petitioner to pay deficiency VAT the amount of 1,590,390.97 Php for the taxable year of 2005. Next Mobile is a domestic corporation located in Sampaloc Manila. On January 14, 2009, respondent BIR issued a Formal letter of demand with a final assessment notice. The BIR thereby reduced the VAT payable to 2,785,754.67 Php which necessitated a petition for review on the part of Next Mobile. It was investigated upon wherein the Special third division ruled in favor of the respondent CIR as there was an undeclared 15M worth in gross receipts. This was not controverted by Next Mobile through sufficient evidence. The only argument is that there is already enough input VAT to which the deficiency may be credited against. However, again, there is no presentation of evidence to support Next Mobile’s contentions. ISSUE: Whether or not the CTA erred in ruling that the deficiency VAT assessment was filed within the prescriptive period and that usage of unutilized VAT input is unavailable to offset? HELD: The court ruled that the petition lacks merit. The contention of the petitioners that only 3 years is available for the tax assessment to be made is erroneous. Generally there is only 3 years available for assessment however when there is deceit and fraud, the prescriptive period extends to a total of 10 years. It was proven and found out that the gross receipts were fraudulently undeclared. The absence of any controverting evidence allows the prescriptive period to remain at 10 years. The court also ruled that petitioner’s argument in unutilized input tax is available for Next Mobile is untenable. Firstly, evidence must be procured ie an invoice or official receipt to substantiate the claim of excess and unutilized input, Such was absent in the case. Furthermore, such contention is irrelevant to the case at bar since the presence or absence of unutilized input VAT is not a ground for the nullification of the subject deficiency tax assessment. As such, the petition must fail.

Avon Products Manufacturing Inc. vs. Commissioner of Internal Revenue CTA EB No: 1059, March 16, 2015 Uy, J.:

FACTS: Petitioner is filing for the review of the case decided by the court of tax appeals in division for the deficiency excise tax assessment issued by respondent with a total shortage of 21,163.49 liters relating to deliveries of denatured ethyl alcohol from January to December 2008. The modified amount is at 628,984 Php with an included surcharge of 125,796 Php based on delinquency interest. The petitioner as a manufacturer of perfumes, toilet waters, splash colognes and body sprays use denatured ethyl alcohol which is acquired from 2 local suppliers named Kool Company and Far East Alcohol Corporation. The bureau issued an order allowing Avon products to acquire such products through licensed suppliers only. A preliminary assesement notice was given as well as the Final assessment notice. This reflected that deficiency excise tax was to be acquired by the bureau because according to the BIR permit, excess from the volume declared would be taxed and assessed. ISSUE: Whether or not the subject denatured ethyl alcohol is subject to excise tax? HELD: The petition of Avon Products Manufacturing is denied. The court said that Spirits or distilled spirits is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof from whatever source by whatever process produced and shall include whisky, brandy, rum, gin and vodka along with other similar products. Based on the foregoing and other technicalities, it is clear that excise tax is impossible in the substance known as ethyl alcohol. However the item in contemplation is that of denatured ethyl alcohol where different amounts may lead to tax exemption. In the presentation of evidence, there is inability to persuade the court that the denatured alcohol in question is fit for oral intake. As such, the claim for exemption becomes more doubtful. Again, every minute aspect must be determined and proved by clear and convincing evidence. Since the petitioner failed to substantiate its claim that the subject denatured ethyl alcohol is subject to an exemption on excise tax, the assessment made by the BIR is binding.

Commissioner of Internal Revenue vs Systems Technology Institute Inc CTA EB No: 1050, March 24, 2015 Ringpis-Liban, J.:

FACTS: The case is a petition to resolve taxation assessments of deficiency on income tax, value added tax and expanded withholding tax on the ground of prescription. Petitioner is the duly appointed Commissioner of Internal Revenue in exercise of the powers vested by law including the power to decide disputed assessments and cancel tax liabilities among others. Respondent on the other hand is a recognized and organized corporation under the Philippine Laws. STI’s Amiel Sangalang signed a waiver of defense of prescription where the assessment and collection of taxes of Fiscal Year 2003 shall not come later than December 31, 2006. Such period was extended until March 31, 2007 and lastly until June 30 same year. On June 28, a FAN was received in the amount of 161,835,737.98 Php. The lower court ruled that the filing of a request for reinvestigation may suspend the running of the prescriptive period. However the protest was filed beyond the 3 year prescriptive period, specifically on July 25, 2007. ISSUE: Whether or not the petitioner’s deficiency tax assessments against the respondent were made within the period prescribed by law? HELD: The court ruled that the time to assess has prescribed. It is unnatural that petitioner contends the existence of fraud in its motion for reconsideration. Such matter must be raised before a decision is rendered. This is in purview of the petitioner’s push to use Section 222 of the NIRC to render the prescriptive period to extend to 10 years other than the general rule of 3 years. The contentions raised are untenable as per the court and is not substantiated by the evidence presented. Also, the liability of the withholding agent could have been avoided had the government agency faithfully fulfilled its duties on time. Furthermore, the waivers executed were not done within the prescribed requirements under the law hence held to be invalid. Waivers do not bar the right to invoke prescription. As such, the invalid waiver does not interrupt the running of the prescriptive period. Wherefore the court ruled that prescription has set forth and the claim by the Bureau lacks merit.

Phil. Gold Processing & Refining Corp vs. Commissioner of Internal Revenue CTA EB Case No. 1121, March 31, 2015 Casanova, J.: FACTS: Petitioner Phil. Gold Processing and Refining Corporation filed with the BIR its Quarterly VAT Returns for the 4th quarter of FY ending June 30, 2009 to the 2nd quarter of FY ending June 30, 2010. It subsequently filed with BIR an administrative claim for refund of its alleged unutilized input VAT attributable to its zero-rated sales. On August 25-26, 2011, it also filed before the CTA a judicial claim for refund of its purported unutilized input VAT attributable to its zero-rated sales for the 4 th quarter of FY ending June 30, 2009 and for the 1 st and 2nd quarters of FY ending June 30, 2010. Respondent raised the following defenses: that the amount allegedly representing unutilized or unapplied creditable input tax was not properly documented; that petitioner has not complied with Section 112 of the NIRC with respect to the periods for claiming tax refund/credit; and that petitioner has not submitted complete documents for its administrative claim. During trial, petitioner presented and formally offered its pieces of testimonial and documentary evidence. On the other hand, respondent manifested that there is no Report of Investigation with regard to petitioner's administrative claim and that she is submitting the case for decision. However, petitioner filed its Motion to Re-open the Division cases praying that the proceedings of the cases be re-opened and that it be allowed to submit the additional documents for its claims for refund but it was denied on the grounds that petitioner did not allege that the documents were not available during trial and neither did it claim any mistake/inadvertence to its omission to present the saiddocuments, nor alleged any intention to correct evidence previously offered. Special Third Division ruled against petitioner on the ground of prescription and denied petitioner's claim for failure to meet the invoicing requirements for zero-rated export sales. Hence, the case. ISSUE: Whether or not petitioner failed to prove its claims for refund/tax credit through proper documentation. HELD: YES. It must be stressed that tax refunds partake of the nature of tax exemptions, which are construed strictissimi juris against the taxpayer, thus, evidence in support of a claim must likewise be strictissimi scrutinized and duly proven. The taxpayer has the burden to present convincing evidence to substantiate a claim for refund. Even if the taxpayer's application for zero-rating has been approved by the Commissioner of Internal Revenue, it must still comply with the invoicing and accounting requirements mandated by Sections 113 and 237 of the NIRC of 1997, as amended, and Section 4.108-1 of RR No. 7-95.

In the case at bar, it is well-settled that petitioner's failure to comply with the invoicing requirements such as the imprinting of the word 'zero-rated' on its invoices is fatal to its claim for refund of input VAT on zero-rated sales. Petitioner also failed to show that the provisional invoices it submitted were duly registered with the BIR as mandated under Sections 237 and 238 of the NIRC. Hence, petitioner is not entitled to any refund for non-compliance under the law.

Brixton Investment Corp vs. Commissioner of Internal Revenue CTA EB Case No. 1099, April 06, 2015 Ringpis-Liban, J.: FACTS: On January 27, 2011, Brixton received from BIR Regional Director Misajon a Formal Letter of Demand (FLD) for alleged deficiency income tax, value-added tax, and penalty for non-maintenance of books of accounts and other accounting records. With the FLD were three assessment notices. Brixton flied a protest against the FLD and its enclosed Assessment Notices. Respondent wrote Brixton that its protest had been forwarded to Revenue District Office for appropriate action. However, the RDO remained with its decision. Brixton filed its petition for review, which was heard by the Court’s Second Division. promulgated its decision dismissing Brixton's petition for lack of jurisdiction. It is Brixton's thesis that its petition was not prematurely filed because what it appealed to the CTA was a decision of the respondent on the disputed assessments, which decision is within the statutory jurisdiction of this Court to review. Hence, the instant petition. ISSUE: Whether or not there was lack of jurisdiction in dismissing the petitioner’s action HELD: YES. The laws applicable to the case is Section 228 of the NIRC in relation to Section 7(1) of R.A. No. 1125 which states that the protest should be filed within 30 days after receipt of the assessment. Within 60 days from the filing of the protest, all relevant supporting documents shall have been submitted. The CIR or his duly authorized representative has 180 days to render a decision on the protest. If an adverse decision is rendered within those 180 days, the taxpayer may appeal the decision to the CTA within 30 days from receipt of the decision. If no decision is rendered within the 180-day period, the taxpayer has 30 days from the lapse thereof, within which to appeal the inaction to the CTA. Thus, from the viewpoint of the CTA, the appeal must be filed with it within 30 days from the taxpayer's receipt of the decision, or within 30 days from the lapse of the 180-day period during which no decision was made by the CIR or his duly authorized representative. In the instant case, although signed by a Regional Director, who is recognized as a duly authorized representative of the CIR, neither of the above-cited FLD and Assessment Notices comprises a decision appealable to the CTA. Indeed, Brixton contradicted its insistence that these are decisions, by protesting them administratively as assessments, instead of filing an appeal against them with the CTA within 30 days from its receipt of these documents. In addition, none of the BIR documents that Brixton alleges to bespeak a decision of the CIR on the disputed assessments made use of the terms "decision," "final decision," or "appeal." It is here that Brixton's contentions fall short, for the Court finds nothing in these documents that unmistakably presents a final determination on the disputed assessments. Hence, the Court found that there was no decision on disputed assessment rendered by the CIR or her authorized representative against Brixton, at the time of the filing of the petition that could assume jurisdiction. Nor had the "inaction" of the CIR, if the aborted resolution of Brixton's protest can be termed as such, ripened into the 180-

day inaction contemplated under Section 228 of the NIRC, which could have given the petitioner 30 days from the lapse thereof within which to file an appeal with this tribunal. Consequently, by operation of Section 228 of the NIRC, the disputed assessments, as revised, became final, executory, and demandable.

Commissioner of Internal Revenue vs. Philippine Airlines CTA EB Case No. 1127, April 07, 2015 Uy, J.: FACTS: In CTA Case No. 5824, former CTA rendered a decision denying PAL's claim for refund in the amount ofPhp731, 190.45 representing alleged erroneously withheld and/orcollected 20% final withholding tax on interest income from bankdeposits for the period from January 1997 to November 1997. An appeal was filed reversing the decision of said case directing the CIR to refund PAL’s claims or, in the alternative, to allow the petitioner a tax credit for the same amount. On November 22, 2006, the decision became final and executory. In CTA Case No. 8677, on July 26, 2013, with the intent to enforce judgment in the above-stated case, PAL filed a petition for revival of judgment. However, CIR counter-argued that executions of judgment in tax cases do not involve enforcement by independent action after the lapse of the period to execute the same as what is explicitly provided under Section 7 of the RRCTA is execution of judgment within the five-year period. PAL asserts that Section 7, Rule 14 of the Revised Rules of the Court of Tax Appeals makes no mention of limiting the period for execution of judgment to a mere five years. Instead, as laid down in Section 3, Rule 1 of the Revised Rules of the CTA, the Rules of Court shall apply suppletorily to the rules of the CTA, making Section 6, Rule 39 of the Rules of Court, in relation to Article 1144 of the Civil Code, is applicable.Hence, the case. ISSUE: Whether or not the petition of revival of judgment is proper. HELD: YES. With regard to Section 3, Rule 1 of the Revised Rules of the CTA in connection with the execution of a judgment through an independent action in Section 6, Rule 39 of the Rules of Court, it states that an action to revive judgment only requires proof of a final judgment which has not prescribed and has remained unexecuted after the lapse of five years but not more than ten years from its finality. After all, an action to revive judgment is not meant to retry the case all over again. Its cause of action is the judgment itself and not the merits of the original action. The doctrine of laches is based upon grounds of public policy and equity. It is invoked to discourage stale claims but is entirely addressed to the sound discretion of the court. Since it is an equitable doctrine, its application is likewise controlled by reasonable considerations. In the case at bench, less than seven years has lapsed between the time that the "Entry of Judgment" was made on November 22, 2006 to July 26, 2013, when PAL filed its "Petition for Revival of Judgment" before the CTA. Hence, laches cannot be said to have set in, as respondent was able to exercise its right to execute the judgment by way of an independent action, within the prescriptive period set by law.

Commissioner of Internal Revenue vs. CE Casecnan Water & Energy Co. CTA EB Case No. 1158, April 07, 2015 Cotangco-Manalastas, J.: FACTS: Respondent is a domestic corporation, registered as VAT taxpayer with BIR engaged in the business of power generation in Central Luzon for the conversion into electricity of water provided for and under contract with the National Irrigation Administration, provided that, in no event it shall engage in the general supply or distribution of electricity, in retail trade or in the business of a public utility, or furnish electricity to end-users or consumers, or provide a public service or engage in industries or activities reserved by the Constitution or by law to corporations. On November 9, 2011, respondent filed with the Large Taxpayers Excise Audit Division I of the BIR an administrative claim for refund or issuance of TCC of its unutilized input VAT for the 1st to 4th quarters of 2010. On November 18, 2011, respondent filed with the BIR LTEAD I a copy of a certification issued by the Department of Finance stating that respondent had not filed a similar claim for refund covering the period concerned. Due to the inaction of petitioner in deciding the administrative claim for refund or issuance of TCC beyond the 120-day period provided for by Section 112(C) of the NIRC, respondent filed a Petition for Review on March 27, 2012 before the Court in Division. During trial, only respondent presented its documentary and testimonial evidence while petitioner manifested that she would not present evidence. The 1ST Division found that respondent has sufficiently proven itsentitlement to a refund or issuance ofTCC as to the amount ofP15,729,679.92, representing the unutilized input VAT incurred for the four quarters of taxable year 2010 attributable to its zero-rated sales of generated power to NIA. Hence, the case at bar. ISSUE: Whether or not the claim of refund alleged by the respondent was properly founded by the Court. HELD: YES. Revenue Memorandum Circular No. 029-09 is explicit that if the taxpayer failed to present accounting books and records for audit/verification and additional documents to explain discrepancies/findings, it is incumbent upon the BIR to notify the taxpayer. In the present case, there is nothing on record which would show that a written notice was sent by BIR to petitioner for purposes of informing petitioner that the submitted documents are incomplete or that petitioner is required to submit additional documents. Also, the Court did not state that the entire input VAT is attributable to petitioner's zero-rated sales during the covered period. In fact, of the total substantiated input VAT of P35,162,953.78, the Court determined that only P15,791,375.69 is attributable to zero-rated sales. It deducted the net amount of P61,695.77 as petitioner's net output VAT payable. Thus, the refundable amount was reduced to P15, 729,679.92. Hence, there was no error in finding the refund claimed by the respondent.

National Power Corp. vs. Province of Nueva Vizcaya CTA EB Case No. 1069, April 07, 2015 Uy, J.: FACTS: On November 21, 2007, petitioner National Power Corporation received an Assessment Letter from respondent Martinez, the Provincial Treasurer of Nueva Vizcaya, demanding payment of local franchise tax for the years 2002 to 2006 in the aggregate amount of P8,776,271.35 pursuant to Tax Ordinance No. 2003-01 of the Province of Nueva Vizcaya which demanded local franchise tax is based on the payment made by NUVELCO to petitioner. Petitioner filed a protest letter assailing the assessment of local franchise tax on the ground that with the effectivity of the EPIRA, petitioner is now considered only as a generation company as its transmission and sub-transmission functions have been transferred to TRANSCO, thus, it is no longer required to secure a franchise and consequently, cannot be burdened with the payment of the local franchise tax. Respondents counter-argue that pursuant to law, ordinance and jurisprudence, petitioner is clearly liable to pay franchise tax to the Province of Nueva Vizcaya. According to respondents, EPIRA Law never repealed petitioner's corporate powers under its franchise and as long as it exercises its rights and privileges bestowed by its charter, aside from performing missionary electrification function through SPUG, it is considered a business enjoying a franchise that comes within the ambit of Sections 137 and 192 of the LGC. RTC and CTA Division ruled in favor of respondents. Hence, the instant case. ISSUE: Whether or not NPC is liable for the payment of franchise tax. HELD: NO. Upon the enactment and effectivity of Republic Act 9136 or EPIRA on June 26, 2001, National Transmission Company (TRANSCO) shall assume the electrical transmission function of NPC and have the power and functionshereinafter granted. The TRANSCO shall assume the authorityand responsibility of NPC for the planning, construction andcentralized operation and maintenance of its high voltagetransmission facilities, including grid interconnections andancillary services. The requisites to be covered by local franchise tax are: (1) that petitioner has a 'franchise' in thesense of a secondary or special franchise; and (2) that it is exercisingits right or privileges under this franchise within the territory of thelocal government unit concerned. Applying the law in the case, with regard to the first requisite, considering that petitioner'sfranchise has already been transferred to TRANSCO,petitioner can no longer be considered as having a monopoly in thegeneration and distribution of electricity. As for the secondrequisite, it cannot be said that petitioner is able to exercise its rightor privileges under its franchise within the province of Nueva Vizcaya,since in the first place, petitioner has no franchise to speak of.Plainly, petitioner can no longer be said to be a "business enjoying afranchise" in Nueva Vizcaya as the phrase is used under Section137 of the Local Government

Code.Thus, petitioneris not the proper party subject to the local franchise tax foroperating that business. Rather, said tax is alreadycollectible from PSALM Corp. and/or TRANSCO, on the basisof the EPIRA.

Commissioner of Internal Revenue v. Sonoma Services CTA EB Case No. 1163 ; April 21, 2015 Cotangco- Manalastas, J.: FACTS: On April 15, 2010, petitioner filed its Annual Income Tax Return (ITR) for CY 2009 through the Electronic Filing and Payment System (EFPS) with EFPS Reference No. 121000003720677. In the said ITR, petitioner reported gross revenues in the amount of P44,641,000.00, taxable income of P3,319,677.00, income tax liability of P995,903.10, and income tax credits in the total amount of P6,307,844.60. After deducting petitioner's income tax liability for CY 2009 from its income tax credits for CY 2009, petitioner had a tax overpayment of P5,311,941.50. Petitioner opted to claim a refund by shading the appropriate box in the ITR. On June 24, 2010, petitioner filed its administrative claim for refund of excess and unutilized CWT for CY 2009 amounting to P4,045,410.00 with ROO No. 50. Respondent failed to act on petitioner's administrative claim, prompting petitioner to file the instant claim before this Court on April 11, 2012. Trial ensued, after which, the CTA Division promulgated its Decision, dated November 27, 2013, which granted respondent Sonoma's claim for refund. Petitioner CIR argues that the evidence presented by respondent Sonoma Services, i.e. certificates of creditable tax withheld accomplished by its withholding agents, does not constitute conclusive evidence of payment and remittances to the Bureau of Internal Revenue (BIR) of the withheld taxes on respondent's income. ISSUE: Whether the Honorable First Division of the CTA erred in granting respondent's Petition for Review and ordering the refund of the amount of P4,045,410.00 representing its excess and unutilized creditable withholding taxes for the calendar year 2009? HELD: No, the Honorable First Division of the CTA did not erred in granting respondent's Petition for Review and ordering the refund of the amount of P4,045,410.00 representing its excess and unutilized creditable withholding taxes for the calendar year 2009. The presentation of a certification from [petitioner]'s Revenue Accounting Division is not required before a taxpayer will be entitled to a claim of tax refund or issuance of a tax credit certificate. Furthermore, [respondent] has no control on the remittance of taxes withheld from its income by the withholding agents or payors; thus, the Certificates of Creditable Tax Withheld at Source issued by the latter are prima facie proof of actual payment by [respondent]. In the case Commissioner of Internal Revenue v. Asian Transmission Corporation, the Supreme Court reiterated the ruling of this Court En Bane, to wit:

xxx proof of actual remittance by the respondent is not needed in order to prove withholding and remittance of taxes to petitioner. Section 2.58.3(8) of Revenue Regulation No. 2-98 clearly provides that proof of remittance is the responsibility of the withholding agent and not of the taxpayer- refund claimant.

Total (Philippines) Corporation v Commissioner of Internal Revenue CTA EB Case No. 1154; April 21,2015 Castaneda, Jr.J.: FACTS: Petitioner Total Philippines is licensed by the SEC to acquire, assemble, install, construct, equip, repair, remodel, maintain, develop, operate, hold, own, lease and otherwise deal with oil terminals and service station networks; to develop and operate a wholesale distribution network and carry out the purchase, acquisition, including importation, if appropriate, storage, marketing, distribution, transport, use, wholesale, exportation, refinement, treatment, distillation and manufacture of, and generally deal in, Fuel Oils, Gas Oils, Gasolines, Lubricants and, subject to market conditions, Bitumens, Solvents and Kerosenes and, subject to the written agreement of the stockholders any and all kinds of oil and oil products, such as Jet Fuel and liquefied petroleum gas. On the belief that it has unutilized input tax for the first, second, third, and fourth quarters of 2007, petitioner filed its administrative claims for refund with the Large Taxpayer Audit and Investigation Division II of the BIR. According to the respondent Commissioner of Internal Revenue, the petition for review we're prematurely filed; petitioner should give respondent 120 days to process its claim for refund. It can appeal to this Honorable Court only after the expiration of the 120-day period granted by law or within thirty days from the decision of respondent denying its claim for refund. Petitioner did not submit complete documents in support of its administrative claim for refund in CTA Case Nos. 7898 and 8008 and therefore the 120-day period commenced to run on the date of filing of the administrative claims in said cases. ISSUE: Whether or not the Honorable Special First Division erred in disregarding petitioner’s sales in 2007 in the amount of P1,091,958,783.59 as zero-rated sales, the same having been actually exported or sold to entities registered with PEZA/CDC/BOI. HELD: No, the Honorable Special First Division erred in disregarding petitioner’s sales in 2007 in the amount of P1,091,958,783.59 as zero-rated sales, the same having been actually exported or sold to entities registered with PEZA/CDC/BOI. Based on the findings of the Court a quo, out of the alleged zero-rated sales of Pl,091,958,783.59, only the amount o f P74,460,845.27 was considered while the remainder was disregarded for lack of sufficient evidence to prove that it pertained to zero-rated sales. Petitioner failed to prove that the sales were made to entities duly registered with Philippine Economic Zone Authority (PEZA), Clark Development Corporation (CDC), or Board o f Investment (BOI).

As correctly found by the Court a quo, some Certifications/Certificate of Registration failed to indicate the effectivity dates or period of coverageof the registration. The period of coverage will aid the court in ascertaining whether or not the sales for taxable year 2007 were made to duly registered PEZA/CDC/BOI entities. Only the Certifications which are indicative of the fact that the named entities therein are duly registered with the PEZA or BOI or CDC, as the case may be, and only during the effectivity thereof, which must be within the year 2007, shall be considered valid for purposes of determining petitioner's zero-rated sales for the year 2007.

Chevron Holdings Inc. v Commissioner of Internal Revenue CTA EB Case No. 1146; April 14, 2015 Casanova, J.: FACTS: Petitioner filed an administrative claim for refund of its purported unutilized input VAT for the four quarters of taxable year 2008 on March 5, 2010 and was later amended on March 31, 2010. Due to inaction of respondent on the administrative claim for refund, petitioner filed the instant Petition for Review with this Court on March 31, 2010. According to the respondent CIR, the claim for refund in the amount of One Hundred Seventy Seven Million Three Hundred Thirty Seven Thousand Four Hundred Ninety Two Pesos and 52/100 (P1 77,337,492.52) allegedly representing accumulated and unutilized VAT input taxes paid by it for the taxable year 2008 is not properly documented.Likewise, for a judicial claim to prosper, the party must not only prove that it is a VAT-registered entity, it must substantiate the input VAT paid by purchase invoices or official receipts. Such that failure to comply with the requirements for a valid request for refund including the requirement for a valid sales invoice is fatal to the claim for refund. ISSUE: Whether or not the Court erred in denying Chevron Holdings' accumulated "input tax carry-over of Php196,500,668.53" from previous taxable quarters on [the] ground that it failed to substantiate the same. HELD: No, the Court did noterred in denying Chevron Holdings' accumulated "input tax carry-over of Php196,500,668.53" from previous taxable quarters on [the] ground that it failed to substantiate the same. In claiming excess unutilized input tax from zero-rated or effectively zero-rated transactions, it is the excess over the output taxes which should be refunded to the taxpayer or credited against other internal revenue tax. Hence, it is important for the taxpayer to prove that it has enough prior year’s excess input tax credits to cover its output tax liability for the current taxable year. The 'prior year's excess input tax credits' may be proved by following the substantiation requirements under Section 4.110-8 of Revenue Regulations No. 162005, otherwise known as the 'Consolidated Value-Added Tax Regulations of 2005'. Mere declaration of the amount of P196,500,668.53 as 'Input Tax Carried Over from Previous Quarter' in petitioner's Quarterly VAT Return for taxable year 2008 will not suffice. In this case, petitioner failed to present and offer in evidence any VAT invoice or official receipt to support the 'Input Tax Carried Over from Previous Quarter' which petitioner seeks to be credited or charged against its output Vat liability for taxable year 2008. Hence, the input tax carry-over of P196,500,668.53 cannot be validly

applied against petitioner's output tax for the year 2008 pursuant to Section 110 of the NIRC of 1997, as amended. Coca-Cola Bottlers Phils. V. Commissioner of Internal Revenue CTA EB Case No. 1061; April 10, 2015 Bautista, J.: FACTS: On October 21, 2009, petitioner filed its administrative claim for refund for its alleged erroneous overpayment of VAT for the quarter ending September 30,2007 in the amount of P60,420,422.20. Petitioner, likewise, filed with respondent its claim for refund/ tax credit on January 20, 2010, for its alleged erroneous overpayment of VAT for the quarter ending December 31, 2007 in the amount of P112,341,092.68. Thereafter, the instant Petitions for Review were filed on October 23,2009 and January 22,2010. Respondent CIR humbly manifests that the Honorable Court is bereft of jurisdiction to hear and try the case considering that petitioner's administrative claim for refund was already belatedly filed on October 21, 2009. It bears stressing that the claim for refund arose from the alleged erroneous VAT payments for the quarter ending September 30, 2007. Ergo, by express provision of law, petitioner is given a period of two (2) years from the date or payment of erroneously or illegally collected taxes or until September 30, 2009 within which to file a written claim for refund. However, in the case at hand, petitioner filed the administrative claim for refund only on October 21, 2009 which was already a month beyond the deadline period set on September 30, 2009 in total disregard of the provision of law. It is likewise noteworthy of emphasis that the Petition for Review was filed by petitioner before the Court of Tax Appeals on October 23, 2009 or exactly two (2) days after the filing of the administrative claim for refund with respondent giving the latter no ample opportunity to decide and act on the matter. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund. ISSUE: Whether or not petitioner is entitled to tax refund or issuance of tax credit certificate in the aggregate amount of Php172,761,514.88 allegedly representing erroneous payment of output VAT for the third and fourth quarters of taxable year 2007. HELD: No, petitioner is not entitled to tax refund or issuance of tax credit certificate in the aggregate amount of Php172,761,514.88 allegedly representing erroneous payment of output VAT for the third and fourth quarters of taxable year 2007. Notwithstanding the timeliness of the filing of petitioner's administrative and judicial claims under Section 229, it should not be forgotten that Sections 204 and 229 must be read together with the provision of Section 4.110-8 of Revenue Regulations No. 16-2005.

In order for input taxes to be available as tax credits, they must be substantiated and reported in the VAT returns of the taxpayer. Here, the Court-commissioned Independent CPA (ICPA) found that out of petitioner's alleged unclaimed input tax credits for the third and fourth quarters of 2007 in the respective amounts of P60,420,422.20 and P112,341,092.68, totaling P172,761,514.88, only the input taxes of P19,342,803.07 and P34,440,405.24 for the third and fourth quarters of 2007, respectively, totaling P53,783,208.31 were properly supported by VAT official receipts. In the present case, as found by the Court in Division, petitioner is claiming an input VAT for the third and fourth quarters of 2007 amounting to Php60,420,422.20 and Php112,341,092.68 respectively or a total amount of Php172,761,514.88, which were undeclared in the returns. Applying the foregoing, the claimed input taxes for the said quarters cannot be credited against the output taxes as the said input taxes were not declared in the return. Furthermore, based on the report of the Independent Certified Public Accountant (ICPA),20 " it was found out that out of petitioner's alleged unclaimed input tax credits for the third and fourth quarters of 2007 in the respective amounts of Php60,420,422.20 and Php112,341,092.68 or totaling to Php172,761,514.88 only the input taxes of Php19,342,803.07 and Php34,440,405.24 for the third and fourth quarters of 2007, respectively or totaling Php53,783,208.31 were properly supported by VAT official receipts."

National Transmission Corporation v. Municipality of Labrador CTA EB Case No. 1034; April 7,2015 Bautista,J.: FACTS: On January 10, 2011, Transco was served at its principal office a Notice of Assessment for Local Business Tax, Surcharge and Monthly Interests for the Taxable Year 2009 in the amount of P39,688,904.09, inclusive ofsurcharge and monthly interest. According to plaintiff, defendant did not file any protest either personally, by registered mail or by any other manner. Thus, for failure to protest, the Notice of Assessment has become 'final and executory. As a result, on April 5, 2011, plaintiff filed the instant Complaint, praying that defendant Transco be ordered to pay its local business tax for calendar year 2009 in the amount of P41,065,397.87 as of April2011 plus monthly interest of P458,831.27 for not more than 36 months from February 2009 to the Office of the Municipal Treasurer of the Municipality of Labrador, Pangasinan. ISSUE: Assuming that Transco received the 2009 assessment notice, whether in the interest of substantial justice, the protests it filed for other assessments may be considered for the 2009 assessment. HELD: No, the protests it filed for other assessments may not be considered for the 2009 assessment. A taxpayer who disagrees with the assessment made by the local treasurer should file a written protest within sixty (60) days from receipt of the subject assessment with the local treasurer contesting the assessment. Failure to do so is crucial and will render the assessment final and executory. In the present case, the subject of the assessment is for the year 2009. However, petitioner filed a protest on assessment notices for the years 2006, 2007, and 2008. No protest was filed on the assessment notice for the year 2009. Therefore, the assessment has become final and executory. Thus, after determining that the notice of assessment for the year 2009 was received by petitioner and that it failed to file a protest against said assessment, the Court En Bane agrees with the Court in Division's conclusion that the assessment on the local business tax for the year 2009 has become final and executory.

Commissioner of Internal Revenue V. Power Sector Assessments and Liabilities Management (PSALM) Corp. CTA EB No: 1088, May 04, 2015 Casanova, J: FACTS: On October 8, 2009, PSALM Corp. was issued a Preliminary Assessment Notice (PAN) with Details of Discrepancies assessing petitioner for deficiencies for the taxable year ending December 31, 2006. FLDs and FANs were subsequently issued holding PSALM liable for P315,472,516.55. Petitioner filed a protest. Since no decision was issued in relation to said protest, PSALM filed a Petition for Review before the CTA Special Third Division. The CTA Special Third Division partially granted PSALM’s petition. Both parties submitted their respective Motions for Reconsideration; however, both were denied. Hence, this consolidated petition for review filed by both parties before the CTA En Banc. ISSUE: Whether or not the CTA Third Division erred in partially granting PSALM’s petition? HELD: No. The CTA held that after thorough evaluation and consideration of the parties’ arguments as well as the records of the case, both petitions are without merit. The arguments raised by both parties in their respective Petition for Review are mere reiterations of their arguments in their respective Motion for Partial Reconsideration. Thus, the CTA En Banc finds no new matters which have not yet been considered and passed upon by the CTA Special Third Division in its Resolution.

Crescent Park 14-678 Property Holdings, Inc. V. Commissioner of Internal Revenue CTA EB No: 1068, May 04, 2015 Bautista, J.: FACTS: On August 3, 2009, petitioner purchased four parcels of land. As such, petitioner incurred a value-added tax on the said sale. Also on the same day, petitioner entered into a Land Lease Agreement of the same four parcels of land, the purpose of which was for the building and/or maintaining a PEZA-registered IT building or facility. On March 31, 2011, petitioner applied for tax credits/refunds for the alleged unutilized input tax that petitioner incurred from the purchase of the four parcels of land. On August 25, 2011, petitioner filed a Petition for Review with the CTA. The CTA denied the petition for lack of merit. A subsequent Motion for Reconsideration was likewise denied. Hence, this petition to the CTA En Banc. ISSUE: Whether or not petitioner is entitled to a claim for refund of excess input taxes? HELD: No. The CTA En Banc ruled that while petitioner is VAT-registered, records show that the execution of the Deed of Absolute Sale of Land and the effectivity of both the Land Lease Agreement and the Amended and Restated Land Lease Agreement were made when petitioner was not a VAT-registered entity. Moreover, petitioner paid the alleged input tax also when it was non VAT-registered. Thus, being a non-VAT taxpayer, petitioner cannot now claim that it incurred input taxes. The CTA En Banc affirms the ruling of the CTA Second Division.

Commissioner of Internal Revenue V. Pilipinas Shell Petroleum Corp. CTA EB No: 1215, April 28, 2015 Del Rosario, J.: FACTS: Pilipinas Shell Petroleum Corp. (PSPC) filed a formal claim for refund or tax credit with the BIR on July 4, 2008 seeking the recovery of excise taxes paid on Jet A-1 fuel sold to tax exempt international air carriers. Since respondent PSPC’s claim remained pending, respondent filed a Petition for Review with the CTA on February 12, 2009. The Court in Division partially granted PSPC’s petition and ordered the CIR to refund or issue a tax credit certificate in favor or respondent. Petitioner’s Motion for Reconsideration was denied. Hence, this petition to the CTA En Banc. ISSUE: Whether or not the PSPC is entitled to tax refunds/credits HELD: Yes. The CTA En Banc held that the Court in Division correctly applied the Supreme Court’s categorical pronouncement in CIR vs. Pilipinas Shell Petroleum Corp. which states that “in fulfillment of international agreement and practice to exempt aviation fuel from excise tax and other impositions, Section 135(a) prohibits the passing of the excise tax to international carriers who buys petroleum products from local manufacturers/sellers xxx respondent as the statutory taxpayer who is directly liable to pay the excise tax on its petroleum products is thus entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, the latter having been granted exemption from the payment of said tax under Section 135(a) of the NIRC”.

WNS Global Services Philippines, Inc. V. Commissioner of Internal Revenue CTA EB No: 1188, April 28, 2015 Castaneda, Jr. , J.: FACTS: On July 31, 2010, petitioner entered into a service contract with WNS Global Services Limited and WNS North America Inc. under which it shall provide ITenabled services to them. For the second to the fourth quarter of fiscal year ended March 31, 2009, all of petitioner’s sales of services were to WNS UK and WNS North America. Allegedly such sales were paid in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP. These sales were zero-rated pursuant to Section 108(B)(2) of the Tax Code. Within the same period, petitioner allegedly incurred and paid input VAT which remained unutilized on account of its zero-rated sales. On September 3, 2010, petitioner filed an administrative claim for refund or issuance of tax credit for the said unutilized input VAT. Since respondent did not act on the claim, petitioner filed a Petition for Review with the CTA. The Court in Division denied the petition. Hence, this petition to the CTA En Banc. ISSUE: Whether or not petitioner is entitled to tax refund/credit? HELD: No. The Court En Banc held that the SEC Certificated of Non-Registration which petitioner heavily relied on do not prove that corporations/partnerships are nonresident corporations doing business outside the Philippines. In the same vein, service agreements only indicate the names of petitioner’s customers to whom petitioner renders services but the same do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. Based on the foregoing, petitioner is not able to satisfy all the requisites in order for its services to be considered as VAT zero-rated under Section 108(B)(2) of the Tax Code. The following requisites are: 1. The services must be other than processing, manufacturing or repacking of goods; 2. The payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and, 3. The recipient of such services is doing business outside the Philippines. Thus, the CTA En Banc ruled that the Court in Division did not err in denying petitioner’s claim for tax refund or tax credit.

Commissioner of Internal Revenue V. Sarangani Resources Corp. CTA EB No: 1098, April 28, 2015 Cotangco-Manalastas, J.: FACTS: On November 12, 2008, Sarangani Resources Corp. received a copy of the Preliminary Assessment Notice (PAN) holding it liable for a deficiency on income and value-added taxes amounting to P3,049,115.31. A FLD and FAN was subsequently issued. On December 22, 2008, petitioner received another FLD and FAN for its tax deficiencies amounting to P1,664,546.43. Petitioner protested said assessments. The Regional Director partially granted the protest. A letter requesting for reconsideration of the RD’s decision was filed by petitioner; however, due to the inaction of the CIR, a Petition for Review was filed. The Court in Division affirmed the liabilities of respondent with some modifications. Hence, this petition with the CTA En Banc. ISSUE: Whether or not respondent is liable for deficiency VAT assessment? HELD: Yes. The CTA En Banc held that respondent Sarangani Resources erred in counting the new 180-day period within which to file an appeal. Considering that the 180-day period expired on September 15, 2009, respondent had thirty days, or until October 15, 2009 to appeal to the CTA. Records show that respondent filed the Petition only on May 13, 2010, or 210 days beyond the last day to file the petition for review. Since the Petition for Review with the CTA was filed way beyond the 30-day reglementary period, the CTA Special First Division had no jurisdiction to entertain the Petition for Review, and should thus have been dismissed for lack of jurisdiction. The other issues were not discussed by the CTA En Banc for being moot based on the foregoing.

People of the Philippines v. Italcar Philippines, Inc. CTA EB CRIM. NO. 029 Ringpis-Laban, J.: FACTS: Three separate informations were filed against Italcar Philippines, a domestic corporation, Fernando Francisco and Antonino Caringal, the Managing Director and/ or President and the Fiscal Controller and/ or Finance Officer, respectively, of ITALCAR Pilipinas, Inc. (ITALCAR) and that at the time required by law, rules and regulations to pay taxes for the said corporation, failed and refused to pay the Excise Tax Deficiency, Withholding Tax Deficiency and Value-Added Tax deficiency of ITALCAR for the taxable year of 1999. Caringal died on May 13, 2011 due to Cardio Pulmonary Arrest Acute Myocardial Infraction-Hypertensive Cardiovascular Disease. Francisco filed a Demurrer to Evidence. Thus, the three criminal cases were dismissed. On October 31, 2013, the prosecution filed a Motion for Partial Reconsideration of the Civil Aspect of the Case but it was dismissed by the Court in division. Thus this petition for review before the Court En Banc. ISSUE: Whether or not the BIR's assessment for deficiency taxes is void? HELD: Yes. Both accused Francisco and Caringal were already dead prior to the filing of the instant Petition for Review. Caringal died on May 13, 2011, when these cases were still pending trial, while Francisco died on December 12, 2013, after the Court in Division issued a Resolution granting his Demurrer to Evidence. The criminal cases against Caringal including his civil liability were ordered dismissed in the Resolution of the Court in Division dated September 2, 2011. Death extinguishes the criminal liability of an accused, this is clear in Section 1, Article 89 of the Revised Penal Code. The criminal cases against Francisco including his civil liability were dismissed by the Court in Division in its March 3, 2014 Resolution. The Court En Banc will treat the instant cases as an action to recover the civil liability of the corporation alone (ITALCAR) on the deficiency taxes for the year 1999. Upon review of the records, it was found that the formal letter of demand (FLD) dated May 7, 2003 was received by the accused on May 19, 2003, hence, the BIR's right to assess accused ITALCAR for deficiency taxes has prescribed. It is noted that both the PAN and FLD did not impose a 50°/o penalty. Under the circumstances, there is no fraud assessment, thus, the presumption is that the 3year prescriptive period applies. For failure to comply with the 3-year period of assessment, the assessment, therefore, is void.

Edmundo Ongsiako, Jr. and H. Tambunting Pawnshop, Inc. v. People of the Philippines CTA EB Crim. No.031 Castaneda, Jr., J.: FACTS: In the Letter of Authority dated September 2000, the Bureau of Internal Revenue (BIR) authorized Revenue Officers to examine the books of accounts and other accounting records of H. Tambunting Pawnshop, Inc. (HTPI) concerning revenue taxes for taxable year 1999. The Commissioner of Internal Revenue issued a Pre-Assessment Notice (PAN) dated October 21, 2002 finding HTPI liable for 1999 deficiency documentary stamp tax (DST) and value added tax (VAT) in the amounts of P2,577,462.45 and P2,737,369.60, respectively, exclusive of compromise penalty. HTPI through its previous counsel Siguion, Reyna, Montecillo and Ongsiako replied to the PAN in the letter dated November 18, 2002. Unconvinced with HTPI's explanation, through Final Assessment Notice (FAN) dated January 24, 2003 with attached final letter of demand, Regional Director ordered the payment of 1999 deficiency DST and VATexclusive of compromise penalties. The Court in Division issued a Decision dated February 26, 2014, found accused criminally liable under Section 255 in relation to Sections 253 (d) and 256 of the 1997 NIRC, as amended, and with HTPI civilly liable for 1999 deficiency DST in the amount of P2,610,478.21, inclusive of surcharge and interest, plus delinquency interest among others. Furthermore, the Court in Division pointed out that since the accused wilfully and knowingly assented to the non-payment of the 1999 eficiency DST of HTPI, and without formally protesting against or appealing the same, despite due assessment, he and the corporate taxpayer should be held solidarily liable for the civil liability of the remaining tax due. ISSUE: Whether or not the petitioner is liable? HELD: Although HTPI is the corporate taxpayer, the accused has assented to patently unlawful acts under Section 31 of the Corporation Code of the Philippines by admitting that he deliberately refused to pay the DST due of HTPI for taxable year 1999 despite assessment. This acknowledgment on the part of the accused validates the piercing the veil of corporate fiction resulting to his solidary liability with HTPI on the DST due. In the event there is a finding by the respondent or any of her authorized representatives of any deficiency or delinquent internal revenue taxes due against the taxpayer, a PAN shall be issued. Should the taxpayer fail to respond to the PAN, a FAN shall be issued and the aggrieved taxpayer is given thirty (30) days from receipt of the assessment notice to file a protest. Within sixty (60) days from filing of the protest, all relevant supporting documents should be submitted. The denial of the protest or the inaction on the protest within 180 days from submission of documents

allows the taxpayer thirty (30) days from receipt of the adverse ruling or upon the lapse of the 180-day period within which to appeal to the Court of Tax Appeals. In the instant case, petitioners refused to avail of the proper remedies allowed by law in contesting an assessment. Petitioners' obstinacy in complying with the procedures mandated by law resulted in the assessment becoming final and collectible.

Coca-Cola Bottlers Philippines v. Commissioner of Internal Revenue CTA EB No. 1178 CASTANEDA, JR., J.: FACTS: Petitioner Coca-Cola filed its Monthly VAT Declarations for the months of October 2008 and November 2008 on November 24, 2008 and December 24, 2008, respectively. On January 26, 2009, petitioner filed its Quarterly VAT Return for the quarter ended December 31, 2008. Subsequently, on May 27, 2009, Zenaida G. Garcia, OIC-ACIR, Large Taxpayers Service of the BIR, issued a Letter of Authority authorizing certain Revenue Officers to examine the books of accounts and other accounting records of petitioner for the period January 1, 2008 to December 31, 2008. During the quarter ended December 31, 2008, due to inadvertence of petitioner's employees, there was an instance when details of official receipts from the suppliers/service providers of petitioner were not uploaded in its computerized accounting system. Petitioner believes that the effect thereof is that there was an erroneous overpayment of VAT for the said quarter in the amount of P111,177,395.70. Petitioner considered amending its Quarterly VAT Return for the quarter ended December 31, 2008, and its Monthly VAT Declarations for October and November 2008 to correct the supposed over/erroneous payment and filed refund claim or tax credit but was allegedly prevented from doing so in view of the said Letter of Authority issued by the BIR against petitioner. The Court in Division denied the Petition for Review. It ruled that neither Section 112 nor Section 229 of the 1997 NIRC, as amended, is applicable. Hence, petitioner is disqualified to the refund claim or tax credit. Dissatisfied, petitioner moved for the reconsideration of the Decision dated December 6, 2013 which the Court in the Resolution dated April 29, 2014 denied for lack of merit. ISSUE: Whether or not petitioner is entitled to a tax refund or tax credit? HELD: NO. Amendment or modification of the tax return is prohibited by law upon the issuance of the LOA. This is to prevent situations where the government is at the losing end in allowing refund or tax credit when eventually it is found that the taxpayer has an existing similar tax liability for the same covered period. Considering that petitioner has undeclared input taxes for the 4th quarter of 2008, it should have immediately modified its return prior to the receipt of the Letter of Authority (LOA) pursuant to Section 6(A) of the 1997 NIRC, as amended; properly declared input tax for the covered period, respectively; and carried over the substantiated claimed input taxes of P111,177,395.70 to the succeeding year.

Should Section 229 serve as basis of petitioner's refund claim in the event of undeclaration of input taxes, this will render nugatory the provision of Section 6(A) of the 1997 NIRC, as amended.

Commissioner of Internal Revenue V. Dakudao & Sons, Inc. CTA EB CASE NO. 1150 Mindaro-Grulla, J.: FACTS: Respondents owned two (2) parcels of land located in Davao City. After Metro South Davao Property Corporation incorporation, there were still 15,000 unsubscribed shares remaining, which respondent bought. As consideration for said subscription, petitioner executed a Deed of Assignment in favour of MSDPC on April 30, 2011, assigning all its rights and interest over the two (2) parcels of land in favor of MSDPC. On December 20, 2011, petitioner paid the BIR the amount of P112,140,000.00 for the VAT of said transfer. However, respondents alleged that since the transfer of the subject parcels of land was made in exchange for shares of stock to a controlled corporation, its payment of VAT was erroneous and/or excessive. Thus, on May 2, 2012, petitioner filed an administrative claim for VAT refund with the BIR Revenue Region. Upon its approval, herein petitioner appeals before the court. ISSUE: Whether or not the transaction is an exempt transaction for VAT? HELD: YES. The case shows that the transfer by a real estate dealer on one hand to another real estate dealer where the transferor gains control of the transferee corporation shall not be subject to output VAT. Putting the Revenue Regulations into context, the respective Articles of Incorporation of respondent Dakudao and of MSDPC indicate the purpose for which they were incorporated; viz., the construction, development, improvement of all properties, including but not limited to real estate. A "Real Estate Dealer," meanwhile, includes any person engaged in the business of buying, developing, selling, exchanging real properties as principal and holding himself out as a full or part-time dealer in real estate. Thus, based on the Articles of Incorporation and the definition of "Real Estate Dealer" as provided for under RR No. 16-2005, both respondent and MSDPC are considered as real estate dealers. It bears stressing that respondent Dakudao subscribed 4,964,000 shares of capital stock of MSDPC (or 75°/o of the total subscribed capital stock,) and as payment of the subscription, Dakudao assigned two parcels of land to MSDPC. The assignment resulted to respondent having controlling interest over MSDPC. As such, pursuant to Section 4.106-8 (b) of Revenue Regulations 16-2005, as amended by RR No. 04-2007, the transfer of the lands in exchange for MSDPC's shares of stock is not subject to VAT.

Commissioner of Internal Revenue v. LAWL PTE, LTD. CTA EB No. 1118 Uy, J.: FACTS: Respondent Lawl Pte Ltd. is a corporation duly organized and existing under the laws of Singapore, with principal office at One Marina Boulevard #28-00, Singapore. It does not engage in trade or business in the Philippines. Respondent owns a total of 236,000 Maynilad, a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, shares registered in its own name or through its nominees, with a par value of P1 ,000.00 per share. On February 9, 2009, respondent executed a Deed of Absolute Sale involving said shares in favor of Metro Pacific Investments Corp. (MPIC), a corporation organized and existing under the laws of the Philippines, for the price of P2,029,212,960.00. On March 6, 2009, respondent filed with the BIR Revenue District Office (ROO) No. 39 a capital gains tax (CGT) return for the sale of its shares, indicating that it is availing of the tax exemption under the Philippines-Singapore Tax Treaty. Likewise, respondent applied for tax treaty relief with the International Tax Affairs Division (ITAD) of the BIR on March 25, 2009. Petitioner, on the other hand, issued BIR Ruling No. ITAD 102-11 dated April 4, 2011, denying respondent's application for tax treaty relief for lack of legal basis. Consequently, respondent filed a letter requesting a review of the said BIR Ruling with the Secretary of Finance on May 18, 2011. And the same was elevated before the courts where the ruling was in favor of the respondents. Hence, this petition. ISSUE: Whether or not respondents are exempted from tax for the sale of its shares in a domestic corporation? HELD: Yes. Petitioner fails to make any specific discussion to support her argument, that respondent failed to prove that the application of Article 13 of the PhilippinesSingapore Tax Treaty would justify its claim for refund, and neglects to point out the supposed error in the findings of fact of the Court in Division or in its interpretation and application of the provisions of the law or the said tax treaty. The Court will not belabor to reiterate them in this Decision. As between a well-discussed ruling of the Court in Division and a very general and perfunctory statement made by petitioner against the said ruling, the former must perforce prevail. After all, the Court in Division's findings are always presumed correct. Furthermore, the wrongfully paid tax may be refunded. Jurisprudence would reveal that nowhere was it stated or implied that refund claims may only be granted when the taxpayer pays under a mistake of fact. At most, what can be taken from the said pronouncement is that a tax payment under a mistake of fact is just an example of an “erroneous payment".

In this case, there is wrongful payment because what was paid is not legally due. In other words, the CGT and interest that were paid by petitioner is "one levied without statutory authority". Thus, while a CGT may be imposed on the sale by respondent of its shares of stock in Maynilad under the Section 28(8)(5)(c) of the NIRC of 1997, Article 13 of the Philippines-Singapore Tax Treaty provides for a tax exemption. Needless to state, when a tax is paid and there exists a tax exemption, such tax payment is deemed as a wrongful payment because what was paid is not legally due.

Pilipinas Shell Petroleum Corporation v. Commissioner of Internal Revenue CTA EB No. 1078, July 27, 2015 Cotangco – Manalastas, J.: FACTS: Petitioner is a corporation organized and existing under the laws of the Philippines. It is engaged, among others, in the business of manufacturing, processing, treating and refining petroleum for the purpose of producing marketable products and by-products and the subsequent sale thereof. Petitioner also imports finished Jet A-1 fuel. On February 18, 2010, petitioner filed a claim for refund or tax credit with the Large Taxpayers Audit and Investigation Division II of the BIR, seeking the recovery of excise taxes paid on Jet A-1 fuel sold to tax-exempt international air carriers for the period covering March 18 to April 20, 2008 in the aggregate amount of P59,277,091.31. Due to respondent's inaction on petitioner's administrative claim for refund of excise taxes paid on Jet A- 1 fuel sold to tax-exempt international air carriers for the period beginning March 18 to April 20, 2008, petitioner filed the instant Petition for Review before this Court on March 29, 2010. On July 11, 2013, the Division promulgated its Decision, dismissing petitioner's claim for refund or tax credit. Petitioner submitted a motion for reconsideration but was denied. ISSUE: Whether or not petitioner is entitled to refund? HELD: Section 135 of the NIRC of 1997 states: "SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. – Petroleum products sold to the following are exempt from excise tax: (a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines; Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; (b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and (c) Entities which are by law exempt from direct and indirect taxes." Based on the foregoing, petroleum products sold to international air carriers, whether of Philippine or foreign registry, are exempt from excise taxes provided that: (a) the petroleum products are consumed outside the Philippines; (b) such petroleum products be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; and (c) in the case of foreign

international carriers, their country of registry exempts from excise or similar taxes petroleum products sold to Philippine carriers. As ascertained by the Court-commissioned Independent Certified Public Accountant, Mr. Benjamin P. Valdez of Punongbayan & Araullo, and further verified by this Court, it was found that of the total claim for refund or tax credit of P59,277,091.32, only the amount of P50,797,156.29, 28 was properly supported by relevant documents. On the other hand, the claim in the amount of P8,479,935.03 should be denied. Respondent Commissioner of Internal Revenue is ordered to refund or to issue a tax credit certificate in the reduced amount of P50,797,156.29 to petitioner Pilipinas Shell Petroleum Corporation.

Commissioner of Internal Revenue v. Manila North Tollways Corporation CTA EB No. 1157, July 20, 2015 J.: Castañeda FACTS: Petitioner [now respondent] Manila North Tollways Corporation is a duly organized domestic corporation. It is the builder of the NLEX and is the authorized concessionaire with right to operate, maintain, and charge tolls on NLEX until December 31, 2030. Petitioner avers that on August 29, 1995, Philippine National Construction Company (PNCC) and First Philippine Infrastructure Development Corporation (FPIDC) executed a Joint Venture Agreement (JVA) for the completion, rehabilitation, refurbishing and modernization of the NLEX. Under the JVA, PNCC assigned its usufructuary rights, interests and privileges under its franchise in favor of the Joint Venture Company to be formed under the JVA, insofar as the funding, design, construction, rehabilitation, refurbishing and modernization of the NLEX were concerned. In consideration thereof, PNCC shall receive a percentage of the toll revenues received from the NLEX. On February 4, 1997, petitioner was incorporated to serve as the Joint Venture Company and was subsequently granted the concession. Thereafter, an Amended and Restated Shareholder's Agreement was entered into among FPIDC, PNCC, Egis Projects, S.A., Leighton Asia (Southern) Limited, and petitioner, whereby PNCC, in consideration of the assignment of its franchise, shall be entitled to receive a share of the gross toll revenue collected from the operation of the NLEX. Consistent with the afore-mentioned agreement, petitioner made payments to PNCC and at the same time withheld amounts representing five percent (5%) CWT. However, PNCC insisted that the payment in its favor should be subject to only two percent (2%) and not five percent (5%) CWT. Later, petitioner, allegedly through inadvertence, remitted to the BIR the full five percent. Despite the remittance of the full ( 5%) CWT to the BIR, petitioner still proceeded with the placement of an equivalent amount in the escrow account. Afterwards, the BIR issued BIR Ruling No. DA-282-07 sustaining PNCC's opinion that its Share in Gross Revenues is subject to a two percent (2%) CWT rate. In view thereof, petitioner instructed the escrow agent to release the three percent (3%) difference to PNCC in consonance with the escrow agreement. Petitioner then filed its administrative claim for refund with the BIR. ISSUE: Whether or not petitioner is entitled to refund? HELD: Respondent already reimbursed PNCC the overpaid 3% CWT prior to respondent's filing of its claim for refund. Considering that respondent had already reimbursed PNCC of the said amount, PNCC need not indicate in its Return the option to carry-over or claim for refund the overpaid amount, because there is nothing more to carry-over or to refund. In other words, the irrevocability rule under Section 76 of the NIRC of 1997, as amended, is inapplicable in this case considering that the respondent -as

withholding agent, already refunded to the principal taxpayer PNCC the amount which could have been the latter's basis for carry-over, refund or issuance of a tax credit certificate. PNCC has no more basis in order for it to exercise the option to carry-over, refund, or request for the issuance of a tax credit certificate, because it had already been reimbursed by respondent of the said amount.

Commissioner of Internal Revenue v. Euro-Philippines Airline Services, Inc. CTA EB No. 1106, July 14, 2015 Mindaro – Grulla, J.: FACTS: Petitioner (Euro-Philippines Airline Services, Inc.) is a domestic corporation which is an exclusive passenger sales agent of British Airways PLC, an offline international airline in the Philippines to service the latter's passengers in the Philippines. Petitioner received a FAN dated September 13, 2010 with Details of Discrepancies together with Assessment No. IT-LA69595-FY07-10-0455 for income tax, Assessment No. VT-LA69595-FY07-10-0455 for VAT, Assessment No. WCLA69595-FY07-10-0455 for withholding tax on compensation, and Assessment No. DS-LA69595-FY07-10-0455 for documentary stamp tax, inclusive of surcharge and interest, for taxable year ending March 31, 2007, in the aggregate amount of P4,271,228.20. Respondent disallowed petitioner's salaries and wages expense in the amount of P542, 772.84 for failure of petitioner to withhold the corresponding withholding tax thereon and to remit the same to the BIR. In addition, the commission and miscellaneous income received by the local sales agents from their foreign principals are subject to VAT. On September 29, 2010, petitioner filed with respondent its protest together with supporting documents. Respondent failed to act on petitioner's protest within the required 180-day period within which to resolve the protest. Hence, this Petition for Review filed on April 20, 2011. In sum, the Special First Division ruled that the assessments for value-added tax and documentary stamp tax be cancelled and withdrawn, and Euro-Phil to pay partial amount of the assessed income tax and withholding tax on compensation, including surcharge and interests. CIR's Partial Motion for Reconsideration covers only the value-added tax that was denied in the Decision. Such Motion was denied for lack of merit. Hence, this Petition. ISSUE: Whether or not Euro-Philippines should be liable for the amounts indicated in the FAN? HELD: In the instant case, the taxpayer being questioned herein is the general sales agent and not the foreign airline company. Also, the tax involved is VAT on the services rendered by the said general sales agent and not foreign airline company's income tax on the specified sale of air tickets. Thus, the ruling in the said cases does not affect the applicability of Section 108 of the 1997 NIRC in the instant case, as it covers the general sales agent, which is Euro-Phil herein, with respect to its VAT transactions. That Euro-Phil wasn't able to present official receipts with words "zero-rated" imprinted hereon cannot also hold water. It must be noted that the case cited by CIR, Kepco Philippines Corporation vs. Commissioner of Internal Revenue,20 as well as other Supreme Court cases21 having the same issue, cannot be applied in the case at bar as the afore-mentioned cases involve claims for tax refund or issuance of tax credit certificate. In said claims, the burden is necessarily upon the

taxpayer, as exemptions are granted strictly against the grantee and liberally in favor of the government. In the instant case, what was made against Euro-Phil is an assessment, unlike in cases of claims for refund or tax credit, where the taxpayer has the burden to prove its claim, thus, the fatality of non-presentation of official receipts or invoices.

Commissioner of Internal Revenue v. Philippine Airlines, Inc. CTA EB No. 1197, July 1, 2015 Cotangco – Manalastas, J.: FACTS: Petitioner CIR is the head of the Bureau of Internal Revenue (BIR), a government agency tasked with the assessment and collection of all national internal revenue taxes, fees and charges. Respondent, on the other hand, is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines. On October 13, 2006, the former Second Division of the Court rendered a Decision 5 in CTA Case No. 6734 entitled "Philippine Airlines, Inc. vs. Commissioner of Internal Revenue" granting respondent's claim for refund in the amount of P1,048,375.132. Aggrieved, petitioner CIR moved for the reconsideration of the said Decision, which was denied. Petitioner appealed the Decision to the Court En Banc, docketed as CTA EB No. 242. The Court En Banc rendered a decision denying the petition. Petitioner then appealed the case to the Supreme Court. In a Minute Resolution, the Supreme Court granted petitioner CIR's motion to withdraw appeal and considered the case closed and terminated. An Entry of Judgment was issued, declaring the said resolution final and executory. Thereafter, respondent filed a Petition for Revival of Judgement 10 in relation to CTA Case No. 6734. Petitioner filed her Answer and alleged by way of special and affirmative defenses that Section 6, Rule 39 of the Revised Rules of Civil Procedure and Article 1144 of the New Civil Code are not applicable in the present case. ISSUES: Whether or not Section 6, Rule 39 of the Revised Rules of Civil Procedure and Article 1144 of the New Civil Code of the Philippines are applicable in the present case? HELD: Section 7 of Rule 14 of the RRCTA provides for the rule on execution of judgment, to wit: "SECTION 7. Execution of Judgment. - Upon the expiration of the period to appeal from a judgment or order that disposes of the action or proceeding and no appeal has been duly perfected, execution shall issue as a matter of right, on motion. If an appeal has been duly perfected and finally resolved, execution may be forthwith applied for in the court of origin, on motion of the judgment obligee, submitting therewith a certified true copy of the judgment or final order sought to be enforced and of its entry, with notice to the adverse party." Unfortunately, as observed by the Court in Division, the above provision is silent as to when and how can a judgment which has long attained finality be revived and executed. Thus, Section 6 of Rule 39 of the Revised Rules of Civil Procedure applies suppletorily in this case, pursuant to Section 3 of Rule 1 of the RRCTA which provides that "[t]he Rules of Court in the Philippines shall apply suppletorily to these Rules." Suppletory is defined as "supplying deficiencies."

Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right by mere motion within five years from the date of entry of judgment. If the prevailing party fails to have the decision enforced by a motion after the lapse of five years, the said judgment is reduced to a right of action which must be enforced by the institution of a complaint within ten years from the time the judgment becomes final. Thus, an action to revive judgment only requires proof of a final judgment which has not prescribed and has remained unexecuted after the lapse of five (5) years but no more than ten (10) years from its finality.

V.Y. Domingo Jewellers v. Commissioner of Internal Revenue CTA EB No. 1170, July 1, 2015 Cotangco – Manalastas, J.: FACTS: Petitioner V.Y. Domingo Jewellers, Inc. is a corporation duly organized under existing laws. Respondent Commissioner of Internal Revenue (CIR) is the government authority duly designated to collect all taxes, grant refunds, issue and abate tax assessments, and examine books of accounts and returns filed with it to determine the correctness of taxes paid under the National Internal Revenue Code. The Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice (PAN) assessing petitioner for deficiency income tax and value-added tax, inclusive of interest, for taxable year 2006 which was received by petitioner sometime in the second week of September 2009. Petitioner then filed a Request for Re-evaluation / Re-investigation and Reconsideration with the Regional Director of BIR- Revenue Region No. 6 in response to the PAN. Petitioner received the Preliminary Collection Letter (PCL) dated August 10, 20 11, informing the petitioner of the existence of Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243 dated November 18, 2010. Petitioner filed a petition for review with the Court in Division, attaching therewith certified true copies of Assessment Notice Nos. 32-06- IT-0242 and 32-06VT-0243 dated November 18, 2010, praying that the Court issue a decision declaring as null and void, cancelled, withdrawn and with no force and effect Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243 dated November 18, 2010 and Preliminary Collection Letter dated August 10, 2011. Respondent filed her Answer on October 26, 2011, alleging, among others, by way of special and affirmative defense, that the Court has no jurisdiction to entertain the instant petition considering that the Formal Letter of Demand and Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT0243 all dated September 9, 20 10 had become final for failure of petitioner to protest the Final Assessment Notice within thirty (30) days from receipt of the assessment. Respondent filed her Motion to Dismiss seeking the dismissal of the petition for review for want of jurisdiction arguing that it is neither the assessment nor the formal letter of demand that is appealable to the Court of Tax Appeals (CTA) but the decision of the CIR on the disputed assessment. Since the petition for review was anchored on petitioner's receipt of the PCL, which petitioner treated as a denial of its Motion for Reinvestigation of the PAN, then there is no disputed assessment to speak of, thus, the CTA has no jurisdiction to entertain the petition for review. ISSUE: Whether or not the First Division of the Court erred in holding that it has no jurisdiction to hear the petition for review? HELD: The Court in Division has jurisdiction to entertain petitioner's Petition for Review in CTA Case No. 8335, which specifically prays for a decision declaring as null and void, cancelled, withdrawn and with no force and effect Assessment Notice Nos. 32-06-IT-0242 and 32-06-VT-0243 and the Preliminary Collection Letter dated August 10, 2011, pursuant to Section 7(a)(1)of RA No. 1125 as amended by RA No. 9282, to wit:

"Sec. 7. Jurisdiction. -The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue; Petitioner cannot be faulted for not filing an administrative protest before filing a petition for review before the Court in Division since it did not receive the FAN and the language of the PCL shows that the respondent is already demanding payment from petitioner presupposing that the assessment has become final. Petitioner’s petition for review does not involve an appeal from a decision of the CIR on a disputed assessment since there is no "disputed" assessment to speak of as petitioner did not file an administrative protest against the Assessment Notices, justified by its non-receipt of the same.

CIR V. COL Financial Group Inc. CTA EB No. 1187, June 30, 2015 Mindaro-Grulla, J.: FACTS: On June 17, 2008, then President Gloria Arroyo, signed into law RA 9504, which introduced several amendments to RA 8242. On November 26, 2008, the BIR issued RR 16-2008, implementing Sec. 3 of RA 9504. Under the said regulation, taxpayers had the option of using either itemized or OSD deduction in preparing their quarterly ITRs, provided only one method shall be applied in preparing their annual ITR. During the first three quarters of the taxable year 2009, respondent COL Financial Group Inc. used the itemized method of deduction in determining its income tax payable pursuant to RR 16-2008. On February 24, 2010, the BIR issued RR 02-2010, which amends certain provisions of RR 16-2008. Thereafter, the BIR issued RMC 016-10 on February 26, 2010, stating that RR 02-2010 will also apply to the taxable year 2009. Under RR 022010 and as clarified by RMC 16-2010, the BIR now required taxpayers to choose the deduction method during its first quarterly filing, by indicating on the form whether it will opt for the itemized or OSD deduction. The choice of deduction method during the first quarter obligates the taxpayer to use the same method throughout the year, as well as in the preparation of the annual ITR. On April 12, 2010, respondent filed its annual ITR for taxable year 2009 using the OSD and paid the corresponding income tax due. On April 15, 2010, respondent paid under protest an additional income tax amounting to Php 8,960,245.00 in order to avoid the imposition of interests, penalties, surcharges, and other increments should the BIR require respondent to use the itemized method of deduction for its annual ITR. On October 11, 2011, respondent filed an application for refund of and/or the issuance of TCCs for the excess income tax paid during the taxable year 2009. In view of the petitioner CIR’s inaction on the claim and the impending lapse of the prescriptive period on filing a judicial claim, respondent filed on April 3, 2012 its petition for review. On April 15, 2014, the Third Division of the CTA rendered its decision granting respondent’s petition, and directing the issuance of a TCC in its favor. The CIR then filed a motion for reconsideration (MR), arguing that (1) RR 02-2010 was merely an interpretative ruling, which neither had a prospective nor retroactive nature, and (2) that respondent’s failure to submit complete supporting documents was tantamount to non-exhaustion of administrative remedies which prevented the CTA from acquiring jurisdiction over the petition for review filed by respondent. However, the MR was denied for lack of merit. ISSUES: Whether or not the Third Division of the CTA erred in ordering the issuance of TCC in favor of respondent?

HELD: No. The Third Division of the CTA correctly ordered the issuance of TCC in favor of the respondent because RR 02-2010 cannot be applied retroactively as to require the respondent to use the itemized method of deduction. The test of whether or not a revocation, modification, or reversal of a tax regulation can be given retroactive effect is not whether the ruling partakes of the nature of an interpretative or substantial legislation, but rather the effect on the taxpayers. If the taxpayers are prejudiced because a new interpretation of the regulation removes a benefit provided by a previous interpretation, then the new interpretation is retroactive. Pursuant to Sec. 246 of the NIRC, as amended, any revocation, modification or reversal of any of the rules and regulations promulgated in accordance with the preceding Sections or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification or reversal will be prejudicial to the taxpayers, except in the following cases: (a) where the taxpayer deliberately misstates or omits material facts from his return or any document required of him by the Bureau of Internal Revenue; (b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or (c) where the taxpayer acted in bad faith. Under the said section, absent any one of the exceptions provided therein, taxpayers may rely upon a rule or ruling issued by the Commissioner from the time the rule or ruling is issued up to its reversal by the Commissioner or this Court. The revocation, modification or reversal is not given retroactive effect. Under RR 02-2010 and RMC No. 16-2010, BIR curtailed the taxpayer's option to choose the deduction method from quarter to quarter, which was previously allowed under RR 16-2008. The implementation of RR 02-2010 in effect moved the deadline for choosing a method of deduction earlier, from the filing of the final adjustment income tax return on April 15, 2010 to the filing of the first quarterly tax return on May 30, 2009, which was the last day of filing the first quarterly return for the taxable year 2009. Respondent filed its quarterly returns for the first to third quarters for the taxable year 2009 with the option that they can change the method of deduction from quarter to quarter as was provided for by RR 16-2008. Having lost this option upon the issuance of RR 02-2010, the same should not be given retroactive application for being prejudicial to the rights of the taxpayers, including herein respondent. Since petitioner has failed to show the existence of any of the exceptions enumerated in Sec. 246 of the NIRC of 1997 against respondent, and this Court sees none, RR 02-2010 cannot be given retroactive application. Correspondingly, RR 16-2008 may still be made as a basis for the application for the claim for refund of respondent.

San Francisco Water District V. BIR CTA EB No. 1107, June 30, 2015 Castañeda, Jr., J.: FACTS: On January 22, 2004, the RTC of Agusan denied the Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction or Restraining Order of petitioner San Francisco Water District on the ground that it has no jurisdiction to enjoin respondent BIR from collecting deficiency taxes for the years 1997 and 1999 from petitioner. The CA sustained the RTC and the ruling became final and executory on August 23, 2010. Consequently, Revenue District Officer Satar Laguinlab of BIR RDO 104 issued a Warrant of Garnishment for the purpose of collecting the said delinquent accounts. On January 6, 2011, respondent served the Warrant of Garnishment to the DBP San Francisco Branch, garnishing petitioner’s General Fund in the amount of Php 734,793.63 for the income tax due for the years 1997 and 1999. Following the service of the warrant, petitioner’s representative went to RDO 104 to discuss the matter and was allegedly advised by the Assistant Revenue District Officer to prepare a letter to request to lift the Warrant of Garnishment. On January 19, 2011, the petitioner’s General Manager then wrote a request addressed to the Revenue District Officer for the lifting of the Warrant of Garnishment invoking RA 10026, which grants exemption to local water districts from paying income taxes and condoning income tax due from August 13, 1996 until the effectivity of RA 10026. Instead of acting on the letter-request, respondent allegedly wrote a letter dated January 27, 2011 to the DBP San Francisco Branch Manager to effect the immediate turn-over/transfer of petitioner’s General Fund Php 734,793.63 to respondent’s account. On January 28, 2011, petitioner received a letter from the DBP informing and furnishing it with a copy of the Notice of Execution of Garnishment received from respondent. This prompted petitioner to file a Petition for Injunction with the RTC of Agusan, claiming that the acts of respondent in garnishing and causing the transfer of petitioner's fund to its account run counter to the provisions of RA No. 10026 and the decision of the CA in the case of CIR v. Secretary of Justice and Camarines Norte Water District (CNWD). In its answer, respondent raised the affirmative defense of RTC’s lack of jurisdiction over the subject matter of the petition, citing Sec. 218 of the NIRC, which provides that the RTC is not vested with competence to try and hear the case much more grant any injunctive relief to stop the collection of taxes imposed under the NIRC. On January 29, 2011, the RTC of Agusan dismissed the petitioner’s Petition for Injunction on the ground that it has no jurisdiction to enjoin the collection of taxes as the power lies with the CTA. The petitioner moved for reconsideration but was denied, hence, it filed a Petition for Review with the CTA. On July 10, 2013, the CTA in Division dismissed the Petition for Review on the ground of lack of jurisdiction. The

motion for reconsideration was likewise denied, hence, the petition was elevated to the CTA En Banc. ISSUE: Whether or not the CTA has jurisdiction to entertain the Petition for Review? HELD: No. There is nothing in Sec. 7 of RA 1125, as amended, as well as in Sections 2 and 3 of the Revised Rules of the CTA (RRCTA) which give the CTA - whether in Division or En Banc - jurisdiction over cases decided by the RTC involving petitions for injunction to restrain the collection of national internal revenue taxes. In the absence of a clear mandate from the law creating this Court, it cannot assume jurisdiction over the petition assailing the Resolutions of the RTC of Agusan dismissing petitioner's Petition for Injunction to restrain the transfer of petitioner's fund to respondent pursuant to Warrant of Garnishment issued by the latter and denying petitioner's Motion for Reconsideration. Considering that this Court has no jurisdiction over the subject matter of the appeal and it has no authority to resolve the same on the merits, this Court has no option but to dismiss the instant Petition for Review. There is no dispute that the CTA has appellate jurisdiction over other cases arising under the NIRC or related laws administered by the BIR, which include the determination of whether a Warrant of Garnishment issued by the BIR is valid or void. However, the exercise of the Court's jurisdiction to rule on decisions of the CIR on other matters arising under the NIRC or other laws administered by the BIR, is conditioned on the timeliness of the filing of the appeal. Pursuant to Sec. 11 of RA 1125, as amended, petitioner had 30 days from January 6, 2011 or until February 5, 20 11, within which to seek the nullification of the Warrant of Garnishment. However, instead of filing a Petition for Review with the CTA, petitioner filed a Petition for Injunction with the RTC of Agusan on January 28, 2011. For reason only known to it, petitioner filed the instant Petition for Review only on December 8, 2011 to appeal the assailed Resolutions of the RTC of Agusan. Since the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional, the failure to perfect the appeal renders the Warrant of Garnishment final and executory and beyond the power of this Court to review.

CIR V. Philex Mining Corporation

CTA EB No. 1168, June 19, 2015 Castañeda, Jr., J.: FACTS: On March 11, 2004, respondent Philex Mining Corporation entered into a Long Term Gold and Copper Concentrates Sales Agreement with Pan Pacific Copper Co., Ltd. of Tokyo, Japan, for the sale of its copper concentrates starting April 1, 2004. On August 16, 2007, respondent entered into a similar contract with Louis Dreyfus Commodities Metals Suisse SA, a Swiss company, for the sale of its copper concentrates. Respondent claims to have made several shipments of mineral products to its foreign buyers during the 3 rd quarter of 2009 with a total sales of US $71,556,185.00. On October 21, 2009, respondent filed its original or tentative VAT return for the 3 quarter of 2009. On May 18, 2011, it filed as amended VAT return reflecting total zero-rated sales of Php 3,444,737,285.82, importation of good of Php196,911,750.00 with input tax of Php 23,629,410.00, and purchases of services of Php 156,020,402.42 with input tax of Php 18, 722,448.29. rd

On June 15, 2011, respondent filed an administrative claim for refund with the One-Stop-Shop Center of the Department of Finance (DOF) in the amount of Php 42,351,858.29, allegedly representing excess input tax for the 3rd quarter of 2009. On November 10, 2011, petitioner filed the instant Petition for Review alleging inaction on the part of the respondent on its administrative claim for refund. In its answer, petitioner CIR interposed the following special and affirmative defenses, among others: (1) claim for tax refund is subject to administrative investigation and/or examination; (2) taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable; (3) it is imperative for respondent to prove its compliance with the registration, invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT pursuant to Sections 113 and 114 of the NIRC, as amended, as non-compliance will result in the disallowance of the claim for input tax of the taxpayer claimant, and the submission of complete documents which is a condition sine qua non prior to the filing of such claim. On November 12, 2013, the CTA in Division partially granted the Petition for Review and directed the petitioner to refund respondent the amount of Php 36,650,834.57, representing respondent’s unutilized input VAT attributable to zerorated sales for the 3rd quarter of 2009. Both parties filed their motion for reconsideration and motion for partial reconsideration, respectively. On April 15, 2014, the CTA in division denied the petitioner’s motion for reconsideration and granted the respondent’s motion for partial reconsideration. Accordingly, petitioner was directed to refund respondent the amount of Php 37,379,000.22, representing respondent's unutilized excess input VAT attributable to zero-rated sales for the 3rd quarter of 2009. Hence, petitioner filed this Petition for Review with the CTA En Banc. ISSUE:

Whether or not respondent is entitled to the refund or tax credit of the alleged excess and unutilized input taxes for the 3rd quarter of 2009? HELD: Yes. Respondent sufficiently proved that it is entitled to its claim for refund. It is noteworthy that the subject claim involves respondent's unutilized excess input VAT attributable to zero-rated sales for the 3 rd quarter of 2009. Hence, at that time, RMO No. 12-2013, which requires that the Authority to Print (ATP) be reflected or indicated on invoices or receipts, was not yet in force. At any rate, respondent sufficiently proved before the CTA in Division that it printed the ATP at the bottom left hand comer of all of its other sales invoices. The Supreme Court has consistently ruled that the BIR ATP is not required to be reflected or indicated on invoices or receipts. What is important is that it has been secured or obtained by the taxpayer and that invoices or receipts are duly registered. In the case of CIR v. First Express Pawnshop Company, Inc., the Supreme Court ruled that relevant supporting documents are those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional documents. The BIR cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit. While it is conceded that the mandatory requirements set forth under Sec. 113 (C) and Sec. 114 (A) of the NIRC, as amended, should be complied with, it is equally important to consider the doctrine laid down under the First Express Pawnshop Company, Inc. case that it is the taxpayer who has the leeway to determine what type of relevant supporting documents it shall present for the successful prosecution of its claim. As aptly found by the CTA in Division, respondent was able to prove by its relevant supporting documents that it is entitled to its claim for refund. Whether respondent maintains a subsidiary sales journal and subsidiary purchase journal does not affect respondent's claim for refund, because it is not one of the requisites for respondent to be entitled thereto. Nonetheless, non-compliance with the foregoing may be the subject of a separate and independent cause of action by petitioner. Similarly, respondent was able to prove before the CTA in Division that it paid its VAT liabilities. Failure to timely pay VAT on a monthly basis may give rise to the payment of penalties under the NIRC, as amended, but it does not affect respondent's entitlement to its claim for refund because it has sufficiently shown that it has in fact been paid.

Michigan Holdings Inc. V. City Treasurer of Makati

CTA EB No. 1093, June 17, 2015 Ringpis-Liban, J.: FACTS: On Jan. 24, 2008, Michigan Holdings received a Billing Assessment from the respondent City Treasurer of Makati, assessing it for Mayor's Permit Fee, City License Fee, and Local Business Tax (LBT) for CY 2006, in the total amount of Php 1,277,418.53. The LBT accounted for Php 660,521.40, inclusive of surcharge and interest. On Jan. 29, 2008, Michigan Holdings filed a protest letter contesting the deficiency LBT assessment, pointing out that the revenues being subjected to LBT were generated from passive investments/income, consisting of the following: (1) dividend income, (2) gain on sale of shares sold thru stock exchange, (3) interest income from money market placements, and (4) collection of utilities from lessor. On Feb. 6, 2008, respondent, by letter, partially granted the protest by excluding revenues from the gain on sale of shares sold thru the stock exchange and interest income from money market placements, which were already subjected to final income taxes. The protest on dividend income was denied by the respondent, who invoked Sec. 3A.02(p) of the Revised Makati Revenue Code. On Mar. 14, 2008, Michigan Holdings moved for reconsideration of the remaining denial of its protest. This request, however, was not acted upon by the respondent. Thus, before the expiration of the sixty (60)-day period from its receipt of the Billing Assessment, Michigan Holdings filed a complaint before the RTC of Makati City for the cancellation and withdrawal of the remaining LBT assessment on dividend income. Michigan Holdings posited that under Sec. 133(a) of the LGC, dividend income is subject to income tax, which the local government unit is prohibited from imposing except on banks and other financial institutions. On Sept. 21, 2011, the RTC dismissed Michigan Holdings' appeal on the ground that it was directed not at the tax assessment but rather at the validity of Sec. 3A.02(p) of the Revised Makati Revenue Code. The RTC held that it had no jurisdiction to rule on the validity of the said provision. On Oct. 4, 2012, the RTC denied Michigan Holdings' motion for reconsideration. It pointed out that the proper remedy would be to question the validity of the provision under Sec. 187 of the LGC. Michigan Holdings then filed its petition for review with the CTA in Division. The Second Division of the CTA dismissed the petition for lack of merit. The decision stated that the authority the authority to decide the legality of Sec. 3A.02(p) of the Revised Makati Revenue Code is lodged with the Secretary of Justice, pursuant to the LGC and its IRR. The motion for reconsideration was likewise denied for lack of merit. Hence, Michigan Holdings elevated the petition to the CTA En Banc. ISSUES: Whether or not the City Treasurer of Makati may levy LBT on dividend income?

Whether or not the RTC had jurisdiction to determine the legality of the basis of assessment? HELD: No. Section 133(a) of the LGC expressly provides that the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of income tax, except when levied on banks and other financial institutions. Sec. 131(e) of the LGC defines “banks and other financial institutions” and the enumeration appears to be exclusive of other entities. Nowhere in the entirety of Sec. 131 is a holding company mentioned. However, this, by itself, does not place holding companies beyond the reach of local taxation, except on their income. Sec. 143 of the LGC is the law on local business taxes. Subsection (f) thereof expressly allows local taxation on banks and other financial institutions on their income from dividends, based on gross receipts of the preceding calendar year. What Section 3A.02(h) of the Revised Makati Revenue Code did was to expand the taxpayer base to encompass “owners or operators of banks and other financial institutions which include offshore banking, non-bank, financial intermediaries, lending investors, finance and investment companies, investment house, pawnshops, moneyshops, insurance companies, stock markets, stock brokers, dealers in securities, including pre-need companies, foreign exchange.” The City Treasurer of Makati, while invoking this Sec. 3A.02(h), made it applicable to holding companies, such as Michigan Holdings, by virtue of Section 3A.02(p), which provides that holding companies “shall be taxed at the rate prescribed either under subsection (g) or (h), of the gross sales and/ or receipts during the preceding calendar year.” Sec. 3A.02(h) of the Revised Makati Revenue Code, which took effect on January 1, 2006, imposes a local business tax on the dividend income of certain taxable entities. Sec. 3A.02(p) makes holding companies liable for this business tax. Thus, Section 3A.02(p) in relation to Section 3A.02(h), both of the Revised Makati Revenue Code, violates the limit set by Section 133(a) of the Local Government Code. Indeed, if the business of a holding company is in the same class as that of a bank or other financial institutions, the Makati City tax ordinance could simply have included holding companies in its Section 3A.02(h), instead of placing them all by themselves in Section 3A.02(p) and then making the tax rates in either Section 3A.02(h) or (g) applicable to them. That holding companies, exclusively, were placed in a separate section, shows that they comprise a category distinct from the class of "banks and other financial institutions" as defined by Section 131(e) of the LGC. That holding companies were subjected to a tax on dividend income which the LGU is not authorized and is in fact prohibited from levying on businesses other than banks and financial institutions, shows a deliberate intent to circumvent the prohibition laid down by Section 133(a) that the taxing powers of LGUs shall not extend to the levy of income tax, except on banks and other financial institutions. Moreover, under Sec. 27(D)(4) of the NIRC, dividends received by a domestic corporation from another corporation are not subject to the corporate income tax. Such intracorporate dividends are some of the passive incomes that are subject to

the 20% final tax, just like interest on bank deposits. Intracorporate dividends, being already subject to the final tax on income, no longer form part of the bank's gross income under Section 32 of the Tax Code for purposes of the corporate income tax. Thus, Sec. 3A.02(p) in relation to Section 3A.02(h), both of the Revised Makati Revenue Code, likewise violates Sec. 27(D)(4) of the NIRC. Sec. 3A.02(p) of the Revised Makati Revenue Code is thus an ultra vires exercise of local taxing power, and cannot be given effect without violating the principle that an ordinance can neither amend nor repeal but must conform to a statute. Yes. The RTC had jurisdiction to determine the legality of the basis of assessment. As a general rule, failure to appeal the legality or constitutionality of a tax ordinance to the Secretary of Justice is fatal to the action of an aggrieved taxpayer before the courts. However, this general rule is not without exceptions. The rule can be relaxed in view of “more substantive matters,” as in Cagayan Electric Power and Light Co., Inc. v. City of Cagayan de Oro, where the Supreme Court voided the tax ordinance for imposing a tax rate in excess of the limit fixed by law, particularly Sec. 143(h) of the LGC. In this case, the trial court should have proceeded as the RTC in Cagayan Electric did, instead of dismissing the action on the basis of a technicality. After all, it has been held that the courts have the power to relax or suspend technical or procedural rules or to except a case from their operation when compelling reasons so warrant or when the purpose of justice requires it. What constitutes good and sufficient cause that would merit suspension of the rules is discretionary upon the courts. The Supreme Court has held that although, as a rule, administrative remedies must first be exhausted before resort to judicial action can prosper, there is a wellsettled exception in cases where the controversy does not involve questions of fact but only of law. This principle was reiterated in 2009 in Evelyn Ongsuco and Antonia Salaya v. Hon. Mariano M. Malones, where the Supreme Court held that it was not necessary to exhaust administrative remedies under Sec. 187 of the LGC, when "the parties are not disputing any factual matter on which they still need to present evidence," and the issue is “undoubtedly a pure question of law.” The Supreme Court reiterated that a case where the issue raised is a purely legal question, well within the competence and the jurisdiction of the court and not the administrative agency, constitutes an exception to the rule on exhaustion of administrative remedies. Ongsuco appears to suggest that Sec. 187 is not inflexibly mandatory after all, but may be optional -- that the taxpayer with a pure question of law has the option to repair directly to the courts. Although Sec. 187 vests the Secretary of Justice Justice with the authority to resolve challenges to the validity or constitutionality of tax ordinances and revenue measures, it is plain that Section 187 does not declare this authority to be so exclusive as to oust the courts from having concurrent original jurisdiction, and not just appellate jurisdiction. Had the Congress wanted this authority of the Justice Secretary to be exclusive, and its exercise a condition precedent for recourse to the courts, Congress would have written Sec. 187 differently. Metropolitan Naga Water District V. Provincial Government of Camarines Sur

CTA EB No. 1079, June 17, 2015 Ringpis-Liban, J.: FACTS: Respondent Provincial Government of Camarines Sur thru its Provincial Treasurer sent to petitioner Metropolitan Naga Water District (MNWD) an assessment letter with an attached Revised Franchise Tax Assessment for the years 2004 to 2009 in the amount of Php 1,039,100.10, inclusive of surcharges and interests. MNWD, thru the Office of the Government Corporate Counsel (OGCC), filed a protest with the Office of the Provincial Treasurer against the assessment, invoking exemption under Sec. 193 of the Local Government Code (LGC). The Provincial Treasurer denied MNWD’s protest, explaining that while tax exemption privileges of LWDs was not withdrawn with the passage of the LGC by virtue of Sec. 193, RA 7109 itself that granted tax exemption to local water districts (LWDs) expressly provides that such privilege shall be enjoyed only for a period of 5 years, that is, from August 14, 1991 to August 14, 1996. Simply put, Section 193 of the Local Government Code merely recognized exemption from local taxes of local water districts, but it did not grant a tax exemption. Thus, from August 15, 1996, local water districts created pursuant to PD 198 do not anymore enjoy exemption from local taxes. MNWD then appealed the respondent’s decision on the protest to the RTC, pursuant to Sec. 195 of the LGC. The RTC denied both MNWD’s appeal and motion for reconsideration. MNWD further appealed the RTC decision and order to the CTA through a petition for review. MNWD argued that Sec. 46 of PD 198, as amended, grants LWDs the privilege of exemption from local taxes; that even granting that RA 7109 impliedly repealed PD 198, RA 7109 was in turn impliedly repealed by Sec. 193 of the LGC, resulting in the continuing exemption of LWDs from local taxation; that MNWD is a government instrumentality exempt from local government taxes, and against which the rule of strict interpretation of statutes granting tax exemption does not apply; and that in case of doubt regarding MNWD’s continuing exemption from local taxes, such doubt shall be resolved liberally in MNWD’s favor. The Special Division of the CTA dismissed the petition for lack of merit and denied MNWD’s motion for reconsideration. Hence, MNWD filed a Petition for Review with the CTA En Banc. ISSUE: Whether or not MNWD is exempt from the payment of provincial franchise tax? HELD: No. MNWD was properly assessed franchise tax by the Provincial Government of Camarines Sur. When the LGC took effect on January 1, 1992, the tax exemptions enjoyed by LWDs, and which Sec. 193 of the LGC did not withdraw, were the exemptions granted by RA 7109. After the privilege to enjoy these

exemptions expired by express provision of Sec. 3 of RA 7109 on August 13, 1996, LWDs had no more exemption from any tax, until RA 10026 lapsed into law on March 11, 2010 and granted LWDs exemption from income tax, thru an amendment to Sec. 27 (c) of the NIRC, as amended. PD 198, the Provincial Water Utilities Act of 1973, exempted LWDs from all local government taxes. On August 14, 1991, RA 7109 granted tax exemption privileges to LWDs. Entitlement to the tax exemptions granted by R.A. No. 7109, however, was premised on conditions laid down in Sec. 3, and was limited to a period of five (5) years from the effectivity of the law, or until August 13, 1996. Compliance with the conditions was to be monitored by the Bureau of Local Government Finance of the Department of Finance, to which the LWDs were required to furnish statistical data and financial statements. There is no showing whatsoever in Sec. 1 or elsewhere in the relatively short text of RA 7109 that the exemptions granted thereunder to LWDs are limited to national taxes. Although income tax is a national internal revenue tax under Sec. 21(a) of the NIRC, it does not follow that the franchise taxes mentioned in Sec. 1 of RA 7109 are necessarily and exclusively also national taxes. As it has been held, "obviously, we cannot read any distinction into the law where it is not obvious or even obviously intended.” Inasmuch as the exemption from franchise tax granted to LWDs by RA 7109 expired on August 13, 1996, per Revenue Memorandum Circular 63-2003 issued by the BIR on October 10, 2003, MNWD became subject to franchise taxes effective that date. In its Sec. 1, RA 7109 exempted LWDs from the payment of "franchise taxes," without qualifying whether this exemption applied only to national franchise tax or only to local franchise tax, or covered both. If the Congress in enacting RA 7160 intended to limit the exemption to only either one of them, it would have explicitly stated so; by not distinguishing between them, it exempted both. In line with the rule that tax exemptions are never presumed and are strictly construed against the taxpayer and liberally in favor of the taxing authority, the 5-year limit should apply to both. It is clear from the language of Sec. 193 of the LGC that it did not withdraw tax exemptions enjoyed by LWDs that were subsisting as of January 1, 1992. These tax exemptions, at that time, were those enumerated under RA 7109. But because RA 7109 limited the enjoyment of the tax exemptions to 5 years, the privilege expired by operation of law on August 13, 1996, without need of repeal by Sec. 193 of the LGC. Sec. 193 only excepted LWDs from the immediate withdrawal of tax exemptions they were enjoying when the LGC took effect on January 1, 1992; it did not expand the scope or extend the effectivity of the subsisting tax exemptions of LWDs. Thus, the LGC did not repeal RA 7109, but merely allowed its tax exemptions to expire by operation of the latter law’s Sec. 3, at the end of the 5-year period. Moreover, MNWD is not a government instrumentality but a GOCC. A local water district cannot be a national government instrumentality because under the special charter of LWDs, the formation of an LWD is on a local option basis. LWDs

are considered government-owned or controlled corporations not only because of their creation by special charter but also because the government in fact owns and controls the LWDs.

DELTEK SYSTEMS v CIR

CTA EB NO. 1105 Castañeda J.: FACTS: Deltek had filed its VAT Returns for the four quarters of 2007. In 2009, it applied for Tax Credits or Refunds due to alleged excess or unutilized input VAT pertaining to its zero-rated sales of sevices for 2007. It also filed an administrative claim of tax credit certificate for P9.5 million as excess/unutilized input VAT. After a few days, it filed a Petition for Review with the CTA. Among others, Deltek claimed that its income was derived from its sole client Deltek, Inc., a company incorporated in the USA and was not registered with the SEC. The mode of sale between a local company and a foreign non-resident entity was raised by Deltek for it to be qualified to VAT zero-rating under Section 108 of the NIRC; however, the receipts presented were not marked zer-rated.The Court in Division, denied the petition due to lack of merit because Deltek had failed to prove all the requisites under Section 108 and that the receipts presented were not compliant with the requirements. ISSUE: Whether the claim for refund could be denied on the ground of failure to substantiate and establish the existence of the excess/unutilized input VAT credits? HELD: Section 113 of the NIRC requires that, inter alia, the term “zero-rated sale” must be stated in the VAT invoice or official receipt if the sale is subject to zero percent VAT. Such failure was fatal for an applicant for a tax credit or refund must be able to prove entitlement and must also comply with the requirements. The requirement of the appearance of the word “zero-rated” is important to prevent buyers from falsely claiming input VAT from their purchases when no VAT was actually paid. Had there been a successful claim absent such requirement, the government would be refunding money it did not collect.

CIR v YUMEX PHILIPPINES CORPORATION

CTA EB NO. 1139, August 11, 2015 Uy J.: FACTS: The respondent was informed of the investigation of its accounting records for the taxable year of 2007. A Formal Letter of Demand (FLD) was subsequently sent to the respondent finding it liable to pay deficiency income tax, fringe benefits tax, improperly accumulated earnings tax (IAET), and compromise penalty. It then filed a protest and alleged that it was registered under the Philippine Economic Zone Authority (PEZA) which enjoyed payment of special rate on registered activities. Thus, the respondent argued that it was not subject to IAET. After re-investigation, the Revenue District Officer informed, through a letter, the respondent that the request was subject to approval of the CIR. The respondent had treated the letter as CIR’s Final Decision on Disputed Assessment and filed a Petition for Review. The Court in Division later ordered to set aside the assessment issued against the respondent for deficiency IAET because the latter was not accorded due process in the issuance of subject assessment. ISSUE: Whether due process was complied? HELD: The Bureau of Internal Revenue had failed to comply with due process requirements in the issuance of the subject assessment. Section 228 of the NIRC provides a taxpayer must be notified of the findings of the CIR and the former must be given a period to respond to said notice. A preliminary assessment notice (PAN) must be issued for the proposed assessment and the taxpayer must be given 15 days to respond. If he fails to respond, a formal letter of demand and assessment shall be issued. Here, the respondent was not given an opportunity to contest the PAN. Therefore, due process was violated. Moreover, the respondent was registered with the PEZA which was excluded from the imposition of the improperly accumulated earnigns tax.

CIR v ASALUS CORPORATION

CTA EB NO. 1191, July 30, 2015 Cassanova J.: FACTS: In December 2010, Asalus Corporation (respondent) had received a Notice of Informal Conference to discuss the investigation report on its internal revenue tax for 2007. It later filed its reply disputing the computation made by the Revenue Officer. A Preliminary Assessment Notice (PAN) was subsequently issued finding the respondent liable for deficiency tax for about P414 Million. In August 2011, the respondent received a Formal Assessment Notice (FAN) finding it liable for deficiency of value-added tax in the amoun of P95 Thousand. The FAN was then protested stating that the subject tax deficiency had already prescribed based on Section 203 of the National Internal Revenue Code (NIRC). The following year, a Final Decision on Disputed Assessment (FDDA) was issued finding the respondent liable for deficiency VA in the amount of P106 Million and a compromise penalty of P25 Thousand. The FDDA also stated that it was the final decision appealable with the Court of Tax Appeals (CTA). A petition for review was filed where the CIR asserted that the assessment notices were valid even if the three-year period had already lapsed because the applicable period of limitation was ten years due to false VAT returns filed by the respondent. The respondent then argued that the FAN was not premised on the alleged fraudulent return so the said period was not applicable. ISSUE: Whether or not the applicable prescriptive period to assess the deficiency was ten years HELD: Section 203 of the NIRC provides that the Bureau of Internal Revenue has three years to asses and collect an internal revenue tax counted from the period fixed by law for the filing of the tax return or the actual date of filing whichever is later. According to Section 222 of the same Code, the ten-year period shall be applied should there be a case of a false or fraudulent return with intent to evade tax, among other. In this case, however, there was nothing in the FAN and FDDA that would indicate the non-application of the three-year period. There was no indication that the respondent had filed false returns or made any fraudulent returns with intent to evade. Moreover, CIR had not substantiated its claim to apply the ten-year period. Because CIR had failed to prove fraud or false returns, the three-year period had already lapsed.

CARMEN COPPER CORPORATION v CIR

CTA EB NO. 1124, July 30, 2015 Uy J.: FACTS: The petitioner had filed administrative claims for refund of its iput VAT payments for the third and fourth quarters of 2007 and all four quarters for 2008. Upon the belief that the period to claim for refund was about to lapse and that the claim remained unresolved, the petitioner filed a Petition for Review in May 2010. The respondent answered that the claim was subject to investigations/examinations. In 2013, the case was transferred to the Third Division of the CTA. In 2014, the respondent moved to dismiss the case on the ground of lack of juriscition due to petitioner’s belated filing of its judicial claim for refund. The petition was subsequently dismissed. ISSUE: Whether the petitioner timely filed its judicial claim? HELD: The petition was correctly dismissed due to lack of jurisdiction as the same was filed beyond the 30-day period under Section 112 of the NIRC. It provides that the refund or tax credits of input tax should be within 30 days in case of denial of the claim or inaction of the Commissioner to act on the application. Based on the same provision, said period shall commence from the expiration of the 120-day period given to the Commissioner to act on the application/s. Such claim must be construed strictly against the taxpayer. The “120 + 30” day period is mandatory and jurisdictional. Hence,the claims for refund on the payments made in 2007 and 2008 should have been filed in 2009 depending on each quarter paid.

CIR v PHILEX MINING CORPORATION

CTA EB NO. 1138, July 29, 2015 Cotangco-Manalastas J.: FACTS: The respondent was VAT-registered and had an approved application for Zero-Rate. In July 2009, it filed its original quarterly VAT return for the second quarter of 2009. It subsequently filed an amended quarterly VAT return in May 2011 which reflected total zero-rated sales. The following month, it filed its claim for refund or tax credit for the amount of P30 million. Due to inaction, it then filed a petition for review in October 2011. The petitioner answered that, among others, the registration requirements and the invoicing and accounting requirements were not proved. The Court in Division later ordered the CIR to refund the respondent the amount of P26 million as the excess input VAT attributable to its zero-rated sales for the second quarter of 2009. ISSUE: Whether the respondent was entitled to refund? HELD: The Court held that the respondent was able to prove its compliance with the requirements delineated in Section 112 (A) of the NIRC by submitting satisfactory documents of its entitlement to a refund. The non-submission of subsidiary sales journal, subsidiary purchase journal, and monthly VAT declarations should not be a ground to deny such claim and should not be considered fatal to the judicial claim.

Jacinto - Henares V. Atlas Consolidated Mining & Development Corp.

CTA EB No: 1101, August 14, 2015 Fabon-Victorino J.: FACTS: On February 29, 2000, BIR Revenue Region No: 10 issued Assessment notices to Atlas Consolidated Mining & Development Corp., herein respondent, to pay for the alleged deficiency taxes. Months after, the respondent corporation received a formal letter of demand to pay for the same and later on failed also to file an administrative protest within the required period. On November 21, 2006, Atlas wrote to the BIR to request for the confirmation that it is no longer subject to assessment and collection by the BIR with respect to the excise tax due which was later granted on the ground of prescription. However, the Commissioner of Internal Revenue issued the memorandum letter concerning the previous ruling to be declared null and void. Upon such issuance, another demand letter was sent to atlas contending that if full settlement will not be received, the letter shall serve as formal notice of Warrant of Distraint or Levy or Garnishment. A petition for Review with application for TRO was filed by Atlas. The Commissioner of Internal Revenue, herein petitioner opposed as based on the following grounds: first that the CTA has no jurisdiction over the case, second that the cause of action and remedy were not proper and lastly, that there was no legal basis for the application of the TRO. The Court in Division on the ground that there was jurisdiction and ruled that there was no suspension of the period. Hence, this petition. ISSUE: Whether or not the CTA has jurisdiction over the case? Whether or not the BIR’s right to collect has prescribed? HELD: As to the first issue, the court ruled on the affirmative. As provided under Section 7 of RA1125, the issue on prescription of the BIR’s right to collect taxes covered by the term “other matters” arising under the NIRC over which the court in Division has jurisdiction. In the case at bar, the issue of prescription was considered a matter provided by the NIRC is well within the jurisdiction of the CTA to decide because it is part under the “other matters”. As to the second issue, the court ruled on the negative. As provided under Section 205 of the NIRC of 1997, the institution of a criminal action has the effect of suspending the running of the prescriptive period. In the present case, the contention of the petitioner on the ground that it was suspension as based on the previous criminal action filed for the collection remedy was not accepted by the court. However, the filing of the alleged criminal action against the President of the respondent corporation did not toll the running of the prescription to collect since the respondent was not impleaded nor was it at the very least, afforded due process, which is in fact indispensable for the government to collect the tax against the corporation. Thus, such period was not suspended. Therefore, the Petition for Review was denied by the Court of Tax Appeals. Commissioner of Internal Revenue V. Oakwood Management Services, Inc.

CTA EB No: 1080, August 14, 2015 Ringpis-Lipan J.: FACTS: Respondent Oakwood is a domestic corporation duly organized and existing in the Philippines. This case originated from the petition for review filed by the respondent against the assessments for deficiency taxes. The Special Second Division promulgated the decision by reducing the deficiency tax assessments. Respondent moved for reconsideration in finding the deficiency tax final and imposing 25% surcharge for such deficiency. Petitioner Commissioner of Internal Revenue moved also for reconsideration and maintained that the second division erred in cancelling the deficiency income tax and assessments. By Resolution promulgated both motions denied for lack of merit. Thereafter, both parties appealed to the Court En Banc through their respective petition for review. During the trial, the court order them to submit the consolidated memorandum. However, respondent obeyed the order but the Commissioner of Internal Revenue failed to do such. Thereafter, the court ruled that the respondent is liable for deficiency of the final withholding tax but respondent was relieved to pay for the assessments of income tax. Respondent raised the substantial issue contending that CTA Case No: 6758 should be taken consideration for the services rendered by the Oakwood Asia Employees. Hence, this petition. ISSUE: Whether or not the Special Second Division erred in failing to consider the allocation of service fees from the previous case originated before the Court of Tax Appeals? HELD: No. In taking consideration the legal basis of the facts of the case, the court defined and stated the “law of the case”. The Law of the case is the opinion delivered on a former appeal. IT means that whatever is once irrevocably established as the controlling legal rule of the decision between the same parties in the same case continues to be a law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. In the case at bar, Oakwood contention was not proper because respondent failed to comply with the exact definition of the law of the case. First, CTA Case No: 6758 is a case involving a refund or issuance of a tax credit certificate and CTA Case No: 7989 is a case involving a cancellation of the Bureau of Internal Revenue’s Formal Notice of Assessment. Thus, it was not considered a law of the case. In addition, the court also ruled the employees of Oakwood Asia, even if they are nonresident, are still subject to income tax only on income derived from all sources within the Philippines. Therefore, the petition for review are denied. Coca-Cola Bottlers Philippines, Inc. V. Commissioner of Internal Revenue

CTA EB NO: 1111, August 12, 2015 Castañeda, Jr. J.: FACTS: Coca-Cola Bottlers Philippines, the petitioner of this case, filed their quarterly several VAT Returns. For the month of February, its monthly VAT Return was filed on March 23, 2008. However, it was not able to amend the said quarterly VAT Return since a Letter of Authority was subsequently issued by the BIR. Upon receipt of such letter, petitioner now filed an administrative claim for the refund or tax credit of its alleged erroneous payment of VAT. Three days after, petitioner then again filed for a judicial claim of the same by way of Petition for Review. The Commissioner of Internal Revenue, herein respondent, filed their answer that such claim was subjected to BIR administrative routinary examination upon presentation of the evidence by the petitioner. On September 2, 2010, a pre-trial order was issued to the parties. Coca-Cola Bottlers Philippines presented 5 witnesses to support their case. The first witness named Gerardo Espidirion contended that some of the official receipts or transactions were not uploaded into the system resulting to the understatement of input VAT. The second witness named, Rosemarie Gambao also defended their company that the latter were only keeping the details of their accepted suppliers and not with prospective ones. However, the cross examination of the remaining 3 witness were not admitted because of failureof counsel for the respondent during hearing, despite due notice. The CTA Division ruled to deny the petition and also with the motion for reconsideration. Feeling aggrieved, both parties filed before the CTA En banc and the latter requested them to file memorandum. Thereafter, the partied obeyed to the order. Hence, this petition. ISSUE: Whether or not the petitioner is entitled to tax refund or issuance of tax credit certificate over the erroneous understatement of VAT overpayment? HELD: No. As provided under Sections 204 and 229 of the 1997 NIRC, the claim for refund is anchored on the erroneous understatement of VAT overpayment or excess allowable input VAT which was carried to the succeeding quarter resulting to unjust enrichment in favor of the government. It was also stated under the same code under Section 110 that the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarters. However, when the input tax attributable to zero-rated sales exceeds the output tax, it may be refunded or credited. In the case at bar, the claimed input VAT is not attributable to zero rated sales, in effect, it is not entitled to a tax refusal credit. Lastly, the court emphasized that the claim essentially represents undeclared input taxes and not erroneously paid VAT or under statement of VAT overpayment. Thus, it does not fall under the required cases where the excess put taxes can be claimed since it can only be claimed by VATregistered person whose sales are zero-rated and the VAT registration of the

claimant has been cancelled due to retirement from or cessation of business or due to changes in or cessation of status. Therefore, the petitioner was not entitled to the tax refund or issuance of the tax credit certification together with the denial of the petition.

Prudentalife Market Resources Corporation V. Commissioner of Internal Revenue CTA EB No: 1110, August 14, 2015 Contangco-Manalastas J.: FACTS: Prudentialife, herein petitioner, filed its amended Annual Income Tax Return for the year of December 2007 which also indicated its option to ask for the excess of the creditable withholding taxes. Petitioner then again filed before the BIR Revenue District Officer a written application for refund of its excess but unfortunately the BIR failed to act on the said applications. Thereafter, Prudentlife Corporation filed a Petition for Review. Respondent Commissioner of Internal Revenue, on the other hand, opposed to the petition on these 2 grounds, first is that there is a presumption that taxes are made in accordance of the law which in effect renders to be not refundable and lastly, that it is no longer entitled to any refund based on the NIRC. The Special First Division ruled in denying the petitioner’s claim. However, upon motion of reconsideration by petitioner, the same court ruled on the same. Feeling aggrieved, the petitioner filed the instant petition for review before the CTA En Banc. Hence, this petition. ISSUE: Whether or not the petitioner is entitled to refund or issuance of tax credit certificate of its alleged unutilized creditable withholding taxes? HELD: No. The requisites for claiming a tax credit or a refund of creditable withholding tax are as follows, first is that the claim must be filed with the Commissioner of Internal Revenue within the 2 year period from the date of payment of the tax, second is that 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 the tax withheld and lastly, that it must be shown on the return that the income received was declared as part of the gross income. In the case at bar, the second requisite was partly complied but only with respect to the PHP 10,434,995.11 and not PHP 26,302,677.89. It was also proved that there was a non-submission of the second page on the ground it was not properly signed by the authorized representative. As to the third requisite, the court also agreed that the petitioner failed to establish that the income payment related to the claimed presented by them. Thus, the court is not convinced that the petitioner had presented sufficient evidence to prove that they are entitled to the tax refund or issuance of the tax credit certificate. Therefore, the court ruled to deny such petition.

One Network Bank, Inc. V. Commissioner of Internal Revenue CTA EB No: 1200, August 14, 2015 Ringpis-Liban J.: FACTS: Two domestic corporations namely One Network Rural Bank, Inc. and Rural Bank of New Corella, Inc. entered into a plan of Consolidation whereby said corporations shall consolidate with the One Network Bank, Inc which is the petitioner of this case. Thereafter, the Agreement and Articles of Corporation was also executed by the to corporations. The Security and Exchange Commission approved the Plan of Consolidation and also ceased the entire assets and liabilities of the previous two domestic corporations. Petitioner filed its Monthly Percentage Tax Returns together with the protest of the gross receipts. Later on, the petitioner again filed an administrative claim for the refund of the amount representing its gross receipts but unfortunately it was not acted by the Bureau of Internal Revenue. The Commissioner of Internal Revenue, herein respondent, presented these affirmative defenses; that the claim for refund is subjected to routinary investigation, that the gross receipts tax was not properly documented, that there was failure of the taxpayer to prove his contention, that the petitioner must show that it has complied within the period required and lastly, that the claims for refund are construed strictly against the claimant. The Court in Division denied the petitioner’s claim for lack of merit. Petitioner filed its motion for Reconsideration but it was also denied. Hence, this petition before the CTA En Banc. ISSUE: Whether or not the Court in Division erred in denying the petitioner’s claim of entitling them a tax exemption on the ground that there was a previous exemption granted to them? Whether or not the Court in Division erred in applying the same retroactively to the prejudice of the petitioner? HELD: As to the first issue, the court ruled in the negative. Under Section 15 and 18 of RA 7353, it states the limitation on rural banks from payment for only a period of 5 years, and 7 years with respect to the incentives for rural banks which merge and consolidate and limits the benefit. Furthermore, it was also stated on the same preceding section that such incentives may be availed by those rural banks within 3 years after enactment of the RA 7353. In the case at bar, the three-year mark was already prescribed. Hence, the petitioner is ineligible for the incentives offered by the Rural Banks Act. As to the second issue, the court also ruled in the negative. Under Section 246 of the Tax Code, there are also instances where there could be retroactive application of the rulings and these are as follows; first is when the taxpayer deliberately omits the material facts from any document therein, second is where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based and lastly is where the taxpayer

is in bad faith. In the case at bar, the contention of the petitioner was misplaced because the phrase “date of commencement of operation” refers to the date when the rural bank was registered with the SEC or the date when the Certificate of Authority to operate as a rural bank was issued by the Monetary Board of the Central Bank. Petitioner was misled to believe that it was exempted from gross receipts tax under Section 15. Thus, the petitioner is not liable for the same period. Therefore, the previous ruling by the Second Division was affirmed and denied the petition for review.

PNB V. CIR CTA En Banc No: 1129, August 24, 2015 Castañeda Jr. J.: FACTS:  April 15, 2008, PNB manually filed its Annual Income Tax Return for the calendar year ending December 31, 2007  April 22, 2008, it electronically filed the same ITR thru EFPS  July 4, 2008, filed an Amended Annual ITR for the calendar year 2007  October 8, 2009, filed another Amended Annual ITR for the calendar year ending December 31, 2007. Petitioner filed its Quarterly Income Tax Returns for the calendar year 2008 on the following dates: (a) May 29, 2008, for the first (1st) quarter; (b) August 29, 2008, for the second (2nd) quarter; and (c) November 28, 2008, for the third (3rd) quarter. On April 15, 2009, petitioner manually filed its Annual Income Tax Return for the calendar year 2008; while on April 30, 2009 and June I, 2009, filed its Amended Income Tax Returns for the calendar year 2008 through the BIR's EFPS. On November 12, 2009, petitioner filed with the BIR an administrative claim for the issuance of a tax credit certificate for its excess and unutilized creditable withholding tax for calendar year 2007. And on April 14, 2010, alleging inaction on the part of respondent, petitioner filed the present Petition for Review. On June 28, 2010, respondent filed her Answer, interposing that. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the BIR and is thus unsubstantiated. CTA Division held that the supporting documents submitted by PNB are insufficient to prove that the Related Income was included in the gross taxable income reported in PNB's Annual ITR for CY 2007 ISSUE: Whether the CTA Division erred in denying petitioner's claim for excess and unutilized CWT for CY 2007 on the ground that PNB failed to prove that the related income (upon which the CWTs being claimed were withheld) was included as part of the gross taxable income declared in PNB's Income Tax Return (ITR) for CY 2007. HELD: The Court cannot verify with certainty that the income related to CWT indeed formed part of 2007 ITR. A detailed general ledger or any other supporting documents for the Court to verify 'with certainty that the income payments related to the claimed creditable withholding taxes indeed formed part of its gross taxable income in its 2007 Annual ITR.' However, even a simple perusal of petitioner's motion, with its attachments, failed to comply with the above requisites. Petitioner merely presented and offered the same set of documents that had already been considered by this Court in the assailed Decision. Further, while petitioner attached an Amended Report dated December 5, 2013, with additional documents to support its claim, the Court still finds the same to be insufficient in order to reverse the assailed Decision; the attached evidence merely shows the reconciliation between the income declared in its Financial Statement as against its Annual Income Tax Return for the subject year.

P & G Asia PTE LTD V. CIR CTA En Banc No: 1140, August 24, 2015 Ringpis-Liban, J.: FACTS: Petitioner is a foreign corporation duly organized and existing under the laws of Singapore and is maintaining Regional Operating Headquarters in the Philippines. Petitioner renders services to its affiliates in the Philippines and abroad pursuant to Service Agreements with said affiliates. The affiliates to whom petitioner rendered services for the period January 1, 2009 to June 30, 2009 are engaged in business conducted outside the Philippines and remitted the corresponding foreign currency payment for all services rendered as stipulated in the Service Agreement. On June 24, 2010, petitioner filed an administrative claim dated June 21, 2010 with the BIR for the refund or issuance of a tax credit certificate in the aggregate amount of P57,759,533.68 representing unutilized input VAT attributable to its zerorated sales covering the period of January to June 2009. Due to respondent's inaction, petitioner filed with this Court a Petition for Review on November 19, 2010. Respondent CIR filed her Answer4 dated January 10, 2011, and interposed as her Special and Affirmative Defenses that:  petitioner's claim for refund or issuance of tax credit certificate in the amount of P57, 759,533.68, as alleged unutilized input VAT attributable to its zerorated sales of goods and services for the period covering January 1, 2009 to June 30, 2009 were not fully substantiated by proper documents  petitioner's sale of goods and services to various alleged clients/ affiliates do not qualify as zero-rated VAT  The amount subject of the claim for refund of petitioner does not pertain in full to its input VAT attributable to its zero-rated sales of goods and services for the period covering to Section 113 and 237 of the 1997 Tax Code  petitioner failed to comply with the conditions/requirements for claim for refund/tcc ISSUE: Whether or not petitioner is entitled to its claimed refund in the total aggregate amount of P57,759,533.68, as alleged unutilized input VAT attributable to its zerorated sales of goods and services for the quarters ended March 31, 2009 and June 30, 2009? HELD: The court held that in order to be entitled to a refund or issuance of tax credit certificate of input VAT paid, petitioner must prove the following: 1. the taxpayer is VAT -registered; 2. the taxpayer is engaged in zero-rated or effectively zero-rated sales; 3. the input taxes are due or paid;

4. the input taxes are not transitional input taxes; 5. the input taxes have not been applied against output taxes during and in the succeeding quarters; 6. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales 7. for zero-rated sales under Section 106(A)(2)(1) and (2), 106(B), and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 8. where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributed to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and 9. the claim is filed within two years after the close of the taxable quarter when such sales were made. Petitioner is duly registered with the BIR as a VAT taxpayer and the services it performs in the Philippines, through its regional headquarters. For the said services, petitioner received payments which was duly accounted for in accordance with the rules and regulations of the BSP as evidenced by the Certifications and Inward Remittances and the Bank Statements issued by Citibank, N.A., Philippine Branch, and duly affirmed by the testimony of Citibank's representative. This Court also finds that petitioner has sufficiently established that it rendered services to its non-resident affiliates which were not registered corporations in the Philippines and were not doing business in the country as evidenced by SEC Certificates of Non- Registration, Service Agreements, affidavits executed by the respective officers of petitioner's affiliates abroad with attached proof of business registrations of the affiliates duly authenticated by consuls of the Republic of the Philippines, and Subsidiaries Report, which can be accessed at the United States Securities and Exchange Commission website. Based on the foregoing, petitioner has sufficiently proven that it had VAT zerorated sales m the amount of P1,364,417,224.90 for the period covering January 1, 2009 to June 30,2009. However, this Court finds the disallowance of the P11,263,057 .40 input VAT to be in order because the corresponding invoices, receipts and other documents did not meet the substantiation requirements under Sections 110(A) and 113(A) and (B) of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of Revenue Regulations (RR) No. 16-05. Aside from the Independent CPA's recommended disallowance of P11,263,057.40, the following input VAT in the amount of P98,298,633.06 should be denied. Lastly, P & G's assertion that the separate indication of VAT in the sales invoice corresponding to the official receipts issued by Hewlett-Packard Phils. Corporation can be sufficient compliance of the law, finds no merit in fact and in law. Moreover, P & G cannot blame its service provider in the issuance of the receipts, because it is the taxpayer's (P & G) liability as far as the tax code is concerned.

Festo Holdings Inc. V. CIR CTA En Banc: 1129, August 25, 2015 Castañeda, J.: FACTS: Petitioner Festo Holdings, Inc. is a corporation duly organized and existing under the laws of the Republic of the Philippines. On May 12, 2010, petitioner received from respondent a Preliminary Assessment Notice (PAN) dated May 12, 2010 finding petitioner liable for deficiency income tax. On May 27, 2010, petitioner through its counsel filed a letter of reconsideration dated May 17, 2010 with respondent. On September 23, 2010, petitioner received a Formal Assessment Notice (FAN) dated September 14, 2010 informing petitioner that the request for reconsideration filed on May 27, 2010 was denied. Respondent found petitioner liable for deficiency income tax for the taxable year 2008. On October 14, 2010, petitioner through counsel filed its formal letter of protest. On January 5, 2011, petitioner received a letter from BIR denying the October 14, 2010 protest letter with finality. On February 4, 2011, petitioner filed a Petition for Review appealing the decision of Revenue District Officer. On August 18, 2011, during the pendency of CTA Case petitioner received from the CIR a Final Decision on Disputed Assessment (FDDA) dated August 11, 2011 denying petitioner's protest with finality. Attached to the said FDDA was an Amended Notice of Assessment dated August 11, 2011. In her Answer dated November 18, 2011, respondent averred that Verification disclosed that that (sic) the interest expense claimed in the amount of P1 , 500,000.00 is unreasonable and unnecessary on the following grounds: a. The company is primarily engage[ d) in leasing activity. Hence, the business may continue on a going concern without incurring such optional expense. It is therefore indicative that the said loan is unreasonable and unnecessary and also expenses attached to said loan pursuant to Section 34(A) of the NIRC in relation to Section 36 of the Code. b. The company's loan is coming from a related party. Hence, the interest not deductible therefore is disallowed as expense pursuant to Section 34(B) of the Code in relation to Section 36 of the same Code. The interest expense amounting to P1,500,000.00 will still be disallowed for lack of support. FHI failed to provide the source document evidencing interest expense.

ISSUE: Whether or not the petitioner may claim the interest expense arising from a loan obligation with Festo, Inc. as a deduction from petitioner's taxable income? HELD: Petitioner failed to adduce sufficient evidence to prove that the interest expense arising from the Loan and Mortgage Agreement was reasonably necessary to petitioner's trade or business. Upon evaluation of Petition for review, it was notable that there were mere restatements of petitioner's arguments previously raised before the Court in Division. Notably, these matters had already been adequately discussed and passed upon by the Court in Division in the assailed Decision and Resolution. Petitioner failed to comply with the first requirement of Section 34(B) of the 1997 NIRC, as amended, when it did not provide any necessary documentary evidence to support its claim that the loan was a reasonable necessity to its trade or business. Neither did petitioner's financial statements for 2008 and 2007 clearly indicate how it made use of the proceeds from the Loan and Mortgage Agreement. The mere testimony of the Finance Manager of Festo that the said Loan and Mortgage Agreement was a valid corporate obligation, based on an arm's length transaction, is insufficient to prove that the transaction was actually related to the business. Thus, the amount of Php1,500,000.00 as interest expense arising from the Loan and Mortgage Agreement cannot be deducted for income tax purposes.

CIR V. Lindberg Subic Inc. CTA En Banc No: 1195, August 20, 2015 Cassanova, J.: FACTS: On 20 December 2007, a domestic corporation duly-registered with Subic Bay Metropolitan Authority (SBMA) contracted a loan with a Danish corporation. Pursuant to the said contract, interest on the loan was paid by the domestic corporation to the Danish corporation in 2007. The domestic corporation did not file for an application for tax treaty relief in accordance with RMO 1-2000 prior to the payment of interest. On 21 March 2012, the domestic corporation received from the BIR Revenue Region No. 4 a Formal Letter of Demand dated 12 March 2012, with Final Assessment Notice and Details of Discrepancy. The domestic corporation protested the said assessment invoking the provisions of law and jurisprudence justifying the application of the 10% tax treaty rate, instead of the 20% regular tax rate. However, the assessment was upheld by the BIR regional Director. On 11 February 2014, the first division of the Philippine Court of Tax Appeals ruled in favor of the domestic corporation and cited the recent pronouncement of the Supreme Court in Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue, G.R. No. 188550, August 19, 2013. It held that notwithstanding the absence of a tax treaty relief, which merely serves to confirm entitlement to such relief, the domestic corporation may apply the 10% preferential tax rate, provided all requirements set forth under the RP-Denmark Tax Treaty have been complied with. On March 4, 2014, petitioner-CIR filed her Motion for Reconsideration filed on April10, 2014. On June 19, 2014, the Court denied petitioner-CIR's Motion for Reconsideration for lack of merit per Resolution promulgated on the same day. Thus, petitioner-CIR elevated the case to the Court En Banc by way of the instant Petition for Review filed on July 24, 2014. Hence this case. ISSUE: Whether or not the pronouncement of the Honorable Supreme Court in the case of Deutsche Bank AG Manila Branch vs. Commissioner of Internal Revenue is not applicable in the present case? Held: This court disagrees.Petitioner contends that the "Deutsche Bank Case" should not be applied in this case as the two cases involve different claims. In Deutsche Bank, petitioner therein claims for a refund or credit of the excess branch profit remittance taxes paid on the net income remitted to Deutsche Bank Germany for 2002 and prior taxable years, involving the 10% preferential tax rate under the RP-Denmark Tax Treaty. However, petitioner therein failed to secure an application for tax treaty relief within the period required under RMO No. 1-2000. For this reason, this Court denied petitioner's claim ruling that an application for tax treaty relief is mandatory before a taxpayer may avail of the preferential tax rate under the tax treaty. Thus, the Supreme Court was confronted with the sole issue of

'whether the failure to strictly comply with RMO No. 1-2000 will deprive persons or corporations of the benefit of tax treaty'. This is exactly the same point at issue in the instant case. Here, petitioner seeks the cancellation of the deficiency final withholding tax assessment on interest payments on foreign loans issued by respondent as a result of petitioner's failure to secure a tax treaty relief application, as required under RMO No. 1-2000, prior to its availment of the 10% preferential tax treaty rate under the RP-Denmark Tax Treaty. As stipulated by the parties, the issue of 'whether a prior application for tax treaty relief is mandatory for the entitlement to the preferred rate of interest on foreign loans under the RP-Denmark tax treaty' is submitted for this Court's resolution. Considering that both cases involve exactly the same legal issue, this Court is duty bound to adhere to the precedent laid down by the Supreme Court in the Deutsche Bank case. Furthermore, it makes no sense to deprive petitioner of the benefit of the ruling in Deutsche Bank, simply because the instant case does not involve a refund, when the Supreme Court itself, in resolving the issue, did not make any qualifications. Lastly, non-compliance with RMO No. 1-2000 cannot deprive a taxpayer of the benefits provided under Philippine tax treaties, whether a taxpayer is claiming for a refund or seeking to cancel an assessment.

CIR V. BPI-PhilAm Life Insurance Corp. CTA En Banc No: 1240, February 11, 2016 Castañeda, J.: FACTS: Petitioner CIR filed a petition for review before the CTA 3rd division, however it was denied. Hence this Motion for reconsideration: Petitioner raises the following grounds in support of her Motion, to 1) The rule that no issue may be raised for the first time on appeal is not a hard and fast rule; 2) Respondent is estopped from assailing the timeliness of the deficiency valueadded tax (VAT) assessment when respondent partially paid a portion thereof; 3) Petitioner has the power to assess premium tax on respondent; and 4) Respondent was not denied due process. 1. 2. 3. 4.

On the other hand, respondent in its comment alleged the ff: The alleged filing of false returns was never raised in the Answer nor was there any evidence adduced by petitionerto support such allegation. The principle of estoppel should not apply in the present case. Interest income from loans is not subject to premium tax Due process right was violated when petitioner changed the nature of the assessment on interest income from deficiency VAT assessment to deficiency premium tax.

Petitioner again alleges that the failure of respondent to declare income which was supposed to be subjected to VAT in the amount of 1!69,837,708.82, rendered respondent's VAT returns false hence, the 1 0-year prescriptive period under Section 222 of the National Internal Revenue Code of 1997, as amended, (1997 NIRC) applies. ISSUE: Whetheror not respondent is liable for deficiency VAT and deficiency premium tax? HELD: Petitioner's position is untenable. On the issue on the alleged falsity of respondent's VAT returns, petitioner did not present any evidence to prove such affirmative allegation. It is a basic rule in evidence that burden of proof lies on the party who makes the allegations. Indeed, petitioner's allegation as to the falsity of respondent's VAT returns involves a question of fact, and the burden rests upon petitioner to prove that respondent intentionally filed false VAT returns. Petitioner also contends that respondent is estopped from assailing the timeliness of the deficiency VAT assessment by making full payment of its deficiency income tax and also by paying partial settlement of its deficiency VAT assessment. Respondent's partial payment of the deficiency VAT assessment, by itself, cannot be taken as an implied admission on its part of the timeliness of the issuance of such assessment.

Further, Interest income on policy loans is not subject to deficiency premium tax because interest income is not the "premium collected" under Section 123 of the 1997 NIRC. Furthermore, interest income on policy loans cannot be considered as "akin to premiums" because it is not an administrative charge related to the issuance of policy contracts but income earned from debt claims of any kind. Lastly, The change of the nature of the assessment from deficiency VAT to deficiency premium tax only upon the issuance by petitioner of the Final Decision on Disputed Assessment ("FDDA") violated respondent's due process rights as the latter was unduly deprived of an opportunity to be heard and to dispute the new assessment at the administrative level. The issuance of the FDDA signifies the final stage of the administrative procedure for the issuance of the deficiency tax assessment. It constitutes petitioner's final decision on respondent's administrative protest. Thus, it strains credulity to state that respondent was given an opportunity to challenge the assessment when it was belatedly informed of the nature of such assessment.

National Irrigation Administration [NIA] V. Marinay [Provincial Treasurer] ; Aliguyon [Municipal Treasurer] CTA EB 1055 September 04, 2015 Castañeda Jr, J.: FACTS: Petitioner NIA, a body corporate created by RA3601, filed its Tax Declaration of Real Property, covering a real property described as a dam in Ifugao. On the basis thereof, the Municipal Treasurer sent several Notice of Assessment with attached Computation of Tax Due and Statements of Account, with said real properties determined to be subject to P13.3 million plus real property tax [RPT]. Petitioner subsequently received a collection letter from the Provincial Treasurer, reasserting their liability and positing that since other government instrumentalities, like the NFA and a PTA subsidiary, are paying RPT, petitioner should do too. Petitioner filed its protest with the Local Board of Assessment Appeal, Ifugao, but the board denied the protest. The CBAA likewise ruled against petitioner and denied their appeal. Petitioner thus filed its petition for review with the CTA en Banc. ISSUES: Whether or not the petition for review should be granted? HELD: NO. The CTA en banc has no jurisdiction to take cognizance of the instant petition. Petitioner argues that protest is required when the taxpayer questions the excessiveness or reasonableness of the assessment under Section 252 of the LGC, but the same is not applicable in this case where petitioner questions not the excessiveness, reasonableness or correctness of the assessment, but the legality of the assessment on account of the taxpayer’s claim that it is exempt from tax. Moreover, Section 252 of the LGC provides that no protest shall be entertained unless the taxpayer pays the tax, which must be filed within 30 days from payment thereof and shall be decided within 60 days from receipt of the protest. In the event of the denial of the protest or upon the lapse of the 60-day period, the aggrieved taxpayer may avail of the remedies provided for under Chapter 3, Title II, Book II of the LGC of 1991, which concerns appeal to the LBAA and to the CBAA. This procedure, however, is premised on the condition that the issues raised are cognizable by the LBAA. Under Section 229 of the LGC, the proceeding before the LBAA solely for the purpose of ascertaining the facts, thus when the issues are not factual, the taxpayer need not pay under protest. Accordingly, if the only issue is the legality or validity of the assessmentquestions of law – direct recourse to the RTC is warranted. When the issue/s involved is/are purely factual in nature; or (2) both factual and legal in nature, jurisdiction over RPT assessments is lodged on the LBAA. However, when the issues involved are pure questions of law, jurisdiction is conferred upon the regular courts.

Petitioner’s issues are pure questions of law, that the determination whether the subject properties may be subjected to RPT and whether petitioner is a GOCC and not an instrumentality. Even both parties admitted that the issues involved are mere questions of law. Thus both LBAA and CBAA decisions are null for lack of jurisdiction

Santos, Isabel V. LBAA of Valenzuela City et al CTA EB 1103 September 04, 2015 Mindaro – Grulla, J.: FACTS: Petitioner, a widower, is a co-owner of two parcels of land located in Valenzuela City. She received two Notices of Realty Tax Deficiency from the Valenzuela City Treasurer informing her of alleged tax deficiencies by reason of reclassification from residential to commercial lots. Petitioner initially paid a portion of the tax, but later paid under protest, questioning the basis of the reclassification, the tax deficiency, and the propriety of the back assessment. She alleged that one of the staff members in the Office of the City Treasurer told her that there was a mistake in the assessment of back taxes, reasoning that it was brought about by a glitch in the computer system, and consequently, there was, in fact, no tax liability. Petitioner filed a letter-appeal with the City Treasurer, but the same was not acted upon within the 60-day period. The City Treasurer and City Assessor on the other hand aver that the assessments was because of the discovery that the lot consisted of several establishments used for operation of business which petitioner failed to report, thus the actual use of the lot is commercial in nature. The LBAA ruled against petitioner while the CBAA dismissed her appeal. ISSUE: Whether or not petitioner validly protested her assessment? HELD: NO. The LGC provides successive administrative remedies to a taxpayer who questions the correctness of an assessment in Section 226 and 252. If the taxpayer questions the correctness of the assessment, he should first comply with Section 252 of LGC, i.e., the requirement of payment under protest. Failure to prove such requirement renders his administrative protest under Section 226 of the LGC without any effect. To emphasize, no protest shall be entertained unless the taxpayer first pays the tax. In the instant case, it is undisputed that petitioner questions the correctness of the reclassification from "residential" to "commercial" lots of her two (2) co-owned properties. By reason of such reclassification, petitioner similarly questions the correctness of the alleged deficiency realty tax assessments of the subject properties. Consequently, it is incumbent upon petitioner to comply with the requirement of payment under protest The records disclosed that petitioner failed to comply with the requirement of payment under protest when she exercised her right to protest the said deficiency realty tax assessments before the respondent City Treasurer. Accordingly, petitioner's failure to comply with the requisite payment under protest violates a mandatory provision of Section 252 of the LGC. It therefore violates the doctrine of exhaustion of administrative remedies and renders the

present petition premature and thus without a cause of action, with the effect that this Court does not acquire jurisdiction over the present petition

China Banking Corporation V. City Treasurer of Manila CTA EB 1144 September 04, 2015 Mindaro-Grulla, J.: FACTS: Petitioner bank paid under protest the amount of P138,589.50, which was assessed by respondent on the bank’s Masangkay Branch. The assessment was allegedly made pursuant to a local ordinance known as the “Amended Revenue Code of the City of Manila”. The bank formally protested respondent’s imposition asserting that the ordinance did not cover it, and assuming arguendo, the additional tax under the ordinance would constitute double taxation. Respondent denied the bank’s request for refund prompting the latter to file a complaint for a refund with MTC Manila. The MTC dismissed CBC’s complaint on the grounds of lack of cause of action, prematurity and non-exhaustion of administrative remedies. The RTC affirmed the decision of the MTC finding that there was no double taxation.CBC thus filed the instant petition. ISSUE: Whether or not CBC is entitled to their claim of refund? HELD: The case should proceed to trial. In the recovery of any tax, fee, or charge erroneously or illegally collected, a written claim for refund or credit filed with the local treasurer is necessary within two (2) years from the date of the payment. In this case, petitioner was able to file its claim for refund within the two-year period. The business tax appears to have been paid on January 2006 while the claim for refund was filed on February 2006, well within the two-year period. Evidently, respondent's arguments for lack of cause of action, prematurity and non-exhaustion of administrative remedies pursuant to Section 195 of RA 7160 must fail. While the RTC was correct in applying Section 196 of R.A. 7160 and sustaining the authority of the signatory in the verification and certification, it erred when it ruled that there was no double taxation. The ordinance was already declared void by the Supreme Court in a separate case, thus the controversy of whether there is double declared void and of no legal effect for failure to satisfy the publication for three consecutive days requirement. Further in another case, the Supreme Court found that there is indeed double taxation if a taxpayer is subjected to both the taxes under Sections 14 and 21 of Tax Ordinance because the two taxes are imposed on the same subject matter, for the same purpose, by the same taxing authority, within the same jurisdiction, during the same taxing period, and having the same kind of character. Records disclosed that the issues were not yet joined and that the parties have yet to present their respective evidence. Thus, We hold that the instant case should proceed to trial for the parties to adduce their respective evidence to support their positions in defense of their asserted rights.

Commissioner of Internal Revenue vs St. Lukes Medical Center, Inc CTA EB 1183 Aug 26, 2015 Fabon-Victorino, J.: FACTS: The BIR issued audit results/assessment notice, assessing respondent with assessed deficiency income taxes [IT] of P97,700,084.50 for taxable year 2003, and P134,841,854.84 for taxable year 2004, or a total deficiency ITs of P232,541,939.34. Respondent also received an undated Formal Letter of Demand [FLD] and Details of Discrepancies with attached Assessment Notices. Respondent thus filed with the BIR its protest against the assessments indicated in the FLD and Assessment Notices Petitioner failed to act on the protest within the 180-day period prescribed under NIRC S228, prompting respondent to file 2 separate petitions for review with the Court in Dvision. The division partially granted the review and held that the 2003 assessment is cancelled due to prescription but upheld the 2004 assessment. Thus respondent was ordered to pay P151,850,822.97 for deficiency taxes inclusive of the 25% surcharge imposed by NIRC Section 248(A)(3). ISSUE: Whether or not the petition for review was seasonably filed? HELD: NO. NIRC Section 228 provides that an aggrieved taxpayer can administratively protest an assessment issued against him within thirty (30) days from receipt thereof. On the other hand, the CIR has 180 days from the filing of the protest and the submission of documents to act thereon. If the CIR failed to act on the protest within the 180-day period from submission of documents, the taxpayer adversely affected by such inaction may appeal to the CTA within 30 days from the lapse of the said 180-day period. The first assessment was received by respondent on December 14, 2007 giving it 30 days or until January 13, 2008 to file administrative protest. However, since January 13, 2008 was a Sunday, the filing by respondent of its protest on January 14, 2008, the next working day, was timely. As to the second assessment under C.T.A. Case No. 7832, respondent received the FLD and Details of Discrepancies with attached Audit Result/ Assessment Notices all dated January 9, 2008 on January 21, 2008. Thus, respondent had 30 days, or until February 20, 2008 to protest the same. Clearly, respondent's protest was seasonably filed on February 20, 2008. The same is not true with regard respondent's appeal to the Court in Division. From the filing of the protest on February 20, 2008, petitioner had 180 days or until August 18, 2008 to act on the protest on her level. With her inaction, respondent had 30 days from the lapse of the 180-day period or until September 17, 2008 to appeal to the Court. Respondent however filed its Petition For Review in C.T.A. Case No. 7832 only on September 18, 2008, which was one (1) day after the period of appeal expired, again divesting the Court of competence to entertain the same.

This 30-day period within which to file an appeal is jurisdictional and failure to comply therewith would bar the appeal and deprive the Court of Tax Appeals of its jurisdiction to entertain and determine the correctness of the impugned assessments. On the ground that the two Petitions for Review were filed by respondent one (1) day late, they should be dismissed for lack of jurisdiction

Medicard Philippines Inc vs Commissioner of Internal Revenue CTA EB 1224 September 02, 2015 FACTS: Petitioner, a VAT-registered taxpayer cleared to operate as a Health Maintenance Organization, filed its quarterly VAT returns. Respondent found discrepancies between Medicard’s Income Tax and VAT returns and issued a Preliminary Assessment Notice for VAT deficiency. It then issued a Formal Assessment Notice. The FAN alleged deficiency VAT for 2006 in the total amount of 1"196,614,4 76.69, inclusive of penalties. Respondent later denied petitioner’s protest. Petitioner thus filed the instant Petition for Review with the CTA. ISSUE: 1. WON petitioner is estopped from raising the issue of invalidity of the assessment due to non-issuance of LOA? 2. WON the premiums paid by petitioner’s clients form part of its gross receipt? 3. WON the adjustments recommended by the ICPA were substantiated? 4. WON clinic and laboratory earnings are separate from the total earnings from its members premium payments? HELD: 1. NO. The presence or absence of LOA does not affect the power of the CIR to make assessments, although it may affect the validity thereof Consequently, petitioner may not be estopped from questioning the validity of the assessment when it was discovered during the respondent's witness' cross examination that no LOA was issued therefore. Under Rule 10 Section 5 of the Rules of Court, issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings, and amendment thereof shall be allowed to conform to the evidence presented. However, the failure to amend does not affect the result of the trial of these issues. 2. YES. Under Section 4.108-3(k) of RR No. 16-2005, HMOs gross receipts shall be the total amount of money or its equivalent representing the service fee actually or constructively received during the taxable period for the services performed or to be performed for another person, excluding the value-added tax. In contrast with the amendment introduced by Section 11 of RR No. 4-2007, to Section 4.108.4 of RR No. 16-2005, Section 4.108-3 of RR No. 16-2005 does not mention of any amount earmarked or received as reimbursement for advance payment to be excluded from gross receipts. there is no basis to exclude petitioner's alleged amounts earmarked for payment to medical, dental and hospital services to independent hospital, clinics and medical professionals, following the specific rules for HMOs under Section 4.1 08-3(k) of RR No. 16-2005 3. NO. Under Rule 13 Section 3 of the 2005 Revised Rules of the CTA, The findings and conclusions of the independent CPA may be challenged by the parties and shall not be conclusive upon the Court, which may, in whole or in part, adopt such findings and conclusions subject to verification. The findings of the ICPA shall not be conclusive upon this Court, and such findings and conclusions are subject to

verification. Petitioner failed to substantiate all the adjustments recommended by the independent CPA. 4. NO. Under Section 109(G) of the NIRC, medical, dental, hospital, and veterinary services except those rendered by professionals, shall be exempt from VAT. However, the VA Table transaction and the time and manner by which the membership fees or premiums were collected, prevent the applicability of Section 109 (G) ofthe NIRC of 1997, as amended, in favor of petitioner. Since the membership fees or premiums were pre-paid by petitioner's clients, VAT accrues the moment the same were paid. In other words, it is petitioner's sale of service of procuring for its members, any and all future and contingent health services covered by their respective contracts, in consideration of the membership fees or premiums which are pre-paid, that is subject to VAT. Whether or not petitioner's future and contingent health services were eventually rendered in its clinics or laboratories do not affect the VATability of petitioner's transactions, as the same were already subjected thereto the moment it sold its services to its member-clients.

Commissioner of Internal Revenue V. Trans-Asia Power Generation CTA EB No. 1114, September 8, 2015 Uy, J.: FACTS: Respondent Trans-Asia Power Generation is a domestic corporation, which owns and operates 52-megawatt (MW) power plant in Norzagaray, Bulacan, which primarily supplies electricity to a cement plant in Bulacan owned by Holcim Philippines, Inc. Since not all generated power are consumed by the said cement plant, respondent sells the excess generated power to various participants in the Wholesale Electricity Spot Market (WESM), administered and managed by the Philippine Electricity Marketing Corporation (PEMC). For its sale of electricity to WESM, respondent issues official receipts in the name of PEMC. On June 1, 2009, respondent received a Preliminary Assessment Notice (PAN) dated May 9, 2009 from petitioner proposing to assess respondent the amount of P8,848,426.50 for deficiency VAT for the period covering January to March 2008. On June 16, 2009, respondent sent a letter detailing its disagreement over the proposed assessment. On September 16, 2009, respondent received an Assessment Notice and a Formal Letter of Demand from petitioner assessing respondent for deficiency VAT (including interest as of August 31, 2009) in the amount of P9,086,799.29, allegedly due to undeclared gross receipts of P58,831, 163.52. On October 16, 2009, respondent filed a Protest Letter against the said Assessment Notice and Formal Letter of Demand. On April 12, 2011, respondent received a Final Decision on Disputed Assessment (FDDA) dated January 31, 2011 denying respondent’s protest. On the basis of the FDDA, respondent filed its Petition for review with the Court in Division. Petitioner filed he Answer interposing, among others, that sale of electricity shall be subject to twelve percent VAT on their Gross Receipts. Moreover, it also alleges that while it is true that universal charges and benefits to host communities do not form part of taxable gross receipts, however, herein respondent failed to establish the basis as o how the said amount identified as universal charges and benefits to host communities was computed, to whom the said amount was paid, and proof of such payments. The Court in Division partially granted the Petition for Review and reduced the assessment issued against respondent to PhP 2, 363, 841.14. In addition, respondent was ordered to pay a) deficiency interest, b) delinquency interests. Aggrieved, petitioner filed a Motion for Partial Reconsideration, but was denied. Hence, it filed an instant Petition for Review before the Court En Banc and alleged among others that RMC No. 71-2012 already clarified the issues and instituted certain procedures to address the tax implications affecting the electric power industry. As clearly provided in RMC No.. 71-2012, generators such as respondent herein are only required to remit the amount of deferred VAT prior to August 25, 2012 (thus covering the instant case) which they have collected from DUs/ECs and which the latter collected from end-users and/or customers.

ISSUE: Whether or not respondent is liable for deficiency VAT in the amount of P9,277, 187.58 for the period of January 1, 2008 to March 31, 2008 plus surcharges and interest? HELD: Without doubt, VAT should be imposed on the amounts received by respondent during the first quarter of 2008 as advance payments from PEMC covering its sale of electricity, pursuant to Sections 105 and 108 of the NIRC of 1997, as amended, the pertinent provisions of which read as follows: "SEC. 105. Persons Liable. - Any person who, in the course of trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 1 06 to 1 08 of the Code. XXX XXX xxx." (Emphases supplied) "SEC. 1 08. Value-Added Tax on Sale of Services and Use or Lease of Properties. - (A) Rate and Base of Tax. - There shall be levied, assessed and collected, a value-added tax equivalent to ten percent (1 0%) of gross receipts derived from the sale or exchange of services, including the use or lease of properties: Provided, That the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%), 21 after any of the following conditions has been satisfied: XXX XXX XXX The phrase 'sale or exchange of services' means the performance of all kinds of services in the Philippines for others for a fee, remuneration or consideration, including xxx sales of electricity by generation companies, transmission, and distribution companies xxx. The Court En Bane affirms the findings of the Court in Division that respondent remitted to the National Transmission Commission and National Grid Corporation of the Philippines, the Universal Charges which it collected during the first quarter of 2008 in the amount of P1,781,600.44, 29 as the same is fully supported by evidence consisting of official receipts, Universal Charge Bills, Statements of Account, other related documents, as well as billings issued by the respondent with computation details. Clearly from the foregoing pieces of evidence, the Court a quocorrectly concluded that the same should not form part ofrespondent's gross receipts, subject to VAT, for the first quarter of2008. Being well-supported by the evidence on record, and there isno need to further elaborate on the matter.”

Delta Airlines, Inc., v. HON. SEC. CESAR V. PURISIMA (in his capacity as Sec. of the Department of Finance) and HON. COM. KIM S. JACINTO-HENARES (in her capacity as Incumbent Commissioner of Internal Revenue CTA EB No. 1113, September 10, 2015 Fabon-Victorino, J.: FACTS: During its operations in the Philippines, petitioner entered into Hotel Room Agreement 106750 with The Peninsula Manila (Hotel) under which the latter would provide room accommodations and other hotel services to petitioner's guests including its pilots and cabin crews during flight layovers in the Philippines for consideration to be paid by petitioner. On August 11, 2010, petitioner filed with the Law Division of the BIR a Request for VAT Ruling dated August 10, 20105 on the application of Section 108 (B)(4) of the NIRC of 1997, as amended, to services rendered to persons engaged in international air transport operations, such as services provided by local suppliers to petitioner for the accommodation/lodging, including meals of its pilots and cabin crews. On May 9, 2016, petitioner received from respondent a BIR Ruling stating that the services provided by the Hotel to its clients engaged in international air transport operations pertain to room accommodations and food and beverage services. As they are rendered within the Hotel's premises, they have no direct connection with the transport of goods or passengers, and as such, they cannot be considered as services directly attributable to the transport of goods and passengers from a Philippine port directly to a foreign port entitled to zero-rating. Such being the case, the sale of the foregoing services by the Hotel is not zero rated, but is appropriately subject to the 12% VAT. Petitioner elevated the matter for review to respondent Secretary, who eventually sustained BIR Ruling. Petitioner then filed with the Court in Division a Petition for Review impugning the BIR Ruling. Respondent, in her Answer, averred that the BIR Ruling was a valid interpretation of the 1997 NIRC and it would remain to be such unless and until reveres or modified by the respondent Secretary. Moreover, the Court has no jurisdiction to rule on the issue of the validity of Answer of RMC No. 46-2008 for failure of petitioner to exhaust all administrative remedies. Respondent Secretary counter-argued that contrary to existing jurisprudence is petitioner's claim that his interpretation that zero-rated services under Section 108(B)(4) of the NIRC are subject to the destination principle and cross border doctrine has no legal bases. ISSUES: Whether or not the Petition is premature for lack of an actual tax Dispute Whether or not services rendered to persons engaged in international air transport operations, such as services provided by VAT-registered suppliers for accommodation/lodging of pilots and cabin crew members during flight layovers in the Philippines are subject to Twelve Percent (12%) VAT. HELD: Petitioner was able to exhaust available administrative remedies and complied with the required procedures before it sought judicial intervention with the Court via a Petition for Review. In other words, BIR Ruling No. 099-2011 and DOF letter can be subject of the instant Petition. However, with respect to RMC No. 462008, respondent / CIR was correct when she argued that Court has no jurisdiction to rule on the issue of the validity of Answer 11 of RMC No. 46-2008 for failure of

petitioner to exhaust all administrative remedies considering that petitioner did not question or elevate to respondent Secretary the validity of said RMC, as required under Section 4 of the NIRC of 1997, as amended. It is clear that the services performed in the Philippines by a VAT-registered person to persons engaged in international shipping or air transport operations, including leases of property for use thereof are generally subject to zero percent (0%) VAT. However, RR No. 16- 2005, as amended by RR No. 4-2007, provides that when the services performed in the Philippines by a VAT registered person are rendered to common carriers by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines, the same shall already be subject to twelve percent (12%) starting February 1, 2006. It is undisputed that the services provided by the Hotel to petitioner were rendered within the Hotel's premises, they have no direct connection with the transport of goods or passengers, and as such, they cannot be considered as services directly attributable to the transport of goods and passengers from a Philippine port directly to a foreign port to be entitled to zero-rating. The Court recognizes the doctrine that interpretations of administrative agencies in charge of enforcing a law are entitled to great weight and consideration by the courts, unless such interpretations are in a sharp conflict with the governing statute or the Constitution and other laws, which is not obtaining in the present case.

Commissioner of Internal Revenue V. Waterfront Mactan Casino Hotel, Inc. CTA EB No. 1060, September 15, 2015 Bautista, J.: FACTS: On August 31, 2007, [Commissioner] issued a Letter of Authority for the purpose of examining [WMCHI] books of accounts and other accounting records for all internal revenue taxes for the taxable period January 1, 2006 to December 31, 2006. The examination of [WMCHI' s] business operations led to the eventual issuance by [Commissioner] of a Preliminary Assessment Notice [('PAN')] on March 16, 2009 and a Formal Letter of Demand [('FLD')] and Audit Result/ Assessment Notice dated January 5, 2010, covering deficiency income tax, withholding tax on compensation, and [Value-Added Tax ('VAT')] for the taxable year 2006. The total deficiency taxes amount to PhP 22, 148, 164.71. In a letter to [Commissioner] dated June 24, 2010, [WMCHI] manifested that it already paid the assessments for deficiency withholding tax on compensation and income tax through e-payment facility. With respect to the assessment for deficiency VAT, [WMCHI] informed [Commissioner] that it initially charged Philippine Amusement and Gaming Corporation [('PAGCOR')] with output tax, but the said corporation disputed it based on PAGCOR's claim that it is VAT-exempt and it even furnished [WMCHI] with a copy of the Court Order in OSJ Case No. 2004-1, declaring PAGCOR's exemption from all taxes. It appears that the factual basis of the deficiency VAT assessment was the income payments received by [WMCHI] from P AGCOR that were not subjected to VAT. On July 30, 2010, [Commissioner] issued the Final Decision on Disputed Assessment ['FDDA'], informing [WMCHI] that its protest was duly 'reconsidered' but respondent maintained that petitioner's claim for VAT exempt sales to P AGCOR has no legal basis. Thereafter, a notice was issued for pre-trial conference. After the filing of the [Commissioner’s Memorandum sans WMCHI’s memorandum, the instant case was submitted for decision. The Court in Division issued a Decision, cancelling the VAT assessment issued against WMCHI for the taxable year 2006 by the Commissioner. Petitioner filed a Motion for Reconsideration, which was denied by the Court. Hence, this Petition for Review. ISSUE: Whether or not respondent is liable for the deficiency value-added tax assessment for the taxable year 2006 in the amount of PhP 22, 638, 106. 79) plus surcharges and interest? HELD: No. WMCHI transactions with PAGCOR are subject to a Value-Added Tax of 0% rate. Commissioner avers that WMCHI transactions with PAGCOR are subject to VAT of twelve percent (12%) pursuant to the passage of RA No. 9337, wherein P AGCOR was excluded from the government institutions that are exempt from paying income tax. Commissioner postulates that WMCHI is under obligation to pay income tax and VAT corresponding to the income payments it received from P AGCOR because the latter is no longer an entity exempt from the payment of internal revenue taxes with the repeal of Presidential Decree (“PD”) No. 1869 by RA No. 9337. There is no legal basis for the VAT assessment issued by respondent against petitioner in the amount of P22,638,106.79 for the taxable year of 2006.

Commissioner of Internal Revenue V. Bank of the Philippine Islands CTA EB No. 1173, September 16, 2015 Mindaro-Grulla, J.: FACTS: On April 15, 1987, Citytrust Banking Corporation ("CBC") filed its Annual Income Tax Returns for its Regular Banking Unit, and Foreign Currency Deposit Unit, for the taxable year 1986. On August 11, 1989, July 12, 1990, and November 8, 1990, CBC executed Waivers of the Statute of Limitations under the National Internal Revenue Code.In March 7,1991, petitioner issued a PAN against CBC for deficiency of taxes, among which is for deficiency of Income Tax for taxable year 1986 in the total amount of P19,202,589.97; on April 22, 1991, counsel for CBC filed its Protest against the said PAN. On May 6, 1991, [petitioner] issued a Letter, with attached Assessment Notices, demanding for the payment of the subject deficiency taxes within thirty (30) days from receipt thereof; on May 27, 1991, counsel for CBC filed its Protest against the said assessments, and on February 17, 1992, counsel for CBC filed another Protest thereto. On February 5, 1992, [petitioner] issued a Letter addressed to CBC, requesting for the payment of its tax liabilities, within ten (10) days from receipt thereof. On March 29, 1994, counsel for CBC issued a Letter addressed to [petitioner], offering a compromise settlement on its deficiency Income Tax assessment for taxable year 1986 in the amount of 20% of the subject assessment. This was later approved by the petitioner provided that 100% of its deficiency Income Tax assessment for the year 1986 or in the amount of P 8, 607, 517.00 be paid within 15 days from receipt thereof. On July 27, 1995, CBC issued a Letter addressed to [petitioner], requesting for reconsideration and offering to pay the increased amount of PhP 4,303, 758.50. On October 4, 1996, the SEC approved the Articles of Merger between [respondent] and CBC, with the former as the surviving corporation. On May 26, 2011, [petitioner] issued a Notice of Denial addressed to [respondent], requesting for the payment of CBC's deficiency Income Tax for the taxable year 1986, within fifteen ( 15) days from receipt thereof. On May 26, 2011 petitioner issued a Notice Denial addressed to respondent requesting for the payment of CBC's deficiency Income Tax for the taxable year 1986, within fifteen ( 15) days from receipt thereof. On July 28, 2011, [petitioner] issued another Letter addressed to [respondent], denying the offer of compromise penalty, and requesting for the payment of the amount of ~19,202,589.97, plus all increments incident to delinquency pursuant to Sections 248(A)(3) and 249(C)(3) of the 1997 National Internal Revenue Code, as amended. On September 21, 2011, [petitioner] issued a Warrant of Distraint and/or Levy against [respondent]. And on October 7, 2011, [respondent] filed the [present] Petition for Review." The Court in Division denied the petition, hence this Petition for Review. CIR argues that the Supreme Court has not acquired jurisdiction over the case as the assessment issued, being undisputed, has become final and unappealable. CIR insists that a Decision was rendered on February 5, 1992, asking BPI to settle the deficiency tax assessment and failure to do so will lead to enforcement of collection. Since the Decision was never disputed by BPI, such became final, thus, it can no longer be appealed before this Court. ISSUE: Whether or not the Court has no jurisdiction over the case?

HELD: We reiterate the ruling of the Court in Division that this Court has jurisdiction over cases praying for the cancellation and withdrawal of the Warrant of Distraint and/or Levy, as already enunciated by the Supreme Court in the case of Pantoja vs. David, 9 citing the provisions of Section 7 of Republic Act 9282. The February OS, 1992 Decision of the CIR, which she insists to be the reckoning point to protest, was not proven to have been received by BPI when the latter denied its receipt. Thus, the assessment notice dated May 6, 1991 should be deemed as the final decision of the CIR on the matter, in which BPI timely protested on May 27, 1991. While a mailed letter is deemed received by the addressee in the ordinary course of mail, this is still merely a disputable presumption subject to controversion, and a direct denial of the receipt thereof shifts the burden upon the party favored by the presumption to prove that the mailed letter was indeed received by the addressee. 10 In the instant case, BPI denies receiving the assessment notice, and the CIR was unable to present substantial evidence that such notice was, indeed, mailed or sent before the BIR's right to assess had prescribed and that said notice was received by BPI. As to the contention that by the repeated requests of BPI to compromise, such is already estopped to raise the defense of prescription, the several offers of compromise are rendered futile as these would no longer serve their purpose as the period for assessment has already prescribed in the first place. If there is no valid assessment, then there is nothing to compromise.

Philippine Associated Smelting and Refining (PASAR) Corporation V. Commissioner of Customs and the Bureau of Customs CTA EB No. 1172; September 4, 2015 Casanova, J.: FACTS: Petitioner is a Philippine corporation engaged in the production of copper and its by-products for export. Petitioner avers that it uses for its operations petroleum products such as industrial diesel oil (IDO), automotive diesel (ADO), diesel, bunker fuel oil (BFO) or industrial fuel oil (IFO) and lubricants purchased from local distributors like Petron Corporation (Petron). Petron imports these petroleum products and pays the corresponding customs duties to the BOC and excise taxes to the Bureau of Internal Revenue (BIR). Petron, in turn, bills petitioner the duties it paid on the petroleum products. For purchases of petroleum products during the period January 2009 to September 2009, Petron billed petitioner the duties paid to the BOC in the total amount of Five Million One Hundred Forty-Five Thousand Five Hundred Seventy-Three Pesos and 38/100 (P5, 145,573.38). Petitioner filed with the District Collector of the Port of Manila (POM) a claim for refund or issuance of tax credit certificate (TCC) in the amount it paid on petroleum products purchased from Petron Corporation. This claim was however denied in the Memorandum submitted by the respondent. Petitioner challenged such denial before the BOC who endorsed the incident to the District Collector, who recommended the denial of petitioner’s claim for refund with finality. Petitioner’s eventual appeal was dismissed for failure to perfect the same within the reglementary period. Hence, the instant Petition for Review. Respondents COC and BOC filed their comment arguing that petitioner failed to prove its claim for refund. Petitioner filed a Reply arguing that its action is an ordinary claim for refund of payments of tax and duties and not a protest, thus, compliance with Sections 2313 and 2308 of the TCCP is not required. Petitioner alleges that he was denied due process as its claim for refund was acted upon or denied after twenty three (23) months on the ground that it was not perfected within the reglementary period. The CTA Third Division promulgated a Resolution denying the Petition for Review and its subsequent Motion for Reconsideration. Undaunted, petitioner filed the instant Petition for Review with the Court En Banc. ISSUE: Whether or not the PASAR failed to prove its claim for refund? HELD: Yes. An administrative claim for refund with the District Collector of the Port of Manila is different from a judicial claim for refund with the Court. The burden of proving its entitlement to the amount claimed for refund falls heavily with the claimant. It carries that not only was the claimant entitled under substantive law for the allowance of its claim for refund, but also that it met all the requirements for evidentiary substantiation of its claim before the administrative official concerned, and, thereafter, in the trial conducted before the Court. The Court of Tax Appeals, as a court of record, is required to conduct a formal trial of each and every case before it. Pieces of evidence submitted in the administrative proceeding have no evidentiary value unless presented and formally offered before the Court. Petitioner failed to prove its claim for refund. While the evidentiary documents above show that

petitioner indeed has a claim for refund they, nonetheless, fail to prove how much of the claimed amount is petitioner entitled to.

People of the Philippines V. Bienvenido S. Dimson CTA EB CRIM. No: 033, September 21, 2015 Casanova, J.: FACTS: CRIMINAL CASE No. 0-085 (TAXABLE YEAR 1999) Dimson filed, on April 23, 2000, its income tax return for taxable year 1999. No payment was made by Dimson because it declared in its ITR that its Prior Years Excess Credits in the amount of Php2,961,317.04 exceeded the income tax due in the amount of Php752,751.87. BIR discovered the non-payment of taxes for taxable year 1999. Subpeonas Duces Tecum and Notices from the BIR were served on Dimson. However, the company failed to present its books of account and other accounting records which were needed in the investigation. The revenue officers made their assessment and computation based on the evidence available in their file and found out that in taxable year 1999, Dimson’s total deficiency taxes amounted to Php68,016,046.85. Rolando Relos, accountant of Dimson, executed a Waiver of the Defense of Prescription under the Statute of Limitations of the NIRC. Thereafter, BIR issues a PAN then a Formal Notice of Demand and Assessment Notice on EWT, VAT and Income tax, all stamp-marked ‘DISPUTED’. Accused wrote to the BIR formally protesting the findings stated in the assessment report. After serving all the necessary notices, the case of Dimson was forwarded to the Chief of Legal Division for appropriate action. The accused appealed but was denied by the Regional Director and requesting him to pay the taxes due. Dimson alleged that its Joint Venture Managers, CONCRETE AGGREGATE CORPORATION and JM LUCIANO CONSTRUCTION have allegedly paid Dimson’s taxes for taxable year 1999. BIR oopines that Dimson must file separate income tax returns and/or VAT returns on its net income from its two joint venture projects less its proportionate share in the joint venture expenses because the joint venture is not embraced within the meaning of the term ‘corporation’, hence not subject to corporate income tax. Even assuming that Dimson is right that the income taxes for the aforesaid joint projects were erroneously paid by the joint venture, an automatic credit againt Dimson’s deficicieny income, VAT and EWT liabilities cannot be allowed. Instead, a claim for refund should be filed by the Joint Managers within two years from the alleged erroneous payment of taxes. The Regional Director issued a recommendation letter addressed to the City Prosecutor of Manila, recommending the immediate criminal prosecution of accused as president/general manager of Dimson. CRIMINAL CASE NO. 0-071 (TAXABLE YEAR 2000) Dimson filed on April 5, 2001 its income tax return for taxable year 2000. No payment was made by Dimson because it declared in its ITR that its Prior Years Excess Credits in the amount of 2,208,565.17 exceeded the income tax due in the amount of Php733,993.44. Revenue officer discovered the non-payment of taxes

due for taxable year 2000 when they conducted an audit. BIR Notices were served on Dimson. However, despite the receipt of notices, the company failed to present the documents required by the BIR. Hence, the revenue officers made the assessments based on the available record in their file. Based on their findings, the total deficiency taxes for taxable year 2000 amounted to Php10,031,184.02. BIR then issued a PAN and thereafter a FAN. Accused filed a protest refuting the assessment. It claimed that their taxes were paid by their authorized managing officers as part of their JV projects. CTA Third Division convicted accused-appellant on two counts of violation of Sec. 255 of NIRC. ISSUE: Whether or not the Court in Division erred in convicting accused-appellant on two counts of Violation of Sec. 255 of NIRC. HELD: NO. Plaintiff-apellee must prove beyond reasonable doubt the following: 1. That the corporate taxpayer is required under the NIRC to pay tax; 2. That accused, as the officer/employee responsible for the violation, failed to pay such tax at the time required by law or regulations; and 3. That the failure to pay was willful. The first element of the offense has been clearly established. Dimson, Inc. as a domestic corporation and registered with the BIR as a taxpayer is required to pay its taxes in accordance with the nature of its business. Accused-appellant, on the other hand, is the corporation’s President/General Manager, thus, undoubtedly a responsible officer of the corporation in charge of directing the affairs thereof. Thus, to make the accused-appellant liable for non-payment of tax, the prosecution must prove that he was aware that there was a demand on him to pay the said deficiency taxes. Records reveal that accused-appellant was sufficieintly apprised of the nature, factual and legal bases of his tax deficiciencies as well as how the said deficiency taxes being assessed against him were computed. The exchange of correspondence and documents between the parties would sufficiently show that the requirement that the taxpayer should be informed in writing of the law and the facts on which the assesment is made. Accused-appellant’s wilfulness or bad faith in not paying or refusing to pay the computed tax deficiencies can be inferred from his testimony on the hearing. His assertion of honest mistake cannot be countenanced by this Court. Being a Civil Engineer by profession and an experienced businessman/contractor for 40 years, it is downright incredible that accused appellant was not aware that the corporation could be held liable for the taxes due on whatever income that was reported in the ITR of Dimson, Inc. After all, the filing of the said return and the obligation to pay corporate taxes are significant incidents of any business operation. Thus, the possibility of not knowing the same is nil.

Natiional Power Corporation V. Philippine National Bank and Municipality of Sual, Pangasinan CTA EB No: 1104, September 24, 2015 J.: RINGPIS-LIBAN FACTS: NPC received a Notice of Assessment from the Municipality of Sual, demanding payment of local business tax and interest. NPC received a Notice of Seizure or Confiscation from the said municipality against its personal properties to the extent of Php48,703,713.14 as of December 2010, allegedly representing unpaid local business tax for the year 2010 and accrued monthly interest thereon. On January 27, 2011, the NPC received a letter dated January 7, 2011 from the PNB, informing the NPC of the existence of a Warrant of Distraint issues by Municipality of Sual in the amount of Php48,703,713.14. NPC explained that the alleged business tax liability for the year 2010 had no legl and factual basis. NPC received a letter from PNB warning that unless the Warrant of Distraint is discharged, dissolved or lifted or its implementation and enforcment is enjoined, PNB would be contrained to deliver the funds garnished to the Municipality of Sual. Eventually, PNB informed NPC that its accounts were put on hold. NPC filed before the RTC against PNB and Municipality of Sual, a petition for injunction with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction. However, it was denied for lack of merit. CTA Second Division affirmed the RTC’s order. ISSUE: Whether or not the EPIRA so unburdened the NPC of its tax liabilities as to render the Notice of Assessment legally baseless and Sec. 195 of the LGC inoperative against it. HELD: NPC tries to repel liability for the business tax assessed by arguing that because of the EPIRA, it was no longer engaged in the generation and distribution of electric power in the Municipality of Sual in 2010. Thus, it should not be held liable for the payment of the business ta assessed for the year 2010. Under the EPIRA, the NPC’s assets and liabilites were supposed to have been transferred to the Power Sector Assets and Liabilities Management (PSALM) Corporation. EPIRA itself provided for an eight-year privatization period, during which time the NPC was still allowed to “generate and sell electricity only from the undisposed generating assets and IPP contracts of PSALM” the NPC had to show to local tax authorities that it was actually no longer engaged in such business in their respective territorial jurisdictions. At the center of the dispute is the 1,200-megawatt Sual Coal-Fired Thermal Power Plant. This facility was not among those transferred by the NPC to the PSALM within 3 years of the effectivity of EPIRA. In fact, the NPC even awarded to Pozzolanic Philippines the exclusive right to withdraw fly ash from this plant, for use in manufacturing cement. This belies the NPC’s stance that upon effectivity of the EPIRA in June 2001, the NPC no longer maintained any business activity within the

Municipality of Sual; while this stance may be true as to most power generation and transmission activities of the NPC, which were generally transferred to PSALM by operation of law, it did not extend to all other business activities. The taking effect of the EPIRA did not make the NPC functus officio, dormant, inactive, non-functonal or inpoerative.

Liquigaz Philippines Corp. V. Commissioner of Internal Revenue CTA EB No: 1117, September 21, 2015 Uy, J.: FACTS: LPC filed with the BIR its Annual Corporate Income Tax Return for the taxable year ending December 31, 2006. LPC also filed its Quarterly VAT Returns and Monthly Remittance Return of Creditable Income Taxes Withheld, and its Monthly Remittance Return of Income Taxes Withheld on Compensation. CIR issued PAN and Details of Discrepancies, which were received by LPC on the same date. LPC received the Formal Letter of Demand and FAN issued by the BIR Large Taxpayers Service, assessing LPC for alleged deficiency tax liabilities, inclusive of interest and compromise penalties. LPC filed its protest letter against the FLD and the FAN. A Tax Verification Notice was issued for the reinvestigation of LPC’s deficiency tax liabilities for the taxable year ending Dec. 31, 2006, pursuant to its protest letter. As no decision was issued by the CIR on its protest letter, LPC filed a Petition for Review on Aug. 16, 2010 before the Court in Division. CIR raised its right to issue the necessary assessments against LPC has not yet prescribed, and that the FAN is valid as the deficiency taxes stated therein were computed in accordance with NIRC. Court in Division rendered decision affirming with modifications the assessments issued by the BIR against LPC. Accordingly, LPC was ordered to pay the CIR the reduced amount of Php81,806,081.69. LPC filed a Manifestation and Motion stating that it already paid the BIR the amound of Php54,806,640.74, which represents partial payment of the judgment award. LPC filed a Tender of Excluded Evidence but was denied admission of the pieces of evidence by the Court in Division. ISSUE: Whether or not LPC was deprived of its right to due process in the issuance of the subject assessments HELD: LPC alleges in its Petition for Review that the CIR herself admitted that she did not examine the invoices, receipts, and other supporting documents of LPC before the assessment was made, and that neither did she exercise the powers granted to her under Sec. 5 of the NIRC, including but not limited to the power to obtain information, and to summon, examine and take testimony of persons other than person whose internal revenue tax liability is subject of audit or reinvestigation. According to LPC, the supposed “bold admission” of the CIR did not escape the attention of the Court in Division, when it noted, at the hearing, that what the CIR had done was a “table assessment”, as stated in the testimony of her witness. However, the testimony of the witness cannot in anyway be considered as indicative of an admission by the CIR that she did not examine the invoices, receipts, and other supporting documents of LPC before the assessment was made and that she did not exercise the powers granted to her under Sec. 5 of the NIRC. What the CIR merely said was that she did not go to the office of LPC before making the assessments. However, she made mention about a “subpeona” for the production of records. To the ind of the Court En Banc, what was answered in the affirmitive by the CIR is the said fac alone, based on the question raised by LPC’s counsel. Said

counsel did not ask whether or not she examined LPC’s records and whether the CIR exercised her powers under the said Sec. 5. Even granting that a table assessment was indeed made in this case, the same is of no moment. This must be so because the CIR ought to know the tax records of all taxpayers, including that of LPC. Thus, the CIR is authorized to make an assessment, even without going to the office of the taxpayer. Furthermore, The Court do not agree that there was a violation of the requirement that the tribunal must consider the evidence presented. In the instant case, it is very apparent that the supposed “evidence”, which were the subject of the subpeona, were never presented by LPC to the BIR. Thus, there is nothing for the BIR to consider. Anent the supposed violations of the CIR of Sec. 228 of the NIRC, it is clear from the provisions that due process demand that the taxpayer shall be informed, in writing of the legal and factual bases of the assessment, and is given the opportunity to contest the assessment. The CIR complied with the twin requirements of due process in the conduct and issuance of the FAN and FLD. First, LPC was informed of the facts and law on which the assessments were made. Second, LPC was given the opportunity to protest the assessent and subit relevant documents in support thereof. Clearly, LPC was accorded its rights to be heard and to explain itself.

Commissioner of Internal Revenue V. Philippine Bank of Communications CTA EB No: 1128, September 21, 2015 Ringpis-Liban, J.: FACTS: Petitioner filed its ITR for calendar year 2008, where petitioner reported a net loss of P655,794,182.41 and creditable tax withheld in the amount of P31,591,458.62. On April 8, 2011, petitioner filed an administrative claim for the issuance of tax credit certificate, with the BIR for its alleged unutilized CWT for 2008. Respondent failed to render decision on petitioner’s application for tax credit certificate, prompting petitioner to file the instant Petition for Review before this Court. CIR filed her answer and interposed her defense that petitioner’s alleged claim for refund is subject to administrative routinary investigtion by the BIR, a claim for refund is not ipso fact granted because CIR still has to investigate and ascertain the validity of the claim; nowhere in the petition did petitioner aver the required submission of supporting documents to justify its claim for refund; in order to be entitiled to the refund being sought, petitioner must satisfactorily comply with the following requisites: a) that the claim for refund was filed within the two-year prescriptive period; b) that the fact of withholding is established by a copy of a statement duly issues by the payor to the payee, showing the amount paid and the amount of tax withheld therefrom; and that the income upon which the taxes were withheld was included in the return of the recipient; petitioner has the burden of proving that the right to such tax refund indubitably exists and well-founded doubt is fatal to the claim. ISSUE: Whether or not the Court in Division erred in finding that petitioner is entitled to a refund in the amount of Php10,042,655.42, representing petitioner’s unutilized and excess creditable withholding taxes for calendar year 2008 HELD: A taxpayer must establish the following requirements before a claim of tax credit or refund of creditable withholding tax will be granted: 1) The claim must be flied within the two-year prescriptive period as provided under Sections 204 (C) and 229 of the NIRC of 1997, as amended; 2) The fact of withholding must be 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) The income upon which the taxes were withheld must be included in the return of the recipient. On April 15, 2009, PBCom flied its Annual Income Tax Return.On April 7, 2011, PBCom flied its administrative claim before the BIR.On April 14, 2011, PB Com flied the Petition for Review before the Court in Division.Thus, the filing of the administrative claim for refund before the BIR and the Petition for Review before the Court in Division both fell within the prescriptive period allowed by law. After a careful review of PBCom's and the CIR's arguments and the records of the case, the Court En Bane finds both petitions to be unmeritorious. The issues

raised by them have been exhaustively discussed and resolved by the Court in Division in the assailed Decision and Resolution. Petitioner was able to establish that the income payments of P209,399,244.03 (P203,345,072.26 plus P6,054,171.77) with a corresponding CWT of P10,042,655.42 (P9,921,571.97 plus P121,083.45) formed part of the gross income declared by petitioner in its Annual ITR for calendar year 2008; thus, in compliance with the third requisite. In sum, petitioner has sufficiently proven compliance with the three requisites for the refund of unutilized creditable withholding taxes, but only to the extent of P1 0,042,655.42 out of the total claimed CWT of P31,819,116.25

Commissioner of Internal Revenue V. Axia Power Holdings Philippines Corp. CTA EB No: 1135, September 21, 2015 Uy, J.: FACTS: Respondent, as the surviving corporation and Marubeni Pacific Energy Holding Corp, and Marubeni Energy Services Corporation (MESC), as the absorbed corporations, entered into an Articles of Merger and Plan of Merger, which was approved by the SEC. MESC is a duly registered taxpayer and filed its income tax returns for taxable year 2009. MESC sent the Letter dated April 13, 2010 to petitioner requesting for the cancellation of its TIN and the issuance of a Tax Clearance Certificate (TCC/TCL) in its favor. Attached to the said letter is MESC’s Application for the Tax Credits/Refunds. Consequently, BIR issued a Letter of Authority authorizing the Regional Officers to examing respondent’s books of accounts and other account records in connection with the latter’s closure of business and claim for refund. Pursuant to the First Request for Presentation of Records, MESC transmittd its pertinent documents to BIR. Due to inaction of the petitioner, respondent, being the surviving entity after the merger, filed a Petition for Review before the Court in Division on April 12, 2012. Petitioner filed her Answer on May 31, 2012, interposing, among others, certain special and affirmative defenses, to wit: that petitioner's claim for refund or issuance of a tax credit certificate in the amount of P11, 106,080.00, as alleged unutilized creditable withholding taxes for calendar year ending December 31, 2009 was not fully substantiated by proper documents, such as sales invoices, official receipts and others; and that it is incumbent upon herein respondent, Axia Power Holdings Phils. Corporation to show that it has complied with the provision of Section 204 (C) in relation to Section 229 of the 1997 NIRC, as amended, for in an action for refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to discharge the burden is fatal to the claim of the taxpayer. ISSUES: Whether or not the presentation of succeeding quarterly income tax returns/annual income tax return is indispensable to respondent's claim for refund of its excess/unutilized creditable withholding taxes (CWT) for taxable year 2009 in order to prove that it did not utilize or carry-over its claimed excess CWT to the succeeding quarters/year; and Whether or not respondent is entitled to the subject claim for refund in light of respondent's non- compliance with the requisite (that the income upon which taxes were withheld was declared as part of respondent's gross income in its tax return for taxable year 2009) in the claim for refund or issuance of TCC for unutilized CWT inasmuch as there was no entry in the Creditable Tax Withheld column of Schedule 1 of respondent's 2009 annual income tax return. HELD: The non-presentation of the annual income tax return or the final adjustment return (FAR) for purposes of determining whether the concerned taxpayer utilized or carried over excess creditable withholding tax to the succeeding quarters/years has already been settled by the Supreme Court. In the the Philam case, the Supreme Court ruled as follows:

"Requiring that the ITR or the FAR of the succeeding year be presented to the BIR in requesting a tax refund has no basis in law and jurisprudence. Anent the presentation of the quarterly income tax returns, in Winebrenner &Iñigo Insurance Brokers, Inc. vs. Commissioner of Internal Revenue,the Supreme Court categorically stated that succeeding quarterly income tax returns are not necessary to prove the fact of not having carried over the excess credits to the subsequent quarters or taxable year. Based on the foregoing jurisprudential pronouncements, it is clear that the presentation of the taxpayer of its quarterly/annual income tax returns for the succeeding years is unnecessary. There is neither law nor jurisprudence that states that the taxpayer's failure to fill up the entry in the "Creditable Tax Withheld" column of Schedule 1 of the Annual Income Tax Return would be fatal to a claim for refund. What Section 2.58.3of Revenue Regulations No. 2-98 and the applicable jurisprudence require is that the taxpayer be able to declare as part of its gross income in the Annual Income Tax Return the income payment from which the withholding was made. An entry into the "Creditable Tax Withheld" column found in page 2 of the Annual Income Tax Return, specifically Schedule 1 or the "Schedule of Sales/Revenues/Receipts! Fees" may expedite the determination of respondent's compliance with the requirement that the income payments from which the withholding of taxes were made formed part of its gross income declared in its Annual Income Tax Return. It does not, however, follow that the Court should immediately deny respondent's claim for refund only because it failed to make such entry, with the Court looking at the evidence submitted. In other words, failure on the part of a taxpayer to make an entry in the "Creditable Tax Withheld" column under Schedule 1 of the Annual Income Tax Return, is not a sufficient basis to conclude that the taxpayer failed to comply with the requirement that "the income upon which the taxes were withheld were included in the return of the recipient" when the taxpayer has offered, and this Court has admitted, other evidence to establish its compliance with this requirement.

Coca-Cola Bottles Philippines V. CIR October 12, 2015. CASTANEDA, JR., J. : FACTS: Petitioner Coca-Cola Bottlers Philippines, Inc. is a corporation duly organized and existing by virtue of Philippine laws engaged in the business of manufacturing beverages. On October 25, 2008, the petitioner Coca cola filed a VAT return for the period of September 2008 and paid the same. On October 19, 2010, petitioner filed with respondent's Large Taxpayers Service an administrative claim for refund or tax credit of its alleged over/erroneous payment of VAT. And seven (7) days after, petitioner filed a judicial claim for refund. The claim for refund is based on the petitioner’s claim that there was overpayment of VAT based on input taxes which serves as tax credits.Thereafter, the Court in division rendered a decision denying the petition for refund. ISSUE: Whether the CT A Special Third Division correctly denied petitioner's claim for refund/tax credit amounting to P72,738,183.31 allegedly representing erroneously paid value-added tax (VAT)? HELD: No. The instant petition is denied. The Petitioner is neither claiming a reported input tax nor output tax, but instead its alleged understatement of overpayment of VAT due to undeclared input taxes for the quarter ended 2008. However, under revenue regulations number 16-2005, Input taxes must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau. Hence in accordance with the revenue regulation, in order for input taxes to be available as tax credits, the same must be substantiated and reflected in the VAT return of the taxpayer. Furthermore, the contention of the petitioner that the VAT refund shall not be construed strictly is devoid of any merit. Because the Supreme Court has previously held in the case of Panasonic Communications Imaging Corporation v. Commissioner of Internal Revenue that “statutes that grant tax exemptions are construed strictissmi juris against the taxpayer and liberally in favor of the taxing authority. Tax refunds in relation to the VAT are in the nature of such exemptions.”

Commissioner of Internal Revenue V. Sony Ericsson Mobile Communications October 12, 2015. CASTANEDA, JR., J.: FACTS: The instant petition is a Petition for Review filed by the Commissioner of Internal Revenue (CIR), assailing the October 9, 2014 Decision and the January 21, 2015 Amended Decision of the First Division of this Court. Respondent is primarily engaged in providing marketing services to companies located outside the Philippines by organizing promotional events to launch new products and services under the brand name of 'Sony Ericsson’. From July 2010 to January 25, 2011, the respondent filed its quarterly VAT Return covering periods of April 2010 to December 2010. On June 29, 2012, respondent filed an administrative claim for refund or issuance of TCC of its unutilized input VAT for the 2nd to 4'h quarters of 2010. The claim for refund is based on alleged zero-rated sales. Due to inaction of the petitioner CIR after the lapse of 120 day period, the petitioner filed a petition for review. The CTA in division partially granted the petition for refund by Sony Ericson. Hence this instant petition. The petitioner CIR contended that the respondent failed to submit the necessary documents to support its claim. ISSUE: Whether or not the CTA first division erred in granting the tax refund despite the failure of the respondent to submit the documents required by the rules? HELD: No. This instant petition is devoid of any merit. The contention of the CIR that the documents were not submitted to substantiate the claim is erroneous. Because Records show that when Sony Ericson filed the administrative claim on June 29, 2012, it simultaneously submitted the documents in support of its claim. Also, during the hearing, it was admitted by the CIR that the respondent has already submitted the necessary documents. On the second contention of CIR that the word “Zerorated sales” does not appear on the sales receipt by Sony Ericson, the same is also erroneous, because upon reviewing exhibit NN to NN-23, it is clear that the official receipts bear the word “zero rated sales”.

Commissioner of Internal Revenue vs Mindanao Sanitarium October 5, 2015 Bautista, J.: FACTS: The instant petition is a petition for review seeking for the nullification of the decision promulgated by the CTA first division. The Respondent Mindanao Sanitarium and Hospital, Inc., is a corporation organized under Philippine laws engaged in missionary works …The petitioner CIR after investigation ascertained that there is still an amount due on the respondent amounting to 37 Million pesos as deficiency tax. Hence, a letter of protest was filed by the Respondent Corporation. Due to inaction of the CIR, the case was elevated to CTA first Division. The respondent corporation contended that they did not receive the Final Assessment Notice, hence they were deprived of due process as required by the rules, it further alleged that the Final Letter of Demand is not sufficient to satisfy the requirement. The CTA in division granted the petition of the respondent. ISSUE: Whether or not the CTA in division erred in holding that the assessment by the CIR against the respondent is void in the absence of FAN? HELD: No. CTA is correct in holding the invalidity of the assessment. Revenue Regulation no. 12-99 contains the word “shall” which indicates the mandatory nature of requirement laid down. Hence, based on NIRC and the Revenue regulation, the issuance of Final Assessment Notice is a mandatory requirement. In order to prove the receipt of the mail, it must be proven :(a) that the letter was properly addressed with postage prepaid; and (b) that it was mailed. Once these facts are established, the presumption is that the letter was received by the addressee as soon as it could have been transmitted to him in the ordinary course of the mail. The Corporation presented as witnesses Atty. Francisco I. Naputo, Crispulo T. Aguillon, Jr. and Joaquin S. Samaco, who testified by way of their Judicial Affidavits that the FAN was not attached to the FLD. The testimony of Francisco I. Naputo remains uncontroverted and is given credence specifically since respondent never crossexamined him. Also, on a letter sent by the corporation, it was requesting for the issuance of the FAN. Hence, a careful scrutiny of the said testimonies and the letter dated April 27, 2010 sufficiently established that petitioner did not receive the FAN.

Pilipinas Shell Petrolium Corporation vs Commissioner of Customs September 28, 2015 Casanova, J.: FACTS: The petitioner PSPC is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines. "On January 30, 2009, respondent District Collector of the Port of Batangas, Atty. Juan N. Tan, issued a Demand for Payment of Excise Tax, Value-added Tax (VAT) on the said Excise Tax, and Penalty, on Shipments Declared as Catalytic Cracked Gasoline (CCG) against petitioner, covering the years 2006 to 2008. In turn, the petitioner sent a letter demanding for the cancellation of the demand letter initially issued against them, the demand was denied. Hence another letter was sent to Commissioner of Customs appealing the denial. On appeal to the CTA in division, the court granted the PSPC’s petition enjoining the respondent from collecting the alleged excise taxes and VAT. Hence this petition. ISSUE: Whether or not the importation of unleaded gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG) are subject to excise tax? HELD: Yes. According to Section 128 and 149 of the Tax Code, Excise tax is an indirect tax applicable to certain specified goods or articles manufactured or produced in the Philippines for domestic sales or consumption, and to things imported. Since the phrase "things imported", was worded without any qualification, the Court is duty-bound to abide strictly by its literal meaning and to refrain from resorting to any convoluted attempt at construction. Also, assuming arguendo that the phrase "for domestic sales or consumption" equally applies to "things imported", CCG and LCCG still remain excisable inasmuch as these imported articles are being consumed. It must be understood that tax exemptions are construed strictissimi juris against the taxpayer. A claim of statutory exemption from taxation should be manifest and unmistakable (rom the language of the law on which it is based.

CIR V. Masin-AES Pte. Ltd-Philippine Branch CTA EB No. 1201, Oct. 28, 2015 Uy, J.: FACTS: Respondent Masin-AES Pte. Ltd.-Philippine Branch is a foreign company organized and existing under the laws of Singapore, duly licensed by the Securities and Exchange Commission to establish its branch office in the Philippines. Respondent entered into a Subordinated Loan Agreement with AES Phil Investment Pte. Ltd. (AES Phil). On September 21, 2011, respondent filed an Application for Relief from Double Taxation on Interest Income (BIR Form 0901-1) with the Bureau of Internal Revenue (BIR) - International Tax Affairs Division (ITAD). The BIR issued BIR Ruling ITAD No. 019-12 dated January 10, 2012 denying respondent's claim for relief on interest paid by it to AES Phil on or before September 21, 2011, but declared that the interest it paid to AES Phil on September 22, 2011, and thereafter, and until the maturity of the loan is subject to an income tax rate of 15% under paragraph 2, Article 11 of the Philippines-Singapore Tax Treaty. A Final Letter of Demand was issued against the respondent for tax deficiencies on or before Sept 21, 2011. The latter sent a protest but was later on denied. A Final Decision on Disputed Assessment was issued against the respondent. The respondent filed a petition for review to the CTA Division. The CTA Division ruled in favor of the respondent. A motion for reconsideration was filed by petitioner but was denied. Hence, the petitioner file an appeal to the CTA en banc arguing that interest accrued on the Subordinated Loan Agreement due from respondent to AES Philippines is subject to final withholding tax at the rate of twenty percent (20%) of the gross amount thereof considering that respondent's application for tax treaty relief was filed beyond the period prescribed under RMO No. 1-200019 in relation to RMO No. 722010. The respondent argued that according to respondent, the Supreme Court has already ruled that taxpayers can avail of the benefits of tax treaties even without a strict compliance with the rules on the tax treaty relief application. In the 2013 case of Deutsche Bank AG Manila Branch v. ClR, the Supreme Court addressed prior application with the BIR-ITAD is not a prerequisite for enjoying tax treaty benefits; and at most, the application for tax treaty relief should merely operate to confirm the entitlement of a taxpayer to the relief under the tax treaty. ISSUE: Is the respondent liable to for the tax deficiency? HELD: No. It is clear from jurisprudence that a prior application for tax treaty relief is not mandatory before a taxpayer may enjoy the reliefs provided under Philippine tax treaties. Not only is the requirement illogical, but it is also an imposition that is not found at all in the applicable tax treaties. The respondent’s is correct in saying that a prior application is not a prerequisite for enjoying tax treaty benefits hence, it is not liable for taxes prior to September 21, 2011 and not liable for the tax deficiency assessed by the petitioner.

CIR v. Sutherland Global Services Philippines, Inc. CTA EB No. 1156, Oct. 28, 2015 Mindaro-Grulla, J.: FACTS: Sutherland Global Services Philippines, Inc. is an existing, non-pioneer Information Technology locator enterprise registered as an ECOZONE IT Enterprise by virtue of the Philippine Economic Zone Authority (PEZA) Certificates of Registration. It is also registered with the Clark Development Corporation prior to the proclamation of the Clark Special Economic Zone as a PEZA Special Economic Zone. Respondent was authorized to conduct and operate its business inside the Clark Special Economic Zone (CSEZ). Under the Agreement, PEZA also granted [respondent] tax incentives, more particularly, to 'pay 5% tax on gross income. The PEZA Board passed Resolution approving the grant of full PEZA Incentives to CSEZ export-oriented and IT locator enterprises that registered with CDC after the proclamation of CSEZ as a PEZA Special Economic Zone. A Supplemental Agreement was executed which formed part of the original Agreement, entitling respondent to a four year Income Tax Holiday (ITH) under non-pioneer status. Upon the expiration of the ITH incentive, respondent shall enjoy 5% gross income tax incentive and other incentives under the PEZA Law. Respondent claims that during fiscal year July 1, 2007 to June 30, 2008, it had erroneously paid 5% preferential tax granted to it under the Registration Agreement on its gross income instead of the ITH given under the Supplemental Agreement. Respondent filed an administrative claim for refund with the petitioner. However, three days after filing the administrative claim, respondent filed a petition for review with the CTA Division claiming inaction on the part of the petitioner. CTA Division ruled in favor of the respondent. Petitioner filed a motion for reconsideration but was denied. Hence, it filed a petition for review to the CTA en banc. He argued that respondent's claim for refund must be denied for failure to establish that its income is actually derived from its PEZA-registered business activities within the CSEZ. Petitioner further states that in order for respondent to be exempt from the payment of income tax by virtue of the Income Tax Holiday, it must present proof of payment of other taxes such as Value-Added Tax (VAT) or Percentage Tax, and filing of the corresponding VAT/Percentage Tax returns. Also, that respondent failed to exhaust its administrative remedy before resorting to judicial action. Respondent argued that from the evidences it presented it has sufficiently established that its income for the fiscal year ending June 30, 2008 was actually derived from its PEZA-registered activities. ISSUE: Whether or not respondent failed to exhaust its administrative remedies before it availed its judicial remedy? HELD: No. Respondent timely filed its administrative and judicial claims for refund pursuant to Sections 204(C) and 229 of the National Internal Revenue Code (NIRC) of 1997, it provides that recovery of tax credit/refund shall be made within two years from the time of payment and the suit for the recovery of tax erroneously paid shall also be made within 2 yrs from the date of payment of the tax or penalty. Consequently, counting the two year prescriptive period from the date when respondent filed and paid its original Annual Income Tax Return pursuant to Sections

204(C) and 229 of the NIRC of 1997, as amended, or on October 15, 2008, it is clear that respondent timely filed its administrative claim before the petitioner on October 12, 2010 and its judicial appeal before this Court on October 15, 2010.

CIR v. Sony Ericsson Mobile Communications International AB C.T.A. EB No. 1171, Oct. 28, 2015 Fabon-Victorino, J.: FACTS: Sony Ericsson Mobile Communications International AB is a Philippin branch of Sony Ericsson Mobile Communications International AB, which is a corporation organized and existing under the laws of Sweden. On July 20, 2011, respondent filed its application for issuance of tax credit certificate or refund of its alleged unutilized input VAT covering the 2"d, 3rd and 4th quarters of calendar year 2009. In order to comply with the prescribed period for filing claims for refund of input VAT, (respondent) filed its judicial claim for refund or issuance of tax credit certificate before this Court on December 16, 2011. Petitioner contended that the petition for review should be dismissed because the 2nd quarter claim has already prescribed while the 3rd and 4th quarters claims were prematurely filed. Applying Section 112 (A) and (C) of the National Internal Revenue Code of 1997, respondents claim for refund of the 2nd quarter VAT input taxes has already prescribed. For the 3rd and 4th quarters claims, the same have been filed prematurely. Moreover, petitioner argued that when respondent filed the judicial claim for tax refund/credit with this Court without waiting for the expiration of the 120-day period given to decide on such claim, such action is tantamount to a wanton disregard of the doctrine of administrative remedies. The CTA Division partially granted the petition saying that respondent sufficiently complies with the requisites for refund of unutilized input VAT attributes to its zero-rated sales, but not the full amount claimed for the 3 rd and 4th quarters of 2009. Petitioner filed a partial motion for reconsideration but was denied. Hence, he appealed to the CTA en banc, arguing that respondent is required to substantiate the input VAT it paid by documentary evidence such as purchase invoices or official receipts, which in turn must also comply with the invoicing requirements provided under Revenue Memorandum Circular (RMC) No. 42-2003. Petitioner also contends that respondent's claim for refund includes transactions outside the period subject of refund. With the foregoing infirmities, petitioner invokes the principle that tax refunds/tax credits are construed strictly against the taxpayer as they partake the nature of tax /exemptions. Respondent argued that it has sufficiently established and proved by clear and convincing evidence its entitlement to claim for refund of input VAT attributable to its zero-rated sales and that out-of-period claims may be allowed provided they comply with the requirements set forth in RMC 422003. Also, respondent was able to fully substantiate its claim. The word "zero-rated" was stamped on the face of every respondent's invoice. ISSUES: Whether or not respondent failed to comply with RMC no. 42-2003? Whether or not respondent claimed refunds from transactions outside the tax period? HELD: No. the Court in Division observed that the word "zero-rated" was clearly stamped on the face of respondent's invoices, which is sufficient compliance with Section 113(B)(2)(c) of the NIRC of 1997, as amended and as implemented by Section 4.113-1(B)(2)(c) of Revenue Regulations No. 16-05, which provides that if

the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt. The Court likewise finds without merit petitioner's contention that respondent's claim for refund includes transactions outside the period being claimed for. Absent any evidence to back up petitioner's contention, the Court cannot make a reasonable conclusion as it is logically and legally flawed to draw conclusions from mere assumptions. To be sure, bare allegations, unsubstantiated by evidence, are not equivalent to proof.

Crescent Park Property Holding, Inc. vs. CIR CTA EB No. 1126, Oct. 15, 2015 Mindaro- Grulla, J.: FACTS: Petitioner Crescent Park 6-3 Property Holdings, Inc. is a domestic corporation duly registered with the Securities and Exchange Commission. Petitioner and 6-3 Property Holdings, Inc., a Philippine Economic Zone Authority (PEZA)-registered entity, entered into a contract, whereby the latter sold by virtue of a "Deed of Absolute Sale of Land on Installment" a parcel of land. Subsequently, the two entered into a contract of lease covering the same parcel of land in order for the 6-3 Property Holdings Inc., to build and maintain a PEZA-registered information technology building or facility. Petitioner filed for its quarterly VAT Returns for the year 2008 and 2009. Such VAT return reported that petitioner had a tax overpayment. Hence, petitioner filed for an application for the issuance of a tax credit certificate for the unutilized VAT input. Two days after filing for such application, petitioner filed for a judicial claim for tax refund/issuance of tax credit certificate before the CTA. The Division dismissed the petition for having filed prematurely. Petitioner’s motion for reconsideration was partially granted. However, respondent filed a motion for reconsideration which was also granted. Hence, petitioner filed an appeal to the CTA en banc arguing that to be considered engaged in zero-rated sales, it need not prove compliance with the invoicing requirements on its sales/receipts; instead, it only proves that its sales/receipts are zero-rated. ISSUE: Is the petitioner entitled for a tax refund? HELD: No. Under Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, to be entitled to refund of input tax, a claimant must prove that it is engaged in zero-rated or effectively zero-rated sales, and, to prove said zero-rated or effectively zero-rated sales, the claimant must present duly registered invoices or receipts evidencing zero-rated sales. In the case, at the time the official receipts were issued in 2009, they were not yet registered with the BIR as the ATP/BIR Permit was only issued on February 22, 2011. the ATP was secured in 2011, only after the official receipts were issued by petitioner in 2009, it clearly shows that petitioner had no duly registered official receipts at the time the sales transactions were made. Absence of a duly-registered official receipts to establish zero-rated sales is fatal to petitioner's claim.

Total (Philippines) Corporation vs. CIR CTA EB N0.1153, Oct. 14, 2015 Bautista, J.: FACTS: Petitioner Total (Philippines) Corporation is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines. On November 26, 2010, petitioner filed its application for TCC/refund for the unutilized input VAT attributable to zero-rated sales for 2009. Subsequently, on March 31, 2011, petitioner filed the instant judicial claim for refund or issuance of TCC. The Court in Division issued a Decision, denying petitioner's claim for refund or issuance of TCC. Petitioner filed for a motion for reconsideration but was denied. Hence, petitioner filed an appeal to the CTA en banc alleging that it is entitled to a refund of a refund of input taxes related to VAT zero-rated sales, regardless of the amount of total input taxes and output taxes, pursuant to Section 112 (A) of the 1997 NIRC. Also, petitioner claims that if there are any disallowance of input VAT and zero-rated sales in any refund proceedings, it should be recomputed to determine the amount of input VAT properly allocated to zero-rated sales, and any difference between the recomputed input VAT allocated to VA Table sales must be tackled in a separate proceeding and not in a judicial claim for refund. Third, petitioner alleges that a new trial is in order pursuant to the newly discovered evidence it has. Finally, petitioner alleges that, in the interest of justice, the Court should consider the IERDs, supplier Sis, and ORs in rendering the Motion for Reconsideration. However, respondent argued that petitioner cannot claim a refund if its output VAT exceeds its input tax, which is present in the instant case. Second, the motion for new trial is unwarranted because presentation of forgotten evidence is disallowed, because it results in a piecemeal presentation of evidence, a procedure that is not in accord with orderly justice and serves only to delay the proceedings. Third, respondent invokes the Castillo Case against petitioner's allegation that the Court in Division in the Resolution dated March 17, 2014 should have considered the IERDs, supplier Sis and ORs "in the interest of justice." In the Castillo Case, the Supreme Court ruled that petitioners "ought to be reminded that the bare invocation of 'the interest of substantial justice' is not a magic wand that will automatically compel this Court to suspend procedural rules." ISSUE: Is petitioner entitled to a tax credit certificate/refund? HELD: No. Petitioner's claimed input VAT for the year 2009 are not enough to cover its output VAT for the same year. While petitioner reflected in its amended Quarterly VAT Return for the first quarter of 2009. There is no excess input VAT which may be the subject of a claim for refund/ tax credit certificate under Section 112 (A) of the NIRC of 1997, as amended by RA 9337, the instant claim must be denied.

Honorable Herbert Bautista vs. PAGCOR CTA EB No. 1159/November 5, 2015. Ringpis-Liban, J.:

FACTS: PAGCOR, through its power to enter into special contracts under RA 9487 has made several contracts or agreements in their operation of PAGCOR e-Games stations or PEGS. Through this PEGS, PAGCOR has developed a 24 hour gaming/casino shops that deals with gambling based on computerized interaction. These PEGS, are handled or franchised by independent contractors/agents which has a 28% commission on the total winnings of the PEGS. Quezon City has a total 17 PEGS on its territorial jurisdiction. During the previous years, the Local Government of Quezon City has taxed these PEGS based on the 28% commission received by the independent agents of such PEGS. However, during the period of 2010, the City government of Quezon City assessed the PEGS on a higher rate. The local government assailed that such taxes should be based on the gross winnings of the PEGS and not only upon the 28% commission of the independent agents. PAGCOR countered that, if the local government of Quezon City be allowed to tax the gross winnings of the PEGS, it its tantamount to PAGCOR being subjected to income tax as well, which it is exempted from. ISSUE: Whether or not the tax assessment of the petitioners are valid? HELD: . No the tax assessment was not valid. Under PD. 1869, PAGCOR is exempted from income tax from gaming operations. Thus if the petitioners will tax the whole commission of the PEGS, such assessment is invalid, for it will include the income of PAGCOR itself.

ATTY. Racimo Estampador vs. The city assessor of Manila CTA EB No.1109/November 5, 2015 Cassanova J;. FACTS: Herein petitioner was the lessee of a 10,649.87 square meters at Chicago St. Manila. Such property was located in the port area of Manila. On December 23, 1975, the Philippine Ports Authority has gained jurisdiction or control over the said parcel of land from the Bureau of Building and Real Property Management, Department of General Services. On January 7, 1996, herein petitioner received an assessment from the city assessor of Manila. The petitioner was shocked that the property leased was subjected to taxes by the local government unit. The petitioner argued that such property was exempted from tax because it belonged to the National Government through the Philippine Ports Authority. However the PPA was not impleaded as party on all of the proceedings. ISSUE: Whether or not the proceedings will prosper? HELD: No the proceedings will not prosper. According to the CTA, the Philippine Ports Authority being the lessor in the given case is an indispensable party to the proceedings. Pursuant to the Rules of Courts, an indispensable party is a party in whose absence, no final determination of the case can be had. Clearly, the PPA will stand to be benefitted and damaged from the result of this case. The case is ordered to be remanded back to the LBAA.

Commissioner of Internal Revenue vs. Sutherland Global Services Philippines Inc. CTA EB No. 1182/October 28, 2015 Mindaro-Grulla, J.: FACTS: Herein respondent is an Information Technology company which entered into an agreement with the Philippine Economic Zone Authority to engage in business within the Clark Special Economic Zone. Under this agreement, herein respondent was given a 4 year income tax holiday in which it is exempted for paying income taxes. However, herein respondent alleged that it has been paying its income tax erroneously from July 1, 2008 to June 30, 2009. With this allegation, respondent filed a claim with herein petitioner for tax refund. However, petitioner contended that respondent is not eligible to claim such. ISSUE: Whether or not, the claim of the respondent has already prescribed? HELD: No, the claim of the respondent has not expired. Sections 204(C) and 229 of the National Internal Revenue Code provides that for a claim of tax refund to prescribe, a lapse of two years must first set in. Respondent has paid its taxes on October 14, 2009, and has filed for a claim of refund on October 13. 2011, a day short of the prescription period.

Commissioner of Internal Revenue vs. South Entertainment Gallery Inc. CTA EB No. 1214/October 28, 2015 Cassanova J,: FACTS: Herein respondent has its business operations located at SM City Pampanga. Such business was engaged in the operation of bingo games. On the other hand herein petitioner is tasked of collecting and assessing taxes of individuals and corporations. Respondent received a preliminary notice of assessment from herein petitioner in the amounts of P8 million and P30 million inclusive of surcharges and penalties. Herein petitioner sent a Final assessment Notice or Final Letter of demand through mail. Respondents never replied. After some time petitioners ordered distraint and levy upon the properties of the respondents. ISSUE: Whether or not the distraint and levy is valid? HELD: No, the levy is not valid. It is clearly shown that the FAN or FLD was not sent personally to the respondents. Based on evidence at hand, they never received the FAN and FLD. The act of the petitioners, sending the FAN/FLD through mail was fatal to the validity of the levy. Since respondents, did not receive the FAN/FLD, it cannot be a valid ground for levy.

Commissioner of Internal Revenue vs. Univation Motor Philippines Inc. CTA EB No. 1236/October 28, 2015 Cassanova, J,: FACTS: Univation Philippines Inc, formerly known as Nissan Motors is a corporation engaged in the selling, distribution, maintenance, assembling and importing automotive and automotive parts in the country. On April 2010, Univation filed its annual income tax return. Through such filing, it proved that it has unutilized creditable withholding taxes for 2009 in the amount of P14 million. However, Commissioner of Internal Revenue opposed such refund. It states that a claim of refund must be accompanied of an Income tax return for the succeeding year. ISSUE: Is the Commissioner of Internal Revenue right? HELD: No, the Commissioner was not right. The CTA stressed that there is no mandatory requirement to present Income tax returns from the succeeding year to validate the claim of tax refund. According to the CTA, the requirement of presenting an Income tax return for the succeeding year has no basis both in law and in jurisprudence. There is no law nor a decision that mandates such requirement.

Commissioner of Internal Revenue vs. San Miguel Brewery, Inc. CTA EB NO. 1279, November 26, 2015 Castañeda, Jr., J. FACTS: In a letter dated January 28, 2002, SMC Group Tax Services requested the BIR Large Taxpayers Assistance Division II for information on the tax rate and classification of San Mig Light. In response thereto, the BIR Large Taxpayers Assistance Division II confirmed on February 7, 2002, that based on the documents submitted, SMC was using the correct classification and rates for San Mig Light and Gold Eagle King. Subsequently, or on May 28, 2002, the same BIR office issued to SMC a Notice of Discrepancy stating that from the year 2000, petitioner should be subjected to a higher excise tax rate. In a letter-reply dated July 9, 2002, the SMC requested for the withdrawal of the said Notice of Discrepancy. This was rejected by the BIR via the letter-rejoinder issued on October 14, 2002 reiterating that San Mig Light Pale Pilsen was a variant of San Miguel Pale Pilsen. On November 20, 2002, the SMC requested the BIR to reconfirm its previous issuance that San Mig Light was a new brand and that the notice of deficiency and demand for payment against SMC be withdrawn. In a letter issued to SMC on January 6, 2004, the BIR maintained its position that San Mig Light was a variant of San Miguel Pale Pilsen in can. On January 28, 2004, the BIR issued a Preliminary Assessment Notice (PAN) against SMC for P852,039,418.15, allegedly representing deficiency excise tax, inclusive of increments, on the removals of San Mig Pale Pilsen Light for the period covering 1999 to January 7, 2004. Subsequently or on April 12, 2004, the BIR issued Formal Letter of Demand (FLD) against SMC, with Assessment Notice for the payment of deficiency excise tax in the total amount of P876,098,898.83, inclusive of interest until April 30, 2004, for the period of November to December 1999 at Pl2.52 per liter, and January 2000 to January 7, 2004 at P13.61 per liter. In the details of Discrepancy, the BIR confirmed the classification of San Mig Light as variant of RPT in cans. Aggrieved, SMC filed a Protest/Request for Reconsideration of the FLD with Assessment Notice. It was however denied on August 17, 2004 in a Final Decision on Disputed Assessment (FDDA), for lack of factual and legal bases. Once again, the BIR stated that San Mig Light was a variant of RPT in can. In accordance with the January 28, 2004 PAN, SMC paid a higher excise tax on San Mig Light at the rate ofP13.61 per liter from February 1, 2004 to December 31, 2006; and P 1 7.64 from January 1, 2007 to September 30, 2007. On different dates, SMC filed with the BIR three (3) applications for refund of the amounts allegedly representing excise taxes erroneously, excessively and/or illegally collected on the removals of San Mig Light beer product.

Meanwhile, by virtue of the "Master Deed of Assignment of Domestic Beer Assets" dated August 23, 2007, SMC assigned, transferred and conveyed in favor of petitioner SMB all of its rights, title and interest over its beer assets used in its domestic beer business, effective October 1, 2007. Petitioner continued SMC's business operations of manufacturing, selling and distribution of fermented and maltbased beverages, including San Mig Light. On December 23, 2011, [now respondent] filed the instant Petition for Review with the Court citing as ground [now petitioner’s] inaction on its application for refund. On December 1, 2014, the Court in Division rendered the assailed Decision ordering petitioner Commissioner of Internal Revenue to refund or to issue a tax credit certificate in favor of respondent San Miguel Brewery, Inc for erroneously, or excessively and/or illegally collected, and overpaid excise taxes on ‘San Mig Light’ during the period from January 1, 2010 to December 31, 2010. Thereafter, on December 19, 2014, petitioner filed before the Court in Division her Motion for Partial Reconsideration which was denied by the Court in the Resolution promulgated on February 18, 2015. On March 26, 2015, petitioner filed the instant Petition for Review before the Court En Banc which was given due course by this Court in the Resolution dated May 29, 2015. ISSUE: Should San Mig Light be classified as a variant of San Miguel Pale Pilsen and not as a new brand? HELD: NO. This issue has already been settled in previous cases decided by the Court En Banc. In the case of Commissioner of Internal Revenue vs. San Miguel Corporation, the Court En Bane held that San Mig Light is a new brand, inthis wise: “It is clear that when the product 'San Mig Light' was introduced in 1999, it was considered as an entirely new product and a 'new brand' of petitioner's fermented liquor, there being no root name of 'San Miguel' or 'San Mig' in its existing brand names. The existing registered and classified brand name of petitioner at that time was 'Pale Pilsen'. Therefore, the word 'Light' cannot be considered as a mere suffix to the word 'San Miguel', but it is part and parcel of an entirely new brand name, 'San Mig Light'. Evidently, as correctly pointed out by petitioner, 'San Mig Light' is not merely a variant of an existing brand, but an entirely 'new brand'.” In the instant case, respondent presented as evidence a request for the registration of its then new product, San Mig Light, on October 19, 1999.12 Thus, petitioner proved that the subject product was introduced in the market between

January 1, 1997 and December 31, 2003. Consequently, respondent likewise proved that San Mig Light is a new brand as of December 31, 2003 through the letter13 from Assistant Commissioner Edwin R. Abella dated February 7, 2002, classifying San Mig Light as a new brand. Hence, pursuant to Section 143 of the NIRC, as amended by Republic Act No. 9334, said classification by the BIR cannot be revised except by an act of Congress. In other words, the BIR cannot unilaterally revise the classification it previously accorded to San Mig Light, i.e., as a new brand, without an act of Congress. Petitioner failed to adduce evidence showing that there was misrepresentation on the part of respondent. In light of the foregoing circumstances, this Court maintains that San Mig Light is a new brand and not a variant.

J Square C Construction Supply, Inc. vs. Commissioner of Internal Revenue CTA EB NO. 1229, November 25, 2015 Cotangco-Manalastas, J. FACTS: Respondent CIR issued a Preliminary Assessment Notice (PAN) dated 10 March 2011, which allegedly was received by petitioner on 18 March 2011, assessing petitioner of deficiency VAT on sale of its real property. On 8 April 2011, petitioner filed a letter dated 1 April 2011 to the Bureau of Internal Revenue (BIR) Region 7 informing the latter that the issue of subjecting the sale of lot to 12% VAT has been brought up in the examination of its return in 2010, which after thorough verification and submission of required supporting evidence, the concerned examiners and officers classified and affirmed the property as capital asset, subject only to final tax of 6%. On 8 April 2011, respondent, through Regional Director Nestor S. Valeroso issued a Formal Letter of Demand/Final Assessment Notice to petitioner, which it received on 15 April 2011, finding petitioner liable for deficiency VAT in the total amount P1,573,545.25, inclusive of interest. On August 10, 2011, petitioner received a letter from Regional Director Nestor S. Valeroso dated July 29, 2011, whereby the latter has acknowledged the receipt of petitioner's protest letter (on the PAN) dated April 1, 2011, and gave petitioner fifteen (15) days from August 10, 2011 to file its protest against the Final Assessment Notice/Formal Letter of Demand. In a letter dated August 17, 2011, which the BIR Region 7 received on August 24, 2011, petitioner protested the Final Assessment Notice/Formal Letter of Demand restating that in its April 1, 2011 letter it gave full explanation and directed the attention of the BIR to the different supporting documents of why it is subject to 6% capital gains tax instead of the 12% VAT. On 1 March 2012, Jonas DP. Amora, OIC-Regional Director of Revenue Region 7, Quezon City issued the Final Decision denying petitioner's protest against the Final Assessment Notice/Formal Letter of Demand for failure to submit documents in support thereof. On April 10, 2012, petitioner assailed the foregoing decision before the First Division of the Court of Tax Appeals by filing a Petition for Review. On July 31, 2014, the Court in Division issued the challenged Decisions denying J Square C Construction's petition for review, holding that the final assessment notice received by petitioner on April 15, 2011 had become final, executory and demandable as petitioner's protest was filed only on August 24, 2011, way beyond the 30-day reglementary period.

On September 11, 2014, the Court in Division resolved that petitioner's Motion for Reconsideration was a mere scrap of paper as it did not contain a notice of hearing, thus, did not toll the running of the period to appeal. Hence, the filing of the subject Petition for Review. ISSUE: Does the Court En Banc have jurisdiction over the present case? HELD: NO. Petitioner’s Motion for Reconsideration before the CTA First Division was filed beyond the 15-day reglementary period. In the assailed Resolution, the CTA First Division resolved that petitioner's Motion for Reconsideration of the Decision dated July 31, 2014 is a mere scrap of paper due to petitioner's failure to include a notice of hearing required under Sections 4 and 5 of Rule 15 of the 1997 Rules of Civil Procedure; thus, according to the CTA First Division, petitioner's Motion for Reconsideration did not toll the running of the period to appeal. In view of the said ruling, petitioner submits this first issue in the present Petition, urging the Court to apply liberality I relaxation in the interpretation of the rules of procedure. After scrutiny of the records, the Court En Banc would like to underscore the fact that petitioner failed to comply with not just one, but two procedural rules when it filed its Motion for Reconsideration with the CTA First Division. Apart from the aforementioned failure of petitioner to include a notice of hearing, petitioner's Motion for Reconsideration was likewise filed five days too late. The filing or service by petitioner of the Motion for Reconsideration by private courier service cannot be trivialized. 'Service and filing of pleadings by courier service is a mode not provided in the Rules.'. In varying but consistent language, the Supreme Court has ruled that the "the date of delivery of pleadings to a private letterforwarding agency is not to be considered as the date of filing thereof in court;” instead, "the date of actual receipt by the court x x x is deemed the date of filing of that pleading." Applying the foregoing rules and jurisprudential precepts, it is clear that, while petitioner indeed mailed via LBC the Motion for Reconsideration on August 22, 2014, the said Motion is deemed filed on the day of actual receipt by the CTA First Division, i.e. August 26, 2014, a date which is already five days beyond the 15-day reglementary period. Considering that petitioner's Motion for Reconsideration was filed beyond the reglementary period to file motion for reconsideration or new trial provided under Section 1, Rule 15 of the 2005 RRCTA, the said motion is deemed pro forma, and thus, did not suspend the running of the period to appeal.

Having established that petitioner's Motion for Reconsideration of the July 31, 2014 Decision of the CTA First Division in CTA Case No. 8455 was belatedly filed with the said Court in Division, petitioner had also lost its right to appeal the said Decision to this Court. 'A motion for reconsideration must necessarily be filed within the period to appeal. When filed beyond such period, the motion for reconsideration ipso facto forecloses the right to appeal.' Also, the belated filing of petitioner's Motion for Reconsideration did not toll the July 31, 20 14 Decision of the CTA First Division in CTA Case No. 8455 from becoming final and executory. 'As such the Decision is past appellate review and constitutes res judicata as to every matter offered and received in the proceedings below as well as to any other matter admissible therein and which might have been offered for that purpose.’ Consequently, this Court is devoid of jurisdiction from taking cognizance of the present Petition for Review.' The unjustified delay in the filing of petitioner's Motion for Reconsideration xxx is not just a procedural lapse, but also a jurisdictional defect which effectively prevents this Court from taking cognizance of the Petition at bar. '

Herbalife International Philippines, Inc. vs. Commissioner of Internal Revenue

CTA EB NO. 1249, November 25, 2015 Mindaro-Grulla, J. FACTS: On April 26, 2014, petitioner filed a “Petition for Review with Motion for Suspension of Collection of Tax” in the Third Division of the Court of Tax Appeals. In the said case, petitioner filed its Formal Offer of Evidence. On July 14, 2014, the Third Division promulgated its Resolution denying the admission of petitioner’s Exhibits “C”, “E” and “G” for failure to present originals for comparison. The Court a quo similarly denied petitioner’s “Motion for Partial Consideration” in a Resolution dated October 22, 2014 for lack of merit. Aggrieved, petitioner filed a Petition for Review before the Court En Banc on December 5, 2014. Thereafter, petitioner filed an “Ex Parte Motion to Admit Amended Petition for Review” on December 10, 2014, which was granted in a Resolution dated February 9, 2015, hence, the present Amended Petition for Review. In its amended petition, petitioner argued that the Court a quo erred in holding that it failed to establish the validity of presenting secondary evidence in denying the admission in evidence of its Exhibits “C”, “E” and “G”. Petitioner claims that the genuineness and due execution of the said documents are deemed admitted for failure on the part of respondent to specifically deny them in her Answer pursuant to Sectioon 8, Rule 8 of the Rules of Court. It further opines that Exhibits “C” and “E” were not offfered to prove its authenticity but to prove the existence of said documets and the policies embodied therein. Thus, petitioner concludes that the Court a quo erred in applying the rule on authentication of private documents in the assailed Resolutions. ISSUE: Did petitioner avail of the proper remedy of appealing the Resolution of the Third Division of the CTA? HELD: NO. Basic is the rule that in determining the appropriate remedy or remedies available, a party aggrieved by a court order, resolution or decision must first correctly identify the nature of the order, resolution, or decision he intends to assail. “Case law has conveniently demarcated the line between a final judgment or order and an interlocutory one on the basis of the disposition made. A judgment or order is considered final if the order disposed of the action or proceeding completely, or terminates a particular stage of the same action; in such case, the remedy available to an aggrieved party is appeal. If the order or resolution, however, merely resolves incidental matters and leaves something more to be done to resolve the merits of the case, the order is interlocutory and the aggrieved party’s remedy is a petition for certiorari under Rule 65.”

Commissioner of Internal Revenue vs. Top Master Construction (Philippines), Inc. CTA EB NO. 1185, November 12, 2015

Bautista, J. FACTS: Topmaster filed its original and amended Quarterly VAT Returns for the period covering the fourth quarter of fiscal year 2009 to the second quarter of fiscal year 2010. Alleging that it has unutilized input VAT from its zero-rated sales, Topmaster filed with the BIR Revenue District Office No. 50 its Application for Tax Credits/Refunds for excess input tax on June 30, 2011. CIR failed to act on Topmaster’s claim for refund or issuance of tax credit certificate, prompting Topmaster to file the instant Petition for Review on November 28, 2011. On February 27, 2014, the Court in Division promulgated a Decision partially granting Topmaster’s Petition for Review by ordering the CIR to refund or issue a tax credit certificate in favor of Topmaster. In an Amended Decision promulgated on May 29, 2014, the Court denied CIR’s “Motion for Reconsideration” and partially granted Topmaster’s “Motion for Partial Reconsidration.” In the instant Petition for Review, petitioner argues that respondent’s sales of services to Travelers International Hotel Group, Inc., a PEZA-registered enterprise, does not qualify as zero-rated sales but subject to 12% VAT. ISSUES: Is Topmaster’s sales of services to a PEZA-registered client subject to zeropercent VAT? HELD: YES. In the case of Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), Inc., the Supreme Court has provided for the VAT implications of treating the ECOZONE as a separate customs territory, to wit: "Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territory; thus, creating the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs Territory shall be considered as an importation into the Customs Territory. Given the preceding discussion, what would be the VAT implication of sales made by a supplier from the Customs Territory to an ECOZONE enterprise? The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT; while, those destined for use or consumption within the Philippines shall be imposed with ten percent (10%) VAT.

In the present case, records disclose that the sales of services made by Topmaster to Travelers International Hotel Group, Inc. qualify for VAT at zero percent for the former is a VAT registered entity, while the latter is a registered enterprise of the ECOZONE, and the sales cover the period fourth quarter of year 2009 to the second quarter of year 2010,12 when RMC No. 74-99 was in forced and effect. Thus, the Court En Banc cannot subscribe to CIR's view that the "old rule" of VAT treatment applies to Topmaster' s sale of services to Travelers International Hotel Group, Inc. considering that the sales involved cover the period fourth quarter of year 2009 to the second quarter of year 2010 when the "old rule" was already abolished by the passing of RMC No. 74-99.

E.E. Black Ltd. – Philippine Branch vs. Commissioner of Internal Revenue CTA EB NO. 1196, November 11, 2015 Bautista, J.

FACTS: On December 23, 2011, respondent issued a Formal Assessment Notice “FAN” received by petitioner on December 27, 2011, assessing petitioner for deficiency Documentary Stamp Tax (DST) and compromise penalty for taxable year ended December 31, 2007. On January 12, 2012, petitioner filed with respondent its letter dated January 9, 2012, protesting the said assessments and submitted all the documents in support of its protest. On July 10, 2012, the 180-day period under Section 228 of the 1997 NIRC lapsed, hence, on August 10, 2012, petitioner filed a Petition for Review with the Second Division of the CTA. Petitioner prays that the assessment of its deficiency DST and compromise penalty, including increments, in the aggregate amount of P2,775,759.62 be declared as invalid and/or devoid of factual or legal basis, and that the said assessments be cancelled. Respondent’s legal argument lies in the Supreme Court decision of Commissioner of Internal Revenue vs. Filinvest Development Corp., G.R. No. 16353/1.67687, July 12, 2011, in relation to Revenue Memorandum Circular No. 482011 dated October 6, 2011 is applicable to the assessed deficiency [DST] and compromise penalty of petitioner for taxable year 2007. The Second Division upheld the assessment for deficiency DST issued by respondent against petitioner for taxable year 2007. Upon the denial of its Motion for Reconsideration, petitioner raised the instant case to the Court En Banc when it filed a Petition for Review respectfully praying for the Court to declare the deficiency DST assessment as invalid and/or devoid of factual and legal basis. ISSUE: Does the ruling in the case of Commissioner of Internal Revenue vs. Filinvest Development Corporation which interpreted Section 180 of the 1993 NIRC apply to the DST assessment issued based on Section 179 of the 1997 NIRC? HELD: YES. Contrary to petitioner's assertion, Commissioner of Internal Revenue vs. Filinvest Development Corporation, G.R. Nos. 163653 and 167689, July 19, 2011 ("Filinvest case") is squarely applicable. Although what was interpreted in Filinvest case is Section 180 of the 1993 NIRC, which then governed the imposition of DST on, among others, loan agreements, by and between affiliates and/ or related interests, the provision is well carried on and further reinforced under the present Section 179 of the 1997 NIRC, as amended. As a matter of fact, Section 179 of the 1997 NIRC imposes DST on, among others, loan agreements, including those signed abroad wherein the object of contract is located or used in the Philippines, a phrase apparently lifted in part from Section 180 of the 1993 NIRC.

In the instant case, except in questioning the legal basis for the DST assessment, petitioner did not attempt to dispute the substantial merit of the amount or computation of such assessment by respondent. Instead, petitioner solely relied on advancing its legal theories and did not anymore present any evidence or witness to provide details of the transaction/ s which resulted in DST assessment. Hence, respondent's DST assessment of Pl,329,255.00 is afforded the presumption of regularity. The facts in the Filinvest case and the case at bar are the same. Just like FDC in Filinvest, petitioner extended cash advances to its affiliates, duly evidenced by cash receipts or cash disbursement vouchers throughout 2007, for which it correctly received an assessment for deficiency DST. While the facts are the same, petitioner argues that Filinvest, which was promulgated in 2011, cannot be applied retroactively to inter-company accounts of petitioner for the year 2007 under the principle of lex prospicit, non respicit. By way of overview, it must be noted that Presidential Decree ("PD") No. 1158 ("1977 NIRC") was approved on June 3, 1977, and Sections 173 and 180 thereof were amended by Republic Act ("RA") No. 7660, which was signed on December 23, 2003 (hence, reference to the "1993 NIRC"), and took effect on February 1, 1994. The 1977 NIRC was further amended by RA No. 8424 ("1997 NIRC") which was signed on December 11, 1997 and became effective on January 1, 2008. Therefore, at the time the advances were made by FDC to its affiliates in 1996 and 1997, Sections 173 and 180 of the 1993 NIRC were in effect. In Filinvest, the SC ruled that when Sections 173 and 180 of the 1993 NIRC are read together, it can be gathered that DST applies to "(a)ll loan agreements, whether made or signed in the Philippines, or abroad when the obligation or right arises from Philippine sources or the property or object of the contract is located or used in the Philippines." Further the said 1993 NIRC must be read in relation with RR No. 9-94, Section 3(b) thereof defines "loan agreement" as "a contract in writing where one of the parties delivers to another money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid. The term shall include credit facilities, which may be evidenced by credit memo, advice or drawings." Based on the foregoing, both provisions impose a stamp tax on all loan agreements signed abroad wherein the object of the contract is located or used in the Philippines. Hence, the latter is a mere reproduction of the former, insofar as DST on loan agreements is concerned.

COMMISSIONER OF INTERNAL REVENUE v FILPRIDE RESOURCES CTA EB No. 1134; November 27, 2015 UY, J.:

FACTS: Respondent received from petitioner a Preliminary Assessment Notice (PAN) dated November 18, 2009, finding respondent liable for deficiency taxes for taxable year 2006. After filing its Reply to the PAN, respondent received from petitioner a Formal Letter of Demand dated January 19, 2010 and Formal Assessment Notices all dated January 18, 2010, with Details of Discrepancy, alleging that respondent had deficiency taxes for taxable year 2006 in the total amount of P759,488,615.53, On April 26, 2010, respondent submitted relevant documents to petitioner addressed to Sarah B. Mopia. On January 19, 2011, respondent received the Final Decision on Disputed Assessment and Audit Result/Assessment Notice all dated January 18, 2011 issued by petitioner. In the said FDDA and revised Assessment Notice, petitioner declared that there is still due from respondent tax liabilities for taxable year 2006 in the reduced amount of P61 ,343,211.66, inclusive of interest and compromise penalties. On February 12, 2013, the case was submitted for decision taking into consideration respondent's Memorandum filed on January 28, 2013, 14 and the Report dated February 6, 2013 of the Records Division that petitioner failed to submit a Memorandum. As mentioned earlier, the Court in Division partially granted the Petition for Review in the assailed Decision. Aggrieved, petitioner filed a Motion for Partial Reconsideration (Re: Decision dated 12 November 2013) on November 29, 2013. 16 The said Motion, however, was denied by the Court in Division in the assailed Resolution. 17 Hence, petitioner filed before the Court En Bane the instant Petition for Review on March 26, 2014 ISSUE: Whether or not respondent is liable for deficiency income, VAT and EWT, including increments, for taxable year 2006 in the total amount of P61 ,343,211.66? HELD: The arguments raised by petitioner in her petition are not new. Said arguments are exactly the same as those interposed by petitioner in her Answer filed in CTA Case No. 8233 with the Court in Division on March 23, 2011, which were sufficiently passed upon and exhaustively discussed in the assailed Decision. Apart from bare reiterations of the details of the subject assessment, petitioner fails to make any specific discussion to support her arguments in the instant petition, and neglects to point out the supposed error in the findings of fact of the Court in Division. ~ DECISION CTA EB No. 1134 Page 11 of21 A careful review of the factual findings of the Court in Division in the assailed Decision clearly shows that it is wellsupported by law and evidence on record. As between a thoroughly discussed ruling of the Court in Division, and reiterated statements made by petitioner against the said ruling, the former must perforce prevail. The Court in Division was correct in finding that there were undeclared sales and understated sales, albeit in reduced amounts, in relation to petitioner's deficiency income tax and deficiency EWT assessments against respondent.

KEPCO PHILIPPINES CORPORATION. V COMMISSIONER OF INTERNAL REVENUE, CTA EB No: 1161, November 26, 2015 Del- Rosario, PJ.:

FACTS: On May 17, 1995, KPC and National Power Corporation executed a Rehabilitation, Operation, Maintenance, and Management Agreement for the 650 MW Malaya Thermal Power Plant Complex (ROMM Agreement).6 On November 10, 2000, KPC together with Korea Electric Power Corporation (KEPCO), KEPCO International Philippines, Inc. (KIPI) and KEPCO Ilijan Corporation (KEILCO) executed the Kepco Replacement Loan Agreement, wherein KPC, KEPCO and KIPI agreed to extend credit to KEILCO to finance the cost of the construction of the power plant located in Ilijan, Batangas City. On February 10, 2006, KPC and KEPCO Philippines Holdings, Inc. (KPHI) executed a contract wherein KPC agreed to extend a loan facility to KPHI to fund its equity investment in Sal con Power Corporation. On September 8, 2009, KPC received a Preliminary Assessment Notice (PAN) dated September 4, 2009 with attached Details ofDiscrepancy and Audit Result/Assessment Notice issued by the CIR for deficiency income tax, value-added tax (VAT), expanded withholding tax (EWT), and final withholding tax (FWT) for 2006. On October 30, 2009, KPC received a Final Letter of Demand (FLD) 11 with attached Details of Discrepancy and Audit Result/Assessment Notice, dated October 28, 2009, issued by the CIR for deficiency VAT under Assessment Notice No. LTAID 11/VT-06-00028, in the amount of P159,640,750.79 and for deficiency FWT under Assessment Notice No. LTAID 11/WF-06-00032, in the amount ofP283,927,571.90 On November 26, 2009, KPC filed its formal protest against the FLD with supporting documents, pursuant to Section 228 of the 1997 NIRC. The CIR failed to act on KPC's protest within the 180-day period from November 26, 2009. Hence, on June 25, 2010, KPC filed a Petition for Review with the Court in Division ISSUE: Whether the petition for review has been filed on time? HELD: Under Section 228 of the NIRC of 1997, as amended, KPC had thirty (30) days from May 25, 2010, the date of the lapse of the 180-day period for the CIR to act on the protest, or until June 24, 2010, within which to appeal to the CT A due to the inaction of the CIR. KPC, however, filed its Petition for Review in CTA Case No. 8112 only on June 25, 2010, one (1) day beyond the reglementary period for filing the Petition for Review. The Petition for Review in CT A Case No. 8112, having been filed late, the disputed assessment against KPC had already become final, executory and demandable. Consequently, the Petition for Review should have been dismissed outright for being filed beyond the reglementary period. Further, records show that no valid or compelling reason has been shown by KPC for the late filing of its petition.

COMMISSIONER OF CUSTOMS V PHILIPPINE AIRLINES, INC CTA EB No. 1186; December 08,2015 UY, J.: FACTS:

On March 1, 2005, then COC Alberto D. Lin a issued Customs Memorandum Order No. 13-2005, which provides for the "Immediate Collection at the Port of Discharge of Duties, Taxes and Other Charges, Including Excise Tax Due on All Importations of Alcohol and Tobacco Products Destined for Duty Free Shops and Free-Port Zones Pursuant to RA No. 9334 and BIR Regulation No. 12-2004". On various dates in 2007 and 2008, PAL's importations of assorted liquors and wines subject of the instant claim arrived in Manila through the Ninoy Aquino International Airport (NAIA). On June 23, 2009, Ms. Gilda L. Cinco, Acting Chief-WAU, wrote a letter addressed to Collector Silveria S. Salazar, Chief, Collection Division, NAIA Customhouse, assessing PAL for excise tax on the importations. On October 26, 2009, PAL paid under protest to the BOC the amount of P796, 153.05, representing the excise taxes on the above importations, as evidenced by BOC Official Receipt No. 168546987. On the same day, PAL wrote a letter address to Mrs. Silveria Salazar, Chief - Collection Division, Collection District Ill, BOC, to formally protest the assessment and collection of P796, 153.05 representing excise taxes. ISSUE: Whether or not the subject importations of liquors, wines and cigarettes are exempt from excise tax? HELD: The tax privilege of PAL provided in Sec. 13 of PD 1590 has not been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec. 6 of RA 9334. In the recent consolidated cases of "Republic of the Philippines rep. by the Commissioner of Customs vs. Philippine Airlines, Inc. (PAL)" and Commissioner of Internal Revenue v. Philippine Airlines, Inc. (PAL)", 21 the Supreme Court held: 19 "In CIR v. PAL, 22 the Supreme Court has already passed upon the very same issues raised by the same petitioners. The only differences are the taxable period involved and the amount of refundable tax. We have held in that case that it is a basic principle in statutory construction that a later law, general in terms and not expressly repealing or amending a prior special law, will not ordinarily affect the special provisions of the earlier statute. A reading of the pertinent provisions of P.O. 1590 and R.A. 9334 shows that there was no express repeal of the grant of exemption. Noteworthy is the fact that PO 1590 is a special law, which governs the franchise of PAL. Between the provisions under PO 1590 as against the provisions under the NIRC of 1997, as amended by 9334, which is a general law, the former necessary prevails. This is in accordance with the rule that on a specific matter, the special law shall prevail over the general law, which shall be resorted only to supply deficiencies in the former. In addition, where there are two statutes, the earlier special and the later general - the terms of the general broad enough to include the matter provided for in the special - the fact that one is special and other general creates a presumption that the special is considered as remaining an exception to

the general, one as a general law of the land and the other as remaining an exception to the general, one as a general law of the land and the other as the law of a particular case. Hence, both the CIR and the COC are in error to argue that Section 131(A) of the NIRC of 1997, as amended by RA No. 9334, withdrew or revoked PAL's conditional tax exemption granted under Section 13 of PO No. 1590. Such being the case, considering the continuation of PAL's tax exemption privileges over the imported goods subject of this case, PAL is not prohibited to file a claim for tax refund or credit on the excise taxes imposed thereon.

AXIA POWER HOLDINGS PHILIPPINES CORPORATION V COMMISSIONER OF INTERNAL REVENUE CTA EB No. 1203; December 2,2015 Ringpis-Liban, .J: FACTS:

Marubeni Energy Services Corporation ("MESC") was a corporation duly organized and existing under and by the laws of the Philippines. On December 22, 2009, the Board of Directors of MESC approved its merger with petitioner Axia Power Holdings Philippines Corporation ("APHPC"), Marubeni Pacific Energy Holdings Corporation (MPEHC) and Marubeni Pacific II Energy Holdings Corporation, with herein petitioner as the surviving entity. The merger was approved by the Securities and Exchange Commission (SEC) on March 20,2010, which effectively dissolved MESC as a corporate entity. The Certificate of Filing of Articles and Plan of Merger dated March 29, 2010 specifically mentioned that the entire assets and liabilities of MPEHC and MESC will be transferred and aborted by the petitioner APHPC. The management fees derived by MESC are subject to expanded withholding tax (EWT) pursuant to Revenue Regulations No. 2-98, as amended. MESC indicated on the face of its said Annual ITR its intention to have its unutilized withholding tax credit carried over as a tax credit for the next year. Hence, the amount of P16,370,326.00 was carried over as a tax credit to the succeeding CY 2008 including the other unutilized withholding tax credits for the year 2004 to 2006. On April 15, 2010, MESC flied with respondent CIR a written claim for refund or issuance of tax credit certificate of the above unutilized creditable withholding taxes allegedly in accordance with Section 240(c) of the 1997 National Internal Revenue Code ("Tax Code"), as amended. Likewise on April 15, 2010, MESC sent the original Petition in CTA Case No. 8092 through registered maiP On October 15, 2010, MESC flied an Amended Petition with this Court in order to properly designate the correct petitioner as herein petitioner APHPC. ISSUE: Whether the claim for the tax refund of MESC will prosper? HELD: No, the allegations in the present Petition, as well as that in the original and amended petitions in CTA Case No. 8092, all stated above, establish that MESC ceased to exist when its merger with petitioner APHPC was approved by the Securities and Exchange Commission (SEC) on March 29, 2010. This effectively dissolved MESC as a corporate entity. Nevertheless, it was MESC that filed the administrative claim on April 15, 2010, not herein petitioner APHPC the surviving corporation. This Court considers such to be fatal to petitioner's claim considering that MESC no longer had any legal personality at the time the administrative claim was flied, and no such administrative claim was flied by petitioner APHPC itself despite the plan of merger having been approved by the SEC. In other words, no administrative claim can be considered flied, thus no suit or proceeding can be maintained in any court for the recovery of the tax hereafter alleged to have been collected. The Supreme Court has emphasized that the requirements for entitlement to the issuance of tax credit certificate involving excess withholding taxes are as follows 18: 1. That the claim for refund was filed within the two-year reglementary period pursuant to Section 229 of the NIRC;

2. When it is shown on the ITR that the income payment received is being declared part of the taxpayer's gross income; and 3. When the fact of withholding is established by a copy of the withholding tax statement, duly issued by the payor to the payee, showing the amount paid and income tax withheld from that amount. In this case, no such claim was filed by an entity with legal personality hence there is no decision or even inaction of respondent to appeal from since none was necessitated by a valid administrative claim. Consequendy, the same should be dismissed for lack of jurisdiction over the subject matter over the same due to herein petitioner's failure to exhaust administrative remedies mandated by the Tax Code, which is apparent from the allegations in the instant Petition and in the original and amended petitions in CTA Case No. 8072.

CASTALLOY TECHNOLOGY CORP., ALLIED INDUSTRIAL CORP. AND ALINSU STEEL FOUNDRY CORP., V ATTY. JOSE N. TAN C.T.A. EB No. 1193; December 2, 2015 Fabon-Victorino, .J.: FACTS:

On various dates in 2006, petitioner Castalloy obtained various loans from the Philippine National Bank (PNB) secured by a real estate mortgage on certain properties of petitioners Allied and Alinsu. Later, Opal Portfolio Investments, Inc. (Opal) acquired all the rights of PNB over the loan obtained by petitioner Castalloy. Subsequently petitioners entered into a dacion en pago wherein the properties of petitioners Allied and Alinsu were transferred to Opal in payment of the loans of petitioner Castalloy. On December 14, 2010, respondent Tan, who considered the dacion en pago a donation by petitioners Allied and Alinsu to petitioner Castalloy, issued a Preliminary Assessment Notice (PAN) with attached Details of Discrepancies, assessing petitioners Allied and Alinsu for alleged deficiency donor's tax in the aggregate amount of P13,972,608.26 for taxable period January 21, 2009. On January 18, 2011, petitioners Allied and Alinsu filed with respondent Tan a protest letter dated January 17, 2011 against the PAN. On March 9, 2011, petitioners Allied and Alinsu received from respondent Tan a Letter dated February 10, 2011, denying their protest. In the letter dated February 10, 2011, respondent Tan, advised petitioners Allied and Alinsu that the BIR office "is left with no alternative but to issue Final Assessment Notice" On March 28, 2011, petitioners, without filing any protest, filed a Petition for Review with the Court in Division to reverse and set aside the letter dated February 10, 2011 and the FLD dated February 16, 2011, to declare the Assessment Notice attached to the FLD null and void, and finally, to declare as tax exempt the dacion en pago executed by petitioners Alinsu and Allied in favor of Opal Portfolio Investments, Inc. On January 30, 2014, the Court in Division rendered the assailed Decision dismissing the Petition for Review for lack of jurisdiction. The assailed Decision ISSUE: Whether the subject assessment became final and executory? HELD: Yes, in the present case, a PAN dated December 14, 2010 was sent to petitioners with attached Details of Discrepancies of even date. In response thereto, petitioners, together with their protest letter dated January 17, 2011, submitted position paper and documents to respondent Tan. Thereafter, the Letter dated February 10, 2011 with Formal Letter of Demand (FLD) and Assessment Notice both dated February 16, 2011 were issued. In the present case, petitioners failed to file protest against the Formal Letter of Demand (FLD) and Assessment Notice both dated February 16, 2011 and in haste, sprinted to the Court for intervention. In other words, there was yet no decision or inaction on the part of the CIR over which the Court could exercise its power of appeal. It must be stressed that the denial of a protest against the PAN is not the final assessment contemplated under the law which may be appealed to this Court.

Provincial Government of Cagayan vs Smart Communications, Inc CTA EB No. 1137; December 8, 2015 Contangco, Manalastas, J.: FACTS:

Petitioner Provincial Government of Cagayan is an LGU, represented by Governor Antonio and Prov. Treasurer Iringan. Respondent SMART is a domestic corporation engaged in telecommunications business. Petitioner claims that since 2009, it had been asking respondent to submit a statement of its gross receipts in the province of Cagayan for purposes of computing its franchise tax. Respondent failed to submit any, prompting petitioner to issue a "presumptive tax assessment" assessing respondent of franchise tax liability from 2004 to 2009 in the total amount of Php86,482,092.60. Respondent received a tax assessment notice. In its protest letter,respondent clarified that it has only one sales office in the Province of Cagayan and it is located in Tuguegarao City, which has its own taxing jurisdiction, thus it is not liable for local franchise tax to the Province of Cagayan. Petitioner argued that respondent conducts its telecommunications business in the entire province of Cagayan evidenced by its cellular towers installed and maintained in the different municipalities of the province from which it derives income. Petitioner issued Notices of Garnishment against respondent's deposits in several banks. Respondent filed with the RTC an Urgent Application for Issuance of a Writ of Preliminary Injunction with Prayer for Temporary Restraining Order (TRO) to restrain petitioner from enforcing the Notices of Garnishment, which was granted. ISSUE: Whether or not the RTC Makati has jurisdiction over the issuance of writ of injunction. HELD: NO. Court En Banc holds that while the Makati RTC, Branch 65 has jurisdiction to set aside the disputed franchise tax assessment for CY 2004 to 2009, it is bereft of jurisdiction to direct petitioner to cease and desist from imposing, in the future, local franchise tax on respondent's gross receipts that it may realize within the territorial jurisdiction of the City of Tuguegarao. Pursuant to Section 21(1) of BP 129, the Makati RTC has no jurisdiction to issue an injunctive writ to enjoin acts being performed or about to be performed outside its territorial boundaries. Clearly, the Makati RTC had no authority to issue a writ of injunction against petitioner, who is in the Province of Cagayan, an area outside its judicial jurisdiction.

Commissioner of Internal Revenue vs Philippine Airlines, Inc. CTA EB No. 1184; December 8, 2015 Uy, J.: FACTS:

On June 11, 1978, by virtue of Presidential Decree No. 1590, PAL was granted a franchise to operate air transport services domestically and internationally. On January 1, 2005, Republic Act (RA) No. 9334, “An Act Increasing the Excise Tax Rates Imposed onAlcohol and Tobacco Products, Amending for the Purpose Sections131, 141, 142, 143, 144, 145 and 288 of the NIRC of 1997, as Amended" took effect. On February 2005, BIR requested the BOC that the excise taxes due on the imported alcohol and tobacco products brought to DFP and the Freeport zones be immediately collected. On various dates in 2007 and 2008, PAL's importations of assorted liquors and wines subject of the instant claim arrived in Manila through NAIA. PAL paid under protest to the BOC the amount representing the excise taxes on the said importations. But it later on filed a written protest and a claim for refund. Due to the CIR's inaction and in observance of the statutory period of two (2) years within which to file a judicial claim for refund, PAL filed a Petition for Review with the Court in Division. The CIR alleged that PAL is liable for excise tax as specified in Section 131 of the NIRC of 1997, as amended by RA No. 9334, and that PAL is mandated to present evidence to support its administrative. But PAL failed to do so. COC alleged that PAL's importations are subject to excise tax under Section 6 of RA No. 9334 and that PO No. 1590, granting tax exemptions to PAL, has been amended by RA Nos. 8424 and 9334, to the extent that PAL's importations of cigars and cigarettes, distilled spirits and wines are now subject to excise taxes. ISSUE: Whether or no the tax privilege of PAL in Sec.13, PD 1590 has been revoked by RA 9334. HELD: NO. It is a basic principle in statutory construction that a later law, general in terms and not expressly repealing or amending a prior special law, will not ordinarily affect the special provisions of the earlier statute. A reading of the pertinent provisions of P.O. 1590 and R.A. 9334 shows that there was no express repeal of the grant of exemption. In other words, the franchise of PAL remains the governing law on its exemption from taxes. Its payment of either basic corporate income tax or franchise tax - whichever is lower - shall be in lieu of all other taxes, duties, royalties, registrations, licenses, and other fees and charges, except only real property tax. However, upon the amendment of the 1997 NIRC, Section 22 of R.A. 9337 abolished the franchise tax and subjected PAL and similar entities to corporate income tax and value-added tax (VAT). PAL nevertheless remains exempt from taxes, duties, royalties, registrations, licenses, and other fees and charges, provided it pays corporate income tax as granted in its franchise agreement.

Commissioner of Internal Revenue vs Macquarie Offshore Services Pty. Ltd. CTA EB No. 1208; December 8, 2015 Ringpis, Liban, J.: FACTS:

Respondent is the Philippine branch of a multinational company organized and existing under and by virtue of the laws of Australia. It is licensed to do business as a Regional Operating Headquarters (ROHQ) in the Philippines by the Securities and Exchange Commission (SEC). It is engaged in the business of providing qualifying services to its affiliates and related parties in the Asia-Pacific Region and in other foreign markets. On separate dates, respondent filed with the BIR applications for Tax Credits/Refunds and a letter requesting for the refund/issuance of a Tax Credit Certificate ("TCC") for its unutilized input value-added tax ("VAT") attributable to its zerorated sales for respective periods. Petitioner claims that respondent failed to prove that its recipient of services, Macquarie Financial Holdings Limited ("MFHL"), is doing business outside the Philippines, hence respondent's transactions cannot qualify as zero-rated. Petitioner claims that by only presenting SEC Certificates of Non-Registration, respondent failed to prove the third requisite in Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. and thus it cannot be said that its sales of services to MFHL can qualify for VAT zero-rating. ISSUE: Whether or not respondent presented enough evidence to prove that MFHL, the recipient of services, is doing business outside the Philippines, hence respondent's transactions qualify as zero-rated. HELD: YES. Court En Banc confirms that respondent has presented more than just SEC Certificates of Non-Registration to prove that MFHL, the recipient of services, is doing business outside the Philippines. Among the evidence presented by respondent is the testimony of respondent's Division Director and Resident Agent, Mr Garry Taylor, who testified on the matter extensively in his Judicial Affidavit. This Court therefore finds that there is plenty evidence to support the Court in Division's findings that MFHL, the recipient of services, is doing business outside the Philippines, hence respondent's transactions with the same qualify as zero-rated. There is a preponderance of said evidence, compared to none presented by petitioner in any of the proceedings before this Court to show that otherwise.

Commissioner of Internal Revenue vs South Entertainment Gallery, Inc. CTA EB No. 1246; January 4, 2016 Mindaro- Grulla, J.: FACTS:

Respondent SEGI is a corporation organized and existing under the laws of the Philippines, with office address at 3/F SM City Pampanga. It is engaged in the business of operating and conducting Bingo games and other games of chance, among others, pursuant to its contractual relationship with PAGCOR, pursuant to Presidential Decree 1869. Petitioner is the duly appointed Commissioner of Internal Revenue who holds office at the BIR National Office Building, Diliman, Quezon City. On February 21, 2008, respondent received a Preliminary Assessment Notice dated February 4, 2008 of its alleged tax deficiencies. Subsequently, it received a Preliminary Collection Letter collecting the said alleged internal revenue tax liabilities in the total amount of P4,067,264.18. It replied informing petitoner that it already paid the withholding tax deficiency but, with regard to the Income Tax and VAT deficiencies, it maintained its exemption from the payment of any kind and form of taxes pursuant to PAGCOR's exemption under PD 1869. On March 2011, respondent received a letter reiterating the collection of the alleged deficiency Income Tax and deficiency VAT. Hence, respondent filed the instant Petition for Review. ISSUE: Whether or not a valid Formal Assessment Notice (FAN) had been issued by the CIR. HELD: NO. CIR has failed to prove service of FAN to SEGI. Since SEGI denied receipt of FAN, it is essential for CIR to prove the fact of mailing through the registry receipt issued by the Bureau of Posts or the Registry return card which would have been signed by SEGI's authorized representative or a certification issued by the Bureau of Posts and any other pertinent document which is executed with the intervention of the Bureau of Posts that the mail matter was served upon SEGI's authorized representative. It is not enough that the registry return card was presented by the CIR. Such should have been signed by SEGI's authorized representative. Neither did the Certification9 prove valid service of FAN since the Certification only states that the letter sent by BIR was received by Mr. Brian David, who has no connection in any manner with SEGI. The failure of the CIR to prove receipt of the assessment by SEGI leads to the conclusion that no assessment was issued. Consequently, the government's right to issue a WDL has no basis to stand on. AFP General Insurance Corporation vs Commissioner of Internal Revenue CTA EB No. 1223; January 4, 2016 Contangco- Manalastas, J.: FACTS:

Petitioner is a domestic corporation duly registered under Philippine laws with principal office address at Cubao, Quezon City. Respondent is the duly appointed Commissioner of the BIR with office address at Diliman, Quezon City. On May 7, 2008, respondent issued Letter of Authority addressed to petitioner, for the examination of its books of accounts and other accounting records covering the taxable year 2006. Petitioner received a Preliminary Assessment Notice (PAN), with attached Details of Discrepancy, for deficiency Income Tax, Documentary Stamp Tax, Valueadded Tax, and Expanded Withholding Tax covering taxable year 2006. It filed its Letter-Reply against the said PAN. Respondent issued a revised PAN. Subsequently, it issued a Formal Letter of Demand with Attached Assessment Notices against petitioner. Petitioner then filed its Letter-Protest against the above assessments. Alleging inaction on the part of respondent, petitioner thus filed the Petition for Review before the Court in Division. On March 13, 2014, the Court in Division, promulgated the assailed Decision , partially granting the petition ISSUE: Whether or not the Letter of Authority will be invalidated if not revalidated within the 120-day period HELD: No.There is nothing in RMO No. 38-88 and RMC No. 40-2006 that indicates that the LA will be invalidated if not revalidated within the 120-day period. The Court noted that there is no mention of the 30-day mandated period for serving of the LA in either RMO No. 38-88 or RMC No. 40-2006 cited by petitioner as its basis for the invalidation of the LA. However, Revenue Audit Memorandum Order (RAMO) No. 1-200018 does provide that a Letter of Authority must be served or presented to the taxpayer within 30 days from its date of issue; otherwise, it becomes null and void unless revalidated. The taxpayer has all the right to refuse its service if presented beyond the 30-day period depending on the policy set by top management. Petitioner admitted that it received the LA on June 13, 2008 or beyond the 30day period for the service of the same. Hence, pursuant to RAMO No. 1-2000, it had every right to refuse the service of the same, yet it did not do so.

Commissioner of Internal Revenue V. Shinko Electric Industries Co. LTD., CTA EB No: 1180, Jan. 4, 2016 Mindaro-Grulla, J.:

FACTS: Respondent received a PAN from the Petitioner for the alleged deficiency in icome tax and VAT covering the fiscal year ending March 31, 2007, together with other documents which disclosed that respondent failed to file VAT returns and quarterly income tax returns. On April 26, 2010, Respondent file a protest to the PAN. On May 14, 2010, respondent received a Final Assessment Notice requesting them to pay such tax deficiencies. Respondent was assessed of deficiency income tax P766,271.65 including interest and P343,930.04 in VAT returns. On June 11, 2010, Respondent filed a protest against the FAN. Due to Petitioners inaction, respondent filed a case in this court. ISSUE: Whether or not Shinko Electric a representative company in the Philippines subject to income tax? HELD: We rule to DENY the Petition for Review. CIR mainly relies on Shinko's SEC Registration, which states that it performs "promotion and quality control of the parent company's products," that it is already involved in ROHQ's qualifying services such as marketing control and sales promotion, as well as research and development services and product development. Thus, in construing this, this Court should be guided by the principle that tax statutes are strictly construed against the taxing authority.10 The very fact that Shinko does not have its own Articles of Incorporation already strengthens its contention that it is a mere representative office of a foreign company, as stated in its application with the SEC itself. Moreover, as prohibited in R.A. 8756, ROHQs are only allowed to offer the mentioned qualifying services therein to their affiliates, branches or subsidiaries declared in their registration with the SEC, while Shinko herein deals directly with the clients of their parent company here in the Philippines.

Loudes College V. Commissioner of Internal Revenue CTA EB No: 1164, Feb. 2, 2016 Ringpis-Liban, J.:

FACTS: Regional Director Gandarosa, sent a Formal Letter of Demand to petitioner demanding payment of deficiency expanded withholding tax and deficiency fringe benefit tax in the total amount of P4,222,510.10, inclusive of surcharges, interest and compromise penalty. petitioner protested the said assessments. In response, respondent, through Revenue District Officer Noel B. Gonzales of Revenue District No. 98, revised and reduced the previous assessments, but included a new assessment for donor's tax in the amount of P1,031,814.58 which petitioner protested in a letter dated June 29, 2009. In a letter dated August 25, 2009, Revenue District Officer Gonzales stated that petitioner is still liable to pay P1,382,362.47, inclusive of all legal increments. Thereafter, a Final Decision on Disputed Assessment (FDDA) dated December 28, 2009, signed by Regional Director Esmeralda M. Tabule, was received by petitioner stating therein that the latter's arguments were found to be frail and unmeritorious. Hence, the assessment is good as undisputed and shall likewise subsist. Petitioner filed a Petition for Review before CTA Division. ISSUE: Whether the Court in Division erred in denying the Petition for lack of merit and holding petitioner liable to pay the amount of P1,121,516.27 inclusive of 25% surcharge imposed under Section 248(A) (3) of the NIRC of 1997 and pay deficiency interest and delinquency interest? HELD: The Court En Banc finds no reason to reverse or modify the Decision and Resolution of the Court in Division. It is clear that the CIR, by stating in her letter that the "letter issued by Regional Director Esmeralda M. Tabule dated January 25, 2010, is considered by this Office as Final Decision on Disputed Assessment," adopted the findings of the Regional Director as her decision on the disputed as well as the basis thereof. Petitioner therefore cannot claim that it is unaware of the basis of the assessment against it.

Philippine Airlines V. Commissioner of Internal Revenue and Commissioner of Customs CTA EB No: 1162, Jan. 7, 2016 Mindaro-Grulla, J.:

FACTS: On February 3, 2005, then BIR Commissioner Guillermo L. Parayno, Jr. wrote then BOC Commissioner George M. Jereos, calling attention to Section 6 of RA No. 9334 and the failure of the BOC to collect excise taxes 'on all importations of alcohol and tobacco products destined for Duty Free Philippines (DFP) and the freeport zones such as the Subic Bay Freeport Zone.'In the said letter, the BIR also requested the BOC that the excise taxes due on the imported alcohol and tobacco products brought to DFP and the freeport zones be immediately collected. On April 4, 2005, PAL contested the action taken by the Collector of Customs of the Manila International Container Port (MICP) in trying to collect excise taxes and customs duties on [PAL's] importation of cigarettes for use in its operations, and in refusing to release them, unless these taxes and duties are first paid. In its letter, PAL requested the immediate release of its imported two pallets of cigarettes for its commissary supplies. Philippine Airlines, Inc. seeks the partial nullification of aforementioned Decision and Resolution, insofar as the denial of PAL's refund for the remammg amount of P4,670,506.42, representing excise taxes it erroneously paid on its various importations of alcohol and tobacco products. The same was granted. On the other hand, the Commissioner of Internal Revenue (CIR) seeks the reversal of the assailed Decision and Resolution insofar as the partial grant of PAL's refund of its erroneously paid excise tax on its importation of wines and liquor for its catering and commissary supplies for international consumption in the amount of P3,131,639.31, and for this Court to deny PAL's entire claim for refund. ISSUE: Whether the Court erred in denying its claim for refund of erroneously paid excise tax on its importation of commissary supplies to the extent of the amount of P4,670,506.42? HELD: In Commissioner of Internal Revenue and Commissioner of Customs v. Philippine Airlines, Inc.,14 the Supreme Court clearly held that the tax privilege of PAL pursuant to Sec. 13 of PD 1590 has not been revoked by Sec. 131 of the NIRC of 1997, as amended by Sec. 6 of RA No. 9334. To be sure, the manner to effectively repeal or at least modify any specific provision of PAL's franchise under PD 1590, as decreed in the aforequoted Sec. 24, has not been demonstrated. Consequently, the Court a quo is correct in upholding the tax privilege of PAL pursuant to Sec. 13 of PO 1590 in the assailed Decision and Resolution. In order to be exempt from payment of taxes, duties, charges, royalties, or fees due on all importations of commissary and catering supplies pursuant to Section 13(2) of PD 1590, it is imperative for PAL to prove, among others, that the imported articles, supplies or materials are not locally available in reasonable quantity, quality or price.

Commissioner of Internal Revenue V. RCD REALTY MARKETING CORP. CTA EB No: 1136, Jan. 7, 2016 Mindaro-Grulla, J.: FACTS:

On April 15, 2009, RCD filed with the BIR its Annual Income Tax Return (ITR) for taxable year 2008, reporting a taxable income of P335,955.43 with tax liability of P117,584.40. On April 24, 2009, RCD amended its Annual ITR for taxable year 2008, reflecting the same taxable income ofP335,955.43 and tax liability of P117,584.40. In its amended 2008 Annual ITR, RCD reported a total tax credit/payment for 2008 in the amount of P3,873,748.70. CIR requested RCD documents for examination. On April 14, 2011, RCD filed the instant Petition for Review citing inaction of CIR on its claim for refund. The CTA Special First Division partially granted RCD's Petition for Review and ordered CIR to refund or issue a tax credit certificate in favor o f RCD in the amount o f P3,696,086.43, representing its unutilized creditable income taxes withheld for the taxable year 2008. ISSUE: Whether or not CTA erred in partially granting the refund of RCD HELD: The petition is denied. There is no dispute that RCD has complied with the first requisite when it filed its claim for refund within the prescriptive period. Anent the second requisite, RCD "presented Certificates of Creditable Tax Withheld at Source (BIR Form No. 2307) duly issued to it by various withholding agents/payors showing CWT in the total amount of P3,875,649.05." 10 However, only the amount o f P3,873,748.71 CWT was reported by RCD.11 In this case, RCD is claiming for refund the excess/unutilized CWT in the amount of P3,756,164.30 for taxable year 2008. However, the Special 1st Division disallowed the CWT in the amount of P60,077.87 supported by BIR Forms No. 2307 issued in the name of its President and not in the name of the claimant-taxpayer.

People of the Philippines V. EFREN 0 . DOCENA AND ROLANDO E. PALAD, SOUTH SEA SURETY & INSURANCE CO., INC., CTA EB Crim No: 030, Jan. 4, 2016 Bautista, J.: FACTS:

Accused Efren O. Docena and Rolando E. Palad were charged with violation of Section 255 in relation to Sections 253(d) and 256 of the 1997 National Internal Revenue Code for alleged willful failure and refusal to pay deficiency income tax and compromise penalty for taxable year 2003, without any formal protest despite due notice and demand, to the prejudice of the Government in the amount Php5,758,176.07. The Information was subsequently amended from income tax to Deficiency (DST) and Compromise Penalty. The prosecution alleges that both accused-respondents, as responsible officers of the Corporation, are the persons required to pay the tax. Hence, they should be jointly and severally liable to pay the total assessed amount. The two accused, on the other hand, argue that the mere fact that they were officers of the Corporation does not make them automatically liable for the penalty of the corporation; that both accused exerted their utmost best to pay the tax liability of the Corporation; and that there was no evidence that the accused assented to patently unlawful acts of the Corporation. ISSUE: Whether or not accused-respondents Docena and Palad, in their capacities as President and EVP/COO, respectively, of South Sea Surety & Insurance Co., Inc., should be held liable for the civil liability of the latter, arising from its DST assessment for 2003? HELD: The offense of willful failure to pay tax is being attributed to the two accused. In accordance with Section 255 of the 1997 NIRC, the essential elements of the said offense are: 1. The accused is a person required to pay the tax; 2. The accused failed to pay the tax at the time required by law; and 3. Failure to pay the tax was willful. Looking into the above-cited provision, it appears that willingness is a common element for the extension of a corporation's tax liability to its responsible officers. The fact that both accused acted in good faith and with best efforts to comply with the demand to pay the assessed deficiency tax will show the absence of the element of willingness, as found by the Court in Division. Further, the Court En Bane sees no reversible error when the Court in Division stated that since the assessment was in the name of the Corporation; and based on the Amended Information, it was the Corporation which was found to be liable for deficiency DST and compromise penalty; the entity required to pay the same under the law is the Corporation itself.

CIR vs STAEDTLER, (PHILIPPINES) INC. CTA EB No. 1310, January 28, 2016 Cassanova, J.: FACTS: On August 26, 2008, respondent received a Letter of Authority No. LOA2007000397986 for the examination of its books of accounts and other

accounting records for all internal revenue taxes for the period from January 1, 2007 to December 31, 2007. On October 21, 2010, respondent received a Preliminary Assessment Notice7 (PAN) dated October 8, 2010 assessing it for deficiency income tax, value-added tax (VAT) and expanded withholding tax (EWT). In response, respondent filed a Letter of Protests against the said PAN on October 29, 2010. Subsequently, on November 19, 2010, respondent received a Formal Letter of Demand with Details of Discrepancies and Assessment Notices No. 040-8105-079 (FLD-DDAN) all dated November 4, 2010. Accordingly, on November 22, 2010, respondent filed its Protest Letter10 dated November 19, 2010 to the FLD-DDAN. The CTA First Divission ruled that the same be cancelled and withdrawn on the ground that it has already prescribed. Petitioner contends that the deficiency VAT assessments for taxable year 2007 has not yet prescribed because the prescriptive period to issue an assessment is suspended by the grant of the request for reinvestigation pursuant to Section 223 of the National Internal Revenue Code (NIRC) of 1997, as amended. Hence, petitioner continues that when she granted respondent's request for reinvestigation, it tolled the running of the period of the statute of limitations. In her Petition for Review, petitioner raised the sole issue of whether the CTA First Division erred in deciding that the VAT Assessments of respondent had already prescribed. ISSUE: Whether or not the action to issue an assessment of petitioner has not yet prescribed pursuant to Section 223 of the NIRC. HELD :The Court ruled in the negative. The general rule is that internal revenue taxes shall be assessed within three (3) years after the last day prescribed by law for the filing of the return or the actual date of filing of said return, whichever comes later. The protests filed by respondent were requests for reinvestigation, there was still no showing that they were granted by petitioner and that actual reinvestigation had been conducted by her or her agents. Section 223 of the NIRC of 1997, as amended, dictates that two requisites must concur before the period to enforce collection may be suspended: (a) that the taxpayer requests for reinvestigation, and (b) that petitioner grants such request. The logic behind it is that a reinvestigation, which entails the reception and evaluation of additional evidence, will take more time than a reconsideration of a tax assessment, which will be limited only. Accordingly, both requisites must be present, for lack of one will not suspend the running of the statute of limitations. The protests of respondents does not even contain a request for reinvestigation. Thus, petitioner’s right to assessed had already prescribed.

CITY ASSESSOR OF PARANAQUE CITY VS. PORTAL HOLDINGS, INC CTA EB No. 998, January 26, 2016 Cotangco-Manalastas, J.: FACTS:

On February 11, 2003, Paranaque City Ordinance No. 03-06, Series of 2003, otherwise known as "An Ordinance Adopting a Straight Line Policy in the Determination of Barangay Boundaries in the Reclaimed Areas in Manila Bay within the Territorial Jurisdiction of the City of Paranaque", was enacted. Sometime in November 2003, respondent alleged that after requesting for a computation of the exact amount of real property taxes due on the subject properties for 2004, respondent discovered an increase in the assessment of the subject properties. The computation provided by the City Treasurer was higher than the rates by which the properties were assessed for previous years. On December 18, 2003, respondent paid the RPT due on the subject properties for the year 2004 under protest, evidenced by the following official receipts. Respondent received new assessments. On March 22, 2004, respondent filed an Appeal16 dated March 19, 2004 with the LBAA. On January 8, 2005, the LBAA issued a Resolution denying respondent's Appeal dated March 19, 2004 on the ground that it has no jurisdiction. The LBAA held that the issues raised by respondent boils down to the constitutionality of Paranaque City Ordinance No. 03-06, which is outside the jurisdiction of the LBAA. On February 17, 2005, respondent filed an Appeal 19 dated February 16, 2005 before the CBAA. The CBAA dismissed the earlier resolution of LBAA and declared that the Tax Declarations made by the City Assessor pursuant to the said ordinance are null and void. ISSUE: Whether or not the tax declarations of petitioner are null and void. HELD: The Court ruled in the affirmative. The City Assessor should comply with the provision of Section 220 of the LGC which provides for the cases where an assessor is authorized to make a classification, appraisal and assessment of the real property listed and described in the declaration irrespective of any previous assessment, to wit: Section 220. Valuation of Real Property. In cases where (a) real property is declared and listed for taxation purposes for the first time; (b) there is an ongoing general revision of property classification and assessment; or (c) a request is made by the person in whose name the property is declared, the provincial, city or municipal assessor or his duly authorized deputy shall, in accordance with the provisions of this Chapter, make a classification, appraisal and assessment of the real property listed and described in the declaration irrespective of any previous assessment or taxpayer's valuation thereon: Provided, however, That the assessment of real property shall not be increased oftener than once every three (3) years except in case of new improvements substantially increasing the value of said property or of any change in its actual use. Clearly, the instant case does not fall within any of the instances enumerated in Section 220 of the LGC. Thus, the tax declarations are null and void. CIR VS. CE CASECNAN WATER AND ENERGY COMPANY, INC. CTA EB No. 1265, January 14, 2016 Cotangco-Manalastas, J.: FACTS:

Respondent’s multipurpose irrigation and power plant project, with an installed capacity of 140-150 MW hydropower generation plant component, has been duly accredited and certified as a Private Sector Generation Facility by the Department of Energy (DOE) as evidenced by its Certificate of Accreditation No. 95- 07-12 issued by the DOE on July 20, 1995. On June 21, 2010, petitioner was issued a Certificate of Compliance No. 10-06-GNS-10701 by the Energy Regulatory Commission (ERC) for its Hydroelectric Generation Facilities which is valid until June 20, 2015. Respondent filed with the SIR its Original and Amended Quarterly VAT Returns for the 1st to 4th quarters of the year 2011. On November 16, 2012, petitioner filed with the Large Taxpayers Excise Audit Division I of the BIR an administrative claim for refund or tax credit of its unutilized input VAT for the period covering the 1st quarter to the 4th quarter of the year 2011. Claiming inaction on the part of respondent, petitioner filed on March 21, 2013 the present Petition for Review invoking Section 112(C) of the National Internal Revenue Code of 1997, as amended. Petitioner prays for a refund or issuance of a TCC in the amount of P17,807,940.34, allegedly representing its unutilized input VAT for the four quarters of the year 2011. After trial, the CTA First Division found that respondent CE Casecnan has sufficiently proven its entitlement to a refund or issuance of a TCC in the amount of P17,593,284.22, representing its unutilized input VAT incurred for the four quarters of the year 2011 attributable to its zero-rated receipts for the same period. The CTA First Division denied the motion for reconsideration of CIR. ISSUE: Whether or not respondent is entitled to a refund of, and/or issuance of tax credit certificate for, its unutilized input VAT in the reduced amount of P17,593,284.22. HELD: The Court ruled in the affirmative. The Court found that when petitioner [herein respondent] filed its administrative claim on November 16, 2012, petitioner simultaneously submitted various documents in support thereof and informed the petitioner that its books of accounts and accounting records are already available for audit and verification of the BIR. Thus, the 120-day period started and continued to run from the date when petitioner filed its administrative claim as it was on the same date that petitioner submitted its supporting documents to substantiate its claim. Contrary to respondent's argument, petitioner's judicial claim was notIt has been held that the determination of what are "complete documents" lies with the taxpayer. In the instant case, respondent submitted its supporting documents with its administrative claim. Petitioner did not make any request for additional documents. Thus, the running of the 120-day period commenced and continued to run from the date respondent filed its administrative claim for refund together with the said 28 classes of supporting documents. CIR VS. AYALA CORPORATION CTA EB NO. 1152, January 14, 2016 Fabon-Victorino, J.: FACTS:

On April 15, 2009, respondent filed it's annual ITR for calendar year (CY) 2008 through the EFPS, declaring a total overpayment of P92,002,780.22. On February 8, 2011, respondent filed with the BIR Large Taxpayer Division an administrative claim for issuance of Tax Credit Certificate (TCC) on its alleged unutilized Creditable Withholding Tax (CWT) for CYs 2008 and 2009 in the aggregate amount of P102,210,569.00. The Court in Division stressed that on appeal before it the Rules of Court and the Revised Rules of the Court of Tax Appeals apply insofar as proving the claimant's entitlement to refund/TCC of excess CWT. Thus, only the following requisites must be met, to wit: (a) 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, as amended; (b) 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 (c) that the income upon which the taxes were withheld were included in the return of the recipient. All these were satisfied but only insofar as the amount ordered to be refunded. Petitioner insists that respondent is not entitled to refund or issuance of TCC of its alleged unutilized and excess CWTs for CYs 2008 and 2009 as it failed to have the withholding tax certificates it presented identified by the respective withholding agents as well as to prove the actual remittance of the amounts indicated therein to the BIR. ISSUE: Whether or not respondent failed to present the testimony of the respective withholding agents to identify the entries in the alleged CWTs and to prove actual remittance to the BIR of the taxes allegedly withheld. HELD: The Court ruled in the negative. There is no denying that the burden of proof is on the respondent whose claim for refund is in the nature of a claim for exemption which is strictly construed against it and in favor of the Government. However, respondent is not required to present proof of actual remittance to the BIR of the tax withheld by the withholding agent. Proof of actual remittance is not a condition to claim for refund of unutilized tax credits under Sections 57 and 58 of the NIRC, as amended. As held in a number of cases and reiterated in the case of Commissioner of Internal Revenue vs. Philippine National Bank, proof of actual remittance by the withholding agent is not needed to prove withholding and remittance of taxes to BIR. The testimony of the withholding agent is also not required to establish the fact of withholding because the certificate of tax withheld at source (BIR Form No. 2307) is competent proof of the fact that taxes were withheld by the withholding agent, who by law, is obliged to remit the amount withheld to the BIR. In other words, it is not necessary for the person who executed and prepared the certificate of creditable tax withheld at source to be presented in court and authenticate the said document.

CITY OF MAKATI VS. MUNICIPALITY OF BAKUN AND LUZON HYDRO CORP. CTA EB CASE NO. 1179, January 14, 2016 Mindaro-Grulla, J.: FACTS: LHC operates a 70MW hydroelectric power plant facility that harnesses the Bakun River spanning the Provinces of Ilocos Sur and Benguet. It maintains

factories, project offices, plants, and/or plantations in the pursuit of its business. LHC allocated 70% of its annual gross sales and receipts apportioning it among the three named local government unit (LGUs) as follows: Municipality of Alilem (plant),Municipality of Bakun (plant) and City of Makati (project office). The City of Makati claims that they are entitled to share in the 70% sales allocation. But it was considered that the said Makati office is just a project office. ISSUE: Whether the Special First Division erred in declaring that the office of Luzon Hydro Corporation (LHC) in Makati City is an administrative office and not a "Project Office". HELD: The Court ruled in the negative. Central to the controversy at hand is the application of Section 150 of Republic Act No. 7160, otherwise known as the "Local Government Code of 1991" and Article 243 of Administrative Order No. 270Prescribing the Implementing Rules and Regulations of the Local Government Code of 1991. To be considered as a branch or sales office for purposes of collection of the taxes, it is not enough that the branch or sales office conducts operations of the business as an extension of the principal office, the branch or sales office shall likewise record the sale or transaction and the tax thereon shall accrue and shall be paid to the municipality where such branch or sales outlet is located pursuant to Article 243 (b) of Administrative Order No. 270 in relation to Section 150 (a) (b)(d) of the LGC. In this case, Makati City failed to present any evidence which will show sales made in Makati City. Likewise, Makati City failed to controvert that invoices or records of all sales to NPC are not handled by the Makati City Office nor does it operate any aspect of the business or primary purposes of the Company as provided in Plaintiff's Articles of Incorporation. Considering that the Makati City office is not a branch or sales office, it is not entitled to share in the 70% sales allocation.

Unisys Philippines Limited (Phil. Branch) v. Commissioner of Internal Revenue CTA EB No. 1205; March 14, 2016 Ringpis- Liban, J.: FACTS:

Petitioner UNISYS entered into several agreements with different government agencies including the Philippine Ports Authority, the Bureau of Customs, and the Armed Forces of the Philippines. It filed its Quarterly VAT Returns for the taxable year 2010 and amended them in 2011. On May 17, 2011 petitioner filed for an Application for Tax Credits/Refunds for an alleged overpayment of VAT. Due to the inaction of the respondent CIR on petitioner’s administrative claim for refund, the latter filed its Petition for Review with the Court of Tax Appeals. The CIR filed a Motion to Dismiss on the ground of prescription. The Court denied that said motion and declared that the administrative complaint of petitioner and the Petition for Review were filed within the two-year prescriptive period. The CTA Second Division partially granted the petition for review and ordered the respondent to refund or to issue a tax credit certificate in favor of petitioner in a reduced amount. ISSUE: Whether or not the petitioner is entitled to the issuance of a tax credit certificate. HELD: Yes. It is already ruled that in order to be entitled to the claimed refund or tax credit certificate, petitioner must be able to establish that it indeed incurred and has enough input tax credits and VAT payments. Thus, it is axiomatic that each and every component of petitioner's tax credits/payments, including the actual input VAT of P9,358,141.74 must be substantiated because, ultimately, the remaining balance of the total tax credits/payments, after deducting its output VAT liability, becomes its overpaid output VAT. Moreover, petitioner must be mindful that the claim for input tax credits shall be allowed only upon compliance with the substantiation requirements prescribed under Sections 110(A) and 113(A) and (B) of the NIRC of 1997, as amended, and as implemented by Sections 4.110-1, 4.110-2, 4.110-8, and 4.1131(A) and (B) of Revenue Regulations No. 16-2005. In view of the foregoing, it becomes imperative for the government to restore to UNISYS its erroneously overpaid output VAT liabilities under the principle of solutio indebiti. It was held in Commisioner of Internal Revenue v. Fortune Tobacco Corporation that the government is not exempt from the application of solutio indebiti. Indeed, the taxpayer expects fair dealing from the Government, and the latter has the duty to refund without any unreasonable delay what it has erroneously collected. If the State expects its taxpayers to observe fairness and honesty in paying their taxes, it must hold itself against the same standard in refunding excess (or erroneous) payments of such taxes. It should not unjustly enrich itself at the expense of taxpayers. And so, given its essence, a claim for tax refund necessitates only preponderance of evidence for its approbation like in any other ordinary civil case.

Commissioner of Internal Revenue v. OFFICEMETRO Phils., Inc. CTA EB No. 1210; March 7, 2016 Castañeda, Jr. J.: FACTS:

CIR issued a Letter of Authority authorizing the examination of respondent OFFICEMETRO’s books of accounts and other accounting records for all internal revenue tax liabilities for taxable year 2005. It filed a Letter of Protests within 15 days from receipt of a Preliminary Assessment Notice (PAN). On September 23, 2009, it received a Formal Assessment Notice (FAN) with attached details of discrepancies and assessment notices which it protested. CIR issued the FDDA for taxable year 2005 finding OFFICEMETRO liable for deficiency EWT, deficiency final withholding VAT, deficiency FWT, and a compromise penalty. CIR claims, among other things, that petitioner failed to submit documents to substantiate the allegations in the respondent’s petition for review. For her, petitioner's Service Agreement with Regus Centres Pty. Ltd. is insufficient to prove that the services covered by the said agreement were performed outside the Philippines. The Court partially granted the petition. ISSUES: 1. Whether or not the condominium dues are subject to EWT. 2. Whether or not respondent is liable for deficiency EWT on rental expense and FWT of VAT. HELD: 1. No. The covered period subject of the instant case is taxable year 2005. At that time, RMC No. 65-2012 was still inexistent. The prevailing rule then, through the various BIR Rulings, is that condominium dues are not subject to income tax and to withholding tax. Likewise, RMC No. 65-2012 was still inexistent at the time when the FAN and FDDA was issued on September 23, 2009 and on October 24, 2011, respectively. In other words, at the time the subject assessments were issued, respondent was not armed with any legal basis to support the assessments. Thus, the reversal of the CIR' s previous and consistent position that condominium dues are not subject to income tax and to withholding tax in RMC No. 65-2012, will cause undue prejudice to Officemetro in this case. 2. Yes. While it is true that in this case condominium dues are not subject to EWT pursuant to Section 246 of the NIRC of 1997, it is incumbent upon Officemetro to prove that the assessment is invalid or incorrect. In the instant case, the Contract of Lease it presented merely prove the existence of the said contracts setting forth the rights and obligations of the parties therein. considering the absence of any supporting evidence to indubitably show that services were actually performed by an NRFC outside the Philippines other than the certification of a director of Officemetro's affiliate company, the Court En Banc sustains the findings of the Court in Division.

Commissioner of Internal Revenue v. SVI Information Services Corp. CTA EB No. 1149; March 3, 2016 Bautista, J.: FACTS:

SVI Information Services, Corp. is principally engaged in the business of providing information and related services in the areas of information technology, finance, economics, investments, real estate and the like. It received a Letter of Authority from the BIR authorizing the examination of its books of accounts and other financial records for all internal revenue taxes for taxable year 2007. It later received a Post Reporting Notice from BIR informing it of tentative findings for deficiency income tac, VAT, EWT, and withholding tax on compensation liabilities for taxable year 2007 and directed it to attend an informal conference or to submit documentary evidence to refute said findings. After its reply, CIR sent Final Assessment Notices and a Formal Letter of Demand with attached details of discrepancies. On May 24, 2012, SVI received a Final Notice Before Seizure. The CTA Second Division held for SVI and granted the petition for review whereby the Preliminary Collection Letter dated April 23, 2012 was cancelled and withdrawn. Aggrieved, petitioner CIR filed a Motion for Reconsideration but was denied for lack of merit. Hence, this petition. ISSUES: Whether or not the CTA Division has jurisdiction over the determination of PCL validity. Whether or not the assessment for deficiency is valid. HELD: 1. Yes. Section 7(a)(1) of RA No. 1125, as amended, provides that the CTA has exclusive appellate jurisdiction to review by appeal decisions of the CIR involving disputed assessments or other matters arising under the NIRC of 1997. In CIR v. Hambrecht & Quist Philippines, Inc.32, the Supreme Court had occasion to dissect the jurisdiction of the CTA, as follows: “xxx [W]e have previously ruled that the appellate jurisdiction of the CTA is not limited to cases which involve decisions of the CIR on matters relating to assessments or refunds. The second part of the provision covers other cases that arise out of the National Internal Revenue Code (NIRC) or related laws administered by the Bureau of Internal Revenue.” 2. No. A perusal of the records shows that petitioner failed to present evidence that respondent actually received the PAN. It is elementary that a taxpayer must actually receive any assessment issued by petitioner in order for the same to be valid. While the presumption exists that constructive service of an assessment- provided the same is properly addressed with postage prepaid and is actually mailed - is received by the taxpayer in the ordinary course of mail, the same is merely a disputable presumption, which can be directly denied by the taxpayer.

Commissioner of Internal Revenue v. VMC Farmers Multi-Purpose Cooperative CTA EB No. 1253; March 3, 2016 Bautista, J.: FACTS:

VMC Farmers Multi-Purpose Cooperative alleged that the BIR Regional Director of Region 12-Bacolod City refused to issue a Certificate Authorizing Release of Refined Sugars (CARRS) because it failed to secure a new Certificate of Tax Exemption. Subsequently, it was able to secure a new CTE from the BIR as a cooperative transacting with members only. However, despite obtaining a new Certificate of Tax Exemption, the BIR refused to issue CARRS without petitioner paying advance VAT. For BIR’s refusal to issue CARRS, VMC paid the advance VAT under protest on 93,503 Lkg bags of refines sugar. As a result, VMC filed a claim for refund alleging that it was exempted from payment of VAT in relation to Articles 60 and 61 of RA No. 9520.Without waiting for the expiration of the two (2)-year prescriptive period for the recovery of tax erroneously or illegally collected, petitioner filed the instant Petition for Review before the CTA. The BIR argued that VMC must prove that its case falls within the provisions of the Joint Rules and Regulations Implementing Articles 60, 61 and 144 of RA No. 9520. ISSUE: Whether or not VMC is exempted from payment of VAT, thus, entitled to a tax refund. HELD: Yes, VMC Farmers Multi-Purpose Cooperative is exempt from payment of VAT. Based on Article 109 (L) of the NIRC of 1997, as amended, and Articles 60 and 61 of RA No. 9520, there are two (2) kinds of cooperatives classified according to the extent of their tax exemption: (1) those duly registered cooperatives which transact business with members only; and (2) those duly registered cooperatives which transact business with both members and non-members. In the instant case, VMC belongs to the category of duly registered cooperatives which transact business with members only as shown by its Certificate of Tax Exemption. Hence, it is Article 60, not Article 61, of RA No. 9520 that should apply with respect to tax-exempt status of the same. Applying Article 60, VMC shall not be subject to “taxes and fees imposed under internal revenue laws and other tax laws,” including VAT. Accordingly, it is wrong for the CIR to argue that VMC failed to submit supporting documents to be entitled to tax exemptions based on Article 61 of RA No. 9520 in relation to Section 8 of the Joint Rules and Regulations. The said provisions apply only to cooperatives which transact business with members and non-members. VMC faithfully complied with the requirements for it to be accorded a tax-exempt status, specifically, from payment of VAT, by presenting the following documents: (1) Certificate of Registration with the CDA; (2) Certificate of Good Standing issued by the CDA; and (3) Certificate of Tax Exemption issued by the BIR. Since petitioner is exempted from paying taxes, including VAT, petitioner may then apply for tax credit/ refund of the advance VAT it already paid.

Commissioner of Internal Revenue v. Elric Auxiliary Services Corporation CTA EB No. 1174; March 3, 2016 Mindaro- Grulla, J.: FACTS:

Elric Auxiliary Services Corporation received the 48-Hour Notice which alleged that the BIR conducted a ten-day surveillance from April 16, 2010 to April 25, 2010 of the gas station located at Cogon, Digos City, Davao del Sur. The results showed that Elric Auxiliary was liable for alleged deficiency VAT. Counting thirty (30) days from July 5, 2011, the date of receipt of the letter-response, Elric filed this Petition for Review with the Court of Tax Appeals on August 4, 2011. The CIR pleaded special and affirmative defenses, arguing mainly that the instant case is not within the jurisdiction of the CTA. It argued that Elric’s reliance with on Section 228 as impleaded by Revenue Regulation No. 12-99 is misplaced, as the 48-hour Notice and the 5-Day VCN should not be treated as assessment notices under Section 228. Petitioners claim that there is no assessment in this case and the issue is petitioners' Oplan Kandado pursuant to Section 115 "Power of the Commissioner to Suspend the Business Operations of a Taxpayer" as implemented by Revenue Memorandum Order No. 3-2009, which is purely an administrative enforcement measure. Furthermore, petitioners claim that what can be elevated before the Court is the decision, ruling or inaction of the CIR on disputed assessments, thus, the claim of the Court's lack of appellate jurisdiction in the case. The CTA denied the motion to dismiss filed by the CIR. On February 17, 2014, the CTA Division declared null and void the 48-Hour Notice and 5-Day VAT Compliance Notice, and enjoined the CIR from enforcing the same. ISSUES: 1. Whether or not the CTA Division had jurisdiction over the case 2. Whether or not the 48-Hour Notice and the 5-Day VAT Compliance Notice was valid. RULING: 1. Yes. The Court of Tax Appeals' jurisdiction is not limited to a decision, ruling or inaction of the CIR on disputed assessment. The Court has jurisdiction to determine if the 48-Hour Notice and 5-Day VAT Compliance Notice issued by the BIR are valid. In the case of Philippine Journalist, Inc. vs. CIR, the Supreme Court has already settled that this Court also has jurisdiction over cases that arise out of the NIRC or related laws administered by the Bureau of Internal Revenue. Concomitantly, the "Oplan Kandado" through the 48- Hour Notice and 5-Day VAT Compliance Notice pursuant to Section 115 "Power of the Commissioner to Suspend the Business Operations of a Taxpayer" of the National Internal Revenue Code (NIRC), as amended, and implemented by Revenue Memorandum Order No. 3-2009, falls within the meaning of "other matters arising under the National Internal Revenue Code". 2. No. The Court finds that the 48-Hour Notice and the 5-Day VAT Compliance Notice have no factual bases. Other than a statement that the result of the surveillance resulted in a VAT liability, the basis thereof must likewise be disclosed. The basis and the method of how respondents computed the said sales amounts were not set forth in the notice. Commissioner of Internal Revenue v. Avon Products Manufacturing, Inc CTA EB No. 1275, April 1, 2016 Casanova, J.: FACTS:

Respondent Avon paid the 20% excise taxes imposed on perfumes and toilet waters under Sec. 150 of the NIRC on its removals of perfumes, toilet waters, splash colognes, and body sprays. Petitioner asserts that an amount of P38 561 292.43 represents the excise tax erroneously paid on removals of splash colognes and body sprays containing essential oils of 3% or less by weight as these products are not subject to the excise tax on toilet waters imposed under the NIRC. Avon filed a claim for refund. Respondent denied the said claim as it did not find any legal basis for the refund. ISSUE: Is respondent Avon entitled to a refund? HELD: Respondent's splash colognes and body sprays fall within the purview of the term "toilet waters", which should be subject to 20% excise tax under the NIRC, as explained in BIR Ruling No. 43-2000 and RMC 1702. Claims for tax refunds are in the nature of tax exemptions. Upon the person claiming an exemption rests the burden of justifying the exemption.

Commissioner of Internal Revenue v. ESS Manufacturing Company, Inc. CTA EB No. 1169, March 30, 2016 Fabon-Victorino, J.:

FACTS: A LOA was issued by the BIR for the examination of accounts of respondent. More than 2 years from the issuance of LOA and corresponding audit, the BIR issued a PAN against ESS for alleged deficiency taxes in the amount of P34 028 524.51. ESS moved for the reconsideration of the PAN. Two months late, ESS received a FAN finding it liable for deficiency taxes. ESS protested the FAN. ESS also petitioned the Court to cancel and declare the assessment as null and void. The CIR asserts that the ten-year prescriptive period to assess should apply as the tax returns filed by ESS were false. Therefore, the subject assessment has not prescribed and should be upheld. But granting that the period was only for 3 years, still the assessment is timely because the period to assess was suspended with the filing of ESS for reinvestigation. ISSUE: May the CIR still collect alleged deficiency taxes from ESS? HELD: The CIR failed to present any evidence to prove the allegation of filing false statements by ESS thus, the 10-year period cannot be applied. Applying the threeyear period,said period was not interrupted. ESS did not submit any additional documents when it filed a Motion for Reconsideration of FAN. Said protest was a request for reconsideration and not for reinvestigation. Therefore, the filing of such did not suspend or interrupt the running of three-year prescriptive period to assess under Section 203 of the NIRC. The CIR may still validly collect from respondent.

Commissioner of Internal Revenue v. Armadillo Holdings, Inc. CTA EB No. 1245, July 21, 2016 Ringpis-Liban, J.:

FACTS: The CIR issued a LOA authorizing its revenue officer to examine Armadillo's internal revenue taxes. Armadillo was found liable for alleged deficiency taxes. CIR issued first, a PAN, then a FAN reiterating the deficiency taxes. Armadillo submitted its administrative protest. The docket was then forwarded to RDO. The protest was denied by the issuance of FDDA. Armadillo filed its Petition for Review with the CTA before the First Division. CIR contests that Armadillo failed to file a valid protest, making the assessments final, executory, and demandable. Armadillo's letter cannot be considered valid protest for failure to state the applicable laws, rules, and regulations on which it was based. ISSUE: Is the protest of Armadillo valid and could it have any effect on the right of CIR to collect? HELD: The administrative protest is invalid for lack of conformity with law and rules. The rules require that the request for reinvestigation or reconsideration shall state the facts, applicable laws, rules and regulations, or jurisprudence on which the protest is based, these cannot be found in respondent's protest. However, after giving due course to Armadillo's letter-protest and issuing ths FDDA, BIR is in estoppel. The letter-protest was treated as a valid administrative protest and the same was scrutinized, evaluated, and given due course.

Philippine Bank of Communications v. Commissioner of Internal Revenue CTA EB No. 1194, March 21, 2016 Del Rosario, PJ.: FACTS:

PBCom filed its Annual Income Tax Return which shows a net loss of P592 038 205.25 and an overpayment of income tax. PBCom opted to be issued tax credit certificate. PBCom filed a written claim for the issuance of a TCC with the BIR representing its excess/ unutilized creditable withholding taxes. PBCom also filed a Petition for Review before the CTA to toll the running of prescriptive period. The CIR asserts that PBCom's claim for refund is subject to routinary investigation by the BIR and that the burden of proof is on the taxpayer who claims the exemption and he must justify his claim by the clearest grant under the Constitution or statutory law. ISSUE: Is respondent entitled to a refund or tax credit of alleged excess and unutilized creditable withholding taxes? HELD: Records show that PBCom presented several BIR forms to prove the fact of withholding. PBCom has sufficiently complied with the requirements for refund of unutilized CWT. There is nothing in the rules that would prejudice PBCom from claiming a refund/ issuance of TCC despite the erroneous use of other BIR forms. It has substantially complied with the statutory and administrative requirements for entitlement to refund/ issuance of TCC.

Commissioner of Internal Revenue v. Bank of the Philippine Islands CTA EB No. 1204, March 17, 2016 Uy, J.: FACTS:

Citytrust executed Waivers of the Statute of Limitations under the NIRC. Petitioner issued a Letter, with attached Assessment Notices against Citytrust for various deficiency internal revenue taxes. Citytrust filed protest letters. Citytrust entered into a merger agreement with respondent BPI, the latter being the surviving entity. Respondent then received the Warrant of Distraint and/ or Levy. Respondent filed a Petition for Review before the Court in Division. CIR asserts that the assessments were issued within the prescriptive period provided by law and that respondent BPI is estopped from questioning the validity of the waivers. ISSUE: May petitioner validly assess and collect from respondent BPI deficiency taxes? HELD: The Waiver of the Statute of Limitations executed are not binding. A perusal of the waiver did not bring about an agreement contemplated under Sec. 223 (b) of the NIRC. Thus, said waiver did not have the effect of extending the power of petitioner CIR to assess respondent BPI. This is because the waiver is not signed by petitioner CIR, there was no agreement to speak of thaf extended the prescriptive period to assess respondent BPI. Also, petitioner can no longer collect the unprescribed assessments. Petitioner CIR had three years from the time of issuance of the assessments within which to collect the same. However, it was several years later that CIR issued the subject Warrant of Distraint and/ or Levy, where the BIR begun the tax collection process. The right to collect of petitioner CIR has prescribed.

Commissioner of Internal Revenue V. Oakwood Overseas Limited CTA EB No. 1212, April 18, 2016 Fabon-Victorino, J.: FACTS:

Respondent Oakwood Overseas Limited is a foreign corporation engaged in the business of leasing condominium units in the Philippines and with office address in Makati City. On December 22, 2009, the petitioner issued a Preliminary Assessment Notice (PAN) against respondent for alleged deficiency income tax (IT) and valueadded tax (VAT) for the fiscal year (FY) ended January 31, 2007 to which respondent filed a protest with supporting documents on January 19, 2010. On February 19, 2010, respondent protested the assessments in a letter dated February 18, 2010. Since respondent already attached to its protest letter to the PAN the documents it deemed would substantiate its position against the assessments, it did not attach any to its protest to the FAN. Subsequently, petitioner issued a Final Decision on Disputed Assessment (FDDA), which respondent received on November 8, 2010. On December 8, 2010, respondent filed with the Court in Division a Petition for Review praying for the cancellation of the foregoing assessments. On April 29, 2014, the Court in Division ordered that the assessments issued by the petitioner CIR against respondent Oakwood covering the deficiency income tax, value-added tax and compromise penalty be cancelled and set aside. Hence, petitioner filed a petition for review on certiorari contending that, since respondent failed to submit certain documents in support of its protest against the FAN the assessed deficiency IT, VAT, increments on late filing/payment of VAT for March 2006 and compromise penalties for FY ending January 31, 2007 became final, executory and demandable, pursuant to Section 228 of the NIRC of 1997, as amended. ISSUE: Did the First Division of the Court of Tax Appeals err in cancelling and setting aside the assessed deficiency Income Tax and Value-Added Tax issued by the BIR to herein respondent for fiscal year ending January 31, 2007? HELD: NO. Notwithstanding the foregoing observation and if only to disabuse petitioner's mind, let it be stressed at this instance that relevant documents to substantiate respondent's Protest both against the PAN and the FAN were timely submitted. The BIR record shows that respondent attached to its protest to the PAN the documents it deemed relevant to bolster its stance against the assessment issued against it by petitioner, namely, the Final or the 2007 Audited Statements of Revenues and Expenses or Financial Statements, and a copy of the Summary of Taxes and Licenses and Condominium Dues. Respondent cited and relied on these very same documents in protesting the FAN. Precisely, it no longer attached to the letter protest to the FAN the same documents for they were already submitted and formed part of the BIR docket. To require submission of the same set of documents to substantiate the FAN is superfluous if not a waste of resources.

It is worth to note that the term "relevant supporting documents "should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. In fine, it is the taxpayer who determines the documents relevant to its position. The BIR can only require submission of additional documents from the taxpayer concerned. It cannot demand the type of supporting documents that should be submitted by the taxpayer, lest the latter will be at the mercy of the former which may require the production of documents that a taxpayer cannot submit or produce.

Commissioner of Internal Revenue V. Philippine Tobacco Fluecuring and Redrying Corporation CTA EB No. 1218, April 11, 2016 Castaneda, Jr., J.: FACTS:

On November 7, 2008, petitioner (PTFC) received anundated Preliminary Assessment Notice (PAN) from the BIR regarding its income tax return for the fiscal year ending August 31, 2005. Petitioner was initially assessed its deficiency tax amounting to P27,221,724.14. On November 21, 2008, petitioner filed its protest letter to the PAN and the supporting documents. However, on December 3, 2008, petitioner received from the BIR a Formal Letter of Demand (FLD) dated November 26, 2008 with attached Audit Results/ Assessment Notices all dated December 2, 2008, which alleged that petitioner had deficiency taxes for FY ending August 31, 2005, in the total amount ofP26,124,490.16. On December 23, 2008, petitioner filed a protest letter to the FLD with all its supporting documents. However, On October 7, 2009, petitioner received the Final Decision on Disputed Assessment dated September 11, 2009. In the said FDDA and Assessment Notice, respondent found petitioner liable for deficiency taxes for FY ending August 31, 2005, in the aggregate amount of P10,842,528.74, inclusive of interest and compromise penalties. Hence, on November 6, 2009, petitioner filed a Petition for Review. On March 26, 2014, the Court in Division rendered the assailed decision which affirmed the disputed assessments. In its petition for review, PTFC alleged that on March 22, 2010, it paid to the BIR the amount of P2,442,230.02 representing 40% of the basic deficiency tax of Php6,105,575.05.The said payment was allegedly in support of PTFC' s application for compromise settlement of its above deficiency tax liabilities. Thus, PTFC argued that the basic deficiency tax amounting to P1,789,857.55 should be deemed paid in view of its alleged compromise payment. ISSUE: Should PTFC's alleged payment of compromise offer be given credence? HELD: No. Section 204 provides that "Where the basic tax involved exceeds One million pesos (P 1, 000,000.00) or where the settlement offered is less than the prescribed minimum rates, the compromise shall be subject to the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4) Deputy Commissioners." At any rate, the Court En Bane finds the said BIR Form 2107 bereft of probative value because, on its face, it does not appear that the alleged compromise offer made by PTFC concerning its deficiency tax liabilities has been approved by the concerned Evaluation Board of the BIR, as required under Section 204 (A) of the National Internal Revenue Code of 1997, as amended (1997 NIRC). The document merely shows that it was received by the Large Taxpayer Collection and Enforcement Division of the BIR on August 6, 2010. There is also no indication whatsoever that the amount stated therein had already been paid.

National Transmission Corporation V. Municipality of Labrador, Pangasinan CTA EB No. 1250, April 8, 2016 Mindaro-Grulla, J.: FACTS:

National Transmission Corporation is a government-owned-and-controlled corporation created under RA 9136. Between the years 2006-2008, petitioner TRANSCO received 3 Notices of Assessment from the Municipal Treasurer of Labrador, Pangasinan for he alleged local business tax liabilities for year 1999-2008. Petitioner protested the assessments arguing, among others, that (a) the assessment was based on mere presumptions and not on actual and true facts; (b) the local government units cannot impose taxes, fees or charges of any kind on the agencies and instrumentalities of the government; (c) the imposition of business tax amounts to double taxation; (d) the assessment was issued beyond the prescriptive period; and (e) the assessment is erroneous. However, the protests were denied by respondents. Consequently, collection cases were instituted against petitioner. Subsequently, a Complaint for refund was filed by petitioner with RTC Branch 37 of Lingayen, Pangasinan on February 9, 2011, alleging that it is a government instrumentality not liable to pay local tax; that the municipality has no power to impose local tax upon respondent because it is enjoying a franchise since only provinces or cities are empowered to levy local business taxes; that the municipal ordinance lacks reference to the business of electric power transmission; and that the situs of taxation is lacking. The RTC ruled in favor of petitioner. On appeal, The Second Division reversed the ruling of the RTC and observed that TRANSCO was not able to appeal the assessments before the court of competent jurisdiction within the time provided for by law. Moreover, payments subject of the claim for refund were not made within the respective sixty-day periods to file protests, making the assessments final and unappealable. TRANSCO's Motion for Reconsideration was likewise denied. Hence, a petition for review was filed. ISSUE: Did the Second Division err in denying TRANSCO's claim for refund on the ground that it is based on final and unappealable assessments under Section 195 of the LGC? HELD: Yes. The rule is settled that the perfection of an appeal in the manner and within the prescribed period fixed by law is not only mandatory but also jurisdictional and noncompliance with these legal requirements is fatal to a party's cause. A taxpayer dissatisfied with a local treasurer's denial of or inaction on his protest over an assessment has thirty (30) days within which to appeal to the court of competent jurisdiction. Under the law, said period is to be reckoned from the taxpayer's receipt of the denial of his protest or the lapse of the sixty (60) day period within which the local treasurer is required to decide the protest, from the moment of its filing. When TRANSCO received the local treasurer's denial of its protest, its remedy is to file an appeal with the court of competent jurisdiction. It should have not ignored the thirty-day period to file an appeal and then thereafter make a claim for refund and raise its very same arguments that it should have raised during the appeal of the denial of its protest.

When the period to protest has lapsed, the taxpayer cannot thereafter pay for the tax then ask for refund. Since the assessments had already become final on account of TRANSCO's failure to appeal with the court of competent jurisdiction within the prescribed period, to grant its prayer thereafter to reverse the ruling in the assailed Decision, to cancel the tax assessment issued against it and to issue a tax refund in its favor is to allow TRANSCO to indirectly file an appeal against the assessments which had already become final and executory. It had been ruled that what one cannot do directly, he cannot do indirectly. For to grant TRANSCO's prayer will allow it to indirectly impugn the subject assessments which have become final and executory. This will allow TRANSCO to indirectly file an appeal against the final decisions of the local treasurer of the Municipality of Labrador, Pangasinan beyond the 60-day period mandated by law.

Prudentialife Plans, Inc. V. Commissioner of Internal Revenue CTA EB No. 1219, April 19, 2016 Uy, J.: FACTS:

Petitioner Prudentialife Plans Inc. is a domestic corporation registered with the Securities and Exchange Commission as a preneed company with principal office at Legaspi Village, Makati City. On July 12, 2005, respondent issued against petitioner a Final Assessment Notice (FAN) on alleged deficiency value-added tax (VAT) for Fiscal Years ended March 31, 2001 and March 31, 2002. Petitioner filed its formal written protest with the BIR National Office Large Taxpayer's Service on September 20, 2005. Subsequently, respondent issued Warrant of Distraint and/or Levy against petitioner. On June 22, 2010, petitioner filed with the Court in Division a Petition for Review. On September 4, 2014, respondent filed a Demurrer to Evidence, praying for the dismissal of CTA Case No. 8109 on the ground that upon the facts and the law, petitioner has shown no right to relief. In the assailed Resolution dated June 23, 2014, the Court in Division denied the admission of petitioner's Formal Offer of Evidence attached to its Comment/Opposition to Respondent's Demurrer on Evidence and granted respondent's Demurrer to Evidence thereby ordering the dismissal of CTA Case No. 8109 for lack of merit. Petitioner's motion for reconsideration was likewise denied. Hence, petitioner filed a petition for Review on Certiorari before the CTA En Banc. Petitioner argues that A-1 0 of Revenue Memorandum Circular No. 13-9664 (RMC No. 13-96) stating that 'the amount of such contribution shall be indicated in the VAT official receipt; otherwise the entire amount shall be subject to VAT' should be declared null and void as the creation and contribution to the trust fund is mandated under the Securities and Regulations Code and its implementing rules. Pursuant thereto, the issuance of the subject VAT assessments, which was based on the violation of said invoicing requirement under RMC No. 13-96, is null and void and should be ordered cancelled by this Honorable Court. Moreover, petitioner avers that the subject VAT assessments have no factual basis inasmuch as respondent did not provide ISSUE: Is the legal basis of the VAT assessments of BIR RMC No. 13-96 null and void? HELD: No. The issue being raised by petitioner, which deals with the validity of A-10 of RMC No. 13-96, was never raised in the proceedings a quo. Thus, the same cannot be passed upon by the Court En Banc. Petitioner failed to prove that such assessment was erroneous. Needless to state, in appeals to this Court, the determination of the respondent is presumed correct and it behooves the taxpayers to rebut such presumption. The burden of proof is upon the complaining party to show clearly that the assessment is erroneous. Failure to present proof of error in the assessment will justify the judicial affirmance of said assessment. Correspondingly, if the Court En Banc would rule on the issue regarding the validity of RMC No. 13-96, despite the absence of proof of error on the subject VAT

assessment, it would be tantamount to rendering a mere advisory opinion. Needless to state, courts are proscribed from rendering an advisory opinion.

Total (Philippines) Corporation V. Commissioner of Internal Revenue CTA EB No. 1264, April 20, 2016 Castaneda, Jr., J.: FACTS:

Petitioner alleged that during the four quarters of taxable year 2008, it sold and exported products to companies located in foreign countries and to companies in special economic and Freeport zones. During the same period, it incurred/paid input taxes on its purchases and/or importations of VA Table goods and services. Thus, Petitioner filed with the BIR its original and amended Quarterly VAT Returns for the four quarters of taxable year 2008. On account that its VAT returns showed excess input taxes, petitioner filed with respondent administrative claims for refund/tax credit of its unutilized input taxes pertaining to zero-rated sales for taxable year 2008. On March 30, 2010 and September 29, 2010, petitioner filed separate Petitions for Review, alleging respondent's inaction in her level. Respondent in her Answer in CTA moved to dismiss the case citing the special and affirmative defenses, among which is that petitioner failed to exhaust administrative remedies for failure to comply with the legal requirements under Section 112(C) of the National Internal Revenue Code (NIRC) of 1997; and a claim for refund being in the nature of tax exemption is strictly construed against the claimant, hence, looked upon with disfavor. ISSUE: Is petitioner entitled to tax refund/credit? HELD: No. As clearly explained in the assailed Amended Decision, Section 112 of the 1997 NIRC must be read and applied in conjunction with the other provisions of the VAT law, particularly Section 110 (B) thereof which provides: "SECTION 110. Tax Credits.XXX XXX XXX (B) Excess Output or Input Tax. - If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT -registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: Provided, however, That any input tax attributable to zero-rated sales by a VAT -registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112." It is evident from the foregoing that when the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter/s. But when input tax attributable to zero-rated sales exceeds the output tax, the excess input tax may be refunded or credited against other internal revenue taxes. Hence, for input tax attributable to zero-rated sales, it is only when input tax exceeds the output tax that a refund or credit is proper. The CTA En Banc is of the view that the foregoing interpretation, i.e., that the input tax attributable to zero-rated sales must be proven to be "excess and unutilized" before it may be considered a proper subject of refund or credit, is fully in consonance with the "tax credit method", the method of computing VAT from which our present VAT law has been drawn. The CTA En Banc agreed with the Court in Division in finding that the audited financial statements submitted by Total failed to

specifically state the effectivity period of registration of the said entities with SBMA. The determination of effectivity period of the registration is required since this will aid the court to ascertain whether or not the sales for taxable year 2008 were made to duly registered ecozone entities. Absent any proof of the required period of coverage, there is no way for the court to determine if the said registration covers the taxable year involved. This Court cannot simply presume that the sales to these entities subject of the present claim fall within the covered period of these.