Case Digests in Tax Review

Leonardo Yepes Jr.

2015-0452

SITEL PHILS. vs. CIR

G.R. No. 201326 (Feb. 8, 2017)

Facts: Sitel, a corporation engaged in the business of providing call center

services, filed on March 28, 2006 formal claims for refund or issuance of tax
credit with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback
Center of the Department of Finance for its unutilized input VAT arising from
domestic purchases of goods and services attributed to zero-rated transactions
and purchases/importations of capital goods. On March 30, 2006, it also filed a
judicial claim for refund or tax credit via a petition for review before the CTA.

The CTA Division denied the claim for failure to prove that the recipients of its
services are doing business outside the Philippines as required under Sec. 108
(B)(2) of the NIRC of 1997. It also disallowed amount representing input VAT paid
on capital goods for failure to comply with invoicing requirements under Sec. 113,
237 and 238 of the NIRC and Sec. 4.108-1 of RR 7-95.

Sitel filed a Petition for Review with the CTA En Banc which was denied for
being prematurely filed. It ruled that the 120-day period for the CIR to act on the
administrative claim under Sec. 112(D) of the NIRC of 1997, as amended, is
mandatory and jurisdictional. Sitel filed the judicial claim without waiting for the
lapse of the 120-day period for the CIR to acct on its administrative claim so the
CTA did not acquire jurisdiction as there was no decision or inaction to speak of.

The SC initially denied Sitel’s petition for failure to show that the CTA En Banc
committed reversible error. However, after a month the Court En Banc decided
the consolidated cases of CIR vs. San Roque where it recognized BIR Ruling No.
DA-489-03 as an exception to the mandatory and jurisdictional nature of the 120-
day waiting period.

Issue: Whether Sitel’s claim for refund was timely filed in light of the Court’s
pronouncement in CIR vs. San Roque.

Ruling: Yes, Sitel’s judicial claim for refund was deemed timely filed pursuant to
CIR vs. San Roque. Under Sec. 112(C) of the NIRC, CIR is given 120 days within
which to grant or deny a claim for refund. Upon receipt of CIR’s decision or ruling
denying the said claim, or upon the expiration of the 120-day period without
action from the CIR, the taxpayer has 30 days within which to file a petition for
review with the CTA. The 120-day period granted to the CIR is mandatory and
jurisdictional.

In San Roque, the Court clarified that the 120-day period does not apply to
claims that were prematurely filed during the period from the issuance of BIR
Ruling No. DA-489-03 on Dec. 10, 2003 until Oct. 6, 2010 when the Aichi
decision was promulgated. The BIR Ruling expressly allowed the filing of judicial
claims with the CTA even before the lapse of the 120-day period, and provided for a valid
claim of equitable estoppel because the CIR had misled taxpayers into prematurely filing
their judicial claim before the CTA.

Here, Sitel filed its administrative and judicial claim for refund on March 28, 2006 and
March 30, 2006, respectively, or after the issuance of BIR Ruling No. DA-489-03, but
before the date when Aichi was promulgated. Thus, even if Sitel filed its judicial claim
prematurely, CTA may still take cognizance of the case as it was filed within the excepted
period.

CIR vs. APO CEMENT CORP.

G.R. No. 193381 (Feb. 8, 2017)

Facts: The BIR assessed APO Cement deficiency taxes for taxable year 1999. APO
Cement paid the deficiency assessments except for the documentary stamp taxes. It
availed of the tax amnesty under R.A. 9480, particularly affecting the 1999 deficiency
documentary stamp taxes. Thus, it filed a Motion to Cancel Tax Assessment which was
granted by the CTA.

Issue: Whether respondent was warranted in not paying the documentary stamp tax when
it availed of the tax amnesty granted under R.A. No. 9480.

Ruling: Yes. Submission of the documentary requirements and payment of the amnesty
tax (which respondent complied with) is considered full compliance with R.A. 9480 and
the taxpayer can immediately enjoy the immunities and privileges enumerated in Sec. 6
of the law. The plain and straightforward conditions were obviously meant to encourage
taxpayers to avail of the amnesty program, thereby enhancing revenue administration and
collection.

The CTA further found there was nothing in the records which would show that
proceedings to question the correctness of the Statement of Assets, Liabilities, and Net
Worth (SALN) have been filed within the one-year period stated in Sec. 4 of the law.
Petitioner never alleged before the Court of Tax Appeals and this Court the existence of
any proceeding to question respondent’s SALN during this period. Thus, the lapse of the
one-year period effectively closed the window to question respondent’s 2005 SALN.

CIR vs. PHILIPPINE AIRLINES

G.R. No. 215705-07 (Feb 22, 2017)

Facts: On January 1, 2005, RA 9334 took effect which amended the NIRC and increased
the rate of excise tax imposed on alcohol and tobacco products. It also removed the
exemption from taxes, duties and charges, including excise taxes, on importations of
cigarettes, distilled spirits, and fermented liquor into the Philippines. PAL’s importations
of alcohol and tobacco products which were intended for use in its commissary supplies
during international flights were subjected to excise taxes. PAL filed an administrative
claim for refund contending that it is entitled to tax privileges under Sec. 13 of PD 1590
which granted its franchise.

Issue: Was the tax privilege of PAL provided in PD 1590 revoked by R.A. 9334?

Ruling: No. A later law, general in terms and not expressly repealing or amending a prior
special law, will not ordinarily affect the special provisions of such earlier statute. P.D.
1590 is a special law. Between its provisions as against the provisions under the NIRC of
1997, as amended, which is a general law, the former prevails.

In PAL vs. CIR the Court declared that PAL’s payment of either the franchise tax or
basic corporate income tax shall be in lieu of all other taxes or duties, and inclusive of all
taxes on all importations of commissary and catering supplies, subject to the condition of
their availability and eventual use.

The franchise of PAL remains the governing law on its exemption from taxes. On July
1, 2005, R.A. 9337 took effect thereby further amending certain provisions of the NIRC.
It abolished the franchise tax and subjected PAL and similar entities to corporate income
tax and VAT. Accordingly, PAL is left with no other option but to pay its basic corporate
income tax, the payment of which shall be in lieu of all other taxes, except VAT, and
subject to certain conditions provided in its charter.

SPOUSES PACQUIAO vs. CTA

G.R. No. 213394 (Apr. 6, 2016)

Facts: The CIR issued assessment for deficiency income taxes against the spouses
Pacquiao for 2008 and 2009, which was later amended to include nonpayment of VAT
liabilities.
 Respondent CTA issued a resolution ordering the CIR to desist from collecting the
deficiency tax assessments which it found to be way beyond the petitioners’ net worth. It
however required the petitioners to deposit a cash bond in the amount of
P3,298,514.894.35 or post a bond of P4,947,772,341.53.

Here, petitioners claim that they should not be required to make a cash deposit or post
a bond to stay the collection of the questioned deficiency taxes considering that the
assessment and collection efforts of the BIR was marred by both procedural and
substantive errors. The CIR asserts that Sec. 11 of R.A. No. 1125, as amended, is without
exception when it states that notwithstanding an appeal to the CTA, a taxpayer, in order to
suspend the payment of his tax liabilities, is required to deposit the amount claimed by
the CIR or to file a security bond for not more than double the amount due.

Issue: Whether petitioners are liable to make a cash deposit or post a bond
notwithstanding their appeal to the CTA.

Ruling: Yes. Sec. 11 of R.A. No. 1125, as amended by R.A. No. 9282 embodies the rule
that an appeal to the CTA from the decision of the CIR will not suspend the payment,
levy, distraint, and/or sale of any property of the taxpayer for the satisfaction of his tax
liability as provided by existing law. When, in the view of the CTA, the collection may
jeopardize the interest of the Government and/or the taxpayer, it may suspend the said
collection and require the taxpayer either to deposit the amount claimed or to file a surety
bond.

The Court holds that the CTA has ample authority to issue injunctive writs to restrain
the collection of tax and to even dispense with the deposit of the amount claimed or the
filing of the required bond, whenever the method employed by the CIR in the collection
of tax jeopardizes the interests of a taxpayer for being patently in violation of the law.

The authority of the courts to issue injunctive writs to restrain the collection of tax and
to dispense with the deposit of the amount claimed or the filing or the required bond is
not simply confined to cases where prescription has set in. As explained by the Court in
those cases, whenever it is determined that the method employed by the CIR in the
collection of tax is not sanctioned by law, the bond requirement under Sec. 11 of R.A.
No. 1125 should be dispensed with. The purpose of the rule is not only to prevent
jeopardizing the interest of the taxpayer, but more importantly, to prevent the absurd
situation wherein the court would declare ‘that the collection by the summary methods of
distraint and levy was violative of law, and then, in the same breath require the petitioner
to deposit or file a bond as a prerequisite for the issuance of a writ of injunction.
Applying the foregoing precepts the Court finds no sufficient basis to determine
whether the dispensation of the required cash deposit or bond is appropriate. In rendering
the assailed resolution, the CTA, without stating the facts and law, made a determination
that the illegality of the methods employed by the CIR to effect the collection of tax was
not patent. It i premature for the court to rule on the issues of whether or not the warrants
were defectively issued, or whether the service thereof was done in violation of the rules,
or whether or not respondent’s assessments were valid. These matters are evidentiary in
nature, the resolution of which can only be made after a full blown trial.