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G.R. No. 179115 September 26, 2012 Asia International Auctioneers, Inc., Petitioner, Commissioner of Internal Revenue, Respondent

The document summarizes a court case between Asia International Auctioneers, Inc. (AIA) and the Commissioner of Internal Revenue (CIR) regarding a tax assessment of over ₱106 million in deficiency value added tax (VAT) and excise tax. AIA claimed it timely filed a protest letter of the assessment, but the CIR denied receiving it within the 30-day period. The Court of Tax Appeals initially dismissed AIA's appeal for lack of jurisdiction. However, the Supreme Court ruled that AIA was eligible for a Tax Amnesty Program and not disqualified as a deemed withholding agent, as the assessment was against AIA directly and not as a withholding agent for the taxes. The deficiency

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90 views2 pages

G.R. No. 179115 September 26, 2012 Asia International Auctioneers, Inc., Petitioner, Commissioner of Internal Revenue, Respondent

The document summarizes a court case between Asia International Auctioneers, Inc. (AIA) and the Commissioner of Internal Revenue (CIR) regarding a tax assessment of over ₱106 million in deficiency value added tax (VAT) and excise tax. AIA claimed it timely filed a protest letter of the assessment, but the CIR denied receiving it within the 30-day period. The Court of Tax Appeals initially dismissed AIA's appeal for lack of jurisdiction. However, the Supreme Court ruled that AIA was eligible for a Tax Amnesty Program and not disqualified as a deemed withholding agent, as the assessment was against AIA directly and not as a withholding agent for the taxes. The deficiency

Uploaded by

Princess Aiza Maulana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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G.R. No.

179115               September 26, 2012

ASIA INTERNATIONAL AUCTIONEERS, INC., Petitioner,


vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.

Before the Court is a Petition for Review seeking to reverse and set aside the Decision dated
August 3, 2007 of the Court of Tax Appeals (CTA) En Banc, 1 and the Resolutions dated
November 20, 20062 and February 22, 20073 of the CTA First Division dismissing Asia
International Auctioneers, Inc.’s (AIA) appeal due to its alleged failure to timely protest the
Commissioner of Internal Revenue’s (CIR) tax assessment.

FACTS:

AIA is a duly organized corporation operating within the Subic Special Economic Zone. It is
engaged in the importation of used motor vehicles and heavy equipment which it sells to the
public through auction.4

On August 25, 2004, AIA received from the CIR a Formal Letter of Demand, dated July 9, 2004,
containing an assessment for deficiency value added tax (VAT) and excise or a total amount of
₱ 106,870,235.00, inclusive of penalties and interest, for auction sales conducted on February
5, 6, 7, and 8, 2004.

AIA claimed that it filed a protest letter dated August 29, 2004 through registered mail on August
30, 2004. It also submitted additional supporting documents on September 24, 2004 and
November 22, 2004.

On March 8, 2006, the CIR filed a motion to dismiss10 on the ground of lack of jurisdiction citing
the alleged failure of AIA to timely file its protest which thereby rendered the assessment final
and executory. The CIR denied receipt of the protest letter dated August 29, 2004 claiming that
it only received the protest letter dated September 24, 2004 on September 27, 2004, three days
after the lapse of the 30-day period prescribed in Section 22811 of the Tax Code.12

AIA submitted the following evidence to prove the filing and the receipt of the protest letter dated
August 29, 2004: (1) the protest letter (2) a Certification issued by Wilfredo R. De Guzman,
Postman III (3) a Certification dated July 5, 2006 issued by Acting Postmaster, Josefina M.
Hora, of the Philippine Postal Corporation-NCR, stating that Registered Letter No. 3824 was
delivered to the BIR Records Section and was duly received by the authorized personnel on
September 8, 2004;15 and (4) a certified photocopy of the Receipt of Important Communication
Delivered.AIA also presented Josefina M. Hora and Felisa U. Arrojado as witnesses to testify on
the due execution and the contents of the foregoing documents.

After hearing both parties, the CTA First Division rendered the first assailed Resolution dated
November 20, 2006 granting the CIR’s motion to dismiss. The CTA First Division faulted AIA for
failing to present the registry return card of the subject protest letter.
On January 30, 2008, AIA filed a Manifestation and Motion with Leave of the Honorable Court to
Defer or Suspend Further Proceedings20 on the ground that it availed of the Tax Amnesty
Program under Republic Act 948021 (RA 9480), otherwise known as the Tax Amnesty Act of
2007.
ISSUE:

Whether AIA is disqualified under Section 8(a) of RA 9480 from availing itself of the Tax
Amnesty Program because it is "deemed" a withholding agent for the deficiency taxes. This
argument is untenable.

RULING:

No. The CIR did not assess AIA as a withholding agent that failed to withhold or remit the
deficiency VAT and excise tax to the BIR under relevant provisions of the Tax Code. Hence, the
argument that AIA is "deemed" a withholding agent for these deficiency taxes is fallacious.

Indirect taxes, like VAT and excise tax, are different from withholding taxes. To distinguish, in
indirect taxes, the incidence of taxation falls on one person but the burden thereof can be
shifted or passed on to another person, such as when the tax is imposed upon goods before
reaching the consumer who ultimately pays for it.

On the other hand, in case of withholding taxes, the incidence and burden of taxation fall on the
same entity, the statutory taxpayer. The burden of taxation is not shifted to the withholding
agent who merely collects, by withholding, the tax due from income payments to entities arising
from certain transactions and remits the same to the government.

Due to this difference, the deficiency VAT and excise tax cannot be "deemed" as withholding
taxes merely because they constitute indirect taxes. Moreover, records support the conclusion
that AIA was assessed not as a withholding agent but, as the one directly liable for the said
deficiency taxes.

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