Commissioner of Internal Revenue vs COL Financial Group Inc.

FACTS:
On April 22, 2014, COL received a copy of the Notice of Decision and
Decision dated 21 April 2014 and 15 April 2014, respectively, issued by the
Third Division of the Court of Tax Appeals in CTA Case No. 8454 filed by COL
Financial Group Inc., against the Commissioner of Internal Revenue.
The case stemmed from the issuance of the Bureau of Internal
Revenue Regulations No. 2-2010 and Memorandum Circular No. 16-2010,
effectively amending Section 7 of BIR Regulations No. 16-2008. Said RR 22010 and RMC 16-2010 were made to apply retroactively, resulting in COL
having to pay additional taxes. April 15, 2010, COL paid under protest the
amount of P8, 960, 245.00, to avoid the imposition of penalties should the
retroactive effect of said issuances be upheld.
On April 3, 2012, COL Financial filed a Petition for Review to preserve
its right to claim a tax refund or secure a tax credit certificate for the
additional income tax paid under protest for the taxable year 2009.
The CTA granted COLs Petition for Review and ordered the Respondent
to issue a tax credit certificate in the amount of P8, 960, 245.00,
representing the additional income tax under protest. Hence, the respondent
filed a Motion for Reconsideration on the said decision contending, among
others, that once the taxpayer elected the optional standard deduction
(OSD) in its first quarterly return, such election is considered irrevocable for
the taxable year, as stated in Section 34(L) 3 of the National Internal
Revenue Code (NIRC) of 1997.
ISSUE:
Whether or not the Motion for Reconsideration is meritorious
HELD:
No, as correctly observed by COL, it is clear that Section 34(L) pertains
to the irrevocability of the election of OSD. However, the election of itemized
deduction will not bar the taxpayer to choose OSD later on. Records show
that RR No. 16-2008 was the prevailing ruling of the CIR when COL filed its
three quarterly returns for the taxable year 2009. COL simply relied on RR
No. 16-2008 at the time of filing of the quarterly returns, the revenue
regulation prevailing at such time, and it would be the height of injustice to
apply a new rule on the filing of quarterly return when such was already filed.
A reversal of a BIR regulation or ruling cannot adversely prejudice a taxpayer
who in good faith relied on the BIR regulation or ruling prior to its reversal.
Thus, premises considered, the Motion for Reconsideration is denied.

G.R. No. 202789, June 22, 2015

COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. PUREGOLD DUTY FREE,
INC.,Respondent.
FACTS:
Puregold is engaged in the sale of various consumer goods exclusively
within the Clark Special Economic Zone (CSEZ),and operates its store under
the authority and jurisdiction of Clark Development" Corporation (CDC) and
CSEZ. As an enterprise located within CSEZ and registered with the CDC,
Puregold had been issued Certificate of Tax Exemption No. 94-4, later
superseded by Certificate of Tax Exemption No. 98-54, 4which enumerated
the tax incentives granted to it, including tax and duty-free importation of
goods. The certificates were issued pursuant to Sec. 5 of Executive Order No.
(EO) 80, extending to business enterprises operating within the CSEZ all the
incentives granted to enterprises within the Subic Special Economic Zone
(SSEZ) under RA 7227, otherwise known as the "Bases Conversion and
Development Act of 1992."
Thus, in accordance with the tax exemption certificates granted to
respondent Puregold, it filed its Annual Income Tax Returns and paid the five
percent (5%) preferential tax, in lieu of all other national and local taxes for
the period of January 1998 to May 2004.
On July 25, 2005, in Coconut Oil Refiners v. Torre, however, this Court
annulled the adverted Sec. 5 of EO 80, in effect withdrawing the preferential
tax treatment heretofore enjoyed by all businesses located in the CSEZ.
On November 7, 2005, then Deputy Commissioner for Special
Concerns/OIC-Large Taxpayers Service of the Bureau of Internal Revenue
(BIR) Kim Jacinto-Henares issued a Preliminary Assessment Notice regarding
unpaid VAT and excise tax on wines, liquors and tobacco products imported
by Puregold from January 1998 to May 2004.
On July 27, 2007, Puregold availed itself of the tax amnesty under RA
9399, filing for the purpose the necessary requirements and paying the
amnesty tax. Nonetheless, on October 26, 2007, Puregold received a formal
letter of demand from the BIR for the payment of P2,780,610,174.51,
supposedly representing deficiency VAT and excise taxes on its importations
of alcohol and tobacco products from January 1998 to May 2004.

In its response-letter, Puregold, thru counsel, requested the

cancellation of the assessment on the ground that it has already availed of
the tax amnesty under RA 9399. This notwithstanding, the BIR issued on June
23, 2008 a Final Decision on Disputed Assessment stating that the availment
of the tax amnesty under RA 9399 did not relieve Puregold of its liability for
deficiency VAT, excise taxes, and inspection fees under Sec. 13l(A) of the
1997 National Internal Revenue Code (1997 NIRC).

ISSUE:
Whether or not Puregold remains to be liable for excise taxes on its wine,
liquor, and tobacco importations.
HELD:
Yes, clearly, these are not taxes on articles, raw materials, capital
goods, equipment and consumer items removed from the Special Economic
Zones and Freeport Zones and entered into the customs territory of the
Philippines for local or domestic sale. This may be verified in respondent's
Formal Letter of Demand where it was stated that the assessment was made
against petitioner's importation of wines, liquors and tobacco products. In
view thereof, the deficiency tax assessments made against petitioner, which
were sought to be cancelled in the instant petition, are not excluded under
R.A. No. 9399.
The coverage of the tax amnesty is the difference of all national and
local taxes that petitioner is liable under the Local Government Code, the Tax
Code and other pertinent laws, and the 5% tax that petitioner had previously
been liable pursuant to Executive Order (EO) No. 80.
Being liable to VAT and excise taxes on importations of alcohol and
cigars under Section 131 of the 1997 Tax Code is not a condition to be
excluded from the tax amnesty. Contrarily, being liable to such taxes is
obviously contemplated by RA No. 9399 thru the phrase "all national and
local tax impositions under relevant tax laws, rules and
regulations."

G.R. No. 192024, July 01, 2015

FORTUNE TOBACCO ORPORATION, Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE
FACTS:
Petitioner is the manufacturer/producer of, several cigarette brands, with tax
rate classification based on net retail price prescribed by law. Immediately
prior to January 1, 1997, these cigarette brands were subject to ad valorem
tax pursuant to then Section 142 of the Tax Code of 1977, as amended.
However, on January 1, 1997, R.A. No. 8240 took effect causing a shift from
the ad valorem tax (AVT) system to the specific tax system. As a result of
such shift, the aforesaid cigarette brands were subjected to specific tax
under Section 142 thereof, now renumbered as Section 145 of the Tax Code
of 1997.
On 31 March 2005, petitioner filed a claim for tax credit or refund
under Section 229 of the National Internal Revenue Code of 1997 (1997
NIRC) for erroneously or illegally collected specific taxes covering the period
June to December 31, 2004 in the total amount of Php219,566,450.00.
On November 14, 2005, petitioner filed a Petition for Review which was
raffled to the Former First Division of this Court. Respondent in his Answer
raised among others, that the amount of Php219,566,450.00 being claimed
by petitioner as alleged overpaid excise tax for the period covering 1 June to
31
December
2004,
is
not
properly
documented.
After trial on the merits, the Former First Division of this Court rendered
the assailed Decision, dated April 30, 2009, which consistently ruled that RR
17-99 is contrary to law and that there is insufficiency of evidence on the

claim for refund. Petitioner filed its motion for reconsideration therefrom, and
which was denied by the Former First Division on August 18, 2009.
Petitioner elevated its claim to the CTA En Banc, but was rebuffed after
the tax tribunal found no cause to reverse the findings and conclusions of the
CTA Division. Hence, this petition.
ISSUE:
Whether or not there is sufficient evidence to warrant the grant of
petitioner's claim for tax refund
HELD:
None, the petitioner's documentary evidence submitted were refused
admission for being merely photocopies. Section 3 of Administrative Matter
(A.M.) No. 05-11-07 CTA, the Revised Rules of the Court of Tax Appeals,
provides that the Rules of Court shall apply suppletorily in the proceeding
before the tax tribunal.
In this connection, Section 3 of Rule 130 of the Rules of Court lays
down the Best Evidence Rule with respect to the presentation of
documentary evidence. In this case, petitioner did not even attempt to
provide a plausible reason as to why the original copies of the documents
presented could not be produced before the CTA or any reason that the
application of any of the foregoing exceptions could be justified. Although
petitioner presented one (1) witness to prove its claim, it appears that this
witness was not even a signatory to any of the disputed documentary
evidence.
Petitioner utterly failed to, not only comply with the basic procedural
requirement of presenting only the original copies of its documentary
evidence, but also to adhere to the requirement to properly make its offer of
proof or tender of excluded evidence for the proper consideration of the
appellate tribunal.
Indeed, while it is true that litigation is not a game of technicalities is
equally true, however, that every case must be established in accordance
with the prescribed procedure to ensure an orderly and speedy
administration of justice. In all, the Court finds that the failure of petitioner to
prove its claim in accordance with the settled evidentiary rules merits its
dismissal.

G.R. No. 210836, September 01, 2015

CHEVRON PHILIPPINES INC., Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE,Respondent.
FACTS:
Chevron sold and delivered petroleum products to CDC in the period
from August 2007 to December 2007. Chevron did not pass on to CDC the
excise taxes paid on the importation of the petroleum products sold to CDC
in taxable year 2007; hence, on June 26, 2009, it filed an administrative
claim for tax refund or issuance of tax credit certificate in the amount of
P6,542,400.00. Considering that respondent Commissioner of Internal
Revenue (CIR) did not act on the administrative claim for tax refund or tax
credit, Chevron elevated its claim to the CTA by petition for review on June
29, 2009. The case, docketed as CTA Case No. 7939, was raffled to the CTA's
First Division.
The CTA First Division denied Chevron's judicial claim for tax refund or
tax credit through its decision dated July 31, 2012, and later on also denied
Chevron's Motion for Reconsideration on November 20, 2012.
In due course, Chevron appealed to the CTA En Banc (CTA EB No. 964),
which, in the decision dated September 30, 2013, affirmed the ruling of the
CTA First Division, stating that there was nothing in Section 135(c) of the
NIRC that explicitly exempted Chevron as the seller of the imported
petroleum products from the payment of the excise taxes; and holding that
because it did not fall under any of the categories exempted from paying
excise tax, Chevron was not entitled to the tax refund or tax credit.
Chevron sought reconsideration, but the CTA En Banc denied its motion
for that purpose in the resolution dated January 7, 2014. Chevron appealed
to the Court, but the Court (Second Division) denied the petition for review
on certiorari for failure to show any reversible error on the part of the CTA En
Banc.
Hence, Chevron has filed the Motion for Reconsideration, submitting
that it was entitled to the tax refund or tax credit.
ISSUE:
Whether or not Chevron was entitled to the tax refund or the tax credit
for the excise taxes paid on the importation of petroleum products that it had
sold to CDC in 2007
HELD:

Yes, it is noteworthy that excise taxes are considered as a kind of

indirect tax, the liability for the payment of which may fall on a person other
than whoever actually bears the burden of the tax. Simply put, the statutory
taxpayer may shift the economic burden of the excise tax payment to
another - usually the buyer.
Thus, conformably with Section 204(C) of the NIRC, supra, and
pertinent jurisprudence, Chevron, as a statutory taxpayer, was entitled to the
refund or credit of the excise taxes erroneously paid on the importation of
the petroleum products sold to CDC.

C.T.A. CASE NO. 6315

FLUOR DANIEL, INC. - PHILIPPINES, Petitioner, -versus- COMMISSIONER OF
INTERNAL REVENUE, Respondent
FACTS:
Petitioner is a corporation duly organized and existing under the laws
of the Philippines, and is primarily engaged in the construction and design
engineering business, with principal office at 3/F Asian Star Building, ASEAN
Drive, Filinvest Corporate City, Muntinlupa City. On February 15, 2000,
petitioner filed its Annual Income Tax Return (ITR) for the fiscal year ended
October 31, 1999 and decided to carry-over as tax credit for next year its
supposed excess overpayment in the amount of P17,894,655.00
On February 15, 2001, petitioner filed its ITR for the fiscal year ended
October 31, 2000, reflecting an overpayment of income tax in the amount of
P 16,776,328.00, which it chose "To be issued a Tax Credit Certificate".
However, on April 18, 200 l, petitioner filed an Amended Annual ITR for the
fiscal year ended October 31, 2000, showing instead an income tax
overpayment in the amount of P16,513,519, after increasing its Minimum

Corporate Income Tax (MCIT) from P1 ,703,367.00 to P 1,966,176.00.

Petitioner again elected the option "To be issued a Tax Credit Certificate
On May 25, 2001, petitioner filed with the respondent a request for the
issuance of tax credit certificate for the subject amount of Pl6,513,519.00,
representing the income tax overpayment and unutilized creditable
withholding tax shown in the amended ITR for the taxable fiscal year ended
October 31, 2000, pursuant to Sections 76 and 204(C) of the 1997 Tax Code.
ISSUE:
Whether or not petitioner is entitled to refund/issuance of tax credit
certificate for the amount of Pl6,513,519, representing the overpaid income
tax and unutilized CWT for taxable year ended December 31, 2000
HELD:
No, in the case at bar, the records indicate that petitioner elected its
1999 excess income tax payment to be carried-over as tax credit to the
succeeding year. Pursuant to Section 76 of the 1997 Tax Code, if a
corporation exercises the option to carry over its excess tax credits to the
succeeding years, the option becomes irrevocable for the taxable period and
no application for cash refund or issuance of a tax credit certificate shall be
allowed. Hence, petitioner is only allowed to carry-over its 1999 excess
income tax payment as an automatic tax credit until the same is fully
utilized.

G.R. No. 172509, February 04, 2015

CHINA BANKING CORPORATION, Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE,Respondent.
FACTS:
Petitioner CBC is a universal bank duly organized and existing under
the laws of the Philippines. For the taxable years 1982 to 1986, CBC was
engaged in transactions involving sales of foreign exchange to the Central
Bank of the Philippines (now Bangko Sentral ng Pilipinas), commonly known
as SWAP transactions. Petitioner did not file tax returns or pay tax on the
SWAP transactions for those taxable years.
On 19 April 1989, petitioner CBC received an assessment from the
Bureau of Internal Revenue (BIR) finding CBC liable for deficiency DST on the

sales of foreign bills of exchange to the Central Bank. Thereafter, petitioner

CBC, through its vice-president, sent a letter of protest to the BIR, requesting
a reinvestigation so as to substantiate its assertions.
On 6 December 2001, more than 12 years after the filing of the
protest, the Commissioner of Internal Revenue (CIR) rendered a decision
reiterating the deficiency DST assessment and ordered the payment thereof
plus increments within 30 days from receipt of the Decision.
The CTA ruled that a SWAP arrangement should be treated as a
telegraphic transfer subject to documentary stamp tax. Hence, petitioner
CBC filed a Motion for Reconsideration, but it was denied in a Resolution
dated 14 July 2005.
On 5 August 2005, petitioner appealed to the CTA En Banc. The
appellate tax court, however, dismissed the Petition for Review in a Decision
dated 1 December 2005. CBC filed a Motion for Reconsideration on 21
December 2005, but it was denied in a 20 March 2006 Resolution.
The taxpayer now comes to this Court with a Rule 45 Petition, reiterating the
arguments it raised at the CTA level and invoking for the first time the
argument of prescription.
ISSUE:
Whether or not the right of the BIR to collect the assessed DST from
CBC is barred by prescription
HELD:
Yes, pursuant to Section 319(c) of the National Internal Revenue Code
of 1977, as amended, the time limit for the government to collect the
assessed tax is set at three years, to be reckoned from the date when the
BIR mails/releases/sends the assessment notice to the taxpayer. Further,
Section 319(c) states that the assessed tax must be collected by distraint or
levy and/or court proceeding within the three-year period.
In this case, the records do not show when the assessment notice was
mailed, released or sent to CBC. Nevertheless, the latest possible date that
the BIR could have released, mailed or sent the assessment notice was on
the same date that CBC received it, 19 April 1989. The attempt of the BIR to
collect the tax through its Answer with a demand for CBC to pay the
assessed DST in the CTA on 11 March 2002 did not comply with Section
319(c) of the 1977 Tax Code, as amended. The demand was made almost
thirteen years from the date from which the prescriptive period is to be
reckoned. Thus, the claim of the CIR for deficiency DST from petitioner is
forever lost, as it is now barred by time.

G.R. No. 200670, July 06, 2015

CLARK INVESTORS AND LOCATORS ASSOCIATION, INC., Petitioner, v. SECRETARY OF FINANCE
AND COMMISSIONER OF INTERNAL REVENUE, Respondents.

FACTS:
On March 13, 1992, Congress enacted RA No. 7227 which mandated the accelerated conversion of the Clark
and Subic military reservations into special economic zones. Based on Section 12 (c) of RA No. 7227, in lieu
of national and local taxes, all businesses and enterprises operating within the Subic Special Economic Zone
shall pay a preferential gross income tax rate of five percent (5%). In addition, Section 12 (b) also provides
that such businesses and enterprises shall be exempt from the payment of all taxes and duties on the
importation of raw materials, capital, and equipment into the Subic Special Economic Zone. Meanwhile, on

March 20, 2007, Congress enacted RA No. 9400 which extended the aforementioned tax and fiscal
incentives under RA No. 7227 to the Clark Freeport Zone.
Thus, the businesses and enterprises within the Clark Freeport Zone are similarly exempt from the payment
of all taxes and duties on the importation of raw materials, capital and equipment. On February 17, 2012,
the DOF, upon recommendation of the BIR, issued RR 2-2012 which imposed VAT and excise tax on the
importation of petroleum and petroleum products from abroad and into the Freeport or Economic Zones.