CLEOFE, Mark Jeff V.

TAXATION 2 (SUNDAY 9:00-12:00)

CHINA BANKING CORPORATION, Petitioner, v. COMMISSIONER OF

INTERNALREVENUE, Respondent.

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

Facts:

China Banking Corporation (“CBC”) is a universal bank duly organized under the laws of the
Philippines. It is engaged in transactions involving sales of foreign exchange to the Central Bank
of the Philippines" commonly known as SWAP TRANSACTIONS. CBC did not pay tax on the
SWAP transactions for the years 1982- 1986.

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 amounting to P11, 383,165.50 CBC protested asserting five defenses; double
taxation, absence of liability, due process violation, validity of assessment and tax exemption.
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, CBC filed a Petition for Review with the CTA, but it was denied. The CTA ruled that
a SWAP arrangement should be treated as a telegraphic transfer subject to documentary stamp
tax. Thus, CBC is liable to pay such assessed deficiency. On appeal, CBC raised the issue of
prescription, but the BIR did not answer in its comment.

Issue:

Whether the right of the BIR to collect the assessed DST from CBC is barred by prescription?

Ruling:

Yes, the right of the BIR to collect the assessed DST is barred by the statute of limitations. 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. Assuming therefore
that 19 April 1989 is the reckoning date, the BIR had three years to collect the assessed DST.
However, the records of this case show that there was neither a warrant of distraint or levy
served on CBC's properties nor a collection case filed in court by the BIR within the three-year
period.
CLEOFE, Mark Jeff V.
TAXATION 2 (SUNDAY 9:00-12:00)

NIPPON EXPRESS (PHILIPPINES) CORP., Petitioner, v. COMMISSIONER OFINTERNAL

REVENUE, Respondents.

G.R. No. 185666, February 04, 2015

Facts:

Petitioner Corporation applied for a tax credit/refund based on section 112 of the Tax Code in the
amount of P24, 826.667.61 representing the value of input VAT paid by the Corporation in
relation to sales attributable to zero-rated sales. Petitioner corporation filed an administrative
claim with the One-stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the
Department of Finance (OSSAC-DOF) on September 24, 2001. Having no resolution from
OSSAC-DOF, petitioner corporation filed a petition for review to CTA. The CTA denied the
claim for tax credit/refund for petitioner’s failure to comply with the receipt and invoicing
requirements provided by the Tax Code for refund based on zero-rated transactions.

Issues:

Whether or not petitioner is entitled to a TCC in the amount of P24,826,667.61 allegedly

representing its excess and unutilized input VAT for the taxable year 2000?

Ruling:

No, In the present case, although it appears that petitioner has indeed complied with the required
two-year period within which to file a refund/tax credit claim with the BIR (OSSAC-DOF in this
case) by filing all its administrative claims on 24 September 2001 (within the period from the
close of the taxable quarters for the year 2000, when the sales were made), this Court finds that
petitioner’s corresponding judicial claim was filed beyond the 30-day period Section 112(D) of
the NIRC of 1997 categorically states that in case of failure on the part of the respondent to act
on the application within the 120day period prescribed by law, petitioner only has 30 days after
the expiration of the 120day period to appeal the unacted claim with the CTA. Since petitioner’s
judicial claim for the aforementioned quarters for taxable year 2000 was filed before the CTA
only on 24 April 2002,32 which was way beyond the mandatory 120+30 days to seek judicial
recourse, such non-compliance with the mandatory period of 30 days is fatal to its refund claim
on the ground of prescription. Consequently, the CTA had no jurisdiction over the instant claim
of petitioner as the petition was belatedly filed.
CLEOFE, Mark Jeff V.
TAXATION 2 (SUNDAY 9:00-12:00)

WINEBRENNER & IÑIGO INSURANCE BROKERS, INC., vs. COMMISSIONER

OFINTERNAL REVENUE,

G.R. No. 206526, January 28, 2015

Facts:

Winebrenner & Ifiigo Insurance Brokers, Inc. (petitioner) seeks the review of the March 22,
2013 Decision1of the Court of Tax Appeals En Banc (CTAEn Banc)which affirmed the denial of
petitioner's judicial claim for refund or issuance of tax credit certificate for excess and unutilized
creditable withholding tax (CWT) for the 1st to 4th quarter of calendar year (CJ} 2003
amounting to P4,073,954.00. It held that petitioner failed to prove that the excess CWT for CY
2003 was not carried over to the succeeding quarters of the subject taxable year. Under the 1997
National Internal Revenue Code (NIRC), a taxpayer must not have exercised the option to
carryover the excess CWT for a particular taxable year in order to qualify for refund.

Issue:

Whether the submission and presentation of the quarterly ITRs of the succeeding quarters of a
taxable year is indispensable in a claim for refund?

Ruling:

Yes. The respondent misused the ruling in Philam. Quarterly ITRs are of succeeding taxable
years is not required. Further the court ruled that, what Section 76 requires, just like in all civil
cases, is to prove the prima facie entitlement to a claim, including the fact of not having carried
over the excess credits to the subsequent quarters or taxable year. It does not say that to prove
such a fact, succeeding quarterly ITRs are absolutely needed. Moreso, it stated that the rule that
was underscored is that any document, other than quarterly ITRs may be used to establish that
indeed the noncarry over clause has been complied with, provided that such is competent,
relevant and part of the records. Thus, the Court is yet to be prepared to make a pronouncement
as to the indispensability of the quarterly ITRs in a claim for refund for no court can limit a party
to the means of proving a fact for as long as they are consistent with the rules of evidence and
fair play. The means of ascertainment of a fact is best left to the party that alleges the same. The
Court’s power is limited only to the appreciation of that means pursuant to the prevailing rules of
evidence. To stress, what the NIRC merely requires is to sufficiently prove the existence of the
non-carry over of excess CWT in a claim for refund.

The petitioner in this case failed to submit and offer as part of its evidence the first, second, and
third Quarterly ITRs for the year 2004. Consequently, petitioner was not able to prove that it did
not exercise its option to carry-over its excess CWT. As such, claims for refund are civil in
nature and, petitioner, as claimant, though having a heavy burden of showing entitlement, need
only prove preponderance of evidence in order to recover excess credit in cold cash.
CLEOFE, Mark Jeff V.
TAXATION 2 (SUNDAY 9:00-12:00)

PANAY POWER CORPORATION (formerly AVON RIVER POWER

HOLDINGSCORPORATION), Petitioner, vs. COMMISSIONER OF INTERNALREVENUE,
Respondent.

G.R. No. 203351, January 21, 2015

Facts:

A petition for review on certiorari1are the Decision2dated May 17, 2012 and the Resolution
dated August 29, 2012 of the Court of Tax Appeals (CTA) En Banc in CTA EB No. 709, which
affirmed the Amended Decision4dated December 6, 2010 of the CT A Special First Division
(CTA Division) in CTA Case No. 7402 and dismissed the claim for refund/credit of excess input
value-added tax (VAT) of petitioner Panay Power Corporation, formerly Avon River Power
Holdings Corporation (petitioner), for being prematurely filed.

Issue:

Whether the CTA En Banc correctly affirmed the CTA Division’s outright dismissal of
petitioner’s claim for tax refund/credit on the ground of prematurity?

Ruling:

In the case at hand, the Court ruled that the dismissal of the petitioner’s claim is improper. It
cited, Taganito Mining Corporation v. CIR, which states that the rule must therefore be that
during the period December 10, 2003 (when BIR Ruling No. DA-48903 was issued) to October
6, 2010 (when the Aichi case was promulgated), taxpayersclaimants need not observe the 120-
day period before it could file a judicial claim for refund of excess input VAT before the CTA.
Before and after the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the
observance of the 120-day period is mandatory and jurisdictional to the filing of such claim.

The petitioner filed its administrative and judicial claims for refund/credit of its input VAT on
December 29, 2005 and January 20, 2006, respectively, or during the period when BIR Ruling
No. DA-489-03 was in place, i.e., from December 10, 2003 to

October 6, 2010. As such, it need not wait for the expiration of the 120-day period before filing
its judicial claim before the CTA, and hence, is deemed timely filed. Thus, the erroneous ruling
of the CTA En Banc.
CLEOFE, Mark Jeff V.
TAXATION 2 (SUNDAY 9:00-12:00)

COMMISSIONER OF INTERNAL REVENUE, vs. TEAM (PHILS.) ENERGY

CORPORATION (formerlyMIRANT (PHILS.) ENERGY CORPORATION),

G.R. No. 188016, January 14, 2015

Facts:

The case is an appeal from the decision promulgated by the Court of Tax Appeals En Banc
which upheld the decision of the CTA in Division rendered on May 15, 2008 ordering the
Commissioner of Internal Revenue to refund or to issue a tax credit certificate in favor of the
respondent in the modified amount of P16,366,412.59 representing the respondent's excess and
unutilized creditable withholding taxes for calendar years 2002 and 2003.

Respondent Mirant (Philippines) Energy Corporation, a domestic corporation, filed with the
Securities and Exchange Commission (SEC) its Amended Articles of Incorporation stating its
intent to change its corporate name from Mirant (Philippines) Mobile Corporation to Mirant
(Philippines) Energy Corporation; and to include the business of supplying and delivering
electricity and providing services necessary in connection with the supply or delivery of
electricity. The SEC approved the amendment. Subsequently, it filed its annual income tax return
(ITR) for calendar years 2002 and 2003 on April 15, 2003 and April 15, 2004, respectively,
reflecting overpaid income taxes or excess creditable withholding taxes which also indicated in
the ITRs its option for the refund of the tax overpayments for calendar years 2002 and 2003. The
respondent then filed an administrative claim for refund or issuance of tax credit certificate with
the Bureau of Internal Revenue (BIR) in the total amount of P16,366,413.00, representing the
overpaid income tax or the excess creditable withholding tax of the respondent for calendar years
2002 and 2003.6

Due to the inaction of the BIR and in order to toll the running of the two-year prescriptive period
for claiming a refund under Section 229 of the National Internal Revenue Code (NIRC) of 1997,
the respondent filed a petition for review in the Court of Tax Appeals (CTA).7

Issue:

Whether or not the respondent proved its entitlement to the refund?

Ruling:

Yes, the petitioner is entitled to a refund. The court ruled that the submission of the quarterly
returns is not mandatory for as long as it was able to establish prima facie its right to the refund
via testimonial and object evidence, which would give the petitioner an opportunity to rebut to
shift the burden of evidence back to the respondent. The BIR's failure to present such vital
document during the trial in order to bolster the petitioner's contention against the respondent's
claim for the tax refund was fatal.