People of the Philippines vs. Edmundo T. Ongsiako, Jr.

CASE NUMBER O-196 (February 2014)

Facts:

Respondent in this case is the president of H. Tambunting Pawnshop, Inc. at the time when the case was
filed. The said corporation was assessed with a deficiency tax pertaining to VAT and Documentary Stamp
Tax. Respondent refused to pay the said assessments relying on previous rulings by the BIR stating that
documentary stamp tax does not apply to pawn tickets. A demurrer to evidence was partially granted
dismissing partially the case pertaining to VAT.

Issue:

Whether or not respondent is criminally liable for refusing to pay an assessment for DST

Held:

The Court of Tax Appeals ruled that the respondent is criminally liable. It held that respondents willful
refusal to pay the assessed tax even after acknowledging its authority to assess the same is one that
deserves liability. In this case, despite having a clear remedy readily available to H. Tambunting
Pawnshop, Inc., the accused, as the President thereof, deliberately chose to ignore the subject
deficiency assessment, along with all the other notices and demand letters sent by the BIR.

Any well founded belief based on previous rulings by the BIR should have been ventilated out in the
form of a valid protest. The willful disobedience to the authority by the respondent makes him criminally
liable.
Philippine Gold Processing and Refining Inc. vs. Commissioner of Internal Revenue

CTA Case No. 8301 (February 27, 2014)

Facts:

The case involves the seeking of petitioner for issuance of a tax credit. Petitioner is a domestic
corporation for refining precious metals for export. Petitioner filed with BIR a VAT return indicating
creditable input VAT for its importations to which the BIR confirmed such as indeed creditable. Since the
corporation had no output VAT liability for that period, petitioner filed for a refund. Respondent failed
to act on such a claim. Respondent argues further that petitioners failed to submit all required
documents necessary for its claim.

Issue:

Whether or not petitioner is entitled to a refund or tax credit amounting to more than 107 million pesos

Held:
The CTA ruled that the failure to submit complete documents in support of the taxpayer's administrative
claim is not fatal to the judicial claim timely filed. Non-submission of supporting documents in the
administrative level is not fatal to a claim for refund. Judicial claims are litigated de novo and decided
based on what has been presented and formally offered by the parties during trial.

The Court however sees no connection or relevance to its alleged export sales for the first and second
quarters of fiscal year 2010 since petitioner failed to submit VAT zero-rated sales invoices and export
documents such as export declarations and bills of lading or airway bills. Thus, petitioner's alleged
export sales for the first and second quarters ~ fiscal year ending June 30, 2010 in the amount of
P3,252,883,799.44 cannot qualify for VAT zero-rating and the alleged input VAT incurred by petitioner
for the period covering January to March 2009 in connection thereto in the amount of P1 07,502,796.09
cannot be refunded.
Mindanao II Geothermal Partnership vs. CIR

CTA Case no. 8251 (February 2014)

Facts:
Petitioner seeks the refund or issuance of tax credit certificate (TCC) in the total amount of Seven Million
One Hundred Eighty-Six Thousand Five Hundred Eighty-Six Pesos (P7,186,586.00), representing its
excess income tax payments for calendar years 2008 and 2009. To date, no tax clearance was issued by
the BIR ROO No. 108, Kidapawan, North Cotabato despite follow-ups. Thus, petitioner was constrained
to file the present Petition for Review without waiting for the tax clearance from the BIR

Issue:

Whether or not petitioner is entitled to tax refund or tax credit

Held:

No it is not entitled to a tax refund or credit. Consistent with several Supreme Court Decisions and
related rules and regulations, petitioner must comply with the following requisites in order to be
entitled to a refund of unutilized excess creditable taxes withheld at source:

1. 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;

2. 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

3. That the income upon which the taxes were withheld was included in the return of the recipient.

In the instant case, there is no entry whatsoever in the "Creditable Tax Withheld" columns. This
declaration, at the very least, can be taken to mean, that no part of the gross income reported therein
were ever subjected to creditable withholding tax. Correspondingly, the supposed income payments to
which taxes were allegedly withheld, cannot be said to have been declared as part of the gross income
for the taxable year 2009. From this fact alone, it can be said that petitioner failed to comply with the
third requisite that the income upon which the taxes were withheld was included in the return of the
recipient.
Procter & Gamble Asia, PTE. LTD vs. CIR

CTA Case No. 8341 (February 24, 2014)

Facts:

Petitioner seeks the refund of the amount of P98,422,081.42, representing its alleged unutilized input
value-added tax (VAT) attributable to zero-rated sales for the fiscal year covering July 1, 2009 to June 30,
2010. In support of its reported input VAT of P218,916,263.97, petitioner presented Schedule of
Domestic Purchases of Goods, Schedule of Domestic Purchases of Services, Schedule of Capital Goods
Purchased , and the related VAT sales invoices, official receipts and other documents which were all
examined by the Court commissioned Independent CPA.

Issue:

Whether or not petitioner is entitled to the refund

Held:

No it is not, anent deductions to creditable tax.

Based on the provision of Section 112(A), petitioner must comply with the following requisites to be
entitled to a refund or tax credit of unutilized input taxes attributable to zero-rated or effectively zero-
rated sales:

1. that there must be zero-rated or effectively zero-rated sales; 2. that input taxes were incurred or paid;
3. that such input taxes are attributable to zero-rated sales or effectively zero-rated sales; 4. that the
input taxes were not applied against any output VAT liability; and 5. that the claim for refund was filed
within the two-year prescriptive period.

A perusal and systematic computations as required by law of the petitoners valid input VAT it can be
gleamed that petitioner's output tax liability in the amount of P119,369,965.37 as reflected in its
Quarterly VAT Returns for the four ( 4) quarters of fiscal year ending June 30, 2010 is a lot higher than
the valid input VAT of P21,162,485. 72. Therefore, there is no excess input VAT which may be the proper
subject of a claim for refund under Section 112(A) of the NIRC of 1997, as amended.
CASTALLOY Technology Corp. vs. Atty. Jose Tan, as Regional Director of BIR

CTA Case no. 8244 (January 30, 2014)

Facts:

On December 14, 2010, respondent Tan issued a Preliminary Assessment Notice (PAN)2 with the
attached Details of Discrepancies, assessing petitioners Allied Industrial Corporation and Alinsu Steel
Foundry Corporation for alleged deficiency donor's tax in the aggregate amount of ~13,972,608.26 for
taxable period January 21, 2009. Without filing any formal protest letter against the foregoing final
assessment, petitioners filed the instant Petition for Review on March 28, 2011.

Petitioner filed a protest against the PAN after receiving it, as issued by BIR Regional Director Jose Tan.
In response, the BIR issued a letter dated February 10, 2011 18 together with the Formal Letter of
Demand and Assessment Notice dated February 16, 2011, which petitioners received on March 9, 2011.
The February 10, 2011 letter of the Regional Director clearly indicated that his "office is left with no
alternative but to issue Final Assessment Notice (FAN) reiterating the demand for the payment of the
deficiency donor's tax shown therein to protect the interest of the government."

Issue:

Whether the case must be given due course by the CTA

Held:

It must not. Section 228 of the NIRC of 1997, as amended, and RR No. 12-99 require that petitioners
should file an administrative protest against the said FAN of the Regional Director. Petitioners, however,
did not protest the final assessment notice before the Commissioner of Internal Revenue. Instead, on
March 28, 2011, petitioners immediately filed the instant Petition for Review with this Court without
filing a protest against respondent's final assessment.

It is settled that the premature invocation of the court's intervention is fatal to one's cause of action. If a
remedy within the administrative machinery can still be resorted to by giving the administrative officer
every opportunity to decide on a matter that comes within his jurisdiction, then such remedy must first
be exhausted before the court's power of judicial review can be sought. The party with an administrative
remedy must not only initiate the prescribed administrative procedure to obtain relief but also pursue it
to its appropriate conclusion before seeking judicial intervention in order to give the administrative
agency an opportunity to decide the matter itself correctly and prevent unnecessary and premature
resort to the court.
Total Philippines Corporation vs. Commissioner of Internal Revenue

CTA Case No. 8056 (January 24, 2014)

Facts:

Petitioner Total (Philippines) Corporation prays for refund or issuance of tax credit certificate in the
aggregate amount of P187,554,770.69, allegedly representing unutilized input value-added tax (VAT)
attributable to zero-rated sales for the four taxable quarters of 2008. On May 31, 2010, respondent in
her Answer in CTA Case No. 8056 moved to dismiss the case citing the following special and affirmative
defenses, viz, petitioner's claim for refund or issuance of tax credit certificate in the amount of
P98,760,987.68, allegedly representing unutilized input VAT on purchase/importations of VATable goods
and services attributable to its zero-rated sales for the 1st and 2nd quarters of taxable year 2008 were
not properly and fully substantiated; the sales of goods and services to various alleged clients/affiliates
do not qualify for VAT zero-rating; the amount subject of the claim for refund do not pertain in full to its
input VAT attributable to its zero-rated sales for the 1st and 2nd quarters of taxable year 2008;
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:

Whether the petitioner is entitled to a tax credit

Held:

Since there is no excess input VAT which may be the subject of a claim for refund or issuance of tax
credit certificate under Section 112(A) of the NIRC of 1997, as amended, the instant claim must be
denied.

Only the portion of the input VAT claim attributable to the substantiated zero-rated sales of
P1,531,397,312.49 will be considered for refund. The rate to be applied is based on the substantiated
zero-rated sales over the total amount of reported zero-rated sales.

Petitioner's properly substantiated input taxes for the year 2008 are not sufficient to cover its output
taxes for the same year. While petitioner reflected in its Quarterly VAT Return for the first quarter of
2008 the amount of P205,081,910.96 as "Input Tax Carried Over from Previous Period", it however
failed to present VAT invoices or receipts to prove the existence of such amount. Hence, the input tax
carry-over of P205,081,910.96 cannot be validly applied against petitioner's output tax pursuant to
Section 110(A) and (B) of the NIRC of 1997, as amended.