CIR vs Petron Corporation, G.R. No.

185568, March 21, 2012 Facts: Respondent Petron is a corporation engaged in the production of petroleum products and is a Board of Investment (BOI) registered enterprise in accordance with the provisions of the Omnibus Investments Code of 1987 (E.O. 226) under Certificate of Registration Nos. 891037 and D95-136. During the period covering the taxable years 1995 to 1998, Petron had been an assignee of several Tax Credit Certificates (TCCs) from various BOI-registered entities for which it utilized in the payment of its excise tax liabilities for the taxable years 1995 to 1998. The transfers and assignments of the said TCCs were approved by the Department of Finances One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF Center) composed of representatives from the appropriate government agencies. Taking ground on a BOI letter issued on May 15, 1998 which states that hydraulic oil, penetrating oil, diesel fuels and industrial gases are classified as supplies and considered the suppliers thereof as qualified transferees of tax credit, Petron acknowledged and accepted the transfers of the TCCs from the various BOI-registered entities. Such acceptance and use of the TCCs as payment of its excise tax liabilities for the taxable years 1995 to 1998 had been continuously approved by the DOF as well as the BIRs Collection Program Division. On January 30, 2002, Petitioner CIR issued an Assessment against petitioner for deficiency excise taxes for the taxable years 1995 to 1998 in the total amount of P 739,003,036.32, inclusive of surcharges and interests on the ground that the TCCs utilized by petitioner in the payment of excise taxes have been cancelled by the DOF for having been fraudulently issued and transferred. Thus, petitioner, through letters dated August 31, 1999 and September 1, 1999, was required by the DOF Center to submit copies of its sales invoices and delivery receipts showing the consummation of the sale transaction to certain TCC transferors. Instead of submitting the said documents, Petron filed a protest on February 27, 2002. On March 27, 2002, CIR served a Warrant of Distraint and/or Levy on petitioner to enforce payment of the tax deficiencies without first acting on its letter-protest. Construing the Warrant of Distraint and/or Levy as the final adverse decision of the BIR on its protest of the assessment, Petron filed the petition before the CTA Second Division on April 2, 2002. On May 4, 2007, the CTA Second Division promulgated a Decision ordering Petron to pay the reduced amount of P600,769,353.95 representing deficiency excise taxes for the taxable years 1995 to 1998 and 25% late payment surcharge and 20% delinquency interest per annum on the said amount, computed from June 27, 2002 until the amount is fully paid. Petron filed a motion for reconsideration but was denied. Aggrieved, Petron appealed the Decision to the CTA En Banc through a Petition for Review. The CTA en banc reversed and set aside the CTA Second Division and absolved Petron from any deficiency excise tax liability for taxable years 1995 to 1998. The CIR moved for the reconsideration of the CTA En Banc Decision, but the motion was denied. Issue: Did CTA commit reversible error in holding that Petron is not liable for its excise tax liabilities from 1995 to 1998? Ruling: No. Petron is a transferee in good faith and for value of the subject TCCs since the CIR had no allegation that there was a deviation from the process for the approval of the TCCs, which Petron used as payment to settle its excise tax liabilities for the years 1995 to 1998. The CIRs claim that Petron have participated in the fraudulent issuance and transfer of the TCCs is negated by the Joint Stipulation it entered into with Petron in the proceedings before the CTA which states that Petron did not participate in the procurement and issuance of the TCCs, which TCCs were transferred to Petron and later utilized by Petron in payment of its excise taxes.

This stipulation of fact by the CIR amounts to an admission and, having been made by the parties in a stipulation of facts at pretrial, is treated as a judicial admission. The joint stipulation made by the parties consequently obviated the opportunity of the CIR to present evidence on this matter, as no proof is required for an admission made by a party in the course of the proceedings. Thus, the CIR cannot be allowed to change its stand and renege on that admission. Further, the post-audit report on which the CIR based its allegations does not have the effect of a suspensive condition that would determine the validity of the TCCs. As held in Petron v. CIR (G.R. No. 180385, 28 July 2010, 626 SCRA 100), which is on all fours with the instant case, TCCs are valid and effective from their issuance and are not subject to a postaudit as a suspensive condition for their validity. The implication on the instant case of the said earlier ruling is that Petron has the right to rely on the validity and effectivity of the TCCs that were assigned to it. The validity of those TCCs should not depend on the results of the DOFs post-audit findings. Taxes are the nations lifeblood through which government agencies continue to operate and with which the State discharges its functions for the welfare of its constituents. As an exception, however, this general rule cannot be applied if it would work injustice against an innocent party. Petron, in this case, was not proven to have had any participation in or knowledge of the CIRs allegation of the fraudulent transfer and utilization of the subject TCCs. Respondents status as a transferee in good faith and for value of these TCCs has been established and even stipulated upon by petitioner. Respondent was thereby provided ample protection from the adverse findings subsequently made by the Center. Given the circumstances, the CIRs invocation of the non-applicability of estoppel in this case is misplaced. Lascona Land Co., Inc. vs CIR, G.R. No. 171251, March 5, 2012 Facts: On March 27, 1998, respondent issued an Assessment Notice against petitioner for the alleged deficiency income tax for the year 1993 in the amount of P753,266.56. On April 20, 1998, the latter filed a protest but was denied by the Regional Director of the BIR Makati City on the ground that the case was not elevated to the CTA as mandated by the provisions of the last paragraph of Section 228 of the Tax Code. Thus, the said assessment notice has become final, executory and demandable. On April 12, 1999, petitioner then appealed the decision before the CTA. On January 4, 2000, the CTA nullified the subject assessment. CIR filed a motion for reconsideration but was denied. Dissatisfied, the CIR filed an appeal before the CA. on appeal, the CA set aside the decision of the CTA and declared the subject Assessment Notice against petitioner as final, executory and demandable. Hence, this petition. Issue: Whether the subject assessment has become final, executory and demandable due to the failure of petitioner to file an appeal before the CTA within thirty (30) days from the lapse of the One Hundred Eighty (180)-day period pursuant to Section 228 of the NIRC? Ruling: No. As held in RCBC v. CIR (G.R. No. 168498, April 24, 2007, 522 SCRA 144), in case the Commissioner failed to act on the disputed assessment within the 180-day period from date of submission of documents, a taxpayer can either: (1) file a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day period; or (2) await the final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of Tax Appeals within 30 days after receipt of a copy of such decision.

In arguing that the assessment became final and executory by the sole reason that petitioner failed to appeal the inaction of the Commissioner within 30 days after the 180-day reglementary period, respondent, in effect, limited the remedy of Lascona, as a taxpayer, under Section 228 of the NIRC to just one, that is - to appeal the inaction of the Commissioner on its protested assessment after the lapse of the 180-day period. When the law provided for the remedy to appeal the inaction of the CIR, it did not intend to limit it to a single remedy of filing of an appeal after the lapse of the 180-day prescribed period. Precisely, when a taxpayer protested an assessment, he naturally expects the CIR to decide either positively or negatively. A taxpayer cannot be prejudiced if he chooses to wait for the final decision of the CIR on the protested assessment. More so, because the law and jurisprudence have always contemplated a scenario where the CIR will decide on the protested assessment. Accordingly, considering that Lascona opted to await the final decision of the Commissioner on the protested assessment, it then has the right to appeal such final decision to the Court by filing a petition for review within thirty days after receipt of a copy of such decision or ruling, even after the expiration of the 180-day period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. Thus, Lascona, when it filed an appeal on April 12, 1999 before the CTA, after its receipt of the Letter dated March 3, 1999 on March 12, 1999, the appeal was timely made as it was filed within 30 days after receipt of the copy of the decision. Taxpayers cannot be left in quandary by its inaction on the protested assessment. It is imperative that the taxpayers are informed of its action in order that the taxpayer should then at least be able to take recourse to the tax court at the opportune time. Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the other hand, such collection should be made in accordance with law as any arbitrariness will negate the very reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the authorities and the taxpayers so that the real purpose of taxation, which is the promotion of the common good, may be achieved. Thus, even as we concede the inevitability and indispensability of taxation, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with the prescribed procedure. CIR vs. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April 25, 2012 Facts: Respondent is engaged in the business of processing, treating and refining petroleum for the purpose of producing marketable products and the subsequent sale thereof. On July 18, 2002, respondent filed with the Large Taxpayers Audit & Investigation Division II of the Bureau of Internal Revenue (BIR) a formal claim for refund or tax credit in the total amount of P28,064,925.15, representing excise taxes it allegedly paid on sales and deliveries of gas and fuel oils to various international carriers during the period October to December 2001. Subsequently, on October 21, 2002, a similar claim for refund or tax credit was filed by respondent with the BIR covering the period January to March 2002 in the amount of P41,614,827.99. Again, on July 3, 2003, respondent filed another formal claim for refund or tax credit in the amount of P30,652,890.55 covering deliveries from April to June 2002. Since no action was taken by the petitioner on its claims, respondent filed petitions for review before the CTA on September 19, 2003 and December 23, 2003. In its decision on the consolidated cases, the CTAs First Division ruled that respondent is entitled to the refund of excise taxes in the reduced amount of P95,014,283.00. Petitioner moved to reconsider but was denied by the CTA First Division. Petitioner thus case to the CTA En Banc which also upheld the ruling of the First Division. Petitioners motion for reconsideration was likewise denied. Hence, this petition. Issue:

Whether respondent as manufacturer or producer of petroleum products is exempt from the payment of excise tax on such petroleum products it sold to international carriers, hence claim for tax refund or credit? Ruling: Respondents locally manufactured petroleum products are subject to excise tax under Sec. 148 of the NIRC. Hence, its claim for tax refund may not be predicated on Sec. 229 of the NIRC allowing a refund of erroneous or excess payment of tax. Respondents claim is premised on what it determined as a tax exemption "attaching to the goods themselves," which must be based on a statute granting tax exemption, or "the result of legislative grace." Such a claim is to be construed strictissimi juris against the taxpayer, meaning that the claim cannot be made to rest on vague inference. Where the rule of strict interpretation against the taxpayer is applicable as the claim for refund partakes of the nature of an exemption, the claimant must show that he clearly falls under the exempting statute. In Maceda v. Macaraig, Jr. [G.R. No. 88291, May 31, 1991, 197 SCRA 771, 791, cited in Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue, G.R. Nos. 171383 & 172379, November 14, 2008, supra note 15, at 155-156], the Court specifically mentioned excise tax as an example of an indirect tax where the tax burden can be shifted to the buyer. On the other hand, "indirect taxes are taxes primarily paid by persons who can shift the burden upon someone else". For example, the excise and ad valorem taxes that the oil companies pay to the Bureau of Internal Revenue upon removal of petroleum products from its refinery can be shifted to its buyer, like the NPC, by adding them to the "cash" and/or "selling price." An excise tax is basically an indirect tax. Indirect taxes are those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the payment of the tax 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. When the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the liability to pay it, to the purchaser as part of the price of goods sold or services rendered. Thus, because of the tax exemptions privileges being enjoyed by NPC under existing laws, the tax burden may not be shifted to it by the oil companies who shall pay for fuel oil taxes on oil they supplied to NPC. Tax refunds are in the nature of tax exemptions which result to loss of revenue for the government. Upon the person claiming an exemption from tax payments rests the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted; it is never presumed nor be allowed solely on the ground of equity. These exemptions, therefore, must not rest on vague, uncertain or indefinite inference, but should be granted only by a clear and unequivocal provision of law on the basis of language too plain to be mistaken. Such exemptions must be strictly construed against the taxpayer, as taxes are the lifeblood of the government. Accenture, Inc. vs. CIR, G.R. No. 190102, July 11, 2012 Facts: Accenture, Inc. (Accenture) is a corporation engaged in the business of providing management consulting, business strategies development, and selling and/or licensing of software. It is duly registered with the Bureau of Internal Revenue (BIR) as a Value Added Tax (VAT) taxpayer or enterprise in accordance with Section 236 of the National Internal Revenue Code (Tax Code) On July 1, 2004, Accenture filed with the DOF a claim for the refund or the issuance of a Tax Credit Certificate (TCC). But, the DOF did not act on the claim of Accenture. Hence, on August 31, 2004, the latter filed a Petition for Review with the First Division of the Court of Tax Appeals (Division), praying for the issuance of a TCC in its favor in the amount of P35,178,844.21. The CTA however denied the petition of Accenture for failing to prove that

the latters sale of services to the alleged foreign clients qualified for zero percent VAT. Accenture filed an MR but was denied. When it filed an appeal before the CTA En Banc, it was also denied. The CTA En Banc concluded that Accenture failed to discharge the burden of proving the latters allegation that its clients were foreign-based. Resolute, Accenture filed a Petition for Review with the CTA En Banc, but the latter affirmed the Divisions Decision and Resolution. A subsequent MR was also denied. Hence, this Petition for Review under Rule 45. Issue: Is the claim of Accenture for tax refund or credit tenable? Ruling: No. The Court ruled that the recipient of the service must be doing business outside the Philippines for the transaction to qualify for zero-rating under Section 108(B) of the Tax Code. The evidence presented by Accenture may have established that its clients are foreign. This fact does not automatically mean, however, that these clients were doing business outside the Philippines. Consequently, to come within the purview of Section 108(B)(2), it is not enough that the recipient of the service be proven to be a foreign corporation; rather, it must be specifically proven to be a nonresident foreign corporation. A taxpayer claiming a tax credit or refund has the burden of proof to establish the factual basis of that claim. Tax refunds, like tax exemptions, are construed strictly against the taxpayer. Unfortunately, Accenture failed to discharge this burden. It alleged and presented evidence to prove only that its clients were foreign entities. However, as found by both the CTA Division and the CTA En Banc, no evidence was presented by Accenture to prove the fact that the foreign clients to whom petitioner rendered its services were clients doing business outside the Philippines. As ruled by the CTA En Banc, the Official Receipts, Intercompany Payment Requests, Billing Statements, Memo Invoices-Receivable, Memo Invoices-Payable, and Bank Statements presented by Accenture merely substantiated the existence of sales, receipt of foreign currency payments, and inward remittance of the proceeds of such sales duly accounted for in accordance with BSP rules, all of these were devoid of any evidence that the clients were doing business outside of the Philippines. AUF vs. City of Angeles et al., G.R. No. 189999, June 27, 2012 Facts: Petitioner Angeles University Foundation (AUF) is an educational institution established on May 25, 1962 and was converted into a non-stock, non-profit education foundation under the provisions of Republic Act (R.A.) No. 6055 on December 4, 1975. Sometime in August 2005, petitioner filed with the Office of the City Building Official an application for a building permit for the construction of an 11-storey building of the Angeles University Foundation Medical Center in its main. However, the latter issued petitioner a Building Permit Fee Assessment in the amount of P126,839.20. An Order of Payment was also issued by the City Planning and Development Office, Zoning Administration Unit requiring petitioner to pay the sum of P238,741.64 as Locational Clearance Fee. Petitioner then sent separate letters to the City Treasurer and Building Officer claiming that it is exempted from the payment of the building permit and locational clearance fees and was previously issued building permits acknowledging such exemption from payment of building permit fees. Despite petitioners plea, however, respondents refused to issue the building permits for the construction of the AUF Medical Center in the main campus and renovation of a school building located at Marisol Village. Petitioner then appealed the matter to City Mayor Carmelo F. Lazatin but no written response was received by petitioner. Consequently, petitioner paid under protest the amount of P 826, 662.99. By reason of the

above payments, petitioner was issued the corresponding Building Permit, Wiring Permit, Electrical Permit and Sanitary Building Permit. On June 9, 2006, petitioner formally requested the respondents to refund the fees it paid under protest. The City Treasurer however denied the claim for refund. On August 31, 2006, petitioner filed a Complaint before the trial court seeking the refund of the amount it paid plus interest, attorneys fees and other. On September 21, 2007, the trial court rendered judgment in favor of the petitioner. On appeal, the CA reversed the ruling of the trial court holding that while petitioner is a tax-free entity, it is not exempt from the payment of regulatory fees. Petitioner filed a motion for reconsideration which was denied by the CA. Hence, this petition. Issues: 1. 2. Whether petitioner is exempt from the payment of building permit and related fees imposed under the National Building Code; and Whether the parcel of land owned by petitioner which has been assessed for real property tax is likewise exempt?

Ruling: On the first issue. Under the National Building Code, only public buildings and traditional indigenous family dwellings are exempted from the payment of building permit. Thus, not being expressly included in the enumeration of structures to which the building permit fees do not apply, petitioners claim for exemption rests solely on its interpretation of the term "other charges imposed by the National Government" in the tax exemption clause of R.A. No. 6055. A "charge" is broadly defined as the "price of, or rate for, something," while the word "fee" pertains to a "charge fixed by law for services of public officers or for use of a privilege under control of government." As used in the Local Government Code of 1991 (R.A. No. 7160), charges refers to pecuniary liability, as rents or fees against persons or property, while fee means a charge fixed by law or ordinance for the regulation or inspection of a business or activity. Therefore, since building permit fees are not charges on property, they are not impositions from which petitioner is exempt. The petitioners argument that the building permit fees collected by respondents are in reality taxes because the primary purpose is to raise revenues for the local government unit, the same does not hold water. Nevertheless, a charge of a fixed sum which bears no relation at all to the cost of inspection and regulation may be held to be a tax rather than an exercise of the police power. But, petitioner failed to demonstrate that the above bases of assessment were arbitrarily determined or unrelated to the activity being regulated. Neither has petitioner adduced evidence to show that the rates of building permit fees imposed and collected by the respondents were unreasonable or in excess of the cost of regulation and inspection. . On the second issue. Petitioner failed to discharge its burden to prove that its real property is actually, directly and exclusively used for educational purposes. While there is no allegation or proof that petitioner leases the land to its present occupants, still there is no compliance with the constitutional and statutory requirement that said real property is actually, directly and exclusively used for educational purposes. Under the 1973 and 1987 Constitutions and Rep. Act No. 7160, in order to be entitled to the exemption, the petitioner is burdened to prove, by clear and unequivocal proof, that (a) it is a charitable institution; and (b) its real properties are actually, directly and exclusively used for charitable purposes. "Exclusive" is defined as possessed and enjoyed to the exclusion of others; debarred from participation or enjoyment; and "exclusively" is defined, "in a manner to exclude; as enjoying a privilege exclusively." If real property is used for one or more commercial purposes, it is not exclusively used for the exempted purposes but is subject to taxation. The words "dominant use" or "principal use" cannot be substituted for the words "used exclusively" without doing violence to the Constitutions and the law. Solely is synonymous with exclusively.