CTA CASES ON BIR’S PRIOR APPLICATION FOR ZERO-RATING, VOID WARRANT OF DISTRAINT/LEVY DUE TO PENDING APPEAL BEFORE THE CIR, IMPORT PERMIT ON IMPORTATION OF RICE, UNDECLARED PURCHASES LEADING TO INCOME TAX ASSESSMENT, COVERAGE OF 5% GROSS INCOME TAX OF A PEZA-REGISTERED ENTITY
Other Relevant Tax Updates:
- TAX & BUSINESS-RELATED NEWS [APRIL 5-11]
- CTA CASES ON BIR’S PRIOR APPLICATION FOR ZERO-RATING, VOID WARRANT OF DISTRAINT/LEVY DUE TO PENDING APPEAL BEFORE THE CIR, IMPORT PERMIT ON IMPORTATION OF RICE, UNDECLARED PURCHASES LEADING TO INCOME TAX ASSESSMENT, COVERAGE OF 5% GROSS INCOME TAX OF A PEZA-REGISTERED ENTITY
1. TAX & BUSINESS-RELATED NEWS [APRIL 5-11]
- Crypto exchange Coins.ph disables XRP transactions
- CHEd closes 15 non-compliant maritime schools
- PhilHealth reminds hospitals to file claims within 60 days starting this year
- Dela Rosa recommends creation of ‘POGO zone’ instead of total phaseout
- Bostik warns public vs fake sealant products
- BIR BUILDS VIRTUAL VA FOR TAX COLLECTIONS
- LinkedIn offering 100 courses on AI for free until end of June
- LRT 1 Cavite extension inches closer to completion
- Jollibee takes control of HK franchise operations
- Gov demands Nordeco to cease operations
- Boost for Camarines Norte mining
- Google takes action against abusive loan apps
- Peza chief plans ecozone transformation
- The Bowery in BGC closes down
- Deutsche Telekom reaches majority stake in T-Mobile U.S. – CEO
- Bili tapos bawi! Cebu Pacific wants excess vouchers for domestic flights back
- Security Bank gets P2.5-B fund management mandate from SSS
- Unkabogable Dabarkads? TVJ’s Eat Bulaga might switch to TV5 to form back-to-back noontime feast with Vice Ganda’s Showtime
- Bulacan’s first-ever CBD to fuel major employment and business opportunities
- Balai set to acquire P111-M Quezon City property
- ‘Only Marcos EO needed to merge LBP-DBP’
Crypto exchange Coins.ph disables XRP transactions [The Philippine Star, April 11, 2023]
Philippine e-wallet and cryptocurrency exchange Coins.ph said Monday it disabled XRP deposits and withdrawals in its platform as it tries to restore the services.
CHEd closes 15 non-compliant maritime schools [The Manila Times, April 11, 2023]
THE Commission on Higher Education (CHEd) has closed down 15 maritime schools in the country since 2022 due to non-compliance with maritime standards, its chairman Prospero de Vera 3rd said on Tuesday.
PhilHealth reminds hospitals to file claims within 60 days starting this year [Manila Bulletin, April 11, 2023]
The reminder was issued after the Declaration of State of Calamity due the Covid-19 pandemic ended on December 31, 2022, which consequently ended certain special privileges being granted to health care facilities during fortuitous events under PhilHealth Circular 2020-0007 such as extended submission of claims from 60 to 120 calendar days.
Dela Rosa recommends creation of ‘POGO zone’ instead of total phaseout [ABS-CBN News, April 11, 2023]
The lawmaker’s recommendation is part of a committee report that dela Rosa submitted to his colleagues, as chairman of the Senate committee on public order and dangerous drugs.
Bostik warns public vs fake sealant products [GMA News Online, April 11, 2023]
Sealants and adhesives manufacturer Bostik Philippines Inc. has issued a warning concerning the proliferation of counterfeit elastomeric sealants carrying several of its brands.
BIR BUILDS VIRTUAL VA FOR TAX COLLECTIONS [The Manila Times, April 9, 2023]
AS part of its digitalization program, the Bureau of Internal Revenue (BIR) has deployed a virtual assistant (VA) that can provide tax-related services and answer questions.
LinkedIn offering 100 courses on AI for free until end of June [ABS-CBN News, April 7, 2023]
The career development platform said it began offering the courses on generative AI on March 16, and will continue to offer them free of charge until June 30 this year.
LRT 1 Cavite extension inches closer to completion [Philippine Daily Inquirer, April 6, 2023]
The Light Rail Transport Authority (LRTA) is looking to acquire the remaining land needed to complete the LRT 1 Cavite extension project, which will add eight more stations to the existing line and cut the travel time from Pasay City to Cavite from an hour and a half to just around 30 minutes.
Jollibee takes control of HK franchise operations [Inquirer Mobile, April 6, 2023]
Following the transaction, Jollibee’s wholly-owned subsidiary in Singapore, Jollibee Worldwide Pte. Ltd., will own 60 percent of Meko Holdings. The remaining 40 percent will be owned by Meko’s current stockholders.
Gov demands Nordeco to cease operations [The Manila Times, April 6, 2023]
Davao del Norte Gov. Edwin Jubahib demanded the immediate stoppage of the operation of the Northern Davao Electric Cooperative (Nordeco), citing the power company’s continued incompetence, negligence and blatant disregard for the well-being of the people of the province.
Boost for Camarines Norte mining [Inquirer Mobile, April 6, 2023]
Mining activities in Camarines Norte received a boost recently after the Department of Environment and Natural Resources’ (DENR) Mines and Geosciences Bureau (MGB) declared Galeo Equipment Corp. the co-permittee and co-contractor of Mt. Labo Exploration and Development Corp.
Google takes action against abusive loan apps [Manila Bulletin, April 6, 2023]
The new policy prohibits personal loan apps from accessing user contacts or photos, addressing concerns over user privacy violations.
Peza chief plans ecozone transformation [Inquirer Mobile, April 6, 2023]
The first priority is the acceleration of the ecozone transformation roadmap, which will see the creation of new types of special economic zones registrable under the investment promotion agency.
The Bowery in BGC closes down [Rappler, April 6, 2023]
The New York-style resto and cocktail bar announced its closure on Instagram on Monday, April 3, thanking its patrons for a “smashing good awesome amazing 9 years.”
Deutsche Telekom reaches majority stake in T-Mobile U.S. – CEO [Inquirer Mobile, April 5, 2023]
“We have the majority and are the largest shareholder of the world’s most valuable telecommunications company – T-Mobile U.S.,” he said.
Bili tapos bawi! Cebu Pacific wants excess vouchers for domestic flights back [Bilyonaryo, April 5, 2023]
The budget airline announced that it had encountered a “system glitch” during its two-day SuperPass sale, where it handed out extra vouchers beyond what was purchased by some buyers.
Security Bank gets P2.5-B fund management mandate from SSS [Inquirer Mobile, April 5, 2023]
The government-run pension fund for private sector employees awarded the mandate to Security Bank’s Trust and Asset Management Group (TAMG), the lender said in a statement.
Unkabogable Dabarkads? TVJ’s Eat Bulaga might switch to TV5 to form back-to-back noontime feast with Vice Ganda’s Showtime [Bilyonaryo, April 5, 2023]
The comedic trio of Tito, Vic & Joey (TVJ) might be making a move to TV5 and teaming up with Vice Ganda’s “Showtime” for a back-to-back noontime extravaganza that could blow the competition out of the water.
Bulacan’s first-ever CBD to fuel major employment and business opportunities [The Philippine Star, April 5, 2023]
Spearheaded by Megaworld Corporation, Northwin Global City is envisioned to mirror the hustle and bustle of the property giant’s other pioneering township developments like Eastwood City in Quezon City, Uptown Bonifacio and McKinley Hill in Taguig City, and Iloilo Business Park in Mandurriao, Iloilo.
Balai set to acquire P111-M Quezon City property [BusinessWorld, April 5, 2023]
The property, which will be acquired from Lush Properties, Inc., is a 484 sq.m. land with a 288 sq.m. building and improvements. It is located in N. Domingo St., Quezon City.
‘Only Marcos EO needed to merge LBP-DBP’ [The Philippine Star, April 5, 2023]
“What I said before, that’s it. The GCG (Governance Commission for GOCCs) will issue a draft executive order for the President to sign. That’s the action,” Diokno told reporters yesterday.
2. CTA CASES
BIR PRIOR APPLICATION FOR ZERO-RATING DOES NOT APPLY TO EFFECTIVELY ZERO-RATING
Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking nullification of the CTA 2nd Division’s earlier Decision and Resolution, partially granting the Respondent Philippine Mining Service Corporation’s claim for a refund or issuance of a Tax Credit Certificate (TCC) of its unutilized and/or unapplied and excess input Value-Added Tax (VAT) attributable to its zero-rated sales. Petitioner claimed that the Court in Division erred when it ruled that the BIR’s disallowance of Php 19.8 Million is inconsistent with the law. On the other hand, the Respondent countered that the Petitioner failed to ascribe or even state any reversible error committed by the Court in Division, which correctly ruled that an approved application for VAT zero-rating is not a prerequisite to allocating input VAT attributable to zero-rated sales. In ruling, the Court En Banc agreed with the Court in Division. Nowhere in the Tax Code does it mandate that a taxpayer must obtain a prior application for zero rating for a transaction with PEZA-registered entities to be considered zero-rated. Jurisprudence is clear that BIR regulations additionally requiring an approved prior application for zero rating cannot prevail over the clear VAT nature of transactions with PEZA-registered entities. Consequently, the Petition was DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. PHILIPPINE MINING SERVICE CORPORATION, CTA EN BANC CASE NO. 2579, MARCH 14, 2023]
[WARRANT OF DISTRAINT AND/OR LEVY (WDL) EMANATING FROM A NON-DEMANDABLE ASSESSMENT IS VOID & OF NO FORCE & EFFECT] [WDL ISSUED PENDING APPEAL WITH THE CIR IS VOID]
Petitioner Xpert Air Services, Inc. filed a Petition for Review, praying that judgment be rendered declaring the Warrant of Distraint and/or Levy (WDL) as well as the tax assessment issued by the Respondent Commissioner of Internal Revenue (CIR) as null and void. The Petitioner claimed that the tax assessments, which the subject WDL seeks to collect, are null and void as the Letter of Authority (LOA) authorizing the examination of its books of accounts allegedly ceased to be valid. In ruling, the Court held that the WDL is void not because the LOA is invalid but for having been issued prematurely. If a WDL is issued while the tax assessment is still pending appeal with the CIR, the WDL is void and should be of no force and effect. Here, the Petitioner received the Final Decision on Disputed Assessment (FDDA) on May 10, 2019, and appealed the FDDA before the CIR on June 6, 2019. However, pending action by the CIR on the appeal, the Petitioner received the WDL on August 29, 2019, enforcing the collection of the alleged deficiency tax assessments based on the FDDA. Hence, the WDL was declared null and void. Moreover, the Court cannot yet rule on the validity/correctness of the deficiency tax assessments as the same are still pending appeal. Consequently, the Petition was PARTIALLY GRANTED. [XPERT AIR SERVICES, INC. VS. THE COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10171, MARCH 14, 2023]
NO NEED FOR AN IMPORT PERMIT FROM THE NATIONAL FOOD AUTHORITY (NFA) ON THE “OUT-QUOTA” IMPORTATION OF RICE
Petitioner Commissioner of Customs filed a Petition for Review seeking nullification of the CTA 1st Division’s earlier Decision and Resolution which ordered the Petitioner to refund the Respondent Sta. Rosa Farm Products Corporation with the proceeds of the auction sale, less the corresponding customs duties imposable on the subject shipments of rice and other applicable expenses and obligations. The Petitioner argued that since the Respondent has no Import Permit from the National Food Authority (NFA), the subject rice shipments were rightfully forfeited in favor of the government. In ruling, the Court En Banc held that there is no need for the Respondent to secure Import Permits from the NFA for the subject shipments, as correctly ruled by the Court in Division. NFA’s Memorandum Circular No. AO-2017-08-002 governs only the “in-quota” importations of rice and does not cover “out-quota” importations thereof. Since the subject importations of rice were identified as “out-quota” by the NFA, there is no need for the latter to issue import permits. The Court En Banc finds that the Petitioner had no legal basis to seize the rice shipments for lack of NFA Import Permits. Thus, the Petitioner’s forfeiture and disposal of the subject rice shipments by public auction sale are void. Since the forfeiture and subsequent public auction sale of the rice shipments are void, the Court En Banc ruled that the Respondent is entitled to a refund of the proceeds received by the Petitioner on the public auction sale. Consequently, the Petition was DENIED. [COMMISSIONER OF CUSTOMS VS. STA. ROSA FARM PRODUCTS CORPORATION, CTA EN BANC CASE NO. 2542, MARCH 10, 2023]
[CTA IS NOT LIMITED TO CASES THAT INVOLVE DECISIONS OF CIR ON MATTERS RELATING TO ASSESSMENTS OR REFUNDS] [NO INCOME TAX SHOULD BE IMPOSED ON THE SUPPOSED UNDECLARED PURCHASES AND EXPENSES]
Petitioner Jinna Maria O. Yap filed a Petition for Review praying that judgment be rendered lifting the Respondent Commissioner of Internal Revenue (CIR)’s Warrant of Distraint and/or Levy (WDL) and declaring the Assessment Notices and Collection Letter as void. The Petitioner argued that she is not liable for an alleged deficiency income tax because undeclared sales cannot prove undeclared income. On the other hand, the Respondent countered that the Court has no jurisdiction. In ruling, the Court held that it has jurisdiction over the case. The Respondent’s argument must fail in light of the Republic Act (R.A.) No. 1125, or the Act Creating the CTA, as amended, which confers upon the CTA the jurisdiction to decide not only cases on disputed assessments and refunds of internal revenue taxes, but also “other matters” arising under the Tax Code. Clearly, the validity of a WDL is an issue that falls under “other matters” arising from the Tax Code that is within the jurisdiction of the CTA to decide upon. Moreover, it was found that the tax assessments are partially incorrect. The Court held that the undeclared purchases and expenses, even when the same are truly undeclared, should not be automatically treated as income, on which income tax should be imposed. Hence, the Petition was PARTIALLY GRANTED. Considering that the deficiency tax assessments issued by the Respondent against the Petitioner are partially incorrect, the Petitioner was ORDERED TO PAY the Respondent the modified amounts. [JINNA MARIA O. YAP VS. BUREAU OF INTERNAL REVENUE, CTA CASE NO. 10019, MARCH 9, 2023]
[A JUDICIAL ADMISSION REMOVES AN ADMITTED FACT FROM THE FIELD OF CONTROVERSY] [TAXPAYER HAS 30 DAYS FROM RECEIPT OF THE FINAL DECISION ON DISPUTED ASSESSMENT (FDDA) TO FILE AN APPEAL] [FIVE PERCENT (5%) GROSS INCOME TAX COVERS DOCUMENTARY STAMP TAX (DST)]
Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking the reversal of the Court in Division’s earlier Decision and Resolution which partially granted the Respondent Cebu Light Industrial Park, Inc.’s request for cancellation of its tax assessments. Petitioner argued that the Respondent belatedly filed its appeal on June 2, 2017, because the Respondent has 30 days from receipt of the Assistant Regional Director’s Letter, tantamount to FDDA on April 10, 2016, or until May 10, 2016, to institute an Appeal. Petitioner also maintained that the Respondent is liable for the Documentary Stamp Tax (DST). On the other hand, the Respondent countered that the Preliminary Collection Letter (PCL) received on May 5, 2017, is considered as the Petitioner’s Final Decision on Disputed Assessment (FDDA), and that it cannot be made liable to pay for DST because it is a Philippine Economic Zone Authority (PEZA)-Registered Enterprise, that elected the 5% preferential rate, in lieu of national taxes, among others. In ruling, a party who judicially admits a fact cannot later challenge the fact, as judicial admissions are a waiver of proof; the production of evidence is dispensed with. Here, in the parties’ Joint Stipulation of Facts and Issues, among the admissions they made is that the Respondent received the PCL on May 5, 2017, which is considered the final decision of Petitioner. Thus, the earlier Petition was seasonably instituted on June 2, 2017. On whether the Respondent is liable for DST, the Court held that since the Respondent was issued a PEZA Certificate of Registration, the Petitioner may not hold the Respondent liable for DST pursuant to Section 24 of the Republic Act (R.A.) No. 7916, as amended, or the Special Economic Zone Act of 1995. [COMMISSIONER OF INTERNAL REVENUE VS. CEBU LIGHT INDUSTRIAL PARK, INC., CTA EN BANC CASE NO. 2466, MARCH 8, 2023]