WEEKLY TAX UPDATES [NOVEMBER 13-17]

A CTA DECISION ON BURDEN OF PROOF SHIFTED TO THE BIR WHEN TAXPAYER DENIES RECEIPT OF ASSESSMENT

Petitioner Commissioner of Internal Revenue filed a Petition for Review seeking the reversal of the decision and resolution of the CTA 3rd Division cancelling the Income Tax and VAT assessments of the Respondent, Next Mobile, Inc. Petitioner argues that the copies of assessment notices were served through registered mail to the Respondent's business address. Respondent counters, on the other hand, that it never received assessment notices and no proof was adduced that such were indeed actually received by it. The Court in Division ruled that lack of proof of service leads to the conclusion that no assessment was issued against it.   When a letter was duly directed and mailed, it is presumed that it was received in the regular course of the mail, however, when the party who is supposed to receive the said letter denies the receipt of it that presumption is destroyed. Thus, the burden to prove is shifted back to the one who claims that it directed and mailed the letter, and must show that there was an actual receipt by the intended person, through valid evidence. WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED for lack of merit and the earlier decision and resolution of CTA 3rd Division are hereby AFFIRMED. [COMMISSIONER OF INTERNAL REVENUE VS. NEXT MOBILE, INC., CTA EB No. 1583, OCTOBER 23, 2017]

 

A CTA DECISION ON DONORS TAX ASSESSMENT ON ADDITIONAL PAID-IN CAPITAL CANCELLED; DONORS TAX LIABILITY CANNOT BE PASSED ON TO DONEE

Petitioner CIR filed a Petition for Review seeking the reversal of the decision and resolution of the Court in Division cancelling its Donor’s Tax assessment to respondent Toenec Philippines Inc. (TPI). TPI and Toenec Corporation (TC) a corporation domiciled in Japan, executed a Capital Infusion Agreement wherein TP contributed Php 30M as Additional Paid-In Capital (APIC). Subsequently, the CIR imposed Donors Tax of 30% on APIC. CIR argued that whenever one party to the taxable document enjoys exemption and the other party does not, TPI being a donee of the transaction is the instituted agent here in the Philippines and should be the one liable for the Donor’s Tax. TPI argued that the APIC is not a donation and even if the APIC is a donation, TPI as the donee cannot be made liable for Donor’s Tax. TPI added that TC cannot be made liable since it is outside the CIR’s taxing jurisdiction. The Court En Banc agrees with the Court in Division that the liability for donor’s tax falls upon the donor and not the donee. Moreover, it is not mentioned that the donor’s return and tax shall be filed and paid by the donee. Instead, it is provided that the return must be filed with the Philippine Embassy or Consulate in the country where the donor is domiciled at the time of transfer or directly with the Office of the Commissioner. Petition for Review is DENIED. [COMMISSIONER OF INTERNAL REVENUE VS. TOENEC PHILIPPINES, INC. CTA CASE NO. 1520, OCTOBER 23, 2017]

 

A CTA CRIMINAL CASE ACQUITTING PBA BASKETBALL PLAYER PAUL ASI TAULAVA FOR FAILURE OF BIR TO ESTABLISH SERVICE OF ASSESSMENT

Accused Pauliasi Mataeki Taulava is charged for violation of Section 255 of the Tax Code of 1997 as amended for willful failure and neglect to pay his assessment. The accused argued that there has already been full payment of the subject tax liabilities in reference to the compromise settlement made pursuant to Revenue Regulations (RR) No. 30-2002. Accordingly, there is no cause of action for willful failure to pay his assessment since there is no iota or proof that the accused duly received the assessment notices. Plaintiff, on the other hand, argued that efforts have been made by the collection agent to send notices at the different addresses of the accused. While it may be true that he was no longer living at the said address in the year 2009, the accused should have informed the BIR of his change in address, pursuant to Section 11 of RR No. 12-85. However, since the accused denied having received the assessment from the BIR, it then becomes incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. Since the prosecution failed to present the registry receipt issued by the Bureau of Posts or the registry return card in connection with the mailing of the assessment notices or a Bureau of Posts Certification to the effect that the same were mailed, there can be no other conclusion than that the said documents were not mailed and hence, has not been received by the accused. Consequently, the absence of competent proof that the assessment notice was duly transmitted to the taxpayer and that he was informed of the tax assessments, give rise to the conclusion that the accused is under no obligation to pay for the taxes. WHEREFORE, accused PAULIASI MATEAKI TAULAVA is hereby ACQUITTED for failure of the prosecution to prove his guilt beyond reasonable doubt. [PEOPLE OF THE PHILIPPINES VS. PAULIASI MATEAKI TAULAVA, CTA CRIMINAL CASE NO. O-309, NOVEMBER 3, 2017]

 

A CTA DECISION ON BCDA NOT ENTITLED TO REFUND ON CREDITABLE WITHHOLDING TAX (CWT) PAID ON SALE OF SERENDRA UNITS

Bases Conversion and Development Authority filed a Petition for Review seeking refund in the amount of Php 23,913,837.62, corresponding to the alleged excess CWT paid under protest in connection with the sale or disposition of its allocated units or shares in the Serendra Project located in Fort Bonifacio, Taguig City. The Court ruled that R.A. No. 7227, as amended by R.A. No. 7917, expressly exempts the proceeds from the sale of portions of Metro Manila military camps from all forms of taxes. Nonetheless, while it is undisputed that Petitioner paid under protest the total amount of Php 23,913,837.62 representing the CWT on the sale of its condominium units in the Serendra Project, the Court finds Petitioner not entitled to a refund of the said amount for failing to prove that the amount being claimed is not included in the claimed total CWT for the year 2013. The Court opines that Petitioner may benefit twice in case the refund would be granted and would still be able to apply the same to future income tax due, to the prejudice of the government. Being in the nature of tax exemptions, such is construed strictissimi juris against the taxpayer and liberally in favor of the government. Petition for Review is DENIED for lack of merit. [BASES CONVERSION & DEVELOPMENT AUTHORITY VS. CIR, CTA CASE NO. 8966, NOVEMBER 03, 2017]