1. Duty Free Philippines Corporation vs. BIR (CTA Case No.

9355 dated July 26, 2018)

FACTS:

Petitioner is a corporate body attached to the Department of Tourism (DOT, created and
organized by Republic Act (RA) No. 9593 otherwise known as the Tourism Act of 2009. Repondent is a
governmental bureau under the supervision of the Department of Finance (DOF).

In 2012, RA No. 10351 entitled “An Act Restructuring the Excise Tax on Alcohol and Tobacco
Products by Amending Sections 141, 142, 143, 144, 145, 8, 131, and 288 of Republic Act No 8424,
otherwise known as the ational internal Revenue Code of 1997, as amended by RA 9334, and for
other purposes” took effect which, among others restructed excise taxes on alcohol and tobacco
products. Thereafter, BIR assessed and collected value-added tax on DFPC’s importation of alohol and
tobacco merchandise for sale in 1994.

On November 16, 2015, petitioner filed its administrative claim for refund on the alleged
erroneously or illegally assessed and collected VAT. The latter denied the said claim for refund
that DFDC’s importation of tobacco and alccohol products for sale is exempt only as far as the
applicable duties are concerned but not from payment of VAT.

The former Second Division dismissed the Petition for Review for lack of jurisdiction, citing the
Supreme Court En Bane case of Power Sector Assets and Liabilities Management Corporation vs.
Commissioner of Internal Revenue (the "PSALM Case''), which ruled that under Presidential Decree
(PD) No. 242, disputes and claims solely between the BIR and another government entity, which in
this case, is Duty Free Philippines Corporation (DFPC), shall be administratively settled or adjudicated
by the Secretary of Justice, the Solicitor General, or the Government Corporate Counsel, depending
on the issues and government agencies involved. Thus, the jurisdiction belongs to the Secretary of
Justice and the disputes should be resolved pursuant to PD 242.

ISSUE: Whether or not CTA has jurisdiction over the case

RULING:

Based on the foregoing, the Court in Division shall exercise exclusive original jurisdiction to
review by appeal decisions of the CIR in cases involving refund of internal revenue taxes.

However, it is crystal clear in the Supreme Court En Bane's PSALM Case that in disputes and
claims solely between government agencies and offices, including GOCCs, the administrative
procedure in Sections 2 and 3 of PO 242 should be followed. In the instant case, DFPC, is an agency
attached to DOT, which is a national government agency, while respondent represents the Bureau of
Internal Revenue, which is a government agency. Clearly, the petition involves a dispute solely
between a government corporation and another government agency and as such, this Court is bereft
of jurisdiction to take cognizance of the case.

The actual issue in PSALM Case was the demand for payment of deficiency value-added tax
(VAT) on the sale of NPC properties while in the instant case, the refund stems from the demand for
payment of VAT made by the CIR against DFPC. Thus, the facts are substantially the same which belies
DFPC’sargument. The law is clear and covers "all disputes, claims and controversies
solely between or among the departments, bureaus, offices, agencies and instrumentalities of the
National Government, including constitutional offices or agencies arising from the interpretation and
application of statutes, contracts or agreements." When the law says "all disputes, claims and
controversies solely" among government agencies, the law means all, without exception.

2. Ayala Property Management Corporation vs. CIR (CTA Case No. 9298 dated January 21, 2019)

FACTS:
May 26, 2010-Petitioner received a LOA dated May 14, 2010, authorizing revenue officers to examine
its books of accounts for income tax for 2009.
July 8, 2014- Petitioner received the PAN with Details of Discrepancies dated April 21, 2014.

Oct 10, 2014- Petitioner received the Formal Letter of Demand with Details of Discrepancies and
Assessment Notices (FLD/FAN) dated September 25, 2014, assessing it for alleged deficiency income
tax and VAT, inclusive of interests, for taxable year 2009.

Nov 10, 2014- Petitioner sent its Protest Letter dated November 7, 2014, assailing the tax
assessments in the FLD/FAN, together with the documents in support of the same.

January 7, 2015- Petitioner sent a Letter10 dated January 6, 2015 to the BIR to supplement its Protest
Letter and submitted documents in support thereof.

February 17, 2016- Petitioner received the FDDA with Details of Discrepancies, finding it liable for
deficiency income tax and VAT, inclusive of interests, in the aggregate amount of P7,700,009.70 for
taxable year 2009.

March 18, 2016- Petitioner then filed the present Petition for Review before the CTA.

Contentions of Petitioner
Respondent's assessment was based on the comparison of its Summary List of Sales to the Summary
List of Purchases of its customers and on data coming from Third Party Information.

Defense of Respondent
The assessments are in accordance with law

ISSUE: Whether or not the deficiency tax assessments are valid.

HELD: The petition for review is granted. Instead of exerting his best effort in gathering information
from other sources to verify the alleged unaccounted income, respondent chose to resort to
presumptions and heavily relied on the results of the unverified third-party information in
determining petitioner's deficiency tax liability. The FDDA issued by respondent against petitioner for
alleged deficiency income tax and deficiency value-added tax for taxable year 2009 is canceled.

3. CIR vs. FITNESS BY DESIGN, INC., Respondent

G.R. No. 215957
November 9, 2016

FACTS:
On April 11, 1996, Fitness filed its Annual Income Tax Return for taxable year 1995
wherein it was still in its pre-operating stage. On June 9, 2004, Respondent Fitness received a
copy of FAN dated March 17, 2004 which assessed that they had a tax deficiency in the
amount of Php 10, 647, 529.69. Respondent filed a protest to the FAN alleging that the period
to assess had already prescribed.
On February 2, 2005, the Commissioner issued a Warrant of Distraint and/or Levy to
the Respondent. On March 1, 2005, Respondent filed before the First Division of the CTA a
Petition for Review (with Motion to Suspend Collection of Taxes). The petition was granted.
The Commissioner, therefor, filed an MR but was denied by the Court. The CTA En Banc
likewise ruled in favor of the respodent. Hence, this Petition for Review.

ISSUE: Whether or not the FAN issued is a valid assessment.

RULING:
NO. The court held that the petition has no merit. The issuance of a valid formal
assessment is a substantive prerequisite for collection of taxes. A final assessment is a notice
"to the effect that the amount therein stated is due as tax and a demand for payment
thereof". This demand for payment signals the time "when penalties and interests begin to
accrue against the taxpayer and enabling the latter to determine his remedies." Thus, it must
 be "sent to and received by the taxpayer, and must demand payment of taxes described
therein within a specific period. In this case, the disputed FAN is not valid because (1) it lacks
the definite amount of tax liability for which respondent is accountable; and (2) there are no
due dates in the FAN.
Taxes are lifeblood of the government; however its collection should be exercised
"reasonably and in accordance with prescribed procedure". Therefore, petition is DENIED.

NOTE: In this case, the period to assess had already prescribed. The prescriptive period in
making an assessment depends upon whether a tax return was filed or whether the tax return
filed was either false or fraudulent. When a tax return that is neither false nor fraudulent has
been filed, the Bureau of Internal Revenue may assess within three (3) years, reckoned from
the date of actual filing or from the last day prescribed by law for filing.

4. CIR vs. Manasoft

FACTS:
Petitioner Mannasoft Technology Corporation is a corporation registered with the
Securities and Exchange Commission. On the other hand, Respondent is the duly appointed
Commissioner of Internal Revenue ("CIR"), empowered under the 1997 National Internal
Revenue Code, as amended (" 1997 NIRC") to authorize the examination of any taxpayer and
the assessment of the correct amount of tax, and to decide disputed assessments arising
under the laws administered by the Bureau of Internal Revenue ("BIR").
On November 22, 2011, petitioner was issued Formal Assessment Notice ("FAN") dated
November 16, 2011, assessing petitioner for deficiency income tax of Php13,475,472.84, VAT
of Php57,102,109.92, and EWT of Php8,212,654. 77. It was further stipulated that the FAN was
received by a certain Angelo Pineda, as handwritten thereon.
On October 23, 2012, respondent issued a Warrant of Distraint and/ or Levy ("WDL"),
which petitioner protested on October 29, 2012. On November 13, 2012, petitioner once again
appealed for the reinvestigation of the CY 2008 case. On November 25, 2013, petitioner
received respondent's letter denying petitioner's request for reinvestigation, with a statement
that the same constitutes respondent's final decision on the matter. Petitioner filed its appeal
to the Court of Tax Appeals ("CTA") on December 10, 2013.
The Third Division ruled that the Court has jurisdiction over the case as it fall under
"other matters" pursuant to Section 7(a)(1) of RA No. 11254 and Section 3(a)(1), Rule 4 of the
Revised Rules of Court of Tax Appeals. The term "other matters" may include the following:
prescription of the CIR's right to collect taxes; determination of the validity of a warrant of
distraint and levy issued by the CIR; and validity of a waiver of the statute of limitations. The
Third Division also considered the BIR Letter, replying to Mannasoft's request for
reinvestigation/reconsideration as the reckoning point to file an appeal before the Court's
Division, thus, the Petition for Review before it was within the prescribed 30-day period to
appeal. And lastly, the Third Division ruled that the assessment, being void for failure to
comply with due process for want of authority of the person who received the Notice of
Informal Conference (NIC), Preliminary Assessment Notice (PAN) and Final Assessment Notice
(FAN), can never attain finality.
Petitioner's Motion for Reconsideration was denied for lack of merit, thus, the instant
Petition for Review.

ISSUE: Whether the appeal by Mannasoft was filed on time.

RULING:
The period for filing an appeal before this Court is provided under Section 11 of the
Republic Act No. 1125, as amended, which states:
"Section 11. Who may appeal; effect of appeal. Any person association or corporation
adversely affected by a decision or ruling of the Collector of Internal Revenue, the Collector of
Customs or any provincial or city Board of Assessment Appeals may file an appeal in the Court
of Tax Appeals within thirty (30) days after the receipt of such decision or ruling or after the
expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. xxx"
(Underlining supplied)
 Corollary thereto, Section 3 (a) of Rule 8 of the Revised Rules of the Court of Tax
Appeals reads:
“Sec. 3. Who may appeal; period to file petition.(a) A party adversely affected by a
decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed
assessments xxx may appeal to the Court by petition for review filed within thirty days after
receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the
Commissioner of Internal revenue to act on the disputed assessments. Xxx”
In the case of Philippine Journalists Inc., vs. Commissioner of Internal Revenue, (The
"PJI Case''), 10 the Supreme Court reckons the 30-day period to file an appeal before this
Court from receipt of the WDL. The WDL constitutes an act of the CIR on "other matters"
arising under the National Internal Revenue Code or other laws administered by the Bureau of
Internal Revenue which may be the subject of an appropriate appeal before this Court.
Applying the foregoing, the receipt of the WDL by Mannasoft, which per the records of the
case was on October 23, 2012, must be the reckoning period for its 30-day period to file a
petition for review before the Court's division.
According to the CTA en banc, "The right to appeal is not a natural right. It is also not
part of due process. It is merely a statutory privilege and may be exercised only in the manner
and in accordance with the provisions of law. Thus, one who seeks to avail of the right to
appeal must comply with the requirements of the Rules. Failure to do so often leads to the loss
of the right to appeal."
While this Court is not unaware of the remedy of a taxpayer to question "other
matters" before this Court, even those with absence of a protest but assails violation of due
process in the issuance of assessments, such filing of judicial appeals must be made within the
mandatory prescriptive period. If one would consider the subsequent replies of the BIR as the
reckoning point of the jurisdictional period to file an appeal before this Court, then it would be
in effect a never ending question as to which of the subsequent replies would be the
reckoning period and a means for the taxpayer to extend a decision that is, in the eyes of the
law, already considered to have attained finality, which, in this case, is the WDL.
Considering that the WDL has attained finality and in view of this Court's lack of
jurisdiction to act upon the Petition for Review filed beyond the reglementary period, the
collection of tax against Mannasoft must be in order.

5. EMPESANDO, et. al. vs. CIR, CTA Case No. 9093, September 17, 2018.

Facts:
Petitioners argue that since ADB started in 1996 up to 2013, Filipino ADB employees
were exempted from payment of income tax on their salaries. On April 12, 2013, the CIR
issued RMC No. 31-2013 which provides that only the officers and staff who are not Philippine
nationals shall be exempt from income tax. In compliance with the RMV, petitioners paid their
respective income taxes for their 2012 and 22013 salaries. Believing that the issuance of the
RMC was ultra vires, two Filipino ADB employees questioned its legality. The RTC decided that
Section 2(d)(1) is void for being issued without legal basis, in excess of authority, and/or
without due process of law, and in the absence of legislation and/or authority or regulation on
the contrary. The motion for reconsideration filed by respondent was denied.

Issue:
Whether or not petitioners are entitled to claim refund for income taxes paid in taxable years
2012 and 2013 which are alleged to be erroneously paid.

Ruling:
While RMC No. 31-13 is a mere interpretation of an existing law, justice and equity
dictate that it should be applied prospectively. Income of resident citizens employed by foreign
governments and for international organizations should be subjected to income tax beginning
taxable year 2013. While it can be argued that RMC No. 31-13 is a mere interpretation of
existing law and should thus be applied even to the compensation income of petitioners for
taxable year 2012, the Court holds that it should be applied prospectively in the interest of
justice and equity. Consequently, the income of resident citizens employed by foreign
governments and/ or international organizations should only be subjected to income tax
beginning taxable year 2013, the year RMC No. 31-13 took effect.
 Petitioners who have proven their income tax payments for taxable year 2012 may be
refunded. In sum, compensation income of resident citizens is subject to the graduated
income tax rates unless expressly exempted under treaty. With the Philippines' reservation in
the ADB Charter to the effect that it maintains the right to subject to income tax the
compensation of resident citizens employed by the ADB, the rule then is that resident citizens
employed by foreign governments and/ or international organizations, such as ADB, are
subject to the graduated income tax rates under Section 24(A) of the NIRC of 1997, as
amended. However, considering RMC No 31-13 was issued in taxable year 2013, the same
should be made to apply prospectively in the interest of justice and equity. Hence,
compensation income of resident citizens employed by foreign governments and/ or
international organizations shall only be subject to income tax beginning taxable year 2013,
while those income payments made for taxable year 2012 shall be refunded.

Hence, the instant Petition for Review is partially granted.

6. CIR vs. Agrinurture, Inc.

CTA EB No. 1054, January 13, 2019

FACTS:
The respondent is Agrinurture, Inc. which is publicly listed corporation duly organized and
existing under and by virtue of the laws of the Philippines.
Respondent received from the petitioner a PAN dated August 26, 2010, from the LN Task
Force of the BIR, which assessed the respondent of alleged deficiency income tax and VAT for
TTY 2007.
The respondent received the FAN on December 30, 2010. On February 18, 2011, the
respondent filed its protest on the FAN, stating that the assessment for alleged deficiency
predicated solely on the alleged undeclared purchase transaction, should be reconsidered as
there is no factual and/or legal basis for such assessment. There has no action taken by the
petitioner on the protest within 180 days from the filing thereof, hence, respondent filed a
Petition for Review before the Court in Division.
The Court granted the petition, thereby ordering the cancellation and withdrawal of the
assessment for deficiency income tax and VAT for taxable year 2007 against the respondent.
The petitioner filed the instant Petition for Review with the Court En Banc, praying for the
reversal and setting aside the Decision of Court in Division.

ISSUE: Whether of not the Special Second Division of the Court erred when in cancelled the deficiency
VAT and income tax assessment.

RULING:
The instant Petition for Review lacks of merits. Nevertheless, the Court finds it necessary
to address some of the procedural issue raised by respondent.
Petitioner has attached the required document in the instant Petition. Contrary to the
contention of the respondent. the petitioner was able to attach a certificate true copy of both
the assailed Decision and Resolution, duly certified by the Executive Clerk of Court II of the CTA.
The petitioner’s MR of the assailed Decision is not pro forma just because it reiterated
the arguments earlier passed upon and rejected by the court. A movant may raise the same
arguments, precisely to convince the court that its ruling was erroneous.
The subject assessment have no leg to stand. The petitioner cannot feign of the
respondent’s record. It is well-settled principle that petitioner ought to know the records of all
taxpayers. The Office of the CIR has been vested with ample power to know the records of the
taxpayers and assess the correct amount of taxes.

7. Metro Pacific Tollways Development Corporation vs. Makati City, et. al.
CTA AC NO. 191 – January 29, 2019
Facts:

Petitioner Metro Pacific Tollways Development Corporation is a corporation duly organized

and existing under the laws of the Republic of the Philippines, with Securities and Exchange
Commission. The incumbent City Treasurer if Makati City issued the assessment against
petitioner for local business tax (LBT) on dividend income received by petitioner for the year
2012. The deficiency LBT was computed by respondents based on petitioner's dividend income
amounting to P19, 776,032.38 and P1 ,344,587,668.00, and reported in petitioner's financial
statements for the year ending December 31, 2012.

On January 8, 2016, petitioner filed an administrative claim for refund before respondent City
Treasurer. An amended administrative claim for refund was subsequently filed on January 18,
2016. On March 11, 2016, respondents filed a Motion to Dismiss, 6 arguing that the subject
assessments of petitioner's deficiency of LBT for the year 2013 and the LBT for the year 2014
have become final, executory, conclusive, and unappealable. Allegedly, a claim for tax refund
or tax credit cannot prosper on the payment of LBT assessment that is already final and
unappealable.

In the Resolution dated January 3, 2018, the Court gave due course to the petition and the
parties were directed to submit their respective memoranda within thirty (30) days from
receipt thereof. Thus, petitioner filed its Memorandum on January 24, 2018, while the
Memorandum for the Respondents was filed on January 30, 2018.

Issue: Whether or not the respondent’s assessment against petitioner has become final and
unappealable in the absence of any protest by the Petitioner?

Ruling:

Counting sixty (60) days from January 23, 2014, petitioner had until March 24, 2014, within
which to file a written protest with the Makati City Treasurer. However, in view of its failure to
do so, the subject tax assessments have become final and unappealable, in accordance with
Section 195 of the LGC of 1991.

Parenthetically, the filing of an administrative claim on January 8, 2016, and an amended

administrative claim on January 18, 2016, by petitioner, is of no moment. This is simply
because on the said dates, the subject tax assessments have long become final and
unappealable.

It has been held that the perfection of an appeal in the manner and within the period laid
down by law is not only mandatory but also jurisdictional. The failure to perfect an appeal as
required by the rules has the effect of defeating the right to appeal of a party and precluding
the appellate court from acquiring jurisdiction over the case.

8. NANOX PHILIPPINES, INC., vs. CIR

CTA EB No. 1629
Facts:
October 22, 2007, petitioner received Letter of Authority (LOA) No. 00003651 dated
October 4, 2007 from respondent authorizing Revenue Officer (RO) Erlinda M. De Leon and
Group Supervisor Lope N. Tubera to examine its books of accounts and other accounting
records for the FY ended March 31, 2007.
Records show that it was only through an undated Re-Assignment Notice where RO
Rey K. Lugtu was "authorized" to continue the examination of the petitioner's books and
accounting records.Thereafter, invoking the very same LOA, RO Lugtu recommended the
issuance of a PAN against petitioner.
Petitioner argues that the Court in Division has jurisdiction over the appeal (request)
filed by petitioner relative to the nullification/ cancellation of the FLO/FAN.
Issue: Whether or not the subject tax assessments are valid.
Held: We rule in favor of petitioner.
The subject tax assessments are not valid because the revenue officer who conducted
the investigation of petitioner's books of accounts and other accounting records for fiscal year
ending March 31, 2007 was not authorized to do so. Thus, the said tax assessments could not
have attained finality.
The audit process normally commences with the issuance by the respondent of an LOA.
The LOA gives notice to the taxpayer that it is under investigation for possible deficiency tax
assessment; at the same time it authorizes or empowers a designated Revenue Officer (RO) to
examine, verify, and scrutinize a taxpayer's books and records, in relation to internal revenue
tax liabilities for a particular period
Thus, the law requires that an LOA must have been issued in favor of an RO, in order
for such an RO to examine taxpayers and to perform tax assessment and collection functions.
ROs must be authorized, through an LOA, to examine the books of accounts and other
accounting records of a taxpayer; in the absence thereof, the tax assessments are void.
RO Lugtu cannot be considered as validly authorized to examine petitioner's books of
accounts and other accounting records for fiscal year ending March 31, 2007. This must be so
because his authority to examine did not spring from, or was not made pursuant to, an LOA, as
required by law and jurisprudence.
Furthermore, the issuance of the said Re-Assignment Notice in favor of RO Lugtu is
inconsequential, since it is not an LOA. The issuance of ReAssignment Notice for purposes of
audit examination and tax assessment is strictly prohibited. As a corollary, the said
ReAssignment Notice cannot be a source of authority for an RO to examine the books of
accounts and other accounting records of taxpayers.
Correspondingly, since RO Lugtu was not authorized, through an LOA, the subject tax
assessments, which came about as a result of the said RO's examination of petitioner's books
of accounts and accounting records for fiscal year ending March 31, 2007, are void.
Considering now that the subject tax assessments are void, due to the lack of authority
of the revenue officer concerned to conduct an examination of petitioner's books of accounts
and other accounting records for fiscal year ending March 31, 2007, it becomes unnecessary
to address the other issues raised by petitioner in the instant Petition for Review.

9. CIR, Petitioner, vs. FREELIFE PHILIPPINES DISTRIBUTION, INC.- Philippine Branch, Respondent.

CTA EB No. 1714 (CTA Case No. 8838) JANUARY 04, 2019

FACTS:

Petitioner is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) who
has the power to decide disputed assessments, refunds of internal revenue taxes, fees or
other charges, penalties imposed in relation thereto or other matters arising under the
National Internal Revenue Code (NIRC) or other laws or portions thereof administered by the
BIR.
On the other hand, respondent Freelife Philippines Distribution, Inc. - Philippine Branch is a
foreign corporation duly licensed to do business in the Philippines. It is engaged primarily in
the importation, sale, marketing, and distribution of fruit juices and other nutritional products
on wholesale basis to independent distributors.
Petitioner argues that the subject assessment has become final, executory and demandable by
reason of the failure of the respondent to comply with the provisions of Section 228 of the Tax
Code, as amended.
According to petitioner, respondent failed to submit relevant documents in support of its
protest within the sixty (60)-day period provided under Section 228, and thus, the one-
hundred eighty (180)-day period to file the appeal to this Court should be reckoned from the
date of filing of the protest.
Moreover, petitioner contends that the due process requirement in the issuance of the
deficiency tax assessment was complied with.
Finally, petitioner claims that the Court in Division erred in not considering the merits of the
case and declaring respondent not liable for the deficiency tax assessments.
 Respondent counter-argues that petitioner failed to ascribe any reversible error on the part of
the Court of Division. It argues that petitioner's arguments are mere reiterations or rehash of
the arguments already submitted and found to be without merit by the Court in Division.
It is likewise being averred by respondent that the submission of relevant documents within
the sixty-day period under Section 228 of the NIRC is discretionary and that the filing of a
protest without supporting documents does not invalidate the protest.
Moreover, respondent proffers that petitioner failed to observe due process in the issuance of
the assessment notices when it sent the FAN/FLO through email before the expiration of the
mandatory fifteen (15)-day period. Respondent emphasized that the service of the FAN/FLO
via email is not valid.

ISSUE: The Petitioner failed to observe due process in the issuance of the Assessment Notices.

RULING: Petitioner indeed failed to observe the due process requirement of the law. Thus, the subject
tax assessments are void.

FAN issued via email is not valid; Failure to submit additional supporting documents within
the 60- day period shall not invalidate the administrative protest.

Section 3.1.4 of RR 12-99 provides that the FLD and assessment notice shall be sent to the
taxpayer only by registered mail or by personal delivery. Such assessment may be protested
administratively by filing a request for reconsideration or reinvestigation within 30 days from
receipt of the assessment. Within 60 days from filing of the protest, all relevant supporting
documents shall be submitted.

In this case, the FLD and assessment notices were issued to the taxpayer through electronic
mail, contrary to the required mode of service provided under RR 12-99. The Company
protested the assessment on time. However, it failed to submit additional supporting
documents within the 60 day period.

Since the FLD and assessment notices were not served through registered mail or by personal
delivery, it is clear that the BIR failed to comply with due process requirement in the issuance
of the subject FLD and assessment notices. Moreover, since the Company have submitted
supporting documents when it filed its protest letter, the administrative protest cannot be
nullified for failure to submit additional supporting documents. As such, the assessment is
considered null and void.

10. Trans-Asia Oil and Energy Development Corp. v. CIR

CTA Case No. 9078, September 28, 2018

Facts:

Petition for Review filed by Trans-Asia Oil and Energy Development Corporation prays for the
cancellation and withdrawal of the assessment that found petitioner liable for alleged
deficiency donor's tax arising from its distribution of property dividends to its stockholders.
Respondent assessed petitioner for donor's tax pursuant to RR Nos. 6-2008 and 6-2013,
classifying the declaration and distribution of TAPC's shares to petitioner's stockholders as
"other disposition" of shares of stock held as capital assets. Petitioner argues that the
provisions of RR Nos. 6-2008 and 6-2013 apply only to sales, barter, exchange or other
disposition which give rise to the realization of net capital gains subject to capital gains tax.
Petitioner maintains that its declaration and/ or distribution of shares as property dividends
was not a sale, barter, exchange or other disposition that would give rise to any realized net
capital gains on its part, because it received no consideration for such distribution of
dividends.
Issue:
Whether or not the petitioner is liable for donor's tax arising from its distribution of property
dividends to its stockholders
Decision:
 The CTA finds that Petitioner's declaration and distribution of property dividend is not within
the ambit of the term "other disposition of shares of stock" that would recognize gain or loss
from such disposal, as contemplated in RR No. 6-2008, as amended by RR No. 6-2013.
Dividends comprise any distribution whether in cash or other property in the ordinary course
of business, even though extraordinary in amount, made by a domestic or resident
corporation to the stockholders out of its earnings or profits. Property dividend consists of a
portion of corporate property paid to shareholders instead of cash or corporate stock.

Petitioner declared and distributed property dividends to its stockholders out of its earnings or
profits. The said property dividends distributed were comprised of petitioner's shares of
stock/investment in its wholly-owned subsidiary, TAPC, and were recorded in Petitioner's
books at its carrying/book value. In recording the property dividends at their carrying/book
value, there was no profit or gain realized or recognized in the transaction.
Petitioner's declaration and distribution of property dividends to its shareholders in the form
of TAPC shares of stock is not within the ambit of the term "other disposition of shares of
stock" in RR No. 6-2008, as amended by RR No. 6-2013.

Hence, Petition for Review is granted.

11. CIR vs Ocier

Facts:
Respondent received an assessment notice from the BIR to the effect that he had incurred
deficiencies in the CGT and DST for the year 1999.2 The deficiency assessments arose from the
gains that he had realized from the sale of shares of stock of Best World Resources
Corporation (BW Resources) through over-the-counter transactions.
The respondent sent his letter-reply to the BIR alleging that the BIR had erroneously
considered as a sale the transfer of a total of 4.9 million BW Resources shares from his account
to Tan when it was actually a loan.
The respondent received from the BIR two Assessment Notices assessing him the deficiency
DST and CGT, inclusive of increments. He protested the assessments on October 12, 2001,6
but the BIR denied his protest on March 10, 2003. the respondent received the notice of
preliminary collection of the deficiency assessments,8 and filed his reply
The respondent filed a petition for review in the CTA to seek the cancellation of the deficiency
assessments. CTA granted the petition and denied the petitioner’s motion for reconsideration.
The petitioner elevated the adverse decision to the CTA En Banc by petition for review the CTA
En Banc denied the petition and affirmed the decision and subsequently denied the motion for
reconsideration.
Issues:
1. Whether or not the Respondent is liable for the CGT and DST
Ruling:
The respondent's insistence that he was not liable for the CGT and DST because he had
only loaned his shares to Tan without any consideration therefrom, being unsubstantiated,
must fail.
The respondent's admission of transferring the 4.9 million shares of BW Resources to
Tan, and his further admission of the circumstances surrounding the transfer sufficed to
establish the nature of the transaction as a transfer liable for the payment of the CGT. It is
worthy to underscore that the respondent never claimed exemption from the CGT. His denial
of liability solely rested on the fact that the transfer of his shares had been a stock loan, not a
sale. Still, the transfer even in that manner came within the concept and context of
a disposition sufficient for the CGT liability to attach
The CGT is imposed on the net capital gains realized during the taxable year from the sale,
barter, exchange or other disposition of shares of stock in a domestic corporation, except
shares sold, or disposed of through the stock exchange. The term disposition, being neither
 defined nor qualified. is accorded its ordinary meaning, that is, any act of disposing,
transferring to the care or possession of another, or the parting with, alienation of, or giving
up of property. With the respondent himself not disputing (but actually admitting) the transfer
of the 4.9 million shares of BW Resources to Tan,25 such manner of disposition of the shares
was definitely within the contemplation of Section 24(C) of the NIRC.
Anent the assessment for the deficiency DST, the respondent was similarly liable. The
DST is a tax on documents, instruments, loan agreements, and papers evidencing the
acceptance, assignment, sale or transfer of an obligation, right or property incident
thereto,29 but, for clarity, we have to point out that the subject of the DST is not limited to the
document embodying the enumerated transactions. The DST is an excise tax on the exercise of
a right or privilege to transfer obligations, rights or properties incident thereto.30 The transfer
of the shares of stocks is an exercise of the privilege to transfer a right and properties incident
thereto that is embodied in the stock loan agreement/trust declaration. Accordingly, the
transaction between the respondent and was properly subjected to the DST.

12. Smart Communications, Inc vs The Municipality of Jones, Isabela

CTA EB CASE NO. 1671, OCTOBER 8, 2018

FACTS :
Petitioner constructed a telecommunications tower in the Municipality of Jones. On
March 11, 2009, respondent’s Sangguniang Bayan enacted Ordinance No. 2009-03 otherwise
known as the “Ordinance Regulating the Conduct and Operations of Towers and Imposing an
Annual Tower Fee for the Operation of Cell Cites for Commercial Purposes witin the
Municipality of Jones, Isabela” which imposes tower fee for the operations of cell sites in the
municipality. Section 4 of said Ordinance imposes an annual regulatory fee for the operation
of the tower at the rate of Two Hundred Thousand Pesos (Php200,000.00).
On 2011, respondent’s Municipal Treasurer issued a Demand Letter which assessed
petitioner for the said tower for year 2009. On August 12, 2011, petitioner filed a petition for
certiorari and prohibition under Rule 65 of Civil Procedure. Said petition was eventually
dismissed by the said RTC in its Decision dated August 2, 2016 stating that the "instant special
civil action for certiorari and prohibition is not the proper action and therefore dismissible"
and the "instant petition do not have legal and factual basis." Petitioner asked the RTC for a
reconsideration of its decision but the same was also denied by the said Court in its Order
dated September 14, 2016.

ISSUE :
Whether or not the subject matter in the petition is within the jurisdiction of the Court of Tax
Appeals.

RULING:
The factual antecedent of the instant case reveals that the matter which the petitioner
elevated before the CTA is the decision of the power court that does not involve a local
taxcase but a judgment on certiorari and prohibition case under Rule 65 of the Rules of Court.
It pertains to an action questioning the validity of an ordinance of which the CTA is devoid of
any jurisdidction. The subject matter of the case is type an ordinance which partakes of the
nature of a regulatory fee instead of a local tax which may be questioned under Section 187 of
RA No. 7160 or the Local Government Code which provides:
Section 187 . Procedure for Approval and Effectivity of Tax, Ordinances and Revenue
Measures; Mandatory Public Hearings. -
xxx any question on the constitutionality or legality of tax ordinances or revenue
measures may be raised on appeal within thirty (30) days from the effectivity thereof
to the Secretary of Justice who shall render a decision within sixty (60) days from the
date of receipt of the appeal: Provided, however, That such appeal shall not have the
effect of suspending the effectivity of the ordinance and the accrual and payment of
the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after
receipt of the
 decision or the lapse of the sixty-day period without the Secretary of Justice acting upon
the appeal, the aggrieved party may file appropriate proceedings with a court of competent
jurisdiction.The said provision requires that any question on the constitutionality or legality of
tax ordinance or revenue measures may be raised on appeal before the Secretary of Justice.
This is theremedy given to the taxpayer who will question the validity of a tax ordinance.
Failure on the part of Petitioner to it's exhaust such remedy is fatal to its case.
As shown in the abovementioned facts, the matter raised before this Court is not a
local tax case but a petition for certiorari and prohibition on the implementation of an
ordinance, hence, the Court has no jurisdiction. The assailed ordinance does not partake the
nature of a revenue or tax measure but a regulatory fee in the exercise of the police power of
the respondent. In the instant case, the subject matter was neither disputing an assessment
nor claiming for refund but asking for a TRO and prohibiting the respondent LGU from
collecting the annual tower fee embodied in the assailed ordinance. Petitioner should have
first observed the appellate procedure outlined in Section 187 of the 1991 LGC, which is to
appeal before the SOJ. Thus, the dismissal made by the Court in Division is proper in the
instant case considering that the issue elevated in this Court is not a local tax case.

13. WILLORE PHARMA CORPORATION, Petitioner, -versus- COMMISSIONER OF INTERNAL

REVENUE, Respondent.

CTAEB N0.1577 (CTA Case No. 8602)

October 9, 2018

Facts:
On March 21, 2012, petitioner, received the Preliminary Assessment Notice (PAN) on its
deficiency taxes for taxable year 2008. Respondent then issued the Assessment Notices for
taxable year 2008, covered by Formal Letter of Demand received by petitioner on April18,
2012.

On November 8, 2012, petitioner received the Preliminary Collection Notice (PCN) on the
deficiency tax assessments and informed respondent that a protest to the assessment was
already made. Due to the inaction of respondent, petitioner filed a Petition for Review on
January 10, 2013.

On February 19, 2013 respondent filed his Answer, arguing among others that the
presumption is in favor of the correctness of the assessment, and that due process was
observed and the taxpayer was apprised of the facts and the law on which the FAN, FLD and
FDDA were based. Respondent also claims that the Court did not have jurisdiction to act on
the petition since there was no timely administrative protest filed. On June 22, 2016, the Court
in Division partially granted petitioner's Petition for Review.

Petitioner and respondent filed their respective Motions for Partial Reconsideration. On
December 15, 2016, the Court in First Division issued the assailed Resolution denying both
parties respective motions for reconsideration.

On February 2, 2017, petitioner filed a Petition for Review to the Court en banc.

Issues:
Whether or not the respondent’s assessments are all void for being issued without a valid
grant of authority.

Ruling:
According to jurisprudence a revenue officer must be clothed with authority before
proceeding with an examination or assessment that authority must be embodied in a Letter of
Authority, and not in the form of a mere notice to the taxpayer.

The records in this case reveals that the assessment was supported by a mere Tax Verification
Notice (TVN), instead of a valid Letter of Authority (LOA). The BIR Records offered and
admitted into evidence, also do not contain a Letter of Authority.
 The authority relied upon by the revenue officers who conducted the audit and investigation
of the taxpayer was faulty. Considering that the revenue officer who conducted the
examination was not validly authorized to do so by virtue of an LOA signed by the CIR or the
Regional Director, the subject tax assessment or examination is void.

The petition for review is granted. The assailed decision is reversed and set aside. The
Preliminary Collection Notice are cancelled and withdrawn.

14. CLARK WATER CORPORATION VS. CIR

"A Clark Special Economic Zone (CSEZ) enterprise is entitled to enjoy the 5%
special tax regime in lieu of national and local taxes, including VAT, so long as its
sales within the Customs Territory do not exceed the aforesaid 30% threshold.”

FACTS:

Petitioner is authorized by the Securities and Exchange Commission (SEC) to transact

business in the Philippines under SEC Registration No. A199915674 ndated October 1, 1999.
Petitioner is registered as a Clark Special Economic Zone (CSEZ) enterprise. As such, it is
classified as a duly registered CSEZ enterprise engaged in the operation and maintenance of
water and sewerage system within the CSEZ.
On August 1, 2014, petitioner received a copy of the respondent's Preliminary
Assessment Notice (PAN) assessing the petitioner for deficiency VAT and final withholding tax
(FWT) for CY 2011 in the total amount of P24,836,895.45, inclusive of interest, penalties and
surcharge.
On August 15, 2014, petitioner filed its reply letter to the PAN. Petitioner received on
September 8, 2014, a copy of respondent's Formal Letter of Demand (FLD) and Final
Assessment Notice (FAN) dated August 18, 2014, assessing petitioner of the alleged deficiency
taxes for CY 2011.
On October 21 2014 petitioner filed its protest to the FLD/FAN. On February 5, 2016
petitioner received a copy of respondents Final Decision on Disputed Assessment (FDDA) in
which respondent cancelled his deficiency FWT assessment and demanded the payment of
deficiency VAT for CY 2011.
On March 4, 2016 petitioner filed its Petition for Review. Petitioner insists that as a
registered CSEZ enterprise, pursuant to Section 15 of Republic Act No. 7227, Section 5 of
Executive Order No. 80 and Proclamation No. 163, it enjoys the preferential tax rate of 5% in
lieu of all local and national taxes, unless it breaches the 30% threshold on its sales within the
customs territory. Accordingly, since its revenues from enterprises located outside the CSEZ
territory constituted only 7.12% of petitioner's total revenue for CY 2011, petitioner is of the
considered view that its sales within the customs territory should not be subject to VAT.
Respondent, on the other hand, insists that petitioner's sales transactions/services rendered
to a customer from the customs territory is subject to VAT pursuant to RMC No. 50-2007.
ISSUE: WHETHER PETITIONER'S SALE OF SERVICES TO ITS CLIENTS WITHIN THE CUSTOMS TERRITORY
IS SUBJECT TO VAT.

RULING:

We find the Petition meritorious.

The FDDA clearly show that petitioner is being assessed for its failure to pay the
corresponding taxes for the sales of services made outside the CSEZ. In this case, considering
that petitioner is a registered Clark Freeport Enterprise based on its Certificate of Registration
and Tax Exemption Clark Business Registration No. C2011-04828, issued by Clark Development
Corporation, it is entitled to enjoy the 5% special tax regime in lieu of national and local taxes,
including VAT, so long as its sales within the Customs Territory do not exceed the aforesaid
30% threshold. Upon review of the records, the Court confirms that in petitioner's Annual
Income Tax Return and Audited Financial Statements, it had a total revenue of P278,887.00 in
 CY 2011, while its total sales made within the Customs Territory amounted only to
P19,827,638.50, as shown in its Billing Summary for CY 2011.
Thus, petitioner is correct in its claim that its revenues from enterprises located outside
the Clark Territory amounted only to 7.12% of its total revenue for CY 2011, which was way
below the aforesaid 30% threshold. Consequently, following Section 3 (Q7IA7) of RMC No. 50-
2007, petitioner's sale of services to its clients within the Customs Territory should not be
subject to VAT.

15. PETRON CORPORATION VS COMMISSIONER OF INTERNAL REVENUE

FACTS:

Petitioner Petron Corporation is a corporation organized and existing under the laws of the
Philippines, with principal office at San Miguel Corporation Head Office Complex, 40 San
Miguel Avenue, Mandaluyong City. It is engaged in the business of manufacturing and
marketing petroleum products.

Petitioner filed two administrative claims for refund of excise tax with the BIR allegedly
representing excise taxes erroneously, wrongfully, illegally, and excessively imposed and
collected by respondent through the Bureau of Customs per Customs Memorandum Circular
No. 164-2012. Petitioner contends that since alkylate is not among those enumerated under
Section 148(e), it is not subject to excise tax.

Respondent Commissioner of the Bureau of Internal Revenue maintains that petitioner is not
entitled to tax refund or issuance of tax credit certificate on the basis that the subject
imported alkylate is subject to excise tax as it qualifies as a product similar to naphtha used as
gasoline blending component, pursuant to Section 148(e) of the NIRC of 1997, as amended.

ISSUE:

Whether or not petitioner is entitled to a tax refund or issuance of tax credit certificate

RULING:

Tax refunds partake the nature of tax exemptions which are a derogation of the power of
taxation of the State. Consequently, they are construed strictly against a taxpayer and liberally
in favor of the State such that he who claims a refund or exemption must justify it by words
too plain to be mistaken and too categorical to be misinterpreted.

It is incumbent upon petitioner to establish its right to refund and that it is indubitably entitled
thereto; and failure to sustain such burden is fatal for this claim of refund.

From the testimonies of petitioner's witnesses, the raw materials used in producing alkylate,
i.e., light olefins and isobutane, are derived from petroleum. And based on the evidence
presented, alkylate is a product of distillation. While it is not directly produced through the
process of distillation but by alkylation, the raw materials, olefins and isobutane, are products
of distillation. As such, it is obvious that alkylate first undergoes the process of distillation,
because it cannot come into existence without its raw materials, olefins and isobutane. Since it
can be considered a product of distillation similar to naphtha, alkyl ate is subject to excise tax,
pursuant to Section 148( e) of the NIRC of 1997, as amended.

In sum, the Court finds petitioner's alkylate importations subject to excise tax. Hence,
petitioner's refund claims must be denied.
 16. PAYO MANUFACTURING CORPORATION represented by its Chief Operating Officer, Clovis
Jones Louis Sabornido vs. COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE

FACTS:
On January 4, 2019, petitioner Payo Manufacturing Corporation filed the instant Petition for
Review by registered mail and received by the Court on January 15, 2019.
It appears that the case is an appeal assailing the Follow- up Collection Letter dated October 4,
2018 in which the Regional Director of Revenue Region No . 19 denied petitioner's application for
compromise settlement of the balance of its deficiency tax liability amounting to P779, 120.63. The
said Follow-up Collection Letter was received by petitioner on December 3, 2018.
Hence, petitioner had 30 days from the said date of receipt or until January 2, 2019 to file its
appeal to the Court. In view of the suspension of work in the Court on January 2, 2019, petitioner had
until the next working day or until January 3, 2019 to file an appeal. But for unknown reason,
petitioner posted its Petition for Review only on January 4, 2019.
Considering that the Petition for Review was posted on January 4, 2019, such is deemed the
date of filing. Clearly, the Petition for Review was filed out of time depriving the Court of jurisdiction
to entertain the same.

ISSUE: Whether or not the Court acquired jurisdiction over the subject matter

RULING:
Section 3, Rule 13 of the Rules of Court provides that if a pleading is filed by registered mail,
then the date of mailing shall be considered as the date of filing. It does not matter when the court
actually receives the mailed pleading.
The Supreme Court held that while the right to appeal a decision of the Commissioner to the
Court of Tax Appeals is merely a statutory remedy, nevertheless the requirement that it must be
brought within 30 days from notice of the adverse decision is jurisdictional. If a statutory remedy
provides as a condition precedent that the action to enforce must be commenced within a prescribed
time, such requirement is jurisdictional and failure to comply therewith may be raised in a motion to
dismiss.
The Petition For Review was sent through registered mail, a Cashier's Check in the amount of
P8,000.00 was included to cover the payment of docket and filing fees. However, based on the
computation prepared by the Judicial Records Division of the Court, petitioner must pay the amount
of P9,047.00 as docket/filing fees. In fine, the required full amount of docket/filing fees was not paid.
The right to appeal is purely a statutory right. Not being a natural right or a part of due
process, the right to appeal may be exercised only in the manner and in accordance with the rules
provided therefor. For this reason, payment of the full amount of the appellate court docket and
other lawful fees within the reglementary period is mandatory and jurisdictional. The Supreme Court
has consistently upheld the dismissal of an appeal or notice of appeal for failure to pay the full docket
fees within the period for taking the appeal. The payment of docket fees within the prescribed period
is mandatory for the perfection of the appeal. Without such payment, the appellate court does not
acquire jurisdiction over the subject matter of the action and the decision sought to be appealed from
becomes final and executory.
With the non-payment of the full amount of docket fees within the reglementary period for
the filing of a petition for review, the instant appeal was not perfected thereby depriving the Court of
jurisdiction.

17. Organizational Change Consultants International for Learning, Inc. vs CIR (CTA EB No. 1679,
November 19, 2018)
FACTS:
On April 15, 2010, petitioner submitted its Annual ITR for CY 2009. Petitioner received
a PAN dated July 13, 2012 for deficiency taxes to which it protested on August 2, 2012.
Respondent served a Formal Letter of Demand together with the FAN, which the petitioner
disputed on September 17, 2012. Petitioner received a preliminary collection notice on
February 27, 2013. Consequently, petitioner filed a Petition for Review.
The CTA in Division partly granted the Petition for Review. Petitioner filed a Motion for
Partial Consideration arguing that the Court’s Division erred in considering the P 2,251700.00
as subject to income tax and sustaining the disallowance of the consultant fees, commission
 fees, professional fees, facilitator’s fees and donations. The same was, however, denied.
Hence, this present petition.

ISSUE:
W/N petitioner can claim facilitator’s fees and consultant fees as deductions from its gross
income.

RULING:
No. To be entitled to a claim for tax deduction, the requisites for deductibility of
ordinary and necessary expenses must be satisfied, to wit: (1) the expenses must be ordinary
and necessary; (2) they must have been paid or incurred during the taxable year; (3) they must
have been incurred in carrying on the trade or business of the taxpayer; and (4) they must be
supported by receipts, records and other pertinent papers.
Petitioner failed to present as evidence the ORs. While business expenses can be
substantiated not only by ORs but also by other adequate records, vouchers alone to support
alleged expenses incurred are insufficient. For cash vouchers to be given probative value,
these must be validated by ORs.
Hence, the Petition for Review was denied for lack of merit.

18. MAKATI CITY TREASURER AND CITY OF MAKATI, as represented by the CITY MAYOR vs.
MERMAC, INC.,
CTA AC No. 193
(Civil Case No. 14-470)

FACTS:

Respondent Mermac, Inc. is a holding company whose primary purpose is to own and hold
real and personal property, including shares of stock for the purpose of exercising the rights and
privileges of ownership, including all voting powers on any stocks so owned without being a
broker of securities or investment corporation. Its principal office is located in Makati City.
On January 19, 2014, respondent received the Assessment from petitioners assessing
respondent of deficiency local business tax (LBT) for taxable year 2013 in the total amount of
P3,719,473.06
Respondent avers that the Petition for Review did not comply with the requirements
provided for under the Rules of Court on verification and certification against forum shopping, as
the Petition for Review was not verified by petitioner City of Makati, as represented by the City
Mayor; and no certificate of non-forum shopping was validly executed.

ISSUE:
Whether or not the Petition for Review complied with the requirements under the Rules of
Court on verification and certification against forum shopping

RULING:

Petitioners failed to comply with the rules on verification and certification against forum
shopping, as the Petition for Review was not verified by the City of Makati, as represented by the
City Mayor, and the certification against forum shopping was not validly executed.
The Rules of Court, in general, suppletorily apply to the RRCTA, and the provisions of Rule 42,
43, 44 and 46 thereof, specifically apply to original and in appealed cases to this Court, whether in
Division or En Bane. Failure to accompany a petition for review with sworn certification against
forum shopping, inter alia, is a ground for the dismissal thereof.
Noncompliance with the requirement of verification does not necessarily render the pleading
fatally defective. However, as regards the submission of the certification against forum shopping,
it is clear that in case such certification is not accompanied by proof that the signatory thereof is
authorized to file the petition on behalf of the corporation, the same is considered as a ground
for the dismissal of the same.
 The Sangguniang Panlungsod is mandated, inter alia, to approve ordinances and pass
resolutions in the proper exercise of its power to sue. And in connection thereto, the said
Sanggunian shall approve and pass resolutions, among others, determining the powers and
duties of city officials, subject to the provisions of the LGC of 1991 and pertinent
laws. In other words, except when the power to sue is explicitly granted or designated to a
particular city official under the law, a prior ordinance or resolution from the Sangguniang
Panglungsod is necessary for any city official to exercise such power.
Considering that there is no showing that the Sangguniang Panlungsod of petitioner City of
Makati issued an ordinance giving authority to petitioner Makati City Treasurer to initiate the
filing of the instant Petition for Review, the same must be dismissed.

19. HOTEL SPECIALIST (TAGAYTAY), INC. V. CIR

Facts:

Hotel Specialist (Tagaytay), Inc. received the FDDA issued by respondent finding it liable for
deficiency income tax, VAT, WTC, and EWT, including interest and compromise penalty, for
taxable year 2009 after a series of protests and exchange of communication between the
petitioner and the respondent. Petitioner submits that the deficiency VAT assessment for
taxable year 2009 should be cancelled and withdrawn because the imposition of VAT on its
total service charges is without legal basis. First, petitioner claims that respondent did not
make any factual determination as to his basis that the service charges it collected should be
subjected to VAT. Petitioner maintains otherwise and argues that only 15°/o of the service
charges it collected in 2009 should be subjected to VAT pursuant to Article 96 of the Labor
Code which provides that all service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of 85% for all covered employees and fifteen
percent for management. The share of the employees shall be equally distributed among
them. In view of the aforequoted provision, the 85°/o share of the employees is not
considered as "gross receipts" subject to VAT as such amount was merely held in trust to be
eventually distributed to its employees. Petitioner now avers that it already paid the VAT on
its 15 % share of the service charges as seen by the evidence it submitted in Court hence it
should no longer be liable for VAT for taxable year 2009.

Issue:
Whether service charges collected by hotels is subject to VAT.

Ruling:
Service charges collected by hotels, restaruants and other similar establishments, earmarked
and set aside for purposes of distributing the same to the employees should not be subject to
VAT. Gross Receipts is limited to the amount that the taxpayer received for the services it
performed or to the amount it received as advance payment for the services it will render in the
future to another person. Accordingly, gross receipts do not include monies or receipts which do
not redound to the benefit of the taxpayer.

20. HALLIBURTON WORLDWIDE LIMITED-PHILIPPINE BRANCH vs. COMMISSIONER OF INTERNAL

REVENUE

FACTS:
Petitioner disagrees with the Court’s findings that the partial grant of its claim for
refund of input VAT was due to non-compliance with the substantiation requirements
prescribed by law and regulations. Petitioner insists that it was able to prove its excess and
unutilized input VAT attributable to its zero-rated sales during the 4 quarters of CY 2014 by its
filing of BIR Form No. 1600, which constitutes sufficient documentary substantiation of the
input VAT rendered by non-residents. Petitioner cites RR No. 8-02, which provides that only
the duly filed BIR Form No. 1600 is required to prove remittance of the tax insofar as the
claimed input VAT on services rendered by non-residents is concerned.
ISSUE:
Whether or not BIR Form No. 1600 is sufficient to substantiate its claim for refund.

RULING:

The argument of petitioner in so far as the sufficiency of BIR Form No. 1600 is without
merit. The filing of such form is insufficient to prove the amount actually remitted to the BIR
and the dates when these were remitted and as such, these must be supported by payment
confirmation receipts. Without such confirmation receipts, this Court could not determine the
amount actually withheld and remitted/paid to the BIR and the corresponding date of
payment. While this Court acknowledges that the standard of proof in civil cases is only
preponderance of evidence, the strict construction in the appreciation of evidence will still
apply in cases where compliance with conditions are an important facet to determine whether
or not an important claim for refund as in claims for refund of alleged excess/unutilized input
VAT attributable to zero-rated sales.