FIRST DIVISIONG.R. No. 185115, February 18, 2015NORTHERN MINDANAO POWER CORPORATION,Petitioner,v.COMMISSIONER OF INTERNAL REVENUE,Respondents.D E C I S I O NSERENO,C.J.:This is a Petition for Review onCertiorari1under Rule 45 of the 1997 Rules of Civil Procedure filed by Northern Mindanao Power Corporation (petitioner). The Petition assails the Decision2dated 18 July 2008 and Resolution3dated 27 October 2008 issued by the Court of Tax AppealsEn Banc(CTAEn Banc) in C.T.A. EB No. 312.The Facts

Petitioner is engaged in the production sale of electricity as an independent power producer and sells electricity to National Power Corporation (NPC). It allegedly incurred input value-added tax (VAT) on its domestic purchases of goods and services that were used in its production and sale of electricity to NPC. For the 3rdand the 4thquarters of taxable year 1999, petitioners input VAT totaled to P2,490,960.29, while that incurred for all the quarters of taxable year 2000 amounted toP3,920,932.55.4chanroblesvirtuallawlibrary

Petitioner filed an administrative claim for a refund on 20 June 2000 for the 3rdand the 4thquarters of taxable year 1999, and on 25 July 2001 for taxable year 2000 in the sum of P6,411,892.84.5chanroblesvirtuallawlibrary

Thereafter, alleging inaction of respondent on these administrative claims, petitioner filed a Petition6with the CTA on 28 September 2001.

The CTA First Division denied the Petition and the subsequent Motion for Reconsideration for lack of merit. The Court in Division found that the term zero-rated was not imprinted on the receipts or invoices presented by petitioner in violation of Section 4.108-1 of Revenue Regulations No. 7-95. Petitioner failed to substantiate its claim for a refund and to strictly comply with the invoicing requirements of the law and tax regulations.7In his Concurring and Dissenting Opinion, however, then Presiding Justice Ernesto D. Acosta opined that the Tax Code does not require that the word zero-rated be imprinted on the face of the receipt or invoice. He further pointed out that the absence of that term did not affect the admissibility and competence of the receipt or invoice as evidence to support the claim for a refund.8chanroblesvirtuallawlibrary

On appeal to the CTA En Banc, the Petition was likewise denied. The court ruled that for every sale of services, VAT shall be computed on the basis of gross receipts indicated on the official receipt. Official receipts are proofs of sale of services and cannot be interchanged with sales invoices as the latter are used for the sale of goods. Further, the requirement of issuing duly registered VAT official receipts with the term zero-rated imprinted is mandatory under the law and cannot be substituted, especially for input VAT refund purposes. Then Presiding Justice Acosta maintained his dissent.

Hence, this appeal before us.Issues

Petitioners appeal is anchored on the following grounds:chanRoblesvirtualLawlibrarySection 4.108-1 of Revenue Regulations (RR) No. 7-95 which expanded the statutory requirements for the issuance of official receipts and invoices found in Section 113 of the 1997 Tax Code by providing for the additional requirement of the imprinting of the terms zero-rated is unconstitutional.

Company invoices are sufficient to establish the actual amount of sale of electric power services to the National Power Corporation and therefore sufficient to substantiate Petitioners claim for refund.9The Courts Ruling

To start with, this Court finds it appropriate to first determine the timeliness of petitioners judicial claim in order to determine whether the tax court properly acquired jurisdiction, although the matter was never raised as an issue by the parties. Well-settled is the rule that the issue of jurisdiction over the subject matter may, at any time, be raised by the parties or considered by the Courtmotu proprio.10Therefore, the jurisdiction of the CTA over petitioners appeal may still be considered and determined by this Court.

Section 112 of the National Internal Revenue Code (NIRC) of 1997 laid down the manner in which the refund or credit of input tax may be made. For a VAT-registered person whose sales are zero-rated or effectively zero-rated, Section 112(A) specifically provides for a two-year prescriptive period after the close of the taxable quarter when the sales were made within which such taxpayer may apply for the issuance of a tax credit certificate or refund of creditable input tax. In the consolidated tax casesCommissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue11(hereby collectively referred to asSan Roque), the Court clarified that the two-year period refers to the filing of an administrative claim with the BIR.

In this case, petitioner had until 30 September 2001 and 31 December 2001 for the claims covering the 3rdand the 4thquarters of taxable year 1999; and 31 March, 30 June, 30 September and 31 December in 2002 for the claims covering all four quarters of taxable year 2000 - or the close of the taxable quarter when the zero-rated sales were made - within which to file its administrative claim for a refund. On this note, we find that petitioner had sufficiently complied with the two-year prescriptive period when it filed its administrative claim for a refund on 20 June 2000 covering the 3rdand the 4thquarters of taxable year 1999 and on 25 July 2001 covering all the quarters of taxable year 2000.

Pursuant to Section 112(D) of the NIRC of 1997, respondent had one hundred twenty (120) days from the date of submission of complete documents in support of the application within which to decide on the administrative claim. The burden of proving entitlement to a tax refund is on the taxpayer. Absent any evidence to the contrary, it is presumed that in order to discharge its burden, petitioner attached to its applications complete supporting documents necessary to prove its entitlement to a refund.12Thus, the 120-day period for the CIR to act on the administrative claim commenced on 20 June 2000 and 25 July 2001.

As laid down inSan Roque, judicial claims filed from 1 January 1998 until the present should strictly adhere to the 120+30-day period referred to in Section 112 of the NIRC of 1997. The only exception is the period 10 December 2003 until 6 October 2010. Within this period, BIR Ruling No. DA-489-03 is recognized as an equitable estoppel, during which judicial claims may be filed even before the expiration of the 120-day period granted to the CIR to decide on a claim for a refund.

For the claims covering the 3rdand the 4thquarters of taxable year 1999 and all the quarters of taxable year 2000, petitioner filed a Petition with the CTA on 28 September 2001.

Both judicial claims must be disallowed.

a) Claim for a refund of input VAT covering the 3rdand the 4thquarters of taxable year 1999

Counting 120 days from 20 June 2000, the CIR had until 18 October 2000 within which to decide on the claim of petitioner for an input VAT refund attributable to its zero-rated sales for the period covering the 3rdand the 4thquarters of taxable year 1999. If after the expiration of that period respondent still failed to act on the administrative claim, petitioner could elevate the matter to the court within 30 days or until 17 November 2000.

Petitioner belatedly filed its judicial claim with the CTA on 28 September 2001. Just like inPhilex, this was a case of late filing. The Court explained thus:chanRoblesvirtualLawlibraryUnlike San Roque and Taganito, Philexs case is not one of premature filing but of late filing. Philex did not file any petition with the CTA within the 120-day period. Philex did not also file any petition with the CTA within 30 days after the expiration of the 120-day period. Philex filed its judicial claimlong afterthe expiration of the 120-day period, in fact 426 days after the lapse of the 120-day period.In any event, whether governed by jurisprudence before, during, or after theAtlascase, Philexs judicial claim will have to be rejected because of late filing.Whether the two-year prescriptive period is counted from the date of payment of the output VAT following theAtlasdoctrine, or from the close of the taxable quarter when the sales attributable to the input VAT were made following theMirantandAichidoctrines, Philexs judicial claim was indisputably filed late.

TheAtlasdoctrine cannot save Philex from the late filing of its judicial claim. Theinactionof the Commissioner on Philexs claim during the 120-day period is, by express provision of law, deemed a denial of Philexs claim. Philex had 30 days from the expiration of the 120-day period to file its judicial claim with the CTA. Philexs failure to do so rendered the deemed a denial decision of the Commissioner final and inappealable. The right to appeal to the CTA from a decision or deemed a denial decision of the Commissioner is merely a statutory privilege, not a constitutional right. The exercise of such statutory privilege requires strict compliance with the conditions attached by the statute for its exercise. Philex failed to comply with the statutory conditions and must thus bear the consequences.

x x x x

Philexs situation is not a case of premature filing of its judicial claim but of late filing, indeed very late filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means non-exhaustion of the 120-day period for the Commissioner to act on an administrative claim. Philex cannot claim the benefit of BIR Ruling No. DA-489-03 because Philex did not file its judicial claim prematurely but filed it long after the lapse of the 30-day periodfollowing the expiration of the 120-day period. In fact, Philex filed its judicial claim 426 days after the lapse of the 30-day period.13(Emphasis in the original)Petitioners claim for the 3rdand the 4thquarters of taxable year 1999 was filed 319 days after the expiration of the 30-day period. To reiterate, the right to appeal is a mere statutory privilege that requires strict compliance with the conditions attached by the statute for its exercise. LikePhilex, petitioner failed to comply with the statutory conditions and must therefore bear the consequences. It already lost its right to claim a refund or credit of its alleged excess input VAT attributable to zero-rated or effectively zero-rated sales for the 3rdand the 4thquarters of taxable year 1999 by virtue of its own failure to observe the prescriptive periods.

b) Claim for the refund of input VAT covering all quarters of taxable year 2000

For the year 2000, petitioner timely filed its administrative claim on 25 July 2001within the two-year period from the close of the taxable quarter when the zero-rated sales were made. Pursuant to Section 112(D) of the NIRC of 1997, respondent had 120 days or until 22 November 2001 within which to act on petitioners claim. It is only when respondent failed to act on the claim after the expiration of that period that petitioner could elevate the matter to the tax court.

Records show, however, that petitioner filed its Petition with the CTA on 28 September 2001 without waiting for the expiration of the 120-day period. Barely 64 days had lapsed when the judicial claim was filed with the CTA. The Court inSan Roquehas already settled that failure of the petitioner to observe the mandatory 120-day period is fatal to its judicial claim and renders the CTA devoid of jurisdiction over that claim. On 28 September 2001 the date on which petitioner filed its judicial claim for the period covering taxable year 2000 - the 120+30 day mandatory period was already in the law and BIR Ruling No. DA-489-03 had not yet been issued. Considering this fact, petitioner did not have an excuse for not observing the 120+30 day period. Again, as enunciated inSan Roque, it is only the period between 10 December 2003 and 6 October 2010 that the 120-day period may not be observed. While the ponente had disagreed with the majority ruling inSan Roque, the latter is now the judicial doctrine that will govern like cases.

The judicial claim was thus prematurely filed for failure of petitioner to observe the 120-day waiting period. The CTA therefore did not acquire jurisdiction over the claim for a refund of input VAT for all the quarters of taxable year 2000.

In addition, the issue of the requirement of imprinting the word zero-rated has already been settled by this Court in a number of cases. InWestern Mindanao Power Corporation v. CIR,14we ruled:chanRoblesvirtualLawlibraryRR 7-95, which took effect on 1 January 1996, proceeds from the rule-making authority granted to the Secretary of Finance by the NIRC for the efficient enforcement of the same Tax Code and its amendments. InPanasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue, we ruled that this provision is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. Moreover, we have held inKepco Philippines Corporation v. Commissioner of Internal Revenuethat the subsequent incorporation of Section 4.108-1 of RR 7-95 in Section 113 (B) (2) (c) of R.A. 9337 actually confirmed the validity of the imprinting requirement on VAT invoices or official receipts a case falling under the principle of legislative approval of administrative interpretation by reenactment.

In fact, this Court has consistently held as fatal the failure to print the word zero-rated on the VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated sales, even if the claims were made prior to the effectivity of R.A. 9337. Clearly then, the present Petition must be denied.cralawredFinally, as regards the sufficiency of a company invoice to prove the sales of services to NPC, we find this claim is without sufficient legal basis. Section 113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter or exchange of goods or properties, while a VAT official receipt properly pertains to every lease of goods or properties; as well as to every sale, barter or exchange of services.

The Court has in fact distinguished an invoice from a receipt inCommissioner of Internal Revenue v. Manila Mining Corporation:15A sales or commercial invoice is a written account of goods sold or services rendered indicating the prices charged therefor or a list by whatever name it is known which is used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods and services.

A receipt on the other hand is a written acknowledgment of the fact of payment in money or other settlement between seller and buyer of goods, debtor or creditor, or person rendering services and client or customer.cralawredA VAT invoice is the sellers best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyers best evidence of the payment of goods or services received from the seller. A VAT invoice and a VAT receipt should not be confused and made to refer to one and the same thing. Certainly, neither does the law intend the two to be used alternatively.16chanroblesvirtuallawlibrary

WHEREFORE,premises considered, the instant Petition isDENIED.

SO ORDERED.

FIRST DIVISIONG.R. No. 185666, February 04, 2015NIPPON EXPRESS (PHILIPPINES) CORP.,Petitioner,v.COMMISSIONER OF INTERNAL REVENUE,Respondents.D E C I S I O NPEREZ,J.:Before the Court is a Petition for Review onCertiorariseeking to reverse and set aside the 20 August 2008 Decision1and the 16 December 2008 Resolution2of the Court of Tax Appeals (CTA)En Bancin C.T.A. E.B. No. 335 which affirmedin totothe Decision and Resolution dated 15 June 20073and 13 November 2007,4respectively, of the First Division of the CTA (CTA in Division)5in C.T.A. Case No. 6464, denying due course petitioners claim for the issuance of a Tax Credit Certificate (TCC) in the amount of P24,826,667.61 allegedly representing accumulated excess or unutilized input taxes attributable to its zero-rated sales for the calendar year 2000, and therefore dismissing the petition for failure to comply with the substantiation requirements.

The Facts

As aptly found by the CTA in Division, the factual antecedents of the case are undisputed:chanRoblesvirtualLawlibraryPetitioner is a corporation duly organized and existing under the laws of the Republic of the Philippines, registered with the Securities and Exchange Commission (SEC) under Certificate of Registration No. ASO95-005669, and with principal office at U-2701 Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave., Salcedo Village, Makati City.

Likewise, petitioner is registered with the Large Taxpayers District Office of the Bureau of Internal Revenue in Makati City as, among others, a Value-Added Tax (VAT) taxpayer rendering freight forwarding services.

Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue vested with power to decide, approve, and grant refunds or tax credits of overpaid internal revenue taxes as provided by law and holds office and may be served with summons, orders, pleadings, and other processes at BIR Revenue Region 8, 5/F Atrium Bldg., Makati Ave., Makati City.

The precedent facts, as culled from the records are as follows:chanRoblesvirtualLawlibrary

For the calendar year 2000, petitioners gross receipts were primarily derived from rendering its services to Philippine Economic Zone Authority (PEZA)-registered clients. Likewise, it incurred total sales of P1,063,357,608.74, which as shown in petitioners Amended Quarterly VAT Return, is made up of the following:chanRoblesvirtualLawlibraryTaxable Sales

1stquarter (Annex B, Petition for Review)P19,416,405.90

2ndquarter (Annex C, Petition for Review)21,727,369.30

3rdquarter (Annex D, Petition for Review)25,478,221.80

4thquarter (Annex E, Petition for Review)19,106,829.00P85,728,826.00

Zero-Rated Sales

1stquarter (Annex B, Petition for Review)163,837,757.11

2ndquarter (Annex C, Petition for Review)189,237,849.49

3rdquarter (Annex D, Petition for Review)228,507,608.58

4thquarter (Annex E, Petition for Review)247,387,949.22828,971,164.40

Exempt Sales

1stquarter (Annex B, Petition for Review)45,234,485.51

2ndquarter (Annex C, Petition for Review)27,632,934.35

3rdquarter (Annex D, Petition for Review)49,971,632.54

4thquarter (Annex E, Petition for Review)25,818,565.94148,657,618.34

Grand TotalP1,063,357,608.74

Also, for the same year, petitioner paid input taxes amounting to P31,846,253.57 and apportioning this amount with its total sales above in accordance with Section 112 of the 1997 Tax Code, as amended; the amount of total sales attributable to zero-rated sales would be P24,826,667.61.

Under the premise that it is entitled to a refund of the amount of P24,826,667.61, petitioner filed four separate applications for tax credit/refund with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance (OSSAC-DOF) on September 24, 2001.

Receiving no resolution from OSSAC-DOF, petitioner filed the instant petition for review on April 24, 2002 pursuant to Section 112 in relation to Section 229 of the 1997 Tax Code, as amended.6

Docketed as C.T.A. Case No. 6464, trial ensued having both parties submitted various documentary and testimonial evidence during the proceedings, as well as rebuttal and sur-rebuttal evidence, in order to establish their respective claim.The Ruling of the CTA in Division

In a Decision dated 15 June 2007,7the CTA in Division denied due course and accordingly dismissed petitioners claim for the issuance of a TCC on the ground of its failure to comply with the substantiation requirements. It explained that the sales invoices, transfer slips, and credit memos presented in support thereof did not comply with the substantiation requirements provided for under Sections 106, 108, and 1138of the National Internal Revenue Code (NIRC) of 1997, as amended, considering that petitioners sales are sales of services which should only be supported by official receipts. Consequently, without the VAT official receipts evidencing its zero-rated revenues, the input VAT payment alleged to be directly attributable thereto cannot be refunded or a TCC cannot be issued in its favor in accordance with Revenue Memorandum Circular (RMC) No. 42-2003. Having rendered such ruling, the CTA in Division decided not to pass upon other incidental issues raised before it for being moot.

On 13 November 2007, the CTA in Division denied both petitioners Motion for Reconsideration and Supplemental Motion for Reconsideration for lack of merit.9chanroblesvirtuallawlibrary

Aggrieved, petitioner appealed to the CTAEn Bancby filing a Petition for Review under Section 18 of Republic Act (R.A.) No. 1125, as amended by R.A. No. 9282,10on 21 December 2007, docketed as C.T.A. E.B. No. 335.The Ruling of the CTA En Banc

The CTA En Banc affirmedin totoboth the aforesaid Decision and Resolution rendered by the CTA in Division in CTA Case No. 6464, pronouncing that although Sections 113 and 237 of the NIRC of 1997, as amended, and Section 4.108-1 of Revenue Regulations (RR) No. 7-95 use the words invoice and receipt without distinction, nevertheless, the NIRC of 1997, as amended, provides separate provisions, which must be read in relation thereto: Section 106 for VAT on sale of goods or properties, and Section 108 for VAT on sale of services and use or lease of properties.11 Clearly therefore, the CTAEn Bancagreed with the courta quosfindings that the evidence submitted by petitioner, i.e. sales invoices, transfer slips, credit memos, cargo manifests, and credit notes, as well as formal report of the independent certified public accountant (ICPA), to prove its zero-rated sales, were insufficient so as to entitle it to the issuance of a TCC since the aforesaid legal provisions do not provide for any other document that can be used as an alternative to, or in lieu of an invoice and official receipts.12 Ultimately, it ruled that petitioners sales, being sales of services, shall properly be supported by VAT official receipts only, which unfortunately were not presented and submitted as evidence by petitioner during trial.

Upon denial of petitioners Motion for Reconsideration thereof, it filed the instant Petition for Review onCertioraribefore this Court seeking the reversal of the aforementioned Decision and the 16 December 2008 Resolution13rendered in C.T.A. E.B. No. 335, based on the following grounds:chanRoblesvirtualLawlibrary1. That nowhere in the NIRC of 1997, as amended, and its regulations does it state that only official receipts support the sale of services or that only sales invoices support the sale of goods;chanrobleslaw2. That the NIRC of 1997, as amended, its implementing regulations, and well-established jurisprudence allow other documentary evidence to prove the zero-rated sales;chanrobleslaw3. That amendment in the law that requires the issuance of sales invoice for every sale of goods and the issuance of official receipt for every sale of services cannot be given retroactive effect;chanrobleslaw4. That the majority of the CTAEn Banccommitted grave abuse of discretion amounting to lack or want of jurisdiction when they made an erroneous interpretation and application of the applicable law and regulations;chanrobleslaw5. That denial of petitioners just and valid claim constitutes unjust enrichment at the expense of the taxpayer and should not be sustained;chanrobleslaw6. That even assuming for the sake of argument that the majority of the CTAEn Bancis correct, petitioner should at least be allowed to introduce its existing official receipts in the interest of justice and equity; and7. That petitioner has fully complied with all requirements for its claim for refund or TCC considering that:chanRoblesvirtualLawlibrarya. Petitioner filed both administrative and judicial claims for refund/TCC within the two (2) year prescriptive period;chanrobleslawb. Petitioners input taxes amounting to P31,846,253.87 were incurred for the period from January 1, 2000 to December 31, 2000 of which P24,826,667.61 remained unutilized and unapplied against its output tax;chanrobleslawc. Petitioners input taxes subject of the present case were not applied against any of its output tax liability;chanrobleslawd. Petitioners input taxes subject of the present case are directly attributable to zero-rated sales;chanrobleslawe. Petitioners zero-rated sales are supported by documentary evidence in accordance with the NIRC of 1997, as amended, and its implementing regulations; andf. The input taxes being claimed are supported by VAT invoices or official receipts in accordance with Section 4.108-5 of RR No. 7-95 in relation to Sections 110 and 237 of the NIRC of 1997, as amended.14

The Issue

The sole issue for this Courts consideration is whether or not petitioner is entitled to a TCC in the amount of P24,826,667.61 allegedly representing its excess and unutilized input VAT for the taxable year 2000, in accordance with the provisions of the NIRC of 1997, as amended, other pertinent laws, and applicable jurisprudential proclamations.Our Ruling

At the outset, in a petition for review oncertiorariunder Rule 45 of the Rules of Court, only questions of law may be raised.15 The Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the (CTA) are conclusive and binding on the Court16 and they carry even more weight when the (CTAEn Banc) affirms the factual findings of the trial court.17 However, this Court had recognized several exceptions to this rule,18including instances when the appellate court manifestly overlooked relevant facts not disputed by the parties, which, if properly considered, would probably justify a different conclusion.

InCommissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue (San Roque case),19this Court has finally settled the issue on proper observance of the prescriptive periods in claiming for refund of creditable input tax due or paid attributable to any zero-rated or effectively zero-rates sales. In view of the foregoing jurisprudential pronouncements, there appears to be an imperious need for this Court to review the factual findings of the CTA in order to attain a complete determination of the issue presented.

Records reveal that the CTA in Division in C.T.A. Case No. 6464 merely focused on the compliance with the substantiation requirements, which particularly ruled that the evidence submitted by petitioner to prove its zero-rated sales were insufficient so as to entitle it to the issuance of a TCC. The same findings were adopted and affirmedin totoby the CTAEn Bancin the assailed 20 August 2008 Decision.20chanroblesvirtuallawlibrary

While it is true that the substantiation requirements in establishing a refund claim is a valid issue, the Court finds it imperative to first and foremost determine whether or not the CTA properly acquired jurisdiction over petitioners claim covering taxable year 2000, taking into consideration the timeliness of the filing of its judicial claim pursuant to Section 112 of the NIRC of 1997, as amended, and consistent with the pronouncements made in theSan Roquecase. Clearly, the claim of petitioner for the TCC can proceed only upon compliance with the aforesaid jurisdictional requirement.

Relevant to the foregoing, Section 7 of R.A. No. 1125,21which was thereafter amended by R.A. No. 9282,22clearly defined the appellate jurisdiction of the CTA, to wit:chanRoblesvirtualLawlibrarySection 7.Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided.(1)Decisions of the Commissioner of Internal Revenue in cases involvingdisputed 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 or other law or part of law administered by the Bureau of Internal Revenue;chanrobleslaw

x x x.23(Emphasis supplied)

Moreover, Section 11 of the same law prescribes how the said appeal should be taken. It reads:chanRoblesvirtualLawlibrarySection 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 Appealsmay file an appeal in the Court of Tax Appealswithin thirty daysafter the receipt of such decision or ruling.24x x x (Emphasis and underscoring supplied)

The timeliness in the administrative and judicial claims can be found in Section 112 of the NIRC of 1997, as amended, which reads:chanRoblesvirtualLawlibrarySEC. 112.Refunds or Tax Credits of Input Tax. -

(A)Zero-rated or Effectively Zero-rated Sales. Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may,within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: x x x.

x x x x

(D)25Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsections (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, orthe failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may,within thirty (30) daysfrom the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals.

x x x x. (Emphasis and underscoring supplied)

As mentioned earlier, the proper interpretation of the afore-quoted provision was finally settled in theSan Roquecase26by this Court sittingEn Banc. The relevant portions of the discussion pertinent to the focal issue in the present case are quoted hereunder as follows:chanRoblesvirtualLawlibraryTo repeat, a claim for tax refund or credit, like a claim for tax refund exemption, is construed strictly against the taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System iscompliance with the 120+30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of theAtlasdoctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional.27(Emphasis supplied)

The same disposition was declared inMindanao II Geothermal Partnership v. Commissioner of Internal Revenue, and Mindanao I Geothermal Partnership v. Commissioner of Internal Revenue,28which, for emphasis, further provided a Summary of Rules on Prescriptive Periods Involving VAT as a guide for all parties concerned, to wit:chanRoblesvirtualLawlibraryWe summarize the rules on the determination ofthe prescriptive period for filing a tax refund or credit ofunutilized input VATas provided in Section 112 of the 1997 Tax Code,as follows:chanRoblesvirtualLawlibrary

(1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.

(2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period.If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction.

(3)A judicial claim must be filed with the CTA within 30 days from the receipt of the CIRs decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR.

(4)All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court inAichion October 6, 2010, as an exception to the mandatory and jurisdictional 120+30 day periods.29(Emphasis supplied)

Certainly, it is evident from the foregoing jurisprudential pronouncements that a taxpayer-claimant only had a limited period of thirty (30) days from the expiration of the one hundred twenty (120)-day period of inaction of the Commissioner of Internal Revenue (CIR) to file its judicial claim with the CTA, with the exception of claims made during the effectivity of Bureau of Internal Revenue (BIR) Ruling No. DA-489-03 (from 10 December 2003 to 5 October 2010).30 Failure to do so, the judicial claim shall prescribe or be considered as filed out of time.

Applying the foregoing discussion to the present case, although it appears that petitioner has indeed complied with the required two-year period within which to file a refund/tax credit claim with the BIR (OSSAC-DOF in this case) by filing all its administrative claims on 24 September 2001 (within the period from the close of the taxable quarters for the year 2000, when the sales were made), this Court finds that petitioners corresponding judicial claim was filed beyond the 30-day period, detailed hereunder as follows:chanRoblesvirtualLawlibraryTaxable year 2000 (close of taxable quarters)Filing date of the administrative claim (within the 2-year period)Last day of the 120-day period under Section 112(D) from the date of submission of complete documents in support of its applicationLast day of the 30-day period to judicially appeal said inactionFiling date of the Petition for Review

1stQuarter(31 March 2000)2ndQuarter(30 June 2000)3rdQuarter(30 September 2000)4thQuarter(31 December 2000)24 September 200122 September 200121 February 200224 April 2002

Section 112(D) of the NIRC of 1997 categorically states that in case of failure on the part of the respondent to act on the application within the 120-day period prescribed by law, petitioner only has 30 days after the expiration of the 120-day period to appeal the unacted claim with the CTA. Since petitioners judicial claim for the aforementioned quarters for taxable year 2000 was filed before the CTA only on 24 April 2002,32which was way beyond the mandatory 120+30 days to seek judicial recourse, such non-compliance with the mandatory period of 30 days is fatal to its refund claim on the ground of prescription. Consequently, the CTA had no jurisdiction over the instant claim of petitioner as the petition was belatedly filed.

It must be emphasized that jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a given controversy,33and is conferred only by law and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or nature of an action. Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties.34 If the court has no jurisdiction over the nature of an action, its only jurisdiction is to dismiss the case. The court could not decide the case on the merits.35chanroblesvirtuallawlibrary

The CTA, even if vested with special jurisdiction, is, as courts of general jurisdiction can only take cognizance of such matters as are clearly within its statutory authority.36 Relative thereto, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, the court shall dismiss the claim.37chanroblesvirtuallawlibrary

Finally for academic discussion, as regards the substantiation requirements, it is worthy to mention that inKepco Philippines Corporation v. Commissioner of Internal Revenue,38the High Court ruled that under the law, a VAT invoice is necessary for every sale, barter or exchange of goods or properties while a VATofficial receiptproperly pertains to every lease of goods or properties, and every sale, barter or exchange of services. In other words, the VAT invoice is the sellers best proof of the sale of the goods or services to the buyer while the VAT receipt is the buyers best evidence of the payment of goods or services received from the seller. Thus, the High Court concluded that VAT invoice and VAT receipt should not be confused as referring to one and the same thing. Certainly, neither does the law intend the two to be used interchangeably.

All told, the CTA has no jurisdiction over petitioners judicial appeal considering that its Petition for Review was filed beyond the mandatory 30-day period pursuant to Section 112(D)39of the NIRC of 1997, as amended, and consistent with the ruling in theSan Roquecase. Consequently, petitioners instant claim for refund must be denied.

WHEREFORE,the claim for refund is by prescriptionBARRED. Accordingly, the petition for review filed before the Court of Tax Appeals docketed as CTA Case No. 6464 isDISMISSEDfor lack of jurisdiction and the issue on substantiation requirements renderedMOOTandACADEMIC.This petition is, for such reason,DISMISSED.

SO ORDERED.

Sereno, CJ., (Chairperson), Leonardo-De Castro, Bersamin,andPerlas-Bernabe, JJ., concur.cr

FIRST DIVISIONG.R. No. 172509, February 04, 2015CHINA BANKING CORPORATION,Petitioner,v.COMMISSIONER OF INTERNAL REVENUE,Respondent.D E C I S I O NSERENO,C.J.:This Rule 45 Petition1requires this Court to address the question of prescription of the governments right to collect taxes. Petitioner China Banking Corporation (CBC) assails the Decision2and Resolution3of the Court of Tax Appeals (CTA)En Bancin CTAEn BancCase No. 109. The CTAEn Bancaffirmed the Decision4in CTA Case No. 6379 of the CTA Second Division, which had also affirmed the validity of Assessment No. FAS-5-82/85-89-000586 and FAS-5-86-89-00587. The Assessment required petitioner CBC to pay the amount of P11,383,165.50, plus increments accruing thereto, as deficiency documentary stamp tax (DST) for the taxable years 1982 to 1986.cralawredFACTS

Petitioner CBC is a universal bank duly organized and existing under the laws of the Philippines. For the taxable years 1982 to 1986, CBC was engaged in transactions involving sales of foreign exchange to the Central Bank of the Philippines (nowBangko Sentral ng Pilipinas), commonly known as SWAP transactions.5Petitioner did not file tax returns or pay tax on the SWAP transactions for those taxable years.

On 19 April 1989, petitioner CBC received an assessment from the Bureau of Internal Revenue (BIR) finding CBC liable for deficiency DST on the sales of foreign bills of exchange to the Central Bank. The deficiency DST was computed as follows:chanroblesvirtuallawlibraryDeficiency Documentary Stamp Tax Amount

For the years 1982 to 1985P 8,280,696.00

For calendar year 1986P 2,481 ,975.60

Add : SurchargeP 620,493.90P 3,102.469.50

P11 ,383,165.506

On 8 May 1989, petitioner CBC, through its vice-president, sent a letter of protest to the BIR. CBC raised the following defenses: (1)double taxation, as the bank had previously paid the DST on all its transactions involving sales of foreign bills of exchange to the Central Bank; (2)absence of liability,as the liability for the DST in a sale of foreign exchange through telegraphic transfers to the Central Bank falls on the buyer ? in this case, the Central Bank; (3)due process violation, as the banks records were never formally examined by the BIR examiners; (4)validity of the assessment, as it did not include the factual basis therefore; (5)exemption,as neither the tax-exempt entity nor the other party was liable for the payment of DST before the effectivity of Presidential Decree Nos. (PD) 1177 and 1931 for the years 1982 to 1986.7In the protest, the taxpayer requested a reinvestigation so as to substantiate its assertions.8chanRoblesvirtualLawlibrary

On 6 December 2001,more than 12 years after the filing of the protest,the Commissioner of Internal Revenue (CIR) rendered a decision reiterating the deficiency DST assessment and ordered the payment thereof plus increments within 30 days from receipt of the Decision.9chanRoblesvirtualLawlibrary

On 18 January 2002, CBC filed a Petition for Review with the CTA.On 11 March 2002, the CIR filed an Answer with a demand for CBC to pay the assessed DST.10chanRoblesvirtualLawlibrary

On 23 February 2005, and after trial on the merits, the CTA Second Division denied the Petition of CBC. The CTA ruled that a SWAP arrangement should be treated as a telegraphic transfer subject to documentary stamp tax.11chanRoblesvirtualLawlibrary

On 30 March 2005, petitioner CBC filed a Motion for Reconsideration, but it was denied in a Resolution dated 14 July 2005.

On 5 August 2005, petitioner appealed to the CTA En Banc. The appellate tax court, however, dismissed the Petition for Review in a Decision dated 1 December 2005. CBC filed a Motion for Reconsideration on 21 December 2005, but it was denied in a 20 March 2006 Resolution.

The taxpayer now comes to this Court with a Rule 45 Petition, reiterating the arguments it raised at the CTA level and invoking for the first time the argument of prescription. Petitioner CBC states that the government has three years from 19 April 1989, the date the former received the assessment of the CIR, to collect the tax. Within that time frame, however, neither a warrant of distraint or levy was issued, nor a collection case filed in court.

On 17 October 2006, respondent CIR submitted its Comment in compliance with the Courts Resolution dated 26 June 2006.12The Comment did not have any discussion on the question of prescription.

On 21 February 2007, the Court issued a Resolution directing the parties to file their respective Memoranda. Petitioner CBC filed its Memorandum13on 26 April 2007. The CIR, on the other hand, filed on 17 April 2007 a Manifestation stating that it was adopting the allegations and authorities in its Comment in lieu of the required Memorandum.14chanRoblesvirtualLawlibraryISSUE

Given the facts and the arguments raised in this case, the resolution of this case hinges on this issue: whether the right of the BIR to collect the assessed DST from CBC is barred by prescription.15chanRoblesvirtualLawlibraryRULING OF THE COURT

We grant the Petition on the ground that the right of the BIR to collect the assessed DST is barred by the statute of limitations.

Prescription Has Set In.

To recall, the Bureau of Internal Revenue (BIR) issued the assessment for deficiency DST on 19 April 1989, when the applicable rule was Section 319(c) of the National Internal Revenue Code of 1977, as amended.16 In that provision, the time limit for the government to collect the assessed tax is set at three years, to be reckoned from the date when the BIR mails/releases/sends the assessment notice to the taxpayer. Further, Section 319(c) states that the assessed tax must be collected by distraint or levy and/or court proceeding within the three-year period.

With these rules in mind, we shall now determine whether the claim of the BIR is barred by time.

In this case, the records do not show when the assessment notice was mailed, released or sent to CBC. Nevertheless, the latest possible date that the BIR could have released, mailed or sent the assessment notice was on the same date that CBC received it, 19 April 1989. Assuming therefore that 19 April 1989 is the reckoning date, the BIR had three years to collect the assessed DST. However, the records of this case show that there was neither a warrant of distraint or levy served on CBC's properties nor a collection case filed in court by the BIR within the three-year period.

The attempt of the BIR to collect the tax through its Answer with a demand for CBC to pay the assessed DST in the CTAon 11 March 2002did not comply with Section 319(c) of the 1977 Tax Code, as amended. The demand was madealmost thirteen years fromthe date from which the prescriptive period is to be reckoned. Thus, the attempt to collect the tax was made way beyond the three-year prescriptive period.

The BIRs Answer in the case filed before the CTA could not, by any means, have qualified as a collection case as required by law. Under the rule prevailing at the time the BIR filed its Answer, the regular courts, and not the CTA, had jurisdiction over judicial actions for collection of internal revenue taxes. It was only on 23 April 2004, when Republic Act Number 9282 took effect,17that the jurisdiction of the CTA was expanded to include, among others, original jurisdiction over collection cases in which the principal amount involved is one million pesos or more.

Consequently, the claim of the CIR for deficiency DST from petitioner is forever lost, as it is now barred by time. This Court has no other option but to dismiss the present case.

The running of the statute oflimitations was not suspendedby the request for reinvestigation.

The fact that the taxpayer in this case may have requested a reinvestigation did not toll the running of the three-year prescriptive period. Section 320 of the 1977 Tax Code states:chanroblesvirtuallawlibrarySec. 320.Suspension of running of statute.The running of the statute of limitations provided in Sections 318 or 319 on the making of assessment and the beginning of distraint or levy or a proceeding in court for collection, in respect of any deficiency, shall be suspended for the period during which the Commissioner is prohibited from making the assessment or beginning distraint or levy or a proceeding in court and for sixty days thereafter;when the taxpayer requests for a re-investigation which is granted by the Commissioner; when the taxpayer cannot be located in the address given by him in the return filed upon which a tax is being assessed or collected:Provided,That if the taxpayer informs the Commissioner of any change in address, the running of the statute of limitations will not be suspended; when the warrant of distraint and levy is duly served upon the taxpayer, his authorized representative, or a member of his household with sufficient discretion, and no property could be located; and when the taxpayer is out of the Philippines. (Emphasis supplied)

The provision is clear. A request for reinvestigation alone will not suspend the statute of limitations. Two things must concur: there must be a request for reinvestigation and the CIR must have granted it.BPI v. Commissioner of Internal Revenue18emphasized this rule by stating:chanroblesvirtuallawlibraryIn the case ofRepublic of the Philippines v. Gancayco,taxpayer Gancayco requested for a thorough reinvestigation of the assessment against him and placed at the disposal of the Collector of Internal Revenue all the [evidence] he had for such purpose; yet, the Collector ignored the request, and the records and documents were not at all examined. Considering the given facts, this Court pronounced thatx x x.The act of requesting a reinvestigation alone does not suspend the period. The request should first be granted, in order to effect suspension. (Collector v. Suyoc Consolidated, supra; also Republic v. Ablaza, supra). Moreover, the Collector gave appellee until April 1, 1949, within which to submit his evidence, which the latter did one day before. There were no impediments on the part of the Collector to file the collection case from April 1, 1949 x x x.InRepublic of the Philippines v. Acebedo, this Court similarly found that . . .[T]he defendant, after receiving the assessment notice of September 24, 1949, asked for a reinvestigation thereof on October 11, 1949 (Exh. A). There is no evidence that this request was considered or acted upon. In fact, on October 23, 1950 the then Collector of Internal Revenue issued a warrant of distraint and levy for the full amount of the assessment (Exh. D), but there was follow-up of this warrant. Consequently, the request for reinvestigation did not suspend the running of the period for filing an action for collection.(Emphasis in the original)The Court went on to declare that the burden of proof that the request for reinvestigation had been actually granted shall be on the CIR. Such grant may be expressed in its communications with the taxpayer or implied from the action of the CIR or his authorized representative in response to the request for reinvestigation.

There is nothing in the records of this case which indicates, expressly or impliedly, that the CIR had granted the request for reinvestigation filed by BPI. What is reflected in the records is the piercing silence and inaction of the CIR on the request for reinvestigation, as he considered BPI's letters of protest to be.

In the present case, there is no showing from the records that the CIR ever granted the request for reinvestigation filed by CBC. That being the case, it cannot be said that the running of the three-year prescriptive period was effectively suspended.

Failure to raise prescription at theadministrative level/lower court as adefense is of no moment.When the pleadings or the evidence on recordshow that the claim is barred by prescription,the court must dismiss the claim even if prescriptionis not raised as a defense.

We note that petitioner has raised the issue of prescription for the first time only before this Court. While we are mindful of the established rule of remedial law that the defense of prescription must be raised at the trial court that has also been applied for tax cases.19 Thus, as a rule, the failure to raise the defense of prescription at the administrative level prevents the taxpayer from raising it at the appeal stage.

This rule, however, is not absolute.

The facts of the present case are substantially identical to those in the 2014 case,Bank of the Philippine Islands (BPI) v. Commissioner of Internal Revenue.20In that case, petitioner received an assessment notice from the BIR for deficiency DST based on petitioners SWAP transactions for the year 1985 on 16 June 1989. On 23 June 1989, BPI, through its counsel, filed a protest requesting the reinvestigation and/or reconsideration of the assessment for lack of legal or factual bases.Almost ten years later,the CIR, in a letter dated 4 August 1998, denied the protest. On 4 January 1999, BPI filed a Petition for Review with the CTA.On 23 February 1999, the CIR filed an Answer with a demand for BPI to pay the assessed DST. It was only when the case ultimately reached this Court that the issue of prescription was brought up. Nevertheless, the Court ruled that the CIR could no longer collect the assessed tax due to prescription. Basing its ruling on Section 1, Rule 9 of the Rules of Court and on jurisprudence, the Court held as follows:chanroblesvirtuallawlibraryIn a Resolution dated 5 August 2013, the Court, through the Third Division, found that the assailed tax assessment may be invalidated because the statute of limitations on the collection of the alleged deficiency DST had already expired, conformably with Section 1, Rule 9 of the Rules of Court and the Bank of the Philippine Islands v. Commissioner of Internal Revenue decision. However, to afford due process, the Court required both BPI and CIR to submit their respective comments on the issue of prescription.

Only the CIR filed his comment on 9 December 2013. In his Comment, the CIR argues that the issue of prescription cannot be raised for the first time on appeal. The CIR further alleges that even assuming that the issue of prescription can be raised, the protest letter interrupted the prescriptive period to collect the assessed DST, unlike in the Bank of the Philippine Islands case.

x x x x

We deny the right of the BIR to collect the assessed DST on the ground of prescription.

Section 1, Rule 9 of the Rules of Court expressly provides that:ChanRoblesVirtualawlibrarySection 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived.However, when it appears from the pleadings or the evidence on recordthat the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by prior judgment or by thestatute of limitations, the court shall dismiss the claim.If the pleadings or the evidence on record show that the claim is barred by prescription, the court is mandated to dismiss the claim even if prescription is not raised as a defense.InHeirs of Valientes v. Ramas, we ruled that the CA maymotu propriodismiss the case on the ground of prescription despite failure to raise this ground on appeal. The court is imbued with sufficient discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case. More so, when the provisions on prescription were enacted to benefit and protect taxpayers from investigation after a reasonable period of time.

Thus, we proceed to determine whether the period to collect the assessed DST for the year 1985 has prescribed.

To determine prescription, what is essential only is that the facts demonstrating the lapse of the prescriptive period were sufficiently and satisfactorily apparent on the record either in the allegations of the plaintiffs complaint, or otherwise established by the evidence. Under the then applicable Section 319(c) [now, 222(c)] of the National Internal Revenue Code (NIRC) of 1977, as amended, any internal revenue tax which has been assessed within the period of limitation may be collected by distraint or levy, and/or court proceeding within three years following the assessment of the tax. The assessment of the tax is deemed made and the three-year period for collection of the assessed tax begins to run on the date the assessment notice had been released, mailed or sent by the BIR to the taxpayer.

In the present case, although there was no allegation as to when the assessment notice had been released, mailed or sent to BPI, still, the latest date that the BIR could have released, mailed or sent the assessment notice was on the date BPI received the same on 16 June 1989. Counting the three-year prescriptive period from 16 June 1989, the BIR had until 15 June 1992 to collect the assessed DST. But despite the lapse of 15 June 1992, the evidence established that there was no warrant of distraint or levy served on BPIs properties, or any judicial proceedings initiated by the BIR.

The earliest attempt of the BIR to collect the tax was when it filed its answer in the CTA on 23 February 1999, which was several years beyond the three-year prescriptive period. However, the BIRs answer in the CTA was not the collection case contemplated by the law. Before 2004 or the year Republic Act No. 9282 took effect, the judicial action to collect internal revenue taxes fell under the jurisdiction of the regular trial courts, and not the CTA. Evidently, prescription has set in to bar the collection of the assessed DST. (Emphasis supplied)

BPIthus provides an exception to the rule against raising the defense of prescription for the first time on appeal: the exception ariseswhen the pleadings or the evidence on record show that the claim is barred by prescription.

In this case, the fact that the claim of the government is time-barred is a matter of record. As can be seen from the previous discussion on the determination of the prescription of the right of the government to claim deficiency DST, the conclusion that prescription has set in was arrived at using the evidence on record. The date of receipt of the assessment notice was not disputed, and the date of the attempt to collect was determined by merely checking the records as to when the Answer of the CIR containing the demand to pay the tax was filed.Estoppel or waiver prevents the governmentfrom invoking the rule against raising theissue of prescription for the first time on appeal.

In this case, petitioner may have raised the question of prescription only on appeal to this Court. The BIR could have crushed the defense by the mere invocation of the rule against setting up the defense of prescription only at the appeal stage. The government, however, failed to do so.

On the contrary, the BIR was silent despite having the opportunity to invoke the bar against the issue of prescription. It is worthy of note that the Court ordered the BIR to file a Comment. The government, however, did not offer any argument in its Comment about the issue of prescription, even if petitioner raised it in the latters Petition. It merely fell silent on the issue. It was given another opportunity to meet the challenge when this Court ordered both parties to file their respective memoranda. The CIR, however, merely filed a Manifestation that it would no longer be filing a Memorandum and, in lieu thereof, it would be merely adopting the arguments raised in its Comment. Its silence spoke loudly of its intent to waive its right to object to the argument of prescription.

We are mindful of the rule in taxation thatestoppeldoes not prevent the government from collecting taxes; it is not bound by the mistake or negligence of its agents. The rule is based on the political law concept the king can do no wrong,21which likens a state to a king: it does not commit mistakes, and it does not sleep on its rights. The analogy fosters inequality between the taxpayer and the government, with the balance tilting in favor of the latter. This concept finds justification in the theory and reality that government is necessary, and it must therefore collect taxes if it is to survive. Thus, the mistake or negligence of government officials should not bind the state, lest it bring harm to the government and ultimately the people, in whom sovereignty resides.22chanRoblesvirtualLawlibrary

Republic v. Ker & Co. Ltd.23involved a collection case for a final and executory assessment. The taxpayer nevertheless raised the prescription of the right to assess the tax as a defense before the Court of First Instance. The Republic, instead of objecting to the invocation of prescription as a defense by the taxpayer, litigated on the issue and thereafter submitted it for resolution. The Supreme Court ruled for the taxpayer, treating the actuations of the government as a waiver of the right to invoke the defense of prescription.Kereffectively applied to the government the rule ofestoppel. Indeed, the no-estoppel rule is not absolute.

The same ingredients inKer- procedural matter and injustice - obtain in this case. The procedural matter consists in the failure to raise the issue of prescription at the trial court/administrative level, and injustice in the fact that the BIR has unduly delayed the assessment and collection of the DST in this case. The fact is that it tookmore than 12 yearsfor it to take steps to collect the assessed tax. The BIR definitely caused untold prejudice to petitioner, keeping the latter in the dark for so long, as to whether it is liable for DST and, if so, for how much.cralawredCONCLUSION

Inasmuch as the governments claim for deficiency DST is barred by prescription, it is no longer necessary to dwell on the validity of the assessment.chanrobleslaw

WHEREFORE, the Petition isGRANTED. The Court of Tax AppealsEn BancDecision dated 1 December 2005 and its Resolution dated 20 March 2006 in CTA EB Case No. 109 are herebyREVERSEDandSET ASIDE. A new ruling is entered DENYING respondents claim for deficiency DST in the amount of P11,383,165.50.

SO ORDERED.cralawlawlibrary

Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 197525 June 4, 2014VISAYAS GEOTHERMAL POWER COMPANY,Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE,Respondent.D E C I S I O NMENDOZA,J.:Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the February 7, 2011 Decision1and the June 27, 2011 Resolution2of the Court of Tax Appeals En Banc (CTA En Banc) in CTA EB Case Nos. 561 and 562, which reversed and set aside the April 17, 2009 Decision of the CT A Second Division in CTA Case No. 7559.The Facts:Petitioner Visayas Geothermal Power Company (VGPC) is a special limited partnership duly organized and existing under Philippine Laws with its principal office at Milagro, Ormoc City, Province of Leyte. It is principally engaged in the business of power generation through geothermal energy and the sale of generated power to the Philippine National Oil Company (PNOC),pursuant to the Energy Conversion Agreement.VGPC filed with the Bureau of Internal Revenue (BIR)its Original Quarterly VAT Returns for the first to fourth quarters of taxable year 2005 on April 25, 2005, July 25, 2005, October 25, 2006, and January 20, 2006, respectively.On December 6, 2006, it filed an administrative claim for refund for the amount of 14,160,807.95 with the BIR District Office No. 89 of Ormoc City on the ground that it was entitled to recover excess and unutilized input VAT payments for the four quarters of taxable year 2005, pursuant to Republic Act (R.A.) No. 9136,3which treated sales of generated power subject to VAT to a zero percent (0%) rate starting June 26, 2001.Nearly one month later, on January3, 2007, while its administrative claim was pending, VGPC filed its judicial claim via a petition for review with the CTA praying for a refund or the issuance of a tax credit certificate in the amount of 14,160,807.95, covering the four quarters of taxable year 2005.In its April 17, 2009 Decision, the CTA Second Division partially granted the petition as follows:WHEREFORE, in view of the foregoing considerations, the Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the reduced amount of SEVEN MILLION SIX HUNDRED NINENTY NINE THOUSAND THREE HUNDRED SIXTY SIX PESOS AND 37/100 (P7,699,366.37) representing unutilized input VAT paid on domestic purchases of non-capital goods and services, services rendered by non-residents, and importations of non-capital goods for the first to fourth quarters of taxable year 2005.SO ORDERED.4The CTA Second Division found that only the amount of 7,699,366.37 was duly substantiated by the required evidence. As to the timeliness of the filing of the judicial claim, the Court ruled that following the case of Commissioner of Internal Revenue (CIR) v. Mirant Pagbilao Corporation (Mirant),5both the administrative and judicial claims were filed within the two-year prescriptive period provided in Section 112(A) of the National Internal Revenue Code of 1997 (NIRC),the reckoning point of the period being the close of the taxable quarter when the sales were made.In its October 29, 2009 Resolution,6the CTA Second Division denied the separate motions for partial reconsideration filed by VGPC and the CIR. Thus, both VGPC and the CIR appealed to the CTA En Banc.In the assailed February 7, 2011 Decision,7the CTA En Banc reversed and set aside the decision and resolution of the CTA Second Division, and dismissed the original petition for review for having been filed prematurely, to wit:WHEREFORE, premises considered:i. As regards CTA EB Case No. 562, the Petition for Review is hereby DISMISSED; andii. As regards CTA EB Case No. 561, the Petition for Review is hereby GRANTED.Accordingly, the Decision, dated April 17, 2009, and the Resolution, dated October 29, 2009, of the CTA Former Second Division are hereby REVERSED and SET ASIDE, and another one is hereby entered DISMISSING the Petition for Review filed in CTA Case No. 7559 for having been filed prematurely.SO ORDERED.8The CTA En Banc explained that although VGPC seasonably filed its administrative claim within the two-year prescriptive period, its judicial claim filed with the CTA Second Division was prematurely filed under Section 112(D) of the National Internal Revenue Code (NIRC).Citing the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi),9the CTA En Banc held that the judicial claim filed 28 days after the petitioner filed its administrative claim, without waiting for the expiration of the 120-day period, was premature and, thus, the CTA acquired no jurisdiction over the case.The VGPC filed a motion for reconsideration, but the CTA En Banc denied it in the assailed June 27, 2011 Resolution for lack of merit. It stated that the case of Atlas Consolidated Mining v. CIR (Atlas)10relied upon by the petitioner had long been abandoned.Hence, this petition.ASSIGNMENT OF ERRORSIThe CTA En Banc erred in finding that the 120-day and 30-day periods prescribed under Section 112(D) of the 1997 Tax Code are jurisdictional and mandatory in the filing of the judicial claim for refund. The CTA-Division should take cognizance of the judicial appeal as long as it is filed with the two-year prescriptive period under Section 229 of the 1997 Tax Code.IIThe CTA En Banc erred in finding that Aichi prevails over and/or overturned the doctrine in Atlas, which upheld the primacy of the two-year period under Section 229 of the Tax Code. The law and jurisprudence have long established the doctrine that the taxpayer is duty-bound to observe the two-year period under Section 229 of the Tax Code when filing its claim for refund of excess and unutilized VAT.IIIThe CTA En Banc erred in finding that Respondent CIR is not estopped from questioning the jurisdiction of the CTA. Respondent CIR, by her actions and pronouncements, should have been precluded from questioning the jurisdiction of the CTA-Division.IVThe CTA En Banc erred in applying Aichi to Petitioner VGPCs claim for refund. The novel interpretation of the law in Aichi should not be made to apply to the present case for being contrary to existing jurisprudence at the time Petitioner VGPC filed its administrative and judicial claims for refund.11Petitioner VGPC argues that (1) the law and jurisprudence have long established the rule regarding compliance with the two-year prescriptive period under Section 112(D) in relation to Section 229 of the 1997 Tax Code; (2) Aichi did not overturn the doctrine in Atlas, which upheld the primacy of the two-year period under Section 229; (3) respondent CIR is estopped from questioning the jurisdiction of the CTA and Aichi cannot be indiscriminately applied to all VAT refund cases; (4) applying Aichi invariably to all VAT refund cases would effectively grant respondent CIR unbridled discretion to deprive a taxpayer of the right to effectively seek judicial recourse, which clearly violates the standards of fairness and equity; and (5) the novel interpretation of the law in Aichi should not be made to apply to the present case for being contrary to existing jurisprudence at the time VGPC filed its administrative and judicial claims for refund. Aichi should be applied prospectively.Ruling of the CourtJudicial claim not prematureThe assignment of errors is rooted in the core issue of whether the petitioners judicial claim for refund was prematurely filed.Two sections of the NIRC are pertinent to the issue at hand, namely Section 112 (A) and (D) and Section 229, to wit:SEC. 112. Refunds or Tax Credits of Input Tax. (A) Zero-rated or Effectively Zero-rated Sales.- Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.x x x(D) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsections (A) and (B) hereof.In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day period, appeal the decision or the unacted claim with the Court of Tax Appeals.SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.[Emphases supplied]It has been definitively settled in the recent En Banc case of CIR v. San Roque Power Corporation (San Roque),12that it is Section 112 of the NIRC which applies to claims for tax credit certificates and tax refunds arising from sales of VAT-registered persons that are zero-rated or effectively zero-rated, which are, simply put, claims for unutilized creditable input VAT.Thus, under Section 112(A), the taxpayer may, within 2 years after the close of the taxable quarter when the sales were made, via an administrative claim with the CIR, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales. Under Section 112(D), the CIR must then act on the claim within 120 days from the submission of the taxpayers complete documents. In case of (a) a full or partial denial by the CIR of the claim, or (b) the CIRs failure to act on the claim within 120 days, the taxpayer may file a judicial claim via an appeal with the CTA of the CIR decision or unacted claim, within 30 days (a) from receipt of the decision; or (b) after the expiration of the 120-day period.The 2-year period under Section 229 does not apply to appeals before the CTA in relation to claims for a refund or tax credit for unutilized creditable input VAT.Section 229 pertains to the recovery of taxes erroneously, illegally, or excessively collected.13San Roque stressed that "input VAT is not excessively collected as understood under Section 229 because, at the time the input VAT is collected, the amount paid is correct and proper."14It is, therefore, Section 112 which applies specifically with regard to claiming a refund or tax credit for unutilized creditable input VAT.15Upholding the ruling in Aichi,16San Roque held that the 120+30 day period prescribed under Section 112(D) mandatory and jurisdictional.17The jurisdiction of the CTA over decisions or inaction of the CIR is only appellate in nature and, thus, necessarily requires the prior filing of an administrative case before the CIR under Section 112.18The CTA can only acquire jurisdiction over a case after the CIR has rendered its decision, or after the lapse of the period for the CIR to act, in which case such inaction is considered a denial.19A petition filed prior to the lapse of the 120-day period prescribed under said Section would be premature for violating the doctrine on the exhaustion of administrative remedies.20There is, however, an exception to the mandatory and jurisdictional nature of the 120+30 day period. The Court in San Roque noted that BIR Ruling No. DA-489-03, dated December 10, 2003, expressly stated that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for Review."21This BIR Ruling was recognized as a general interpretative rule issued by the CIR under Section 422of the NIRC and, thus, applicable to all taxpayers. Since the CIR has exclusive and original jurisdiction to interpret tax laws, it was held that taxpayers acting in good faith should not be made to suffer for adhering to such interpretations. Section 24623of the Tax Code, in consonance with equitable estoppel, expressly provides that a reversal of a BIR regulation or ruling cannot adversely prejudice a taxpayer who in good faith relied on the BIR regulation or ruling prior to its reversal. Hence, taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up to its reversal by this Court in Aichion October 6, 2010, where it was held that the 120+30 day period was mandatory and jurisdictional.Accordingly, the general rule is that the 120+30 day period is mandatory and jurisdictional from the effectivity of the 1997 NIRC on January 1, 1998, up to the present. As an exception, judicial claims filed from December 10, 2003 to October 6, 201024need not wait for the exhaustion of the 120-day period.A review of the facts of the present case reveals that petitioner VGPC timely filed its administrative claim with the CIR on December 6, 2006, and later, its judicial claim with the CTA on January 3, 2007. The judicial claim was clearly filed within the period of exception and was, therefore, not premature and should not have been dismissed by the CTA En Banc.In the present petition, VGPC prays that the Court grant its claim for refund or the issuance of a tax credit certificate for its unutilized input VAT in the amount ofP14,160,807.95. The CTA Second Division, however, only awarded the amount ofP7,699,366.37. The petitioner has failed to present any argument to support its entitlement to the former amount.In any case, the Court would have been precluded from considering the same as such would require a review of the evidence, which would constitute a question of fact outside the Courts purview under Rule 45 of the Rules of Court. The Court, thus, finds that the petitioner is entitled to the refund awarded to it by the CTA Second Division in the amount ofP7,699,366.37.Atlas doctrine has no relevanceto the 120+30 day period forfiling judicial claimAlthough the core issue of prematurity of filing has already been resolved, the Court deems it proper to discuss the petitioners argument that the doctrine in Atlas, which allegedly upheld the primacy of the 2-year prescriptive period under Section 229,should prevail over the ruling in Aichi regarding the mandatory and jurisdictional nature of the 120+30 day period in Section 112.In this regard, it was thoroughly explained in San Roque that the Atlas doctrine only pertains to the reckoning point of the 2-year prescriptive period from the date of payment of the output VAT under Section 229, and has no relevance to the 120+30 day period under Section 112, to wit:The Atlas doctrine, which held that claims for refund or credit of input VAT must comply with the two-year prescriptive period under Section 229, should be effective only from its promulgation on 8 June 2007 until its abandonment on 12 September 2008 in Mirant. The Atlas doctrine was limited to the reckoning of the two-year prescriptive period from the date of payment of the output VAT. Prior to the Atlas doctrine, the two-year prescriptive period for claiming refund or credit of input VAT should be governed by Section 112(A) following the verba legis rule. The Mirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule, thus applying Section 112(A) in computing the two year prescriptive period in claiming refund or credit of input VAT.The Atlas doctrine has no relevance to the 120+30 day periods under Section 112(C) because the application of the 120+30 day periods was not in issue in Atlas. The application of the 120+30 day periods was first raised in Aichi, which adopted the verba legis rule in holding that the 120+30 day periods are mandatory and jurisdictional. The language of Section 112(C) is plain, clear, and unambiguous. When Section 112(C) states that "the Commissioner shall grant a refund or issue the tax credit within one hundred twenty (120) days from the date of submission of complete documents," the law clearly gives the Commissioner 120 days within which to decide the taxpayers claim. Resort to the courts prior to the expiration of the 120-day period is a patent violation of the doctrine of exhaustion of administrative remedies, a ground for dismissing the judicial suit due to prematurity. Philippine jurisprudence is awash with cases affirming and reiterating the doctrine of exhaustion of administrative remedies. Such doctrine is basic and elementary.25[Underscoring supplied]Thus, Atlas is only relevant in determining when to file an administrative claim with the CIR for refund or credit of unutilized creditable input VAT, and not for determining when to file a judicial claim with the CTA. From June 8, 2007 to September 12, 2008, the 2-year prescriptive period to file administrative claims should be counted from the date of payment of the output VAT tax. Before and after said period, the 2-year prescriptive period is counted from the close of the taxable quarter when the sales were made, in accordance with Section 112(A). In either case, the mandatory and jurisdictional 120+30 day period must be complied with for the filing of the judicial claim with the CTA, except for the period provided under BIR Ruling No. DA-489-03, as previously discussed.The Court further noted that Atlas was decided in relation to the 1977 Tax Code which had not yet provided for the 30-day period for the taxpayer to appeal to the CTA from the decision or inaction of the CIR over claims for unutilized input VAT. Clearly then, the Atlas doctrine cannot be invoked to disregard compliance with the 120+30 day mandatory and jurisdictional period.26In San Roque, it was written:The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioners decision if the two-year prescriptive period is about to expire, cannot apply because that rule was adopted before the enactment of the 30-day period. The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the 120-day period. With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of the 120-day period.27At any rate, even assuming that the Atlas doctrine was relevant to the present case, it could not be applied since it was held to be effective only from its promulgation on June 8, 2007 until its abandonment on September 12, 2008 when Mirant was promulgated. The petitioner in this case filed both its administrative and judicial claims outside the said period of effectivity.Aichi not applied prospectivelyPetitioner VGPC also argues that Aichi should be applied prospectively and, therefore, should not be applied to the present case. This position cannot be given consideration.Article 8 of the Civil Code provides that judicial decisions applying or interpreting the law shall form part of the legal system of the Philippines and shall have the force of law. The interpretation placed upon a law by a competent court establishes the contemporaneous legislative intent of the law. Thus, such interpretation constitutes a part of the law as of the date the statute is enacted. It is only when a prior ruling of the Court is overruled, and a different view adopted, that the new doctrine may have to be applied prospectively in favor of parties who have relied on the old doctrine and have acted in good faith.28Considering that the nature of the 120+30 day period was first settled in Aichi, the interpretation by the Court of its being mandatory and jurisdictional in nature retro acts to the date the NIRC was enacted. It cannot be applied prospectively as no old doctrine was overturned.The petitioner cannot rely either on the alleged jurisprudence prevailing at the time it filed its judicial claim. The Court notes that the jurisprudence relied upon by the petitioner consists of CTA cases. It is elementary that CTA decisions do not constitute precedent and do not bind this Court or the public. Only decisions of this Court constitute binding precedents, forming part of the Philippine legal system.29As regards the cases30which were later decided allegedly in contravention of Aichi, it is of note that all of them were decided by Divisions of this Court, and not by the Court En Banc.1wphi1Any doctrine or principle of law laid down by the Court, either rendered En Bancor in Division, may be overturned or reversed only by the Court sitting En Banc.31Thus, the cases cited by the petitioner could not have overturned the doctrine laid down in Aichi.CIR not estoppedThe petitioners argument that the CIR should have been estopped from questioning the jurisdiction of the CTA after actively participating in the proceedings before the CTA Second Division deserves scant consideration.It is a well-settled rule that the government cannot be estopped by the mistakes, errors or omissions of its agents.32It has been specifically held that estoppel does not apply to the government, especially on matters of taxation. 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.33Thus, the government cannot be estopped from collecting taxes by the mistake, negligence, or omission of its agents. Upon taxation depends the ability of the government to serve the people for whose benefit taxes are collected. To safeguard such interest, neglect or omission of government officials entrusted with the collection of taxes should not be allowed to bring harm or detriment to the people.34Rules on claims for refund or tax credit of unutilized input VATFor clarity and guidance, the Court deems it proper to outline the rules laid down in San Roque with regard to claims for refund or tax credit of unutilized creditable input VAT. They are as follows:1. When to file an administrative claim with the CIR:a. General rule Section 112(A) and Mirant Within 2 years from the close of the taxable quarter when the sales were made.b. Exception AtlasWithin 2 years from the date of payment of the output VAT, if the administrative claim was filed from June 8, 2007 (promulgation of Atlas) to September 12, 2008 (promulgation of Mirant).2. When to file a judicial claim with the CTA:a. General rule Section 112(D); not Section 229i. Within 30 days from the full or partial denial of the administrative claim by the CIR; orii. Within 30 days from the expiration of the 120-day period provided to the CIR to decide on the claim. This is mandatory and jurisdictional beginning January L 1998 ( effectivity of 1997 NI RC).b. Exception - BIR Ruling No. DA-489-03The judicial claim need not await the expiration of the 120-day period, if such was filed from December 10, 2003 (issuance of BIR Ruling No. DA-489-03) to October 6, 2010 (promulgation of Aichi).WHEREFORE, the petition is PARTIALLY GRANTED. The February 7, 2011 Decision and the June 27, 2011 Resolution of the Court of Tax Appeals En Banc, in CT A EB Case Nos. 561 and 562 are REVERSED and SET ASIDE. The April 17, 2009 Decision and the October 29, 2009 Resolution of the CTA Former Second Division in CTA Case No. 7559 are REINSTATED.Public respondent is hereby ORDERED TO REFUND or, in the alternative, TO ISSUE A TAX CREDIT CERTIFICATE, in favor or the petitioner the amount of SEVEN MILLION SIX HUNDRED NINETY NINE THOUSAND THREE HUNDRED SIXTY SIX PESOS AND 37/100 (P7,699,366.37) representing unutilized input VAT paid on domestic purchases of non-capital goods and services, services rendered by nonresidents, and importations of non-capital goods for the first to fourth quarters of taxable year 2005.SO ORDERED.

SECOND DIVISION[G.R. No. 118176. April 12, 2000]PROTECTOR'S SERVICES, INC.,petitioner,vs. COURT OF APPEALS AND COMMISSIONER OF INTERNAL REVENUE,respondents.KorteD E C I S I O NQUISUMBING,J.:Assailed in this petition for review is the Decision[1]of the Court of Appeals dated November 28, 1994, in CA-G.R. SP No.31825. It affirmed the judgment of the Court of Tax Appeals which had dismissed the petition for review of assessments made by the Commissioner of Internal Revenue imposing deficiency percentage taxes on petitioner for the years 1983, 1984 and 1985. The dispositive portion of the CTA's decision states:"WHEREFORE, in all the foregoing, this case is hereby DISMISSED for lack of jurisdiction--the subject assessments having become final and unappealable."[2]The facts are as follows:Petitioner Protector's Services, Inc. (PSI) is a contractor engaged in recruiting security guards for clients. After an audit investigation conducted by the Bureau of Internal Revenue (BIR), petitioner was assessed for deficiency percentage taxes including surcharges, penalties and interests thereon, as follows:YEAR..........AMOUNT..........DEMAND LETTER NO.1983..........P503,564.59..........18-452-83B-87-B21984...........831,464.30..........18-451-84B-87-B21985..........P1,514,047.86.......18-450-85B-87-B2On December 7, 1987, respondent Commissioner sent by registered mail, demand letters for payment of the aforesaid assessments. However, petitioner alleged that on December 10, 1987, it only received Demand Letter Nos. 18-452-83B-87 -B2 and 18-451-84B-87 -B2 for the years 1983 and 1984, respectively. It denied receiving any notice of deficiency percentage tax for the year 1985.Petitioner sent a protest letter dated January 02, 1988, to the BIR regarding the 1983 and 1984 assessments. The petitioner claimed that its gross receipts subject to percentage taxes should exclude the salaries of the security guards as well as the corresponding employer's share of Social Security System (SSS), State Insurance Fund (SIP) and Medicare contributions.SclawWithout formally acting on the petitioner's protest, the BIR sent a follow-up letter dated July 12, 1988, ordering the settlement of taxes based on its computation. Additional documentary stamp taxes of two thousand twenty-five (P2,025.00) pesos on petitioner's capitalization for 1983 and 1984, and seven hundred three pesos and forty-one centavos (P703.41) as deficiency expanded withholding tax were included in the amount demanded. The total unsettled tax amounted to two million, eight hundred fifty-one thousand, eight hundred five pesos and sixteen centavos (P2,851,805.16).On July 21, 1988, petitioner paid the P2,025.00 documentary stamp tax and the P703.41 deficiency expanded withholding tax. On the following day, July