Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 185115 February 18, 2015NORTHERN MINDANAO POWER CORPORATION,Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE,Respondent.D E C I S I O NSERENO,CJ:This is a Petition for Review on Certiorari1under 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 Appeals En Banc (CTA En Banc) in C.T.A. EB No. 312.THE FACTSPetitioner 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 3rd and the 4th quarters of taxable year 1999, petitioners input VAT totaled toP2,490,960.29, while that incurred for all the quarters of taxable year 2000 amounted toP3,920,932.55.4Petitioner filed an administrative claim for a refund on 20 June 2000 for the 3rd and the 4th quarters of taxable year 1999, and on 25 July 2001 for taxable year 2000 in the sum ofP6,411,892.84.5Thereafter, 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.8On 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.ISSUESPetitioners appeal is anchored on the following grounds:Section 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 RULINGTo 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 Court motu 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 cases Commissioner 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 as San 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 3rd and the 4th quarters 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 3rd and the 4th quarters of taxable year 1999 and on 25 July 2001covering 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 in San 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 3rd and the 4th quarters of taxable year 1999 and all the quarters of taxable year2000, petitioner filed a Petition with the CTA on 28 September 2001.Both judicial claims must be disallowed.a) Claim for a refund of input VATcovering the 3rd and the 4thquarters of taxable year 1999Counting 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 3rd and the 4th quarters 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 in Philex, this was a case of late filing. The Court explained thus:Unlike 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 claim long after the 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 the Atlas case, 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 the Atlas doctrine, or from the close of the taxable quarter when the sales attributable to the input VAT were made following the Mirant and Aichi doctrines, Philexs judicial claim was indisputably filed late.The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of 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 xPhilexs 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 period following 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 3rd and the 4th quarters 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. Like Philex, 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 3rd and the 4th quarters of taxable year 1999 by virtue of its own failure to observe the prescriptive periods.b) Claim for the refund of inputVAT covering all quarters oftaxable year 2000For 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 in San 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 in San 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 in San 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.1wphi1The 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. In Western Mindanao Power Corporation v. CIR,14we ruled:RR 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. In Panasonic 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 in Kepco Philippines Corporation v. Commissioner of Internal Revenue that 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.Finally, 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 m Commissioner 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.A VAT invoice is the seller's best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer's 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.16WHEREFORE, premises considered, the instant Petition is DENIED.SO ORDERED.MARIA LOURDES P.A. SERENOChief Justice, ChairpersonWE CONCUR:TERESITA J. LEONARDO-DE CASTROAssociate JusticeLUCAS P. BERSAMINAssociate JusticeJOSE PORTUGAL PEREZAssociate Justice

ESTELA M. PERLAS-BERNABEAssociate JusticeC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.MARIA LOURDES P.A. SERENOChief Justice

Footnotes1Rollo, pp. 9-42.2Id. at 61-80; penned by Associate Justice Juanito C. Castaneda, Jr and concurred in by Associate Justices Lovell R. Bautista, Caesar A. Casanova, Erlinda P. Uy and Olga Palanca-Enriquez, with the Concurring and Dissenting Opinion of then Presiding Justice Ernesto D. Acosta.3Id. at 45-60; penned by Associate Justice Juanito C. Castaneda Jr and concurred in by Associate Justices Caesar A. Casanova, Erlinda P. Uy and Olga Palanca-Enriquez, with then Presiding Justice Ernesto D. Acosta dissenting.4Id. at 62-63.5Id. at 63.6Docketed as C.T.A. Case No. 6337, raffled to the CTA First Division, id. at 85-90.7Id. at 139-151.8Id. at 152-157.9Petition for Review, id. at 18.10Namuhe v. Ombudsman, 358 Phil. 782 (1998), citing Section 1, Rule 9, 1997 Rules of Civil Procedure (formerly Rule 9, Section 2); Fabian v. Desierto, 356 Phil. 787 (1998).11G.R. Nos. 187485, 196113, 197156, 12 February 2013, 690 SCRA 336.12Applied Food Ingredients Company, Inc. v. CIR, G.R. No. 184266, 11 November 2013.13Supra note 13, at 389-390 and 405-406.14G.R. No. 181136, 13 June 2012, 672 SCRA 350, 363.15505 Phil. 650, 665 (2005).16KEPCO Philippines Corporation v. CIR, G.R. No. 181858, 24 November 2010, 636 SCRA 166.

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Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 168950 January 14, 2015ROHM APOLLO SEMICONDUCTOR PHILIPPINES,Petitioner,vs.COMMISSIONER OF INTERNAL REVENUE,Respondents.D E C I S I O NSERENO,CJ:This Rule 45 Petition1requires this Court to address the question of timeliness with respect to petitioner's judicial claim for refund or credit of unutilized input Value-Added Tax (VAT) under Sections 112(A) and 112(D)2of the 1997 Tax Code. Petitioner Rohm Apollo Semiconductor Philippines., Inc. (Rohm Apollo) assails the Decision3and Resolution4of the Court of Tax Appeals En Banc (CTA En Banc) in CTA En Banc Case No. 59, affirming the Decision in CTA Case No. 6534 of the CTA First Division.5The latter denied the claim for the refund or issuance of a tax credit certificate filed by petitioner Rohm Apollo in the amount ofP30,359,615.40 representin& unutilized input VAT paid on capital goods purchased for the months of July and August 2000.FACTSPetitioner Rohm Apollo is a domestic corporation registered with the Securities and Exchange Commission.6It is also registered with the Philippine Economic Zone Authority as an Ecozone Export Enterprise.7Rohm Apollo is in the business of manufacturing semiconductor products, particularly microchip transistors and tantalium capacitors at the Peoples Technology Complex Special Economic Zone, Barangay Maduya, Carmona Cavite.8Further, it is registered with the Bureau of Internal Revenue (BIR) as a value-added taxpayer.9Sometime in June 2000, prior to the commencement of its operations on 1 September 2001, Rohm Apollo engaged the services of Shimizu Philippine Contractors, Inc. (Shimizu) for the construction of a factory.10For services rendered by Shimizu, petitioner made initial payments ofP198,551,884.28 on 7 July 2000 andP132,367,923.58 on 3 August 2000.11It should be noted at this point that Section 112(B),12in relation to Section 112(A)13of the 1997 Tax Code, allows a taxpayer to file an application for the refund or tax credit of unutilized input VAT when it comes to the purchase of capital goods. The provision sets a time frame for the filing of the application at two years from the close of the taxable quarter when the purchase was made.Going back to the case, petitioner treated the payments as capital goods purchases and thus filed with the BIR an administrative claim for the refund or credit of accumulated unutilized creditable input taxes on 11 December 2000.14As the close of the taxable quarter when the purchases were made was 30 September 2000, the administrative claim was filed well within the two-year prescriptive period.Pursuant to Section 112(D)15of the 1997 Tax Code, the Commissioner of Internal Revenue (CIR) had a period of 120 days from the filing of the application for a refund or credit on 11 December 2000, or until 10 April 2001, to act on the claim. The waiting period, however, lapsed without any action by the CIR on the claim.Instead of filing a judicial claim within 30 days from the lapse of the 120-day period on 10 April, or until 10 May 2001, Rohm Apollo filed a Petition for Review with the CTA docketed as CTA Case No. 6534 on 11 September 2002. It was under the belief that a judicial claim had to be filed within the two-year prescriptive period ending on 30 September 2002.16On 27 May 2004, the CTA First Division rendered a Decision17denying the judicial claim for a refund or tax credit. In support of its ruling, the CTA First Division held, among others, that petitioner must have at least submitted its VAT return for the third quarter of 2001, since it was in that period that it began its business operations. The purpose was to verify if indeed petitioner did not carry over the claimed input VAT to the third quarter or the succeeding quarters.On 14 July 2004, petitioner RohmApollo filed a Motion for Reconsideration, but the tax court stood by its Decision.18On 18 January 2005, the taxpayer elevated the case to the CTA En Bancvia a Petition for Review.19On 22 June 2005, the CTA En Bancrendered its Decision denying Rohm Apollos Petition for Review.20The appellate tax court held that the failure to present the VAT returns for the subsequent taxable year proved to be fatal to the claim for a refund/tax credit, considering that it could not be determined whether the claimed amount to be refunded remained unutilized. Petitioner filed a Motion for Reconsideration of the Decision, but it was denied for lack of merit.Persistent, the taxpayer filed this Rule 45 Petition, arguing that it has satisfied all the legal requirements for a valid claim for refund or tax credit of unutilized input VAT.ISSUEThe threshold question to be resolved is whether the CTA acquired jurisdiction over the claim for the refund or tax credit of unutilized input VAT.THE COURTS RULINGWe deny the Petition on the ground that the taxpayers judicial claim for a refund/tax credit was filed beyond the prescriptive period.The judicial claim was filed out of time.Section 112(D) of the 1997 Tax Code states the time requirements for filing a judicial claim for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the CIR to act on the administrative claim for a refund or credit; and the period of 30 days, which refers to the period for filing a judicial claim with the CTA. It is the 30-day period that is at issue in this case.The landmark case of Commissioner of Internal Revenue v. San Roque Power Corporation21has interpreted Section 112 (D). The Court held that the taxpayer can file an appeal in one of two ways: (1) file the judicial claim within 30 days after the Commissioner denies the claim within the 120-day waiting period, or (2) file the judicial claim within 30 days from the expiration of the 120-day period if the Commissioner does not act within that period.In this case, the facts are not up for debate. On 11 December 2000, petitioner filed with the BIR an application for the refund or credit of accumulated unutilized creditable input taxes. Thus, the CIR had a period of 120 days from 11 December 2000, or until 10 April 2001, to act on the claim. It failed to do so, however. Rohm Apollo should then have treated the CIRs inaction as a denial of its claim. Petitioner would then have had 30 days, or until 10 May 2001, to file a judicial claim withthe CTA. But Rohm Apollo filed a Petition for Review with the CTA only on 11 September 2002. The judicial claim was thus filed late.The error of the taxpayer lies in the fact that it had mistakenly believed that a judicial claim need not be filed within 30 days from the lapse of the 120-day period. It had believed that the only requirement is that the judicial claim must be filed withinthe two-year period under Sections 112(A) and (B) of the 1997 Tax Code. In other words, Rohm Apollo erroneously thought that the 30-day period does not apply to cases of the CIRs inaction after the lapse of the 120-day waiting period, and that a judicial claim is seasonably filed so long as it is done within the two year period. Thus, it filed the Petition for Review with the CTA only on 11 September 2002.These mistaken notions have already been dispelled by Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. (Aichi)22and San Roque. Aichi clarified that it is only the administrative claim that must be filed within the two-year prescriptive period.23San Roque, on the other hand, has ruled that the 30-day period always applies, whether there is a denial or inaction on the part of the CIR.24Justice Antonio Carpio, writing for the Court in San Roque, explained that the 30-day period is a 1997 Tax Code innovation that does away with the old rule where the taxpayer could file a judicial claim when there is inaction on the part of the CIR and the two-year statute of limitations is about to expire. Justice Carpio stated:The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioner's 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.25(Emphases supplied) The 30-day period to appeal is mandatory and jurisdictional.As a general rule, the 30-day period to appeal is both mandatory and jurisdictional. The only exception to the general rule is when BIR Ruling No. DA-489-03 was still in force, thatis, between 10 December 2003 and 5 October 2010, The BIR Ruling excused premature filing, declaring 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. In San Roque, the High Court explained boththe general rule and the exception:To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer.1wphi1One of the conditions for a judicial claim of refund or credit under the VAT System is 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 the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichidoctrine was adopted, which again reinstated the 120+30 day periods as mandatory and jurisdictional.26(Emphases supplied)San Roque likewise ruled out the application of the BIR ruling to cases of late filing. The Court held that the BIR ruling, as an exception to the mandatory and jurisdictional nature of the 120+30 day periods, is limited to premature filing and does not extend to the late filing of a judicial claim.27In sum, premature filing is allowed for cases falling during the time when BIR Ruling No. DA-489-03 was in force; nevertheless, late filing is absolutely prohibited even for cases falling within that period.As mentioned above, the taxpayer filed its judicial claim with the CTA on 11 September 2002. This was before the issuance of BIR Ruling No. DA-489-03 on 10 December 2003. Thus, Rohm Apollo could not have benefited from the BIR Ruling. Besides, its situation was not a case of premature filing of its judicial claim but one of late filing. To repeat, its judicial claim was filed on 11 September 2002 long after 10 May 2001, the last day of the 30-day period for appeal. The case thus falls under the general rule the 30-day period is mandatory and jurisdictional. CONCLUSIONIn fine, our finding is that the judicial claim for the refund or credit of unutilized input VAT was belatedly filed. Hence, the CTA lost jurisdiction over Rohm Apollos claim for a refund or credit. The foregoing considered, there is no need to go into the merits of this case.A final note, the taxpayers are reminded that that when the 120-day period lapses and there is inaction on the part of the CIR, they must no longer wait for it to come up with a decision thereafter. The CIRs inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within 30 days from the lapse of the 120-day waiting period.WHEREFORE, the Petition is DENIEDfor lack of merit.SO ORDERED.MARIA LOURDES P.A. SERENOChief Justice, ChairpersonWE CONCUR:TERESITA J. LEONARDO-DE CASTROAssociate JusticeLUCAS P. BERSAMINAssociate JusticeJOSE PORTUGAL PEREZAssociate Justice

ESTELA M. PERLAS-BERNABEAssociate JusticeC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.MARIA LOURDES P.A. SERENOChief Justice

Footnotes1Rollo, pp. 10-51.2The section is numbered 112(0) under R.f.. 8424, but R.A. 9337 renumbered the section to 112(C).3Id. at 252-258; CTA En Banc Decision dated 22 June 2005, penned by Presiding Justice Ernesto D. Acosta, and concurred in by Associate justices Lovell R. Bautista, Caesar A. Casanova, Juanito C. Castaneda, Jr., Olga Palanca-Enriquez, and Erlinda P. Uy.4Id. at 274-275; CTA Resolution dated 28 July 2005.5Id. at 117-129; dated 27 May 2004, penned by Associate Justice Lovell R. Bautista, and concurred in by Pcesiding Justice Ernesto D. Aoosta and Asjoeiote fostiee Juanito C. Castaneda.6Rollo, p. 252.7Under the provisions of R. A. 7916.8Rollo, p. 253.9Id. at 252.10Id. at 253.11Id.12(B) Capital Goods. - A VAT-registered person may apply for the issuance of a tax credit certificate or refund of input taxes paid on capital goods imported or locally purchased, to the extent that such input taxes have not been applied against output taxes. The application may be made only within two (2) years after the close of the taxable quarter when the importation or purchase was made. (Emphases supplied)13Section 112(A) states: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. (Emphasis supplied)14Rollo, p. 118.15(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 Subsection (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.(Emphases supplied)16Rollo, p. 253.17Id.18Id. at 254.19Id. at 252.20Id.21G.R. No. 187485, 12 February 2013, 690 SCRA 336, 397.22G.R. No. 184823, 6 October 2010, 632 SCRA 422, 443-444.23Id.24Supra note 21, at 387-388.25Id.26Id. at 398-399.27Id. at 405-406.

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Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 202789 June 22, 2015COMMISSIONER OF INTERNAL REVENUE,Petitioner,vs.PUREGOLD DUTY FREE, INC.,Respondent.DISSENTING OPINIONVILLARAMA, JR.,J.:If this is not SMUGGLING I do not know what it is.With all due respect, I DISSENT.Before us is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1dated May 9, 2012 and Resolution2dated July 18, 2012 of the Court of Tax Appeals (CTA) En Banc in CTA EB No. 723 (CTA Case No. 7812). The CTA En Banc upheld the Resolutions3dated November 25, 2010 and January 20, 2011 of the Second Division which cancelled and set aside the assessment for deficiency value-added tax (VAT) and excise tax against the respondent.The AntecedentsPuregold Duty Free, Inc. (respondent) is a domestic corporation registered with the Securities and Exchange Commission (SEC) on June 13, 1994 and the Clark Development Corporation (CDC) as a Clark Special Economic Zone (CSEZ) Enterprise on July 20, 1994.4On November 7, 2005, then Deputy Commissioner for Special Concerns/OIC-Large Taxpayers Service (LTS) of the Bureau of Internal Revenue (BIR) Kim S. Jacinto-Henares issued a Preliminary Assessment Notice regarding unpaid VAT and excise tax on wines, liquors and tobacco products imported by respondent from January 1998 to May 2004.Respondent through counsel protested the assessment, citing the tax exemptions granted to CSEZ pursuant to Executive Order No. (EO) 80. It noted that CSEZ enjoys similar tax incentives granted by Republic Act No. (R.A.) 7227 to Subic Special Economic and Freeport Zone (SSEFZ), and by analogy is thus also covered by the exception mentioned in Section 131 (A) of R.A. 8424 (National Internal Revenue Code of 1997). In a Supplementary Protest Letter and the Addendum thereto, respondent further invoked the provisions of R.A. No. 7916, Proclamation No. 1035 issued by then President Gloria Macapagal-Arroyo, and BIR Ruling No. 046-95 issued by then Commissioner Liwayway Vinzons-Chato.5On October 26, 2007, respondent received the formal letter of demand for the payment of deficiency VAT and excise taxes assessed against its importation of alcohol and tobacco products for the taxable periods January 1998 to May 2004, in the total amount ofP2,780,610,174.51 inclusive of fees, charges and interest. In reply, respondent's counsel wrote Elvira R. Vera, Head Revenue Executive Assistant, LTS-Excise Large Taxpayers Division, requesting the cancellation of the assessment on the ground that respondent has already availed of tax amnesty under R.A. No. 9399 which relieved it of any civil, criminal or administrative liabilities for the applicable taxes and duties, inclusive of penalties, interests and other additions thereto.6A Final Decision on Disputed Assessment was sent to respondent on June 23, 2008 stating that availment of the tax amnesty under R.A. 9399 does not necessarily relieve respondent of its deficiency VAT and excise tax liabilities, which arose from its importation of tobacco and alcohol products, in accordance with Section 131 (A) of the National Internal Revenue Code of 1997, as amended ( 1997 NIRC).7On July 22, 2008, respondent filed a petition for review before the CTA, arguing that the subject assessment is void on grounds of prescription, the operative fact doctrine, non-retroactivity of BIR rulings and availment of tax amnesty under R.A. 9399. Respondent posited that its entitlement to tax and duty-free importation of capital goods, equipment, raw materials and supplies and household and personal items, in accordance with EO 80 and Customs Administrative Order No. 6-94, which interpreted R.A. 7227, and that special income tax regime or tax incentives granted to enterprises registered within the secured area of Subic and Clark Special Economic Zones remained despite the effectivity of R.A. 8424 (1997 NIRC) on January 1, 1998. Thus, as a CSEZ enterprise affected by the ruling in the case of Coconut Oil Refiners Association, Inc. v. Hon. Torres8which put into question the aforesaid issuances, respondent duly complied with the requirements for the grant of tax amnesty provided by R.A. 9399.In its Answer, the Commissioner of Internal Revenue (petitioner), through the Solicitor General, asserted that pursuant to Section 131 (A) of the 1997 NIRC, as amended, tax and duty free exemptions on importation of alcohol and tobacco products are limited only to Duty Free Philippines, Inc., a government-operated duty free shop, as well as locators in the duly registered free port zones created under special laws, namely: Subic, Cagayan and Zamboanga Free Port Zones.Respondent filed a motion for early resolution of the issue of tax amnesty and was allowed to present its evidence thereon, which was subsequently admitted by the CTA First Division. Resolution of the tax amnesty issue as requested by respondent was nevertheless deferred as the documents submitted by respondent failed to prove its total accrued tax liabilities. The case was set for further reception of evidence by both parties. Respondent's supplemental formal offer of evidence and petitioner's formal offer of documentary evidence were both admitted by the CTA First Division.9On June 3, 2010, the CTA Second Division resolved that the issue of respondent's compliance with the provisions of R.A. 9399 should be properly resolved together with the other issues submitted by the parties after a full-blown trial. Respondent filed a motion for reconsideration but resolution thereof was likewise held in abeyance pending the submission of the notice of availment and tax amnesty return.10Ruling of the CTA Second DivisionOn November 25, 2010, the CTA Second Division granted respondent's motion for reconsideration and forthwith resolved the issue of tax amnesty under R.A. 9399.11The CTA Second Division found that respondent complied with the requirements for availing of the benefits under R.A. 9399 by filing a notice and return in such form as prescribed by the Commissioner of Internal Revenue and the Commissioner of Customs, and thereafter, paying the amnesty tax ofP25,000.00 within six (6) months from the effectivity of R.A. 9399.On the question of whether respondent's tax liabilities are excluded under R.A. 9399, the CTA Second Division noted that what respondent sought to cancel was the assessment of deficiency VAT and excise taxes on imported alcohol and tobacco products, which clearly are not taxes on articles, raw materials, capital, goods and consumer items removed from the Special Economic Zones and Freeport Zones and entered into the customs territory of the Philippines for local or domestic sale. Hence, it was concluded that the subject impositions are not excluded from the coverage of amnesty as provided in Section 1 of R.A. 9399.As to whether respondent is entitled to avail of the tax amnesty under R.A. 9399, the CTA Second Division declared that liability for VAT and excise taxes on importation of alcohol and cigars under Section 131 of the 1997 NIRC was obviously contemplated by R.A. 9399 as can be gleaned from the phrase "all national and local impositions under relevant tax laws, rules and regulations." Consequently, if respondent is liable for VAT and excise taxes under Section 131 (A) of the 1997 NIRC, then such amount will be used in determining the difference mandated by R.A. 9399.The CTA Second Division thus ruled:In the light of this Court's findings that petitioner has substantially complied with the tax amnesty program, petitioner is thereby relieved of any civil, criminal and/or administrative liabilities arising from or incident to the nonpayment of taxes, duties and other charges covered by the tax amnesty. However, the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local impositions under relevant tax laws, rules and regulations; and (ii) five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered. Accordingly, the amount covered by the tax amnesty shall be the difference between the amount ofP2,780,610,174.51, which comprises petitioner's deficiency excise tax and VAT; and the amount ofP38,700,200.55 which is the equivalent of 5% tax on gross income earned by said registered business enterprises for the calendar year 1998 to 2004; or a total ofP2,741,909,973.96. Details are as follows:Deficiencv Excise Tax, VAT and Inspection Fees per Assessment

Excise TaxP 923,418,902.25

VAT1,857,037,916.57

Inspection Fees153,355.70P2,780,610,174.51

Less:5% Income Tax Paid PerReturns Filed

ExhYear5% Tax

G1998P 2,504,241.00

I199911,357,233.00

K20008,748,137.00

M20013,419,044.00

O20023,938,554.00

P20034,295,522.00

Q20044,437,469.5538,700,200.55

Taxes covered by the tax amnesty2,741,909,973.96

WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby GRANTED. The Resolution of this Court promulgated on June 3, 2010 is hereby set aside. Respondent's assessment against petitioner for deficiency VAT and excise tax for the importation of alcohol and tobacco products covering the period January 1998 to May 2004 is hereby CANCELLED and SET ASIDE solely in view of petitioner's availment of Tax Amnesty under Republic Act No. 9399. Accordingly, the instant Petition for Review is hereby deemed WITHDRAWN and the case is considered CLOSED and TERMINATED.SO ORDERED.12Petitioner moved to reconsider the foregoing ruling but the CTA Second Division denied the motion in its January 20, 2011 Resolution.1wphi1Ruling of the CTA En BancBy Decision dated May 9, 2012, the CTA En Banc dismissed petitioner's appeal. The CTA adopted in toto the findings and conclusions of the CTA Second Division on the issues raised anew by petitioner concerning the applicability of Section 13 l(A) of the 1997 NIRC to respondent's availment of the tax amnesty under R.A. 9939, and the exclusion of respondent's deficiency VAT and excise taxes on its importation of tobacco and alcohol products from the coverage of said amnesty.Petitioner's motion for reconsideration was likewise denied under Resolution dated July 18, 2012.Issues/ ArgumentsThe petition sets forth the following grounds for reversal of the CTA En Banc ruling:ITHE HONORABLE CTA EN BANC GRAVELY ERRED IN LIMITING THE REQUIREMENTS UNDER REPUBLIC ACT NO. 9399 FOR THE AVAILMENT OF TAX AMNESTY OF (i) FILING OF NOTICE AND RETURN FOR TAX AMNESTY WITHIN SIX (6) MONTHS FROM EFFECTIVITY OF THE LAW AND (ii) PAYMENT OF THE AMNESTY TAX OFP25,000.00, AND TOTALLY AND DELIBERATELY DISREGARDING THE MATERIAL AND SUBSTANTIAL FACT THAT RESPONDENT'S PLACE OF BUSINESS IS IN METRO MANILA AND NOT CLARK FIELD, PAMPANGA, AS STATED IN ITS ARTICLES OF INCORPORATION; THUS, RESPONDENT IS NOT ENTITLED TO THE BENEFITS UNDER R.A. NO. 9399.IIASSUMING WITHOUT ADMITTING THAT RESPONDENT IS A DULY CSEZ REGISTERED ENTERPRISE WITH PRINCIPAL PLACE OF BUSINESS IN CLARK FIELD, PAMPANGA, STILL THE HONORABLE CTA EN BANC GRAVELY AND SERIOUSLY ERRED, AS ITS RULING IS CONTRARY TO THE INTENT OF R.A. 9399 WHICH EXCLUDES DEFICIENCY TAX; THUS, RESPONDENT REMAINS TO BE LIABLE FOR EXCISE TAXES ON ITS WINE, LIQUOR AND TOBACCO IMPORTATIONS.13In fine, the issues presented to us are: (1) whether respondent is qualified to avail of the tax amnesty under R.A. 9399 considering that its principal place of business as stated in its articles of incorporation is in Metro Manila; and (2) whether R.A. 9399 applies to those taxes, i.e., VAT and excise taxes, imposed on alcohol and tobacco products described in R.A. 8424 and 9334, which are clearly and expressly mandated to be paid by enterprises like the respondent.Our RulingThe petition is meritorious.R.A. 7227, otherwise known as the "Bases Conversion and Development Act of 1992", provided for the conversion of the Clark and Subic military reservations and their extension such as the Camp John Hay in Baguio City, into alternative productive uses in order to promote economic and social development of the country, particularly Central Luzon. It likewise created the Bases Conversion and Development Authority (BCDA) which shall administer and implement a comprehensive development plan for the former military reservations and their extensions.Section 12 of R.A. 7227 established the Subic Special Economic and Freeport Zone (SSEFZ) which was granted incentives such as tax and duty-free importations and exemption of businesses therein from local and national taxes, under a liberalized financial and business climate.Section 15 of R.A. 7227 authorized the President of the Philippines to create by executive proclamation the CSEZ and other SEZs subject to the concurrence of the local government units directly affected.On April 3, 1993, President Fidel V. Ramos issued Proclamation No. 163 creating the CSEZ with the BCDA as its governing body. EO 80 established the Clark Development Corporation (CDC) as the operating and implementing arm of the BCDA to manage the CSEZ. EO 80 also provided for tax incentives for CSEZ, viz:SECTION 5. Investment Climate in the CSEZ. - Pursuant to Section 5(m) and Section 15 of RA 7227, the BCDA shall promulgate all necessary policies, rules and regulations governing the CSEZ, including investment incentives, in consultation with the local government units and pertinent government departments for implementation by the CDC.Among others, the CSEZ shall have all the applicable incentives in the Subic Special Economic and Free Port Zone under RA 7227 and those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign InvestmentsAct of 1991 and new investments laws which may hereinafter be enacted.x x x x (Emphasis supplied)On July 5, 1994 President Ramos issued Proclamation No. 420, which established a SEZ on a portion of Camp John Hay and contained a similar provision on the grant of applicable incentives as in the above-cited provision of Proclamation No. 163.On October 24, 2003, this Court ruled in John Hay Peoples Alternative Coalition v. Lim14that the same grant of privileges to the John Hay SEZ finds no support in R.A. 7227, the incentives under the latter law being exclusive only to the Subic SEZ. Such grant by Proclamation No. 420 of tax exemption and other privileges is void as it violates the Constitution's requirement that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress.Almost two years later, in the case of Coconut Oil Refiners Association, Inc. v. Hon. Torres 15 this Court held EO 80 as an invalid exercise of executive legislation. Thus:In John Hay Peoples Alternative Coalition, et al. v. Victor Lim, et al., this Court resolved an issue, very much like the one herein, concerning the legality of the tax exemption benefits given to the John Hay Economic Zone under Presidential Proclamation No. 420, Series of 1994, "CREATING AND DESIGNATING A PORTION OF THE AREA COVERED BY THE FORMER CAMP JOHN AS THE JOHN HAY SPECIAL ECONOMIC ZONE PURSUANT TO REPUBLIC ACT NO. 7227."In that case, among the arguments raised was that the granting of tax exemptions to John Hay was an invalid and illegal exercise by the President of the powers granted only to the Legislature. Petitioners therein argued that Republic Act No. 7227 expressly granted tax exemption only to Subic and not to the other economic zones yet to be established. Thus, the grant of tax exemption to John Hay by Presidential Proclamation contravenes the constitutional mandate that "[n]o law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress."This Court sustained the argument and ruled that the incentives under Republic Act No. 7227 are exclusive only to the SSEZ. The President, therefore, had no authority to extend their application to John Hay. To quote from the Decision:More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the legislature, unless limited by a provision of a state constitution, that has full power to exempt any person or corporation or class of property from taxation, its power to exempt being as broad as its power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions, or local governments may pass ordinances on exemption only from local taxes.The challenged grant of tax exemption would circumvent the Constitution's imposition that a law granting any tax exemption must have the concurrence of a majority of all the members of Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by tradition and usage for Congress to legislate upon.Contrary to public respondents' suggestions, the claimed statutory exemption of the John Hay SEZ from taxation should be manifest and unmistakable from the language of the law on which it is based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax exemption cannot be implied as it must be categorically and unmistakably expressed.If it were the intent of the legislature to grant to John Hay SEZ the same tax exemption and incentives given to the Subic SEZ, it would have so expressly provided in R.A. No. 7227.In the present case, while Section 12 of Republic Act No. 7227 expressly provides for the grant of incentives to the SSEZ, it fails to make any similar grant in favor of other economic zones, including the CSEZ. Tax and duty-free incentives being in the nature of tax exemptions, the basis thereof should be categorically and unmistakably expressed from the language of the statute. Consequently, in the absence of any express grant of tax and duty-free privileges to the CSEZ in Republic Act No. 7227, there would be no legal basis to uphold [the] questioned portions of two issuances: Section 5 of Executive Order No. 80 and Section 4 of BCDA Board Resolution No. 93-05-034, which both pertain to the CSEZ.16(Emphasis supplied)On March 20, 2007, President Gloria Macapagal-Arroyo signed into law R.A. 9399,17Sections 1 and 2 of which state:SECTION 1. Grant of Tax Amnesty. Registered business enterprises operating prior to the effectivity of this Act within the special economic zones and freeports created pursuant to Section 15 of Republic Act No. 7227, as amended, such as the Clark Special Economic Zone created under Proclamation No. 163, series of 1993; Poro Point Special Economic and Freeport Zone created under Proclamation No. 216, series of 1993; John Hay Special Economic Zone created under Proclamation No. 420, series of 1994; and Morong Special Economic Zone created under Proclamation No. 984, series of 1997, may avail themselves of the benefits of remedial tax amnesty herein granted on all applicable tax and duty liabilities, inclusive of fines, penalties, interests and other additions thereto, incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G.R. No. 119775 dated 24 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G. R. No. 132527 dated 29 July 2005, by filing a notice and return in such form as shall be prescribed by the Commissioner of Internal Revenue and the Commissioner of Customs and thereafter, by paying an amnesty tax of Twenty-five thousand pesos (P25,000.00) within six months from the effectivity of this Act: Provided, That the applicable tax and duty liabilities to be covered by the tax amnesty shall refer only to the difference between: (i) all national and local tax impositions under relevant tax laws, rules and regulations; and (ii) the five percent (5%) tax on gross income earned by said registered business enterprises as determined under relevant revenue regulations of the Bureau of Internal Revenue and memorandum circulars of the Bureau of Customs during the period covered: Provided, however, That the coverage of the tax amnesty herein granted shall not include the applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from the special economic zone and freeport and entered in the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties prescribed in the National Internal Revenue Code (NIRC) of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.SEC. 2. Immunities and Privileges. - Those who have availed themselves of the tax amnesty and have fully complied with all its conditions shall be relieved of any civil, criminal and/or administrative liabilities arising from or incident to the nonpayment of taxes, duties and other charges covered by the tax amnesty granted under Section 1 herein.Respondent's Actual BusinessOperations is in Clark Field,PampangaThe Solicitor General argues that while respondent may have complied with the required filing of notice and return, respondent is not qualified, in the first place, to avail of the benefits under the above-cited tax amnesty law because its principal place of business as stated in its articles of incorporation is Metro Manila and not Clark Field, Pampanga.Contending that this issue was raised for the first time on appeal, respondent noted that petitioner CIR never made any allegation or evidence during the proceedings at the BIR and before the CTA that the principal place of business is not in Clark Field, Pampanga.Ordinarily, a part(a cannot raise for the first time on appeal an issue not raised in the trial court.18The rule against raising new issues on appeal is not without exceptions; it is a procedural rule that the Court may relax when compelling reasons so warrant or when justice requires it. What constitutes good and sufficient cause that would merit suspension of the rules is discretionary upon the courts.19In Commissioner of Internal Revenue v. Procter & Gamble Philippine Manufacturing Corporation,20we took exception to an issue raised for the first time in the Supreme Court, thus:x x x As clearly ruled by Us "To allow a litigant to assume a different posture when he comes before the court and challenges the position he had accepted at the administrative level," would be to sanction a procedure whereby the Court - which is supposed to review administrative determinations - would not review, but determine and decide for the first time, a question not raised at the administrative forum. Thus it is well settled that under the same underlying principle of prior exhaustion of administrative remedies, on the judicial level, issues not raised in the lower court cannot generally be raised for the first time on appeal. x x xNonetheless it is axiomatic that the State can never be in estoppel, and this is particularly true in matters involving taxation. The errors of certain administrative officers should never be allowed to jeopardize the government's financial position.21(Emphasis supplied; citation omitted) Since the issue raised by the Solicitor General is crucial for determining the validity of the government's claim for unpaid taxes, we now proceed to resolve it.Respondent's articles of incorporation registered with the SEC on June 13, 1994 indicated Metro Manila as its principal office.22Attached to its Comment, however, is a photocopy of Certificate of Filing of Amended Articles of Incorporation23issued by the SEC on September 7, 1995 stating that its principal office is to be established or is located at Clark Field, Pampanga.The statement of the principal office in the articles of incorporation establishes the residence of the corporation. This may prove important in determining venue in an action by or against a corporation, or in determining the province where a chattel mortgage of shares should be registered.24For jurisdictional purpose, the place of business indicated in the articles of incorporation is binding.25R.A. 9399 requires that the taxpayer seeking amnesty be a registered business enterprise of and operating within the special economic zones, in this case, the CSEZ created pursuant to Proclamation No. 163. Respondent adduced substantial evidence before the CTA that it is a duly registered CSEZ business enterprise and actually conducts its business therein by operating a duty-free shop. Among the documentary evidence submitted are the Certificate of Registration as a locator and Certificates of Tax Exemption both issued by CDC and CSEZ, as well as BIR Certificate of Registration, several BIR Permits to operate cash registers, and a BIR Certification that respondent has no registered branch under Puregold Duty Free, Inc. Respondent's Accounting Manager, Marissa I. delos Reyes, also submitted her Judicial Affidavit and testified in court in support of the allegations in the petition for review filed in the CTA.26Proof of respondent's actual business operations within CSEZ, rather than the place of principal office, is relevant for the availment of one-time tax amnesty under R.A. 9399. This is evident from Rule 2, Article 4 of the Implementing Rules and Regulations of R.A. 9399, Department Order No. 33-07 issued on September 11, 2007, declaring the coverage of R.A. 9399 as follows:ARTICLE 4. Coverage. - Business enterprises operating, authorized, duly registered and granted with tax and duty incentives prior to the effectivity of RA 9399, within the following Special Economic Zones and Freeport Zones may avail themselves of the one-time remedial amnesty, to wit:1. Clark Special Economic Zone (CSEZ) created under Proclamation No. 163, Series of 1993;x x x x (Emphasis supplied)In fine, we hold that respondent satisfactorily established its actual business operations within the CSEZ and hence is qualified, for purposes of Section 1, R.A. 9399 to apply for tax amnesty granted to duly registered business enterprises of SEZs specifically mentioned therein. Respondent Liable to Pay AssessedDeficiency TaxesWhile petitioner's contention as to respondent's lack of qualification to apply for tax amnesty is clearly without legal basis, we find its argument that the tax amnesty granted under R.A. 9399 does not include those applicable taxes and duties on the importation of alcohol and tobacco products tenable.R.A. 8424, otherwise known as the Tax Code of 1997 (1997 NIRC), was passed into law on December 11, 1997 and took effect on January 1, 1998. Thus, at the time respondent started the subject importation of alcohol and tobacco products in the year 1998, the governing law is Section 131 (A) which reads:SEC. 131. Payment of Excise Taxes on Imported Articles. (A) Persons Liable. x x xx x x xThe provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled spirits and wines into the Philippines, even if destined for tax and duty free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon: Provided, however, That this shall not apply to cigars and cigarettes, distilled spirits and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and are not transshipped to any other port in the Philippines: Provided, further, That importations of cigars and cigarettes, distilled spirits and wines by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable taxes, duties, charges, including excise tax due thereon: Provided, still further, That such articles directly imported by a government-owned and operated duty-free shop like the Duty-Free Philippines, shall be labelled 'tax and duty-free' and 'not for resale': Provided, still further, That if such articles brought into the duly chartered or legislated freeports under Republic Acts No. 7227, 7922 and 7903 are subsequently introduced into the Philippine customs territory, then such articles shall, upon such introduction, be deemed imported into the Philippines and shall be subject to all imposts and excise taxes provided herein and other statutes: Provided, .finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles, from one freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory.x x x xConsidering that CSEZ was not a duly chartered or legislated SEZ, it is not exempt from the applicable taxes on importation of alcohol and tobacco products. Section 15 of R.A. 7227 merely authorized the creation of CSEZ by executive proclamation. And as we held in John Hay Peoples Alternative Coalition v. Lim27and Coconut Oil Refiners Association, Inc. v. Hon. Torre,28the tax incentives being claimed by Clark and other SEZs pursuant to EO 80 and related issuances cannot be sustained as these contravenes the Constitution which requires the concurrence of Congress in the grant of tax exemptions.Respondent likewise cannot seek refuge from R.A. 9400,29which, while amending Section 15 of R.A. 7227, still is not the charter or legislation establishing the CSEZ and CFZ. While amending Section 15 of R.A. 7227, said law reproduced the provision authorizing the President to create by executive proclamation the CSEZ and inserted sub-sections on Poro Point Freeport Zone, Morong SEZ and John Hay SEZ, all similarly created by previous Presidential Proclamations. Moreover, R.A. 9400 was approved on March 20, 2007, long after the subject importations and assessment of deficiency taxes.Significantly, Section 131 (A) of the 1997 NIRC was amended by R.A. 9334, approved on December 31, 2004, which no longer exempted the SEZs from applicable duties and taxes on imported alcohol and tobacco products, viz:SEC. 131. Payment of Excise Taxes on Imported Articles (A) Persons Liable. x x xThe provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the Philippines, even if destined for tax and duty-free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits, fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and such other freeports as may hereafter be established or created by law: Provided, further, That importations of cigars and cigarettes, distilled spirits, fermented liquors and wines made directly by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable duties only: Provided, still further, That such articles directly imported by a government-owned and operated duty-free shop, like the Duty-Free Philippines, shall be labeled 'duty-free' and 'not for resale': Provided, finally, That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles other than cigars and cigarettes, distilled spirits, fermented liquors and wines, from one freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory.Section 131 (A) was further amended by R.A. 1035130approved on December 19, 2012, which did not change the application of duties and charges even to chartered and legislated SEZs and freeports.In the light of the foregoing, the CTA clearly erred in holding that petitioner has no rightful claim over the unpaid taxes assessed against respondent's importation of alcohol and tobacco products for the taxable period January 1998 to May 2004. The CTA's ruling stemmed from its narrow and erroneous interpretation of Section 1, R.A. No. 9399 by citing Article 7 of Department Order No. 33-07 on exclusions:ARTICLE 7. Exclusions. -The one-time remedial amnesty under RA 9399 shall not include applicable taxes and duties on articles, raw materials, capital goods, equipment and consumer items removed from Special Economic Zones and Freeport Zones and entered into the customs territory of the Philippines for local or domestic sale, which shall be subject to the usual taxes and duties, as prescribed in the National Internal Revenue Code of 1997, as amended, and the Tariff and Customs Code of the Philippines, as amended.The CTA also erred in concluding that the applicable taxes and duties under Section 131 (A) of the 1997 NIRC were already contemplated by the legislature in enacting R.A. 9399 by the phrase "all applicable tax and duty liabilities, inclusive of fines, penalties, interests and other additions thereto" It failed to consider that said phrase was further qualified by the succeeding phrase "incurred by them or that might have accrued to them due to the rulings of the Supreme Court in the cases of John Hay People's Coalition v. Lim, et. al., G.R. No. 119775 dated 23 October 2003 and Coconut Oil Refiners Association, Inc. v. Torres, et. al., G.R. No. 132527 dated 29 July 2005." The assessed deficiency taxes including the penalties, interests and charges, were not incurred by respondent due to the aforesaid decisions of this Court, but are clearly imposable taxes and duties on their importation of alcohol and tobacco products under existing provisions of the Tax Code. In other words, even without the aforesaid rulings, respondent as a non-chartered SEZ remains liable for the payment of VAT and excise taxes on its importation of alcohol and tobacco products from January 1998 to May 2004.Respondent's reliance on BIR Ruling No. 149-99 is likewise misplaced. The CIR had opined therein that while EO 80 and R.A. 7227 were approved and made effective prior to January 1, 1998, the date of effectivity of R.A. No. 8424, they are not covered by the repealing provision of the new Tax Code (Section 291). EO 80, insofar as it granted similar tax incentives to CSEZ, is clearly inconsistent with Section 131 (A) which then limited the tax exemption for importation of alcohol and tobacco products those duly chartered and legislated SEZs and freeports.In Commissioner of Internal Revenue v. Michel J. Lhuillier Pawnshop, lnc.,31we held that "the [Commissioner] cannot, in the exercise of [its interpretative] power, issue administrative rulings or circulars not consistent with the law sought to be applied. Indeed, administrative issuances must not override, supplant or modify the law, but must remain consistent with the law they intend to carry out. Only Congress can repeal or amend the law."In the earlier case of Philippine Bank of Communications v. Commissioner of Internal Revenue,32we ruled that a memorandum-circular of a bureau head could not operate to vest a taxpayer with a shield against judicial action. There could be no vested rights to speak of respecting a wrong construction of the law by the administrative officials and such wrong interpretation could not place the Government in estoppel to correct or overrule the same.33A tax amnesty, much like a tax exemption, is never favored or presumed in law. The grant of a tax amnesty, similar to a tax exemption, must be construed strictly against the taxpayer and liberally in favor of the taxing authority.34Taxes being the lifeblood of the nation through which the government agencies continue to operate and with which the State effects its functions for the welfare of its constituents35, the present amnesty tax law must be strictly construed against herein respondent which claims tax incentives granted to it by mere presidential proclamation. It is likewise settled that taxes are the lifeblood of the government and their prompt and certain availability is an imperious need.36I therefore VOTE that - -1. The present petition be GRANTED;2. The Decision dated May 9, 2012 and Resolution dated July 18, 2012 of the Court of Tax Appeals En Banc in CTA EB No. 723 (CTA Case No. 7812) be REVERSED and SET ASIDE;3. Respondent Puregold Duty Free, Inc. be ORDERED to PAYP2,780,610,174.51 deficiency VAT and excise taxes inclusive of surcharge and interest, plus 20% deficiency interest computed from June 23, 2008 until full payment thereof pursuant to Section 249 (C) of the 1997 National Internal Revenue Code, as amended; and4. Should any motion for reconsideration be filed, the same be referred to the Banc as the subject matter herein may have a huge financial impact on businesses thus affecting the country's welfare.37MARTIN S. VILLARAMA, JR.Associate JusticeFootnotes1Rollo, pp. 61-67. Penned by Associate Justice Amelia R. Cotangco-Manalastas.2Id. at 68-70.3CTA En Banc records, pp. 22-33.4CTA Division records, pp. 218-233.5BIR records, pp. 87-88, 91-105, 123-129 & 131-133.6CTA Division records, pp. 21, 26-27.7Id. at 89-90.8503 Phil. 42 (2003).9CTA Division records, pp. 167-182, 211-323, 329-330, 332-341, 394, 427-428.10Id. at 442-444, 492-494.11Supra note 3, at 22-29.12Id. at 28-29.13Rollo, pp. 30-31.14460 Phil. 530 (2003).15Supra note 8.16Id. at 60-61.17AN ACT DECLARING A ONE-TIME AMNESTY ON CERTAIN TAX AND DUTY LIABILITIES, INCLUSIVE OF FEES, FINES, PENALTIES, INTERESTS AND OTHER ADDITIONS THERETO, INCURRED BY CERTAIN BUSINESS ENTERPRISES OPERATING WITHIN THE SPECIAL ECONOMIC ZONES AND FREEPORTS CREATED UNDER PROCLAMATION No. 163, SERIES OF 1993; PROCLAMATION No. 216, SERIES OF 1993; PROCLAMATION No. 420, SERIES OF I 994; AND PROCLAMATION No. 984, SERIES OF I 997' PURSUANT TO SECTION I 5 OF REPUBLIC ACT No. 7227' As AMENDED, AND FOR OTHER PURPOSES.18Commissioner of Internal Revenue v. The Philippine American Accident Insurance Company, Inc., 493 Phil. 785, 792 (2005), citing Lim v. Queensland Tokyo Commodities, Inc., 424 Phil. 35, 47 (2002).19Commissioner of Internal Revenue v. Eastern Telecommunications Phils., Inc., 638 Phil. 334, 348 (2010), citing CIR v. Mirant Pagbilao Corporation, 535 Phil. 481, 491 (2006).20243 Phil. 703 (1988).21Id. at 709.22CTA Division records, pp. 218-229.23Rollo, pp. 551-555.24J. CAMPOS, JR. and M. C. L. CAMPOS, The Corporation Code: Comments, Notes and Selected Cases, Vol. 1, 1990 Ed., p. 77.25C. L. VILLANUEVA, Philippine Corporate Law, 2001 Ed., p. 201.26CTA Division records, pp. 231-237 & 291-322.27Supra note 14.28Supra note 8.29AN ACT AMENDING REPUBLIC ACT No. 7227, As AMENDED, OTHERWISE KNOWN As THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992. AND FOR OTHER PURPOSES.30AN 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 NATIONAL INTERNAL REVENUE CODE OF 1997, As AMENDED BY REPUBLIC ACT NO. 9334, AND FOR OTHER PURPOSES.31453 Phil. 1043, 1052 (2003).32361 Phil. 916 (1999).33Id. at 931.34Baas, Jr. v. Court of Appeals, 382 Phil. 144, 156 (2000). See also People v. Castaneda, Jr., 247-A Phil. 420, 434 (1988), citing E. Rodriguez, Inc. v. The Collector of Internal Revenue, 139 Phil. 354, 364 (1969); Commissioner of Internal Revenue v. Guerrero, 128 Phil. 197, 201 (1967).35Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 106611, July 21, 1994, 234 SCRA 348, 356.36Province of Tarlac v. Alcantara, G .R. No. 65230, 23 December 1992, 216 SCRA 790, 798.37Internal Rules of the Supreme Court, AM. No. 10-4-20-SC, Part I, Rule 2, Section 3, sub-paragraph k).

The Lawphil Project - Arellano Law Foundation

FIRST DIVISIONG.R. No. 192173, July 29, 2015COMMISSIONER OF INTERNAL REVENUE,Petitioner,v.STANDARD CHARTERED BANK,Respondent.D E C I S I O NPEREZ,J.:For the Courts consideration is a Petition for Review onCertiorariwhich seeks to reverse and set aside the 1 March 2010 Decision1and the 30 April 2010 Resolution2of the Court of Tax Appeals (CTA)En Bancin CTA EB Case No. 522, affirmingin totothe Decision3and Resolution4dated 27 February 2009 and 29 July 2009, respectively, of the Second Division of the CTA (CTA in Division) in CTA Case No. 7165. The courta quocancelled and set aside the Formal Letter of Demand and Assessment Notices dated 24 June 2004 issued by petitioner against respondent for deficiency income tax, final income tax Foreign Currency Deposit Unit (FCDU), and expanded withholding tax (EWT) in the aggregate amount of P33,076,944.18, including increments covering taxable year 1998, for having been issued beyond the reglementary period.The Facts

As found by the CTA in Division and affirmed by the CTAEn Banc, the factual antecedents of the case and the proceedings conducted thereon were as follows:chanRoblesvirtualLawlibraryOn July 14, 2004, [respondent] received [petitioners] Formal Letter of Demand dated June 24, 2004, for alleged deficiency income tax, final income tax FCDU, [withholding tax compensation (WTC)], EWT, [final withholding tax (FWT)], and increments for taxable year 1998 in the aggregate amount of P33,326,211.37, broken down as follows:chanRoblesvirtualLawlibraryTaxBasic TaxInterestCompromise PenaltyTotal

Income Tax3,594,272.003,803,936.6725,000.007,423,208.67

Final Income Tax FCDU11,748,483.9912,433,808.3125,000.0024,207,292.30

Withholding Tax - Compensation50,282.5955,450.4812,000.00117,733.07

Expanded Withholding Tax678,361.62748,081.5920,000.001,446,443.21

Final Withholding Tax56,845.8462,688.2812,000.00131,534.12

TOTAL16,128,246.0417,103,965.3394,000.0033,326,211.37

On August 12, 2004, [respondent] protested the said assessment by filing a letter-protest dated August 9, 2004 addressed to the BIR Deputy Commissioner for Large Taxpayers Service stating the factual and legal bases of the assessment, and requested that it be withdrawn and cancelled.

As of the date of filing of thisPetition for Review, [petitioner] has not rendered a decision on [respondents] protest.

In view of [petitioners] inaction on [respondents] protest, on March 9, 2005, [respondent] filed the present Petition for Review.

x x x x

On October 14, 2005, [respondent] filed aMotion for Leave of Court to Serve Supplemental Petition, with attachedSupplemental Petition for Review, pursuant toRule 10 of the 1997 Rules of Civil Procedure, as amended, in view of the alleged payments made by [respondent] through the BIRs Electronic Filing and Payment System (eFPS) as regards its deficiency [WTC] and [FWT] assessments in the amounts of P124,967.73 and P139,713.11, respectively. In itsSupplemental Petition for Review, (respondent) seeks to be fully credited of the payments it made to cover the deficiency [WTC] and [FWT]. Thus, the remaining assessments cover only the deficiency income tax, final income tax FCDU, and [EWT] in the modified total amount of P33,076,944.18, computed as follows:chanRoblesvirtualLawlibraryTaxBasic TaxInterestCompromise PenaltyTotal

Income Tax3,594,272.003,803,936.6725,000.007,423,208.67

Final Income Tax FCDU11,748,483.9912,433,808.3125,000.0024,207,292.30

Expanded Withholding Tax678,361.62748,081.5920,000.001,446,443.21

TOTAL16,021,117.6116,985,826.5770,000.0033,076,944.18

Finding merit in [respondents]motion, the same was granted and theSupplemental Petition for Reviewwas admitted in aResolutiondated December 12, 2005.

[Respondent] presented Chona G. Reyes, its Vice-President, as witness, and documentary exhibits which were admitted by the Court in its Resolutions dated October 1, 2007, and January 31, 2008.

On the other hand, [petitioner] presented Juan M. Luna, Jr., Revenue Officer II of the BIR LTAID I, as witness, and documentary evidence marked asExhibits 1 to 4.

Thereafter, the parties were ordered to file their simultaneous memoranda, within thirty (30) days from notice, afterwhich the case shall be deemed submitted for decision.

[Petitioners] Memorandum was filed on August 4, 2008, while [respondents]Memorandumwas filed on October 24, 2008 after a series of motions for extension of time to file memorandum were granted by the [c]ourt. The case was deemed submitted for decision on November 12, 2008.5chanroblesvirtuallawlibraryThe Ruling of the CTA in Division

In a Decision dated 27 February 2009,6the CTA in Division granted respondents petition for the cancellation and setting aside of the subject Formal Letter of Demand and Assessment Notices dated 24 June 2004 on the ground that petitioners right to assess respondent for the deficiency income tax, final income tax FCDU, and EWT covering taxable year 1998 was already barred by prescription. The courta quoexplained that although petitioner offered in evidence copies of the Waivers of Statute of Limitations executed by the parties, for the purpose of justifying the extension of period to assess respondent, the subject waivers, particularly the First and Second Waivers dated 20 July 2001 and 4 April 2002, respectively, failed to strictly comply and conform with the provisions of Revenue Memorandum Order (RMO) No. 20-90, citing the case ofPhilippine Journalists, Inc. v. CIR.7It therefore concluded that since the aforesaid waivers were invalid, it necessarily follows that the subsequent waivers did not in any way cure these defects. Neither did it extend the prescriptive period to assess. Accordingly, it ruled that the assailed Formal Letter of Demand and Assessment Notices are void for having been issued beyond the reglementary period.8Having rendered such ruling, the CTA in Division decided not to pass upon other incidental issues raised before it for being moot.

On 29 July 2009, the CTA in Division denied petitioners Motion for Reconsideration thereof for lack of merit.9ChanRoblesVirtualawlibrary

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 3 September 2009, docketed as CTA EB No. 522.

The Ruling of the CTA En Banc

The CTAEn Bancaffirmedin totoboth the aforesaid Decision and Resolution rendered by the CTA in Division in CTA Case No. 7165, pronouncing that there was no cogent justification to disturb the findings and conclusion spelled out therein, since what petitioner merely prayed was for the appellate court to view and appreciate the arguments/discussions raised by petitioner in her own perspective of things, which unfortunately had already been considered and passed upon.

In other words, the CTAEn Bancsimply concurred with the ruling that petitioners subject Formal Letter of Demand and Assessment Notices (insofar as to the deficiency income tax, final income tax FCDU, and EWT) shall be cancelled considering that the same was already barred by prescription for having been issued beyond the three-year prescriptive period provided for in Section 203 of the National Internal Revenue Code (NIRC) of 1997, as amended. The waivers of the statute of limitations executed by the parties did not extend the aforesaid prescriptive period because they were invalid for failure to comply with and conform to the requirements set forth in RMO No. 20-90.

Upon denial of petitioners Motion for Reconsideration thereof, it filed the instant Petition for Review onCertioraribefore this Court seeking the reversal of the 1 March 2010 Decision11and the 30 April 2010 Resolution12rendered in CTA EB No. 522, based on the sole ground, to wit: The CTAEn Banccommitted reversible error in not holding that respondent is estopped from questioning the validity of the waivers of the Statute of Limitations executed by its representatives in view of the partial payments it made on the deficiency taxes sought to be collected in petitioners Formal Letter of Demand and Assessment Notices dated 24 June 2004.The Issues

The primary issue presented before this Court is whether or not petitioners right to assess respondent for deficiency income tax, final income tax FCDU, and EWT covering taxable year 1998 has already prescribed under Section 203 of the NIRC of 1997, as amended, for failure to comply with the requirements set forth in RMO No. 20-90 dated 4 April 1990, pertaining to the proper and valid execution of a waiver of the Statute of Limitations, and in accordance with existing jurisprudential pronouncements.

Subsequently, even assuming that petitioners right to assess had indeed prescribed, another issue was submitted for our consideration, to wit: whether or not respondent is estopped from questioning the validity of the waivers of the Statute of Limitations executed by its representatives in view of the partial payments it made on the deficiency taxes (i.e.WTC and FWT) sought to be collected in petitioners Formal Letter of Demand and Assessment Notices dated 24 June 2004.Our Ruling

We find no merit in the petition.

At the outset, the period for petitioner to assess and collect an internal revenue tax is limited only to three years by Section 203 of the NIRC of 1997, as amended, quoted hereunder as follows:chanRoblesvirtualLawlibrarySEC. 203.Period of Limitation Upon Assessment and Collection. Except as provided in Section 222,internal revenue taxes shall be assessed within three years after the last day prescribed by law for the filing of the return, and no proceeding in court without assessment for the collection of such taxes shall be begun after the expiration of such period:Provided, Thatin a case where a return is filed beyond the period prescribed by law, the three (3)-year period shall be counted from the day the return was filed.

For purposes of this Section,a return filed before the last day prescribed by law for the filing thereof shall be considered as filed on such last day. (Emphasis supplied)chanroblesvirtuallawlibraryThis mandate governs the question of prescription of the governments right to assess internal revenue taxes primarily to safeguard the interests of taxpayers from unreasonable investigation by not indefinitely extending the period of assessment and depriving the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of reasonable period of time.13ChanRoblesVirtualawlibrary

Thus, in the present case, petitioner only had three years, counted from the date of actual filing of the return or from the last date prescribed by law for the filing of such return, whichever comes later, to assess a national internal revenue tax or to begin a court proceeding for the collection thereof without an assessment. However, one of the exceptions to the three-year prescriptive period on the assessment of taxes is that provided for under Section 222(b) of the NIRC of 1997, as amended, which states:chanRoblesvirtualLawlibrarySEC. 222.Exceptions as to Period of Limitation of Assessment and Collection of Taxes.

x x x x

(b) If before the expiration of the time prescribed in Section 203 for the assessment of the tax,both the Commissioner and the taxpayer have agreed in writing to its assessment after such time, the tax may be assessed within the period agreed upon.

The period so agreed upon may be extended by subsequent written agreement made before the expiration of the period previously agreed upon.(Emphasis supplied)chanroblesvirtuallawlibraryFrom the foregoing, the above provision authorizes the extension of the original three-year prescriptive period by the execution of a valid waiver, where the taxpayer and the Commissioner of Internal Revenue (CIR) may stipulate to extend the period of assessment by a written agreement executed prior to the lapse of the period prescribed by law, and by subsequent written agreements before the expiration of the period previously agreed upon. It must be kept in mind that the very reason why the law provided for prescription is to give taxpayers peace of mind, that is, to safeguard them from unreasonable examination, investigation, or assessment. The law on prescription, being a remedial measure, should be liberally construed in order to afford such protection. As a corollary, the exceptions to the law on prescription should perforce be strictly construed.14ChanRoblesVirtualawlibrary

In the landmark case ofPhilippine Journalists, Inc. v. CIR(PJI case),15we pronounced that a waiver is not automatically a renunciation of the right to invoke the defense of prescription. A waiver of the Statute of Limitations is nothing more than an agreement between the taxpayer and the Bureau of Internal Revenue (BIR) that the period to issue an assessment and collect the taxes due is extended to a date certain. It is a bilateral agreement, thus necessitating the very signatures of both the CIR and the taxpayer to give birth to a valid agreement. Furthermore, indicating in the waiver the date of acceptance by the BIR is necessary in order to determine whether the parties (the taxpayer and the government) had entered into a waiver before the expiration of the time prescribed in Section 203 (the three-year prescriptive period) for the assessment of the tax. When the period of prescription has expired, there will be no more need to execute a waiver as there will be nothing more to extend. Hence, no implied consent can be presumed, nor can it be contended that the concurrence to such waiver is a mere formality.

In delineation of the same sense about the waiver of the Statute of Limitations, RMO No. 20-90 and Revenue Delegation Authority Order (RDAO) No. 05-01 were issued on 4 April 1990 and 2 August 2001, respectively. The said revenue orders outline the procedure for the proper execution of a waiver,viz.:16cralawlawlibrary1.The waiver must be in the proper form prescribed by RMO 20-90.The phrase but not after ____ 19 __, which indicates the expiry date of the period agreed upon to assess/collect the tax after the regular three-year period of prescription, should be filled up.

2. The waiver must be signed by the taxpayer himself or his duly authorized representative. In the case of a corporation, the waiver must be signed by any of its responsible officials. In case the authority is delegated by the taxpayer to a representative, such delegation should be in writing and duly notarized.

3. The waiver should be duly notarized.

4.The CIR or the revenue official authorized by him must sign the waiver indicating that the BIR has accepted and agreed to the waiver.The date of such acceptance by the BIR should be indicated. However, before signing the waiver, the CIR or the revenue official authorized by him must make sure that the waiver is in the prescribed form, duly notarized, and executed by the taxpayer or his duly authorized representative.

5.Both the date of execution by the taxpayer and date of acceptance by the Bureau should be before the expiration of the period of prescription or before the lapse of the period agreed upon in case a subsequent agreement is executed.

6. The waiver must be executed in three copies, the original copy to be attached to the docket of the case, the second copy for the taxpayer and the third copy for the Office accepting the waiver.The fact of receipt by the taxpayer of his/her file copy must be indicated in the original copy to show that the taxpayer was notified of the acceptance of the BIR and the perfection of the agreement.(Emphases supplied)chanroblesvirtuallawlibraryThe provisions of the RMO and RDAO explicitly show their mandatory nature, requiring strict compliance. Hence, failure to comply with any of the requisites renders a waiver defective and ineffectual. It is worth mentioning that strict compliance with the requirements set forth in RMO No. 20-90 has been upheld in thePJIcase.17In reversing the decision of the Court of Appeals promulgated on 5 August 2003, this Court ruled that:chanRoblesvirtualLawlibraryThe NIRC, under Sections 203 and 222, provides for a statute of limitations on the assessment and collection of internal revenue taxes in order to safeguard the interest of the taxpayer against unreasonable investigation. Unreasonable investigation contemplates cases where the period of assessment extends indefinitely because this deprives the taxpayer of the assurance that it will no longer be subjected to further investigation for taxes after the expiration of a reasonable period of time x x x

x x x x

RMO No. 20-90 implements these provisions of the NIRC relating to the period of prescription for the assessment and collection of taxes.A cursory reading of the Order su