REPUBLIC OF THE PHILIPPINES
Court ofTax Appeals
QUEZON CITY
Third Division
TOTAL (PHILIPPINES) CORPORATION, CTA CASE NO. 8479
Petitioner,
Members:
Bautista, Chairperson
- versus- Fa bon-Victorino, and
Ringpis-Liban, Il·
COMMISSIONER OF INTERNAL Promulgated:
REVENUE,
Respondent.
c.-+- !r;y, .., _ - -
X-----------------------------------------------------------------------------------------X
RESOLUTION
BAUTISTA, J:
For resolution are:
1. Petitioner's Motion for Reconsideration ("petitioner's
MR") filed on January 23, 2017, with respondent's
Comment/ Opposition (Re: Petitioner's Motion for Reconsideration
dated 23 January 2017) ("respondent's Comment") filed on February
17, 2017; and
2. Respondent's Motion for Partial Reconsideration (Re:
Decision dated 22 December 2016) ("respondent's MPR") filed on
January 23,2017, with petitioner's Comment (to Respondent's Motion
for Partial Reconsideration) ("petitioner's Comment") filed on
February 23, 2017.
On December 22, 2016, the Court rendered a Decision, the
dispositive portion thereof states the following:
RESOLUTION
CTA CASE NO. 8479
Page 2of6
WHEREFORE, the Petition for Review is PARTIALLY
GRANTED. Accordingly, the assessment issued by
respondent against petitioner for taxable year 2005 covering
deficiency Expanded Withholding Tax and Fringe Benefit Tax
is UPHELD but in the reduced amount of Sixteen Million
Seventy-Seven Thousand Six Hundred Forty-Five Pesos and
16/100 Pesos (Php16,077,645.16), inclusive of the 25% surcharge
imposed under Section 248(A)(1)(3) of the 1997 NIRC, computed
as follows:
TYPE OF TAX BASIC 25% SURCHARGE TOTAL
Expanded Withholding Tax
Supplier at 1% Php 11,589,526.30 Php 2,897,381.58 Php 14,486,907.88
Contractor at 2% 451,048.99 112,762.25 563,811.24
Fringe Benefit Tax 821,540.84 205,385.21 1,026,926.05
TOTAL PHP 12,862,116.13 PHP 3,215,529.03 PHP 16,077,645.16
In addition, petitioner is also ORDERED TO PAY:
1. Deficiency interest at the rate of twenty percent
(20%) per annum on the basic deficiency EWT and FBT
computed from the dates indicated below until full payment
thereof pursuant to Section 249(B) of the 1997 NIRC:
TYPE OF TAX BASIC DEFICIENCY INTEREST COMPUTED FROM
Expanded Withholding Tax
Supplier at 1% Php 11,589,526.30 January 16, 2006
Contractor at 2% 451,048.99 January 16, 2006
Fringe Benefit Tax 821,540.84 January 16, 2006
2. Delinquency interest at the rate of twenty percent
(20%) per annum on the amount of Php16,077,645.16,
representing the basic deficiency EWT and FBT and the
corresponding 25% surcharge; and on the twenty percent (20%)
deficiency interest which have accrued as aforestated in item
(1), computed from March 26, 2012 until full payment thereof
pursuant to Section 249(C) of the 1997 NIRC.
SO ORDERED.t
In the above-stated Decision, the Court held that it has
jurisdiction to entertain the present Petition for Review since the
assessments have not yet attained finality; that the Letter of Authority
("LOA") is valid; that the Waivers are binding on the parties and the
assessments were issued within the prescriptive period, as extended;
that the assessment for deficiency expanded withholding tax ("EWT")
is reduced and the assessment for deficiency fringe benefit tax ("FBT")
is upheld; and that petitioner is not liable for compromise penalties.
(
1 Emphases retained.
RESOLUTION
CTA CASE NO. 8479
Page3of6
In petitioner's MR, on one hand, it avers that the assessment has
already prescribed; that the rules established in Commissioner of
Internal Revenue v. Next Mobile, Inc. (G.R. No. 212825, December 7, 2015)
(uNext Mobile") is the exception, rather than the general rule; that the
Waivers are defective for (1) not being signed by the Commissioner of
Internal Revenue (uCIR"), (2) non-indication of the dates of acceptance
of the Bureau of Internal Revenue (uBIR") Officials, (3) failure to
specify the kind and amount of tax due, (4) not being notarized, and
(5) other defects; that the exception in Next Mobile runs counter to the
established general principles of law; that the assessment did not arise
from a LOA, which was not furnished to petitioner; and that petitioner
is not liable for the alleged deficiency EWT and FBT.
In respondent's Comment, he argues that the Court correctly
ruled that the assessment was issued within the period prescribed by
law and pursuant to a valid LOA; that petitioner failed to prove that it
is not liable for deficiency EWT at 2% and FBT; and that petitioner
failed to prove that its purchases are valid importations, hence, the
same should be subject to deficiency assessment for EWT.
On the other hand, in respondent's MPR, he claims that
petitioner failed to prove that its purchases were valid importations,
hence, the same should be subject to deficiency assessment for EWT;
and that the assessment is valid and lawful.
Petitioner's Comment states that it imports in the normal course
of business; that a substantial amount of its purchases are importations
of gasoline, diesel, lubricants, kerosene, LPG and special fluids; that
these importations are not subject to withholding taxes; that its claims
are supported by evidence; that the assessments were issued beyond
the three (3) year prescriptive period, for the Waivers executed are
defective; that the Next Mobile ruling does not apply to this case since
the parties are not equally guilty; that the Final Letter of Demand
("FLD") lacked factual and legal bases, hence, void; and that the
assessment is invalid since the LOA was not furnished to petitioner.
The Court En Bane shall now resolve petitioner's MR and
respondent's MPR.
RESOLUTION
CT A CASE NO. 8479
Page4 of6
On the claim of non-application of the Next Mobile case, the Court
finds that the latter and the case at bar have the following in common:
1. The BIR and the taxpayer are in pari delicto or "in equal
fault." On one hand, the BIR violated its own rules and was careless in
performing its functions. Its negligence in the performance of its duties
was so gross that it amounted to malice and bad faith. On the other
hand, the taxpayer was given the opportunity to gather and submit
documents to substantiate its claims during investigation; and was
able to postpone the payment of taxes, as well as contest and negotiate
the assessment against it. Despite these, the taxpayer challenged the
validity of the waivers when the consequences thereof were not in its
favor, which can likewise be attributed to bad faith. Moreover,
notwithstanding awareness of the infirmities of the waivers, the
parties continued dealing with each other without bothering to rectify
the errors committed. Needless to say, the parties came to court with
unclean hands.
2. A highly suspicious situation exists, which is dangerous
and open to abuse by unscrupulous taxpayers who intend to escape
their responsibility to pay taxes by raising technicalities. The BIR' s
right to assess and collect taxes should not be jeopardized by mere
mistakes and lapses of its Officers, especially in cases where the
taxpayer is obviously in bad faith.
3. To uphold the validity of the Waivers would be consistent
with the public policy embodied in the lifeblood theory. In view of this,
as between the BIR and the taxpayer, it would be more equitable if
the former's lapses were allowed to pass, in order to support this
principle and public policy.
4. The taxpayer is estopped from questioning the validity of
its waivers. This application of estoppel would promote the
administration of the law, prevent injustice, avert the accomplishment
of a wrong and undue advantage, and is necessary to prevent the
undue injury that the Government would suffer should the assessment
be cancelled.
In view of the foregoing, the Court finds that the doctrine in Next
Mobile applies to the case at bar.
I
RESOLUTION
CTA CASE NO. 8479
Page 5 of6
As to the other contentions of the parties, a perusal of the
contents of petitioner's MR and respondent's MPR show that the
grounds raised therein are the same ones found in their respective
Memoranda and were properly settled in the Decision of the Court.
Reproduced hereunder are the parties' arguments, as appearing in the
December 22,2016 Decision:
Petitioner's Arguments
Petitioner argues that the period to assess deficiency
EWT and FBT for taxable year 2005 has already prescribed. It
likewise contends that the Waivers are defective considering
that they were not signed by the CIR; that the dates of
acceptance by the officials of respondent were not indicated
therein; that they failed to specify the kind and amount of tax
due; that they were not notarized on the part of the respondent;
that they do not conform with the requirements for a valid
execution of a waiver; and that the officers who signed on
behalf of petitioner were not authorized to do so.
With respect to the assessed deficiency taxes, petitioner
argues that the assessment is invalid for having arisen from an
LOA which was not furnished to petitioner. Petitioner further
argues that in the assessment for deficiency EWT, respondent
erroneously included items that are not subject to withholding
taxes, or were already subjected by petitioner to the proper
withholding tax rates. As to the assessment for deficiency FBT,
petitioner argues that the taxable fringe benefits granted to its
officers have been properly subjected thereto.
Respondent's Counter-Arguments
Respondent argues that petitioner voluntarily executed
the subject Waivers; that such Waivers were duly accepted and
approved by the person delegated by respondent; and that the
failure to indicate the date of acceptance by respondent is a
mere oversight which is not fatal to the validity of the Waivers,
bearing in mind that the date of acceptance can be presumed to
be between the date of notarization and the date of receipt by
the taxpayer. Respondent further argues that the first three (3)
waivers did not specify the kind and amount of tax, as there
was yet no assessment at the time of their execution; and that
the fourth waiver already specified the kind of tax being
assessed. He likewise claims that it is only petitioner who is
required to have the Waivers acknowledged before a notary
public; and that petitioner is estopped from questioning the
validity of the Waivers.
RESOLUTION
CTA CASE NO. 8479
Page6of6
Lastly, respondent alleges that the assessments are valid
and binding since the same were issued within the prescriptive
period; and are in accordance with the law, rules and
jurisprudence.
ACCORDINGLY, premises considered, petitioner's Motion for
Reconsideration and respondent's Motion for Partial Reconsideration
(Re: Decision dated 22 December 2016) are hereby DENIED for lack of
merit.
SO ORDERED.
LOVELL (BAUTISTA
Assoc~te
Justice
WE CONCUR:
(On Leave)
MA. BELEN M. RINGPIS-LIBAN
Associate Justice
