ASIATRUST v. CIR

ASIATRUST DEVELOPMENT BANK, INC., Petitioners vs. COMMISSIONER OF INTERNAL REVENUE, Respondents

G.R. No. 201530 / G.R. Nos. 201680-81 

April 19, 2017

Facts:

Asiatrust Development Bank, Inc. (Asiatrust), on separate dates in February 2000, received from the Commissioner of Internal Revenue (CIR) three Formal Letters of Demand (FLD) with Assessment Notices for deficiency internal revenue taxes in the amounts of P131,909,161.85, P83,012,265.78, and ₱l44,012,918.42 for fiscal years ending June 30, 1996, 1997, and 1998, respectively.

Asiatrust timely protested the assessment notices. Due to the inaction of the CIR on the protest, Asiatrust filed before the CTA a Petition for Review praying for the cancellation of the tax assessments for deficiency income tax, documentary stamp tax (DST) - regular, DST - industry issue, final withholding tax, expanded withholding tax, and fringe benefits tax issued against it by the CIR.

The CIR issued against Asiatrust new Assessment Notices for deficiency taxes in the amounts of ₱l 12,816,258.73, ₱53,314,512.72, and ₱133,013,458.73, covering the fiscal years ending June 30, 1996, 1997, and 1998, respectively and Asiatrust partially paid said deficiency tax assessments thus leaving the following balances:

The CIR approved Asiatrust's Offer of Compromise of DST - regular assessments for the fiscal years ending June 30, 1996, 1997, and 1998. During the trial, Asiatrust manifested that it availed of the Tax Abatement Program for its deficiency final withholding tax - trust assessments for fiscal years ending June 30, 1996 and 1998; and that on June 29, 2007, it paid the basic taxes in the amounts of P4,187,683.27 and P6,097,825.03 for the said fiscal years, respectively. Asiatrust also claimed that on March 6, 2008, it availed of the provisions of Republic Act (RA) No. 9480, otherwise known as the Tax Amnesty Law of 2007.

The CTA Division rendered a Decision partially granting the Petition and declared void the tax assessments for fiscal year ending June 30, 1996 for having been issued beyond the three-year prescriptive period. However, due to the failure of Asiatrust to present documentary and testimonial evidence to prove its availment of the Tax Abatement Program and the Tax Amnesty Law, the CTA Division affirmed the deficiency DST- Special Savings Account (SSA) assessments for the fiscal years ending June 30, 1997 and 1998 and the deficiency DST - Interbank Call Loans (IBCL) and deficiency final withholding tax - trust assessments for fiscal year ending June 30, 1998, in the total amount of ₱142,777,785.91.

However, [Asiatrust's] deficiency documentary stamp tax - Special Savings Account assessments for the fiscal years ended June 30, 1997 & 1998, and deficiency documentary sta..111p tax - IBCL and deficiency final withholding tax - trust assessments for the fiscal year ended June 30, 1998, in the aggregate amount of ?142,777,785.91 are hereby AFFIRMED. The said amount is broken down as follows:

Asiatrust filed a Motion for Reconsideration attaching photocopies of its Application for Abatement Program, BIR Payment Form, BIR Tax Payment Deposit Slip, Improved Voluntary Assessment Program Application Forms, Tax Amnesty Return, Tax Amnesty Payment Form, Notice of Availment of Tax Amnesty and Statement of Assets and Liabilities and Networth (SALN). The CIR, on the other hand, filed a Motion for Partial Reconsideration of the assessments assailing the CTA Division's finding of prescription and cancellation of assessment notices for deficiency income, DST - regular, DST - trust, and fringe benefit tax for fiscal years ending June 30, 1997 and 1998. 18 The CTA Division issued a Resolution denying the motion of the CIR while partially granting the motion of Asiatrust.

The CIR appealed the Decision and the Resolution before the CTA En Banc via a Petition for Review. The CTA En Banc however dismissed the Petition for being premature considering that the proceedings before the CTA Division was still pending.

Asiatrust filed a Manifestation informing the CTA Division that the BIR issued a Certification that Asiatrust paid the amounts of ₱4,187,683.27 and ₱6,097,825.03 at the Development Bank of the Philippines in connection with the One-Time Administrative Abatement.

The CTA Division rendered an Amended Decision finding that Asiatrust is entitled to the immunities and privileges granted in the Tax Amnesty Law.

Asiatrust moved for partial reconsideration insisting that the Certification issued by the BIR is sufficient proof of its availment of the Tax Abatement Program considering that the CIR has not yet issued a termination letter. The CTA Division issued a Resolution denying Asiatrust's motion. The CTA Division maintained that it cannot consider Asiatrust's availment of the Tax Abatement Program in the absence of a termination letter from the BIR. Both parties appealed to CTA En Banc. The CTA En Banc denied both appeals. It denied the CIR's appeal for failure to file a prior motion for reconsideration of the Amended Decision, while it denied Asiatrust's appeal for lack of merit. The CTA En Banc sustained the ruling of the CTA Division that in the absence of a termination letter, it cannot be established that Asiatrust validly availed of the Tax Abatement Program.

The CTA En Banc denied the motions for partial reconsideration of the CIR and Asiatrust. Hence, the instant consolidated Petitions under Rule 45 of the Rules of Court.

Issues:

G.R. No. 201530 

1. Whether the CTA en banc erred in finding that Asiatrust is liable for deficiency final withholding tax for fiscal year ending June 30, 1998.

2. Whether the order of the CTA En Banc for petitioner to pay again the final withholding tax for fiscal year ending June 30, 1998 would amount to double taxation.

3. Whether the CTA En Banc erred in resolving the issue of alleged deficiency final withholding tax for fiscal year ending June 30, 1998 based on mere technicalities.

G.R. Nos. 201680-81 

1. Whether xx x the CTA En Banc committed reversible error when it dismissed the CIR's petition for review on the ground that the latter allegedly failed to comply with section 1, rule 8 of the revised rules of the CTA.

2. Whether the CTA en banc committed reversible error when it sustained the amended decision dated 16 march 2010 of the first division declaring closed and terminated respondent's liability for deficiency documentary stamp tax for taxable years 1997 and 1998.

Ruling:

The Petitions lack merit. G.R. No. 201530 An application for tax abatement is considered approved only upon the issuance of a termination letter. Section 204(B) of the 1997 National lnten1al Revenue Code (NIRC) empowers the CIR to abate or cancel a tax liability. The BIR issued RR No. 15-06 prescribing the guidelines on the implementation of the one-time administrative abatement of all penalties/surcharges and interest on delinquent accounts and assessments (preliminary or final, disputed or not). Section 4 of RR No. 15-06 provides:

SECTION 4. Who May Avail, - Any person/ taxpayer, natural or juridical, may settle thru this abatement program any delinquent account or assessment which has been released as of June 30, 2006, by paying an amount equal to One Hundred Percent (100%) of the Basic Tax assessed with the Accredited Agent Bank (AAB) of the Revenue District Office (RDO)/Large Taxpayers Service (LTS)/Large Taxpayers District Office (LTDO) that has jurisdiction over the taxpayer. In the absence of an AAB, payment may be made with the Revenue Collection Officer/Deputized Treasurer of the RDO that has jurisdiction over the taxpayer. After payment of the basic tax, the assessment for penalties/surcharge and interest shall be cancelled by the concerned BIR Office following existing rules and procedures. Thereafter, the docket of the case shall be forwarded to the Office of the Commissioner, thru the Deputy Commissioner for Operations Group, for issuance of Termination Letter.1âwphi1 In this case, Asiatrust failed to present a termination letter from the BIR. Instead, it presented a Certification issued by the BIR to prove that it availed of the Tax Abatement Program and paid the basic tax. It also attached copies of its BIR Tax Payment Deposit Slips and a letter issued by RDO Nacar. These documents, however, do not prove that Asiatrust's application for tax abatement has been approved. If at all, these documents only prove Asiatrust's payment of basic taxes, which is not a ground to consider its deficiency tax assessment closed and terminated.

Thus, the Court finds no error on the part of the CTA En Banc in affirming the said tax assessment. G.R. Nos. 201680-81 An appeal to the CTA En Banc must be preceded by the filing of a timely motion for reconsideration or new trial with the CTA Division.

Section 1, Rule 8 of the Revised Rules of the CTA states: SECTION 1. Review of cases in the Court en bane. - In cases falling under the exclusive appellate jurisdiction of the Court en bane, the petition for review of a decision or resolution of the Court in Division must be preceded by the filing of a timely motion for reconsideration or new trial with the Division.

Thus, in order for the CTA En Banc to take cognizance of an appeal via a petition for review, a timely motion for reconsideration or new trial must first be filed with the CTA Division that issued the assailed decision or resolution. Failure to do so is a ground for the dismissal of the appeal as the word "must" indicates that the filing of a prior motion is mandatory, and not merely directory. In this case, the CIR's failure to move for a reconsideration of the Amended Decision of the CTA Division is a ground for the dismissal of its Petition for Review before the CTA En Banc. Thus, the CTA En Banc did not err in denying the CIR's appeal on procedural grounds.