COMMISSIONER OF INTERNAL REVENUE v. UNITED INTERNATIONAL PICTURES AKTIEBOLAG (UIPA)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC COMMISSIONER OF INTERNAL EB CASE NO. 2823 REVENUE, (CTA Case No. 9930) Petitione1~ Present: -versus- Del Rosario, P.J., Ringpis-Liban, M anahan, Bacorro-Villena, Modesto-San Pedro, Reyes-Fajardo, Cui-David, Ferrer-Flores, and Angeles, ]]. UNITED INTERNATIONAL Promulgated: PICTURES AKTIEBOLAG (UIPA), FEB 28 Respondent, X------------------------------------------------------------------------------------- DECISION RINGPIS-LIBAN, J.: Before this Court is the Petition for Review filed by petltloner Commissioner of Internal Revenue (CIR) on November 22, 20231 assailing the Amended Decision2 dated June 29, 2023 and Resolution3 dated October 13, 2023 promulgated by the Court ofTax Appeals First Division (Court in Division) in the case entitled "United InternationalPicturesAktiebofag vs. Commissioner ofInternal Revenue/' docketed as CTA Case No. 9930. The dispositive portion o f the Amended Decision reads: "WHEREFORE, in light of the foregoing, petitioner's "Motion for Reconsideration" incorporated in its "Omnibus Motion" is hereby GRANTED. The Petition for Revival of 1 Rollo, CT.-\ EB I o . 2823, pages 7-17. 2 Ibid., pp. 23-32. 3 Ibid., pp. 33-35.

D! �:(:JS!< )N CT.\ I-:!-3 ?\0. 2:82:3 (CT\ Ca~c No. 9930) Judgment" ftled by petitioner United International Pictures Aktiebolag on September 18,2018 is GRANTED. Accordingly, the Decision rendered in CTA Case No. 6912 promulgated on August 10, 2008 is hereby REVIVED and the Commissioner of Internal Revenue is hereby ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner United Internal Pictures Aktiebolag in the amount ofP7,200,302.97, representing excess/unutilized creditable withholding taxes for taxable year 2002. Let the corresponding Writ of Execution be issued. SO ORDERED." The dispositive portion of the Resolution reads: "WHEREFORE, prcrruses considered, respondent's "Motion for Reconsideration" is hereby DENIED for lack of merit. SO ORDERED." THE PARTIES Petitioner CIR is a public officer duly appointed by the President of the Philippines and is the head of the Bureau ofinternal Revenue (BIR), vested with the power to decide disputed assessments, refund of internal revenue taxes, fees or other charges, and penalties imposed in relation thereto. The CIR is being represented in this case by the Legal Officers of the Legal Division, Revenue Region 8A, Makati City, with office address at 2/F Legal Division, BIR Bldg., No. 313 Sen. Gil Puyat "~ve., Makati City, where summons, pleadings, notices and other processes of the Court may be served' Respondent United International Pictures Aktiebolag (UIP I\.kticbolag) is the Philippine branch of United International Pictures "~ktiebolag, a corporation duly and existing under the laws of Sweden, duly licensed to engage in business in the Philippines, with office address at 18'h Floor, Philamlifc Tower, 8767 Pasco de Roxas, Makati City. It may be served with notices and other processes through its counsel at 3'J Floor, Sycip Law Center Center, 105 Pasco de Roxas, Makati City;v- ~ Decision, p. 2. 5 Ibid., pp. 1-2.

DJ�:CISJO'i CT.\ J,:H !\'0. 2823 (C:T\ Case No_ 9930) THE FACTS The undisputed facts 6 as found by the Court in Division are as follows: "On August 28, 2008, the First Division of the Court of Tax Appeals (CTA) rendered a Decision in CTA Case No. 6912 entitled U11ited 117tematio!7al Pittzrres AB vs. Commissioner ofI11temaf Revenm, the dispositive portion of which reads: 'WHEREFORE, premises considered, the Petition is hereby PARTIALY GRANTED. Respondent rs ORDERED to REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of Se,�en l\lillion Two Hundred Thousand Three Hundred Two Pesos and 97/100 (P7,200,302.97) representing excess/unutilized creditable withholding taxes for taxable Year 2002. SO ORDERED.' The CIH. received the said Decision on September 3, 2008. Despite the period provided under the Revised Rub; of the Court of Tax \ppcals (RRCL\), rhe ClH. did nor file a 1\lorion for Reconsideration. Consequemh�, the Decision dated .\ugust 28, 2008 became final and executory on September 19, 2008 and was recorded in the Book of Entries ofJudgments. On October 21, 2008, United International Pictures c\B (UIP AB) ftled a 1\lotion for Issuance of Writ of Execution which the Court granted. A \Xlrit of Execution was issued by the Court on November 17, 2008. On November 19, 2009, UIP c\.B caused the service of the \Vrit of Execution on the BIR and the same was received by Ms. /\mafe Ingal, Litigation Receiving Clerk. On October 26, 2011, Sheriff Adelbcrto Juan of the CTA followed up on the status of the \Xlrit of Execution served upon the CIR and was informed that the docket of the case was forwarded to the BIR, Revenue Region No. 7 for appropriate action. After ten (1 0) years, there was no action from the BIR to satisfy the judgment of the Court as decreed in the Decision dated August 28, 2008; hence, UIP [\ktiebolag flied the present Petition for Revival ofJudgment on September 18,2018/ (,Decision, pp. 2-5.

DH:JSIO'i CT\ J�:B I\0. 2823 (CT\ Ca~c No. 9930) On December 12, 2018, the CIR filed his Answer and raised the following Special and "\ffirmative Defenses: (i) Taxes are the lifeblood of the government, and, (ii) Section 6, Rule 39 of the Rules of Court is not applicable in the present case. On September 12, 2019, the CIR filed his Pre-Trial Brief, 13 while UIP "\ktiebolag filed its Pre-Trial Brief' on September 13, 2019. The Pre-Trial Conference was held on September 19, 2019.15 The parties flied their Joint Stipulation of Facts and Issue (JSPI) 16 on November 8, 2019 via registered mail. On January 29, 2020, UIP "\ktiebolag flied a Request for "\dmissions" pursuant to Rules 26 and 29 of the Rules of Court, questing respondent to admit under oath the truth of the following tnatters: '1. There is no document in the records of the Bureau of Internal Rc,�enuc (BIR) for Cnitccl International Pictures AB ,. Commissioner of Internal Revenue, docketed as Court of Tax .Appeals (CTA) Case No 6912, which would show that the Decision dated August 28,2008 in CT"\ Case "Jo. 6912, has already been satisfied; 2. There is no document in the records of the BIR for CTA Case No. 6912 which would show that the Writ of Execution elated Nm�ember 17, 2008 has already been satisfied; 3. There is no docutncnt in the records of the BIR for CTA Case No. 6912 which would show that the CIR eid1cr (1) refunded to UIP or (ii) issued a tax credit certificate in favor of UIP for Php7,200,302.97, pursuant to the CfA Decision; and, 4. To date, the CIR has yet to refund or issue a tax credit certificate in fm�or of UIP for Php 7,200,302 97, pursuant to the CTA Decision.' On February 12, 2020, the CIR filed a Compliance (With Reply /Objection and rdanifestation to Petitioner's Request for Admission). On J\Iarch 9, 2020, UIP Aktiebolag flied a Motion for Leave to File and to Admit Reply with attached Reply. On "-\ugust 3, 2020, the Court issued a Resolution directing the CIR to answer the Request for Admissions by filing a sworn certification denying specifically the matters for admission and/or ~

Dl �:C:JSI< lN c:�t'.\ J�:B N< ). 2813 (C:'l'.\ (:a:;c I'<(). 9930) setting forth in detail the reasons why he cannot truthfully admit or deny them. On September 16, 2020, the CIR filed a Reply (To Request for Admission) via electronic mail and by registered mail. On October 1, 2020, the Court issued a Resolution declaring that the matters stated in UIP I\ktiebolag's Request for Admission are deemed admitted due to the CIR's failure to submit the required sworn statement denying specifically the matters requested for admission. During trial, UIP I\ktiebolag presented documentary evidence UIP Aktiebolag also offered in evidence the testimony of its witness, Renz Jeffrey A Ruiz, together with his corresponding Judicial Affidavit. UIP Aktiebolag's formally offered exhibits, as contained in its Formal Offer of Evidence filed on October 23, 2020, were admitted in evidence in the Resolution dated January 21, 2021. Considering that the CIR manifested during the hearing on October 24, 2020 that he will not be presenting any witness or documentary evidence, the Court, in the Resolution dated January 21,2021, ordered the parties to subrnit their respective memoranda within thirty (30) clays from notice. UIP "-\ktiebolag filed its Memorandum on I\Iarch 17, 2021, while the CIR fried his Memorandum on I\Iarch 22, 2021 via registered mail. The case was submitted for decision on May 20, 2021. On October 12, 2021, UIP Akticbolag filed a Manifestation and Submission with attached Memorandum stating that the rviemorandum submitted to the Court on 1\'Iarch 17, 2021 was an earlier draft and not the final version. The Court noted UIP Aktiebolag's Manifestation and Submission in the Resolution elated November 11, 2021." On l'viarch 15, 2022, the Court in Division promulgated a Decision dismissing for lack of cause of action the Petition for Review. On April 6, 2022, respondent filed a "Motion for Reconsideration" praying that the Court (z) reconsider the assailed Decision, (ii) revive the Decision dated August 28,2008 in CTA Case No. 6912; and (iii) order respondent CIR to refund or issue a tax credit in the amount ofP7,200,302.97 in its favorj\/

Dl�:c:ISIO!\: C:T\ FH ~( ). 2823 (C:T\ Ca~c :---:o. 9930) On June 29, 2023, the Court in Division issued the assailed Amended Decision. On July 26, 2023, petitioner filed by registered mail his "Motion for Reconsideration" of the ,\mended Decision. On October 13, 2023, the Court in Division issued the assailed Resolution denying for lack of merit the petitioner's "Motion for Reconsideration." On November 6, 2023, petitioner filed by registered mail a "l\Iotion for Extension of Time to File Petition for Review,"7 stating that petitioner has until November 7, 2023 within which to file the Petition for Review. Petitioner prays for an extension of fifteen (15) days from November 7, 2023 or until November 22, 2023, within which to file the Petition for Review. On November 17, 2023, the Court issued a Minute Resolution granting petitioner's "J\Iotion for Extension of Time to File Petition for Review." On November 22, 2023, petitioner filed by registered mail the instant Petition for Review, which was received by the Court on November 30, 2023. On February 14, 2024, the Court En Bant issued Minute Resolution ordering respondent to ftle Comment on the Petition for Review within ten (1 0) days from notice. On March 4, 2024, respondent ftled a "Comment (on the Petitionfor RelJieu; dated November 21, 2023)."8 On ;_rarch 14, 2024, the Court En Bane issued a l\Iinute Resolution which noted respondent's "Comment (on the Petition for Review dated November 21, 2023)" and considered the case submitted for decision. THE ISSUE "Whether ornot the Court in Division erredin granting the Petition for Revival ofJudgment filed by respondent." THE ARGUMENTS Petitioner mainly argues that respondent has demonstrated estoppel by laches by neglecting to pursue its tax refund through administrative channels. Respondent slept on its right to enforce the tax refund against petitioner. It failed ,/'~"' 7 Rollo, pp. 1-4. 1\ Ibid., pp. 59-""74, with attachments.

Page 7 ofll DECJS!ON CT.\ EB ~;()_ 2823 (CT.\ Ca~c ~o. 9930) to explain the cause of the delay to follow up its tax refund in this case with the office of the CIR or any office of the BIR. Hence, respondent is already barred by laches to execute the tax refund by revival of judgment. Conversely, respondent states that the Petition for Review does not have a proper Verification and Certification Against Forum Shopping since it was executed and notarized twelve (12) days before the petition was prepared. The petition is dated November 21, 2023, while the verification was subscribed and sworn to before the Officer-in-Charge of the Legal Division of the BIR on November 9, 2023. Respondent further claims that new arguments cannot be raised on appeal. The sole ground raised by petitioner on appeal is estoppel by laches. This issue was never raised by the CIR during trial of the Petition for Revival of Judgment before the Court in Division. Additionally, respondent asserts that the remedy of filing an independent action to revive a judgment within ten (1 0) years is expressly granted by the Civil Code and the Rules of Court, and it timely flled the Petition for Revival of Judgment within the ten-year period. THE RULING OF THE COURT EN BANC Timeliness of the Petition On July 11, 2023, the petitioner received the Amended Decision of the Court in Division. On July 26, 2023, petitioner filed a Motion for Reconsideration of the said Amended Decision. On October 23, 2023, the Court in Division issued the assailed Resolution denying petitioner's motion. Said Resolution was received by petitioner on October 23, 2023. From receipt of the said Resolution on October 23, 2023, petitioner has until November 7, 2023 within which to file the Petition for Review. On November 6, 2023, petitioner filed a 1\fotion for Extension of Time to File Petition for Review, praying that an extension of fifteen (15) days be granted to petitioner from November 7, 2023 or until November 22, 2023, within which to file the instant Petition for Review. The Petition for Review was filed by registered mail on November 22, 2023, and received by the Court on November 30, 2023. Hence, this Petition for Review was timely filed,iv"

Dl�:c:JSIO!' CT.\ I,:H NO_ 2823 (C:T.\ Case No_ 9930) The Court in Division did not commit any error in granting the Petition for Revival ofJudgment After a careful review of petitioner's arguments and the records of the case, the Court En Bane finds the Court in Division did not err in granting respondent's Petition for Revival ofJudgment. First, there is no doubt that the Decision in CTA Case No. 6912 entitled United Intemationaf Pictures AB vs. Commissioner ofInternal RetJentte has not yet been executed since it became finaL Second, the action for the revival of said judgment was timely filed before the Court in Division. In Doug!aJ F. A11ama vs. Citibank, NA. (former!J Fin�t National City Bankj,9 the Supreme Court emphasized when can an action for revival judgment be brought to Court for the enforcement of a final and executory judgment, viz: "I\n action to revive a judgment is an action whose exclusive put1)0se is to enforce a judgment which could no longer be enforced by mere motion. Section 6, Rule 39 of the Revised Rules of Court provides: Sec. 6. Execution by motion or by independent action. - A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. i\fter the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations. Section 6 is clear. Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right by mere motion within five years from the date of entry of judgment. If the prevailing party fails to have the decision enforced by a motion after the lapse of five years, the said judgment is reduced to a right of action which must be enforced by the institution of a complaint in a regular court within 10 years from the time the judgment becomes final. Further, a revival suit is a new action, having for its cause of action the judgment sought to be revived. It is different and distinct /V"' '.! G.R. :::-\o. 192048, December 13, 2017. Citations omitted.

Page 9 of11 DJ ,:CIS]( )1\: CL\ EH NO. 2823 (CT.\ Ca~c "\:o. 9930) from the original judgment sought to be revived or enforced. It is a new and independent action, wherein the cause of action is the decision itself and not the merits of the action upon which the judgment sought to be enforced is rendered. Revival of judgment is premised on the assumption that the decision to be revived, either by motion or by independent action, is already final and executory." (EmphmiJ� mpp!ied) Pursuant to the Entry ofJudgment,10 the Decision dated August 28, 2008 in CTA Case No. 6912 became final and executory on September 19, 2008. On October 20, 2008, respondent filed a Motion for Issuance of Writ of Execution11 before the Court in Division. During the hearing on October 31, 2008, 1 Court in Division granted the Motion for Issuance of Writ of Execution. " However, the said Decision remained unexecuted. As previously stated, the subject judgment became final on September 19, 2008. Thus, Respondent has until September 19, 2018 within which to file an action to enforce said judgment. On September 18, 2018, Respondent timely filed before the Court in Division, a Petition for Revival ofJudgment. The principle of estoppel by laches does not apply in this case. In Republic ofthe Phi!zppines JJJ. Sixto Smzdiam, L & F JV!arketing, Im�., jose Ma. Lope:v Rosendo D. Bondm~ Augusto F Del Rosazio, and Liberty Engineering Cozporation, 13 the Supreme Court explains the concept of estoppel by laches. It states that: "In a general sense, laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or should have been done earlier. Stated differently, it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the peace of society, the discouragement of stale claims, and is not a mere question of time but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted." Records show that upon finality of the August 28, 2008 Decision on September 19, 2008, respondent immediately applied and obtained a Writ of 111 Docket, CT~\ Case .:\"o. 6912, p. 29-J. ,N' II Ibid., PP� 295~297. 12 Ibid., :\Iinutes of the I-Ieanng, p. 299. u G.R. :\o. 236381, ~-\ugust 27, 2020. Citations omitted.

DECISION CT.\ EH :-JC ). 2823 (( :T. \ Case No. 9930) Execution to enforce the said Decision. Next, it coordinated with the sheriffs of the Court in Division who served the Writ of Execution to the BIR in 2009 and 2011. 14 Afterwards, Respondent timely filed the Petition for Revival ofJudgment before the Court in Division. Therefore, the Court E" Ba11c finds that there was no failure or neglect, for an unreasonable length of time on the part of respondent, to do that which, by exercising due diligence, could or should have been done earlier. In fact, it was the petitioner who should be guilty of neglect for failure to act on the Court's order to refund to respondent the amount of Php7,200,302.97 representing excess/unutilized creditable taxes for taxable year 2002. Respondent has established its right to refund its money that was erroneously taken by petitioner for a very long of period time. WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The Amended Decision dated June 29,2023 and Resolution dated October 13, 2023 are AFFIRMED. SO ORDERED. 9:v. ~ / '--- WE CONCUR: MA. BELEN M. RINGPIS-LIBAN "\ssociate Justice Presiding Justice z~ T- A-- .A_ __ CATHERINE T. MANAHAN Associate Justice \ MARIARO -SAN PEDRO 1 ~ Docket, CT~-\. Case I:\'o. 6912, pp. 300, 303.

lll�:c!SJOi'i CT.\ EH NC ). 2823 (CT.\ C:a,;c :\.io. 9930) ~~f. ~J -F~~ MARIAN 1-Y#. REy�~FAJAliDO Associate Justice ~{/fill LANEE S. CUI-IfAVID Associate Justice },ssociate Justice HENRY /R.NGELES Associate Justice CERTIFICATION Pursuant to I\rticle VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice