NEW COAST HOTEL, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY Third Div ision NEW COAST HOTEL, INC., CTA CASE NO. 9146 Petitioner, Members: BAUTISTA, Chairperson -versus- FABON-VICTORINO, and RINGPIS-LIBAN, fl. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. ~___...._�_-._,_,.__.--U:-JL.l---------'- ?-c. -/-0--:-e->-Z---C-?-�---�- X - - --- --- --- - --- --- --- ---- --- --- ---- --- --- --- - --- --- ------- --- --- --- --- -- X RESOLUTION BAUTI STA, J.: For resolution is petitioner's Motion for Reconsideration (Re: Decision dated September 19, 2017) ("Motion for Reconsideration") filed on October 11, 2017; with Opposition Re: Petitioner's Motion for Reconsideration (Re: Decision dated September 19, 2017) ("Opposition") from respondent filed on November 6, 2017. On September 19, 2017, the Court promulgated a Decision1 ("Assailed Decision"), the dispositive portion of which states:2 WHEREFORE, in view of the foregoing, the Petition for Review filed by petitioner New Coast Hotel, Inc., claiming for the refund of or the issuance of a tax credit certificate in the amount of Php592,273.32, is hereby D ENIED for lack of merit. SO ORDERED. In its Motion for Reconsideration, petitioner assails the ruling of the Court that the assessment for deficiency expanded withholding 1 Records, CTA Case No. 9146, Decision, pp. 406-430. 2 Id. , p. 428.

RESOLUTION CTA CASE NO. 9146 Page 2of7 I tax ("EWT") for the month <Pf August 2012 had already attained finality when petitioner filed hs juridical claim before the Court on September 16, 2015. Petitioner': reiterates that the Preliminary Notice issued by the Large Taxpayer~ - Document Processing and Quality Assurance Division, with attacred Audit Results/ Assessment Notice, does not qualify as an assessnjtent notice under Section 33 of Revenue Regulations ("RR") No. 12-1999~, for failure to contain a definite and I unequivocal demand for the p~yment of deficiency taxes. According to petitioner, the Preliminary rtJotice merely informed petitioner that its BIR Form No. 1601-E for the month of August 2012 cannot be processed; and that instead :lof demanding payment for alleged deficiency EWT, it merely reql�ested for an explanation/information or correction within thirty (3 ) days from notice. Moreover, even assuming that the tenor of the, etter dated April1, 2014 constitutes a definite and unequivocal derpand for the payment of deficiency taxes, petitioner submits that the same cannot be a valid substitute I for a Formal Letter of Demand':or Final Assessment Notice because it was only issued in response t~ petitioner's explanation letter dated March 25, 2014; more so, that no assessment notice was attached thereto. Petitioner restates that even assuming for the sake of argument that there was a valid asse~sment, there is no legal basis for respondent to disallow the a~plication of petitioner's excess EWT payment in the month of July 1012 as credit against its EWT liability for August 2012. It is petitiotjler's stance that there is no express prohibition on offsetting of Ew]r in the 1997 National Internal Revenue Code5, as amended ("1997 NIRC"~, or in any administrative regulation. Petitioner adds that the Electro~ic Filing and Payment System of the Bureau of Internal Revenue ("~IR") allowed petitioner to apply its excess EWT payment for July 2~12 as a credit against its EWT liability for August 2012. Thus, petitioper concludes, it should not be held liable for the offsetting. 3 SECTION 3. Due Process Requirement in the ~ssuance of a Deficiency Tax Assessment. - XXX , XXX XXX 3.1.4 Formal Letter of Deman4 and Assessment Notice. -The formal letter of demand and assessment notice shal1 be issued by the Commissioner or his duly authorized representative. The let~er of demand calling for payment of the taxpayer's deficiency tax or taxesi, shall state the facts, the law, rules and regulations, or jurisprudence on w~ich the assessment is based, othenvise, the formal letter of demand and assessment ~otice shall be void (see illustration in ANNEX B hereof). , 4 Implementing the Provisions of the Natiqnal Internal Revenue Code of 1997 Governing the Rules on Assessment of National Internal !Revenue Taxes, Civil Penalties and Interest and the Extra-Judicial Settlement of a Taxpayer's Cr~minal Violation of the Code Through Payment of a Suggested Compromise Penalty, September~, 1999. .} 5 Republic Act No. 8424, January 1, 1998. \

RESOLUTION CTA CASE NO. 9146 Page 3 of7 Petitioner asserts that i~s act of offsetting the Php340,760.16 amount from its total EWT dtie for the month of August 2012 does not violate the Trust Fund Doch"ine because said amount was already remitted and paid in advance tb the government when it filed its July EWT Return. On the contrary~ petitioner avers that the government benefitted from such advance Ij>ayment as it received money from the taxpayer which is not yet due ~nd payable. Lastly, petitioner insists ~hat it should not be held liable for the I alleged deficiency EWT becmtse it merely relied on the advice of respondent's Revenue Officerl, ("RO"). Petitioner submits that the principle of equity should be ~pplied, especially in the instant case where no prejudice was cau4ed to the government and to third parties, and where petitioner'~ action was impelled by an honest belief that the RO's recommendation was an established practice in the BIR. Meanwhile, in his Oppqsition, respondent counters that the Court correctly denied the Peti~ion for Review in view of the finality of the assessment. Respondent! avers that petitioner's argument that 1 there was no valid assessment should not be given credence because I petitioner had all the opporhltnities to challenge the demand for payment contained in the lett~r dated April 1, 2014. Moreover, the payment made on December 11 2014 constitutes a positive act which concludes petitioner's admissipn of its own tax liability. Clearly, respondent submits, petitioner iis already estopped from questioning 1 the validity of the assessment. Respondent further asserts that there was no erroneous or unlawful payment of deficiency EWT for the month of August 2012. Respondent adds that since the~e was no provision in the 1997 NIRC or administrative regulation vihich allows a taxpayer to offset its excess EWT payment against !its EWT liability for the succeeding taxable period, petitioner cann~t perform a particular remedy which I is not provided by law; thus, i~, should have filed a claim for refund on its overpayment. Contrary to petitioner's cl~im that there was no violation of the Trust Fund Doctrine, respondert alleges that a violation is evident when only a portion of the tax~s that petitioner withheld on August

RESOLUTION CTA CASE NO. 9146 Page4 o�7 2012 was remitted to the gove~nment, and the remaining portion was kept by petitioner. Finally, respondent insis~s that petitioner's alleged reliance on the advice of the RO cannot s~t aside its liability to pay the correct and exact EWT, more so, tha~ it could have known that its proper remedy in case of excess pay~ent of tax is to file a claim for refund and/ or tax credit pursuant to ~ection 204(C) and Section 229 of the 1997 NIRC. According to respondept, petitioner cannot also rely on the principle of equity because the !same is applied only in the absence of, but never in contravention of statutory law. The Court will now: resolve petitioner's Motion for Reconsideration. After a careful conside~ation and evaluation of the parties' I respective arguments, the Coqrt finds that the arguments proffered by petitioner are mere rehash qf that which have already been amply discussed, analyzed and pass~d upon by the Court in the Assailed Decision. Consequently, the Court finds petitioner's Motion for Reconsideration devoid of medt. Nevertheless, the Court 'fill expound on the finding of lack of jurisdiction of the Court to nile on the validity of the assessment which resulted in the collection of tax that is subject of the claim for refund or the issuance of a tax credit certificate ("TCC"), if only to reinforce the discussion in the 4-ssailed Decision. Section 228 of the 1997 NI"fC and Section 3.1.5 of RR No. 12-1999 lay out the procedure to be followed in questioning an assessment, the pertinent provisions of whidh read: SEC. 228. Protesting ofiAssessment. - XXX XXX XXX If the protest is deni~d in whole or in part, or is not acted upon within one }1undred eighty (180) days from submission of documents, t~e taxpayer adversely affected by the decision or inaction njlay appeal to the Court of Tax Appeals within thirty (30) 4ays from receipt of said decision, or from the lapse of the onel hundred eighty (180)-day period; ~

RESOLUTION CTA CASE NO. 9146 Page 5 of7 otherwise, the decision s~all become final, executory and demandable. 3.1.5 Disputed Assessl}zent. - XXX XXX XXX If the protest is deiilied, in whole or in part, by the Commissioner, the taxpay~r may appeal to the Court of Tax Appeals within thirty (30) qiays from date of receipt of the said decision, otherwise, the : assessment shall become final, executory and demandablef In general, if the prdtest is denied, in whole or in part, by the Commissioner or ~is duly authorized representative, the taxpayer may appeal t~ the Court of Tax Appeals within thirty (30) days from dat� of receipt of the said decision, otherwise, the assessment !shall become final, executory and demandable: Provided, howe~er, that if the taxpayer elevates his protest to the CommissionE:ir within thirty (30) days from date of receipt of the final de4sion of the Commissioner's duly authorized representative, ':the latter's decision shall not be considered final, executor~ and demandable, in which case, the protest shall be decidediby the Commissioner. If the Commissiorer or his duly authorized representative fails to act o* the taxpayer's protest within one hundred eighty (180) days, from date of submission, by the taxpayer, of the required d<j>cuments in support of his protest, the taxpayer may appeal tq the Court of Tax Appeals within thirty (30) days from the lapse of the said 180-day period, otherwise, the assessment $hall become final, executory and demandable. From the foregoing, a ta~payer who disagrees with the denial of the protest by the Commis$ioner of Internal Revenue's ("CIR") authorized representative may1 appeal to the CIR or to the CTA within thirty (30) days from ntceipt of such denial. If the taxpayer opted to elevate the matter to !the CIR, the latter has one hundred or eighty (180) days from filing the protest to decide. The taxpayer may then appeal the adverse d~cision to the CTA within thirty (30) days receipt thereof. If the CIR fails to decide within the 180-day period, said inaction shall be cdnsidered a denial, in which case, the taxpayer may elevate the matte~ with the CTA within thirty (30) days from the lapse of the 180-day p~riod. In the alternative, the taxpayer may opt to wait for the decisio:r). of the CIR even beyond the 180-day ~

RESOLUTION CTACASENO. 9146 Page 6 of7 period, and thereafter elevate Hs claim to the CTA within thirty (30) days from receipt of the advdrse decision. It must be remembered, I however, that these options are mutually exclusive and resort to one bars application of the other.6 In the instant case, the nrotest filed by petitioner was denied7 by OIC-Assistant Commissid,ner Alfredo V. Misajon ("Assistant Commissioner Misajon") in a l~tters dated April1, 2014 and received by petitioner on May 6, 2014.1; Under the foregoing rules, petitioner has thirty (30) days from Majr 6, 2014 or until June 5, 2014 within which to appeal to the CIR o~I to the CTA. Petitioner requested for I reconsideration with Assistant Commissioner Misajon on May 29, 2014.9 It also filed an appea~ before the CIR on June 5, 2014.10 Thereafter, without waiting f~r the decision of the CIR, petitioner filed a Petition for Review wit~ the Court on September 16,2015. When petitioner appeal~d to the CIR, the CIR had only until September 22, 2014, or one hm}dred eighty (180) days from the filing of the protest on March 26, 20~4, to decide. Thereafter, petitioner has until October 22, 2014 to appe~l to the CTA. Clearly, when petitioner filed its appeal before the Co~rt on September 16, 2015, the same is already beyond the period 4llowed by law, thus rendering the assessment final, executory and demandable. Given that the assessmerjtt had become final, petitioner cannot now question its validity in a ~orm of a claim for refund or issuance of a TCC before this Court. Ins~ead of incorporating in the Petition its defenses against the validity of! the assessment, petitioner could have raised the same in an appeal tirhely filed before this Court. For failure to do so, petitioner has no one tb blame but itself. To reiterate the ruling <Pf the Supreme Court in Zamboanga Forest Managers Corporation v. Pacific Timber and Supply Co.ll: Although appeal is essential part of our judicial process, it has been held, time and ~gain, that the right thereto is not a natural right or part of tlhe due process but is merely a 6 RCBC v. Commissioner of Internal Revenue, O.R. No. 168498, April24, 2007, 522 SCRA 144. 7 Records, Exhibit "P-8," Letter Re: Offsetting, p. 294. s Id., Exhibit "P-8," Letter Re: Offsetting, p. 294. 9 Id., Exhibit "P-9," Request for Reconsideration': to Mr. Misajon, pp. 295-299. rJ to Id., Exhibit "P-10," Request for Reconsiderati~n, pp. 300-305. n G.R. No. 173342, October 13, 2010, 633 SCltA 82.

RESOLUTION CTA CASE NO. 9146 Page 7 of7 statutory privilege. Thus, ~he perfection of an appeal in the manner and within the pehod prescribed by law is not only I mandatory but jurisdiction~! and failure of a party to conform to the rules regarding ap~eal will render the judgment final and executory. Once a dec~sion attains finality, it becomes the law of the case irrespe~tive of whether the decision is erroneous or not and no co~ut- not even the Supreme Court- has the power to revise, re-hew, change or alter the same. The basic rule of finality of! judgment is grounded on the fthuantd, aamt tehnetarliskproinf coicpclaesioofn~!!puebrrloicr, policy and sound practice the judgment of courts and the award of quasi-judici~l agencies must become final at some definite date fixed by law. 1 Among the ends to which a motion for reconsideration is addressed, one is precisely to! convince the Court that its ruling is erroneous and improper, contary to laws and evidence.12 Having failed to do so, petitioner'~ Motion for Reconsideration must necessarily fail. All told, the Court finds no cogent justification to disturb the 1 conclusions reached in the Assctiled Decision. WHEREFORE, premises! considered, petitioner's Motion for Reconsideration (Re: Decision1 dated September 19, 2017) filed on 1 October 11, 2017 is hereby D~NIED for lack of merit. Accordingly, the Assailed Decision datetl September 19, 2017 is hereby AFFIRMED and UPHELD. SO ORDERED. LOVEL~. BAUTISTA WE CONCUR: Associate Justice ~.~A--'-- MA. BELEN M. RINGPIS-LIBAN Associate Justice 12 Coquilla v. Commission on Elections, G.R. No. 151914, July 31, 2002,434 Phil. 861.