Cir vs Acesite

8/12/2019 Cir vs Acesite

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G.R. No. 147295 February 16, 2007

THE COMMISIONER OF INTERNA RE!EN"E, Petitioner,vs.ACESITE #$HII$$INES% HOTE COR$ORATION,Respondent.

D E C I S I O N

!EASCO, &R., J.:

The Case

Before us is a Petition for Review on Certiorari1under Rule ! of the Rules of Court,assailin" the Nove#$er 1%, &''' De(ision&of the Court of )ppeals *C)+ in C)-.R. SPNo. !/1, whi(h affir#ed the 0anuar 2, &''' De(ision2of the Court of Ta3 )ppeals*CT)+ in CT) Case No. !! entitled )(esite *Philippines+ 4otel Corporation v. The

Co##issioner of Internal Revenue for Refund of 5)T Pa#ents.

T'e Fa()*

The fa(ts as found $ the appellate (ourt are undisputed, thus6

)(esite is the owner and operator of the 4olida Inn 7anila Pavilion 4otel alon" 8nitedNations )venue in 7anila. It leases ,%/.!2 s9uare #eters of the hotel:s pre#ises tothe Philippine )#use#ent and -a#in" Corporation ;hereafter, P)-COR< for (asinooperations. It also (aters food and $evera"es to P)-COR:s (asino patrons throu"h thehotel:s restaurant outlets. =or the period 0anuar *si(+ > to )pril 1>>%, )(esite in(urred

5)T a#ountin" to P2',1!&,/>&.'& fro# its rental in(o#e and sale of food and$evera"es to P)-COR durin" said period. )(esite tried to shift the said ta3es toP)-COR $ in(orporatin" it in the a#ount assessed to P)-COR $ut the latter refusedto pa the ta3es on a((ount of its ta3 e3e#pt status.1awphi1.net

Thus, P)-COR paid the a#ount due to )(esite #inus the P2',1!&,/>&.'& 5)T whilethe latter paid the 5)T to the Co##issioner of Internal Revenue ;hereafter, CIR< as itfeared the le"al (onse9uen(es of nonpa#ent of the ta3. 4owever, )(esite $elatedlarrived at the (on(lusion that its transa(tion with P)-COR was su$?e(t to @ero rate as itwas rendered to a ta3e3e#pt entit. On &1 7a 1>>/, )(esite filed an ad#inistrative(lai# for refund with the CIR $ut the latter failed to resolve the sa#e. Thus on &> 7a

1>>/, )(esite filed a petition with the Court of Ta3 )ppeals ;hereafter, CT)< whi(h wasde(ided in this wise6

)s earlier stated, Petitioner is su$?e(t to @ero per(ent ta3 pursuant to Se(tion 1'& *$+*2+;now 1'*)+*C+< insofar as its "ross in(o#e fro# rentals and sales to P)-COR, a ta3e3e#pt entit $ virtue of a spe(ial law. )((ordin"l, the a#ounts of P&1,12,'&.%/and P/,%2>,/!.&, representin" the 1'A E5)T on its sales of food and servi(es and
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"ross rentals, respe(tivel fro# P)-COR shall, as a #atter of (ourse, $e refunded tothe petitioner for havin" $een inadvertentl re#itted to the respondent.

Thus, tain" into (onsideration the pres(ri$ed portion of Petitioner:s (lai# for refund ofP>/,%2.', and (onsiderin" further the prin(iple of solutio indebiti: whi(h re9uires the

return of what has $een delivered throu"h #istae, Respondent #ust refund to thePetitioner the a#ount of P2','!,1/. (o#puted as follows6

Total a#ount per (lai# 2',1!&,/>&.'&

ess Pres(ri$ed a#ount *E3hs ), , F &'+

0anuar 1>> P &,1>>.>

=e$ruar 1>> &,&'!.'

7ar(h 1>> %',22/.& >/,%2.'

P2','!,1/.vvvvvvvvvvvvvv

G4ERE=ORE, in view of all the fore"oin", the instant Petition for Review is partiall-R)NTED. The Respondent is here$ ORDERED to RE=8ND to the petitioner thea#ount of T4IRTH 7IION =I=TH =O8R T4O8S)ND ONE 48NDRED =ORTHEI-4T PESOS )ND SITH =O8R CENT)5OS *P2','!,1/.+ i##ediatel.

SO ORDERED.

T'e Ru+- o/ )'e Cour) o/ Aea+*

8pon appeal $ petitioner, the C) affir#ed in totothe de(ision of the CT) holdin" thatP)-COR was not onl e3e#pt fro# dire(t ta3es $ut was also e3e#pt fro# indire(tta3es lie the 5)T and (onse9uentl, the transa(tions $etween respondent )(esite andP)-COR were effe(tivel @erorated $e(ause the involved the rendition of servi(esto an entit e3e#pt fro# indire(t ta3es. Thus, the C) affir#ed the CT):s deter#ination$ rulin" that respondent )(esite was entitled to a refund of PhP 2','!,1/. fro#petitioner.

The Issues

4en(e, we have the instant petition with the followin" issues6 *1+ whether P)-COR:sta3 e3e#ption privile"e in(ludes the indire(t ta3 of 5)T to entitle )(esite to @ero per(ent*'A+ 5)T rateJ and *&+ whether the @ero per(ent *'A+ 5)T rate under then Se(tion 1'&*$+*2+ of the Ta3 Code *now Se(tion 1'/ *B+*2+ of the Ta3 Code of 1>>%+ le"all appliesto )(esite.

The petition is devoid of #erit.
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In resolvin" the first issue on whether P)-COR:s ta3 e3e#ption privile"e in(ludes theindire(t ta3 of 5)T to entitle )(esite to @ero per(ent *'A+ 5)T rate, we answer in theaffir#ative. Ge will however dis(uss $oth issues to"ether.

$AGCOR * ee) /ro aye-) o/ -3re() )ae*

It is undisputed that P.D. 1/>, the (harter (reatin" P)-COR, "rants the latter ane3e#ption fro# the pa#ent of ta3es. Se(tion 12 of P.D. 1/> pertinentl provides6

Se(. 12. E3e#ptions. K

3 3 3 3

*&+ In(o#e and other ta3es. K *a+ =ran(hise 4older6 No )a o/ a-y -3 or /or,-(oe or o)'er*e, a* e++ a* /ee*, ('are* or +ee* o/ 'a)eer -a)ure,'e)'er Na)o-a+ or o(a+, *'a++ be a**e**e3 a-3 (o++e()e3 u-3er )'* Fra-('*e

/ro )'e Corora)o- -or *'a++ a-y /or o/ )a or ('are a))a(' - a-y ay )o )'eear--* o/ )'e Corora)o-, e3(ept a =ran(hise Ta3 of five *!A+ per(ent of the "rossrevenue or earnin"s derived $ the Corporation fro# its operation under this =ran(hise.Su(h ta3 shall $e due and paa$le 9uarterl to the National -overn#ent and shall $e inlieu of all inds of ta3es, levies, fees or assess#ents of an ind, nature or des(ription,levied, esta$lished or (olle(ted $ an #uni(ipal, provin(ial, or national "overn#entauthorit.

3 3 3 3

*$+ Others6 The ee)o-* 'ere- ra-)e3 /or ear--* 3ere3 /ro )'e

oera)o-* (o-3u()e3 u-3er )'e /ra-('*e *e(/(a++y /ro )'e aye-) o/ a-y)a, -(oe or o)'er*e, a* e++ a* a-y /or o/ ('are*, /ee* or +ee*, *'a++-ure )o )'e be-e/) o/ a-3 e)e-3 )o (orora)o-#*%, a**o(a)o-#*%, ae-(y#e*%, or-33ua+#*% )' 'o )'e Corora)o- or oera)or 'a* a-y (o-)ra()ua+re+a)o-*' - (o--e()o- )' )'e oera)o-* o/ )'e (a*-o#*% au)'or8e3 )o be(o-3u()e3 u-3er )'* Fra-('*eand to those re(eivin" (o#pensation or otherre#uneration fro# the Corporation or operator as a result of essential fa(ilities furnishedandLor te(hni(al servi(es rendered to the Corporation or operator. *E#phasis supplied.+

Petitioner (ontends that the a$ove ta3 e3e#ption refers onl to P)-COR:s dire(t ta3lia$ilit and not to indire(t ta3es, lie the 5)T.

Ge disa"ree.

) (lose s(rutin of the a$ove provisos (learl "ives P)-COR a $lanet e3e#ption tota3es with no distin(tion on whether the ta3es are dire(t or indire(t. Ge are one with theC) rulin" that P)-COR is also e3e#pt fro# indire(t ta3es, lie 5)T, as follows6


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8nder the a$ove provision ;Se(tion 12 *&+ *$+ of P.D. 1/>


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3 3 3 3

*2+ Ser(e* re-3ere3 )o er*o-* or e-))e* 'o*e ee)o- u-3er *e(a++a*or international a"ree#ents to whi(h the Philippines is a si"nator effe(tivelsu$?e(ts the suppl of su(h servi(es to @ero *'A+ rate *e#phasis supplied+.

The rationale for the e3e#ption fro# indire(t ta3es provided for in P.D. 1/> and thee3tension of su(h e3e#ption to entities or individuals dealin" with P)-COR in (asinooperations are $est elu(idated fro# the 1>/% (ase ofCommissioner of Internal Revenuev. John Gotamco & Sons, Inc.,!where the a$solute ta3 e3e#ption of the Gorld 4ealthOr"ani@ation *G4O+ upon an international a"ree#ent was upheld. Ge held in said (asethat the e3e#ption of (ontra(tee G4O should $e i#ple#ented to #ean that the entit orperson e3e#pt is the (ontra(tor itself who (onstru(ted the $uildin" owned $ (ontra(teeG4O, and su(h does not violate the rule that ta3 e3e#ptions are personal $e(ausethe a-/e*) -)e-)o- o/ )'e areee-) * )o ee) )'e (o-)ra()or *o )'a) -o(o-)ra()or* )a ay be *'/)e3 )o )'e (o-)ra()ee :HO. Thus, the proviso in P.D.

1/>, e3tendin" the e3e#ption to entities or individuals dealin" with P)-COR in (asinooperations, is (learl to pros(ri$e an indire(t ta3, lie 5)T, that #a $e shifted toP)-COR.

A(e*)e a3 !AT by *)ae

Considerin" the fore"oin" dis(ussion, there are undou$tedl erroneous pa#ents of the5)T pertainin" to the effe(tivel @erorate transa(tions $etween )(esite and P)-COR.5eril, )(esite has (learl shown that it paid the su$?e(t ta3es under a #istae of fa(t,that is, when it was not aware that the transa(tions it had with P)-COR were @erorated at the ti#e it #ade the pa#ents. In US Cooperative Store v. Cit! of "anila,we

e3plained that there is erroneous pa#ent of ta3es when a ta3paer pas under a#istae of fa(t, as for the instan(e in a (ase where he is not aware of an e3istin"e3e#ption in his favor at the ti#e the pa#ent was #ade. %Su(h pa#ent is held to $enot voluntar and, therefore, (an $e re(overed or refunded. /

7oreover, it #ust $e noted that aside fro# not raisin" the issue of )(esite:s (o#plian(ewith pertinent Revenue Re"ulations on e3e#ptions durin" the pro(eedin"s in the CT),it (annot $e "ainsaid that )(esite should have done so as it paid the 5)T under a#istae of fa(t. 4en(e, petitioner:s ar"u#ent on this point is utterl tenuous.

Solutio indebitia+e* )o )'e Goer-e-)

Ta3 refunds are $ased on the prin(iple of 9uasi(ontra(t or solutio indebitiand thepertinent laws "overnin" this prin(iple are found in )rts. &1& and &1! of the CivilCode, whi(h provide, thus6

)rt. &1&. Certain lawful, voluntar, and unilateral a(ts "ive rise to the ?uridi(al relationof 9uasi(ontra(t to the end that no one shall $e un?ustl enri(hed or $enefited at thee3pense of another.
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)rt. &1!. If so#ethin" is re(eived when there is no ri"ht to de#and it, and it wasundul delivered throu"h #istae, the o$li"ation to return it arises.

Ghen #one is paid to another under the influen(e of a #istae of fa(t, that is to sa,on the #istaen supposition of the e3isten(e of a spe(ifi( fa(t, where it would not have

$een nown that the fa(t was otherwise, it #a $e re(overed. The "round upon whi(hthe ri"ht of re(over rests is that #one paid throu"h #isapprehension of fa(ts $elon"sin e9uit and in "ood (ons(ien(e to the person who paid it.>

The -overn#ent (o#es within the s(ope of solutio indebitiprin(iple as elu(idatedin Commissioner of Internal Revenue v. #ireman$s #und Insurance Compan!, where weheld that6 Enshrined in the $asi( le"al prin(iples is the ti#ehonored do(trine that noperson shall un?ustl enri(h hi#self at the e3pense of another. It "oes without sain"that the -overn#ent is not e3e#pted fro# the appli(ation of this do(trine.1'

A()o- /or re/u-3 *)r()+y (o-*)rue3 A(e*)e 3*('are3 )'e bur3e- o/ roo/

Sin(e an a(tion for a ta3 refund partaes of the nature of an e3e#ption, whi(h (annot$e allowed unless "ranted in the #ost e3pli(it and (ate"ori(al lan"ua"e, it is stri(tl(onstrued a"ainst the (lai#ant who #ust dis(har"e su(h $urden (onvin(in"l.11In theinstant (ase, respondent )(esite had dis(har"ed this $urden as found $ the CT) andthe C). Indeed, the re(ords show that )(esite proved its a(tual 5)T pa#ents su$?e(tto refund, as attested to $ an independent Certified Pu$li( )((ountant who was dul(o##issioned $ the CT). On the other hand, petitioner never disputed nor (ontestedrespondent:s testi#onial and do(u#entar eviden(e. In fa(t, petitioner never presentedan eviden(e on its $ehalf.

One final word. The BIR #ust release the refund to respondent without anunreasona$le dela. Indeed, fair dealin" is e3pe(ted $ our ta3paers fro# the BIR andthis dut de#ands that the BIR should refund without an unreasona$le dela what ithas erroneousl (olle(ted.1&

G4ERE=ORE, the petition is DENIED for la( of #erit and the Nove#$er 1%, &'''De(ision of the C) is here$ )==IR7ED. No (osts.

SO ORDERED.

$RES;ITERO &. !EASCO, &R.

)sso(iate 0usti(e
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