BOTH THE ADMINISTRATIVE & JUDICIAL REFUND OF ERRONEOUSLY PAID FINAL VALUE-ADDED TAX (FVAT) & FINAL WITHHOLDING TAX (FWT) ON ROYALTIES PAID SHOULD BE FILED WITHIN THE TWO-YEAR PERIOD, REGARDLESS OF THE INTERVAL BETWEEN THEM

Petitioner Syngenta Philippines, Inc. filed a Petition for Review seeking a refund or tax credit representing allegedly erroneous Withholding VAT and Final Withholding Tax paid on royalties to its parent company, Syngenta Crop Protection AG of Switzerland. The taxes were based on double-charged royalties: 25% under the Corn Germplasm License Agreement and 20% under the Bt-11 Trait License Agreement. After discovering the error in 2021, Petitioner reversed the royalty expense, SCPAG refunded the excess amount, and the Bt-11 agreement was terminated in 2022. Petitioner then filed its administrative claim on January 9, 2023, and judicial claim on January 11, 2023. The issues were (1) whether the Court had jurisdiction despite the short interval between administrative and judicial claims; and (2) whether Syngenta was entitled to the refund. Petitioner argued that both claims were filed within the two-year prescriptive period under the Tax Code, which does not require the CIR to first resolve the administrative claim. It also maintained that the WVAT and FWT were erroneously paid because they were based on royalties later refunded by SCPAG. On the other hand, the Respondent Commissioner of Internal Revenue (CIR) countered that the CTA had no jurisdiction since administrative remedies were not exhausted, noting the judicial claim was filed only two (2) days after the administrative claim. He further argued that the royalties and taxes were valid at the time of payment and that refunds, being in the nature of tax exemptions, must be strictly construed. In ruling, the Court ruled in favor of the Petitioner, holding that jurisdiction was proper since the law merely requires that both administrative and judicial claims be filed within the two-year period, regardless of the interval between them. Citing jurisprudence (Carrier, Nanox, CBK Power), the Court clarified that the CIR’s prior action on the administrative claim is not a prerequisite for judicial review. On the substantive issue, the Court found that the Petitioner indeed made erroneous payments of WVAT and FWT due to double-counting of royalties. Since SCPAG refunded the excess royalties and the Bt-11 agreement was subsequently terminated, there was no underlying income to justify the tax payments. Consequently, the Petition was GRANTED, and the Respondent was ordered to refund the Petitioner. [SYNGENTA PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO.11067, AUGUST 27, 2025]

TO BE CRIMINALLY LIABLE FOR THE ACTS OF CORPORATION, IT MUST BE SHOWN THAT ITS OFFICERS OR EMPLOYEES EITHER ACTIVELY PARTICIPATED IN THE WRONGFUL ACT OR HAD THE POWER TO PREVENT IT

The Plaintiff, People of the Philippines, filed a case against the Accused, Chow Master Corporation (CMC), represented by its officers Rebecca Ann K. Sy, Jojo Candelario, and Alice Lao Yap, for violation of Section 255 of the Tax Code. The case arose from the Corporation’s alleged failure to pay deficiency income tax for the taxable year 2011, despite having received due notice and demand from the BIR, and without filing a formal protest. The Plaintiff argued that Sy and Yap, as CMC’s Chairman/CEO and CFO, were obliged under the Tax Code to ensure payment of taxes but willfully failed to settle CMC’s deficiency taxes despite repeated demands. The Accused countered that the Prosecution failed to prove they were the corporate officers responsible to submit the required documents, and that there was no evidence showing they were properly notified of any tax obligations. They further argued that it was not established that they failed to pay the required taxes or file the returns, nor was it proven that any such failure, assuming they were liable, was willful. In ruling, the Court held that the Prosecution failed to prove beyond reasonable doubt that CMC, along with its officers Sy and Yap, violated Section 255 of the Tax Code. The Court found that the essential elements of the offense were not established due to insufficient proof that CMC was properly notified of its tax assessments, or that Sy and Yap were the responsible officers who willfully failed to pay. The Court emphasized that mere designation as corporate officers does not automatically create liability without evidence of active participation or authority to prevent the wrongful act. Given these deficiencies, the Court acquitted the Accused. On the civil aspect of the case, the Court clarified that acquittal in the criminal case does not erase CMC’s tax liability under the law. However, since there was no proof that the tax assessments were properly served on CMC or its authorized representatives, no civil liability could be imposed in this case. Consequently, the Accused CMC, Rebecca Ann K. Sy, and Alice Lao Yap, are hereby ACQUITTED due to the Prosecution’s failure to establish their guilt beyond reasonable doubt, and the respective cash bail bonds of the Accused are likewise CANCELLED and ordered RELEASED to them upon presentation of proper documents. [PEOPLE OF THE PHILIPPINES VS CHOW MASTER CORPORATION/REBECCA ANN K. SY, JOJO CANDELARIO & ALICE LAO TAP, CTA CRIMINAL CASE NO. O-809, AUGUST 14, 2025]

[DST IS A TAX ON THE TRANSACTION, AS REPRESENTED BY THE DOCUMENT & NOT ON THE DOCUMENT ITSELF] [THE SITUS FOR DST IMPOSITION ON DEBT INSTRUMENTS IS DETERMINED NOT BY THE PLACE OF PERFECTION OF THE CONTRACT, BUT BY THE LOCATION OR USE OF THE OBJECT OF THE CONTRACT] [THE ONLY INSTANCE WHERE DST MAY BE IMPOSED ON A DEBT INSTRUMENT ISSUED BY AN NRFC IS WHEN THE OBJECT THEREOF IS LOCATED OR USED IN THE PHILIPPINES]

Both the Commissioner of Internal Revenue (CIR) and Bloomberry Resorts Corporation filed a Consolidated Petitions for Review seeking the reversal of the Decision and Resolution of the Special Second Division affirming the assessment for Documentary Stamp Tax (DST) against Bloomberry and cancelling the compromise penalty related thereto. The CIR argues that the Court in Division erred in cancelling the compromise penalty, asserting that its imposition is warranted since Bloomberry failed to pay the deficiency DST. Citing CIR v. Filinvest Development Corporation, the CIR maintained that compromise penalties, though termed as such in the Tax Code, essentially function as fines for violations of tax laws. Meanwhile, Bloomberry contends that its loans or advances to Non-Resident Foreign Corporation (NRFC) affiliates are not subject to DST since the obligations and rights arose outside the Philippines and did not involve property situated in the country. It claims that the Court in Division erred in using citizenship or residency to determine tax situs, asserting instead that both payment obligations and collection rights originate abroad. Bloomberry also asserts that the alternative thresholds under Sections 173 and 179 of the Tax Code, pertaining to the location of the property or the object of the contract do not apply, since a loan contract is a real contract, perfected upon delivery of the loaned amount. Moreover, since the object of the contract is not located in the Philippines, the loans or advances are not considered “debt instruments” as contemplated under Section 179 of the Tax Code. In ruling, the Court rejected the CIR’s position, affirming that compromise penalties cannot be unilaterally imposed by the CIR without the concurrence of the other party and apply only in cases involving criminal tax liabilities, which is not present in this case. On the core issue of DST, the Court found the assailed Decision untenable, ruling that Bloomberry’s loans to its NRFC affiliates are not subject to DST. It clarified that DST is a tax on transactions rather than on documents, and that the situs rules under Sections 173 and 179 of the Tax Code are complete and distinct from income tax rules. The Court emphasized that an obligation arises from Philippine sources only if the loan contract is perfected in the Philippines, meaning the loan proceeds are delivered or used within the country. Since the loan proceeds were used in Korea, the contracts were considered perfected abroad and outside Philippine jurisdiction. The Court further held that the shifting rule in Section 173 does not create DST liability when none exists. With no evidence that the proceeds were delivered in the Philippines, and with testimonial proof confirming their use abroad, the Court ruled the loans were not subject to DST. Any doubt must be resolved in favor of the taxpayer, leading to the reversal of the Assailed Decision. Consequently, the CIR’s Petition was DENIED, while Bloomberry’s Petition was GRANTED. The Assailed Decision and Resolution were REVERSED and SET ASIDE. [COMMISSIONER OF INTERNAL REVENUE VS. BLOOMBERRY RESORTS CORPORATION, CTA EN BANC CASE NO. 2933, BLOOMBERRY RESORTS CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA EN BANC CASE NO. 2935, AUGUST 6, 2025]