MANILA – The Court of Tax Appeals (CTA) has upheld its earlier ruling in favor of a telecommunications firm, disregarding the order of the Bureau of Internal Revenue (BIR) to pay PHP1.9 million in taxes due from the sale of a real estate property.
In a 12-page decision written by Associate Justice Catherine Manahon, the CTA en banc affirmed its earlier decision on Sept. 11, 2019 in favor of Philippine Communications Satellite Corporation (Philcomsat), a subsidiary of the Philippine Overseas Telecommunications Corporation.
The CTA stood by its earlier decision that the assessment by revenue officials for value-added tax (VAT) deficiency in 2007 over a sale of real property against Philcomsat was already beyond the three-year prescriptive period.
The tribunal also turned down the revenue officials' argument that a 10-year prescriptive period, not three years, should apply.
"There was no failure or omission to file a return which would warrant the application of the 10-year prescriptive period," the CTA said.
On March 12, 2012, Philcomsat received from the BIR a Final Decision on Disputed Assessment, ordering it to pay P7.336 million in deficient VAT assessment.
Earlier, in 2007, PCSC sold its property used as a transport maintenance center in Mandaluyong City that had served as a garage and repair shop for its vehicles to Fortune Enrichment Resources Holdings and Development Corporation.
On the same year, a One-Time Tax team of the BIR issued a computation of the real property as ordinary asset and said the amount of taxes due was PHP1.5 million for expanded withholding tax and PHP391,545 for documentary stamp taxes.
A tax clearance certificate was issued by the BIR confirming that all internal revenue taxes due for the transfer of the property have already been settled.
Later, however, the company was sent a notice of deficiency VAT assessment in the amount of PHP6.5 million, with PHP4.27 million as disallowance of excess input tax.
When the case reached the CTA's Second Division, the court ruled that the assessment for deficiency "had already prescribed".
In affirming the CTA Second Division, the decision said counting three years from July 24, 2007 when Philcomsat filed its VAT return for the second quarter of 2007, revenue officials had until July 25, 2010 within which to assess deficiency.
"Unfortunately, the subject assessment was received only on July 1, 2011, clearly beyond the three year prescriptive period," the court said.
Philcomsat is involved in global communications and Internet protocol technologies and applications and maintains licenses in Very Small Aperture Terminals, value-added services, International Satellite Carrier, Voice Over Internet Protocol, and International Maritime Satellite. (PNA)
