SR Metals, Inc. v. Commissioner of Internal Revenue

EN BANC [C.T.A. EB CASE NO. 1922. January 14, 2020.] (C.T.A. Case No. 9256) SR METALS, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION RINGPIS-LIBAN , J p : This resolves Respondent's "Motion for Reconsideration (Re: Decision dated 24 September 2019)" 1 ("Motion for Reconsideration") filed on October 11, 2019, with Petitioner's "Comment/Opposition [to Respondent's Motion for Reconsideration (Re: Decision dated 24 September 2019) dated 9 October 2019]" 2 seeking to set aside the Decision 3 promulgated on September 24, 2019 ("Assailed Decision"),the dispositive portion of which reads: HEITAD " WHEREFORE ,premises considered, the Petition for Review filed with the Court En Banc on September 14, 2018 is GRANTED .Accordingly, the May 15, 2018 Decision and August 08, 2018 Resolution in CTA Case No. 9256 is REVERSED and SET ASIDE .The deficiency income tax assessment issued by Respondent against Petitioner for taxable year 2011 is CANCELLED . SO ORDERED ." 4 In his motion for reconsideration, Respondent raises the following arguments: 1) The Court erred in invalidating the deficiency income tax assessment against Petitioner for taxable year 2011; and 2) The Decision of the Supreme Court dated October 03, 2018 in Board of Investments v. SR Metals, Inc. 5 ("BOI v. SR Metals") cannot be applied retroactively. On the other hand, Petitioner, in its Comment/Opposition, asserts that the grounds relied upon by Respondent in his motion deserve scant consideration, for the following reasons: 1) The issuance of a Certificate of Entitlement ("COE") required by Respondent, rests upon the validity of Petitioner's Income Tax Holiday ("ITH") incentive. Such withdrawal of Petitioner's ITH incentive was already decided by the Supreme Court in favor of Petitioner in BOI v. SR Metals ;and 2) The Court properly took judicial notice of BOI v. SR Metals in rendering the Assailed Decision. We resolve to deny the motion for lack of merit. Review of Respondent's arguments shows that the same were sufficiently addressed and passed upon in the Assailed Decision. At any rate, the Court shall reiterate the pertinent portions of said Decision in order to prove its point. Respondent insists that Petitioner cannot avail the ITH incentive under the Omnibus Investments Code of 1987. 6 A COE is a formal requirement for entitlement to such incentive. Thus, even if Petitioner may be successful in ultimately having the revocation by the Board of Investments ("BOI") of its incentive be reversed, still, as of the time it filed its Income Tax Return for taxable year 2011, it is not in possession of a COE. Moreover, Respondent argues that the subsequent Decision in BOI v. SR Metals cannot alter the established fact that when it issued the subject assessment, Petitioner had no COE in order for it to be entitled to ITH incentive for taxable year 2011. Respondent is mistaken. The Supreme Court in BOI v. SR Metals declared unequivocally that the withdrawal by the BOI of Petitioner's ITH incentive was baseless and unwarranted. Conversely, Petitioner is entitled to the ITH incentive as stated in its Certificate of Registration No. 2008-113, 7 although it is not in possession of a COE which was required to be submitted for taxable year 2011. ATICcS This Court cannot ignore that the subject matter in both BOI v. SR Metals and the instant case pertain to the very same Certificate of Registration from which the ITH incentive granted to Petitioner is based. We cannot also ignore that the withdrawal of the said incentive by the BOI was without basis. It is true that Respondent cannot be faulted for pursuing his duty under the National Internal Revenue Code (NIRC) of 1997, as amended, and assessing Petitioner's taxable income at the regular rate of thirty percent (30%) pursuant to Section 27 (A) of the Code since the latter failed to submit a COE which would prove its entitlement to the ITH Incentive. And yet, neither can Petitioner be faulted for failing to provide the necessary COE as it was erroneously withdrawn by the BOI. The ruling however in BOI v. SR Metals is crystal clear. Petitioner was entitled to the ITH incentive during the period of the subject assessment. It bears stressing that decisions of the Supreme Court constitute binding precedents, forming part of the Philippine legal system. 8 Decisions of the Supreme Court have the force and effect of law and are binding upon the courts. 9 In this regard, We have no other option but to abide by the ruling of the Supreme Court in BOI v. SR Metals . WHEREFORE ,finding no cogent reason to reverse the Assailed Decision, Respondent's "Motion for Reconsideration (Re: Decision dated 24 September 2019)" is DENIED for lack of merit. SO ORDERED. (SGD.) MA. BELEN M. RINGPIS-LIBAN Associate Justice Roman G. del Rosario, P.J.,Juanito C. Castaeda, Jr.,Erlinda P. Uy, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Catherine T. Manahan, Jean Marie A. Bacorro-Villena and Maria Rowena Modesto-San Pedro, JJ. ,concur. Footnotes 1. Rollo ,pp. 203-209. 2. Id. ,pp. 217-227. 3. Id. ,pp. 183-194. 4. Id. ,p. 193. 5. G.R. No. 219927, October 03, 2018. 6. Executive Order No. 226, July 16, 1987. 7. Docket, p. 347. 8. Visayas Geothermal Power Company v. Commissioner of Internal Revenue ,G.R. No. 197525, June 4, 2014. 9. Commissioner of Internal Revenue v. Philippine Long Distance Telephone Company ,G.R. No. 140230, December 15, 2005.