SC affirms Nippon Express tax win

THE Supreme Court (SC) has upheld an order suspending the collection of P81.35 million in alleged deficiency taxes from Nippon Express Philippines Corp., ruling that the Court of Tax Appeals (CTA) properly suspended collection after the tax agency tried to enforce the assessment before the payment deadline had lapsed.

In a nine-page decision promulgated on April 16 and penned by Associate Justice Henri Jean Paul B. Inting, the SC Third Division dismissed a petition filed by the Commissioner of Internal Revenue (CIR) assailing the CTA Third Division’s resolutions suspending collection of the alleged tax deficiencies for calendar year 2016.

The case stems from the Bureau of Internal Revenue’s (BIR) assessment of alleged deficiency income tax, value-added tax, withholding taxes, documentary stamp tax, and improperly accumulated earnings tax totaling P81.35 million.

After Nippon Express protested the assessment, the CIR issued a Final Decision on Disputed Assessment dated Oct. 2, 2023, directing the company to pay the alleged liabilities on or before Dec. 31, 2023.

However, the BIR issued a warrant of distraint and levy on Oct. 15, 2023, and a warrant of garnishment on Oct. 18, 2023, prompting the company to seek relief before the CTA.

The tax court granted the company’s application to suspend collection, finding that the BIR’s collection measures were premature because the payment period provided in the final assessment had not yet lapsed. It also lifted the warrants and dispensed with the posting of a bond.

Affirming the CTA, the Supreme Court held that the tax court properly suspended collection and waived the bond requirement after finding that the BIR’s collection measures were not sanctioned by law.

The Court likewise found that the CIR’s petition suffered from a procedural defect because it was filed without representation or authority from the Office of the Solicitor General (OSG), which is mandated to represent the government and its officials before the Supreme Court.

It reiterated that while the OSG may deputize BIR lawyers in certain proceedings, the CIR cannot directly file petitions before the Supreme Court without the OSG’s approval and participation as lead counsel.

The Court added that disagreements over the CTA’s interpretation of tax laws, absent grave abuse of discretion, are not proper grounds for certiorari or prohibition. — Mark Joseph M. Sanchez