.

3Republic of tbe tlbilippines

~upreme QCourt
:fflanila

FIRST DIVISION

NOTICE

Sirs/Mesdames:

Please take notice that the Court, First Division, issued a Resolution
dated March 13, 2023 which reads as follows:

"G.R. No. 241337 (Commissioner of Internal Revenue vs. Deutsche

Knowledge Services Pte. Ltd. 1); and G.R. Nos. 241344-45 (Deutsche
Knowledge Services Pte. Ltd. 2 vs. Commissioner of Internal Revenue) -
Before the Court are two consolidated Petitions for Review on Certiorari3
under Rule 45, Rules of Court, seeking to reverse and set aside the Decision4
dated 22 March 2018 and the Resolution5 dated 8 August 2018 of the Court of
Tax Appeals (CTA) En Banc in CTA EB Nos. 1549 and 1552, which
dismissed the separate Petitions for Review filed by the Commissioner of
Internal Revenue (CIR) and by Deutsche Knowledge Services Pte. Ltd.
(DKS) of the Amended Decision6 dated 26 October 2016 of the CTA m
Division.

DKS is the Philippine branch of a multinational company organized

and existing under and by virtue of the laws of Singapore, with registered
office address at One Raffles Quay, Number 17-10 South Tower, Singapore.
It is licensed to do business as a Regional Operating Headquarters (ROHQ) in

1 Also refen-ed to as " Deutsche Knowledge Services, Pte. Ltd." in some parts of the rollos.
2 Also refen-ed to as "Deutsche Knowledge Services, Pte. Ltd." in some parts of the rollos.
3 Rollo (G. R. No. 24 1337), pp. 15-38; rollo (G.R. Nos. 241344-45), pp. 14-38.
4 Rollo (G .R. No. 24 1337), pp. 45-58; penned by Associate Justice Catherine T. Manahan, and concun-ed in

by Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova,
Esperanza R. Fabon- Yictorino, and Cielito N . Mindaro-Grulla. Presiding Justice Roman G. Del Rosario
penned a ConcuITing and Dissenting Opinion (id. at 59-63), and Associate Justice Ma. Belen M. Ringpis-
Liban, a Dissenting Opinion (id. at 64-68).
5 Id. at 70-76; penned by Associate Justice Catherin e T. Manahan, with the concuITence of Associate Justices

Juanito C. Castaneda, Jr. , Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-
Victorino, and C ie lito N. Mindaro-Grulla. Presiding Justice Roman G. Del Rosario penned a Concun-ing and
Dissenting Opinion (id. at 59-63), and Associate Justice Ma. Belen M. Ringpis-Liban, a Dissenting Opinion
(id. at 64-68).
6 Id. at 229-248; p enned by Assoc iate Justice C ie lito N. Mindaro-Grulla and concun-ed in by Presiding

Justice Roman G. Del Rosario; Associate Justice Erlinda P. Uy (on leave). ·

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101
Resolution 2 G.R. Nos. 241337 & 241344-45
March 13, 2023

the Philippines pursuant to Executive Order No. 2267 , as amended by

Republic Act No. 87568 •

On 25 April 2005, DKS was registered as a ROHQ with the Securities

and Exchange Commission (SEC). As a ROHQ, DKS is engaged in general
administration and planning, business planning and coordination,
sourcing/procurement of raw materials and components, corporate finance
advisory services, marketing control and sales promotion, training and
personnel management, logistic services, research and development services,
product development, technical support and maintenance, data processing,
and communication and business development. 9

On 22 April 2009, DKS filed its quarterly Value-Added Tax (VAT)

Return (BIR Fonn No. 2550-Q) with the Bureau of Internal Revenue (BIR)
for the first quarter of the calendar year ( CY) 2009. 10

On 28 October 2010, DKS filed its Application for Tax

Credits/Refunds (BIR Form No. 1914) and administrative claim for refund or
issuance of tax credit certificate for its alleged unutilized input VAT
attributable to its zero-rated sale of services to its foreign-based clients for the
first quarter of CY 2009 in the total amount of PhP 58,385,248.41. 11

Subsequently, due to the alleged inaction of the CIR on DKS'

administrative claim for refund, DKS filed a Petition for Review before the
CTA on 25 March 2011 , docketed as CTA Case No. 8243. The CIR filed its
Answer 12 dated 29 April 2011. 13

On 4 January 2016, the CTA First Division rendered a Decision, 14 the

dispositive portion of which reads:

WHEREFORE, premises considered, the present Petition for

Review is hereby PARTIALLY GRANTED. Accordingly,
respondent is hereby ORDERED TO REFUND OR TO ISSUE A
TAX CREDIT CERTIFICATE in favor of petitioner in the amount
of P2,178,213.10 representing the latter' s unutilized input VAT
attributable to its zero-rated sales for the first quarter of 2009.

7 Entitled " THE O MN IBUS INVESTMENTS CODE OF 1987 ." Approved on 16 Ju ly 1987.
8 Entitled " AN ACT PROVIDING FOR TH E T ERMS, CON DITIONS AND LICENS ING
REQUIREMENT S OF REGIONAL OR A REA HEADQUARTERS, REGIONAL O PERA TING
HEA DQUA RTERS, AND REG IONAL WAREHOUSES OF MULT INATIONAL CO MPANIES,
AMEN DING FOR T HE PURPOSE C ERTAIN PROVISIONS O F EXECUTIVE ORDER NO. 226,
OTH ERWISE KNOWN AS T HE OMNIBUS INVESTMENTS CODE O F 1987." Approved on 23
November 1999.
9 Rollo (G.R. No. 24 1337), p . 17.
10
Id. at 18.
II Id.
12 Id. at 136-1 37.
13
Id. at 48 .
14 Id. at 146- 189; penned by Assoc iate Just ice Cie lito N. Mindaro-Grulla and concurred in by Presiding

Justice Roman G. Del Rosario and A ssoc iate Justice Erlinda P. Uy.

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101
Resolution 3 G.R. Nos. 241337 & 241344-45
March 13, 2023

so ORDERED. 15
Both the CIR and DKS filed a Motion for Partial Reconsideration, with
the DKS likewise moving "to re-open trial." 16

On 26 October 2016, the CTA First Division rendered an Amended

Decision, 17 the dispositive portion of which states:

WHEREFORE, premises considered, petitioner's Motion for

Partial Reconsideration (Re: Decision dated January 4, 2016) is
PARTIALLY GRANTED. Accordingly, respondent is ORDERED
to REFUND OR ISSUE ATAX CREDIT CERTIFICATE in favor
of petitioner the adjusted amount of PS,581,215.62 representing the
latter's unutilized input VAT attributable to its zero-rated receipts for
the first quarter of 2009.

On the other hand, petitioner's Motion to Re-Open Trial and

respondent' s Motion for Partial Reconsideration are DENIED for
lack of merit.

SO ORDERED. 18

The aforesaid Amended Decision prompted the CIR to file a Petition

for Review dated 25 November 2016 before the CTA En Banc, docketed as
CTA EB No. 1549. Likewise, DKS filed a Petition for Review dated 25
November 2016 before the CTA En Banc, docketed as CTA EB No. 1552. 19

On 22 March 2018, the CTA En Banc rendered the assailed Decision20

on the respective petitions of the CIR and DKS, the dispositive portion of
which states:

WHEREFORE, the consolidated Petitions for Review filed by

Deutsche Knowledge Services, Pte. Ltd. and the Commissioner of
Internal Revenue are hereby DISMISSED.

SO ORDERED. 21

The CTA En Banc noted that both parties directly filed their petitions
for review with the CTA En Banc to challenge the Amended Decision dated
26 October 2016, without filing their respective motions for reconsideration
or new trial. The CTA En Banc declared that for it to take cognizance of an
appeal via a petition for review, a motion for reconsideration or new trial

15 Id. at 188.
16
Id. at 49.
17 Id. at 229-248; penned by Associate Justice Cielito N. Mindaro-Gru lla, with the concurrence of Pres iding

Justice Roman G. Del Rosario and Associate Justice Erl inda P. Uy.
18
Id. at 247-248.
19
Id. at 23.
20 Id. at 45-58.
21
Id. at 57.

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101
Resolution 4 G.R. Nos. 241337 & 241344-45
March 13, 2023

must first be filed with the CTA Division that issued the questioned amended
decision. 22

With this, both parties filed their respective Motions for

Reconsideration.23 However, both motions were denied by the CTA En Banc
in a Resolution24 dated 8 August 2018, the dispositive portion of which reads:

WHEREFORE, premises considered, petitioner Deutsche' s

Motion for Reconsideration filed on April 17, 2018 and petitioner
CIR' s Motion for Reconsideration filed April 17, 20 I 8 are hereby
DENIED for lack of merit. Accordingly, the assailed decision
promulgated on March 22, 2018 is AFFIRMED and UPHELD.

SO ORDERED. 25

Hence, the present Petition for Review on Certiorari26 filed by the CIR
on 28 September 2018 (G.R. No. 241337) and Petition for Review on
Certiorari2 7 filed by DKS on 1 October 2018 (G.R. Nos. 241344-45).

Essentially, both petitions seek the reversal of the Decision dated 22

March 2018 and Resolution dated 8 August 2018 of the CTA En Banc.
Likewise, both petitions ask that a decision be rendered by this Court ordering
the CTA En Banc to give due course to the CIR' s Petition for Review
docketed as CTA EB No. 1549 and to DKS ' Petition for Review docketed as
CTA EB No . 1552.28

On the same note, the respective comments of the CIR and DKS pray
for the reversal of the assailed CTA En Banc Decision and Resolution, and
that the CTA En Banc be ordered to give due course to their respective
petitions. 29

The CIR and DKS contend that the ruling in Asiatrust Development
Bank, Inc. v. Commissioner of Internal Revenue30 is not applicable in the
present case. Moreover, the filing of a motion for reconsideration of the CTA
First Division's Amended Decision dated 26 October 2016 would be
tantamount to the filing of a second motion for reconsideration which is a
prohibited pleading.

The instant Petitions lack merit.

22 Id. at 57.
23
Id. at 24.
24 Id. at 70-76.
25 Id. at 75.
26 Id. at 15-34.
27
Rollo (G.R. Nos. 241 344-45), pp. 14-36.
28 Rollo (G.R. No. 241 337), pp. 15-38; rollo (G.R. Nos. 241 344-45), pp. 14-38.
29 Rollo (G.R. No. 241337), pp. 346-363; rollo (G.R. Nos. 241 344-45), pp. 92- 105.
30
809 Phil. 152(201 7).

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Resolution 5 G.R. Nos. 241337 & 241344-45
March 13, 2023

Rule 8, Section 1, Revised Rules of the Court of Tax Appeals

(RRCTA), provides:

RULES
Procedure in Civil Cases

SECTION 1. Review of Cases in the Court en bane. - In cases

falling under the exclusive appellate jurisdiction of the Court en bane,
the petition for review of a decision or resolution of the Court in
Division must be preceded by the filing of a timely motion for
reconsideration or new trial with the Division.

In the present case, the CTA First Division promulgated a Decision in

CTA Case No. 8243 on 4 January 2016, partially granting the petition of
DKS. The Decision granted the claim for refund of DKS' unutilized/excess
input VAT for the 1st quarter of CY 2009 in the amount of PhP 2,178,213.10.
DKS then filed a Motion for Partial Reconsideration with Motion to Re-Open
Trial (re: Decision dated January 4, 2016), while CIR also filed a Motion for
Partial Reconsideration.

On 26 October 2016, the CTA First Division promulgated an Amended

Decision partially granting DKS' Motion for Partial Reconsideration by
increasing the amount of refund to Php 5,581,215.62 but denying its Motion
to Re-Open Trial. In the same Amended Decision, the CTA First Division
denied the CIR's Motion for Partial Reconsideration. Subsequently, DKS and
the CIR filed their respective Petitions for Review before the CTA En Banc.

The issue is whether the CIR and DKS sufficiently complied with the
requirement of filing a motion for reconsideration with the CTA First
Division prior to the filing of a petition for review before the CTA En Banc.

They did not.

In Asiatrust, 31 the Court ruled that a motion for reconsideration of an

amended decision of the CTA in Division is a condition precedent to an
appeal to the CT A En Banc which is based on the finding that the CIR failed
to file a motion for reconsideration of the CTA in Division's amended
decision. Likewise, in CE Luzon Geothermal Power Company, Inc. v.
Commissioner of Internal Revenue, 32 the Court pronounced that an amended
decision is a different decision, and thus, is a proper subject of a motion for
reconsideration anew.

In Asiatrust and CE Luzon, the amended decision of the CTA in

Division was entirely new. The amended decision was based on a re-
evaluation of the parties' allegations or reconsideration of new and/or existing

31
Id.
32
767 Phil. 782-791 (201 5).

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101
Resolution 6 G.R. Nos. 241337 & 241344-45
March 13, 2023

evidence that were not considered and/or previously rejected in the original
decision. In Asiatrust, the case was set for hearing, and the Court allowed
Asiatrust Bank to submit additional evidence, which became the foundation
of the amended decision. In CE Luzon, the Court re-examined the pieces of
documentary evidence supporting CELG's claim for refund of unutilized
input VAT and found it meritorious, thereby increasing the amount of refund
granted to CELG for refund. In both cases, the Court held that the amended
decisions were proper subjects of motions for reconsideration. 33

In this case, the Amended Decision pronounced that DKS has, with
respect to the refundable amount of PhP 5,581 ,215.62, overcome the burden
of showing strict compliance with the conditions for the grant of a tax refund.
Notably, in the Amended Decision, the CTA in Division re-evaluated the
pieces of documentary evidence supporting DKS ' claim for a tax refund.
Similar to the cases cited above, the Amended Decision is the result of a
modified perspective of the court on the same set of evidence which is a
proper subject of a motion for reconsideration. Since the Amended Decision
is considered a new decision, the filing of another motion for reconsideration
will not be tantamount to the filing of a second motion for reconsideration.

The failure of the CIR and DKS to move for a reconsideration or new
trial of the Amended Decision dated 26 October 2016 of the CTA in Division
is a ground for the dismissal of their respective Petitions for Review before
the CTA En Banc. With this procedural lapse, the CTA En Banc is correct in
not taking cognizance of the Petitions for Review filed by both parties.

The rules are clear. Before the CTA En Banc can take cognizance of
the petition for review concerning a case falling under its exclusive appellate
jurisdiction, the litigant must sufficiently show that it sought prior
reconsideration or moved for a new trial with the concerned CTA division.
Procedural rules are not to be trifled with or be excused simply because non-
compliance therewith may have prejudiced a party's substantive rights. Rules
are meant to be followed.34 They may be relaxed only for very exigent and
persuasive reasons which are not present in this case.

WHEREFORE, the instant consolidated Petitions are DENIED. The

Decision dated 22 March 2018 and Resolution dated 8 August 2018 of the
Court of Tax Appeals En Banc in CTA EB Nos. 1549 and 1552 are
AFFIRMED.

33 Commissioner of Internal Revenue v. Commission on Elections, G.R. Nos. 244 I 55 & 247508, I I May
2021 .
34 Commissioner of Customs v. Marina Sales, Inc., 650 Phil. 143 (20 I 0).

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101
Resolution 7 G.R. Nos. 241337 & 241344-45
March 13, 2023

SO ORDERED."

By authority of the Court:

LIBRA
Division Clerk of Com~

by:

MARIA TERESA B. SIBULO

Deputy Division Clerk of Court
101
APR 11 2023
SALVADOR LLANILLO & BERNARDO Court of Tax Appeals
LAW OFFICES National Government Center
Counsel for Deutsche Knowledge Services, Pte., Ltd. Diliman, 1101 Quezon City
8'h Floor, Tower One & Exchange Plaza (CTA EB Nos. 1549 & 1552)
Ayala Triangle, Ayala A venue (CTA Case No. 8243)
1226 Makati City
The Solicitor General
134 Amorsolo Street, Legaspi Village
1229 Makati City

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