THE Commission on Audit has affirmed the 2014 ruling of the COA-National Government Sector (NGS) Cluster 2 granting the appeal of former top officials of the Bureau of Customs (BOC), resulting in the lifting of 94 notices of charge (NCs) on the issuance of P846.26 million worth of tax credits.
In a four-page decision released yesterday, the COA Commission Proper held that BOC Commissioners were duly authorized by the Bureau of Internal Revenue (BIR) to grant value-added tax (VAT) refunds through the issuance of tax credit certificates (TCCs), upholding the position of the COSA-National Government Sector (NGS) Cluster 2 to lift the notices of charge.
A notice of charge is issued by state auditors against officials of an agency for non-collection, under collection, non-remittance, or under remittance of collections.
COA Chairperson Gamaliel A. Cordoba and Commissioners Roland Café Pondoc and Mario G. Lipana signed the decision.
The 94 NCs against the BOC were issued by the audit team on May 18, 2012 for Tax Refunds Payable for years 2001 to 2008 on the ground that the TCCs for VAT refund issued by the BOC constituted “illegal drawbacks.”
Invoking Section 106 of the Tariffs and Customs Code of the Philippines, the audit team and the supervising auditor said the authority of the BOC to refund duties, drawbacks, or tax credits was limited only to three items: fuel imports for vessels engaged in trade with foreign countries, petroleum oil and crude related to power generation, and articles made from imported materials used in production of export goods.
They contended that the refund of internal revenue tax such as VAT through TCCs is under the exclusive jurisdiction of the BIR.
Former BOC Commissioners Ruffy Biazon and Napoleon Morales, together with former deputy commissioners Reynaldo Umali and Felipe Bartolome, appealed before the COA-NGS Cluster 2 arguing that both Sections 106 and 1708 of the Tariffs and Customs Code authorized the BOC Commissioner to grant a refund through tax credit of internal revenue taxes.
They likewise pointed out that the issuance of the TCCs underwent evaluation by the Department of Finance (DOF) Tax Revenue Group and had the approval of the BIR.
Moreover, they cited the BOC-BIR Agreement dated April 8, 1988 designating the commissioners of Customs to act as the duly authorized representatives of the BIR Commissioner.
In affirming that the lifting of the 94 NCs was valid, the COA Commission Proper held that the question of whether the BOC Commissioner has sufficient authority to issue the TCCs on VAT had been settled in COA Decision No. 2014-124 which cited issuances from former BIR Commissioners Bienvenido Tan and Jose U. Ong confirming that the BOC Commissioner can approve the refund and that this authority extends to TCCs.
“Wherefore, premises considered, COA-NGS Decision No. 2014-04 dated July 15, 2014 is hereby approved. Accordingly, the following 94 Notices of Charge, all dated May 18, 2012 …in the total amount of P846,264,032.57, are hereby lifted,” the COA CP declared
