DE LEON 3B 16-17

1. CIR VS MAGSAYSAY LINES INC., GR NO. 146984, Held:

JULY 28, 2006
No. The SC held that Section 99 of the Tax Code is
Facts: sufficient reason for upholding the refund of VAT payments,
and the subsequent disquisitions by the lower courts on the
The National Devt Comp (NDC) sold its shares in the applicability of Section 100 of the Tax Code and Section 4
National Marine Corp and 5 of its vessels to Magsaysay of R.R. No. 5-87 are ultimately irrelevant.
Lines for 168 million. One of the stipulations in the contract
provided that the VAT, if any, shall be for the account of the VAT is ultimately a tax on consumption, even though it is
PURCHASER. The private respondents requested for a assessed on many levels of transactions on the basis of a
ruling on the matter. fixed percentage. It is the end user of consumer goods or
services which ultimately shoulders the tax, as the liability
The BIR issued VAT Ruling No. 568-88 which held that the therefrom is passed on to the end users by the providers of
sale of the vessels was subject to the 10% VAT because these goods or services who in turn may credit their own
NDC was a VAT-registered enterprise and thus its VAT liability (or input VAT) from the VAT payments they
transactions incident to its normal VAT registered activity of receive from the final consumer (or output VAT). The final
leasing out personal property including sale of its own purchase by the end consumer represents the final link in a
assets that are movable, tangible objects which are production chain that itself involves several transactions
appropriable or transferable are subject to the 10% VAT. It and several acts of consumption. The VAT system assures
also held that the sale of the vessels were among those fiscal adequacy through the collection of taxes on every
transactions deemed sale, as enumerated in Section 4 of level of consumption, yet assuages the manufacturers or
R.R. No. 5-87. Pursuant to said ruling, the NDC drew on the providers of goods and services by enabling them to pass
Letter of Credit filed by the private respondents as a bond, on their respective VAT liabilities to the next link of the chain
to pay for the VAT. until finally the end consumer shoulders the entire tax
liability.
The private respondents appealed to the CTA which
decided that the sale of the vessels was an isolated Yet, VAT is not a singular-minded tax on every transactional
transaction, not done in the ordinary course of NDCs level. Its assessment bears direct relevance to the
business, and was thus not subject to VAT, which under taxpayers role or link in the production chain. Hence, as
Section 99 of the Tax Code, was applied only to sales in the affirmed by Section 99 of the Tax Code and its subsequent
course of trade or business. The CTA further held that the incarnations, the tax is levied only on the sale, barter or
sale of the vessels could not be deemed sale, and thus exchange of goods or services by persons who engage in
subject to VAT, as the transaction did not fall under the such activities, in the course of trade or business.
enumeration of transactions deemed sale as listed either in
Section 100(b) of the Tax Code, or Section 4 of R.R. No. 5- These transactions outside the course of trade or business
87. may invariably contribute to the production chain, but they
do so only as a matter of accident or incident. As the sales
The CA reversed CTA ruling. It held that the sale though an of goods or services do not occur within the course of trade
isolated transaction, not made in the course of NDCs or business, the providers of such goods or services would
regular trade or business, fell within the classification of hardly, if at all, have the opportunity to appropriately credit
those deemed sale under R.R. No. 5-87, since the sale of any VAT liability as against their own accumulated VAT
the vessels together with the NMC shares brought about a collections since the accumulation of output VAT arises in
change of ownership in NMC. But upon MR, it reversed the first place only through the ordinary course of trade or
itself. It held that the change of ownership of business as business.
contemplated in R.R. No. 5-87 must be a consequence of
the retirement from or cessation of business by the owner Accordingly, the Court ruled that given the undisputed
of the goods, as provided for in Section 100 of the Tax finding that the transaction in question was not made in the
Code. It agreed with the CTA that the classification of course of trade or business of the seller, NDC that is, the
transactions deemed sale was a classification statute, and sale is not subject to VAT pursuant to Section 99 of the Tax
not an exemption statute, thus warranting the resolution of Code, no matter how the said sale may hew to those
any doubt in favor of the taxpayer. transactions deemed sale as defined under Section 100.
Petition is denied.
Issue: Is the sale by the NDC of 5 of its vessels to the private
respondents subject to VAT under the NIRC of 1986?
 DE LEON 3B 16-17

2. MINDANAO II GEOTHERMAL PARTNERSHIP, vs CIR business as it was involuntary and made pursuant to the
G.R. No. 193301 March 11, 2013 Government’s policy for privatization.

Facts: Mindanao II’s sale of the Nissan Patrol is said to be an

isolated transaction. However, it does not follow that an
Mindanao II is a VAT registered partnership. It alleged that isolated transaction cannot be an incidental transaction for
its sale of generated power and delivery of electric capacity purposes of VAT liability. Indeed, a reading of Section 105
and energy to NPC for and in behalf of PNOC-EDC is its of the 1997 Tax Code would show that a transaction "in the
only revenue-generating activity which is in the ambit of course of trade or business" includes "transactions
VAT zero-rated sales under the EPIRA Law. In the course incidental thereto."
of its operation, Mindanao II made domestic purchases of
goods and services, including the sale of its Nissan Patrol, Mindanao II’s business is to convert the steam supplied to
and accumulated creditable input taxes. It filed an it by PNOC-EDC into electricity and to deliver the electricity
application for refund and/or issuance of tax credit to NPC. In the course of its business, Mindanao II bought
certificate with the BIR. Because of the CIR's inaction, it and eventually sold a Nissan Patrol. Prior to the sale, the
filed different petitions with the CTA Division. Nissan Patrol was part of Mindanao II’s property, plant, and
equipment. Therefore, the sale of the Nissan Patrol is an
The CTA Division ruled that Mindanao II satisfied the twin incidental transaction made in the course of Mindanao II’s
requirements of a VAT zero-rating under EPIRA: (1) it is a business which should be liable for VAT.
generation company, and (2) it derived sales from power
generation. It also stated that Mindanao II complied with the
5 requirements to be entitled to a refund: 3. TOLENTINO VS SECRETARY OF FINANCE
G.R. NO. 115455 OCTOBER 30, 1995
1. There must be zero-rated or effectively zero-rated sales;
2. That input taxes were incurred or paid; Facts:
3. That such input VAT payments are directly attributable to
zero-rated sales or effectively zero-rated sales; These are motions seeking reconsideration of the SC
4. That the input VAT payments were not applied against decision dismissing the petitions filed for the declaration of
any output VAT liability; and unconstitutionality of R.A. No. 7716, or the Expanded
5. That the claim for refund was filed within the two-year Value-Added Tax Law.
prescriptive period.
Issues raised by the petitioners:
The CTA Division allowed but modified the claim for refund
and reduced the input VAT on the sale of the Nissan Patrol 1. Power of the Senate to propose amendments to
because the output VAT for the sale was not included in the revenue bills. Petitioners contend that RA 7716 did not
VAT declarations. "originate exclusively" in the House of Representatives
as required by Art. VI, §24 of the Constitution.
Upon appeal, Mindanao II claimed that the sale of a fully
depreciated Nissan Patrol is not an incidental transaction in 2. S. No. 1630 is a mere amendment of H. No. 11197.
the course of its business; hence, it is an isolated Petitioners contend that S. No. 1630 is an independent
transaction that should not have been subject to 10% VAT. and distinct bill.

Issue: 3. The President's certification. Petitioners contend that

since that H. No. 11197 and S. No. 1630 are distinct
Is the sale of the Nissan Patrol an isolated transaction which and unrelated measures, the President separately
should not be subject to VAT? certifying the need for the immediate enactment of
these measures, was ineffectual and void.
Held:
4. Power of Conference Committee. Petitioners contend
No. Mindanao II relies on CIR v. Magsaysay Lines, Inc. and that in violation of the constitutional policy of full public
Imperial v. CIR to justify its position. Magsaysay which was disclosure and the people's right to know the
decided under the NIRC of 1986, involved the sale of Conference Committee met for two days in executive
vessels of the NDC to Magsaysay Lines, Inc. We ruled that session with only the conferees present.
the sale of vessels was not in the course of NDC’s trade or
 DE LEON 3B 16-17

5. The titles of S. No. 1630 and H. No. 11197. PAL an 3. violates the rule that taxes should be uniform and
entitiy exempted from the payment of the VAT along equitable and that Congress shall "evolve a
with other entities by Section 103 of the NIRC contends progressive system of taxation."
that the amendment of its franchise by the withdrawal
of its exemption from the VAT is not expressed in the 8. Alleged violation of policy towards cooperatives. The
title of the law which violates Art. VI, Section 26 (1) of Cooperative Union of the Philippines (CUP), after briefly
the Constitution which provides that "Every bill passed surveying the course of legislation, argued that
by Congress shall embrace only one subject which 1. to subject cooperatives to the VAT would therefore
shall be expressed in the title thereof." infringe a constitutional policy. Also, they claimed
2. RA 7716 denied the cooperatives the equal
6. Claims of press freedom and religious liberty. protection of the law because electric cooperatives
a. PPI contends that are exempted from the VAT.
1. by removing the exemption of the press from
the VAT while maintaining those granted to Held:
others, the law discriminates against the
press. 1. While Art. VI, §24 provides that all appropriation, revenue
2. Further, that the discriminatory treatment of or tariff bills, bills authorizing increase of the public debt,
the press is highlighted by the fact that bills of local application, and private bills must "originate
transactions, which are profit oriented, exclusively in the House of Representatives," it also adds,
continue to enjoy exemption under RA 7716. "but the Senate may propose or concur with amendments."
3. Finally, it asserts that it does not really matter In the exercise of this power, the Senate may propose an
that the law does not discriminate against the entirely new bill as a substitute measure. As petitioner
press because "even nondiscriminatory Tolentino states in a high school text, a committee to which
taxation on constitutionally guaranteed a bill is referred may do any of the following: (1) to endorse
freedom is unconstitutional. the bill without changes; (2) to make changes in the bill
omitting or adding sections or altering its language; (3) to
b. Also, the Philippine Bible Society, Inc. claims that make and endorse an entirely new bill as a substitute, in
although it sells bibles, the proceeds derived from which case it will be known as a committee bill; or (4) to
the sales are used to subsidize the cost of printing make no report at all.
copies which are given free to those who cannot
afford to pay so that to tax the sales would be to 2. In several instances, the provisions of S. No. 1630,
increase the price, while reducing the volume of clearly appear to be mere amendments of the
sale. corresponding provisions of H. No. 11197. The very tabular
comparison of the provisions of H. No. 11197 and S. No.
7. Alleged violations of the due process, equal protection 1630 attached as Supplement A to the basic petition of
and contract clauses and the rule on taxation. petitioner Tolentino, while showing differences between the
Petitioners contend that RA 7716: two bills, at the same time indicates that the provisions of
1. impairs the obligations of contracts - because the the Senate bill were precisely intended to be amendments
application of the tax to existing contracts of the to the House bill.
sale of real property by installment or on deferred
payment basis would result in substantial Without H. No. 11197, the Senate could not have enacted
increases in the monthly amortizations to be paid S. No. 1630. Because the Senate bill was a mere
because of the 10% VAT. The additional amount, amendment of the House bill, H. No. 11197 in its original
it is pointed out, is something that the buyer did not form did not have to pass the Senate on second and three
anticipate at the time he entered into the contract. readings. It was enough that after it was passed on first
reading it was referred to the Senate Committee on Ways
2. classifies transactions as covered or exempt and Means. Neither was it required that S. No. 1630 be
without reasonable basis - it is pointed out that passed by the House of Representatives before the two
while Section 4 of RA 7716 exempts such bills could be referred to the Conference Committee.
transactions as the sale of agricultural products,
food items, petroleum, and medical and veterinary 3. As to what Presidential certification can accomplish, the
services, it grants no exemption on the sale of real phrase "except when the President certifies to the necessity
property which is equally essential. of its immediate enactment, etc." in Art. VI, §26 (2) qualifies
not only the requirement that "printed copies of a bill in its
 DE LEON 3B 16-17

final form must be distributed to the members three days 1. With respect to the first contention, it would suffice
before its passage" but also the requirement that before a to say that since the law granted the press a
bill can become a law it must have passed "three readings privilege, the law could take back the privilege
on separate days." The exception is based on the prudential anytime without offense to the Constitution. The
consideration that if in all cases three readings on separate reason is simple: by granting exemptions, the
days are required and a bill has to be printed in final form State does not forever waive the exercise of its
before it can be passed, the need for a law may be rendered sovereign prerogative.
academic by the occurrence of the very emergency or 2. An enumeration of some of these transactions will
public calamity which it is meant to address. suffice to show that by and large this is not so and
that the exemptions are granted for a purpose. As
Apparently, the members of the Senate believed that there the Solicitor General says, such exemptions are
was an urgent need for consideration of S. No. 1630, granted, in some cases, to encourage agricultural
because they responded to the call of the President by production and, in other cases, for the personal
voting on the bill on second and third readings on the same benefit of the end-user rather than for profit.
day. While the judicial department is not bound by the 3. The VAT is not a license tax. It is not a tax on the
Senate's acceptance of the President's certification, the exercise of a privilege, much less a constitutional
respect due coequal departments of the government in right. It is imposed on the sale, barter, lease or
matters committed to them by the Constitution and the exchange of goods or properties or the sale or
absence of a clear showing of grave abuse of discretion exchange of services and the lease of properties
caution a stay of the judicial hand. purely for revenue purposes. To subject the press
to its payment is not to burden the exercise of its
4. The public's right to know was fully served because the right any more than to make the press pay income
Conference Committee in this case submitted a report tax or subject it to general regulation is not to
showing the changes made on the differing versions of the violate its freedom under the Constitution.
House and the Senate. Nor is there any doubt about the
power of a conference committee to insert new provisions
as long as these are germane to the subject of the 6. b. Granting that to be the case, the resulting burden on
conference. The jurisdiction of the conference committee is the exercise of religious freedom is so incidental as to make
not limited to resolving differences between the Senate and it difficult to differentiate it from any other economic
the House. It may propose an entirely new provision. What imposition that might make the right to disseminate religious
is important is that its report is subsequently approved by doctrines costly. The registration fee of P1,000.00 imposed
the respective houses of Congress. by Section 107 of the NIRC, as amended by Section 7 of
RA 7716, although fixed in amount, is really just to pay for
5. By stating that R.A. 7716 seeks to "[RESTRUCTURE] the expenses of registration and enforcement of provisions
THE VALUE-ADDED TAX (VAT) SYSTEM [BY] such as those relating to accounting in Section 108 of the
WIDENING ITS TAX BASE AND ENHANCING ITS NIRC. That the PBS distributes free bibles and therefore is
ADMINISTRATION, AND FOR THESE PURPOSES not liable to pay the VAT does not excuse it from the
AMENDING AND REPEALING THE RELEVANT payment of this fee because it also sells some copies. At
PROVISIONS OF THE NATIONAL INTERNAL REVENUE any rate whether the PBS is liable for the VAT must be
CODE, AS AMENDED AND FOR OTHER PURPOSES," decided in concrete cases, in the event it is assessed this
Congress thereby clearly expresses its intention to amend tax by the CIR.
any provision of the NIRC which stands in the way of
accomplishing the purpose of the law. 7.

PAL asserts that the amendment of its franchise must be 1. Even though such taxation may affect particular
reflected in the title of the law by specific reference to P.D. contracts, as it may increase the debt of one person
No. 1590. It is unnecessary to do this in order to comply and lessen the security of another, or may impose
with the constitutional requirement, since it is already stated additional burdens upon one class and release the
in the title that the law seeks to amend the pertinent burdens of another, still the tax must be paid unless
provisions of the NIRC, among which is §103(q), in order to prohibited by the Constitution, nor can it be said that it
widen the base of the VAT. impairs the obligation of any existing contract in its true
legal sense." Indeed not only existing laws but also "the
6. a. reservation of the essential attributes of sovereignty, is
. . . read into contracts as a postulate of the legal order."
 DE LEON 3B 16-17

Contracts must be understood as having been made in 8.

reference to the possible exercise of the rightful 1. The withdrawal of tax incentives applied to all,
authority of the government and no obligation of including government and private entities. The
contract can extend to the defeat of that authority. Constitution does not really require that
2. The sale of food items, petroleum, medical and cooperatives be granted tax exemptions in order
veterinary services, etc., which are essential goods to promote their growth and viability. Hence, there
and services was already exempt under Section 103, is no basis for petitioner's assertion that the
pars. (b) (d) (1) of the NIRC before the enactment of government's policy toward cooperatives had
R.A. No. 7716. Petitioner is in error in claiming that RA been one of vacillation, as far as the grant of tax
7716 granted exemption to these transactions, while privileges was concerned, and that it was to put an
subjecting those of petitioner to the payment of the end to this indecision that the constitutional
VAT. Moreover, there is a difference between the provisions cited were adopted. Perhaps as a
"homeless poor" and the "homeless less poor" in the matter of policy cooperatives should be granted
example given by petitioner, because the second tax exemptions, but that is left to the discretion of
group or middle class can afford to rent houses in the Congress. If Congress does not grant exemption
meantime that they cannot yet buy their own homes. and there is no discrimination to cooperatives, no
The two social classes are thus differently situated in violation of any constitutional policy can be
life. "It is inherent in the power to tax that the State be charged.
free to select the subjects of taxation, and it has been 2. The classification between electric and other
repeatedly held that 'inequalities which result from a cooperatives (farmers cooperatives, producers
singling out of one particular class for taxation, or cooperatives, marketing cooperatives, etc.)
exemption infringe no constitutional limitation.'" apparently rests on a congressional determination
3. Equality and uniformity of taxation means that all that there is greater need to provide cheaper
taxable articles or kinds of property of the same class electric power to as many people as possible,
be taxed at the same rate. The taxing power has the especially those living in the rural areas, than there
authority to make reasonable and natural is to provide them with other necessities in life. We
classifications for purposes of taxation. To satisfy this cannot say that such classification is
requirement it is enough that the statute or ordinance unreasonable.
applies equally to all persons, forms and corporations
placed in similar situation. Conclusion

The Constitution does not really prohibit the imposition of The law suffers from none of the infirmities attributed to it
indirect taxes which, like the VAT, are regressive. What it by petitioners and that its enactment by the other branches
simply provides is that Congress shall "evolve a progressive of the government does not constitute a grave abuse of
system of taxation." The constitutional provision has been discretion. Any question as to its necessity, desirability or
interpreted to mean simply that "direct taxes are . . . to be expediency must be addressed to Congress as the body
preferred and as much as possible, indirect taxes should be which is electorally responsible, remembering that, as
minimized." Indeed, the mandate to Congress is not to Justice Holmes has said, "legislators are the ultimate
prescribe, but to evolve, a progressive tax system. guardians of the liberties and welfare of the people in quite
Otherwise, sales taxes, which perhaps are the oldest form as great a degree as are the courts." It is not right, as
of indirect taxes, would have been prohibited with the petitioner in G.R. No. 115543 does in arguing that we
proclamation of Art. VIII, Section 17(1) of the 1973 should enforce the public accountability of legislators, that
Constitution from which the present Art. VI, Section 28(1) those who took part in passing the law in question by voting
was taken. Sales taxes are also regressive. for it in Congress should later thrust to the courts the burden
of reviewing measures in the flush of enactment. This Court
Resort to indirect taxes should be minimized but not does not sit as a third branch of the legislature, much less
avoided entirely because it is difficult, if not impossible, to exercise a veto power over legislation.
avoid them by imposing such taxes according to the
taxpayers' ability to pay. In the case of the VAT, the law WHEREFORE, the motions for reconsideration are denied
minimizes the regressive effects of this imposition by with finality and the temporary restraining order previously
providing for zero rating of certain transactions (R.A. No. issued is hereby lifted.
7716, §3, amending §102 (b) of the NIRC), while granting
exemptions to other transactions.
 DE LEON 3B 16-17

4. ABAKADA GURO PARTYLIST VS ERMITA the operation of the 12% rate effective January 1, 2006,
G.R. NO. 168056 SEPTEMBER 1, 2005 contingent upon a specified fact or condition. It leaves the
entire operation or non-operation of the 12% rate upon
Facts: factual matters outside of the control of the executive.

Before RA 9337 took effect, petitioners ABAKADA GURO No discretion would be exercised by the President.
Party List, et al., filed a petition for prohibition questioning Highlighting the absence of discretion is the fact that the
the constitutionality of Sections 4, 5 and 6 of the said law, word shall is used in the common proviso. The use of the
amending Sections 106, 107 and 108, respectively, the word shall connotes a mandatory order. Its use in a statute
NIRC. Section 4 imposes a 10% VAT on sale of goods and denotes an imperative obligation and is inconsistent with
properties, Section 5 imposes a 10% VAT on importation of the idea of discretion. Where the law is clear and
goods, and Section 6 imposes a 10% VAT on sale of unambiguous, it must be taken to mean exactly what it says,
services and use or lease of properties. These questioned and courts have no choice but to see to it that the mandate
provisions contain a uniform proviso authorizing the is obeyed.
President, upon recommendation of the Secretary of
Finance, to raise the VAT rate to 12%, effective January 1, Thus, it is the ministerial duty of the President to
2006 upon the satisfaction of certain conditions, which immediately impose the 12% rate upon the existence of any
accdg to petitioners constitutes undue delegation of the of the conditions specified by Congress. This is a duty which
legislative power to tax. cannot be evaded by the President. Inasmuch as the law
specifically uses the word shall, the exercise of discretion
Petitioners argue that the law is unconstitutional, as it by the President does not come into play. It is a clear
constitutes abandonment by Congress of its exclusive directive to impose the 12% VAT rate when the specified
authority to fix the rate of taxes under Article VI, Section conditions are present. The time of taking into effect of the
28(2) of the 1987 Philippine Constitution. 12% VAT rate is based on the happening of a certain
specified contingency, or upon the ascertainment of certain
Further, they argue that the VAT is a tax levied on the sale, facts or conditions by a person or body other than the
barter or exchange of goods and properties as well as on legislature itself.
the sale or exchange of services, which cannot be included
within the purview of tariffs under the exempted delegation
as the latter refers to customs duties, tolls or tribute payable 5. FORT BONIFACIO DEVT CORP VS CIR
upon merchandise to the government and usually imposed G.R. NO. 173425 SEPTEMBER 4, 2012
on goods or merchandise imported or exported.
Facts:
Issue: Petitioner Fort Bonifacio Development Corporation (FBDC)
Is the grant of a stand-by authority to the President is a duly registered domestic corporation engaged in the
constitutes undue delegation of power? development and sale of real property. In October 1996,
petitioner started selling Global City lots to interested
Held: buyers. When petitioner realized that its transitional input
tax credit was not applied in computing its output VAT for
The legislature may delegate to executive officers or bodies the 1st quarter of 1997, it filed a claim for refund to recover
the power to determine certain facts or conditions, or the the output VAT it erroneously or excessively paid for the 1st
happening of contingencies, on which the operation of a quarter of 1997.
statute is, by its terms, made to depend, but the legislature
must prescribe sufficient standards, policies or limitations The claim was denied by the CIR maintaining that petitioner
on their authority. While the power to tax cannot be is not entitled to a transitional input tax credit because no
delegated to executive agencies, details as to the taxes were paid in the acquisition of the Global City
enforcement and administration of an exercise of such property; prior payment of taxes is inherent in the nature of
power may be left to them, including the power to determine a transitional input tax; The CIR insists that RR 7-95 which
the existence of facts on which its operation depends. limited the 8% transitional input tax credit to the value of the
improvements on the land, is valid because it was issued
The case before the Court is not a delegation of legislative by the Secretary of Finance, who is mandated by law to
power. It is simply a delegation of ascertainment of facts promulgate all needful rules and regulations for the
upon which enforcement and administration of the increase implementation of Section 105 of the old NIRC.
rate under the law is contingent. The legislature has made
 DE LEON 3B 16-17

Issues: As mandated by Article 7 of the Civil Code, an

1. May the petitioner claim a transitional input tax credit? administrative rule or regulation cannot contravene the law
2. Is RR 7-95 valid? on which it is based. RR 7-95 is inconsistent with Section
105 insofar as the definition of the term "goods" is
Held: concerned. This is a legislative act beyond the authority of
the CIR and the Secretary of Finance. The rules and
1. Yes. Prior payment of taxes is not required for a taxpayer regulations that administrative agencies promulgate, which
to avail of the 8% transitional input tax credit. are the product of a delegated legislative power to create
new and additional legal provisions that have the effect of
To require prior payment of taxes, is not only tantamount to law, should be within the scope of the statutory authority
judicial legislation but would also render nugatory the granted by the legislature to the objects and purposes of the
provision in Section 105 of the old NIRC that the transitional law, and should not be in contradiction to, but in conformity
input tax credit shall be "8% of the value of [the beginning] with, the standards prescribed by law. To be valid, an
inventory or the actual VAT paid on such goods, materials administrative rule or regulation must conform, not
and supplies, whichever is higher" because the actual VAT contradict, the provisions of the enabling law. An
(now 12%) paid on the goods, materials, and supplies implementing rule or regulation cannot modify, expand, or
would always be higher than the 8% (now 2%) of the subtract from the law it is intended to implement. Any rule
beginning inventory. that is not consistent with the statute itself is null and void.

In filing a claim for tax refund, petitioner is simply applying As we see it then, the 8% transitional input tax credit should
its transitional input tax credit against the output VAT it has not be limited to the value of the improvements on the real
paid. Hence, it is merely availing of the tax credit incentive properties but should include the value of the real properties
given by law to first time VAT taxpayers. As we have said as well.
in the earlier case of Fort Bonifacio, the provision on
transitional input tax credit was enacted to benefit first time Wherefore, petition is granted. Respondent CIR is ordered
VAT taxpayers by mitigating the impact of VAT on the to refund to petitioner Fort Bonifacio Development
taxpayer. Corporation the amount of P 359,652,009.47 paid as output
VAT for the first quarter of 1997 in light of the transitional
It is apparent that the transitional input tax credit operates input tax credit available to petitioner for the said quarter, or
to benefit newly VAT-registered persons, whether or not in the alternative, to issue a tax credit certificate
they previously paid taxes in the acquisition of their corresponding to such amount.
beginning inventory of goods, materials and supplies.
During that period of transition from non-VAT to VAT status,
the transitional input tax credit serves to alleviate the impact 6. BONIFACIO WATER CORP VS CIR
of the VAT on the taxpayer. At the very beginning, the VAT- G.R. NO. 175142 JULY 22, 2013
registered taxpayer is obliged to remit a significant portion
of the income it derived from its sales as output VAT. The Facts:
transitional input tax credit mitigates this initial diminution of Petitioner is a domestic corporation engaged in the
the taxpayer's income by affording the opportunity to offset collection, purification and distribution of water. It is
the losses incurred through the remittance of the output registered with the BIR as a VAT taxpayer. It filed with RDO
VAT at a stage when the person is yet unable to credit input 44–Pateros and Taguig, an administrative claim for refund
VAT payments. or issuance of a tax credit certificate representing unutilized
input VAT on capital goods purchased for the period
The Court found the petitioner entitled to the 8% transitional beginning the 4th quarter of 1999 up to the 4th quarter of
input tax credit provided in Section 105 of the old NIRC. The 2000. The next day, petitioner filed its Petition for Review
fact that it acquired the Global City property under a tax-free with the CTA, to toll the running of the two- year prescriptive
transaction makes no difference as prior payment of taxes period.
is not a pre-requisite.
The CTA Division partly granted the petition holding that an
2. No. Section 4.105-1 of RR 7-95, insofar as it limits the examination of the various official receipts presented by
transitional input tax credit to the value of the improvement petitioner, to support its purchases for capital goods, shows
of the real properties, is a nullity. that some of its purchases, such as rental, management
fees and direct overhead, cannot be considered as capital
goods. Further, it ruled that the official receipts under the
 DE LEON 3B 16-17

name "Bonifacio GDE Water Corporation" were disallowed GST is a domestic corporation primarily engaged in the
on the ground that the use of said business name by business of manufacturing, processing, selling, and dealing
petitioner was never approved by the SEC. The CTA En in all kinds of iron, steel or other metals. It is a VAT-
Banc affirmed the decision of the CTA Division. registered enterprise. It deals with companies registered
with PEZA, among others. Sales made by a VAT-registered
Issue: person to a PEZA-registered entity are considered exports
Is the CTA En Banc correct in only partly granting to a foreign country subject to a zero rate.
petitioner’s claim for refund or issuance of a tax credit
certificate and not allowing those receipts under the name GST filed before the BIR separate claims for refund for its
Bonifacio GDE Water Corporation? unutilized excess input VAT. Upon the CIR's inaction, GST
filed a petition for review with the CTA. The CTA Division
Held: granted the claim for refund which was upheld by the CTA
En Banc finding GST’s administrative and judicial claims for
1. Yes. The change of name to Bonifacio GDE Corporation refund to have been filed well within the prescribed periods
being unauthorized and without approval from the provided in the Tax Code.
Securities and Exchange Commission, petitioner cannot
now seek for a refund of input taxes which are supported by Issue:
receipts under that name. The requisite that the receipt be Whether GST’s action for refund has complied with the
issued showing the name, business style, if any, and prescriptive periods under the Tax Code.
address of the purchaser, customer or client is precise so
that when the books of accounts are subjected to a tax audit Held:
examination, all entries therein could be shown as
adequately supported and proven as legitimate business Partly yes.
transactions. The absence of official receipts issued in the
taxpayer’s name is tantamount to non-compliance with the There is no dispute that the 120-day period is mandatory
substantiation requirements provided by law. and jurisdictional, and that the CTA does not acquire
jurisdiction over a judicial claim that is filed before the
Taxpayers claiming for a refund or tax credit certificate must expiration of the 120-day period. There are, however, two
comply with the strict and mandatory invoicing and exceptions to this rule. The first exception is if the
accounting requirements provided under the 1997 NIRC, as Commissioner, through a specific ruling, misleads a
amended, and its implementing rules and regulations. particular taxpayer to prematurely file a judicial claim with
Rules and regulations with regard to procedures are the CTA. Such specific ruling is applicable only to such
implemented not to be ignored or to be taken for granted, particular taxpayer. The second exception is where the
but are strictly adhered to for they are developed from the Commissioner, through a general interpretative rule issued
law itself. under Section 4 of the Tax Code, misleads all taxpayers
into filing prematurely judicial claims with the CTA. In these
Thus, the change of petitioner’s name to "Bonifacio GDE cases, the Commissioner cannot be allowed to later on
Water Corporation," being unauthorized and without question the CTA's assumption of jurisdiction over such
approval of the SEC, and the issuance of official receipts claim since equitable estoppel has set in as expressly
under that name which were presented to support authorized under Section 246 of the Tax Code.
petitioner’s claim for tax refund, cannot be used to allow the
grant of tax refund or issuance of a tax credit certificate in Since the Commissioner has exclusive and original
petitioner’s favor. The absence of official receipts issued in jurisdiction to interpret tax laws, taxpayers acting in good
its name is tantamount to noncompliance with the faith should not be made to suffer for adhering to general
substantiation requirements provided by law and, hence, interpretative rules of the Commissioner interpreting tax
the CTA En Banc’s partial grant of its refund on that ground laws, should such interpretation later turn out to be
should be upheld. erroneous and be reversed by the Commissioner or this
Court.

7. CIR VS GST PHILIPPINES, INC. BIR Ruling No. DA-489-03 was classified in the San Roque
G.R. NO. 190872 OCTOBER 17, 2013 case as a general interpretative rule having been made in
response to a query by a government agency tasked with
Facts: processing tax refunds and credits. As such, all taxpayers
can rely on said ruling from the time of its issuance on
 DE LEON 3B 16-17

December 10, 2003 up to its reversal by this Court in Aichi on zero-rated sales should be counted, not from the close
on October 6, 2010, where it was held that the 120+30 day of the quarter when the zero-rated sales were made, but
periods are mandatory and jurisdictional. from the date of filing of the quarterly VAT return and
payment of the tax due 20 days thereafter.
Therefore, GST can benefit from BIR Ruling No. DA-489-
03 with respect to its claims for refund of unutilized excess Issues:
input VAT for the second and third quarters of taxable year
2005 which were filed before the CIR on November 18, 1. Has the petitioner's action for refund prescribed? Partly
2005 but elevated to the CTA on March 17, 2006 before the yes.
expiration of the 120-day period (March 18, 2006 being the 2. Were the evidence presented by petitioner sufficient?
120th day). BIR Ruling No. DA-489-03 effectively shielded Yes.
the filing of GST's judicial claim from the vice of prematurity. 3. Has the petitioner sufficiently established the factual
bases for its applications for refund/credit of input VAT.
GST's claims, however, for the four quarters of taxable year No.
2004 and the first quarter of taxable year 2005 should be
denied for late filing of the petition for review before the Held:
CTA.
1. Partly yes.
As a final note, it is incumbent on the Court to emphasize The two-year prescriptive period for instituting a suit or
that tax refunds partake of the nature of tax exemptions proceeding for recovery of corporate income tax
which are a derogation of the power of taxation of the State. erroneously or illegally paid under Section 230 of the Tax
Consequently, they are construed strictly against a Code of 1977, as amended, was to be counted from the
taxpayer and liberally in favor of the State. Thus, as filing of the final adjustment return. Moreover, when
emphasized in Aichi, a taxpayer must prove not only its claiming refund/credit, the VAT-registered taxpayer must be
entitlement to a refund but also its compliance with able to establish that it does have refundable or creditable
prescribed procedures. input VAT, and the same has not been applied against its
output VAT liabilities information which are supposed to be
Wherefore, petition if partly granted. reflected in the taxpayers VAT returns. Thus, an application
for refund/credit must be accompanied by copies of the
taxpayers VAT return/s for the taxable quarter/s concerned.
8. ATLAS CONSOLIDATED MINING AND DEVT CORP
VS CIR It is more practical and reasonable to count the two-year
G.R. NOS. 141104 & 148763 JUNE 8, 2007 prescriptive period for filing a claim for refund/credit of input
VAT on zero-rated sales from the date of filing of the return
Facts: and payment of the tax due which, according to the law then
Petitioner corporation is engaged in the business of mining, existing, should be made within 20 days from the end of
production, and sale of various mineral products, such as each quarter.
gold, pyrite, and copper concentrate. It is a VAT-registered
taxpayer. In this case, the administrative and judicial claims of
The present Petitions involve the claims of petitioner petitioner corporation for refund of its input VAT on its zero-
corporation for refund/credit of the input VAT on its rated sales for the last three quarters of 1990 were all filed
purchases of capital goods and on its effectively zero-rated within the prescriptive period. However, the same cannot
sales to CBP and EPZA-registered enterprises PASAR and be said for the claim of petitioner corporation for refund of
PHILPHOS for the second, third, and fourth quarters of its input VAT on its zero-rated sales for the first quarter of
1990 and first quarter of 1992 which were not acted upon 1992.
by the CIR.
2. Yes. Court finds that the claims for refund/credit of input
Upon appeal to the CTA, the CTA denied such claim on the VAT of petitioner corporation have sufficient legal bases.
ground of prescription, insufficiency of evidence and failure
to comply with Section 230 of the Tax Code. The CA Section 106(b)(2), in relation to Section 100(a) (2) of the
affirmed the CTA decision. Tax Code of 1977, as amended, allowed the refund/credit
of input VAT on export sales to enterprises operating within
Petitioner now claims that the two-year prescriptive period export processing zones and registered with the EPZA,
for the filing of the application for refund/credit of input VAT since such export sales were deemed to be effectively zero-
 DE LEON 3B 16-17

rated sales. The fact that PASAR and PHILPHOS, to whom were due to its export sales of coconut oil, the proceeds of
petitioner corporation sold its products, were operating which were paid for in acceptable foreign currency and
inside an export processing zone and duly registered with accounted for in accordance with the rules and regulations
EPZA, was never raised as an issue herein. of the BSP and, thus, are zero-rated for VAT purposes.

Meanwhile, the effective zero-rating of sales of gold to the On June 27, 2003, Cargill filed an administrative claim for
CBP from 1989 to 1991 was already affirmed by this Court refund of its unutilized input VAT in the amount of
in one case. Sec. 100 of the NIRC in relation to Sec. 2 of P26,122,965.81 for April 2001 - Feb 2003 (first refund
E.O. No. 581 s. 1980 which prescribed that gold sold to the claim) before the BIR.
Central Bank shall be considered export and therefore shall Three days after, it filed a judicial claim for refund, by way
be subject to the export and premium duties. In coming out of a petition for review, before the CTA.
with this interpretation, the BIR also considered Sec. 169 of
Central Bank Circular No. 960 which states that all sales of On May 31, 2005, Cargill filed a second administrative claim
gold to the Central Bank are considered constructive for refund of its unutilized input VAT in the amount of
exports. P22,194,446.67 for the period of March 2003 - August 2004
(second refund claim) before the BIR. On the same date, it
3. No. As for the Petition in G.R. No. 141104, involving the filed a petition for review before the CTA, docketed as CTA
input VAT of petitioner on its zero-rated sales in the first Case No. 7262.
quarter of 1992, the petitioner failed to comply with Section
106(b) of the Tax Code of 1977, as amended, imposing the The CIR denied the claim for refund of unutilized input VAT
two-year prescriptive period for the filing of the application because the same were not properly documented. The CTA
for refund/credit thereof. This bars the grant of the Division found that while Cargill timely filed its
application for refund/credit, whether administratively or administrative and judicial claims within the 2-year
judicially, by express mandate of Section 106(e) of the prescriptive period, it failed to substantiate the remainder of
same Code. its claims for refund of unutilized input VAT, resulting in the
partial denial thereof. Upon MR however, the CTA Division
Granting arguendo that the application of petitioner reversed itself and held that the 120-day period provided
corporation for the refund/credit of the input VAT on its zero- under Section 112(D) of the NIRC must be observed prior
rated sales in the first quarter of 1992 was actually and to the filing of a judicial claim for tax refund. It dismissed the
timely filed, petitioner corporation still failed to present case, without ruling on the merits, for being prematurely
together with its application the required supporting filed.
documents, whether before the BIR or the CTA.
Issue:
The Petition in G.R. No. 148763, concerning the input VAT
of petitioner corporation on its zero-rated sales in the Should Cargill’s claims for refund of unutilized input VAT be
second, third, and fourth quarters of 1990, the petitioner dismissed for prematurity?
failed to sufficiently establish its claims. Already
disregarding the declarations made by the Court of Appeals Held:
on its erroneous application of Revenue Regulations No. 2-
88, still petitioner failed to submit sufficient evidence in Partly yes.
accordance with the requirements under Revenue
Regulations No. 3-88. Allowing the refund or credit of unutilized input VAT finds its
genesis in EO 273, series of 1987, which is recognized as
Wherefore, the petition is denied. the “Original VAT Law.” Thereafter, it was amended through
the passage of RA 7716, RA 8424, and, finally by RA 9337,
which took effect on November 1, 2005. Considering that
9. CARGILL PHILS, INC., VS CIR, GR NO. 203774, Cargill’s claims for refund covered periods before the
MARCH 11, 2015 effectivity of RA 9337, Section 112 of the NIRC, as
amended by RA 8424, should, therefore, be the governing
Facts: law.

Cargill is a VAT-registered domestic corporation. As such, In the landmark case of Aichi, it was held that the
it filed its quarterly VAT returns. Said returns reflected observance of the 120-day period is a mandatory and
overpayments. Cargill maintained that said overpayments jurisdictional requisite to the filing of a judicial claim for
 DE LEON 3B 16-17

refund before the CTA. As such, its non-observance would Province of Laguna. It filed an Application for VAT Zero-
warrant the dismissal of the judicial claim for lack of Rate with the BIR which was subsequently granted. Thus,
jurisdiction. petitioner's sale of electricity to the NPC from 1 January
2005 to 31 October 2005 was declared to be entitled to the
However, the court recognized an exception to the benefit of effectively zero-rated VAT.
mandatory and jurisdictional nature of the 120-day period in
the case of CIR vs San Roque which enunciated that BIR Petitioner filed its administrative claims for the issuance of
Ruling No. DA-489-03 dated December 10, 2003, which tax credit certificates for its alleged unutilized input taxes on
expressly declared that the “taxpayer-claimant need not its purchase of capital goods and alleged unutilized input
wait for the lapse of the 120-day period before it could seek taxes on its local purchases and/or importation of goods
judicial relief with the CTA by way of petition for review,” and services, other than capital goods, pursuant to Sections
provided a valid claim for equitable estoppel under Section 112(A) and (B) of the NIRC of 1997. Alleging the BIR's
246 of the NIRC. inaction, it filed a Petitioner for Review with the CTA on April
28, 2007.
In the more recent case of Taganito Mining Corporation v.
CIR, the Court reconciled the pronouncements in Aichi and Issues:
San Roque, holding that from December 10, 2003 to 1. What is the applicable prescriptive period on its claim
October 6, 2010 which refers to the interregnum when BIR for refund of unutilized input VAT for the first to third
Ruling No. DA-489-03 was issued until the date of quarters of 2005.
promulgation of Aichi, taxpayer-claimants need not observe
the stringent 120-day period; but before and aftersaid 2. Is BIR Ruling No. DA-489-03 a general interpretative rule
window period, the mandatory and jurisdictional nature of applicable to all taxpayers or a specific ruling applicable
the 120-day period remained in force. only to a particular taxpayer?

In this case, Cargill’s first refund claim should be dismissed 3. Is the principle of solutio indebiti applicable in this case?
since it filed its administrative claim with the BIR on June
27, 2003, and its judicial claim before the CTA on June 30, Held:
2003, or before the period when BIR Ruling No. DA-489-03 1. Section 112(A) is clear that for VAT-registered persons
was in effect, (December 10, 2003 to October 6, 2010). As whose sales are zero-rated or effectively zero-rated, a claim
such, it was incumbent upon Cargill to wait for the lapse of for the refund or credit of creditable input tax that is due or
the 120-day period before seeking relief with the CTA. paid, and that is attributable to zero-rated or effectively
zero-rated sales, must be filed within two years after the
In contrast, with respect to Cargill’s second refund claim, its close of the taxable quarter when such sales were made.
administrative and judicial claims were both filed on May 31, The reckoning frame would always be the end of the quarter
2005, or during the period of effectivity of BIR Ruling NO. when the pertinent sale or transactions were made,
DA-489-03, and, thus, fell within the exemption window regardless of when the input VAT was paid.
period contemplated in San Roque, i.e., when taxpayer-
claimants need not wait for the expiration of the 120-day Section 112(D) further provides that the CIR has to decide
period before seeking judicial relief. Verily, the CTA En on an administrative claim within 120 days from the date of
Banc erred when it outrightly dismissed CTA Case No. 7262 submission of complete documents in support thereof.
on the ground of prematurity.
Thereafter, the taxpayer affected by the CIR’s decision or
The case is partly granted and CTA case no. 7262 is inaction may appeal to the CTA within 30 days from the
remanded to the CTA First Division for its resolution on the receipt of the decision or from the expiration of the 120-day
merits. period within which the claim has not been acted upon.

Considering further that the 30-day period to appeal to the

10. CBK POWER COMPANY LIMITED VS CIR CTA is dependent on the 120-day period, compliance with
G.R. NOS. 198729-30 JANUARY 15, 2014 both periods is jurisdictional. The period of 120 days is a
prerequisite for the commencement of the 30-day period to
Facts: appeal to the CTA.
Petitioner is engaged, among others, in the operation, 2. BIR Ruling No. DA-489-03 is a general interpretative rule
maintenance, and management of the some hydroelectric because it was a response to a query made, not by a
power plants and their related facilities located in the particular taxpayer, but by a government agency asked with
 DE LEON 3B 16-17

processing tax refunds and credits, that is, the One Stop 11. ROHM APOLLO SEMICONDUCTOR PHILIPPINES
Shop Inter-Agency Tax Credit and Drawback Center of the VS CIR
Department of Finance. This government agency is also the G.R. NO. 168950 JANUARY 14, 2015
addressee, or the entity responded to, in BIR Ruling No.
DA-489-03. Facts:
Petitioner Rohm Apollo is a vat-registered domestic
However, while petitioner filed its administrative and judicial corporation which is also registered with the PEZA as an
claims during the period of applicability of BIR Ruling No. Ecozone Export Enterprise. Prior to the commencement of
DA-489-03, it cannot claim the benefit of the exception its operations it engaged the services of Shimizu for the
period as it did not file its judicial claim prematurely, but did construction of a factory. Petitioner treated the payments it
so long after the lapse of the 30-day period following the made to Shimizu as capital goods purchases and thus filed
expiration of the 120-day period. Again, BIR Ruling No. DA- with the BIR an administrative claim for the refund or credit
489-03 allowed premature filing of a judicial claim, which of accumulated unutilized creditable input taxes on 11
means non-exhaustion of the 120-day period for the December 2000. As the close of the taxable quarter when
Commissioner to act on an administrative claim, but not its the purchases were made was 30 September 2000, the
late filing. administrative claim was filed well within the two-year
prescriptive period.
For failure of petitioner to comply with the 120+30 day
mandatory and jurisdictional period, petitioner lost its right The waiting period, however, lapsed without any action by
to claim a refund or credit of its alleged excess input VAT. the CIR on the claim.

With regard to petitioner’s argument that Aichi should not Instead of filing a judicial claim within 30 days from the lapse
be applied retroactively, we reiterate that even without that of the 120-day period on 10 April, or until 10 May 2001,
ruling, the law is explicit on the mandatory and jurisdictional Rohm Apollo filed a Petition for Review with the CTA
nature of the 120+30 day period. docketed as CTA Case No. 6534 on 11 September 2002. It
was under the belief that a judicial claim had to be filed
3. No. Though the principle of solutio indebiti may be within the two-year prescriptive period ending on 30
applicable to some instances of claims for a refund, the September 2002.
elements thereof are wanting in this case.
Issue:
First, there exists a binding relation between petitioner and Was the judicial claim filed within the prescriptive period?
the CIR, the former being a taxpayer obligated to pay VAT.
Held:
Second, the payment of input tax was not made through
mistake, since petitioner was legally obligated to pay for No. The judicial claim was filed out of time.
that liability. The entitlement to a refund or credit of excess
input tax is solely based on the distinctive nature of the VAT The error of the taxpayer lies in the fact that it had
system. At the time of payment of the input VAT, the amount mistakenly believed that a judicial claim need not be filed
paid was correct and proper. within 30 days from the lapse of the 120-day period. It had
believed that the only requirement is that the judicial claim
Finally, equity, which has been aptly described as "a justice must be filed within the two-year period under Sections
outside legality," is applied only in the absence of, and 112(A) and (B) of the 1997 Tax Code. In other words, Rohm
never against, statutory law or judicial rules of procedure. Apollo erroneously thought that the 30-day period does not
Section 112 is a positive rule that should preempt and apply to cases of the CIR’s inaction after the lapse of the
prevail over all abstract arguments based only on equity. 120- day waiting period, and that a judicial claim is
Well-settled is the rule that tax refunds or credits, just like seasonably filed so long as it is done within the two year
tax exemptions, are strictly construed against the taxpayer. period. Thus, it filed the Petition for Review with the CTA
The burden is on the taxpayer to show strict compliance only on 11 September 2002.
with the conditions for the grant of the tax refund or credit.
Aichi clarified that it is only the administrative claim that
Wherefore, the petition is denied. must be filed within the two-year prescriptive period. San
Roque, on the other hand, has ruled that the 30-day period
always applies, whether there is a denial or inaction on the
part of the CIR.
 DE LEON 3B 16-17

1. Did the CTA acquire jurisdiction over the petitioner's

In fine, the SC held that the judicial claim for the refund or claim? No.
credit of unutilized input VAT was belatedly filed. Hence, the 2. Did the petitioner comply with the substantiation
CTA lost jurisdiction over Rohm Apollo’s claim for a refund requirements for a grant of a refund/tax credit? No.
or credit. The foregoing considered, there is no need to go
into the merits of this case. Held:

A final note, the taxpayers are reminded that that when the 1. No. Although it appears that petitioner has indeed
120-day period lapses and there is inaction on the part of complied with the required 2-year period within which
the CIR, they must no longer wait for it to come up with a to file a refund/tax credit claim with the BIR (OSSAC-
decision thereafter. The CIR’s inaction is the decision itself. DOF in this case) by filing all its administrative claims
It is already a denial of the refund claim. Thus, the taxpayer on 24 September 2001 (within the period from the
must file an appeal within 30 days from the lapse of the 120- close of the taxable quarters for the year 2000, when
day waiting period. the sales were made), the Court found that petitioner’s
corresponding judicial claim was filed beyond the 30-
Wherefore, the petition is denied for lack of merit. day period.

Section 112(D) of the NIRC of 1997 categorically states that

12. NIPPON EXPRESS PHILIPPINES CORP VS CIR in case of failure on the part of the respondent to act on the
G.R. NO. 185666, FEBRUARY 04, 2015 application within the 120-day period prescribed by law,
petitioner only has 30 days after the expiration of the 120-
Facts: day period to appeal the unacted claim with the CTA. Since
Petitioner is a VAT-registered domestic corporation. petitioner’s judicial claim for the aforementioned quarters
Petitioner’s gross receipts were primarily derived from for taxable year 2000 was filed before the CTA only on 24
rendering its services to PEZA-registered clients. Under the April 2002, 32 which was way beyond the mandatory
premise that it is entitled to a refund, petitioner filed four 120+30 days to seek judicial recourse, such non-
separate applications for tax credit/refund which were not compliance with the mandatory period of 30 days is fatal to
acted upon by the One-Stop Shop Inter-Agency Tax Credit its refund claim on the ground of prescription.
and Duty Drawback Center of the Department of Finance Consequently, the CTA had no jurisdiction over the instant
(OSSAC-DOF). claim of petitioner as the petition was belatedly filed.

The petitioner filed a petition for review with the CTA. The 2. Under the law, a VAT invoice is necessary for every sale,
CTA Division denied due course and accordingly dismissed barter or exchange of goods or properties while a VAT
petitioner’s claim for the issuance of a TCC on the ground official receipt properly pertains to every lease of goods or
of its failure to comply with the substantiation requirements. properties, and every sale, barter or exchange of services.
It explained that the sales invoices, transfer slips, and credit In other words, the VAT invoice is the seller’s best proof of
memos presented in support thereof did not comply with the the sale of the goods or services to the buyer while the VAT
substantiation requirements provided for under Sections receipt is the buyer’s best evidence of the payment of goods
106, 108, and 113 8 of the NIRC of 1997, as amended, or services received from the seller. Thus, the SC
considering that petitioner’s sales are sales of services concluded that VAT invoice and VAT receipt should not be
which should only be supported by official receipts. confused as referring to one and the same thing. Certainly,
Consequently, without the VAT official receipts evidencing neither does the law intend the two to be used
its zero-rated revenues, the input VAT payment alleged to interchangeably.
be directly attributable thereto cannot be refunded or a TCC
cannot be issued in its favor in accordance with Revenue Wherefore, the claim for refund is barred by prescription.
Memorandum Circular (RMC) No. 42-2003. Having The petition for review is dismissed for lack of jurisdiction
rendered such ruling, the CTA Division decided not to pass and the issue on substantiation requirements rendered
upon other incidental issues raised before it for being moot. MOOT and ACADEMIC.

The CTA En Banc affirmed in toto the decision of the CTA

Division. Hence, this petition.

Issues:
 DE LEON 3B 16-17

13. SILICON PHILS INC VS CIR consequently, the decision of the CTA En Banc - is a total
G.R. NO. 182737, MARCH 02, 2016 nullity that creates no rights and produces no effect.

Facts: The judicial claims filed by petitioner with the Court of Tax
Petitioner is a vat-registered corporation engaged in the Appeals for the refund of the input value- added tax paid on
business of designing, developing, manufacturing and imported capital goods for the 2 nd , 3 rd and 4 th quarters
exporting integrated circuit components. It is a preferred of 2001 are DISMISSED for lack of jurisdiction.
pioneer enterprise registered with the BOI. Petitioner
sought to recover the VAT it paid on imported capital goods
for the 2nd, 3rd and 4th quarters of 2001. Because of the 13.2 SILICON PHILS VS CIR
continuous inaction by respondent on the administrative G.R. NO. 173241, MARCH 25, 2015
claims of petitioner for a tax credit/refund the latter filed
separate petitions for review before the CTA. Facts:
Petitioner is a vat-registered corporation engaged in the
The CTA Second Division dismissed the petitions for lack business of designing, developing, manufacturing and
of merit. Upon appeal, the CTA En Banc affirmed the exporting integrated circuit components. It is a preferred
decision of the CTA Division. It emphasized the evidentiary pioneer enterprise registered with the BOI. Petitioner filed
nature of a claim that a VAT-registered person made on on May 6, 1999 with the One-Stop Shop Inter-Agency Tax
capital goods purchases. It is necessary to ascertain the Credit and Duty Drawback Center of the Department of
treatment of the purported capital goods as depreciable Finance an Application for Tax Credit/Refund of Value-
assets, which can only be determined through the Added Tax Paid covering the Third Quarter of 1998.
examination of the detailed general ledgers and audited
financial statements, including the person's income tax When respondent CIR failed to act upon its aforesaid
return. In view of petitioner's lack of evidence on this point, Application for Tax Credit/Refund, SPI filed on September
the claim for the refund or the issuance of tax credit 29, 2000 a Petition for Review before the CTA Division. The
certificates must be denied. CTA Division only partially granted the claim of SPI for tax
credit/refund. The CTA Division disallowed the claim of SPI
Issue: Did the CTA acquire jurisdiction over the claim? for tax credit/refund of input VAT in the amount of
P23,105,548.83 for failure of SPI to properly substantiate
Held: the zero-rated sales to which it attributed said taxes. Upon
No. The judicial claims of petitioner were filed beyond the appeal, the CTA En Banc affirmed the decision of the CTA
120+30 day period. Division.

The 120-day period begins to run from the date of During the pendency of the petition with the SC, the SC en
submission of complete documents supporting the banc promulgated on February 12, 2013 its Decision in the
administrative claim. If there is no evidence showing that consolidated cases of CIR v. San Roque Power
the taxpayer was required to submit - or actually submitted Corporation, Taganito Mining Corporation v. CIR, and
- additional documents after the filing of the administrative Philex Mining Corporation v. CIR (hereinafter collectively
claim, it is presumed that the complete documents referred to as San Roque). In San Roque, the Court settled
accompanied the claim when it was filed. Considering that the rules on the prescriptive periods for claiming
there is no evidence in this case showing that petitioner credit/refund of input VAT under Section 112 of the 1997
made later submissions of documents in support of its Tax Code.
administrative claims, the 120-day period within which
respondent is allowed to act on the claims shall be reckoned Issue:
from 16 October 2001 and 4 September 2002. The judicial Is the claim for refund filed within the prescriptive period?
claim shall be filed within a period of 30 days after the
receipt of respondent's decision or ruling or after the Held:
expiration of the 120-day period, whichever is sooner. SPI filed on May 6, 1999 its administrative claim for tax
credit/refund of the input VAT attributable to its zero-rated
Th CTA had no jurisdiction to act upon, take cognizance of, sales and on its purchases of capital goods for the Third
and render judgment upon the petitions for review filed by Quarter of 1998. The two-year prescriptive period for filing
petitioner. For having been rendered without jurisdiction, an administrative claim, reckoned from the close of the
the decision of the CTA Second Division in this case - and taxable quarter, prescribed on September 30, 2000.
 DE LEON 3B 16-17

Therefore, the herein administrative claim of SPI was timely telecommunications carriers and handles incoming
filed. telecommunications services for non- resident foreign
telecommunication companies and the relay of said
However, SPI belatedly filed its judicial claim. It filed its international calls within and around other places in the
Petition for Review with the CTA 391 days after the lapse Philippines.
of the 120-day period without the CIR acting on its
application for tax credit/refund, way beyond the 30-day ETPI filed an administrative claim with the BIR for the refund
period under Section 112 of the 1997 Tax Code. of the excess input tax attributable to its effectively zero-
rated sales in 1998. Upon the inaction of the BIR, ETPI filed
Because the 30-day period for filing its judicial claim had a petition for review with the CTA.
already prescribed by the time SPI filed its Petition for
Review with the CTA Division, the CTA Division never The CTA denied the petition because the VAT official
acquired jurisdiction over the said Petition. The CTA receipts presented by ETPI to support its claim failed to
Division had absolutely no jurisdiction to act upon, take imprint the word “zero-rated” on its face in violation of the
cognizance of, and render judgment upon the Petition for invoicing requirements under Section 4.108-1 of RR No. 7-
Review of SPI in CTA Case No. 6170, regardless of the 95. ETPI filed a petition before the CA which referred the
merit of the claim of SPI. The Court stresses that the case to the CTA en banc due to the passage of R.A. No.
120/30-day prescriptive periods are mandatory and 9282.
jurisdictional, and are not mere technical requirements. The
Court should not establish the precedent that The CTA en banc affirmed the decision of the old CTA. In
noncompliance with mandatory and jurisdictional conditions its disquisition, the CTA en banc stated that VAT-registered
can be excused if the claim is otherwise meritorious, persons must comply with the invoicing requirements
particularly in claims for tax refunds or credit. Such prescribed in Sections 113(A) 19 and 237 20 of the NIRC.
precedent will render meaningless compliance with Moreover, the invoicing requirements enumerated in
mandatory and jurisdictional requirements. Section 4.108-1 of RR No. 7-95 are mandatory due to the
word “shall” and not “may”. Hence, non-compliance with
It is not lost upon the Court that the prescription of the any thereof would disallow any claim for tax credit or VAT
judicial claim has not been raised as an issue by any of the refund.
parties whether before the CTA Division, CTA en banc, or
this Court. Nonetheless, the 120/30-day prescriptive ETPI pointed out that the imprint of the word “zero-rated” on
periods are mandatory and jurisdictional, and the matter of the face of the sales invoice or receipt is merely required in
jurisdiction cannot be waived because it is conferred by law RR No. 7-95 which cannot prevail over a taxpayer’s
and is not dependent on the consent or objection or the acts substantive right to claim a refund or tax credit for its input
or omissions of the parties or any one of them. In addition, taxes. And, that the lack of the word “zero-rated” on its
when a case is on appeal, the Court has the authority to invoices and receipts does not justify an outright denial of
review matters not specifically raised or assigned as error if its claim for refund or tax credit considering that it has
their consideration is necessary in reaching a just presented equally relevant and competent evidence to
conclusion of the case. More importantly, courts have the prove its claim. Moreover, its clients are non-resident
power to motu proprio dismiss an action that already foreign corporations which are exempted from paying VAT.
prescribed. Thus, it cannot take advantage of its omission to print the
word “zero-rated” on its invoices and sales receipts.
Wherefore, the petition is dismissed for being filed out of
time. Issues:
1. Is the word “zero-rated” required on the invoices or
receipts issued by VAT-registered taxpayers.
14. EASTERN TELECOMMUNICATIONS PHILIPPINES, 2. Did ETPI successfully substantiate its claim for refund
INC. (ETPI) VS CIR or tax credit?
G.R. NO. 183531, MARCH 25, 2015
Held:
Facts:
Yes. The word “zero-rated” is required on the invoices or
Petitioner ETPI is a vat-registered domestic corporation. As receipts issued by VAT-registered taxpayers. An applicant
a telecommunications company, ETPI entered into various for a claim for tax refund or tax credit must not only prove
international service agreements with international
 DE LEON 3B 16-17

entitlement to the claim but also compliance with all the credit certificate or the expiration of the 120-day period
documentary and evidentiary requirements. under Section 112(C) of the NIRC.

Revenue Memorandum Circular No. 42-2003 provided that The CTA Division, instead of ruling on the merits, dismissed
the failure of the supplier to comply with the invoicing the judicial claim for VAT refund for lack of jurisdiction.
requirements on the documents supporting the sale of claimed that the failure of ALPI to observe the compulsory
goods and services will result to the disallowance of the 120-day period warranted the dismissal of its petition.
claim for input tax by the purchaser-claimant.
The CTA En Banc reversed the decision of the CTA Division
If the claim for refund/TCC is based on the existence of ordered the remand of the case to the said court pursuant
zero-rated sales by the taxpayer but it fails to comply with to the ruling of the SC in the consolidated cases of San
the invoicing requirements in the issuance of sales invoices Roque et al. In these cases, the Court recognized the legal
(e.g. failure to indicate the TIN), its claim for tax effects of BIR Ruling No. DA-489-03, which stated that the
credit/refund of VAT on its purchases shall be denied "taxpayer-claimant need not wait for the lapse of the 120-
considering that the invoice it is issuing to its customers day period before it could seek judicial relief with the CTA
does not depict its being a VAT-registered taxpayer whose by way of Petition for Review." Thus, all taxpayers could
sales are classified as zero-rated sales. rely on BIR Ruling No. DA-489-03 from the time of its
issuance on December 10, 2003 up to its reversal by this
2. No. ETPI failed to substantiate its claim for refund or tax Court in CIR v. Aichi on October 6, 2010, where it ruled that
credit. ETPI failed to discharge its burden to prove its claim. the 120+30-day period was mandatory and jurisdictional.
Tax refunds, being in the nature of tax exemptions, are
construed in strictissimi juris against the taxpayer and Consequently, as ALPI filed its judicial claim for VAT credit
liberally in favor of the government. on December 29, 2009, then it was covered by BIR Ruling
No. DA-489-03. ALPI need not wait for the lapse of the 120-
Considering that ETPI is engaged in mixed transactions day period before it could seek judicial relief. The CTA En
that cover its zero-rated sales, taxable and exempt sales, it Banc remanded the case to the CTA Division for the
is only appropriate and reasonable for it to present determination of the propriety of the VAT refund or credit
competent evidence to validate all entries in its returns in claim.
order to properly determine which transactions are zero-
rated and which are taxable. Clearly, compliance with all the Hence, this petition filed by the CIR contending that ALPI
VAT invoicing requirements provided by tax laws and cannot benefit from the said BIR Ruling because it did not
regulations is mandatory. A claim for unutilized input taxes assert and invoke the said ruling in its petitions before the
attributable to zero-rated sales will be given due course; CTA Division and the CTA En Banc. Hence, it cannot be
otherwise, the claim should be struck off for failure to do so, said that ALPI was misled in relying on BIR Ruling No. DA-
such as what ETPI did in the present case. 489-03 in its premature filing before the CTA Division.

Issue:
15. CIR VS AIR LIQUIDE PHILS, INC. (ALPI) Is there a need for a taxpayer to specifically invoke BIR
G.R. NO. 210646, JULY 29, 2015 Ruling No. DA-489-03 to benefit from the same?

Facts: Held:
ALPI is a VAT-registered domestic corporation which sells No. The BIR Ruling No. DA-489-03 was a general
chemical products and renders certain related services to interpretative rule because it was a response to a query
some PEZA enterprises. On January 22, 2008, ALPI filed made, not by a particular taxpayer, but by a government
with the BIR its Quarterly VAT Return for the 4th quarter of agency tasked with processing tax refunds and credits.
2007. Thus, it applies to all taxpayers alike, and not only to one
particular taxpayer.
Subsequently, on December 23, 2009, ALPI filed with
petitioner CIR an application for issuance of a tax credit The Court agrees with ALPI in its survey of cases which
certificate for its unutilized input VAT attributable to its shows that BIR Ruling No. DA-489-03 was applied even
transactions with PEZA-registered enterprises for the 4th though the taxpayer did not specifically invoke the same. As
quarter of 2007. On December 29, 2009, or only six (6) days long as the judicial claim was filed between December 10,
later, ALPI filed its petition for review with the CTA Division, 2003 and October 6, 2010, then the taxpayer would not be
without awaiting the resolution of its application for tax required to wait for the lapse of 120-day period.
 DE LEON 3B 16-17

or inaction of the BIR. Petitioner belatedly filed its judicial

Wherefore, the petition is denied. The case is remanded to claim with the CTA on 6 July 2010.
the CTA Division for the proper determination of the
refundable or creditable amount due to the respondent, if The Court found that the Transmittal Letter submitted by
any. petitioner is not a substantial submission that would warrant
a change in the reckoning date for the 120-day period for
the BIR to act on the claim for refund. To allow petitioner’s
16. HEDCOR, INC. VS CIR allegations to prevail would set a dangerous precedent, as
G.R. NO. 207575, JULY 15, 2015 the reckoning period for the 120 days would be at the mercy
of taxpayers. They will then submit complete supporting
Facts: documents even after the two-year prescriptive period for
Petitioner is a vat-registered domestic corporation primarily filing an administrative claim has lapsed. This is obviously
engaged in the operation of hydro-electric power plants and not the intention of the law.
the generation of hydro-electric power. It filed with the BIR Wherefore, the petition is denied.
an administrative claim for the refund of excess and unused
input VAT for the 2nd quarter of taxable year 2008. On 23
March 2010, it admittedly received from the BIR a Letter of 17. CIR VS MIRANT PAGBILAO CORP
Authority or request for the presentation of records. G.R. NO. 172129 SEPT 12, 2008
Nevertheless, petitioner filed on July 6, 2010 a Petition for
Review docketed as CTA Case No. 8129 because of its Facts:
apprehension that the 2 years provided by law to file a Respondent MPC is a domestic corporation engaged in the
judicial claim pursuant to the case of Atlas. generation of power which it sells to the NPC. For the
construction of the electrical and mechanical equipment
The CTA Second Division upon motion of the CIR portion of its Pagbilao, Quezon plant, which appears to
dismissed the Petition for being filed out of time.nPetitioner have been undertaken from 1993 to 1996, MPC secured
insists, though, that it filed on 20 September 2010 the the services of Mitsubishi Corp of Japan.
complete documents supporting its administrative claim;
the 120-day period should then be counted from that date. RA 6395, the NPCs revised charter, NPC is exempt from all
taxes. MPC, on the belief that its sale of power generation
Issue: services to NPC is, pursuant to Sec. 108(B)(3) of the Tax
Was the petition filed out of time? Code, zero-rated for VAT purposes, filed with the BIR an
Application for Effective Zero Rating. The application
Held: covered the construction and operation of its Pagbilao
Yes. Strict compliance with the 120+30 day period is power station under a Build, Operate, and Transfer
necessary for a claim for a refund or credit of input VAT to scheme. The RDO has not yet acted on the application.
prosper. An exception to that mandatory period was, Thus, the MPC re-filed its application to the BIR's National
however, recognized in San Roque during the period office.
between 10 December 2003, when BIR Ruling No. DA-489-
03 was issued, and 6 October 2010, when the Court Pending its application, the CIR issued VAT Ruling No. 052-
promulgated Aichi declaring the 120+30 day period 99 which states that the supply of electricity by Hopewell
mandatory and jurisdictional, thus reversing BIR Ruling No. Phil. to the NPC, shall be subject to the zero percent (0%)
DA-489-03. VAT, pursuant to Section 108 (B) (3) of the NIRC.

Since the claim of petitioner fell within the exception period, While awaiting approval of its application, MPC filed its
it did not have to observe the 120+30 day mandatory period quarterly VAT return for the second quarter of 1998 where
under the San Roque doctrine. The present case, though, it reflected an input VAT of PhP 148,003,047.62, which
is not a case of premature filing. The CTA here found that included PhP 135,993,570 supported by OR No. 0189. It
the judicial claim was filed beyond the mandatory 120+30 the filed an administrative claim for refund of unutilized input
day prescriptive period; hence, it did not acquire jurisdiction VAT in the amount of PhP 148,003,047.62. Upon the BIR's
over the case. inaction, MPC filed a petition for review with the CTA.

Considering that the administrative claim was filed on 28 The CIR asserted that MPCs claim for refund cannot be
December 2009, petitioner had only until 27 May 2010 granted because the sale of electricity to NPC is not zero-
(counting 120+30 days) to appeal to the CTA the decision
 DE LEON 3B 16-17

rated for its failure to secure an approved application for paid. Be that as it may, and given that the last creditable
zero-rating. input VAT due for the period covering the progress billing of
September 6, 1996 is the third quarter of 1996 ending on
The CTA partially granted the claim. Upon appeal to the CA, September 30, 1996, any claim for unutilized creditable
the CA agreed with the CTA on MPCs entitlement to (1) a input VAT refund or tax credit for said quarter prescribed
zero-rating for VAT purposes for its sales and services to two years after September 30, 1996 or, to be precise, on
tax-exempt NPC; and (2) a refund or tax credit for its September 30, 1998. Consequently, MPCs claim for refund
unutilized input VAT for the second quarter of 1998. Their or tax credit filed on December 10, 1999 had already
disagreement, however, centered on the issue of proper prescribed.
documentation, particularly the evidentiary value of OR No.
0189. Also, the MPC cannot avail itself of the provisions of either
Sec. 204(C) or 229 of the NIRC which, for the purpose of
Issue: refund, prescribes a different starting point for the two- year
1. Does OR No. 0189 sufficiently prove the payment of prescriptive limit for the filing of a claim therefor. The said
VAT? provisions apply only to instances of erroneous payment or
2. Is the MPC entitled to the refund of its input VAT illegal collection of internal revenue taxes. In this case,
payments made from 1993 to 1996? MPCs creditable input VAT not erroneously paid.

Held: Wherefore, the petition is partly granted.

1. Yes, OR No. 0189 by itself sufficiently proves payment
of VAT. The law considers a duly-executed VAT
invoice or OR as sufficient evidence to support a claim 18. CIR VS AICHI FORGING COMP OF ASIA
for input tax credit. And any doubt as to what OR No. G.R. NO. 184823 OCTOBER 6, 2010
0189 was for or tended to prove should reasonably be
put to rest by the SGV report on which the CTA notably Facts:
placed much reliance. The SGV report stated that [OR] Respondent Aichi is a VAT-registered domestic corporation
No. 0189 dated April 14, 1998 is for the payment of the which is engaged in the manufacturing, producing, and
VAT on the progress billings from Mitsubishi Japan for processing of steel and its by-products. On September 30,
the period April 7, 1993 to September 6, 1996 for the E 2004, it filed a claim for refund/credit of input VAT for the
& M Equipment Erection Portion of the Companys period July 1, 2002 to September 30, 2002 CIR. On the
contract with Mitsubishi Corporation (Japan). same date, it filed a Petition for Review 7 with the CTA for
the refund/credit of the same input VAT. The CTA Division
While available records do not clearly indicate when MPC partially granted the claim.
actually paid the creditable input VAT amounting to PhP
135,993,570 (USD 5,190,000) for the aforesaid 1993 to The petitioner CIR filed a MR contending that since 2004
1996 service purchases, the presumption is that payment was a leap year, the filing of the claim for tax refund/credit
was made on the date appearing on OR No. 0189, April 14, on September 30, 2004 was beyond the two-year period,
1998. In fact, said creditable input VAT was reflected in which expired on September 29, 2004. In addition, the CIR
MPCs VAT return for the second quarter of 1998. argued that the simultaneous filing of the administrative and
the judicial claims contravenes Sections 112 and 229 of the
2. No. The claim for refund or tax credit for the creditable NIRC, claiming, that a prior filing of an administrative claim
input VAT payment made by MPC embodied in OR No. is a "condition precedent" before a judicial claim can be
0189 was filed beyond the period provided by law for such filed. He explained that the rationale of such requirement
claim. The prescriptive period commences from the close of rests not only on the doctrine of exhaustion of
the taxable quarter when the sales were made and not from administrative remedies but also on the fact that the CTA is
the time the input VAT was paid nor from the time the official an appellate body which exercises the power of judicial
receipt was issued. review over administrative actions of the BIR.

Thus, when a zero-rated VAT taxpayer pays its input VAT The CTA En Banc affirmed the Second Division’s Decision
a year after the pertinent transaction, said taxpayer only has allowing the partial tax refund/credit in favor of respondent.
a year to file a claim for refund or tax credit of the unutilized However, as to the prescriptive period, it held that a
creditable input VAT. The reckoning frame would always be taxpayer has 25 days from the close of each taxable quarter
the end of the quarter when the pertinent sales or within which to file a quarterly return of the amount of his
transaction was made, regardless when the input VAT was gross sales or receipts. In the case at bar, the taxable
 DE LEON 3B 16-17

quarter involved was for the period of July 1, 2002 to 19. CONSOLIDATED CASES BY THE CTA DIVISION
September 30, 2002. Applying Section 114 of the 1997
NIRC, respondent has until October 25, 2002 within which CIR VS SAN ROQUE POWER CORP,
to file its quarterly return for its gross sales or receipts [with] GR 187485 FEBRUARY 12, 2013
which it complied when it filed its VAT Quarterly Return on
October 20, 2002. Facts:
San Roque Power Corp is a VAT-registered domestic corp
It also rejected the claim that simultaneous filing of the registered with the BOI on a preferred pioneer status, to
administrative and judicial claim is not allowed. It ruled that engage in the design, construction, erection, assembly, as
what is controlling is that both claims for refund must be filed well as to own, commission, and operate electric power-
within the two-year prescriptive period. generating plants and related activities. It transacted with
the NPC.
Issue:
Were the respondent’s judicial and administrative claims for On March 28, 2003, it filed amended Quarterly VAT Returns
tax refund/credit filed within the two-year prescriptive for the year 2001 and on the same date filed with the BIR
period? separate claims for refund. Due to the CIR’s inaction on the
subject claims, San Roque filed a Petition for Review with
Held: the CTA.
Yes.
Sec 112 (A) of the NIRC, providing a two-year prescriptive The CTA Division initially denied the claim but later on
period reckoned from the close of the taxable quarter when partially granted the claim. The CIR filed a petition for
the relevant sales or transactions were made pertaining to review with the CTA En Banc, which affirmed the CTA
the creditable input VAT, applies to the instant case, and Division and held that San Roque's claim was not
not to the other actions which refer to erroneous payment prematurely filed.
of taxes.
Issue: Is the claim of San Roque not prematurely filed?
The CTA En Banc erroneously applied Sections 114(A) and
229 of the NIRC in computing the two-year prescriptive Held:
period for claiming refund/credit of unutilized input VAT. To
be clear, Section 112 of the NIRC is the pertinent provision San Roque filed its judicial claim a mere 13 days after it filed
for the refund/credit of input VAT. Thus, the two-year period its amended administrative claim with the CIR. San Roque
should be reckoned from the close of the taxable quarter failed to comply with the 120-day waiting period, the
when the sales were made. compliance of which is mandatory and jurisdictional. San
Roque’s failure to comply with the 120-day mandatory
The respondent's petition (filed on April 14, 2000) was filed period renders its petition for review with the CTA void.
on the last day of the 24th calendar month from the day
respondent filed its final adjusted return. Hence, it was filed TAGANITO MINING CORP VS CIR,
within the reglementary period. Applying this to the present GR 196113 FEBRUARY 12, 2013
case, the two-year period to file a claim for tax refund/credit
for the period July 1, 2002 to September 30, 2002 expired Facts:
on September 30, 2004. Hence, respondent’s Taganito Mining Corp is a VAT-registered domestic
administrative claim was timely filed. corporation engaged in mining, developing, exploiting,
extracting, milling, etc of gold, silver, copper, lead, etc. It is
However, the judicial claim is prematurely filed. In this case, also registered with the BOI.
the administrative and the judicial claims were
simultaneously filed on September 30, 2004. Obviously, On Nov 13, 2006, it claimed a tax refund with the BIR, for
respondent did not wait for the decision of the CIR or the the period January 1 - 31, 2004 Before the lapse of the
lapse of the 120-day period. For this reason, we find the prescriptive period, it filed a petition for review with the CTA
filing of the judicial claim with the CTA premature. Division. The CTA Division partially granted the claim of
Taganito Mining and ruled that the same was filed within the
Wherefore, the petition is dismissed for being prematurely prescriptive period.
filed.
Upon appeal to the CTA En Banc, it reversed the decision
of the CTA Division and held that although the
 DE LEON 3B 16-17

administrative claim was timely filed, the judicial claim was 20. SITEL PHILS CORP VS CIR
prematurely filed which was filed after a lapse of only 92 C.T.A. CASE NO. 7423 OCTOBER 21, 2009
days from filing with the CIR.
Facts:
Issue: Is the judicial claim of Taganito Mining prematurely Sitel is a VAT-registered domestic corp engaged in the
filed? business of providing call center services from the
Philippines to domestic and offshore business including, but
Held: not limited to, tactical telemarketing campaigns and
programs and customer relationship management services.
Taganito also filed its claim without waiting for the 120-day It filed with the BIR an application for refund for its unutilized
period. However, Taganito can invoke BIR Ruling No. DA- input VAT arising from domestic purchase of goods and
489-03 57 dated 10 December 2003, which expressly ruled services attributed to zero-rated transactions and
that the "taxpayer-claimant need not wait for the lapse of purchases/importations of capital goods for the 1st, 2nd,
the 120-day period before it could seek judicial relief with 3rd and 4th quarters of 2004.
the CTA by way of Petition for Review." Taganito filed its
judicial claim after the issuance of BIR Ruling No. DA-489- For the failure of the BIR to act on its claim, the petitioner
03 but before the adoption of the Aichi doctrine. Thus, filed the instant case.
Taganito is deemed to have filed its judicial claim with the
CTA on time. Issue:
Is the petitioner entitled to a refund or tax credit of its
unutilized input VAT arising from purchase of goods and
PHILEX MINING CORP VS CIR, services attributed to zero-rated sales and
GR 197156 FEBRUARY 12, 2013 purchases/importations of capital goods?

Facts: Held:
Philex Mining Corp is a VAT-registered domestic
corporation principally engaged in the mining business. On For the sale of services, petitioner failed to prove that the
October 21, 2005 it filed a Quarterly VAT Return for the 3rd call services it rendered for the year 2004 were made to
quarter of the year 2005 which it amended on December 1, non-resident foreign clients doing business outside the
2005. On March 20, 2006, itfiled its claim for refund/tax Philippines, its alleged sales therefrom in the amount of
credit with the BIR. Because of the BIR's inaction, it filed a P862,520,658.23 cannot qualify for VAT zero-rating under
Petition for Review with the CTA on October 17, 2007. Section 108(8)(2) of the NIRC of 1997, as amended.
Consequently, the input VAT of P7,170,276.02 allegedly
The CTA Division denied the claim due to prescription ruling attributable to the said sales cannot be refunded.
that the 2-year prescriptive period specified in Section
112(A) of RA 8424, as amended, applies not only to the Anent the remaining claim amounting to P15,923,623.57
filing of the administrative claim with the BIR, but also to the which upon verification thereof, the Court-commissioned
filing of the judicial claim with the CTA. Upon appeal, the independent CPA found that out of the P15,923,623.57
CTA En Banc affirmed the CTA Division's decision. claimed input tax on capital goods, only P13,824,129.14
was properly substantiated for VAT purposes.
Issue: Is the claim of Philex Mining barred by prescription?
However, the Court found that the ICPA recommended
Held: amount of P13,824,129.14 should be further reduced by
P2,668,852.55 17 representing input taxes claimed on
Philex filed its Petition for Review with the CTA only on 17 domestic purchases of goods and services which are
October 2007, or four hundred twenty- six (426) days after supported by invoices and ORs, respectively, with pre-
the last day of filing its judicial claim (August 17, 2006). In printed TIN-V instead of TIN-VAT as required under Section
short, Philex was late by one year and 61 days in filing its 4.108-1 of Revenue Regulations No. 7-95.
judicial claim which was way beyond the 30-day prescribed
period. Hence, the court partially granted the refund. respondent
CIR is ORDERED to REFUND OR ISSUE A TAX CREDIT
CERTIFICATE in the reduced amount of P11,155,276.59
representing unutilized input VAT arising from petitioner's
domestic purchases of goods and services which are
 DE LEON 3B 16-17

attributable to zero-rated transactions and issuance of a tax credit certificate or refund of

purchases/importations of capital goods for the taxable year creditable input tax due or paid attributable to such
2004. sales." The phrase "within two (2) years x x x apply for
the issuance of a tax credit certificate or refund" refers
to applications for refund/credit filed with the CIR and
21. CIR VS MINDANAO II GEOTHERMAL not to appeals made to the CTA.
PARTNERSHIP
G.R. NO. 191498 JANUARY 15, 2014 Thus, it is only the administrative claim that must be filed
within the two-year prescriptive period; the judicial claim
Facts: need not fall within the two-year prescriptive period.
Mindanao II is a VAT-registered partnership engaged in the
business of power generation and sale of electricity to the Notwithstanding the timely filing of the administrative
NPC. It filed with the BIR an application for the refund or claims, the SC found that the CTA En Banc erred in holding
credit of accumulated unutilized creditable input taxes. that Mindanao II’s judicial claims were timely filed.
Pursuant to Section 112(D) of the 1997 Tax Code, the CIR
had a period of 120 days, or until 3 February 2006, to act The CTA En Banc’s holding is that, since the word "or" – a
on the claim. The administrative claim, however, remained disjunctive term that signifies dissociation and
unresolved on 3 February 2006. Under the same provision, independence of one thing from another – is used in Section
Mindanao II could treat the inaction of the CIR as a denial 112(D), the taxpayer is given two options: 1) file an appeal
of its claim, in which case, the former would have 30 days within 30 days from the CIR’s denial of the administrative
to file an appeal to the CTA, that is, on 5 March 2006. claim; or 2) file an appeal with the CTA after expiration of
Mindanao II, however, did not file an appeal within the 30- the 120-day period, in which case the 30-day appeal period
day period. does not apply. The judicial claim is seasonably filed so long
as it is filed after the lapse of the 120-day waiting period but
Apparently, Mindanao II believed that a judicial claim must before the lapse of the two- year prescriptive period under
be filed within the two-year prescriptive period provided Section 112(A).
under Section 112(A) and that such time frame was to be
reckoned from the filing of its Quarterly VAT Returns, it filed The SC does not agree. The 30-day period applies not only
a Petition for Review with the CTA claiming inaction on the to instances of actual denial by the CIR of the claim for
part of the CIR and that the two-year prescriptive period was refund or tax credit, but to cases of inaction by the CIR as
about to expire. well.

The CTA Division granted the claim. The CTA En Banc This law is clear, plain, and unequivocal. Following the well-
affirmed the decision of the CTA Division. As to the issue of settled verba legis doctrine, this law should be applied
compliance with the 30-day period for appeal to the CTA, exactly as worded since it is clear, plain, and unequivocal.
the CTA En Banc held that this was a requirement only As this law states, the taxpayer may, if he wishes, appeal
when the CIR actually denies the taxpayer’s claim. But in the decision of the Commissioner to the CTA within 30 days
cases of CIR inaction, the 30-day period is not a mandatory from receipt of the Commissioner's decision, or if the
requirement; the judicial claim is seasonably filed as long Commissioner does not act on the taxpayer's claim within
as it is filed after the lapse of the 120- day waiting period the 120-day period, the taxpayer may appeal to the CTA
but within two years from the date of filing of the return. within 30 days from the expiration of the 120-day period.

Issues: Mindanao II, however, filed a Petition for Review only on 21

1. Are the claims filed within the two-year prescriptive July 2006, 138 days after the lapse of the 30-day period on
period for filing an application for refund or credit of 5 March 2006. The judicial claim was therefore filed late.
unutilized input VAT;
In sum, the court found that the three administrative claims
Held: for the refund or credit of unutilized input VAT were all timely
1. No. Although the application for refund was filed on filed, while the corresponding judicial claims were belatedly
time, the judicial claims were filed out of time. Sec 112 filed. The foregoing considered, the CTA lost jurisdiction
of the NIRC provides that any VAT-registered person, over Mindanao Il’s claims for refund or credit. The CTA EB
whose sales are zero-rated or effectively zero-rated erred in granting these claims.
may, within two years after the close of the taxable
quarter when the sales were made, apply for the WHEREFORE, the petition is granted.