SUMMARY OF CTA DECISIONS (SEPTEMBER 2012)

ASSESSMENT
1.
Deficiency interest and delinquency interest, having different nature for their
existence, cannot be assailed as double imposition of interests as the law itself allows
the simultaneous imposition of these two kinds of interests.
There is no double imposition of interests under Section 249 of the NIRC of 1997. The law
clearly differentiates deficiency interest from delinquency interest. Deficiency interest is
imposed for the shortage of taxes paid, while delinquency interest is imposed for the delay in
payment of taxes. Hence, having different nature for their existence, it cannot be assailed
that there is double imposition of interests as the law itself allows the simultaneous
imposition of these two kinds of interests. Deficiency interest on any deficiency tax shall be
assessed from the date prescribed for its payment until the full payment thereof; while the
assessment of delinquency interest that is imposed upon failure to pay a deficiency tax, or
any surcharge or interest thereon, shall be reckoned from the due date appearing in the
notice and demand of the Commissioner until the amount is fully paid.
It may be argued that the simultaneous imposition of at least 40% interest per annum on any
unpaid tax is grossly excessive and unjust, which may not be reflective of the real intent of
the law in imposing interest on any unpaid tax due to the government. However, the law is
clear. It states that the interests, both deficiency and delinquency interests, shall be
assessed until full payment thereof. [Takenaka Corporation Philippine Branch, CTA EB
Case No. 745 (CTA Case No. 7701), September 4, 2012]
Dissenting Opinion of Justice Acosta
It is not the intent of the law to impose such undue interest on any unpaid tax due to the
Government. The imposition of at least 40% interest per annum on any unpaid tax is grossly
excessive and unjust. The imposition of deficiency interest and delinquency interest
simultaneously for a given period of time and which will translate to at least 40% interest per
annum on any unpaid tax, being grossly excessive and unconscionable, may partake the
nature of an imposition that is penal, rather than compensatory.
The 20% deficiency interest runs only from the date prescribed for the payment of the unpaid
or deficiency tax until the date of payment prescribed by the FAN issued by CIR. After
which, delinquency interest (on the deficiency tax, deficiency interest and surcharge) is
imposed on taxpayer in addition to the basic deficiency tax, deficiency interest and
surcharge, until final payment of the total amount is made.

2.
Failure to include the FCDU onshore income in the percentage tax return, loans
granted to depositors in the documentary stamp tax declarations and the absence of
entry pertaining to branch profit remittance in the tax return will result in the
application of the 10-year prescriptive period, not the 3-year prescriptive period for
the issuance of an assessment.
Taxpayer filed its returns for gross receipts tax, documentary stamp taxes and branch profit
remittance tax for the taxable year 1998. Believing that its FCDU operations were not subject
to gross receipts tax, documentary stamp taxes and branch profit remittance tax, taxpayer
did not include the GRT on its regular onshore income and there was no entry for the loans
made to residents and certificate of time deposits made by resident depositors in its DST
Declaration. Likewise, there was no entry made for branch profit remittances in the Monthly
Remittance Return of Income Taxes Withheld. As the assessment was issued beyond the 3year period to make assessment, taxpayer argued that the right of the BIR to assess had
already prescribed.
The Court held that the 10-year period to assess applies. Citing CIR vs. Republic Cement
Corporation, it held that the absence of FDCU onshore income declaration in taxpayers
returns and considering that loans made to its depositors were not reflected on its DST
Declarations for taxable year 1998, these are tantamount to omission to file the said returns.
The said omissions warrant the application of the 10-yr assessment period under the NIRC
of 1997, within which CIR can assess taxpayer for deficiency GRT and DST. In the case of
BPRT for the year 1998, since there was no entry pertaining to BPRT in the returns filed, the
taxpayer is considered not to have filed the corresponding BPRT Return for its FCDU in
1998. The 10-yr period to assess likewise applies. [Standard Chartered Bank vs. CIR,
CTA EB 731 (CTA 7253), September 13, 2012]
3.
A taxpayer may still elevate his protest to the Commissioner within 30 days
from the date of receipt of the final decision of the Commissioners duly authorized
representative, and the latters decision shall not be considered final, executory and
demandable.
Taxpayer received a Final Assessment Notice (FAN) on April 21, 2008 and filed a protest
thereon on May 21, 2008. It received a Final Decision on Disputed Assessment (FDDA) on
May 25, 2009 issued by the OIC-Assistant Commissioner, Zenaida Garcia. Instead of filing
an appeal with the CTA, it directly appealed to then Commissioner Sixto Esquivas IV on
June 24, 2009. A Revised Final Decision on Disputed Assessment (RFDDA) was issued on
September 8, 2010 by the Assistant Commissioner. The taxpayer filed a Petition for Review
before the CTA on October 7, 2010 after receiving the RFDDA. The BIR alleged the courts
lack of jurisdiction since the decision on the disputed assessment had long been considered
final and executory. The CTA did not agree since Section 3.1.5 of RR 12-99 provides that a
protest may still be made to the Commissioner from the decision issued by the
Commissioners duly authorized representative whose decision shall not be considered final
and executory. The filing of an appeal to the Commissioner based on the OIC-Assistant
Commissioners decision was with legal basis, and did not result to the assessment

becoming final and executory. (Belle Corporation vs. CIR, CTA 8175, September 18,
20121)
4.
Mere payments to stockholders and interest payments cannot be treated as
dividends absent legal and factual bases.
The BIR assessed the taxpayer for deficiency final tax on dividends. It treated the payments
made to stockholders and interest as deemed payments of dividends, and accordingly
imposed final withholding tax on dividends. The Court cancelled the assessment. The
records would show that the payments made to stockholders correspond to the outstanding
balance of companys advances from a stockholder. In addition, the company did not have
sufficient retained earnings to support any declaration of dividends. The Court held that the
BIR has neither legal nor factual basis to presume that payments made to the stockholder
and the interest paid are dividends. It is true that as a general rule, tax assessments by tax
examiners are presumed correct and made in good faith. However, the prima facie
correctness of a tax assessment does not apply upon proof that an assessment is utterly
without foundation, meaning it is arbitrary and capricious. Where the BIR has come out with
a naked assessment i.e., without any foundation character, the determination of the tax
due is without rational basis. The Court also reiterated the settled rule that the presumption
of correctness of assessment being a mere presumption cannot be made to rest on another
presumption. (United Distribution Management, Inc. vs. CIR, CTA Case No. 7885,
September 24, 2012)
5.
A waiver of the defense of prescription which does not indicate the date of
acceptance by the BIR does not toll the running of the three-year prescriptive period.
An assessment, dated July 19, 2004, for income tax for the year 2000 was issued by the BIR
against the taxpayer which was received by the latter on September 6, 2004.
The taxpayer argued that the assessment was issued beyond the three-year prescriptive
period. On the other hand, the BIR argued that the taxpayer had executed a waiver of the
defense of prescription which extended the prescriptive period. The Court ruled that the
waiver was in violation of RMO 20-90 because it did not indicate the date of receipt and
acceptance by the BIR. Also, it lacks the signature showing receipt by the taxpayer of
his/her file copy. The Court noted the BIRs explanation that the dates of the execution and
notarization are identical, indicating that the same were executed and accepted by both the
taxpayer and the BIR on the same date. However, scrutiny of the waiver reveals that only
the taxpayers representative appeared before the Notary Public. The Court held that the
period to assess was not suspended or tolled. (First Gas Power Corporation vs. CIR, CTA
Case No. 7281, September 24, 2012)

The Court also noted the following defect s in the waiver:

1. The waiver was executed without the notarized written authority authorizing the signatory to sign
the waiver on behalf of the taxpayer
2. The date of acceptance of the waiver was not clearly indicated, as there are two dates appearing to
be the date of acceptance
3. The waiver was not properly notarized

6.
A Final Assessment Notice without a due date cannot be considered as a
demand but mere request for payment.
The assessment issued against the taxpayer requested the taxpayer to pay the deficiency
tax within the time shown in the assessment notice. However, the Court noted that the due
date in each of the FANs referred to in Assessments was left blank. Accordingly, the Court
ruled that the FANS are not demand but mere request for payment. It cited CIR vs. Pascor
Realty and Development, GR No. 128315, June 29, 1999 where the Supreme Court held
that an assessment must be sent to and received by a taxpayer, and must demand
payment of the taxes described therein within a specified period. Applying the aforecited
jurisprudence to the case, the Court held that the FANs and related Assessments issued by
the BIR against the taxpayer cannot be considered as valid assessment notices since the
BIR did not indicate therein a specific date or period within which the alleged tax liabilities
shall be paid by the taxpayer. (First Gas Power Corporation vs. CIR, CTA Case No.
7281, September 24, 2012)
7.
A taxpayer exempt from VAT but opting to be registered as VAT taxpayer may
be held liable for VAT deficiency for failure to print the words VAT-exempt sale on
the official receipts issued to its PEZA-registered leasee.
Taxpayer is a PEZA-registered Ecozone Facilities Enterprise located at the Light Industry
and
Science Park. Its revenues consisted solely of collections and rental from the lease of a
factory building to another PEZA-registered ecozone enterprise. The BIR assessed the
taxpayer deficiency VAT because it issued official receipts without imprinting thereon the
words VAT ZERO-RATED, which is in violation to Section 4.113-4 of Revenue Regulations
(RR) No. 16-2005, as amended. As a defense, the taxpayer argued that since it availed of
the 5% preferential tax rate pursuant to RA 7916 and its IRR, it is exempt from national and
local taxes including VAT. Also, under Section 5(4a) of RMC 74-99, its sales of services, in
particular, the lease of a factory building to another PEZA-registered enterprise, is
considered an Intra Ecozone Enterprise Sale of Service (Intra Ecozone Transaction) which
is exempt from VAT.
The Court ruled that the taxpayer has been granted 5% gross income tax (GIT) incentive by
the PEZA and is entitled to exemption from national and local taxes including VAT pursuant
to Section 24 of RA No. 7916, as amended by RA 8748. Taxpayer, being exempt from VAT,
may not register as VAT taxpayer. However, taxpayer opted to be registered as VAT
taxpayer. Section 113(D)(2) of the NIRC of 1997,as amended in relation to Section
113(B)(2)(b) of the same Code, explicitly provides that if a VAT registered person issues a
VAT invoice or VAT official receipt for a VAT-exempt transaction, but fails to do display
prominently on the invoice or receipt the words VAT-exempt sale, the transaction shall
become taxable. Thus, the Court held the taxpayer liable for VAT deficiency for failure to
print the words VAT-exempt sale on the official receipts issued to its PEZA-registered
leasee. (First Sumiden Realty, Inc. vs. CIR, CTA Case No. 8151, September 27, 2012)

REFUND / ISSUANCE OF TAX CREDIT

Refund of Input Taxes
8.
Sections 112 (C) cannot simply be harmonized with Section 229 of the NIRC of
1997 as the former specifically pertains to refunds or tax credit of excess and
unutilized input tax while the latter is for the recovery of erroneously or illegally
collected internal revenue taxes.
On March 30, 2010, the taxpayer elevated its claim for refund of excess and unutilized input
VAT, filed on March 23, 2010, to the CTA. The taxpayer filed a judicial claim in order to toll
the running of the prescriptive period provided under Section 229 of the 1997 NIRC, as
amended. It was the position of the taxpayer that its action must be filed within the aforesaid
two-year prescriptive period even without regard to the 120 day period provided under
Section 112 (C) of the same code. It further contended that the 120-30 day period in Section
112 (C) of the NIRC, as amended, is merely permissive on account of the use of the word
may. The court, however, did not agree and explained that Section 112 (C ) cannot simply
be harmonized with Section 229 of the NIRC of 1997 as the former specifically pertains to
refunds or tax credit of excess and unutilized input tax while the latter is for the recovery of
erroneously or illegally collected internal revenue taxes. The court reiterated the ruling in
Aichi case that the phrase within two (2) yearsapply for the issuance of a tax credit
certificate or refund refers to applications for refund/credit filed with the CIR and not to
appeals made to the CTA. The word may in Section 112 (C) refers to the taxpayers
discretion on whether or not to appeal respondents decision or inaction with the Court of
Tax Appeals. It does not connote that the said period can be dispensed with provided that
the judicial claim is lodged within the two year prescriptive period. In fine, petitioners action
was filed prematurely as it was done before the lapse of the 120-day period granted to
respondent to act on the administrative claim. (Harte-Hanks Philippines, Inc. vs. CIR,
CTA EB 748 (CTA 8050), September 7, 2012)
9.
The premature filing of taxpayers judicial claim for refund/credit of input VAT
before the CTA warrants a dismissal, in as much as no jurisdiction was acquired by
the CTA.
The taxpayer in this case is praying for refund or issuance of a TCC, representing its
unutilized input VAT on purchases of goods and services for the 4th quarter of calendar year
2007, attributable to its zero-rated sales of generated power. Taxpayer filed a Petition for
Review with the CTA, on December 29, 2009, barely 11 days after the filing of its
administrative claim on December 18, 2009.
The Court held that the Petition for Review was prematurely filed as the taxpayer did not wait
for the lapse of the 120 days before filing its appeal with the CTA. Citing the Aichi Case (GR
184823, October 6, 2010), the Court held that the premature filing of taxpayers judicial claim
for refund/credit of input VAT before the CTA warrants a dismissal, in as much as no
jurisdiction was acquired by the CTA. It also held that for the CTA to acquire jurisdiction

over refunds of internal revenue taxes, there must be a decision or inaction by the CIR.
(Hedcor Sibulan, Inc. vs. CIR, CTA 8014, September 18, 20122)
Dissenting Opinion of Justice Bautista
When the taxpayer filed its administrative claim for refund/tax credit and the subsequent
Petition for Review, the then controlling doctrine was the Mirant Case (GR 172129,
September 12, 2008). It was merely unfortunate that during the pendency of the case, the
Supreme Court issued the Aichi Case. He opined that the administrative and judicial claims
were filed within the prescribed prescriptive period. It would be the height of injustice to
impose a new ruling, on the basis of the so-called adherence to precedence, for the latter
doctrine is promulgated after the taxpayer-claimant had faithfully relied and complied with
the Courts former ruling.
Separate Concurring Opinion of Justice Cotangco-Manalastas
The Justice opined that the present Petition for Review shall be dismissed, not for lack of
jurisdiction, but on the ground of lack of cause of action. The premature filing of taxpayers
Petition for Review is violation of the doctrine of exhaustion of administrative remedies. This
failure to observe the doctrine of exhaustion of administrative remedies is fatal to ones
cause of action, thus absent any waiver or estoppel, the case is susceptible to dismissal for
lack of cause of action. However, that said, failure to exhaust administrative remedies does
not affect the jurisdiction of the court. Such defense of premature filing of judicial claim for
refund is therefore waivable or may be considered waived pursuant Section 1, Rule 9 of the
Rules of Court. Given that CIR alleged it as affirmative defense, said defense was properly
raised for the consideration of this Court as a valid ground for dismissal.
Refund of Income Tax/Creditable Withholding Tax
10.
A financing institution wholly-owned and controlled by a foreign government is
exempt from income tax and final withholding tax with respect to its income derived
from investments in T-bonds.
The taxpayer, claiming to be a financial institution wholly-owned and controlled by the
Government of Singapore, filed a claim for refund or issuance of tax credit certificate (TCC)
representing final withholding taxes (FWT) erroneously withheld on interest income earned
from its investments in Philippine T-bonds. The Court ruled that for investment in bonds to
be exempt from income tax and final withholding tax under Section 32(B)(7)(a) of the 1997
Tax Code and Section 2.57.5 of RR 2-98, the taxpayer must either be a (a) foreign
government, or (b) financing institution owned, controlled or enjoying refinancing from
foreign governments, or (c) and international or regional financial institution established by
foreign governments. Since there was already previous decision by the Court that taxpayer
is a financing institution wholly-owned and controlled by the Government of Singapore, it is
exempt from income tax and consequently, from FWT on income derived from investments

The same decision was made in the case of Procter and Gamble Asia, Pte. Ltd. vs. CIR, CTA EB 742 (CTA 7581
and 7639), September 21, 2012; Philex Mining Corporation vs. CIR, CTA EB 787 (CTA 7933 & 7968), September
24, 2012; Kepco Ilijan Corporation vs. CIR, CTA EB 733 (CTA 6966), September 6, 2012

in T-bonds. (Government of Singapore Investment Corporation PTE Ltd. vs. CI, CTA
8030, September 5, 20123)
11.
For claims for refund involving creditable taxes withheld, it is necessary to
prove that these creditable taxes were not utilized to pay for tax liabilities. The income
tax returns alone are not enough to fully support the contention that no part of the
creditable withholding tax sought to be refunded by petitioner was utilized.
The taxpayer foreclosed a property which was used by borrower as security for a loan
secured from the taxpayer and other banks. The taxpayer withheld and paid 6% tax based
on the bid price. Arguing that the borrower is habitually engaged in real estate business and
the applicable withholding tax is 5%, it filed a claimed for refund on the difference.
The Court denied taxpayers claim. The taxpayer was able to sufficiently establish the fact
of withholding and the payment of withholding tax. However since the claim for refund
involves creditable taxes withheld, it is necessary to prove that these creditable taxes were
not utilized to pay for tax liabilities. The income tax returns of the borrower alone are not
enough to fully support taxpayers contention that no part of the creditable withholding tax
sought to be refunded by petitioner was utilized; first, there were no other relevant
supporting documents or schedules presented to delineate the figures constituting the
creditable taxes withheld that was reported in the tax returns; and second, this Court cannot
give credence to the Unadjusted Schedule of Prepaid Tax for the taxable year being referred
to by the taxpayer as the same pertains merely to a list of creditable tax withheld for taxable
year and was not accompanied by any attachment to support its contents; also it is manifest
from the records that petitioner failed to have this Schedule of Prepaid Tax offered in
evidence, and thus, was not admitted as part of the records of this case.(Philippine
National Bank vs. CIR, CTA EB 762 (CTA 7355 & 7588), September 12, 2012)
12.
The irrevocability rule only applies to the option of carry-over and not the
option of refund as explicitly stated in Section 76 of the 1997 NIRC, as amended.
On April 6, 2006, the taxpayer filed its annual income tax return for the taxable year 2005
reflecting an income tax overpayment and signified therein its option to be issued a tax credit
certificate. On January 19, 2007, it filed an administrative claim for refund of its excess 2005
excess Creditable Withholding tax. When the BIR did not act upon its claim, it filed a Petition
for Review. The CTA denied its claim and reasoned that despite having originally opted To
be issued a Tax Credit Certificate of its 2005 excess CWT, taxpayer carried over the excess
to the subsequent quarters of taxable year 2006. On its appeal, the taxpayer imputed error
on the CTA in denying its claim on the sole basis of the 2006 1st to 3rd quarter ITRs and in
totally disregarding its categorical choice to be refunded its 2005 CWT in its 2005 annual
ITR. It was the position of the taxpayer that it has an irrevocable option to claim for refund
when it indicated such option to be refunded of its 2005 excess CWT in the 2005 annual
ITR. In denying the claim, the CTA explained that under the irrevocability rule, (Sec. 76 of
the 1997 NIRC, as amended), in the event the corporate taxpayer elects the option to carryover, such option shall be irrevocable for the taxable period, and a refund shall not be
3

A similar decision was previously issued in CTA Case No. 7726, April 29, 2010; CTA EB No. 689, June 10, 2011

allowed. Thus, the irrevocability rule applies only to the option to carry-over and not the
option of a refund as explicitly stated in Section 76 of the 1997 NIRC, as amended. The
irrevocability rule under section 76 of the 1997 NIRC, as amended, applies when the option
to carry-over is actually or constructively chosen. [Stablewood Philippines, Inc. vs. CIR,
CTA EB 751 (CTA 7705)]
13.
Once the taxpayer opts to carry-over the unutilized creditable withholding tax,
such options is considered irrevocable.
The taxpayers results of operations for the year 2006 resulted in a loss. Thus, the credible
withholding taxes were not utilized, for which it later filed for a refund. When the taxpayer
filed its Annual ITR for 2006, it ticked the box To be issued a Tax Credit Certificate as
regards its overpayment. However, taxpayer actually carried-over said excess creditable
withholding tax to the first and second quarters in its Quarterly Income Tax Returns for
taxable year 2007.
The Court held that when taxpayer actually carried-over said excess creditable withholding
tax to the first and second quarters in its Quarterly Income Tax Returns for taxable year
2007, taxpayer opted to carry-over its unutilized creditable withholding tax. Said option to
carry-over becomes irrevocable. Notwithstanding taxpayer's effort to subsequently amend
its first and second Quarterly Income Tax Returns for taxable year 2007 by removing the
unutilized creditable withholding tax carried-over to taxable year 2007, it will not change the
fact that petitioner had already opted the carry-over option and said choice is irrevocable.
Whether or not petitioner applied for the tax credit is irrelevant and would not change the
carry-over option already made. (United Coconut Planters Bank vs. Commissioner of
Internal Revenue, CTA Case No. 7903, September 18, 2012)
14.
To be entitled to the computation of the gain or loss from the sale of an
investment of a non-resident stockholder using a functional currency other than the
Philippine peso, the following elements must be present, to wit: (1) such non-resident
stockholder made the said investment in such functional currency, and not in
Philippine peso; and (2) the investee company in the Philippines uses a functional
currency other than the Philippine peso for its financial statements.
The entire amount of the increase in the capital stock of CEP IIs capital stock was
subscribed by CE Phils Ltd. (CE Phils). As payment for said subscription, CE Phils assigned
to CEP II its 100,00 common shares and 313,141 Series A preferred shares in CE Cebu,
which were valued at US$65,210,000.00. CEP II obtained an approval from the SEC to use
the US dollar as its functional currency in presenting its financial statements.
CEP IIs management effected the redemption of preferred shares. For purposes of
computing the capital gains on the redeemed shares, CE Phils used the peso equivalent of
the redemption price (based on the Philippine Dealing Systems closing rate on the
redemption date) and the peso equivalent of the cost per share (which was translated based
on historical rate) and accordingly paid the capital gains tax due of the resulting capital gain.
CE Phils later applied for a refund of excess capital gains tax paid on the gain realized from
the redemption of preferred shares. It argues that the capital gain should have been
computed using the US dollar redemption price less the cost per share in US dollar. The
8

resulting capital gain is US dollar should then be translated into Philippine peso using the
PDS closing rate at the time of redemption. As this would result to lower capital gains, there
was an excessive payment of capital gains tax.
The Court ruled that to be entitled to the computation of the gain or loss from the sale of an
investment of a non-resident stockholder using a functional currency other than the
Philippine peso, the following elements must be present, to wit: (1) such non-resident
stockholder made the said investment in such functional currency, and not in Philippine
peso; and (2) the investee company in the Philippine uses a functional currency other than
the Philippine peso for its financial statements. As a corollary, if the investor, whether
resident or non-resident, made the investment in Philippine peso, then it shall compute the
gain or loss from sale of said investment using the Philippine peso cost and Philippine peso
selling price.
The Court denied the refund. The Court found that CE Phils was able to prove that the
investee company (CE II) uses the US dollar as its functional currency in its financial
statements. However, it was not able to establish that the investment made in CEP II in the
form of shareholding (which was later redeemed), was in functional currency, other than
Philippine peso, particularly in US dollars. [CE Philippines Ltd. vs. CIR, CTA EB 770 (CTA
7688), September 20, 2012]
Customs-Related Refunds
15.
Failure to pay the required refund processing fee within the statutory limit is
not a ground to deny claim for refund of unutilized advance deposit under Letter of
Credit.
Petitioner claims for a refund for the amount representing unutilized advance deposit under
Letter of Credit. The claim for refund was denied on the ground that it failed to pay the
required refund processing fee within the statutory limit as provided under Section 1707, in
relation to Section 3301 and 3303 of the Tariff and Customs Code of the Philippines.
The Court held that perusal of all the foregoing provisions would show that there is indeed
no mention that the refund processing fee should be paid within the one year period
provided under CAO 5-92, in order to be entitled to a claim for refund of customs duties. In
fact even a reading of Customs Administrative Order No, 2-2001 which enumerates the rates
of customs brokerage fees, including the refund processing fees, does not provide for a
prescriptive period within which to pay the said refund processing fee nor a penalty for nonpayment thereof. (Grandteq Industrial Steel Products, Inc. vs. Hon. Secretary of
Finance, CTA 8201, September 27, 2012)
Refund of Excise Taxes
16.
The excise tax imposed on petroleum under Section 148 is the direct liability of
the manufacturer who cannot thus invoke the excise tax exemption granted to its
buyers who are international carriers.
The taxpayer is a domestic corporation engaged in the business of processing, treating and
refining petroleum for the purpose of producing marketable products and by-products and
the subsequent sale thereof. It filed a claim for refund or tax credit of excise taxes paid on
9

Jet A-1 fuel sold to various international carriers for the period February to April 2006. The
taxpayer based its right to claim for refund on Section 135(a) and (b) of the 1997 NIRC
providing for tax exemption on petroleum products sold to international carriers. It was the
position of the taxpayer that since it had already paid excise taxes on the imported Jet A-1
fuel that were sold to exempt international carriers, then said excise taxes paid partake the
nature of erroneously or illegally collected taxes, hence it is entitled to refund. Also, since the
tax exemption attached to the petroleum products themselves, as provided under Section
148, the manufacturer or producer is under no duty to pay the excise tax thereon. The CTA
ruled that the exemption from excise tax payment on petroleum products under Sec. 135(a)
is conferred on international carriers who purchased the same for their use of consumption
outside the Philippines. Considering that the excise taxes attaches to petroleum products as
soon as they are in existence as such there can be no outright exemption from the payment
of excise tax on petroleum products sold to international carriers. Locally manufactured
petroleum products are clearly subject to excise tax under Sec. 148. Hence, its claim for tax
refund may not be predicated on Sec. 229 of the NIRC allowing refund of erroneous or
excess payment of tax. (Pilipinas Shell Petroleum Corporation vs. CIR, CTA 7731,
September 7, 2012)
17.
On excise tax on brands of alcohol, prior to the effectivity of RA 9334 and RR 32006, any reclassification of new brands shall be done only through the issuance of
an appropriate Revenue Regulations in accordance with RR 9-2003. After the
effectivity of RA 9934 and RR 3-2006, said reclassification may only be done
through an act of Congress.
Taxpayer seeks a refund of the alleged erroneous and/or excess tax for period from
December 1,2005 to July 31, 2007 collected as a consequence of the reclassification of San
Mig Light by the BIR as a variant of San Miguel Pale Pilsen in can. The main issue was
whether San Mig Light comes within the definition of Variant of a Brand or New Brand.
The Court held that prior to the effectivity of RA 9334 and RR 3-2006, any reclassification
of new brands shall be done only through the issuance of an appropriate Revenue
Regulations in accordance with RR 9-2003. After the effectivity of RA 9934 and RR 3-2006,
said reclassification may only be done through an act of Congress. There being none,
the classification of San Mig Light as a new brand remain in force. (CIR vs. San Miguel
Corporation, CTA EB 755 (CTA 7708), September 20, 2012)

10