VAT Qualification for Zero-rated sale

ACCENTURE, INC. vs. COMMISSIONER OF INTERNAL REVENUE G.R. No. 190102 July 11, 2012

Facts: Petitioner Accenture, a VAT registered entity, is a corporation engaged in the business of providing management consulting,
business strategies development, and selling and/or licensing of software. The monthly and quarterly VAT returns of Accenture show
that, notwithstanding its application of the input VAT credits earned from its zero-rated transactions against its output VAT liabilities, it
still had excess or unutilized input VAT credits in the amount of P37,038,269.18. Thus, Accenture filed with the Department of Finance
(DoF) an administrative claim for the refund or the issuance of a Tax Credit Certificate (TCC). When the DoF did not act on the claim,
Accenture filed a Petition for Review with CTA praying for the issuance of a TCC in its favour.

The CIR answered that the sale by Accenture of goods and services to its clients are not zero-rated transactions and that
Accenture has failed to prove that it is entitled to a refund, because its claim has not been fully substantiated or documented. Ruling
that Accentures services would qualify for zero-rating under the 1997 National Internal Revenue Code of the Philippines (Tax Code)
only if the recipient of the services was doing business outside of the Philippines, the Division of the CTA ruled that since Accenture had
failed to present evidence to prove that the foreign clients to which the former rendered services did business outside the Philippines, it
was not entitled to refund.

On appeal before the CTA en banc, Accenture argued that because the case pertained to the third and the fourth quarters of
taxable year 2002, the applicable law was the 1997 Tax Code, and not R.A. 9337 and that prior to the amendment introduced by (R.A.)
9337, there was no requirement that the services must be rendered to a person engaged in business conducted outside the Philippines
to qualify for zero-rating. Nevertheless, the CTA en banc affirmed the decision of the division. Hence this present petition for review
before the SC.

Issues:

1. Should the recipient of the services be "doing business outside the Philippines" for the transaction to be zero-rated under
Section 108(B)(2) of the 1997 Tax Code?

2. Has Accenture successfully proven that its clients are entities doing business outside the Philippines?

3. Is Accenture entitled to tax refund?

Held:

1. Recipient of services must be doing business outside the Philippines for the transactions to qualify as zero-rated.

Accenture anchors its refund claim on Section 112(A) of the 1997 Tax Code, which allows the refund of unutilized input VAT earned
from zero-rated or effectively zero-rated sales. The provision reads:

SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may,
within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or
refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not
been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and
Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with
the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated
or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input
tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis
of the volume of sales. Section 108(B) referred to in the foregoing provision was first seen when Presidential Decree No. (P.D.) 199431
amended Title IV of P.D. 1158 which is also known as the National Internal Revenue Code of 1977. Several Decisions have referred to
this as the 1986 Tax Code, even though it merely amended Title IV of the 1977 Tax Code.

Two years thereafter, or on 1 January 1988, Executive Order No. (E.O.) 27333 further amended provisions of Title IV. E.O. 273 by
transferring the old Title IV provisions to Title VI and filling in the former title with new provisions that imposed a VAT.

The VAT system introduced in E.O. 273 was restructured through Republic Act No. (R.A.) 7716. This law, which was approved on 5
May 1994, widened the tax base. Section 3 thereof reads:

SECTION 3. Section 102 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"SEC. 102. Value-added tax on sale of services and use or lease of properties. x x x

xxx xxx xxx

"(b) Transactions subject to zero-rate. The following services performed in the Philippines by VAT-registered persons shall be subject
to 0%:
"(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are
subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules
and regulations of the Bangko Sentral ng Pilipinas (BSP).

"(2) Services other than those mentioned in the preceding sub-paragraph, the consideration for which is paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)."

Essentially, Section 102(b) of the 1977 Tax Codeas amended by P.D. 1994, E.O. 273, and R.A. 7716provides that if the
consideration for the services provided by a VAT-registered person is in a foreign currency, then this transaction shall be subjected to
zero percent rate.

The 1997 Tax Code reproduced Section 102(b) of the 1977 Tax Code in its Section 108(B), to wit:

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT- registered persons
shall be subject to zero percent (0%) rate.

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are
subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules
and regulations of the Bangko Sentral ng Pilipinas (BSP);

(2) Services other than those mentioned in the preceding paragraph, the consideration for which is paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); x x x.

On 1 November 2005, Section 6 of R.A. 9337, which amended the foregoing provision, became effective. It reads:

SEC. 6. Section 108 of the same Code, as amended, is hereby further amended to read as follows:

"SEC. 108. Value-added Tax on Sale of Services and Use or Lease of

Properties. -

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons
shall be subject to zero percent (0%) rate:

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are
subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules
and regulations of the Bangko Sentral ng Pilipinas (BSP);

"(2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the
Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the
consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP); x x x." (Emphasis supplied)

We rule that the recipient of the service must be doing business outside the Philippines for the transaction to qualify for zero-rating
under Section 108(B) of the Tax Code.

This Court upholds the position of the CTA en banc that, because Section 108(B) of the 1997 Tax Code is a verbatim copy of Section
102(b) of the 1977 Tax Code, any interpretation of the latter holds true for the former.

Moreover, even though Accentures Petition was filed before Burmeister was promulgated, the pronouncements made in that case may
be applied to the present one without violating the rule against retroactive application. When this Court decides a case, it does not pass
a new law, but merely interprets a preexisting one. When this Court interpreted Section 102(b) of the 1977 Tax Code in Burmeister, this
interpretation became part of the law from the moment it became effective. It is elementary that the interpretation of a law by this Court
constitutes part of that law from the date it was originally passed, since this Court's construction merely establishes the
contemporaneous legislative intent that the interpreted law carried into effect.

That the recipient of the service should be doing business outside the Philippines to qualify for zero-rating is the only logical
interpretation of Section 102(b)(2) of the 1977 Tax Code, as we explained in Burmeister:

This can only be the logical interpretation of Section 102 (b) (2). If the provider and recipient of the "other services" are both doing
business in the Philippines, the payment of foreign currency is irrelevant. Otherwise, those subject to the regular VAT under Section 102
(a) can avoid paying the VAT by simply stipulating payment in foreign currency inwardly remitted by the recipient of services. To
interpret Section 102 (b) (2) to apply to a payer-recipient of services doing business in the Philippines is to make the payment of the
regular VAT under Section 102 (a) dependent on the generosity of the taxpayer. The provider of services can choose to pay the regular
VAT or avoid it by stipulating payment in foreign currency inwardly remitted by the payer-recipient. Such interpretation removes Section
102 (a) as a tax measure in the Tax Code, an interpretation this Court cannot sanction. A tax is a mandatory exaction, not a voluntary
contribution.

xxx xxx xxx

Further, when the provider and recipient of services are both doing business in the Philippines, their transaction falls squarely under
Section 102 (a) governing domestic sale or exchange of services. Indeed, this is a purely local sale or exchange of services subject to
the regular VAT, unless of course the transaction falls under the other provisions of Section 102 (b).

Thus, when Section 102 (b) (2) speaks of "services other than those mentioned in the preceding subparagraph," the legislative intent is
that only the services are different between subparagraphs 1 and 2. The requirements for zero-rating, including the essential condition
that the recipient of services is doing business outside the Philippines, remain the same under both subparagraphs.

Lastly, it is worth mentioning that prior to the promulgation of Burmeister, Congress had already clarified the intent behind Sections
102(b)(2) of the 1977 Tax Code and 108(B)(2) of the 1997 Tax Code amending the earlier provision. R.A. 9337 added the following
phrase: "rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in
business who is outside the Philippines when the services are performed."

2. Accenture has failed to establish that the recipients of its services do business outside the Philippines.

In the CTAs opinion, however, the documents presented by Accenture merely substantiate the existence of the sales, receipt of foreign
currency payments, and inward remittance of the proceeds of these sales duly accounted for in accordance with BSP rules. Petitioner
presented no evidence whatsoever that these clients were doing business outside the Philippines.

Accenture insists, however, that it was able to establish that it had rendered services to foreign corporations doing business outside the
Philippines, unlike in Burmeister, which allegedly involved a foreign corporation doing business in the Philippines.51

3. We deny Accentures Petition for a tax refund.

The evidence presented by Accenture may have established that its clients are foreign.1wphi1 This fact does not automatically mean,
however, that these clients were doing business outside the Philippines. After all, the Tax Code itself has provisions for a foreign
corporation engaged in business within the Philippines and vice versa, to wit:

SEC. 22. Definitions - When used in this Title:

xxx xxx xxx

(H) The term "resident foreign corporation" applies to a foreign corporation engaged in trade or business within the Philippines.

(I) The term nonresident foreign corporation applies to a foreign corporation not engaged in trade or business within the Philippines.
(Emphasis in the original)

Consequently, to come within the purview of Section 108(B)(2), it is not enough that the recipient of the service be proven to be a
foreign corporation; rather, it must be specifically proven to be a nonresident foreign corporation.

There is no specific criterion as to what constitutes "doing" or "engaging in" or "transacting" business. We ruled thus in Commissioner of
Internal Revenue v. British Overseas Airways Corporation:52

x x x. There is no specific criterion as to what constitutes "doing" or "engaging in" or "transacting" business. Each case must be judged
in the light of its peculiar environmental circumstances. The term implies a continuity of commercial dealings and arrangements, and
contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in
progressive prosecution of commercial gain or for the purpose and object of the business organization. "In order that a foreign
corporation may be regarded as doing business within a State, there must be continuity of conduct and intention to establish a
continuous business, such as the appointment of a local agent, and not one of a temporary character."53

A taxpayer claiming a tax credit or refund has the burden of proof to establish the factual basis of that claim.1wphi1 Tax refunds, like
tax exemptions, are construed strictly against the taxpayer.54

Accenture failed to discharge this burden. It alleged and presented evidence to prove only that its clients were foreign entities.
However, as found by both the CTA Division and the CTA En Banc, no evidence was presented by Accenture to prove the fact that the
foreign clients to whom petitioner rendered its services were clients doing business outside the Philippines.

G.R. No. 188260 November 13, 2013

LUZON HYDRO CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
Facts:

Luzon Hyrdo Corporation, a corporation duly organized under the laws of the Philippines,
has been registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer. It was
formed as a consortium of several corporations.

Pursuant to the Power Purchase Agreement entered into with the National Power
Corporation (NPC), the electricity produced by the petitioner from its operation of the
Bakun Hydroelectric Power Plant was to be sold exclusively to NPC.Relative to its sale to
NPC, the petitioner was granted by the BIR a certificate for Zero Rate for VAT purposes in
the periods from January 1, 2000 to December 31, 2000; February 1, 2000 to December
31, 2000.

The petitioner alleged herein that it had incurred input VAT in the amount
of P9,795,427.89 on its domestic purchases of goods and services used in its generation
and sales of electricity to NPC in the four quarters of 2001;and that it had declared the
input VAT of P9,795,427.89 in its amended VAT returns for the four quarters on 2001.
On November 26, 2001, the petitioner filed a written claim for refund or tax credit
relative to its unutilized input VAT for the period from October 1999 to October 2001
aggregating P14,557,004.38.Subsequently, on July 24, 2002, it amended the claim for
refund or tax credit to cover the period from October 1999 to May 2002
forP20,609,047.56

The BIR, through Revenue Examiner FelicidadMangabat of Revenue District Office No. 2
in Vigan City, concluded an investigation, and made a recommendation favorable to the
petitioners claim for the period from January 1, 2001 to December 31, 2001.

Respondent Commissioner of Internal Revenue (Commissioner) did not ultimately act on

the petitioners claim despite the favorable recommendation. Hence, on April 14, 2003,
the petitioner filed its petition for review in the CTA, praying for the refund or tax credit
certificate (TCC) corresponding to the unutilized input VAT paid for the four quarters of
2001 totalling P9,795,427.88.

The CTA in Division promulgated its decision in favor of the respondent denying the
petition for review on the ground that in the petitioners VAT returns for the four quarters
of 2001, no amount of zero-rated sales was declared.Without zero-rated sales for the
four quarters of 2001, the input VAT payments allegedly attributable thereto cannot be
refunded

On May 5, 2009, the CTA En Banc promulgated the assailed decision affirming the
Division, and denying the claim for refund or tax credit. Hence, this appeal to the SC.

Issue: Whether or not Luzon Hydro Corporation is entitled to a tax refund or tax credit
certificate for the Input VAT payments allegedly attributable to zero-rated sales. NO

Ruling:

The SC said NO, the petition is without merit.

Section 112 of the National Internal Revenue Code 1997 provides:

SEC. 112. Refunds or Tax Credits of Input Tax.

(A) Zero-rated or Effectively Zero-rated Sales--Any VAT-registered person, whose sales
are zero-rated or effectively zero-rated may, within two (2) years after the close of the
taxable quarter when the sales were made, apply for the issuance of a tax credit
certificate or refund of creditable input tax due or paid attributable to such sales, except
transitional input tax, to the extent that such input tax has not been applied against
output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)
(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency
exchange proceeds thereof had been duly accounted for in accordance with the rules
and regulations of the BangkoSentral ng Pilipinas (BSP): Provided, further, That where the
taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or
exempt sale of goods or properties or services, and the amount of creditable input tax
due or paid cannot be directly and entirely attributed to any one of the transactions, it
shall be allocated proportionately on the basis of the volume of sales.

A claim for refund or tax credit for unutilized input VAT may be allowed only if the
following requisites concur, namely:

(a) the taxpayer is VAT-registered;

(b) the taxpayer is engaged in zero-rated or effectively zero-rated sales;

(c) the input taxes are due or paid;

(d) the input taxes are not transitional input taxes;

(e) the input taxes have not been applied against output taxes during and in the
succeeding quarters;

(f) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales;

(g) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and
(2), the acceptable foreign currency exchange proceeds have been duly accounted for in
accordance with the rules and regulations of the BangkoSentral ng Pilipinas;

(h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt
sales, and the input taxes cannot be directly and entirely attributable to any of these
sales, the input taxes shall be proportionately allocated on the basis of sales volume; and

(i) the claim is filed within two years after the close of the taxable quarter when such
sales were made.

The petitioner did not competently establish its claim for refund or tax
credit.1avvphi1 We agree with the CTA En Banc that the petitioner did not produce
evidence showing that it had zero-rated sales for the four quarters of taxable year 2001.
As the CTA En Banc precisely found, the petitioner did not reflect any zero-rated sales
from its power generation in its four quarterly VAT returns, which indicated that it had
not made any sale of electricity. Had there been zero-rated sales, it would have reported
them in the returns. Indeed, it carried the burden not only that it was entitled under the
substantive law to the allowance of its claim for refund or tax credit but also that it met
all the requirements for evidentiary substantiation of its claim before the administrative
official concerned, or in the de novo litigation before the CTA in Division.

Although the petitioner has correctly contended here that the sale of electricity by a
power generation company like it should be subject to zero-rated VAT under Republic Act
No. 9136,31 its assertion that it need not prove its having actually made zero-rated sales
of electricity by presenting the VAT official receipts and VAT returns cannot be upheld. It
ought to be reminded that it could not be permitted to substitute such vital and material
documents with secondary evidence like financial statements.

CBK POWER COMPANY LIMITED, Petitioner,

vs.

COMMISSIONER OF INTERNAL REVENUE, Respondent.

G.R. Nos. 193383-84 January 14, 2015

PONENTE: Perlas-Bernabe

TOPIC: Tax treaty, ITAD ruling, tax refund

FACTS:

CBK Power is a limited partnership duly organized and existing under the laws of the Philippines, and
primarily engaged in the development and operation of hydro electric power generating plants in
Laguna.

In February 2001, CBK Power borrowed money from Industrial Bank of Japan, Fortis-Netherlands,
Raiffesen Bank, Fortis-Belgium, and Mizuho Bank for which it remitted interest payments from May
2001 to May 2003. It allegedly withheld final taxes from said payments based on the following rates:
(a) fifteen percent (15%) for Fortis-Belgium, Fortis-Netherlands, and Raiffesen Bank; and (b) twenty
percent (20%) for Industrial Bank of Japan and Mizuho Bank.

However, according to CBK Power, under the relevant tax treaties between the Philippines and the
respective countries in which each of the banks is a resident, the interest income derived by the
aforementioned banks are subject only to a preferential tax rate of 10%
Accordingly, on April 14, 2003, CBK Power filed a claim for refund of its excess final withholding
taxes allegedly erroneously withheld and collected.

Due to CIRs inaction, CBK Power appealed to CTA Division. The latter partially granted the refund.
One of the refunds was disallowed because of failure on the part of CBK Power to obtain an ITAD
ruling with respect to its transactions with Fortis-Netherlands. CTA En Banc affirmed said decision.

ISSUE:

Whether or not the BIR may add a requirement prior application for an ITAD ruling that is not
found in the income tax treaties signed by the Philippines before a taxpayer can avail of preferential
tax ratesunder said treaties.

HELD:

NO. The Court held that the obligation to comply with a tax treaty must take precedence over the
objective of RMO No. 1-2000.

Bearing in mind the rationale of tax treaties, the period of application for the availment of tax treaty
relief as required by RMO No. 1-2000 should not operate to divest entitlement to the relief as it would
constitute a violation of the duty required by good faith in complying with a tax treaty. The denial of
the availment of tax relief for the failure of a taxpayer to apply within the prescribed period under the
administrative issuance would impair the value of the tax treaty. At most, the application for a tax
treaty relief from the BIR should merely operate to confirm the entitlement of the taxpayer to the
relief.

Logically, noncompliance with tax treaties has negative implications on international relations, and
unduly discourages foreign investors. While the consequences sought to be prevented by RMO No. 1-
2000 involve an administrative procedure, these may be remedied through other system management
processes, e.g., the imposition of a fine or penalty. But we cannot totally deprive those who are
entitled to the benefit of a treaty for failure to strictly comply with an administrative issuance
requiring prior application for tax treaty relief.

MINDANAO II GEOTHERMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL REVENUE

MINDANAO I GEOTHERMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL REVENUE

G.R. Nos. 193301, 194637

March 11, 2013

Carpio, J.

Petition for Review

DOCTRINE: SUMMARY OF RULES ON PRESCRIPTIVE PERIODS INVOLVING VAT

(1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or
effectively zero-rated sales were made.

(2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to
decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the
filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any
decision from the CIR, then the administrative claim may be considered denied by inaction

(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIRs decision denying the administrative claim, or
from the expiration of the 120-day period without any action from the CIR.

(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal
by this Court in Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional 120+30 day periods.

FACTS: Mindanao I and II (Mindanao) are value-added taxpayers, and Block Power Production Facilities accredited by the Department
of Energy. They had a Build-Operate-Transfer contract with the Philippine National Oil CorporationEnergy Development Company
(PNOC-EDC), whereby Mindanao converts steam supplied to it by PNOC-EDC into electricity, and then delivers the electricity to the
National Power Corporation (NPC) in behalf of PNOC-EDC.

The Electric Power Industry Reform Act of 2000 (EPIRA, RA 9136), amended the Tax Reform Act of 1997 (RA 8424), when it
decreed that sales of power by generation companies shall be subjected to a zero rate of VAT. Pursuant to EPIRA, Mindanao I and II
filed their claims for the issuance of tax credit certificates on unutilized or excess input taxes from their sales of generated power and
delivery of electric capacity and energy to NPC.

The CTA En Banc denied Mindanao IIs claims for refund tax credit for the first and second quarters of 2003, and Mindanao Is
claims for refund/tax credit for the first, second, third, and fourth quarters of 2003, for being filed out of time.

1] ISSUE: Whether the reckoning date for counting the two-year prescriptive period in Section 112 should be counted from the end of
the taxable quarter when the sales were made (Mirant) or the date of filing the return (Atlas)?

HELD: Neither Atlas nor Mirant applies, because when Mindanao II and Mindanao I filed their respective administrative and judicial
claims in 2005, neither case had been promulgated. Atlas was promulgated on 8 June 2007, Mirant on 12 September 2008. Besides,
Atlas merely stated that the two-year prescriptive period should be counted from the date of payment of the output VAT, not from the
close of the taxable quarter when the sales involving the input VAT were made. The Atlas doctrine did not interpret, expressly or
impliedly, the 120+30 day periods.

Prescriptive Period for the Filing of Administrative Claims

Section 112(A) of the 1997 Tax Code was the applicable law at the time of filing of the claims in issue, therefore the claims
needed to have been filed within two (2) years after the close of the taxable quarter when the sales were made. Mindanao I and IIs
administrative claims for the first quarter of 2003 had prescribed, but their claims for the second, third and fourth quarters of 2003 were
filed on time.
Prescriptive Period for the Filing of Judicial Claims

In determining whether the claims for the second, third and fourth quarters of 2003 had been properly appealed, there is still
see no need to refer to either Atlas or Mirant, or even to Sec. 229. The second paragraph of Sect. 112(C) is clear that the taxpayer can
appeal to the CTA within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred
twenty day-period.

The 120+30 day periods are mandatory and jurisdictional. The taxpayer cannot simply file a petition with the CTA without waiting for the
Commissioners decision within the 120-day period, because otherwise there would be no decision or deemed a denial decision for
the CTA to review. Moreover, Sec. 112(C) expressly grants a 30-day period to appeal to the CTA, and this period need not necessarily
fall within the two-year prescriptive period, as long as the administrative claim is filed within such time. The said prescriptive period
does not refer to the filing of the judicial claim with the CTA, but to the administrative claim with the Commissioner.

Commissioner of Internal Revenue v. Visayas Geothermal

Power Co. Inc., G.R. No. 181276, 11 November 2013
24NOV
[MENDOZA, J.]

FACTS
Respondent VGPCI incurred input value added tax of P20,213,044.50 on its domestic purchase of goods and services
and importation of goods used in its business for the third and fourth quarter of 2001 and for the entire year of 2002. Due
to the enactment of Republic Act (R.A.) No. 9136, which became effective on June 26, 2001, VGPCIs sales of generated
power became zero-rated and were no longer subject to VAT at 10%.

On June 26, 2003, VGPCI filed before the BIR a claim for refund of unutilized input VAT payment in the third quarter of
2001. On December 18, 2003, another claim was filed for the last quarter of 2001 and the four quarters of 2002. For
failure of the BIR to act upon said claims, VGPCI filed separate petitions for review before the CTA on September 30,
2003 and December 19, 2003, praying for a refund on the issuance of a tax credit certificate covering the period from July
to September 2001 andfor the period from October 2001 to December 2002, CTA Case Nos. 6790 and 6838, respectively.

ISSUE
Whether VGPCI failed to observe the proper prescriptive period required by law for the filing of an appeal before the CTA
because it filed its petition before the end of the 120-day period granted to the CIR to decide its claim for refund under
Section 112(D) of the National Internal Revenue Code (NIRC).

HELD
YES, to CTA Case No. 6790.

NO, to CTA Case No. 6838.

The judicial claim filed on September 30, 2003 (CTA Case No. 6790) was prematurely filed and cannot be taken
cognizance of because respondent failed to wait for the requisite 120 days after the filing of its claim for refund with the
BIR before elevating the case to the CTA. However, the judicial claim filed on December 19, 2003 (CTA Case No. 6838),
which was made after the issuance of BIR Ruling DA-480-03, can be considered by the CTA despite its hasty filing only
one day after the application for refund was first lodged with the BIR.

Team Energy Corp vs CIR

Case Digest GR 197760 Jan 13 2014
Full Text

Facts:

Team Energy, formerly Mirant Pagbilao, is a registered VAT taxpayer, filed on December 20 2006, an administrative
claim for cash refund or issuance of tax credit certificate for the input VAT it paid for the first three quarters of 2005.
TEC appealed the CIRs inaction before the CTA on April 18, 2007. (The CTA Division took cognizance of the
judicial claim even if it was filed within the 120-day period, pursuant to DA-489-03 which states that the taxpayer-
claimant need not wait for the lapse of 120-day period before it could seek judicial relief with the CTA. During that
time, it was the rule applicable from its issuance on December 3, 2003 before the promulgation of the Aichi
case on October 6, 2010.)

However, on Nov 26, 2010, the CTA Division reversed its earlier decision on the ground that the CTA has no
jurisdiction over the case for being prematurely filed. It based its ruling on the Aichi case which held that the 120-30
day rule in case of inaction under Section 112 (C) of the NIRC is mandatory and jurisdictional.

Issue 1: W/N the CTA has jurisdiction over the claim even if it was prematurely filed

Yes. As a rule laid down by the SC in the San Roque case, the CTA may take cognizance of judicial claims filed
during the interim period from the promulgation of the BIR RR DA-489-03 on Dec 3 2003 until the adoption of
the Aichi case on Oct 6 2010.

Since the Commissioner has exclusive and original jurisdiction to interpret tax laws, taxpayers acting in good faith
should not be made to suffer for adhering to general interpretative rules of the Commissioner interpreting tax laws,
should such interpretation later turn out to be erroneous and be reversed by the Commissioner or by the SC.
Section 246 of the Tax Code expressly provides that a reversal of a BIR regulation or ruling cannot adversely
prejudice a taxpayer who, in good faith, relied on the BIR regulation or ruling prior to its reversal.

Here, TEC filed its judicial claim on April 18, 2007 or after the issuance of BIR Ruling No. DA-489-03 on December
10, 2003 but before October 6, 2010, the date when the Aichi case was promulgated. Thus, even though TECs
judicial claim was prematurely filed without waiting for the expiration of the 120-day mandatory period, the CTA may
still take cognizance of case as it was filed within the period exempted from the 120-30-day mandatory period.

Issue 2: W/N DA-489-03 is a general interpretative rule applicable to all taxpayers

Yes. BIR Ruling No. DA-489-03 is a general interpretative rule because it is a response to a query made, not by a
particular taxpayer, but by a government agency tasked with processing tax refunds and credits, that is, the One
Stop Shop Inter-Agency Tax Credit and Drawback Center of the Department of Finance. This government agency is
also the addressee, or the entity responded to, in BIR Ruling No. DA-489-03. Thus, while this government agency
mentions in its query to the Commissioner the administrative claim of Lazi Bay Resources Development, Inc., the
agency was, in fact, asking the Commissioner what to do in cases like the tax claim of Lazi Bay Resources
Development, Inc., where the taxpayer did not wait for the lapse of the 120-day period.

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers can rely on BIR Ruling No.
DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October
2010, where this Court held that the 120-130 day periods are mandatory and jurisdictional. ##

Silicon v. CIR

Facts: Petitioner, a VAT-registered Philippine corp., is engaged in the business of, among others, manufacturing and
exporting advance and large-scale integrated circuit components. It filed with the CIR an application for credit/refund of
unutilized input VAT for the 4th quarter of 1998. It then filed a Petition for Review with the CTA, alleging that for that
same period, it generated and recorded zero-rated export sales; and that it also paid input VAT which have not been
applied to any output VAT. The CTA partially granted the claim for refund of unutilized input VAT on capital goods
because not all items fall within the definition of capital goods under the law. On its claim for credit/refund of input
VAT attributable to zero-rated export sales, the CTA denied the same because petitioner failed to present an Authority to
Print (ATP) from the BIR; neither did it print on its export sales invoices the ATP and the word "zero-rated.

Issue: WON Silicon is entitled to the refund/credit of unutilized input VAT on all purchased capital goods and on those
attributable to exported sales.

Held: Yes but only to the extent of the capital goods that fall within the definition of capital goods under the law. Under
Section 4.106-1 (b) of RR No. 7-95, capital goods or properties refer to those with an estimated useful life greater than
one year and which are treated as depreciable assets under the law, used directly or indirectly with the production of
taxable goods or services. Office supplies, posters, books, and other similar items purchased by petitioner clearly do not
fall within that category.

The NIRC requires persons engaged in business to secure an ATP from the BIR prior to printing invoices or
receipts for registration purposes. The only way to verify whether the invoices or receipts are duly registered is by
requiring the claimant to present its ATP from the BIR. Without this proof, the invoices or receipts would have no
probative value for the purpose of refund. Failure also to print the word zero-rated is fatal to a claim for refund of input
VAT.

FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE- Transitional Input Value Added
Tax

FACTS:
Petitioner was a real estate developer that bought from the national government a parcel of land that used to be the Fort Bonifacio
military reservation. At the time of the said sale there was as yet no VAT imposed so Petitioner did not pay any VAT on its purchase.
Subsequently, Petitioner sold two parcels of land to Metro Pacific Corp. In reporting the said sale for VAT purposes (because the VAT
had already been imposed in the interim), Petitioner claimed transitional input VAT corresponding to its inventory of land. The BIR
disallowed the claim of presumptive input VAT and thereby assessed Petitioner for deficiency VAT.
ISSUE:
Is Petitioner entitled to claim the transitional input VAT on its sale of real properties given its nature as a real estate dealer and if so (i) is
the transitional input VAT applied only to the improvements on the real property or is it applied on the value of the entire real property
and (ii) should there have been a previous tax payment for the transitional input VAT to be creditable?

HELD:
YES. Petitioner is entitled to claim transitional input VAT based on the value of not only the improvements but on the value of the entire
real property and regardless of whether there was in fact actual payment on the purchase of the real property or not.

The amendments to the VAT law do not show any intention to make those in the real estate business subject to a different treatment
from those engaged in the sale of other goods or properties or in any other commercial trade or business. On the scope of the basis for
determining the available transitional input VAT, the CIR has no power to limit the meaning and coverage of the term "goods" in Section
105 of the Tax Code without statutory authority or basis. The transitional input tax credit operates to benefit newly VAT-registered
persons, whether or not they previously paid taxes in the acquisition of their beginning inventory of goods, materials and supplies.