ATLAS MINING vs CIR

G.R. Nos. 141104 & 148763 June 8, 2007

FACTS AS TO !TITION!R
Petitioner, a VAT-registered taxpayer, filed with the BIR its VAT Return for the
first quarter of 199!

It alleged that it li"ewise filed with the BIR the

#orresponding appli#ation for the refund$#redit of its input VAT on its pur#hases
of #apital goods and on its %ero-rated! &hen its appli#ation for refund$#redit
re'ained unresol(ed )y the BIR, petitioner filed on * April 199+ its Petition for
Re(iew with the ,TA whi#h the petition, on the ground of pres#ription! The #ase
was ele(ated to the ,A whi#h dis'issed the appeal finding that although
petitioner #orporation ti'ely filed its Petitions for Re(iew with the ,TA, it still
failed to su)stantiate its #lai's for the refund$#redit of its input VAT!Petitioner
#ontends that the said two-year pres#ripti(e period should )e #ounted, not fro'
the #lose of the quarter when the %ero-rated sales were 'ade, )ut fro' the date
of filing of the quarterly VAT return and pay'ent of the tax due * days
thereafter!
FACTS AS TO R!SON"!NT
The ,IR #ontends that petitioner-s #lai' is )arred under Re(enue Regulations
.os! -// and 0-//, i!e!, for failure to pro(e the 1*2 threshold for %ero-rating to
apply and for failure to esta)lish the fa#tual )asis for the instant #lai'! It is the
position of the ,IR, that the Re(enue Regulations .o! -// should )e applied in
the #ases at )ar3 and to )e entitled to the %ero-rating of its sales to PA4AR and
P5I6P574, petitioner, 'ust )e a)le to pro(e not only that PA4AR and
P5I6P574 8 #orporations to who' petitioner 'ade %ero rating sales - are B7I-
registered #orporations, )ut also that 'ore than 1*2 of the total annual
produ#tion of these #orporations are a#tually exported!
ISS#!S AS TO !TITION!R
1! Petitioner argues that the two-year pres#ripti(e period should run fro' the
date of the filing of the quarterly VAT return and pay'ent of tax due *
days thereafter!
! Petitioner also argues that 4e#tion of Re(enue Regulations .o! -
//should not ha(e )een applied to the %ero-rating of the sales 'ade )y
petitioner #orporation to PA4AR and P5I6P574!
ISS#!S AS TO R!SON"!NT
1! Respondent argues that the two year pres#ripti(e period should run fro'
the #lose of the quarter when the %ero-rated sales were 'ade!
! Respondent also #ontends that petitioner-s #lai' is )arred under Re(enue
Regulations .os! -// and 0-//, i!e!, for failure to pro(e the 1*2 threshold
for %ero-rating to apply and for failure to esta)lish the fa#tual )asis for the
instant #lai'!
R#LING
1! T59 4:PR9;9 ,7:RT R:69< I. =AV7R 7= P9TITI7.9R
Par >)? 4e#tion 11* pro(ides that the return shall )e filed and the tax paid
within * days following the end of ea#h quarter spe#ifi#ally pres#ri)ed for a
VAT-registered person! It is already well-settled that the two-year pres#ripti(e
period for instituting a suit or pro#eeding for re#o(ery of #orporate in#o'e tax
erroneously or illegally paid under 4e#tion 0*
10
of the Tax ,ode of 1911, as
a'ended, was to )e #ounted fro' the filing of the final ad@ust'ent return!
Also, In our Resolution in the #ase of CIR v. Asia Australia Express, Ltd. we
ruled that the two-year pres#ripti(e period within whi#h to #lai' a refund
#o''en#es to run, at the earliest, on the date of the filing of the ad@usted final
tax return! It is 'ore pra#ti#al and reasona)le to #ount the two-year
pres#ripti(e period for filing a #lai' for refund$#redit of input VAT on %ero-
rated sales fro' the date of filing of the return and pay'ent of the tax due
whi#h, a##ording to the law then existing, should )e 'ade within * days fro'
the end of ea#h quarter!
! T59 4:PR9;9 ,7:RT R:69< I. =AV7R 7= P9TITI7.9R
4e#tion of Re(enue Regulations .o! -//, should not ha(e )een applied
to the %ero-rating of the sales 'ade )y petitioner #orporation to PA4AR
and P5I6P574! At the onset, it 'ust )e e'phasi%ed that PA4AR and
P5I6P574, in addition to )eing registered with the B7I, were also
registered with the 9PAA and lo#ated within an export-pro#essing %one!
&ithout a#tual exportation, Arti#le 0 of the 7'ni)us In(est'ents ,ode of
19/1 also #onsiders #onstru#ti(e exportation as export sales! A'ong
other types of #onstru#ti(e exportation spe#ifi#ally identified )y the said
pro(ision are sales to export pro#essing %ones! 4ales to export pro#essing
%ones are su)@e#ted to spe#ial tax treat'ent!
This ,ourt then reiterates its #on#lusion that 4e#tion of Re(enue
Regulations .o! -//, whi#h applied to %ero-rated export sales to export-
oriented B7I-registered enterprises, should not )e applied to the
appli#ations for refund$#redit of input VAT filed )y petitioner #orporation
sin#e it )ased its appli#ations on the %ero-rating of export sales to
enterprises registered with the 9PAA and lo#ated within export pro#essing
%ones!
=7R P9.
Tax treat'ent of goods )rought into the export pro#essing %ones are only
#onsistent with the <estination Prin#iple and ,ross Border <o#trine to whi#h the
Philippine VAT syste' adheres! A##ording to the <estination Prin#iple,

goods
and ser(i#es are taxed only in the #ountry where these are #onsu'ed! In
#onne#tion with the said prin#iple, the ,ross Border <o#trine
0
'andates that no
VAT shall )e i'posed to for' part of the #ost of the goods destined for
#onsu'ption outside the territorial )order of the taxing authority!
These are ter'ed %ero-rated sales! A %ero-rated sale is still #onsidered a taxa)le
transa#tion for VAT purposes, although the VAT rate applied is *2! A sale )y a
VAT-registered taxpayer of goods and$or ser(i#es taxed at *2 shall not result in
any output VAT, while the input VAT on its pur#hases of goods or ser(i#es
related to su#h %ero-rated sale shall )e a(aila)le as tax #redit or refund!
*