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G.R. No.


August 3, 2010

AT&T Communications Services Philippines, Inc., Petitioner,

Commissioner of Internal Revenue
Petitioner filed with the respondent an application for tax refund and/or tax credit of its
excess/unutilized input VAT from zero-rated sales. To prevent the running of the prescriptive
period, petitioner subsequently filed a petition for review with the CTA.
The CTA held that since petitioner is engaged in sale of services, VAT Official Receipts should
have been presented in order to substantiate its claim of zero-rated sales, not VAT invoices which
pertain to sale of goods or properties.
Whether or not a Sales Invoice would suffice as a proof for entitlement to a refund of unutilized
input VAT from zero-rated sales, even for seller of services
Yes. Section 113 of the Tax Code does not create a distinction between a sales invoice and an
official receipt. Parenthetically, to determine the validity of petitioners claim as to unutilized
input VAT, an invoice would suffice provided the requirements under Sections 113 and 237 of the
Tax Code are met.
Sales invoices are recognized commercial documents to facilitate trade or credit transactions.
They are proofs that a business transaction has been concluded, hence, should not be considered
bereft of probative value (Seaoil Petroleum Corporation v. Autocorp Group, G.R. No. 164326,
October 17, 2008). Only the preponderance of evidence threshold as applied in ordinary civil
cases is needed to substantiate a claim for tax refund proper (Commissioner of Internal Revenue
v. Mirant Pagbilao Corporation, G.R. No. 172129, September 12, 2008).
A taxpayer engaged in zero-rated transactions may apply for tax refund or issuance of tax credit
certificate for unutilized input VAT, subject to the following requirements: (1) the taxpayer is
engaged in sales which are zero-rated (i.e., export sales) or effectively zero-rated; (2) the
taxpayer is VAT-registered; (3) the claim must be filed within two years after the close of the
taxable quarter when such sales were made; (4) the creditable input tax due or paid must be
attributable to such sales, except the transitional input tax, to the extent that such input tax has
not been applied against the output tax; and (5) in case of zero-rated sales, the acceptable foreign
currency exchange proceeds thereof have been duly accounted for in accordance with BSP rules
and regulations.

G.R. No. 184823

October 6, 2010

Commissioner Of Internal Revenue, Petitioner

Aichi Forging Company of Asia, Inc., Respondent.
On September 30, 2004, Aichi Forging filed a claim for refund/credit of input VAT attributable to
its zero-rated sales for the period July 1, 2002 to September 30, 2002 with the CIR through the
DOF One-Stop Shop. On the same day, Aichi Forging filed a Petition for Review with the CTA
for the same action. The BIR disputed the claim and alleged that the same was filed beyond the
two-year period given that 2004 was a leap year and thus the claim should have been filed on
September 29, 2004. The CIR also raised issues related to the reckoning of the 2-year period and
the simultaneous filing of the administrative and judicial claims.
(1) Was the Petitioners administrative claim filed out of time?
(2) Was the filing of the judicial claim premature?

(1) NO. The right to claim the refund must be reckoned from the close of the taxable quarter
when the sales were made in this case September 30, 2004. The Court added that the rules
under Sections 204 (C) and 229 as cross-referred to Section 114 do not apply as they only cover
erroneous payments or illegal collections of taxes which is not the case for refund of unutilized
input VAT. Thus, the claim was filed on time even if 2004 was a leap year since the sanctioned
method of counting is the number of months.
(2) YES. Section 112 mandates that the taxpayer filing the refund must either wait for the
decision of the CIR or the lapse of the 120-day period provided therein before filing its judicial
claim. Failure to observe this rule is fatal to a claim. Thus, Section 112 (A) was interpreted to
refer only to claims filed with the CIR and not appeals to the CTA given that the word used is
application. Finally, the Court said that applying the 2-year period even to judicial claims
would render nugatory Section 112 (D) which already provides for a specific period to appeal to
the CTA --- i.e., (a) within 30 days after a decision within the 120-day period and (b) upon expiry
of the 120-day without a decision.

G.R. No. 172087

March 15, 2011

Philippine Amusement and Gaming Corp. (PAGCOR)., Petitioner,

The Bureau of Internal Revenue (BIR)
With the passage of Republic Act No. (RA) 9337, the Philippine Amusement and Gaming
Corporation (PAGCOR) has been excluded from the list of government-owned and controlled
corporations (GOCCs) that are exempt from tax under Section27(c) of the Tax Code; PAGCOR
is now subject to corporate income tax.
The Supreme Court (SC) held that the omission of PAGCOR from the list of tax-exempt GOCCs
by RA 9337 does not violate the right to equal protection of the laws under Section 1, Article III
of the Constitution, because PAGCORs exemption from payment of corporate income tax was
not based on classification showing substantial distinctions; rather, it was granted upon the
corporations own request to be exempted from corporate income tax. Legislative records
likewise reveal that the legislative intention is to require PAGCOR to pay corporate income tax.
With regard to the issue that the removal of PAGCOR from the exempted list violates the nonimpairment clause contained in Section 10, Article III of the Constitution which provides that
no law impairing the obligation of contracts shall be passed the SC explained that following
its previous ruling in the case of Manila Electric Company v. Province of Laguna 366 Phil.
428(1999), this does not apply.
Franchises such as that granted to PAGCOR partake of the nature of a grant, and is thus beyond
the purview of the non-impairment clause of the Constitution.
As regards the liability of PAGCOR to VAT, the SC finds Section 4.108-3 of Revenue
Regulations No. (RR) 16-2005, which subjects PAGCOR and its licensees and franchisees to
VAT, null and void for being contrary to the National Internal Revenue Code (NIRC), as
amended by RA 9337. According to the SC, RA 9337 does not contain any provision that
subjects PAGCOR to VAT. Instead, the SC finds support to the VAT exemption of PAGCOR under
Section 109(k) of the Tax Code, which provides that transactions exempt under international
agreements to which the Philippines is a signatory or under special laws [except Presidential
Decree No. (PD) 529] are exempt from VAT. Considering that PAGCORs charter, i.e., PD1869
which grants PAGCOR exemption from taxes is a special law, it is exempt from payment
of VAT.
Accordingly, the SC held that the BIR exceeded its authority in subjecting PAGCOR to VAT,
and thus declared RR 16-05 null and void insofar as it subjects PAGCOR to VAT for being contrary
to the NIRC, as amended by RA 9337.

Is Republic Act 9337 constitutional insofar as it excluded PAGCOR from the enumeration of
GOCCs exempt from the payment of corporate income tax?
YES. The original exemption of PAGCOR from corporate income tax was not made pursuant to
a valid classification based on substantial distinctions so that the law may operate only on some
and not on all. Instead, the same was merely granted due to the acquiescence of the House
Committee on Ways and Means to the request of PAGCOR.
The argument that the withdrawal of the exemption also violates the non-impairment clause will
not hold since any franchise is subject to amendment, alteration or repeal by Congress.
However, the Court made it clear that PAGCOR remains exempt from payment of indirect taxes
and as such its purchases remain not subject to VAT, reiterating the rule laid down in the Acesite

G.R. No. 193007

July 19, 2011

Renato V. Diaz and Aurora Ma. F. Timbol, Petitioners,

The Secretary of Finance and The Commissioner of Internal Revenue, Repondents.
Petitioners Renato V. Diaz and Aurora Ma. F. Timbol (petitioners) filed this petition for
declaratory relief assailing the validity of the impending imposition of value-added tax (VAT) by
the Bureau of Internal Revenue (BIR) on the collections of tollway operators. Court treated the
case as one of prohibition.
Petitioners hold the view that Congress did not, when it enacted the NIRC, intend to include toll
fees within the meaning of "sale of services" that are subject to VAT; that a toll fee is a "user's
tax," not a sale of services; that to impose VAT on toll fees would amount to a tax on public
service; and that, since VAT was never factored into the formula for computing toll fees, its
imposition would violate the non-impairment clause of the constitution.
The government avers that the NIRC imposes VAT on all kinds of services of franchise grantees,
including tollway operations; that the Court should seek the meaning and intent of the law from
the words used in the statute; and that the imposition of VAT on tollway operations has been the
subject as early as 2003 of several BIR rulings and circulars.
The government also argues that petitioners have no right to invoke the non-impairment of
contracts clause since they clearly have no personal interest in existing toll operating agreements
(TOAs) between the government and tollway operators. At any rate, the non-impairment clause
cannot limit the State's sovereign taxing power which is generally read into contracts.
May toll fees collected by tollway operators be subjected to VAT (Are tollway operations a
franchise and/or a service that is subject to VAT)?
When a tollway operator takes a toll fee from a motorist, the fee is in effect for the latter's use of
the tollway facilities over which the operator enjoys private proprietary rights that its contract
and the law recognize. In this sense, the tollway operator is no different from the service
providers under Section 108 who allow others to use their properties or facilities for a fee.
Tollway operators are franchise grantees and they do not belong to exceptions that Section 119
spares from the payment of VAT. The word "franchise" broadly covers government grants of a
special right to do an act or series of acts of public concern. Tollway operators are, owing to the
nature and object of their business, "franchise grantees." The construction, operation, and

maintenance of toll facilities on public improvements are activities of public consequence that
necessarily require a special grant of authority from the state.
A tax is imposed under the taxing power of the government principally for the purpose of raising
revenues to fund public expenditures. Toll fees, on the other hand, are collected by private
tollway operators as reimbursement for the costs and expenses incurred in the construction,
maintenance and operation of the tollways, as well as to assure them a reasonable margin of
income. Although toll fees are charged for the use of public facilities, therefore, they are not
government exactions that can be properly treated as a tax. Taxes may be imposed only by the
government under its sovereign authority, toll fees may be demanded by either the government
or private individuals or entities, as an attribute of ownership.

G.R. No. 181858

November 24, 2010

KEPCO Philippines Corporation, Petitioner

Commissioner of Internal Revenue
KEPCO filed a claim for refund of unutilized input Value-Added Tax (VAT) based on its zerorated sale of power to NPC. A substantial portion of the claim was disallowed for having been
supported by VAT invoices which only had the TIN-VAT stamped and notimprinted. There were
also certain sales by KEPCO which failed to indicate the words zero-rated. Lastly, they also
alleged that invoices and receipts are interchangeable and either should suffice as proof of
purchase and consequently as support for a claim for refund.
Whether or not petitioner is entitled to the claim for refund on the disallowed portion
No. The requirement that the Tax Identification Number (TIN) be imprinted and not merely
stamped is a reasonable requirement imposed by the Bureau of Internal Revenue (BIR). More
importantly, the requirement of the appearance of the words zero-rated on the face of the
invoice prevents buyers from falsely claiming input VAT from their purchases when no VAT was
actually paid. The failure to adhere to the said rules will not only expose the taxpayer to penalties
but should also serve to disallow the claim. Finally, the Court disagreed with the portion that
invoices and receipts are interchangeable since the former clearly refer to sale of goods while
the latter to services.

G.R. No. 178697

November 17, 2010

Commissioner of Internal Revenue, Petitioner,

Sony Philippines, Inc., Respondent.
Sony Philippines was ordered examined for the period 1997 and unverified prior years as
indicated in the Letter of Authority. The audit yielded assessments against Sony Philippines for
deficiency VAT and FWT, viz: (1) late remittance of Final Withholding Tax on royalties for the
period January to March 1998 and (2) deficiency VAT on reimbursable received by Sony
Philippines from its offshore affiliate, Sony International Singapore (SIS).
(1) Is Petitioner liable for deficiency Value Added Tax?
(2) Was the investigation of its 1998 Final Withholding Tax return valid?

(1) NO. Sony Philippines did in fact incur expenses supported by valid VAT invoices when it
paid for certain advertising costs. This is sufficient to accord it the benefit of input VAT credits
and where the money came from to satisfy said advertising billings is another matter but does not
alter the VAT effect. In the same way, Sony Philippines can not be deemed to have received the
reimbursable as a fee for a VAT-taxable activity. The reimbursable was couched as an aid for
Sony Philippines by SIS in view of the companys dire or adverse economic conditions. More
importantly, the absence of a sale, barter or exchange of goods or properties supports the nonVAT nature of the reimbursement. This was distinguished from the COMASERCO case where
even if there was similarly a reimbursement-on-cost arrangement between affiliates, there was in
fact an underlying service. Here, the advertising services were rendered in favor of Sony
Philippines not SIS.
(2) NO. A Letter of Authority should cover a taxable period not exceeding one year and to
indicate that it covers unverified prior years should be enough to invalidate it. In addition, even
if the Final Withholding Tax was covered by Sony Philippines fiscal year ending March 1998,
the same fell outside of the period 1997 and was thus not validly covered by the Letter of

G.R. No. 158885

April 2, 2009

Fort Bonifacio Development Corp., Petitioner,

Commissioner of Internal Revenue, Regional Director, Revenue Region No. 8, Chief,
Assessment Division, Revenue Region No. 8, BIR, Respondents.
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.
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?
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