Case No.

: 6 purchases of domestic petroleum products for use in its domestic

operations; NO
Subject: Taxation Law  Whether PAL has sufficiently proved its entitlement to refund; YES

Topic: Excise Taxes, Indirect Taxes, Tax Refunds, Tax Exemptions RULING:
Title: Philippine Airlines, Inc. vs. Commissioner of Internal Revenue A. PAL’s legal personality to file a claim for refund of excise taxes.
G.R. No. 198759 In the Silkair case, the proper party to seek a refund of an indirect tax is the
statutory taxpayer, the person on whom the tax is imposed by law and who paid the
Date: July 1, 2013
same even if he shifts the burden thereof to another. Section 130(A)(2) of the NIRC
Doctrine: Under Section 129 of the National Internal Revenue Code (NIRC), as provides that "[u]nless otherwise specifically allowed, the return shall be filed and
amended, excise taxes are imposed on two (2) kinds of goods, namely: (a) goods the excise tax paid by the manufacturer or producer before removal of domestic
manufactured or produced in the Philippines for domestic sales or consumption or products from place of production."
for any other disposition; and (b) things imported. With respect to the first kind of
However, the abovementioned rule should not apply to instances where the law
goods, Section 130 of the NIRC states that, unless otherwise specifically allowed,
clearly grants the party to which the economic burden of the tax is shifted an
the taxpayer obligated to file the return and pay the excise taxes due thereon is the
exemption from both direct and indirect taxes. In which case, the latter must be
manufacturer/producer. On the other hand, with respect to the second kind of
allowed to claim a tax refund even if it is not considered as the statutory taxpayer
goods, Section 131 of the NIRC states that the taxpayer obligated to file the return
under the law. Precisely, this is the peculiar circumstance which differentiates the
and pay the excise taxes due thereon is the owner or importer, unless the imported
Maceda case from Silkair.
articles are exempt from excise taxes and the person found to be in possession of
the same is other than those legally entitled to such tax exemption. In Maceda, the Court upheld the National Power Corporation’s (NPC) claim for a tax
refund since its own charter specifically granted it an exemption from both direct
FACTS:
and indirect taxes.
For the period July 24 - 28, 2004, Caltex sold 800k liters of imported Jet A-1 fuel to
It may be observed that the propriety of a tax refund claim is hinged on the kind of
PAL for the latter’s domestic operations. Consequently, on July 26 - 29, 2004, Caltex
exemption which forms its basis. If the law confers an exemption from both direct or
electronically filed with the Bureau of Internal Revenue (BIR) its Excise Tax Returns
indirect taxes, a claimant is entitled to a tax refund even if it only bears the
for Petroleum Products, declaring a total amount of ₱2M, as excise taxes due
economic burden of the applicable tax. On the other hand, if the exemption
thereon.
conferred only applies to direct taxes, then the statutory taxpayer is regarded as the
On August 3, 2004, PAL received from Caltex an Aviation Billing Invoice for the proper party to file the refund claim.
purchased aviation fuel and a Certification where it indicated that the excise taxes it
In this case, PAL’s franchise grants it an exemption from both direct and indirect
paid on the imported petroleum products amounted to ₱2M which payment was
taxes on its purchase of petroleum products.
passed on by it to PAL and that it did not file any claim for the refund of the said
excise tax with the BIR. PAL is exempt from paying: (a) taxes directly due from or imposable upon it as the
purchaser of the subject petroleum products; and (b) the cost of the taxes billed or
On October 29, 2004, PAL sought a refund of the excise taxes passed on to it by
passed on to it by the seller, producer, manufacturer, or importer of the said
Caltex. It hinged its tax refund claim on its operating franchise, i.e., Presidential
products either as part of the purchase price or by mutual agreement or other
Decree No. 15907 (PAL’s franchise), which conferred upon it certain tax exemption
arrangement. Therefore, given the foregoing direct and indirect tax exemptions
privileges on its purchase and/or importation of aviation gas, fuel and oil, including
under its franchise, and applying the principles as above-discussed, PAL is endowed
those which are passed on to it by the seller and/or importer thereof. Further, PAL
with the legal standing to file the subject tax refund claim, notwithstanding the fact
asserted that it had the legal personality to file the aforesaid tax refund claim.
that it is not the statutory taxpayer as contemplated by law.
CIR denied the refund and averred that since the excise taxes were paid by Caltex,
B. Coverage of LOI 1483.
PAL had no cause of action.
Based on Section 13 of PAL’s franchise, PAL’s tax exemption privileges on all taxes
Aggrieved, PAL filed a motion for reconsideration which was, however, denied.
on aviation gas, fuel and oil may be classified into three (3) kinds, namely: (a) all
ISSUES: taxes due on PAL’s local purchase of aviation gas, fuel and oil; (b) all taxes directly
due from or imposable upon the purchaser or the seller, producer, manufacturer, or
 Whether PAL has the legal personality to file a claim for refund of the importer of aviation gas, fuel and oil but are billed or passed on to PAL; and (c), all
passed on excise taxes; YES taxes due on all importations by PAL of aviation gas, fuel, and oil.
 Whether the sale of imported aviation fuel by Caltex to PAL is covered by
LOI 1483 which withdrew the tax exemption privileges of PAL on its
Viewed within the context of excise taxes, it may be observed that the first kind of
tax privilege would be irrelevant to PAL since it is not liable for excise taxes on
locally manufactured/produced goods for domestic sale or other disposition; based
on Section 130 of the NIRC, it is the manufacturer or producer, i.e., the local
refinery, which is regarded as the statutory taxpayer of the excise taxes due on the
same. On the contrary, when the economic burden of the applicable excise taxes is
passed on to PAL, it may assert two (2) tax exemptions under the second kind of tax
privilege namely, PAL’s exemptions on (a) passed on excise tax costs due from the
seller, manufacturer/producer in case of locally manufactured/ produced goods for
domestic sale (first tax exemption under the second kind of tax privilege); and (b)
passed on excise tax costs due from the importer in case of imported aviation gas,
fuel and oil (second tax exemption under the second kind of tax privilege). The
second kind of tax privilege should, in turn, be distinguished from the third kind of
tax privilege which applies when PAL itself acts as the importer of the foregoing
petroleum products. In the latter instance, PAL is not merely regarded as the party
to whom the economic burden of the excise taxes is shifted to but rather, it stands
as the statutory taxpayer directly liable to the government for the same.
In view of the foregoing, the Court observes that the phrase "purchase of domestic
petroleum products for use in its domestic operations" – which characterizes the tax
privilege LOI 1483 withdrew – refers only to PAL’s tax exemptions on passed on
excise tax costs due from the seller, manufacturer/producer of locally manufactured/
produced goods for domestic sale and does not, in any way, pertain to any of PAL’s
tax privileges concerning imported goods, may it be (a) PAL’s tax exemption on
excise tax costs which are merely passed on to it by the importer when it buys
imported goods from the latter (the second tax exemption under the second kind of
tax privilege); or (b) PAL’s tax exemption on its direct excise tax liability when it
imports the goods itself (the third kind of tax privilege). Both textual and contextual
analyses lead to this conclusion:
 The term "domestic petroleum products" could not refer to goods which are
imported.
 LOI 1483 was meant to divest PAL from the tax privilege which was tackled
in the Subject DOF Ruling, namely, its tax exemption on aviation gas, fuel
and oil which are manufactured or produced in the Philippines for domestic
sales. In this respect, it cannot be gainsaid that PAL’s tax exemption
privileges concerning imported goods remain beyond the scope of LOI 1483
and thus, continue to subsist.
In this case, records disclose that Caltex imported aviation fuel from abroad and
merely re-sold the same to PAL, tacking the amount of excise taxes it paid or would
be liable to pay to the government on to the purchase price. Evidently, the said
petroleum products are in the nature of "things imported" and thus, beyond the
coverage of LOI 1483 as previously discussed. As such, considering the subsistence
of PAL’s tax exemption privileges over the imported goods subject of this case, PAL
is allowed to claim a tax refund on the excise taxes imposed and due thereon.
C. PAL’s entitlement to refund.
The SC finds that the evidence on record shows that PAL was able to sufficiently
prove its entitlement to the subject tax refund.
First, PAL timely filed its claim for refund.
Section 229 of the NIRC provides that the claim for refund should be filed within two
(2) years from the date of payment of the tax.
Shortly after imported aviation fuel was delivered to PAL, Caltex electronically filed
the requisite excise tax returns and paid the corresponding amount of excise taxes.
PAL filed its administrative claim for refund on October 29, 2004 and its judicial
claim with the CTA on July 25, 2006. In this regard, PAL’s claims for refund were
filed on time in accordance with the 2-year prescriptive period.
Second, PAL paid the lower of the basic corporate income tax or the franchise tax as
provided for in the afore-quoted Section 13 of its franchise.
In its income tax return for FY 2004-2005, PAL reported no net taxable income for
the period resulting in zero basic corporate income tax, which would necessarily be
lower than any franchise tax due from PAL for the same period.
Third, the subject excise taxes were duly declared and remitted to the BIR.
In the Certification of Caltex on the volume of aviation fuel sold to PAL and its
Summary of Local Sales, Caltex sold 800k liters during the subject period out of
which 800k liters were sold to PAL, while the difference of 6,500 liters were sold to
its other client, LBOrendain.
Per Summary of Removals and Excise Tax Due on Mineral Products Chargeable
Against Payments attached to the Excise Tax Returns, the excise tax rate is ₱3.67
per liter, which, if multiplied with 6,500 liters sold by Caltex to LBOrendain, would
equal the discrepancy amount of ₱23,855.00.
Further examination of the records also reveals that the amount reflected in Caltex’s
Certification is consistent with the amount indicated in Caltex’s Aviation Receipts and
Invoices and Aviation Billing Invoice.
Thus, PAL has sufficiently proved its entitlement to a tax refund of the excise taxes
subject of this case.
Case No.: 7
Subject: Taxation Law
Topic: Taxation|Tax Refunds|Tax Credit
Title: J.R.A. Philippines, Inc. v. Commissioner of Internal Revenue
G.R. No. 171307
Date: August 28, 2013
Doctrine: The invoicing requirements for a VAT-registered taxpayer as provided in the NIRC and revenue
regulations are clear. A VAT-registered taxpayer is required to comply with all the VAT invoicing
requirements to be able to file for a claim for input taxes on domestic purchase for goods or services
attributable to zero-rated sales. A "VAT invoice" is an invoice that meets the requirements of Section
4.108-1 of RR 7-95.
FACTS:
J.R.A. Philippines is a VAT and PEZ registered corporation engaged in the manufacture and export of
ready-to-wear items. It claimed to have paid the aggregate sum of ₱7.7M as excess input VAT for the
calendar year 1999, which amount it purportedly used to purchase domestic goods and services directly
attributable to its zero-rated export sales.
Alleging that its input VAT remained unutilized as it has not engaged in any business activity or
transaction for which it may be liable for output VAT, J.R.A. Philippines filed four separate applications for
tax refund with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department
of Finance. When the same was not acted upon by the CIR and in order to toll the two-year prescriptive
period under Section 229 of NIRC – J.R.A Philippines filed a petition for review before the CTA.
The CIR contended that since J.R.A. Philippines is registered with the PEZA, its business was not subject to
VAT as provided under Section 24 of The Special Economic Zone Act of 1995, in relation to Section 109(q)
of the NIRC. Hence, it is not entitled to credit its input VAT under Section 4.103-1 of Revenue Regulations
No. (RR) 7-95. Besides, J.R.A. Philippines’ alleged unutilized input VAT for 1999 was not properly
documented.
ISSUE:
Whether the CTA erred in denying J.R.A Philippines’ claim for tax refund. - NO
RULING:
Case law dictates that in a claim for tax refund or tax credit, the applicant must
prove not only entitlement to the claim but also compliance with all the documentary
and evidentiary requirements therefor. Section 110(A)(1) of the NIRC provides that
creditable input taxes must be evidenced by a VAT invoice or official receipt, which
must, in turn, comply with Sections 237 and 238 of the same law, as well as Section
4.108.1 of RR 7-95. The foregoing provisions require, inter alia, that an invoice must
reflect, as required by law: (a) the BIR Permit to Print; (b) the TIN-V of the
purchaser; and (c) the word "zero-rated" imprinted thereon. In this relation, failure
to comply with the said invoicing requirements provides sufficient ground to deny a
claim for tax refund or tax credit.
In this case, records show that all of the export sales invoices presented by J.R.A
Philippines not only lack the word "zero-rated" but also failed to reflect its BIR
Permit to Print as well as its TIN-V. Thus, it cannot be gainsaid that it failed to
comply with the above-stated invoicing requirements, thereby rendering improper
its claim for tax refund. Clearly, compliance with all the VAT invoicing requirements
is required to able to file a claim for input taxes attributable to zero-rated sales. As
held in Microsoft Philippines, Inc. v. CIR:
The invoicing requirements for a VAT-registered taxpayer as provided in the NIRC
and revenue regulations are clear. A VAT-registered taxpayer is required to comply
with all the VAT invoicing requirements to be able to file for a claim for input taxes
on domestic purchase for goods or services attributable to zero-rated sales. A "VAT
invoice" is an invoice that meets the requirements of Section 4.108-1 of RR 7-95.
Contrary to Microsoft’s claim. RR-7-95 expressly states that "All purchases covered
by invoice other than a VAT invoice shall not give rise to any input tax. Microsoft’s
invoice, lacking the word "zero-rated," is not a "VAT invoice," and thus cannot give
rise to any input tax.
Case No.: 8
Subject: Taxation Law
Topic: Remedial Law|Civil Procedure|Appeals
Title: Taganito Mining Corporation v. Commissioner of Internal Revenue
G.R. No. 197591  
Date: June 18, 2014
Doctrine: It is well-settled that a party who does not appeal from a judgment can
no longer seek modification or reversal of the same.
FACTS:
Taganito is a duly-registered Philippine corporation and a VAT-registered entity
primarily engaged in the business of exploring, extracting, mining, selling, and
exporting precious metals, such as nickel, chromite, cobalt, gold, silver, iron, and all
kinds of ores and metals and their byproducts. For the 1st to 4th quarters of the
year 2004, Taganito filed its Quarterly VAT Returns. Subsequently, it filed Amended
Quarterly VAT Returns on July 20, 2005 for the 4th quarter of 2004 and on
December 28, 2005 for the first three quarters of 2004.
On December 28, 2005, Taganito filed before the BIR an administrative claim for the
refund of input VAT paid on its domestic purchases of taxable goods and services
and importation of goods in the amount of 1.8M covering the period January 1, 2004
to December 31, 2004, in accordance with Section 112, subsections (A) and (B) of
the NIRC. On March 31, 2006, fearing that the period for filing a judicial claim for
refund was about to expire, Taganito proceeded to file a petition for review before
the CTA Division.
CTA Division: Partially granted Taganito’s claim for refund, ordering the CIR to
refund to Taganito the amount of 500k representing its unutilized input VAT for the
period January 1, 2004 to March 9, 2004. The CTA Division also found that
Taganito’s refund claims were filed within the two (2)-year prescriptive period and
the 120-day period provided under Section 112(D) of the NIRC, considering that its
administrative claim was filed on December 28, 2005, and its judicial claim was filed
on March 31, 2006.
The CTA En Banc: Reversed and set aside the decision of the CTA Division.
Taganito filed its judicial claim for refund on March 31, 2006, or a mere 93 days
after it filed its administrative claim on December 28, 2005. Explaining that the
observance of the 120-day period provided under Section 112(D) of the NIRC is
mandatory and jurisdictional to the filing of a judicial claim for refund pursuant to
the case of CIR v. Aichi Forging Company of Asia, Inc. (Aichi), it held that Taganito’s
filing of a judicial claim was premature.
ISSUES:
1. Whether Taganito should be entitled to its claim for refund in the total amount
of ₱1,885,140.22. - NO
2. Whether the CTA En Banc correctly dismissed Taganito’s judicial claim for refund
of excess input VAT. - YES
RULING:
1st Issue:
Taganito did not appeal the CTA Division's partial denial of its claim for refund on the
ground that it failed to provide sufficient evidence that its suppliers did not avail of
the benefits of zero-rating. It is well-settled that a party who does not appeal from a
judgment can no longer seek modification or reversal of the same.For this reason,
Taganito may no longer question the propriety and correctness of the said partial
disallowance as it had lapsed into finality and may no longer be modified. In fine,
Taganito is only entitled to the partial refund of its unutilized input VAT in the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the
amount of ₱537,645.43, as was originally granted to it by the CTA Division and observance of the 120-day period is mandatory and jurisdictional to the filing of
herein upheld. such claim.

2nd Issue: In this case, records disclose that Taganito filed its administrative and judicial claims
As correctly pointed out by the CTA En Banc, the Court, in the 2010 Aichi case, ruled for refund on December 28, 2005 and March 31, 2006, respectively – or during the
that the observance of the 120-day period is a mandatory and jurisdictional requisite period when BIR Ruling No. DA-489-03 was in place. As such, it need not have
to the filing of a judicial claim for refund before the CTA. Consequently, non- waited for the expiration of the 120-day period before filing its judicial claim for
observance thereof would lead to the dismissal of the judicial claim due to the CTA’s refund before the CTA. In view of the foregoing, the CTA En Banc, thus, erred in
lack of jurisdiction. The Court, in the same case, also clarified that the two (2)-year dismissing Taganito's claim on the ground of prematurity.
prescriptive period applies only to administrative claims and not to judicial claims. In
other words, the Aichi case instructs that once the administrative claim is filed within
the prescriptive period, the claimant must wait for the 120-day period to end and,
thereafter, he is given a 30-day period to file his judicial claim before the CTA, even
if said 120-day and 30-day periods would exceed the aforementioned two (2)-year
prescriptive period.

In the recent case of CIR v. San Roque Power Corporation(San Roque), the Court,
however, recognized an exception to the mandatory and jurisdictional treatment of
the 120-day period as pronounced in Aichi. In San Roque, the Court ruled that BIR
Ruling No. DA-489-03 dated December 10, 2003 – wherein the BIR stated that the
"taxpayer-claimant need not wait for the lapse of the 120-day period before it could
seek judicial relief with the CTA by way of Petition for Review" – provided taxpayers-
claimants the opportunity to raise a valid claim for equitable estoppel under Section
246 of the NIRC, viz.:

There is no dispute that the 120-day period is mandatory and jurisdictional, and that
the CTA does not acquire jurisdiction over a judicial claim that is filed before the
expiration of the 120-day period. There are, however, two exceptions to this rule.
The first exception is if the Commissioner, through a specific ruling, misleads a
particular taxpayer to prematurely file a judicial claim with the CTA. Such specific
ruling is applicable only to such particular taxpayer. The second exception is where
the Commissioner, through a general interpretative rule issued under Section 4 of
the Tax Code, misleads all taxpayers into filing prematurely judicial claims with the
CTA. In these cases, the Commissioner cannot be allowed to later on question the
CTA’s assumption of jurisdiction over such claim since equitable estoppel has set in
as expressly authorized under Section 246 of the Tax Code. Section 4 of the Tax
Code, a new provision introduced by RA 8424, expressly grants to the Commissioner
the power to interpret tax laws. The power to decide disputed assessments, refunds
of internal revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other matters arising under this Code or other laws or portions thereof
administered by the Bureau of Internal Revenue is vested in the Commissioner,
subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. 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 this Court. Indeed, 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.

Reconciling the pronouncements in the Aichi and San Roque cases, the rule must
therefore be that during the period December 10, 2003 (when BIR Ruling No. DA-
489-03 was issued) to October 6, 2010 (when the Aichi case was promulgated),
taxpayers-claimants need not observe the 120-day period before it could file a
judicial claim for refund of excess input VAT before the CTA. Before and after the