SICAD VS.

CA
94 SCRA 183 Succession Donation Mortis Causa vs Donation Inter Vivos
In 1979, Aurora Montinola executed a deed entitled Deed of Donation Inter Vivos in favor of her three grandchildren
Catalino Valderrama, ud! Valderrama, and esus Valderrama" #he deed ho$ever %rovided that that the donation shall
&e effective onl! 1' !ears after Montinola(s death" In 19)', the original title of the %arcel of land su&*ect of the donation
$as cancelled and a ne$ title $as given to the Valderramas" Montinola ho$ever retained the original title and she
continued to %erform acts of o$nershi% over the %arcel of land"
In 19)7, Montinola revo+ed the donation &ecause of acts of ingratitude committed against her &! the Valderramas, that
the Valderramas defamed her, that she overheard the Valderramas %lotting against her life" In 199', she %etitioned to
have her title &e reinstated and her grandchildren(s title &e cancelled" -he said that the donation is actuall! a donation
mortis causa and that the same is void &ecause the formalities of a $ill $ere not com%lied $ith" In the same !ear, she sold
her %ro%ert! to s%ouses .rnesto and .vel!n -icad"
#he Valderramas o%%osed the %etition" In 199/, $hile the case $as still %ending, Montinola died" #he %etition $as
continued &! the s%ouses -icad"
ISSUE: 0hether or not the Deed of Donation Inter Vivos is actuall! a donation mortis causa"
HELD: 1es, the deed is a donation mortis causa" Montinola not onl! reserved for herself all the fruits of the %ro%ert!
allegedl! conve!ed, &ut $hat is even more im%ortant, s%eciall! %rovided that $ithout the +no$ledge and consent of the
Montinola, the donated %ro%erties could not &e dis%osed of in an! $a!, there&! den!ing to the transferees the most
essential attri&ute of o$nershi%, the %o$er to dis%ose of the %ro%erties" A donation $hich %ur%orts to &e one inter vivos
&ut $ithholds from the done 2in this case the Valderramas3 the right to dis%ose of the donated %ro%ert! during the donor(s
lifetime is in truth one mortis causa" In a donation mortis causa the right of dis%osition is not transferred to the donee
$hile the donor is still alive" #he donation is therefore void &ecause the formalities of a $ill, $hich is essentiall! a donation
mortis causa, $ere not com%lied $ith"
ALEJANDRO V. GERALDEZ- DONATION MORTIS CAUSA
All provisions of a deed of donation should be construed together in case of conflicting statements in order to determine
whether it is inter vivos or mortis causa.
FACTS:
Sps. Gavino Diaz and Severa Mendoza executed a Deed of Donation in favor of their children, Olimpia, Angel and Andrea
Diaz. In the deed of donation, the Sps. Donated 8 lots, with reservations on certain lots, to their children and daughters-in-
law and with conditions that they are not allowed to alienate the same to 3rd persons while the couple are still alive and
that they shall continue to administer the same until their death. The donees manifested their acceptance in the same
deed of donation. When Gavino died, Severa executed a deed of donation in favor of Angel and Andrea, giving the
siblings each a portion of Lot 2377-A. When Severa died, Andrea sued Angel to have the lots 2377-A and 2502
partitioned. Teodorico Alejandro, the surviving spouse of Olimpia, moved to intervene claiming 1/3 portion of Lot 2502.
The CFI ruled that the donation was a donation mortis causa because the ownership of the properties donated did not
pass to the donees during the donors lifetime but was transmitted to the donees only upon the death of the donors .
It, however, sustained the partition of Lot 2502 since it was an extrajudicial partition. Both parties appealed to the SC,
Andrea contending that it is a donation inter vivos while Alejandro contending it to be mortis causa.
ISSUE: Whether or not the donation is a donation inter vivos or mortis causa
RULING: Donation inter vivos
The donation is a donation inter vivos because it took effect during the lifetime of the donors as provided in Art. 729. It
was stipulated in the deed that out of love and affection by the donors to the donees, the latter are donating
wholeheartedly and unconditionally free from any kind of lien and debt. Likewise, it was accepted by the donees which is
a requirement for donations inter vivos. Donations mortis causa are never accepted during the donors lifetime.
The reservation clause which provides that the donees cannot sell the lots to 3rd persons while the couple is still alive
implies that the ownership already passed.
Although there was a stipulation where the couple reserved to themselves the administration, ownership and rights over
the properties mentioned, this should not be construed as to mean that ownership will pass only after their death. This
refers to the beneficial ownership and not the naked title and what the donors reserved to themselves by means of that
clause was the management of the donated lots and the fruits thereof
4e%u&lic of the 5hili%%ines
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 141104 & 148763 Ju! 8" #007
$TL$S CONSOLID$TED MINING $ND DEVELOPMENT CORPOR$TION" %etitioner,
vs"
COMMISSIONER O% INTERN$L REVENUE" res%ondent"
D E C I S I O N
CHICO&N$'$RIO" J.:
6efore this Court are the consolidated cases involving the unsuccessful claims of herein %etitioner Atlas Consolidated
Mining and Develo%ment Cor%oration 2%etitioner cor%oration3 for the refund7credit of the in%ut Value Added #ax 2VA#3 on
its %urchases of ca%ital goods and on its 8ero9rated sales in the taxa&le :uarters of the !ears 199' and 199;, the denial of
$hich &! the Court of #ax A%%eals 2C#A3, $as affirmed &! the Court of A%%eals"
5etitioner cor%oration is engaged in the &usiness of mining, %roduction, and sale of various mineral %roducts, such as
gold, %!rite, and co%%er concentrates" It is a VA#9registered tax%a!er" It $as initiall! issued VA# 4egistration <o" /;9A9=9
'';;;>, dated 1 anuar! 19)), &ut it had to register ane$ $ith the a%%ro%riate revenue district office 24D?3 of the 6ureau
of Internal 4evenue 26I43 $hen it moved its %rinci%al %lace of &usiness, and it $as re9issued VA# 4egistration <o" /;9'9
''>=;;, dated 1@ August 199'"
1
G.R. No. 141104
5etitioner cor%oration filed $ith the 6I4 its VA# 4eturn for the first :uarter of 199;"
;
It alleged that it li+e$ise filed $ith the
6I4 the corres%onding a%%lication for the refund7credit of its in%ut VA# on its %urchases of ca%ital goods and on its 8ero9
rated sales in the amount of 5;=,'/',>='"''"
/
0hen its a%%lication for refund7credit remained unresolved &! the 6I4,
%etitioner cor%oration filed on ;' A%ril 199> its 5etition for 4evie$ $ith the C#A, doc+eted as C#A Case <o" @1';"
Asserting that it $as a A8ero9rated VA# %erson,A it %ra!ed that the C#A order herein res%ondent Commissioner of Internal
4evenue 2res%ondent Commissioner3 to refund7credit %etitioner cor%oration $ith the amount of 5;=,'/',>='"'',
re%resenting the in%ut VA# it had %aid for the first :uarter of 199;" #he res%ondent Commissioner o%%osed and sought
the dismissal of the %etition for revie$ of %etitioner cor%oration for failure to state a cause of action" After due trial, the
C#A %romulgated its Decision
>
on ;> <ovem&er 1997 $ith the follo$ing dis%osition B
(HERE%ORE, in vie$ of the foregoing, the instant claim for refund is here&! DENIED on the ground of
%rescri%tion, insufficienc! of evidence and failure to com%l! $ith -ection ;/' of the #ax Code, as amended"
Accordingl!, the %etition at &ar is here&! DISMISSED for lac+ of merit"
#he C#A denied the motion for reconsideration of %etitioner cor%oration in a 4esolution
@
dated 1@ A%ril 199)"
0hen the case $as elevated to the Court of A%%eals as CA9C"4" -5 <o" >7='7, the a%%ellate court, in its
Decision,
=
dated = ul! 1999, dismissed the a%%eal of %etitioner cor%oration, finding no reversi&le error in the C#A
Decision, dated ;> <ovem&er 1997" #he su&se:uent motion for reconsideration of %etitioner cor%oration $as also denied
&! the Court of A%%eals in its 4esolution,
7
dated 1> Decem&er 1999"
#hus, %etitioner cor%oration comes &efore this Court, via a 5etition for 4evie$ on Certiorari under 4ule >@ of the 4evised
4ules of Court, assigning the follo$ing errors committed &! the Court of A%%eals B
I
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II
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FA#AG D.F.C#"
III
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54.-C4I5#IV. 5.4I?D -I<C. #D. EDICIAG CGAIM 0A- FIG.D 0I#DI< #0? 2;3 1.A4- F4?M #D.
FIGI<C ?F #D. VA# 4.#E4<"
IV
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F?4 5.#I#I?<.4 #? 54.-.<# ADDI#I?<AG .VID.<C."
)
G.R. No. 148763
C"4" <o" 1>)7=/ involves almost the same set of facts as in C"4" <o" 1>11'> %resented a&ove, exce%t that it relates to
the claims of %etitioner cor%oration for refund7credit of in%ut VA# on its %urchases of ca%ital goods and on its 8ero9rated
sales made in the last three taxa&le :uarters of 199'"
5etitioner cor%oration filed $ith the 6I4 its VA# 4eturns for the second, third, and fourth :uarters of 199', on ;' ul!
199', 1) ?cto&er 199', and ;' anuar! 1991, res%ectivel!" It su&mitted se%arate a%%lications to the 6I4 for the
refund7credit of the in%ut VA# %aid on its %urchases of ca%ital goods and on its 8ero9rated sales, the details of $hich are
%resented as follo$s B
Date of A%%lication 5eriod Covered Amount A%%lied For
;1 August 199' ;
nd
Huarter, 199' 5 @>,'1>,7;;"'>
;1 <ovem&er 199' /
rd
Huarter, 199' 7@,/'>,77>"77
19 Fe&ruar! 1991 >
th
Huarter, 199' >/,);9,7=="1'
0hen the 6I4 failed to act on its a%%lications for refund7credit, %etitioner cor%oration filed $ith the C#A the follo$ing
%etitions for revie$ B
Date Filed 5eriod Covered C#A Case <o"
;' ul! 199; ;
nd
Huarter, 199' >)/1
9 ?cto&er 199; /
rd
Huarter, 199' >)@9
1> anuar! 199/ >
th
Huarter, 199' >9>>
$hich $ere eventuall! consolidated" #he res%ondent Commissioner contested the foregoing 5etitions and %ra!ed for the
dismissal thereof" #he C#A ruled in favor of res%ondent Commissioner and in its Decision,
9
dated /' ?cto&er 1997,
dismissed the 5etitions mainl! on the ground that the %rescri%tive %eriods for filing the same had ex%ired" In a
4esolution,
1'
dated 1@ anuar! 199), the C#A denied the motion for reconsideration of %etitioner cor%oration since the
latter %resented no ne$ matter not alread! discussed in the courtNs %rior Decision" In the same 4esolution, the C#A also
denied the alternative %ra!er of %etitioner cor%oration for a ne$ trial since it did not fall under an! of the grounds cited
under -ection 1, 4ule /7 of the 4evised 4ules of Court, and it $as not su%%orted &! affidavits of merits re:uired &!
-ection ; of the same 4ule"
5etitioner cor%oration a%%ealed its case to the Court of A%%eals, $here it $as doc+eted as CA9C"4" -5 <o" >=71)" ?n 1@
-e%tem&er ;''', the Court of A%%eals rendered its Decision,
11
finding that although %etitioner cor%oration timel! filed its
5etitions for 4evie$ $ith the C#A, it still failed to su&stantiate its claims for the refund7credit of its in%ut VA# for the last
three :uarters of 199'" In its 4esolution,
1;
dated ;7 une ;''1, the a%%ellate court denied the motion for reconsideration
of %etitioner cor%oration, finding no cogent reason to reverse its %revious Decision"
Aggrieved, %etitioner cor%oration filed $ith this Court another 5etition for 4evie$ on Certiorari under 4ule >@ of the
4evised 4ules of Court, doc+eted as C"4" <o" 1>)7=/, raising the follo$ing issues B
A"
0D.#D.4 ?4 <?# #D. C?E4# ?F A55.AG- .44.D I< D?GDI<C #DA# 5.#I#I?<.4N- CGAIM I-
6A44.D E<D.4 4.V.<E. 4.CEGA#I?<- <?-" ;9)) A<D /9)) I".", F?4 FAIGE4. #? 5#?V. JsicK #D.
7'I #D4.-D?GD F?4 M.4?94A#I<C #? A55G1 A<D F?4 FAIGE4. #? .-#A6GI-D #D. FAC#EAG 6A-I-
F?4 #D. I<-#A<# CGAIM"
6"
0D.#D.4 ?4 <?# #D. C?E4# ?F A55.AG- .44.D I< FI<DI<C #DA# #D.4. I- <? 6A-I- #? C4A<#
5.#I#I?<.4N- M?#I?< F?4 <.0 #4IAG"
#here &eing similarit! of %arties, su&*ect matter, and issues, C"4" <os" 1>11'> and 1>)7=/ $ere consolidated %ursuant to
a 4esolution, dated > -e%tem&er ;''=, issued &! this Court" #he ruling of this Court in these cases hinges on ho$ it $ill
resolve the follo$ing +e! issuesO 213 %rescri%tion of the claims of %etitioner cor%oration for in%ut VA# refund7credit, 2;3
validit! and a%%lica&ilit! of 4evenue 4egulations <o" ;9)) im%osing u%on %etitioner cor%oration, as a re:uirement for the
VA# 8ero9rating of its sales, the &urden of %roving that the &u!er com%anies $ere not *ust 6?I9registered &ut also
ex%orting 7'I of their total annual %roduction, 2/3 sufficienc! of evidence %resented &! %etitioner cor%oration to esta&lish
that it is indeed entitled to in%ut VA# refund7credit, and 2>3 legal ground for granting the motion of %etitioner cor%oration for
re9o%ening of its cases or holding of ne$ trial &efore the C#A so it could &e given the o%%ortunit! to %resent the re:uired
evidence"
Prescription
#he %rescri%tive %eriod for filing an a%%lication for tax refund7credit of in%ut VA# on 8ero9rated sales made in 199' and
199; $as governed &! -ection 1'=2&3 and 2c3 of the #ax Code of 1977, as amended, $hich %rovided that B
-.C" 1'=" Refunds or tax credits of input tax. B x x x"
2&3 ero!rated or effective"# $ero!rated sa"es. B An! %erson, exce%t those covered &! %aragra%h 2a3 a&ove, $hose
sales are 8ero9rated ma!, $ithin t$o !ears after the close of the :uarter $hen such sales $ere made, a%%l! for
the issuance of a tax credit certificate or refund of the in%ut taxes attri&uta&le to such sales to the extent that such
in%ut tax has not &een a%%lied against out%ut tax"
x x x x
2e3 %eriod &it'in &'ic' refund of input taxes (a# )e (ade )# t'e Co((issioner. B #he Commissioner shall
refund in%ut taxes $ithin =' da!s from the date the a%%lication for refund $as filed $ith him or his dul! authori8ed
re%resentative" <o refund of in%ut taxes shall &e allo$ed unless the VA#9registered %erson files an a%%lication for
refund $ithin the %eriod %rescri&ed in %aragra%hs 2a3, 2&3 and 2c3 as the case ma! &e"
6! a %lain reading of the foregoing %rovision, the t$o9!ear %rescri%tive %eriod for filing the a%%lication for refund7credit of
in%ut VA# on 8ero9rated sales shall &e determined from the close of the :uarter $hen such sales $ere made"
5etitioner contends, ho$ever, that the said t$o9!ear %rescri%tive %eriod should &e counted, not from the close of the
:uarter $hen the 8ero9rated sales $ere made, &ut from the date of filing of the :uarterl! VA# return and %a!ment of the
tax due ;' da!s thereafter, in accordance $ith -ection 11'2&3 of the #ax Code of 1977, as amended, :uoted as follo$s B
-.C" 11'" Return and pa#(ent of va"ue!added tax. B x x x"
2&3 *i(e for fi"in+ of return and pa#(ent of tax. B #he return shall &e filed and the tax %aid $ithin ;' da!s follo$ing
the end of each :uarter s%ecificall! %rescri&ed for a VA#9registered %erson under regulations to &e %romulgated
&! the -ecretar! of FinanceO %rovided, 'o&ever, #hat an! %erson $hose registration is cancelled in accordance
$ith %aragra%h 2e3 of -ection 1'7 shall file a return $ithin ;' da!s from the cancellation of such registration"
It is alread! $ell9settled that the t$o9!ear %rescri%tive %eriod for instituting a suit or %roceeding for recover! of cor%orate
income tax erroneousl! or illegall! %aid under -ection ;/'
1/
of the #ax Code of 1977, as amended, $as to &e counted
from the filing of the final ad*ustment return" #his Court alread! set out in ACCRA Invest(ents Corporation v. Court of
Appea"s,
1>
the rationale for such a rule, thus B
Clearl!, there is the need to file a return first &efore a claim for refund can %ros%er inasmuch as the res%ondent
Commissioner &! his o$n rules and regulations mandates that the cor%orate tax%a!er o%ting to as+ for a refund
must sho$ in its final ad*ustment return the income it received from all sources and the amount of $ithholding
taxes remitted &! its $ithholding agents to the 6ureau of Internal 4evenue" #he %etitioner cor%oration filed its final
ad*ustment return for its 19)1 taxa&le !ear on A%ril 1@, 19);" In our 4esolution dated A%ril 1', 19)9 in the case
of Co((issioner of Interna" Revenue v. Asia Austra"ia -xpress, .td. 2C"4" <o" )@9@=3, $e ruled that the t$o9!ear
%rescri%tive %eriod $ithin $hich to claim a refund commences to run, at the earliest, on the date of the filing of the
ad*usted final tax return" Dence, the %etitioner cor%oration had until A%ril 1@, 19)> $ithin $hich to file its claim for
refund"
Considering that ACC4AI< filed its claim for refund as earl! as Decem&er ;9, 19)/ $ith the res%ondent
Commissioner $ho failed to ta+e an! action thereon and considering further that the non9resolution of its claim for
refund $ith the said Commissioner %rom%ted ACC4AI< to reiterate its claim &efore the Court of #ax A%%eals
through a %etition for revie$ on A%ril 1/, 19)>, the res%ondent a%%ellate court manifestl! committed a reversi&le
error in affirming the holding of the tax court that ACC4AI<Ns claim for refund $as &arred &! %rescri%tion"
It &ears em%hasis at this %oint that the rationale in com%uting the t$o9!ear %rescri%tive %eriod $ith res%ect to the
%etitioner cor%orationNs claim for refund from the time it filed its final ad*ustment return is the fact that it $as onl!
then that ACC4AI< could ascertain $hether it made %rofits or incurred losses in its &usiness o%erations" #he
Adate of %a!mentA, therefore, in ACC4AI<Ns case $as $hen its tax lia&ilit!, if an!, fell due u%on its filing of its final
ad*ustment return on A%ril 1@, 19);"
In another case, Co((issioner of Interna" Revenue v. *M/ Sa"es, Inc.,
1@
this Court further ex%ounded on the same matter
B
A re9examination of the aforesaid minute resolution of the Court in the %acific %rocon case is $arranted under the
circumstances to la! do$n a categorical %ronouncement on the :uestion as to $hen the t$o9!ear %rescri%tive
%eriod in cases of :uarterl! cor%orate income tax commences to run" A full9&lo$n decision in this regard is
rendered more im%erative in the light of the reversal &! the Court of #ax A%%eals in the instant case of its %revious
ruling in the %acific %rocon case"
-ection ;9; 2no$ -ection ;/'3 of the <ational Internal 4evenue Code should &e inter%reted in relation to the
other %rovisions of the #ax Code in order to give effect the legislative intent and to avoid an a%%lication of the la$
$hich ma! lead to inconvenience and a&surdit!" In the case of %eop"e vs. Rivera 2@9 5hil" ;/= J19//K3, this Court
stated that statutes should receive a sensi&le construction, such as $ill give effect to the legislative intention and
so as to avoid an un*ust or an a&surd conclusion" I0*-R%R-*A*I1 *A.IS I0 AM2I34IS S-M%-R 5RI-0DA
-S*, 4* -VI*A*4R I0C10V-0I-0S -* A2S4RD4M" 0here there is am&iguit!, such inter%retation as $ill
avoid inconvenience and a&surdit! is to &e ado%ted" Furthermore, courts must give effect to the general legislative
intent that can &e discovered from or is unraveled &! the four corners of the statute, and in order to discover said
intent, the $hole statute, and not onl! a %articular %rovision thereof, should &e considered" 2Mani"a .od+e 0o.
671, et a". vs. Court of Appea"s, et a". 7/ -C4A 1=; J197=3 .ver! section, %rovision or clause of the statute must
&e ex%ounded &! reference to each other in order to arrive at the effect contem%lated &! the legislature" #he
intention of the legislator must &e ascertained from the $hole text of the la$ and ever! %art of the act is to &e
ta+en into vie$" 2C'artered 2an8 vs. I(peria", >) 5hil" 9/1 J19;1K, .ope$ vs. -" 9o+er 5i"ipino, >7 5hil" ;>9, cited
in A)oiti$ S'ippin+ Corporation vs. Cit# of Ce)u, 1/ -C4A >>9 J19=@K3"
#hus, in resolving the instant case, it is necessar! that $e consider not onl! -ection ;9; 2no$ -ection ;/'3 of the
<ational Internal 4evenue Code &ut also the other %rovisions of the #ax Code, %articularl! -ections )>, )@ 2no$
&oth incor%orated as -ection =)3, -ection )= 2no$ -ection 7'3 and -ection )7 2no$ -ection =93 on Huarterl!
Cor%orate Income #ax 5a!ment and -ection /;1 2no$ -ection ;/;3 on +ee%ing of &oo+s of accounts" All these
%rovisions of the #ax Code should &e harmoni8ed $ith each other"
x x x x
#herefore, the filing of a :uarterl! income tax returns re:uired in -ection )@ 2no$ -ection =)3 and im%lemented
%er 6I4 Form 17';9H and %a!ment of :uarterl! income tax should onl! &e considered mere installments of the
annual tax due" #hese :uarterl! tax %a!ments $hich are com%uted &ased on the cumulative figures of gross
recei%ts and deductions in order to arrive at a net taxa&le income, should &e treated as advances or %ortions of
the annual income tax due, to &e ad*usted at the end of the calendar or fiscal !ear" #his is reinforced &! -ection
)7 2no$ -ection =93 $hich %rovides for the filing of ad*ustment returns and final %a!ment of income tax"
Conse:uentl!, the t$o9!ear %rescri%tive %eriod %rovided in -ection ;9; 2no$ -ection ;/'3 of the #ax Code should
&e com%uted from the time of filing the Ad*ustment 4eturn or Annual Income #ax 4eturn and final %a!ment of
income tax"
In the case of Co""ector of Interna" Revenue vs. Antonio %rieto 2; -C4A 1''7 J19=1K3, this Court held that $hen a
tax is %aid in installments, the %rescri%tive %eriod of t$o !ears %rovided in -ection /'= 2-ection ;9;3 of the
<ational Internal 4evenue Code should &e counted from the date of the final %a!ment" #his ruling is reiterated
in Co((issioner of Interna" Revenue vs. Car"os %a"anca 21) -C4A >9= J19==K3, $herein this Court stated that
$here the tax account $as %aid on installment, the com%utation of the t$o9!ear %rescri%tive %eriod under -ection
/'= 2-ection ;9;3 of the #ax Code, should &e from the date of the last installment"
In the instant case, #ML -ales, Inc" filed a suit for a refund on March 1>, 19)>" -ince the t$o9!ear %rescri%tive
%eriod should &e counted from the filing of the Ad*ustment 4eturn on A%ril 1@,19);, #ML -ales, Inc" is not !et
&arred &! %rescri%tion"
#he ver! same reasons set forth in the afore9cited cases concerning the t$o9!ear %rescri%tive %eriod for claims for refund
of illegall! or erroneousl! collected income tax ma! also a%%l! to the 5etitions at &ar involving the same %rescri%tive
%eriod for claims for refund7credit of in%ut VA# on 8ero9rated sales"
It is true that unli+e cor%orate income tax, $hich is re%orted and %aid on installment ever! :uarter, &ut is eventuall!
su&*ected to a final ad*ustment at the end of the taxa&le !ear, VA# is com%uted and %aid on a %urel! :uarterl! &asis
$ithout need for a final ad*ustment at the end of the taxa&le !ear" Do$ever, it is also e:uall! true that until and unless the
VA#9registered tax%a!er %re%ares and su&mits to the 6I4 its :uarterl! VA# return, there is no $a! of +no$ing $ith
certaint! *ust ho$ much in%ut VA#
1=
the tax%a!er ma! a%%l! against its out%ut VA#,
17
ho$ much out%ut VA# it is due to
%a! for the :uarter or ho$ much excess in%ut VA# it ma! carr!9over to the follo$ing :uarter, or ho$ much of its in%ut VA#
it ma! claim as refund7credit" It should &e recalled that not onl! ma! a VA#9registered tax%a!er directl! a%%l! against his
out%ut VA# due the in%ut VA# it had %aid on its im%ortation or local %urchases of goods and services during the :uarter,
the tax%a!er is also given the o%tion to either 213 carr! over an! excess in%ut VA# to the succeeding :uarters for
a%%lication against its future out%ut VA# lia&ilities, or 2;3 file an a%%lication for refund or issuance of a tax credit certificate
covering the amount of such in%ut VA#"
1)
Dence, even in the a&sence of a final ad*ustment return, the determination of
an! out%ut VA# %a!a&le necessaril! re:uires that the VA#9registered tax%a!er ma+e ad*ustments in its VA# return ever!
:uarter, ta+ing into consideration the in%ut VA# $hich are credita&le for the %resent :uarter or had &een carried over from
the %revious :uarters"
Moreover, $hen claiming refund7credit, the VA#9registered tax%a!er must &e a&le to esta&lish that it does have refunda&le
or credita&le in%ut VA#, and the same has not &een a%%lied against its out%ut VA# lia&ilities B information $hich are
su%%osed to &e reflected in the tax%a!erNs VA# returns" #hus, an a%%lication for refund7credit must &e accom%anied &!
co%ies of the tax%a!erNs VA# return7s for the taxa&le :uarter7s concerned"
Gastl!, although the tax%a!erNs refunda&le or credita&le in%ut VA# ma! not &e considered as illegall! or erroneousl!
collected, its refund7credit is a %rivilege extended to :ualified and registered tax%a!ers &! the ver! VA# s!stem ado%ted
&! the Gegislature" -uch in%ut VA#, the same as an! illegall! or erroneousl! collected national internal revenue tax,
consists of monetar! amounts $hich are currentl! in the hands of the government &ut must rightfull! &e returned to the
tax%a!er" #herefore, $hether claiming refund7credit of illegall! or erroneousl! collected national internal revenue tax, or
in%ut VA#, the tax%a!er must &e given e:ual o%%ortunit! for filing and %ursuing its claim"
For the foregoing reasons, it is more %ractical and reasona&le to count the t$o9!ear %rescri%tive %eriod for filing a claim for
refund7credit of in%ut VA# on 8ero9rated sales from the date of filing of the return and %a!ment of the tax due $hich,
according to the la$ then existing, should &e made $ithin ;' da!s from the end of each :uarter" Daving esta&lished thus,
the relevant dates in the instant cases are summari8ed and re%roduced &elo$ B
5eriod Covered Date of
Filing24eturn $7
6I43
Date of
Filing2A%%lication $7
6I43
Date of Filing2Case
$7 C#A3
;
nd
Huarter, 199' ;' ul! 199' ;1 August 199' ;' ul! 199;
/
rd
Huarter, 199' 1) ?cto&er 199' ;1 <ovem&er 199' 9 ?cto&er 199;
>
th
Huarter, 199' ;' anuar! 1991 19 Fe&ruar! 1991 1> anuar! 199/
1
st
Huarter, 199; ;' A%ril 199; 99 ;' A%ril 199>
#he a&ove ta&le readil! sho$s that the administrative and *udicial claims of %etitioner cor%oration for refund of its in%ut
VA# on its 8ero9rated sales for the last three :uarters of 199' $ere all filed $ithin the %rescri%tive %eriod"
Do$ever, the same cannot &e said for the claim of %etitioner cor%oration for refund of its in%ut VA# on its 8ero9rated sales
for the first :uarter of 199;" .ven though it ma! seem that %etitioner cor%oration filed in time its *udicial claim $ith the
C#A, there is no sho$ing that it had %reviousl! filed an administrative claim $ith the 6I4" -ection 1'=2e3 of the #ax Code
of 1977, as amended, ex%licitl! %rovided that no refund of in%ut VA# shall &e allo$ed unless the VA#9registered tax%a!er
filed an a%%lication for refund $ith res%ondent Commissioner $ithin the t$o9!ear %rescri%tive %eriod" #he a%%lication of
%etitioner cor%oration for refund7credit of its in%ut VA# for the first :uarter of 199; $as not onl! unsigned &! its su%%osed
authori8ed re%resentative, Ma" 5a8 4" -emilla, Manager9Finance and #reasur!, &ut it $as not dated, stam%ed, and
initialed &! the 6I4 official $ho %ur%ortedl! received the same" #he C#A, in its Decision,
19
dated ;> <ovem&er 1997, in
C#A Case <o" @1';, made the follo$ing o&servations B
#his Court, li+e$ise, re*ects an! %ro&ative value of the A%%lication for #ax Credit74efund of VA# 5aid 26I4 Form
<o" ;@@;3 J.xhi&it A6NK formall! offered in evidence &! the %etitioner on account of the fact that it does not &ear the
6I4 stam% sho$ing the date $hen such a%%lication $as filed together $ith the signature or initial of the receiving
officer of res%ondentNs 6ureau" 0orse still, it does not sho$ the date of a%%lication and the signature of a certain
Ma" 5a8 4" -emilla indicated in the form $ho a%%ears to &e %etitionerNs authori8ed filer"
A revie$ of the records reveal that the original of the aforecited a%%lication $as lost during the time %etitioner
transferred its office 2#-<, %" =, Dearing of Decem&er 9, 199>3" Attem%t $as made to %rove that %etitioner exerted
efforts to recover the original co%!, &ut to no avail" Des%ite this, ho$ever, 0e o&serve that %etitioner com%letel!
failed to esta&lish the missing dates and signatures a&ovementioned" ?n this score, said a%%lication has no
%ro&ative value in demonstrating the fact of its filing $ithin t$o !ears after the Jfiling of the VA# return for the
:uarterK $hen %etitionerNs sales of goods $ere made as %rescri&ed under -ection 1'=2&3 of the #ax Code" 0e
&elieve thus that %etitioner failed to file an a%%lication for refund in due form and $ithin the legal %eriod set &! la$
at the administrative level" Dence, the case at &ar has failed to satisf! the re:uirement on the %rior filing of an
a%%lication for refund $ith the res%ondent &efore the commencement of a *udicial claim for refund, as %rescri&ed
under -ection ;/' of the #ax Code" #his fact constitutes another one of the man! reasons for not granting
%etitionerNs *udicial claim"
As %ointed out &! the C#A, in serious dou&t is not onl! the fact of $hether %etitioner cor%oration timel! filed its
administrative claim for refund of its in%ut VA# for the first :uarter of 199;, &ut also $hether %etitioner cor%oration actuall!
filed such administrative claim in the first %lace" For failing to %rove that it had earlier filed $ith the 6I4 an a%%lication for
refund7credit of its in%ut VA# for the first :uarter of 199;, $ithin the %eriod %rescri&ed &! la$, then the case instituted &!
%etitioner cor%oration $ith the C#A for the refund7credit of the ver! same tax cannot %ros%er"
Revenue Regulations No. 2-88 and te 70! e"port re#uire$ent
Ender -ection 1''2a3 of the #ax Code of 1977, as amended, a 1'I VA# $as im%osed on the gross selling %rice or gross
value in mone! of goods sold, &artered or exchanged" 1et, the same %rovision su&*ected the follo$ing sales made &!
VA#9registered %ersons to 'I VA# B
213 .x%ort sales, and
2;3 -ales to %ersons or entities $hose exem%tion under s%ecial la$s or international agreements to $hich the
5hili%%ines is a signator! effectivel! su&*ects such sales to 8ero9rate"
A.x%ort -alesA means the sale and shi%ment or ex%ortation of goods from the 5hili%%ines to a foreign countr!,
irres%ective of an! shi%%ing arrangement that ma! &e agreed u%on $hich ma! influence or determine the transfer
of o$nershi% of the goods so ex%orted, or foreign currenc! denominated sales" AForeign currenc! denominated
salesA, means sales to nonresidents of goods assem&led or manufactured in the 5hili%%ines, for deliver! to
residents in the 5hili%%ines and %aid for in converti&le foreign currenc! remitted through the &an+ing s!stem in the
5hili%%ines"
#hese are termed 8ero9rated sales" A 8ero9rated sale is still considered a taxa&le transaction for VA# %ur%oses, although
the VA# rate a%%lied is 'I" A sale &! a VA#9registered tax%a!er of goods and7or services taxed at 'I shall not result in
an! out%ut VA#, $hile the in%ut VA# on its %urchases of goods or services related to such 8ero9rated sale shall &e
availa&le as tax credit or refund"
;'
5etitioner cor%oration :uestions the validit! of 4evenue 4egulations <o" ;9)) averring that the said regulations im%osed
additional re:uirements, not found in the la$ itself, for the 8ero9rating of its sales to 5hili%%ine -melting and 4efining
Cor%oration 25A-A43 and 5hili%%ine 5hos%hate, Inc" 25DIG5D?-3, &oth of $hich are registered not onl! $ith the 6?I, &ut
also $ith the then .x%ort 5rocessing Mone Authorit! 2.5MA3"
;1
#he contentious %rovisions of 4evenue 4egulations <o" ;9)) read B
-.C" ;" ero!ratin+" B 2a3 -ales of ra$ materials to 6?I9registered ex%orters" B -ales of ra$ materials to ex%ort9
oriented 6?I9registered enter%rises $hose ex%ort sales, under rules and regulations of the 6oard of Investments,
exceed sevent! %ercent 27'I3 of total annual %roduction, shall &e su&*ect to 8ero9rate under the follo$ing
conditionsO
A213 #he seller shall file an a%%lication $ith the 6I4, A##<"O Division, a%%l!ing for 8ero9rating for each and
ever! se%arate &u!er, in accordance $ith -ection )2d3 of 4evenue 4egulations <o" @9)7" #he a%%lication
should &e accom%anied $ith a favora&le recommendation from the 6oard of Investments"A
A2;3 #he ra$ materials sold are to &e used exclusivel! &! the &u!er in the manufacture, %rocessing or
re%ac+ing of his o$n registered ex%ort %roduct,
A2/3 #he $ords AMero94ated -alesA shall &e %rominentl! indicated in the sales invoice" #he ex%orter
2&u!er3 can no longer claim from the 6ureau of Internal 4evenue or an! other government office tax
credits on their 8ero9rated %urchases,
2&3 -ales of ra$ materials to foreign &u!er" B -ales of ra$ materials to a nonresident foreign &u!er for deliver! to
a resident local ex%ort9oriented 6?I9registered enter%rise to &e used in manufacturing, %rocessing or re%ac+ing of
the said &u!erNs goods and %aid for in foreign currenc!, in$ardl! remitted in accordance $ith Central 6an+ rules
and regulations shall &e su&*ect to 8ero9rate"
It is the %osition of the res%ondent Commissioner, affirmed &! the C#A and the Court of A%%eals, that -ection ; of
4evenue 4egulations <o" ;9)) should &e a%%lied in the cases at &ar, and to &e entitled to the 8ero9rating of its sales to
5A-A4 and 5DIG5D?-, %etitioner cor%oration, as a VA#9registered seller, must &e a&le to %rove not onl! that 5A-A4
and 5DIG5D?- are 6?I9registered cor%orations, &ut also that more than 7'I of the total annual %roduction of these
cor%orations are actuall! ex%orted" 4evenue 4egulations <o" ;9)) merel! echoed the re:uirement im%osed &! the 6?I on
ex%ort9oriented cor%orations registered $ith it"
0hile this Court is not %re%ared to stri+e do$n the validit! of 4evenue 4egulations <o" ;9)), it finds that its a%%lication
must &e limited and %laced in the %ro%er context" <ote that -ection ; of 4evenue 4egulations <o" ;9)) referred onl! to
the 8ero9rated sales of ra$ materials to ex%ort9oriented 6?I9registered enter%rises $hose ex%ort sales, under 6?I rules
and regulations, should exceed sevent! %ercent 27'I3 of their total annual %roduction"
-ection ; of 4evenue 4egulations <o" ;9)), should not have &een a%%lied to the 8ero9rating of the sales made &!
%etitioner cor%oration to 5A-A4 and 5DIG5D?-" At the onset, it must &e em%hasi8ed that 5A-A4 and 5DIG5D?-, in
addition to &eing registered $ith the 6?I, $ere also registered $ith the .5MA and located $ithin an ex%ort9%rocessing
8one" 5etitioner cor%oration does not claim that its sales to 5A-A4 and 5DIG5D?- are 8ero9rated on the &asis that said
sales $ere made to ex%ort9oriented 6?I9registered cor%orations, &ut rather, on the &asis that the sales $ere made to
.5MA9registered enter%rises o%erating $ithin ex%ort %rocessing 8ones" Although sales to ex%ort9oriented 6?I9registered
enter%rises and sales to .5MA9registered enter%rises located $ithin ex%ort %rocessing 8ones $ere &oth deemed ex%ort
sales, $hich, under -ection 1''2a3 of the #ax Code of 1977, as amended, shall &e su&*ect to 'I VA# distinction must &e
made &et$een these t$o t!%es of sales &ecause each ma! have different su&stantiation re:uirements"
#he #ax Code of 1977, as amended, gave a limited definition of ex%ort sales, to $itO A#he sale and shi%ment or
ex%ortation of goods from the 5hili%%ines to a foreign countr!, irres%ective of an! shi%%ing arrangement that ma! &e
agreed u%on $hich ma! influence or determine the transfer of o$nershi% of the goods so ex%orted, or foreign currenc!
denominated sales"A .xecutive ?rder <o" ;;=, other$ise +no$n as the ?mni&us Investments Code of 19)7 9 $hich, in the
!ears concerned 2i.e., 199' and 199;3, governed enter%rises registered $ith &oth the 6?I and .5MA, %rovided a more
com%rehensive definition of ex%ort sales, as :uoted &elo$O
AA4#" ;/" A.x%ort salesA shall mean the 5hili%%ine %ort F"?"6" value, determined from invoices, &ills of lading,
in$ard letters of credit, landing certificates, and other commercial documents, of ex%ort %roducts ex%orted directl!
&! a registered ex%ort %roducer or the net selling %rice of ex%ort %roduct sold &! a registered ex%ort %roducer or to
an ex%ort trader that su&se:uentl! ex%orts the sameO 5rovided, #hat sales of ex%ort %roducts to another %roducer
or to an ex%ort trader shall onl! &e deemed ex%ort sales $henactuall! ex%orted &! the latter, as evidenced &!
landing certificates of similar commercial documentsO 5rovided, further, #hat $ithout actual ex%ortation the
follo$ing shall &e considered constructivel! ex%ortedfor %ur%oses of this %rovisionO 213 sales to &onded
manufacturing $arehouses of ex%ort9oriented manufacturers, 2;3 sales to ex%ort %rocessing 8ones, 2/3 sales to
registered ex%ort traders o%erating &onded trading $arehouses su%%l!ing ra$ materials used in the manufacture
of ex%ort %roducts under guidelines to &e set &! the 6oard in consultation $ith the 6ureau of Internal 4evenue
and the 6ureau of Customs, 2>3 sales to foreign militar! &ases, di%lomatic missions and other agencies and7or
instrumentalities granted tax immunities, of locall! manufactured, assem&led or re%ac+ed %roducts $hether %aid
for in foreign currenc! or notO 5rovided, further, #hat ex%ort sales of registered ex%ort trader ma! include
commission income, and 5rovided, finall!, #hat ex%ortation of goods on consignment shall not &e deemed ex%ort
sales until the ex%ort %roducts consigned are in fact sold &! the consignee"
-ales of locall! manufactured or assem&led goods for household and %ersonal use to Fili%inos a&road and other
non9residents of the 5hili%%ines as $ell as returning ?verseas Fili%inos under the Internal .x%ort 5rogram of the
government and %aid for in converti&le foreign currenc! in$ardl! remitted through the 5hili%%ine &an+ing s!stems
shall also &e considered ex%ort sales" 2Enderscoring ours"3
#he afore9cited %rovision of the ?mni&us Investments Code of 19)7 recogni8es as ex%ort sales the sales of ex%ort
%roducts to another %roducer or to an ex%ort trader, %rovided that the ex%ort %roducts are actuall! ex%orted" For %ur%oses
of VA# 8ero9rating, such %roducer or ex%ort trader must &e registered $ith the 6?I and is re:uired to actuall! ex%ort more
than 7'I of its annual %roduction"
0ithout actual ex%ortation, Article ;/ of the ?mni&us Investments Code of 19)7 also considers constructive ex%ortation
as ex%ort sales" Among other t!%es of constructive ex%ortation s%ecificall! identified &! the said %rovision are sales to
ex%ort %rocessing 8ones" -ales to ex%ort %rocessing 8ones are su&*ected to s%ecial tax treatment" Article 77 of the same
Code esta&lishes the tax treatment of goods or merchandise &rought into the ex%ort %rocessing 8ones" ?f %articular
relevance herein is %aragra%h ;, $hich %rovides that AMerchandise %urchased &! a registered 8one enter%rise from the
customs territor! and su&se:uentl! &rought into the 8one, shall &e considered as ex%ort sales and the ex%orter thereof
shall &e entitled to the &enefits allo$ed &! la$ for such transaction"A
-uch tax treatment of goods &rought into the ex%ort %rocessing 8ones are onl! consistent $ith the Destination 5rinci%le
and Cross 6order Doctrine to $hich the 5hili%%ine VA# s!stem adheres" According to the Destination 5rinci%le,
;;
goods
and services are taxed onl! in the countr! $here these are consumed" In connection $ith the said %rinci%le, the Cross
6order Doctrine
;/
mandates that no VA# shall &e im%osed to form %art of the cost of the goods destined for consum%tion
outside the territorial &order of the taxing authorit!" Dence, actual ex%ort of goods and services from the 5hili%%ines to a
foreign countr! must &e free of VA#, $hile those destined for use or consum%tion $ithin the 5hili%%ines shall &e im%osed
$ith 1'I VA#"
;>
.x%ort %rocessing 8ones
;@
are to &e managed as a se%arate customs territor! from the rest of the
5hili%%ines and, thus, for tax %ur%oses, are effectivel! considered as foreign territor!" For this reason, sales &! %ersons
from the 5hili%%ine customs territor! to those inside the ex%ort %rocessing 8ones are alread! taxed as ex%orts"
5lainl!, sales to enter%rises o%erating $ithin the ex%ort %rocessing 8ones are ex%ort sales, $hich, under the #ax Code of
1977, as amended, $ere su&*ect to 'I VA#" It is on this ground that %etitioner cor%oration is claiming refund7credit of the
in%ut VA# on its 8ero9rated sales to 5A-A4 and 5DIG5D?-"
#he distinction made &! this Court in the %receding %aragra%hs &et$een the 8ero9rated sales to ex%ort9oriented 6?I9
registered enter%rises and 8ero9rated sales to .5MA9registered enter%rises o%erating $ithin ex%ort %rocessing 8ones is
actuall! su%%orted &! su&se:uent develo%ment in tax la$s and regulations" In 4evenue 4egulations <o" 799@, the
Consolidated VA# 4egulations, as amended,
;=
the 6I4 defined $ith more %recision $hat are 8ero9rated ex%ort sales B
213 #he sale and actual shi%ment of goods from the 5hili%%ines to a foreign countr!, irres%ective of an! shi%%ing
arrangement that ma! &e agreed u%on $hich ma! influence or determine the transfer of o$nershi% of the goods
so ex%orted %aid for in acce%ta&le foreign currenc! or its e:uivalent in goods or services, and accounted for in
accordance $ith the rules and regulations of the 2an+8o Sentra" n+ %i"ipinas 26-53:
2;3 #he sale of ra$ materials or %ac+aging materials to a non9resident &u!er for deliver! to a resident local ex%ort9
oriented enter%rise to &e used in manufacturing, %rocessing, %ac+ing or re%ac+ing in the 5hili%%ines of the said
&u!erNs goods and %aid for in acce%ta&le foreign currenc! and accounted for in accordance $ith the rules and
regulations of the 2an+8o Sentra" n+ %i"ipinas 26-53:
2/3 #he sale of ra$ materials or %ac+aging materials to an ex%ort9oriented enter%rise $hose ex%ort sales exceed
sevent! %ercent 27'I3 of total annual %roduction,
An! enter%rise $hose ex%ort sales exceed 7'I of the total annual %roduction of the %receding taxa&le !ear shall
&e considered an ex%ort9oriented enter%rise u%on accreditation as such under the %rovisions of the .x%ort
Develo%ment Act 24"A" 7)>>3 and its im%lementing rules and regulations,
2>3 -ale of gold to the 2an+8o Sentra" n+ %i"ipinas 26-53, and
2@3 #hose considered ex%ort sales under Articles ;/ and 77 of .xecutive ?rder <o" ;;=, other$ise +no$n as the
?mni&us Investments Code of 19)7, and other s%ecial la$s, e"g" 4e%u&lic Act <o" 7;;7, other$ise +no$n as the
6ases Conversion and Develo%ment Act of 199;"
#he #ax Code of 1997, as amended,
;7
later ado%ted the foregoing definition of ex%ort sales, $hich are su&*ect to 'I VA#"
#his Court then reiterates its conclusion that -ection ; of 4evenue 4egulations <o" ;9)), $hich a%%lied to 8ero9rated
ex%ort sales to ex%ort9oriented 6?I9registered enter%rises, should not &e a%%lied to the a%%lications for refund7credit of
in%ut VA# filed &! %etitioner cor%oration since it &ased its a%%lications on the 8ero9rating of ex%ort sales to enter%rises
registered $ith the .5MA and located $ithin ex%ort %rocessing 8ones"
%u&&icienc' o& evidence
#here can &e no dis%ute that the tax%a!er9claimant has the &urden of %roving the legal and factual &ases of its claim for
tax credit or refund, &ut once it has su&mitted all the re:uired documents, it is the function of the 6I4 to assess these
documents $ith %ur%oseful dis%atch"
;)
It therefore falls u%on herein %etitioner cor%oration to first esta&lish that its sales
:ualif! for VA# 8ero9rating under the existing la$s 2legal &asis3, and then to %resent sufficient evidence that said sales
$ere actuall! made and resulted in refunda&le or credita&le in%ut VA# in the amount &eing claimed 2factual &asis3"
It $ould initiall! a%%ear that the a%%lications for refund7credit filed &! %etitioner cor%oration cover onl! in%ut VA# on its
%ur%ortedl! 8ero9rated sales to 5A-A4 and 5DIG5D?-, ho$ever, a more thorough %erusal of its a%%lications, VA#
returns, %leadings, and other records of these cases $ould reveal that it is also claiming refund7credit of its in%ut VA# on
%urchases of ca%ital goods and sales of gold to the Central 6an+ of the 5hili%%ines 2C653"
#his Court finds that the claims for refund7credit of in%ut VA# of %etitioner cor%oration have sufficient legal &ases"
As has &een extensivel! discussed herein, -ection 1'=2&32;3, in relation to -ection 1''2a32;3 of the #ax Code of 1977, as
amended, allo$ed the refund7credit of in%ut VA# on ex%ort sales to enter%rises o%erating $ithin ex%ort %rocessing 8ones
and registered $ith the .5MA, since such ex%ort sales $ere deemed to &e effectivel! 8ero9rated sales"
;9
#he fact that
5A-A4 and 5DIG5D?-, to $hom %etitioner cor%oration sold its %roducts, $ere o%erating inside an ex%ort %rocessing
8one and dul! registered $ith .5MA, $as never raised as an issue herein" Moreover, the same fact $as alread! *udiciall!
recogni8ed in the case At"as Conso"idated Minin+ ; Deve"op(ent Corporation v. Co((issioner of Interna"
Revenue.
/'
-ection 1'=2c3 of the same Code li+e$ise %ermitted a VA#9registered tax%a!er to a%%l! for refund7credit of the
in%ut VA# %aid on ca%ital goods im%orted or locall! %urchased to the extent that such in%ut VA# has not &een a%%lied
against its out%ut VA#" Mean$hile, the effective 8ero9rating of sales of gold to the C65 from 19)9 to 1991
/1
$as alread!
affirmed &! this Court in Co((issioner of Interna" Revenue v. 2en+uet Corporation,
/;
$herein it ruled that B
At the time $hen the su&*ect transactions $ere consummated, the %revailing 6I4 regulations relied u%on &!
res%ondent ordained that gold sales to the Central 6an+ $ere 8ero9rated" #he 6I4 inter%reted -ec" 1'' of the
<I4C in relation to -ec" ; of ."?" <o" @)1 s" 19)' $hich %rescri&ed that gold sold to the Central 6an+ shall &e
considered ex%ort and therefore shall &e su&*ect to the ex%ort and %remium duties" In coming out $ith this
inter%retation, the 6I4 also considered -ec" 1=9 of Central 6an+ Circular <o" 9=' $hich states that all sales of
gold to the Central 6an+ are considered constructive ex%orts" x x x"
#his Court no$ comes to the :uestion of $hether %etitioner cor%oration has sufficientl! esta&lished the factual &ases for
its a%%lications for refund7credit of in%ut VA#" It is in this regard that %etitioner cor%oration has failed, &oth in the
administrative and *udicial level"
A%%lications for refund7credit of in%ut VA# $ith the 6I4 must com%l! $ith the a%%ro%riate revenue regulations" As this
Court has alread! ruled, 4evenue 4egulations <o" ;9)) is not relevant to the a%%lications for refund7credit of in%ut VA#
filed &! %etitioner cor%oration, nonetheless, the said a%%lications must have &een in accordance $ith 4evenue
4egulations <o" /9)), amending -ection 1= of 4evenue 4egulations <o" @9)7, $hich %rovided as follo$s B
-.C#I?< 1=" 4efunds or tax credits of in%ut tax" B
x x x x
2c3 C"ai(s for tax credits<refunds. B A%%lication for #ax Credit74efund of Value9Added #ax 5aid 26I4 Form <o"
;@@;3 shall &e filed $ith the 4evenue District ?ffice of the cit! or munici%alit! $here the %rinci%al %lace of
&usiness of the a%%licant is located or directl! $ith the Commissioner, AttentionO VA# Division"
A %hotoco%! of the %urchase invoice or recei%t evidencing the value added tax %aid shall &e su&mitted together
$ith the a%%lication" #he original co%! of the said invoice7recei%t, ho$ever, shall &e %resented for cancellation
%rior to the issuance of the #ax Credit Certificate or refund" In addition, the follo$ing documents shall &e attached
$henever a%%lica&leO
x x x x
A/" .ffectivel! 8ero9rated sale of goods and services"
Ai3 %hoto co%! of a%%roved a%%lication for 8ero9rate if filing for the first time"
Aii3 sales invoice or recei%t sho$ing name of the %erson or entit! to $hom the sale of goods or
services $ere delivered, date of deliver!, amount of consideration, and descri%tion of goods or
services delivered"
Aiii3 evidence of actual recei%t of goods or services"
A>" 5urchase of ca%ital goods"
Ai3 original co%! of invoice or recei%t sho$ing the date of %urchase, %urchase %rice, amount of
value9added tax %aid and descri%tion of the ca%ital e:ui%ment locall! %urchased"
Aii3 $ith res%ect to ca%ital e:ui%ment im%orted, the %hoto co%! of im%ort entr! document for
internal revenue tax %ur%oses and the confirmation recei%t issued &! the 6ureau of Customs for
the %a!ment of the value9added tax"
A@" In a%%lica&le cases,
$here the a%%licantNs 8ero9rated transactions are regulated &! certain government agencies, a statement
therefrom sho$ing the amount and descri%tion of sale of goods and services, name of %ersons or entities 2exce%t
in case of ex%orts3 to $hom the goods or services $ere sold, and date of transaction shall also &e su&mitted"
In all cases, the amount of refund or tax credit that ma! &e granted shall &e limited to the amount of the value9
added tax 2VA#3 %aid directl! and entirel! attri&uta&le to the 8ero9rated transaction during the %eriod covered &!
the a%%lication for credit or refund"
0here the a%%licant is engaged in 8ero9rated and other taxa&le and exem%t sales of goods and services, and the
VA# %aid 2in%uts3 on %urchases of goods and services cannot &e directl! attri&uted to an! of the aforementioned
transactions, the follo$ing formula shall &e used to determine the credita&le or refunda&le in%ut tax for 8ero9rated
saleO
Amount of Mero9rated -ale
#otal -ales
L
#otal Amount of In%ut #axes
P
Amount Credita&le74efunda&le
In case the a%%lication for refund7credit of in%ut VA# $as denied or remained unacted u%on &! the 6I4, and &efore the
la%se of the t$o9!ear %rescri%tive %eriod, the tax%a!er9a%%licant ma! alread! file a 5etition for 4evie$ &efore the C#A" If
the tax%a!erNs claim is su%%orted &! voluminous documents, such as recei%ts, invoices, vouchers or long accounts, their
%resentation &efore the C#A shall &e governed &! C#A Circular <o" 199@, as amended, re%roduced in full &elo$ B
In the interest of s%eed! administration of *ustice, the Court here&! %romulgates the follo$ing rules governing the
%resentation of voluminous documents and7or long accounts, such as recei%ts, invoices and vouchers, as
evidence to esta&lish certain facts %ursuant to -ection /2c3, 4ule 1/' of the 4ules of Court and the doctrine
enunciated in Co(pania Mariti(a vs. A""ied 5ree =or8ers 4nion >66 SCRA ?4@, as $ell as -ection ) of 4e%u&lic
Act <o" 11;@O
1" #he %art! $ho desires to introduce as evidence such voluminous documents must, after motion and a%%roval
&! the Court, %resentO
2a3 a -ummar! containing, among others, a chronological listing of the num&ers, dates and amounts
covered &! the invoices or recei%ts and the amount7s of tax %aid, and 2&3 a Certification of an inde%endent
Certified 5u&lic Accountant attesting to the correctness of the contents of the summar! after ma+ing an
examination, evaluation and audit of the voluminous recei%ts and invoices" #he name of the accountant or
%artner of the firm in charge must &e stated in the motion so that he7she can &e commissioned &! the
Court to conduct the audit and, thereafter, testif! in Court relative to such summar! and certification
%ursuant to 4ule /; of the 4ules of Court"
;" #he method of individual %resentation of each and ever! recei%t, invoice or account for mar+ing, identification
and com%arison $ith the originals thereof need not &e done &efore the Court or Cler+ of Court an!more after the
introduction of the summar! and C5A certification" It is enough that the recei%ts, invoices, vouchers or other
documents covering the said accounts or %a!ments to &e introduced in evidence must &e %re9mar+ed &! the %art!
concerned and su&mitted to the Court in order to &e made accessi&le to the adverse %art! $ho desires to chec+
and verif! the correctness of the summar! and C5A certification" Gi+e$ise, the originals of the voluminous
recei%ts, invoices or accounts must &e read! for verification and com%arison in case dou&t on the authenticit!
thereof is raised during the hearing or resolution of the formal offer of evidence"
-ince C#A Cases <o" >)/1, >)@9, >9>>,
//
and @1';,
/>
$ere still %ending &efore the C#A $hen the said Circular $as
issued, then %etitioner cor%oration must have com%lied there$ith during the course of the trial of the said cases"
In Co((issioner of Interna" Revenue v. Mani"a Minin+ Corporation,
/@
this Court denied the claim of therein res%ondent,
Manila Mining Cor%oration, for refund of the in%ut VA# on its su%%osed 8ero9rated sales of gold to the C65 &ecause it $as
una&le to su&stantiate its claim" In the same case, this Court em%hasi8ed the im%ortance of com%l!ing $ith the
su&stantiation re:uirements for claiming refund7credit of in%ut VA# on 8ero9rated sales, to $it B
For a *udicial claim for refund to %ros%er, ho$ever, res%ondent must not onl! %rove that it is a VA# registered
entit! and that it filed its claims $ithin the %rescri%tive %eriod" It (ust su(stantiate t'e input VA* paid )#
purc'ase invoices or o&&icial receipts.
#his res%ondent failed to do"
4evenue 4egulations <o" /9)) amending 4evenue 4egulations <o" @9)7 %rovides the re:uirements in claiming
tax credits7refunds"
x x x x
Ender -ection ) of 4A11;@, the C#A is descri&ed as a court of record" As cases filed &efore it are litigatedde
novo, %art! litigants should %rove ever! minute as%ect of their cases" <o evidentiar! value can &e given the
%urchase invoices or recei%ts su&mitted to the 6I4 as the rules on documentar! evidence re:uire that these
documents must &e formall! offered &efore the C#A"
#his Court thus notes $ith a%%roval the follo$ing findings of the C#AO
x x x J-Kale of gold to the Central 6an+ should not &e su&*ect to the 1'I VA#9out%ut tax &ut this does
not ipso fact mean that Jthe sellerK is entitled to the amount of refund sought as it is reAuired )# "a& to
present evidence s'o&in+ t'e input taxes it paid durin+ t'e #ear in Auestion. 0hat is &eing claimed in the
instant %etition is the refund of the in%ut taxes %aid &! the herein %etitioner on its %urchase of goods and
services" Dence, it is necessar# for t'e %etitioner to s'o& proof t'at it 'ad indeed paid t'e input taxes
durin+ t'e #ear 1991. In t'e case at )ar, %etitioner fai"ed to disc'ar+e t'is dut#. It did not adduce in
evidence t'e sa"es invoice, receipts or ot'er docu(ents s'o&in+ t'e input va"ue added tax on t'e
purc'ase of +oods and services.
x x x
Section 8 of Repu)"ic Act 11?B >An Act Creatin+ t'e Court of *ax Appea"s@ provides cate+orica""# t'at te )ourt
o& *a" +ppeals sall (e a court o& record and as suc it is re#uired to conduct a &or$al trial ,trial de novo-
.ere te parties $ust present teir evidence accordingl' if t'e# desire t'e Court to ta8e suc' evidence into
consideration. 2.m%hasis and italics su%%lied3
A Asales or commercial invoiceA is a $ritten account of goods sold or services rendered indicating the %rices
charged therefor or a list &! $hatever name it is +no$n $hich is used in the ordinar! course of &usiness
evidencing sale and transfer or agreement to sell or transfer goods and services"
A Arecei%tA on the other hand is a $ritten ac+no$ledgment of the fact of %a!ment in mone! or other settlement
&et$een seller and &u!er of goods, de&tor or creditor, or %erson rendering services and client or customer"
#hese sales invoices or recei%ts issued &! the su%%lier are necessar! to su&stantiate the actual amount or
:uantit! of goods sold and their selling %rice, and ta+en collectivel! are the &est means to %rove the in%ut VA#
%a!ments"
/=
Although the foregoing decision focused onl! on the %roof re:uired for the a%%licant for refund7credit to esta&lish the in%ut
VA# %a!ments it had made on its %urchases from su%%liers, 4evenue 4egulations <o" /9)) also re:uired it to %resent
evidence %roving actual 8ero9rated VA# sales to :ualified &u!ers, such as 213 %hotoco%! of the a%%roved a%%lication for
8ero9rate if filing for the first time, 2;3 sales invoice or recei%t sho$ing the name of the %erson or entit! to $hom the goods
or services $ere delivered, date of deliver!, amount of consideration, and descri%tion of goods or services delivered, and
2/3 the evidence of actual recei%t of goods or services"
Also $orth noting in the same decision is the $eight given &! this Court to the certification &! the inde%endent certified
%u&lic accountant 2C5A3, thus B
4es%ondent contends, ho$ever, that the certification of the inde%endent C5A attesting to the correctness of the
contents of the summar! of su%%liersN invoices or recei%ts $hich $ere examined, evaluated and audited &! said
C5A in accordance $ith C#A Circular <o" 199@ as amended &! C#A Circular <o" 1'997 should su&stantiate its
claims"
#here is nothing, ho$ever, in C#A Circular <o" 199@, as amended &! C#A Circular <o" 1'997, $hich either
ex%ressl! or im%liedl! suggests that summaries and schedules of in%ut VA# %a!ments, even if certified &! an
inde%endent C5A, suffice as evidence of in%ut VA# %a!ments"
x x x x
#he circular, in the interest of s%eed! administration of *ustice, $as %romulgated to avoid the time9consuming
%rocedure of %resenting, identif!ing and mar+ing of documents &efore the Court" It does not relieve res%ondent of
its im%erative tas+ of pre!(ar8in+ %hotoco%ies of sales recei%ts and invoices andsu)(ittin+ t'e sa(e to t'e
court after the inde%endent C5A shall have examined and com%ared them $ith the originals" 0ithout %resenting
these %re9mar+ed documents as evidence B from $hich the summar! and schedules $ere &ased, the court
cannot verif! the authenticit! and veracit! of the inde%endent auditorNs conclusions"
#here is, moreover, a need to su&*ect these invoices or recei%ts to examination &! the C#A in order to confirm
$hether the! are VA# invoices" Ender -ection ;1 of 4evenue 4egulation, <o" @9)7, all %urchases covered &!
invoices other than a VA# invoice shall not &e entitled to a refund of in%ut VA#"
x x x x
0hile the C#A is not governed strictl! &! technical rules of evidence, as rules of %rocedure are not ends in
themselves &ut are %rimaril! intended as tools in the administration of *ustice, the %resentation of the %urchase
recei%ts and7or invoices is not mere %rocedural technicalit! $hich ma! &e disregarded considering that it is the
onl! means &! $hich the C#A ma! ascertain and verif! the truth of the res%ondentNs claims"
#he records further sho$ that res%ondent misera&l! failed to su&stantiate its claims for in%ut VA# refund for
the first se(ester of 1991" .xce%t for the summar! and schedules of in%ut VA# %a!ments %re%ared &!
res%ondent itself, no other evidence $as adduced in su%%ort of its claim"
As for res%ondentNs claim for in%ut VA# refund for the second se(ester of 1991, it em%lo!ed the services of
oa:uin Cunanan Q Co" on account of $hich it 2oa:uin Cunanan Q Co"3 executed a certification thatO
0e have examined the information sho$n &elo$ concerning the in%ut tax %a!ments made &! the Ma+ati
?ffice of Manila Mining Cor%oration for the %eriod from ul! 1 to Decem&er /1, 1991" ?ur examination
included ins%ection of the %ertinent su%%liersN invoices and official recei%ts and such other auditing
%rocedures as $e considered necessar! in the circumstances" x x x
As the certification merel! stated that it used Aauditing %rocedures considered necessar!A and not auditing
%rocedures $hich are in accordance $ith generall! acce%ted auditing %rinci%les and standards, and that the
examination $as made on Ain%ut tax %a!ments &! the Manila Mining Cor%oration,A $ithout s%ecif!ing that the said
in%ut tax %a!ments are attri&uta&le to the sales of gold to the Central 6an+, this Court cannot rel! thereon and
regard it as sufficient %roof of the res%ondentNs in%ut VA# %a!ments for the second semester"
/7
As for the 5etition in C"4" <o" 1>11'>, involving the in%ut VA# of %etitioner cor%oration on its 8ero9rated sales in the first
:uarter of 199;, this Court alread! found that the %etitioner cor%oration failed to com%l! $ith -ection 1'=2&3 of the #ax
Code of 1977, as amended, im%osing the t$o9!ear %rescri%tive %eriod for the filing of the a%%lication for refund7credit
thereof" #his &ars the grant of the a%%lication for refund7credit, $hether administrativel! or *udiciall!, &! ex%ress mandate
of -ection 1'=2e3 of the same Code"
Cranting ar+uendo that the a%%lication of %etitioner cor%oration for the refund7credit of the in%ut VA# on its 8ero9rated
sales in the first :uarter of 199; $as actuall! and timel! filed, %etitioner cor%oration still failed to %resent together $ith its
a%%lication the re:uired su%%orting documents, $hether &efore the 6I4 or the C#A" As the Court of A%%eals ruled B
In actions involving claims for refund of taxes assessed and collected, the &urden of %roof rests on the tax%a!er"
As clearl! discussed in the C#ANs decision, %etitioner failed to su&stantiate its claim for tax refunds" #husO
A0e note, ho$ever, that in the cases at &ar, %etitioner has relied totall! on 4evenue 4egulations <o" ;9))
in determining com%liance $ith the documentar! re:uirements for a successful refund or issuance of tax
credit" Enmentioned is the a%%lica&le and s%ecific amendment later introduced &! 4evenue 4egulations
<o" /9)) dated A%ril 7, 19)) 2issued &arel! after t$o months from the %romulgation of 4evenue
4egulations <o" ;9)) on Fe&ruar! 1@, 19))3, $hich amended -ection 1= of 4evenue 4egulations <o" @9
)7 on refunds or tax credits of in%ut tax" x x x"
x x x x
AA thorough examination of the evidence su&mitted &! the %etitioner &efore this court reveals outright the
failure to satisf! documentar! re:uirements laid do$n under the a&ove9cited regulations" -%ecificall!,
%etitioner $as not a&le to %resent the follo$ing documents, to $itO
Aa3 sales invoices or recei%ts,
A&3 %urchase invoices or recei%ts,
Ac3 evidence of actual recei%t of goods,
Ad3 6?I statement sho$ing the amount and descri%tion of sale of goods, etc"
Ae3 original or attested co%ies of invoice or recei%t on ca%ital e:ui%ment locall! %urchased, and
Af3 %hotoco%! of im%ort entr! document and confirmation recei%t on im%orted ca%ital e:ui%ment"
A#here is the need to examine the sales invoices or recei%ts in order to ascertain the actual amount or
:uantit! of goods sold and their selling %rice" 0ithout them, this Court cannot verif! the correctness of
%etitionerNs claim inasmuch as the regulations re:uire that the in%ut taxes &eing sought for refund should
&e limited to the %ortion that is directl! and entirel! attri&uta&le to the %articular 8ero9rated transaction" In
this instance, the &est evidence of such transaction are the said sales invoices or recei%ts"
AAlso, even if sales invoices are %roduced, there is the further need to su&mit evidence that such goods
$ere actuall! received &! the &u!er, in this case, &! C65, 5hil%JhKos and 5A-A4"
x x x x
AGastl!, this Court cannot determine $hether there $ere actual local and im%orted %urchase of ca%ital
goods as $ell as domestic %urchase of non9ca%ital goods $ithout the re:uired %urchase invoice or
recei%t, as the case ma! &e, and confirmation recei%ts"
A#here is, thus, the im%erative need to su&mit &efore this Court the original or attested %hotoco%ies of
%etitionerNs invoices or recei%ts, confirmation recei%ts and im%ort entr! documents in order that a full
ascertainment of the claimed amount ma! &e achieved"
A5etitioner should have ta+en the foresight to introduce in evidence all of the missing
documentsa&ovementioned" Cases filed &efore this Court are litigated de novo" #his means that %art!
litigants should endeavor to %rove at the first instance ever! minute as%ect of their cases strictl! in
accordance $ith the 4ules of Court, most es%eciall! on documentar! evidence"A 2%%" /79>;, 4ollo3
#ax refunds are in the nature of tax exem%tions" It is regarded as in derogation of the sovereign authorit!, and
should &e construed in strictissi(i Curis against the %erson or entit! claiming the exem%tion" #he tax%a!er $ho
claims for exem%tion must *ustif! his claim &! the clearest grant of organic or statute la$ and should not &e
%ermitted to stand on vague im%lications 2Asiatic 5etroleum Co" v" Glanes, >9 5hil" >==, <orthern 5hil" #o&acco
Cor%" v" Mun" of Agoo, Ga Enion, /1 -C4A /'>, 4eagan v" Commissioner, /' -C4A 9=), Asturias -ugar Central,
Inc" v" Commissioner of Customs, ;9 -C4A =17, Davao Gight and 5o$er Co", Inc" v" Commissioner of Customs,
>> -C4A 1;;3"
#here is no cogent reason to fault the C#ANs conclusion that the -CVNs certificate is Aself9destructiveA, as it finds
comfort in the ver! -CVNs stand, as follo$sO
AIt is our understanding that the a&ove %rocedure are sufficient for the %ur%ose of the Com%an!" 0e ma+e
no %resentation regarding the sufficienc! of these %rocedures for such %ur%ose" 0e did not com%are the
total of the in%ut tax claimed each :uarter against the %ertinent VA# returns and &oo+s of accounts" #he
a&ove %rocedures do not constitute an audit made in accordance $ith generall! acce%ted auditing
standards" Accordingl!, $e do not ex%ress an o%inion on the com%an!Ns claim for in%ut VA# refund or
credit" Dad $e %erformed additional %rocedures, or had $e made an audit in accordance $ith generall!
acce%ted auditing standards, other matters might have come to our attention that $e $ould have
accordingl! re%orted on"A
#he -CVNs Adisclaimer of o%inionA carries much $eight as it is %etitionerNs inde%endent auditor" Indeed, -CV
ex%ressed that it Adid not com%are the total of the in%ut tax claimed each :uarter against the VA# returns and
&oo+s of accounts"A
/)
Moving on to the 5etition in C"4" <o" 1>)7=/, concerning the in%ut VA# of %etitioner cor%oration on its 8ero9rated sales in
the second, third, and fourth :uarters of 199', the a%%ellate court li+e$ise found that %etitioner cor%oration failed to
sufficientl! esta&lish its claims" Alread! disregarding the declarations made &! the Court of A%%eals on its erroneous
a%%lication of 4evenue 4egulations <o" ;9)), :uoted hereunder is the rest of the findings of the a%%ellate court after
evaluating the evidence su&mitted in accordance $ith the re:uirements under 4evenue 4egulations <o" /9)) B
#he -ecretar! of Finance validl! ado%ted 4evenue 4egulations J<o"K x x x /99) %ursuant to -ec" ;>@ of the
<ational Internal 4evenue Code, $hich recogni8ed his %o$er to A%romulgate all needful rules and regulations for
the effective enforcement of the %rovisions of this Code"A #hus, it is incum&ent u%on a tax%a!er intending to file a
claim for refund of in%ut VA#s or the issuance of a tax credit certificate $ith the 6I4 x x x to %rove sales to such
&u!ers as re:uired &! 4evenue 4egulations <o" /99)" Gogicall!, the same evidence should &e %resented in
su%%ort of an action to recover taxes $hich have &een %aid"
x x x <either has Jherein %etitioner cor%orationK %resented sales invoices or recei%ts sho$ing sales of gold, co%%er
concentrates, and %!rite to the C65, J5A-A4K, and J5DIG5D?-K, res%ectivel!, and the dates and amounts of the
same, nor an! evidence of actual recei%t &! the said &u!ers of the mineral %roducts" It merel! %resented recei%ts
of %urchases from su%%liers on $hich in%ut VA#s $ere allegedl! %aid" #hus, the Court of #ax A%%eals correctl!
denied the claims for refund of in%ut VA#s or the issuance of tax credit certificates of %etitioner Jcor%orationK"
-ignificantl!, in the resolution, dated 7 une ;''', this Court directed the %arties to file memoranda discussing,
among others, the su&mission of %roof for Aits J%etitionerNsK sales of gold, co%%er concentrates, and %!rite to
&u!ers"A <evertheless, the %arties, including the %etitioner, failed to address this issue, there&! necessitating the
affirmance of the ruling of the Court of #ax A%%eals on this %oint"
/9
#his Court is, therefore, &ound &! the foregoing facts, as found &! the a%%ellate court, for $ell9settled is the general rule
that the *urisdiction of this Court in cases &rought &efore it from the Court of A%%eals, &! $a! of a 5etition for 4evie$
on Certiorari under 4ule >@ of the 4evised 4ules of Court, is limited to revie$ing or revising errors of la$, findings of fact
of the latter are conclusive"
>'
#his Court is not a trier of facts" It is not its function to revie$, examine and evaluate or $eigh
the %ro&ative value of the evidence %resented"
>1
#he distinction &et$een a :uestion of la$ and a :uestion of fact is clear9cut" It has &een held that AJtKhere is a :uestion of
la$ in a given case $hen the dou&t or difference arises as to $hat the la$ is on a certain state of facts, there is a :uestion
of fact $hen the dou&t or difference arises as to the truth or falsehood of alleged facts"A
>;
0hether %etitioner cor%oration actuall! made 8ero9rated sales, $hether it %aid in%ut VA# on these sales in the amount it
had declared in its returns, $hether all the in%ut VA# su&*ect of its a%%lications for refund7credit can &e attri&uted to its
8ero9rated sales, and $hether it had not %reviousl! a%%lied the in%ut VA# against its out%ut VA# lia&ilities, are all
:uestions of fact $hich could onl! &e ans$ered after revie$ing, examining, evaluating, or $eighing the %ro&ative value of
the evidence it %resented, and $hich this Court does not have the *urisdiction to do in the %resent 5etitions for 4evie$
on Certiorari under 4ule >@ of the revised 4ules of Court"
Cranting that there are exce%tions to the general rule, $hen this Court loo+ed into :uestions of fact under %articular
circumstances,
>/
none of these exist in the instant cases" #he Court of A%%eals, in &oth cases, found a dearth of evidence
to su%%ort the claims for refund7credit of the in%ut VA# of %etitioner cor%oration, and the records &ear out this finding"
5etitioner cor%oration itself cannot dis%ute its non9com%liance $ith the re:uirements set forth in 4evenue 4egulations <o"
/9)) and C#A Circular <o" 199@, as amended" It concentrated its arguments on its assertion that the su&stantiation
re:uirements under 4evenue 4egulations <o" ;9)) should not have a%%lied to it, $hile &eing cons%icuousl! silent on the
evidentiar! re:uirements mandated &! other relevant regulations"
Re-opening o& cases/olding o& ne. trial (e&ore te )*+
#his Court no$ faces the final issue of $hether the %ra!er of %etitioner cor%oration for the re9o%ening of its cases or
holding of ne$ trial &efore the C#A for the rece%tion of additional evidence, ma! &e granted" 5etitioner cor%oration %ra!s
that the Court exercise its discretion on the matter in its favor, consistent $ith the %olic! that rules of %rocedure &e li&erall!
construed in %ursuance of su&stantive *ustice"
#his Court, ho$ever, cannot grant the %ra!er of %etitioner cor%oration"
An aggrieved %art! ma! file a motion for ne$ trial or reconsideration of a *udgment alread! rendered in accordance $ith
-ection 1, 4ule /7 of the revised 4ules of Court, $hich %rovides B
-.C#I?< 1" 3rounds of and period for fi"in+ (otion for ne& tria" or reconsideration. B 0ithin the %eriod for ta+ing
an a%%eal, the aggrieved %art! ma! move the trial court to set aside the *udgment or final order and grant a ne$
trial for one or more of the follo$ing causes materiall! affecting the su&stantial rights of said %art!O
2a3 Fraud, accident, mista+e or excusa&le negligence $hich ordinar! %rudence could not have guarded against
and &! reason of $hich such aggrieved %art! has %ro&a&l! &een im%aired in his rights, or
2&3 <e$l! discovered evidence, $hich he could not, $ith reasona&le diligence, have discovered and %roduced at
the trial, and $hich if %resented $ould %ro&a&l! alter the result"
0ithin the same %eriod, the aggrieved %art! ma! also move fore reconsideration u%on the grounds that the
damages a$arded are excessive, that the evidence is insufficient to *ustif! the decision or final order, or that the
decision or final order is contrar! to la$"
In C"4" <o" 1>)7=/, %etitioner cor%oration attem%ts to *ustif! its motion for the re9o%ening of its cases and7or holding of
ne$ trial &efore the C#A &! contending that the AJfKailure of its counsel to adduce the necessar! evidence should &e
construed as excusa&le negligence or mista+e $hich should constitute &asis for such re9o%ening of trial as for a ne$ trial,
as counsel $as of the &elief that such evidence $as rendered unnecessar! &! the %resentation of unre&utted evidence
indicating that res%ondent JCommissionerK has ac+no$ledged the sale of JsicK 5A-A4 and J5DIG5D?-K to &e 8ero9
rated"A
>>
#he C#A denied such motion on the ground that it $as not accom%anied &! an affidavit of merit as re:uired &!
-ection ;, 4ule /7 of the revised 4ules of Court" #he Court of A%%eals affirmed the denial of the motion, &ut a%art from
this technical defect, it also found that there $as no *ustification to grant the same"
?n the matter of the denial of the motion of the %etitioner cor%oration for the re9o%ening of its cases and7or holding of ne$
trial &ased on the technicalit! that said motion $as unaccom%anied &! an affidavit of merit, this Court rules in favor of the
%etitioner cor%oration" #he facts $hich should other$ise &e set forth in a se%arate affidavit of merit ma!, $ith e:ual effect,
&e alleged and incor%orated in the motion itself, and this $ill &e deemed a su&stantial com%liance $ith the formal
re:uirements of the la$, %rovided, of course, that the movant, or other individual $ith %ersonal +no$ledge of the facts,
ta+e oath as to the truth thereof, in effect converting the entire motion for ne$ trial into an affidavit"
>@
#he motion of
%etitioner cor%oration $as %re%ared and verified &! its counsel, and since the ground for the motion $as %remised on said
counselNs excusa&le negligence or mista+e, then the o&vious conclusion is that he had %ersonal +no$ledge of the facts
relating to such negligence or mista+e" Dence, it can &e said that the motion of %etitioner cor%oration for the re9o%ening of
its cases and7or holding of ne$ trial $as in su&stantial com%liance $ith the formal re:uirements of the revised 4ules of
Court"
.ven so, this Court finds no sufficient ground for granting the motion of %etitioner cor%oration for the re9o%ening of its
cases and7or holding of ne$ trial"
In C"4" <o" 1>11'>, %etitioner cor%oration invo+es the 4esolution,
>=
dated ;' ul! 199), &! the C#A in another case, C#A
Case <o" @;9=, involving the claim of %etitioner cor%oration for refund7credit of in%ut VA# for the third :uarter of 199/" #he
said 4esolution allo$ed the re9o%ening of C#A Case <o" @;9=, earlier dismissed &! the C#A, to give the %etitioner
cor%oration the o%%ortunit! to %resent the missing ex%ort documents"
#he rule that the grant or denial of motions for ne$ trial rests on the discretion of the trial court,
>7
ma! li+e$ise &e
extended to the C#A" 0hen the denial of the motion rests u%on the discretion of a lo$er court, this Court $ill not interfere
$ith its exercise, unless there is %roof of grave a&use thereof"
>)
#hat the C#A granted the motion for re9o%ening of one case for the %resentation of additional evidence and, !et, den! a
similar motion in another case filed &! the same %art!, does not necessaril! demonstrate grave a&use of discretion or
ar&itrariness on the %art of the C#A" Although the cases involve identical %arties, the causes of action and the evidence to
su%%ort the same can ver! $ell &e different" As can &e gleaned from the 4esolution, dated ;' ul! 199), in C#A Case <o"
@;9=, %etitioner cor%oration $as claiming refund7credit of the in%ut VA# on its 8ero9rated sales, consisting of actual ex%ort
sales, to Mitsu&ishi Metal Cor%oration in #o+!o, a%an" #he C#A too+ into account the %resentation &! %etitioner
cor%oration of in$ard remittances of its ex%ort sales for the :uarter involved, its -u%%l! Contract $ith Mitsu&ishi Metal
Cor%oration, its 199/ Annual 4e%ort sho$ing its sales to the said foreign cor%oration, and its a%%lication for refund" In
contrast, the %resent 5etitions involve the claims of %etitioner cor%oration for refund7credit of the in%ut VA# on
its %urchases of ca%ital goods and on its effectivel! 8ero9rated sales to C65 and .5MA9registered enter%rises 5A-A4 and
5DIG5D?- for the second, third, and fourth :uarters of 199' and first :uarter of 199;" #here &eing a difference as to the
&ases of the claims of %etitioner cor%oration for refund7credit of in%ut VA# in C#A Case <o" @9;= and in the 5etitions at
&ar, then, there are resulting variances as to the evidence re:uired to su%%ort them"
Moreover, the ver! same 4esolution, dated ;' ul! 199), in C#A Case <o" @;9=, invo+ed &! %etitioner cor%oration,
em%hasi8es that the decision of the C#A to allo$ %etitioner cor%oration to %resent evidence Ais a%%lica&le pro 'ac vice or
in this occasion onl! as it is the finding of Jthe C#AK that %etitioner Jcor%orationK has esta&lished a fe$ of the
aforementioned (ateria" points regarding the %ossi&le existence of the ex%ort documents together $ith the %rior and
succeeding returns for the :uarters involved, x x xA J.m%hasis su%%lied"K #herefore, the C#A, in the %resent cases, cannot
&e &ound &! its ruling in C#A Case <o" @;9=, $hen these cases do not involve the exact same circumstances that
com%elled it to grant the motion of %etitioner cor%oration for re9o%ening of C#A Case <o" @;9="
Finall!, assuming for the sa+e of argument that the non9%resentation of the re:uired documents $as due to the fault of the
counsel of %etitioner cor%oration, this Court finds that it does not constitute excusa&le negligence or mista+e $hich $ould
$arrant the re9o%ening of the cases and7or holding of ne$ trial"
Ender -ection 1, 4ule /7 of the 4evised 4ules of Court, the AnegligenceA must &e excusa&le and generall! im%uta&le to
the %art! &ecause if it is im%uta&le to the counsel, it is &inding on the client" #o follo$ a contrar! rule and allo$ a %art! to
diso$n his counselNs conduct $ould render %roceedings indefinite, tentative, and su&*ect to re9o%ening &! the mere
su&terfuge of re%lacing the counsel" 0hat the aggrieved litigant should do is see+ administrative sanctions against the
erring counsel and not as+ for the reversal of the courtNs ruling"
>9
As elucidated &! this Court in another case,
@'
the general rule is that the client is &ound &! the action of his counsel in the
conduct of his case and he cannot therefore com%lain that the result of the litigation might have &een other$ise had his
counsel %roceeded differentl!" It has &een held time and again that &lunders and mista+es made in the conduct of the
%roceedings in the trial court as a result of the ignorance, inex%erience or incom%etence of counsel do not :ualif! as a
ground for ne$ trial" If such $ere to &e admitted as valid reasons for re9o%ening cases, there $ould never &e an end to
litigation so long as a ne$ counsel could &e em%lo!ed to allege and sho$ that the %rior counsel had not &een sufficientl!
diligent, ex%erienced or learned"
Moreover, negligence, to &e Aexcusa&le,A must &e one $hich ordinar! diligence and %rudence could not have guarded
against"
@1
4evenue 4egulations <o" /9)), $hich $as issued on 1@ Fe&ruar! 19)), had &een in effect more than t$o !ears
%rior to the filing &! %etitioner cor%oration of its earliest a%%lication for refund7credit of in%ut VA# involved herein on ;1
August 199'" C#A Circular <o" 199@ $as issued onl! on ;@ anuar! 199@, after %etitioner cor%oration had filed its
5etitions &efore the C#A, &ut still during the %endenc! of the cases of %etitioner cor%oration &efore the tax court" #he
counsel of %etitioner cor%oration does not allege ignorance of the foregoing administrative regulation and tax court
circular, onl! that he no longer deemed it necessar! to %resent the documents re:uired therein &ecause of the
%resentation of alleged unre&utted evidence of the 8ero9rated sales of %etitioner cor%oration" It $as a *udgment call made
&! the counsel as to $hich evidence to %resent in su%%ort of his clientNs cause, later %roved to &e un$ise, &ut not
necessaril! negligent"
<either is there an! merit in the contention of %etitioner cor%oration that the non9%resentation of the re:uired documentar!
evidence $as due to the excusa&le mista+e of its counsel, a ground under -ection 1, 4ule /7 of the revised 4ules of
Court for the grant of a ne$ trial" AMista+e,A as it is referred to in the said rule, must &e a mista+e of fact, not of la$, $hich
relates to the case"
@;
In the %resent case, the su%%osed mista+e made &! the counsel of %etitioner cor%oration is one of
la$, for it $as grounded on his inter%retation and evaluation that 4evenue 4egulations <o" /9)) and C#A Circular <o" 19
9@, as amended, did not a%%l! to his clientNs cases and that there $as no need to com%l! $ith the documentar!
re:uirements set forth therein" And although the counsel of %etitioner cor%oration advocated an erroneous legal %osition,
the effects thereof, $hich did not amount to a de%rivation of his clientNs right to &e heard, must &ind %etitioner cor%oration"
#he :uestion is not $hether %etitioner cor%oration succeeded in esta&lishing its interests, &ut $hether it had the
o%%ortunit! to %resent its side"
@/
6esides, litigation is a not a Atrial and errorA %roceeding" A %art! $ho moves for a ne$ trial on the ground of mista+e must
sho$ that ordinar! %rudence could not have guarded against it" A ne$ trial is not a refuge for the o&stinate"
@>
?rdinar!
%rudence in these cases $ould have dictated the %resentation of all availa&le evidence that $ould have su%%orted the
claims for refund7credit of in%ut VA# of %etitioner cor%oration" 0ithout sound legal &asis, counsel for %etitioner cor%oration
concluded that 4evenue 4egulations <o" /9)), and later on, C#A Circular <o" 199@, as amended, did not a%%l! to its
clientNs claims" #he o&stinac! of %etitioner cor%oration and its counsel is demonstrated in their failure, na!, refusal, to
com%l! $ith the a%%ro%riate administrative regulations and tax court circular in %ursuing the claims for refund7credit, no$
su&*ect of C"4" <os" 1>11'> and 1>)7=/, even though these $ere se%aratel! instituted in a s%an of more than t$o !ears"
It is also evident in the failure of %etitioner cor%oration to address the issue and to %resent additional evidence des%ite
&eing given the o%%ortunit! to do so &! the Court of A%%eals" As %ointed out &! the a%%ellate court, in its Decision, dated
1@ -e%tem&er ;''', in CA9C"4" -5 <o" >=71) B
x x x -ignificantl!, in the resolution, dated 7 une ;''', this Court directed the %arties to file memoranda
discussing, among others, the su&mission of %roof for Aits J%etitionerNsK sales of gold, co%%er concentrates, and
%!rite to &u!ers"A <evertheless, the %arties, including the %etitioner, failed to address this issue, there&!
necessitating the affirmance of the ruling of the Court of #ax A%%eals on this %oint"
@@
%u$$ar'
Dence, although this Court agreed $ith the %etitioner cor%oration that the t$o9!ear %rescri%tive %eriod for the filing of
claims for refund7credit of in%ut VA# must &e counted from the date of filing of the :uarterl! VA# return, and that sales to
.5MA9registered enter%rises o%erating $ithin economic %rocessing 8ones $ere effectivel! 8ero9rated and $ere not
covered &! 4evenue 4egulations <o" ;9)), it still denies the claims of %etitioner cor%oration for refund of its in%ut VA# on
its %urchases of ca%ital goods and effectivel! 8ero9rated sales during the second, third, and fourth :uarters of 199' and
the first :uarter of 199;, for not &eing esta&lished and su&stantiated &! a%%ro%riate and sufficient evidence" 5etitioner
cor%oration is also not entitled to the re9o%ening of its cases and7or holding of ne$ trial since the non9%resentation of the
re:uired documentar! evidence &efore the 6I4 and the C#A &! its counsel does not constitute excusa&le negligence or
mista+e as contem%lated in -ection 1, 4ule /7 of the revised 4ules of Court"
(HERE%ORE, %remises considered, the instant 5etitions for 4evie$ are here&! DENIED, and the Decisions, dated =
ul! 1999 and 1@ -e%tem&er ;''', of the Court of A%%eals in CA9C"4" -5 <os" >7='7 and >=71), res%ectivel!, are
here&! $%%IRMED" Costs against %etitioner"
Dnares!Santia+o, C'airperson, Austria!Martine$, 0ac'ura, EE., concur"

C"4" <o" 1=>/=@ une ), ;''7C?MMI--I?<.4 ?F I<#.4<AG 4.V.<E., %etitioner,

vs"

5GAC.4 D?M. #.CD<ICAG-.4VIC.- 25DIG-"3, I<C", res%ondent"FAC#-O At the -an Antonio Mines in Marindu:ue
o$ned &! Marco%%er Mining Cor%oration2Marco%%er3, mine tailings from the #ai%an 5it started to esca%e through the
Ma+ula%nit #unneland 6oac 4ivers, causing the cessation of mining and milling o%erations, and causing
%otentialenvironmental damage" #o contain the damage and %revent the further s%read of the tailing lea+,5lacer Dome,
Inc" 25DI3, the o$ner of /9"9I of Marco%%er, undertoo+ to %erform the clean9u%and reha&ilitation of the Ma+alu%nit and
6oac 4ivers, through a su&sidiar!" #o accom%lish this,5DI engaged 5lacer Dome #echnical -ervices Gimited 25D#-G3, a
non9resident foreigncor%oration $ith office in Canada, to carr! out the %ro*ect" In turn, 5D#-G engaged the services
of 5lacer Dome #echnical -ervices 25hili%%ines3, Inc" 2res%ondent3, a domestic cor%oration andregistered Value9Added
#ax 2VA#3 entit!, to im%lement the %ro*ect in the 5hili%%ines"5D#-G and res%ondent thus entered into an Im%lementation
Agreement" Due to the urgenc! and%otentiall! significant damage to the environment, res%ondent had agreed to
immediatel!im%lement the %ro*ect, and the Im%lementation Agreement sti%ulated that all im%lementation
services rendered &! res%ondent even %rior to the agreement(s signing shall &e deemed to have
&een %rovided %ursuant to the said Agreement" #he Agreement further sti%ulated that 5D#-G$as to %a! res%ondent Aan
amount of mone!, in E"-" funds, e:ual to all Costs incurred for Im%lementation -ervices as $ell as a fee agreed to one
%ercent 21I3 of such Costs"A4es%ondent amended its :uarterl! VA# returns" In the amended returns, res%ondent
declared atotal in%ut VA# %a!ment of 5>/,'1@,>=1"9) for the said :uarters, and 5>;,)/7,9//"=' as its totalexcess in%ut
VA# for the same %eriod" #hen res%ondent filed an administrative claim for therefund of its re%orted total in%ut VA#
%a!ments in relation to the %ro*ect it had contracted from5D#-G, amounting to 5>/,'1@,>=1"9)" 4es%ondent argued that
the revenues it derived fromservices rendered to 5D#-G, %ursuant to the Agreement, :ualified as 8ero9rated sales
under -ection 1';2&32;3 of the then #ax Code, since it $as %aid in foreign currenc! in$ardl! remitted tothe 5hili%%ines"
0hen the CI4 did not act on this claim, res%ondent dul! filed a 5etition for 4evie$ $ith the C#A, %ra!ing for the refund"
CI4 merel! invo+ed the %resum%tion that taxes arecollected in accordance $ith la$, and that claims for refund of taxes
are construed strictl! againstclaimants"C#A ruled in favor of res%ondent &ut onl! the resulting in%ut VA# of
517,17),/7/"1; could &erefunded"#he rulings of the C#A $ere elevated &! %etitioner to the CA on 5etition for 4evie$" CA
affirmedthe C#A ruling"I--E.O 0hether 5lacer is entitled to the refund as the revenues :ualified as 8ero9rated sales
D.GDO 1es-ection 1';"
Value-Added Tax on Sale of Services and Use or Lease of Properties
"2&3
Transactions Subject to Zero Percent (0% !ate
" R #he follo$ing services %erformed in the
5hili%%ines &! VA#9registered %ersons shall &e su&*ect to 8ero %ercent 2'I3 rateO213 5rocessing, manufacturing or
re%ac+ing goods for other %ersons doing &usiness outside the5hili%%ines $hich goods are su&se:uentl! ex%orted, $here
the services are %aid for in acce%ta&le
4e%u&lic of the 5hili%%ines
SUPREME COURT
Manila
FI4-# DIVI-I?<
G.R. No. 1)*)*3 O+,o-!. 1#" #006
COMMISSIONER O% INTERN$L REVENUE" %etitioner,
vs"
MIR$NT
1
P$G/IL$O CORPOR$TION 01o.2!.34 SOUTHERN ENERG5 6UE'ON" INC.7" res%ondent"
D . C I - I ? <
CHICO&N$'$RIO0 J.:
6efore this Court is a 5etition for 4evie$
;
under 4ule >@ of the 1997 4ules of Civil 5rocedure assailing the
Decision,
/
dated /' ul! ;''/, of the Court of A%%eals in CA9C"4" -5 <o" ='7)/, $hich affirmed in toto the
Decision,
>
dated 11 ul! ;''', of the Court of #ax A%%eals 2C#A3 in C#A Case <o" @=@)" #he C#A %artiall! granted the
claim of herein res%ondent Mirant 5ag&ilao Cor%oration 2M5C3 for the refund of the in%ut Value Added #ax 2VA#3 on its
%urchase of ca%ital goods and services for the %eriod 1 A%ril 199= to /1 Decem&er 199=, and ordered herein %etitioner
Commissioner of the 6ureau of Internal 4evenue 26I43 to issue a tax credit certificate in the amount of 5;),7>>,=;="9@"
#here is no dis%ute as to the follo$ing facts that gave rise to the claim for refund of M5C, as found &! the C#A
@
B
JM5CK is a domestic cor%oration dul! organi8ed and existing under and &! virtue of the la$s of the 5hili%%ines $ith
%rinci%al office address in 5ag&ilao Crande Island, 5ag&ilao, Hue8on" It is licensed &! the -ecurities and
.xchange Commission to %rinci%all! engage in the &usiness of %o$er generation and su&se:uent sale thereof
2.xh" A3" It is registered $ith the 6ureau of Internal 4evenue as a VA# registered entit! $ith Certificate of
4egistration &earing 4D? Control <o" 9=9=''9'';>9), dated anuar! ;=, 199="
For the %eriod A%ril 1, 199= to Decem&er /1, 199=, JM5CK seasona&l! filed its Huarterl! VA# 4eturns reflecting
an 2sic3 accumulated in%ut taxes in the amount of 5/9,//',@''")@ 2.xhs" 6, C, and D3" #hese in%ut taxes $ere
allegedl! %aid &! JM5CK to the su%%liers of ca%ital goods and services for the construction and develo%ment of the
%o$er generating %lant and other related facilities in 5ag&ilao, Hue8on 2#-<, <ovem&er 1=, 199), %" 113"
5ursuant to the %rocedures %rescri&ed under 4evenue 4egulations <o" 799@, as amended, JM5CK filed on une
/', 199), an a%%lication for tax credit or refund of the aforementioned unutili8ed VA# %aid on ca%ital goods
2.xhi&it A.A3"
0ithout $aiting for an ans$er from the J6I4 CommissionerK, JM5CK filed the instant %etition for revie$ on ul! 1',
199), in order to toll the running of the t$o9!ear %rescri%tive %eriod for claiming a refund under the la$"
In ans$er to the 5etition, Jthe 6I4 CommissionerK advanced as s%ecial and affirmative defenses that AJM5CKNs
claim for refund is still %ending investigation and consideration &efore the office of Jthe 6I4 CommissionerK
accordingl!, the filing of the %resent %etition is %remature, $ell9settled is the doctrine that %rovisions in tax refund
and credit are construed strictl! against the tax%a!er as the! are in the nature of a tax exem%tion, in an action for
refund or tax credit, the tax%a!er has the &urden to sho$ that the taxes %aid $ere erroneousl! or illegall! %aid and
failure to sustain the said &urden is fatal to the action for refund, it is incum&ent u%on JM5CK to sho$ that the claim
for tax credit has &een filed $ithin the %rescri%tive %eriod under the #ax Code, and the taxes allegedl! %aid &!
JM5CK are %resumed to have &een collected and received in accordance $ith la$ and revenue regulations"JAK
?n ul! 1>, 199), $hile the case $as %ending trial, 4evenue ?fficer, 4osemarie M" Vitto, $as assigned &!
4evenue District ?fficer, Ma" <imfa 5enalosa9Asensi, of 4evenue District <o" =' to investigate JM5CKNs
a%%lication for tax credit or refund of in%ut taxes 2.xhs" 1 and 19a3" As a result, a memorandum re%ort, dated
August ;7, 199), $as su&mitted recommending a favora&le action &ut in a reduced amount of 5>9,=1=">'
re%resenting una%%lied in%ut taxes on ca%ital goods" 2.xhs" ;, ;9a, /, and /9a3"
JM5CK, due to the voluminous nature of evidence to &e %resented, availed of the services of an inde%endent
Certified 5u&lic Accountant %ursuant to C#A Circular <o" 199@, as amended" As a conse:uence, Mr" 4u&en 4"
4u&io, 5artner of -CV Q Com%an!, $as commissioned to verif! the accurac! of JM5CKNs summar! of in%ut taxes
2#-<, ?cto&er 1@, 199), %%" /9@3" A re%ort, dated March ), 1999, $as %resented stating the audit %rocedures
%erformed and the finding that out of the total claimed in%ut taxes of 5/9,//',@''")@, onl! the sum of
5;),7>@,@';">' $as %ro%erl! su%%orted &! valid invoices and7or official recei%ts 2.xh" C, see also #-<, March /,
1999, %" 1;3"
#he C#A ruled in favor of M5C, and declared that M5C had over$helmingl! %roved, through the VA# invoices and official
recei%ts it had %resented, that its %urchases of goods and services $ere necessar! in the construction of %o$er %lant
facilities $hich it used in its &usiness of %o$er generation and sale" #he tax court, ho$ever, reduced the amount of refund
to $hich M5C $as entitled, in accordance $ith the follo$ing com%utation B
#otal amount of the claim for refund 5/9,//',@''")@
GessO Disallo$ances
a" 5er inde%endent auditor 51',@)>,99)">@
&" 5er C#ANs examination )7@">@ 1',@)@,)7/"9'
5;),7>>,=;="9@
=
#hus, the dis%ositive %ortion of the C#A Decision,
7
dated 11 ul! ;''', reads 9
(HERE%ORE" in vie$ of the foregoing, JM5CKNs claim for refund is here&! %artiall! GR$NTED" J#he 6I4
CommissionerK is ORDERED to ISSUE A #AL C4.DI# C.4#IFICA#. in the amount of 5;),7>>,=;="9@
re%resenting in%ut taxes %aid on ca%ital goods for the %eriod A%ril 1, 199= to Decem&er /1, 199="
#he C#A su&se:uentl! denied the 6I4 CommissionerNs Motion for 4econsideration in a 4esolution,
)
dated /1 August
;''1"
Aggrieved, the 6I4 Commissioner filed $ith the Court of A%%eals a 5etition for 4evie$
9
of the foregoing Decision, dated
11 ul! ;''', and 4esolution, dated /1 August ;''1, of the C#A" <ota&l!, the 6I4 Commissioner identified and
discussed as grounds
1'
for its 5etition arguments that $ere totall! ne$ and $ere never raised &efore the C#A, to $it B
1" 4.-5?<D.<# 6.I<C A< .G.C#4IC E#IGI#1, I# I- -E6.C# #? F4A<CDI-. #AL E<D.4 #D.<
-.C#I?< 117 2<?0 -.C#I?< 1193 ?F #D. #AL C?D. A<D <?# #? VAGE. ADD.D #AL 2VA#3"
;" -I<C. 4.-5?<D.<# I- .L.M5# F4?M VA#, I# I- <?# .<#I#G.D #? #D. 4.FE<D ?F I<5E# VA#
5E4-EA<# #? -.C#I?< >"1'/91 ?F 4.V.<E. 4.CEGA#I?<- <?" 799@"
#he Court of A%%eals found no merit in the 6I4 CommissionerNs 5etition, and in its Decision, dated /' ul! ;''/, it
%ronounced thatO 213 #he 6I4 Commissioner cannot validl! change his theor! of the case on a%%eal, 2;3 #he M5C is not a
%u&lic utilit! $ithin the contem%lation of la$, 2/3 #he sale &! M5C of its generated %o$er to the <ational 5o$er
Cor%oration 2<A5?C?43 is su&*ect to VA# at 8ero %ercent rate, and 2>3 #he M5C, as a VA#9registered tax%a!er, ma!
a%%l! for tax credit" Accordingl!, the decretal %ortion of the said Decision
11
reads as follo$s B
(HERE%ORE, %remises considered, the %etition is DISMISSED for lac+ of merit and the assailed 11 ul!
;''' Decision of res%ondent Court in C#A Case <o" @=@) is here&! $%%IRMED in toto" <o costs"
4efusing to give u% his cause, the 6I4 Commissioner filed the %resent 5etition &efore this Court on the ground that the
Court of A%%eals committed reversi&le error in affirming the Decision of the C#A holding res%ondent entitled to the refund
of the amount of 5;),7>>,=;="9@, allegedl! re%resenting in%ut VA# on ca%ital goods and services for the %eriod 1 A%ril
199= to /1 Decem&er 199=" De argues that 213 #he o&servance of %rocedural rules ma! &e relaxed considering that
technicalities are not ends in themselves &ut exist to %rotect and %romote the su&stantive rights of the %arties, and 2;3 A
tax refund is in the nature of a tax exem%tion $hich must &e construed strictl! against the tax%a!er" De reiterates his
%osition &efore the Court of A%%eals that M5C, as a %u&lic utilit!, is exem%t from VA#, su&*ect instead to franchise tax
and, thus, not entitled to a refund of in%ut VA# on its %urchase of ca%ital goods and services"
#his Court finds no merit in the 5etition at &ar"
I
*e general rule is tat a part' cannot cange is teor' o& te case on appeal.
#o recall, the 6I4 Commissioner raised in its Ans$er
1;
&efore the C#A the follo$ing s%ecial and affirmative defenses B
/" JM5CKNs claim for refund is still %ending investigation and consideration &efore the office of Jthe 6I4
CommissionerK" Accordingl!, the %resent %etition is %remature,
>" 0ell9settled is the doctrine that %rovisions in tax refund and credit are construed strictl! against the tax%a!er as
the! are in the nature of a tax exem%tion,
@" In an action for refund or tax credit, the tax%a!er has the &urden to sho$ that the taxes %aid $ere erroneousl!
or illegall! %aid and failure to sustain the said &urden is fatal to the action for refund,
=" It is incum&ent u%on JM5CK to sho$ that the claim for tax credit has &een filed $ithin the %rescri%tive %eriod
under the tax code,
7" #he taxes allegedl! %aid &! JM5CK are %resumed to have &een collected and received in accordance $ith la$
and revenue regulations"
#hese a%%ear to &e general and standard arguments used &! the 6I4 to o%%ose an! claim &! a tax%a!er for refund" #he
Ans$er did not %osit an! allegation or contention that $ould defeat the %articular claim for refund of M5C" #rial %ro%er
ensued &efore the C#A, during $hich the M5C %resented evidence of its entitlement to the refund and in negation of the
afore9cited defenses of the 6I4 Commissioner" It $as onl! after the C#A %romulgated its Decision on 11 ul! ;''', $hich
$as favora&le to M5C and adverse to the 6I4 Commissioner, that the latter filed his 5etition for 4evie$ &efore the Court
of A%%eals on > ?cto&er ;''', averring, &or te ver' &irst ti$e, that M5C $as a %u&lic utilit!, su&*ect to franchise tax and
not VA#, and since it $as not %a!ing VA#, it could not claim the refund of in%ut VA# on its %urchase of ca%ital goods and
services"
#here is a %al%a&le shift in the 6I4 CommissionerNs defense against the claim for refund of M5C and an evident change of
theor!" 6efore the C#A, the 6I4 Commissioner admitted that the M5C is a VA#9registered tax%a!er, &ut charged it $ith
the &urden of %roving its entitlement to refund" Do$ever, &efore the Court of A%%eals, the 6I4 Commissioner, in effect
denied that the M5C is su&*ect to VA#, ma+ing an affirmative allegation that it is a %u&lic utilit! lia&le, instead, for franchise
tax" Irrefraga&l!, the 6I4 Commissioner raised for the first time on a%%eal :uestions of &oth fact and la$ not ta+en u%
&efore the tax court, an actualit! $hich the 6I4 Commissioner himself does not den!, &ut he argues that he should &e
allo$ed to do so as an exce%tion to the technical rules of %rocedure and in the interest of su&stantial *ustice"
It is alread! $ell9settled in this *urisdiction that a %art! ma! not change his theor! of the case on a%%eal"
1/
-uch a rule has
&een ex%ressl! ado%ted in 4ule >>, -ection 1@ of the 1997 4ules of Civil 5rocedure, $hich %rovides B
-.C" 1@" Fuestions t'at (a# )e raised on appea". B 0hether or not the a%%ellant has filed a motion for ne$ trial
in the court &elo$, he ma! include in his assignment of errors an! :uestion of la$ or fact that has &een raised in
the court &elo$ and $hich is $ithin the issues framed &! the %arties"
#hus, in Carantes v. Court of Appea"s,
1>
this Court em%hasi8ed that B
#he settled rule is that defenses not %leaded in the ans$er ma! not &e raised for the first time on a%%eal" A %art!
cannot, on a%%eal, change fundamentall! the nature of the issue in the case" 0hen a %art! deli&eratel! ado%ts a
certain theor! and the case is decided u%on that theor! in the court &elo$, he $ill not &e %ermitted to change the
same on a%%eal, &ecause to %ermit him to do so $ould &e unfair to the adverse %art!"
In the more recent case of Mon v. Court of Appea"s,
1@
this Court again %ronounced that, in this *urisdiction, the settled rule
is that a %art! cannot change his theor! of the case or his cause of action on a%%eal" It affirms that Acourts of *ustice have
no *urisdiction or %o$er to decide a :uestion not in issue"A #hus, a *udgment that goes &e!ond the issues and %ur%orts to
ad*udicate something on $hich the court did not hear the %arties, is not onl! irregular &ut also extra*udicial and invalid"
#he rule rests on the fundamental tenets of fair %la!"
#he 6I4 Commissioner %leads $ith this Court not to a%%l! the foregoing rule to the instant case, for a rule on technicalit!
should not defeat su&stantive *ustice" #he 6I4 Commissioner a%%arentl! forgets that there are s%ecific reasons $h!
technical or %rocedural rules are im%osed u%on the courts, and that com%liance $ith these rules, should still &e the
general course of action" Dence, this Court has ex%ounded that B
5rocedural rules, $e must stress, should &e treated $ith utmost res%ect and due regard since the! are designed
to facilitate the ad*udication of cases to remed! the $orsening %ro&lem of dela! in the resolution of rival claims
and in the administration of *ustice" #he re:uirement is in %ursuance to the &ill of rights inscri&ed in the
Constitution $hich guarantees that Aall %ersons shall have a right to the s%eed! dis%osition of their cases &efore
all *udicial, :uasi9*udicial and ad(inistrative )odies"A #he ad*udicator! &odies and the %arties to a case are thus
en*oined to a&ide strictl! &! the rules" 0hile it is true that a litigation is not a game of technicalities, it is e:uall!
true that ever! case must &e %rosecuted in accordance $ith the %rescri&ed %rocedure to ensure an orderl! and
s%eed! administration of *ustice" #here have &een some instances $herein this Court allo$ed a relaxation in the
a%%lication of the rules, &ut this flexi&ilit! $as Anever intended to forge a &astion for erring litigants to violate the
rules $ith im%unit!"A A li&eral inter%retation and a%%lication of the rules of %rocedure can &e resorted to onl! in
%ro%er cases and under *ustifia&le causes and circumstances"
1=
#he courts have the %o$er to relax or sus%end technical or %rocedural rules or to exce%t a case from their o%eration $hen
com%elling reasons so $arrant or $hen the %ur%ose of *ustice re:uires it" 0hat constitutes good and sufficient cause that
$ould merit sus%ension of the rules is discretionar! u%on the courts"
17
In his 5etition and Memorandum &efore this Court, the 6I4 Commissioner made no attem%t to %rovide reasona&le
ex%lanation for his failure to raise &efore the C#A the issue of M5C &eing a %u&lic utilit! su&*ect to franchise tax rather
than VA#" #he 6I4 Commissioner argues, in a singular %aragra%h in his 5etition,
1)
su&se:uentl! re%roduced in his
Memorandum,
19
that the Court of A%%eals should have ta+en cogni8ance of the said issue, although it $as raised for the
first time on a%%eal, entirel! on the &asis of this CourtNs ruling in S# v. Court of Appea"s"
;'
De contends that B
#he su&mission fails to ta+e into account that although this Donora&le Court has re%eatedl! ruled that litigants
cannot raise an issue for the first time on a%%eal, as this $ould contravene the &asic rules of *ustice and fair %la!,
the o&servance of %rocedural rules ma! &e relaxed, noting that technicalities are not ends in themselves &ut exist
to %rotect and %romote the su&stantive rights of the litigants 2S4 8. Cou., o1 $99!:3s"//' -C4A @7' J;'''K3"
#his Court is unconvinced" #here is no sufficient cause to $arrant the relaxation of technical or %rocedural rules in the
instant case" #he general rules of %rocedure still a%%l! and the 6I4 Commissioner cannot &e allo$ed to raise an issue for
the first time on a%%eal"
It should &e em%hasi8ed that the 6I4 Commissioner is invo+ing a sus%ension of the general rules of %rocedure or an
exce%tion thereto, thus, it is incum&ent u%on him to %resent sufficient cause or *ustifia&le circumstance that $ould :ualif!
his case for such a sus%ension or exce%tion" #hat this Court had %reviousl! allo$ed in another case such sus%ension of
or exce%tion to technical or %rocedural rules does not necessaril! mean that the same shall also &e allo$ed in the %resent
case" #he 6I4 Commissioner has the &urden of %ersuading this Court that the same causes or circumstances that
*ustified the sus%ension of or exce%tion to the technical or %rocedural rules in the other case are also %resent in the case
at &ar"
#he S# case, on $hich the 6I4 Commissioner full! anchored his claim for sus%ension of or exce%tion to the technical or
%rocedural rules, is not even on all fours $ith his case" It involves a %etition for declaration of nullit! of marriage instituted
&! the therein %etitioner Fili%ina -! &efore the 4egional #rial Court 24#C3 on the &asis of the alleged %s!chological
inca%acit! of her hus&and, Fernando -!" Der %etition $as denied &! the 4#C &ecause it found that FernandoNs acts did
not constitute %s!chological inca%acit!, a finding later affirmed &! the Court of A%%eals" In an a%%eal &! certiorari &efore
this Court, Fili%ina raised the issue that her marriage to Fernando $as void from the ver! &eginning for lac+ of a marriage
license at the time of the ceremon!" #his Court too+ cogni8ance of the said issue, reversed the 4#C and the Court of
A%%eals, and ruled in favor of Fili%ina" Its ratiocination on the matter is re%roduced in full &elo$ B
5etitioner, for the first time, raises the issue of the marriage &eing void for lac+ of a valid marriage license at the
time of its cele&ration" It a%%ears that, according to her, the date of the actual cele&ration of their marriage and the
date of issuance of their marriage certificate and marriage license are different and incongruous"
Although $e have re%eatedl! ruled that litigants cannot raise an issue for the first time on a%%eal, as this $ould
contravene the &asic rules of fair %la! and *ustice, in a num&er of instances, $e have relaxed o&servance of
%rocedural rules, noting that technicalities are not ends in themselves &ut exist to %rotect and %romote su&stantive
rights of litigants" 0e said that certain rules ought not to &e a%%lied $ith severit! and rigidit! if &! so doing, the
ver! reason for their existence $ould &e defeated" Dence, $hen su&stantial *ustice %lainl! re:uires, exem%ting a
%articular case from the o%eration of technicalities should not &e su&*ect to cavil" In our vie$, the case at &ar
re:uires that $e address the issue of the validit! of the marriage &et$een Fili%ina and Fernando $hich %etitioner
claims is void from the &eginning for lac+ of a marriage license, in order to arrive at a 1ust resolution o& a
deepl' seated and violent con&lict (et.een te parties. Note0 o.ever0 tat ere te pertinent &acts are
not disputed2 and .at is re#uired no. is a declaration o& teir e&&ects according to e"isting
la..
;1
J.m%hasis su%%lied"K
In the instant case, the conflict &et$een the M5C and the 6I4 Commissioner could &e hardl! descri&ed as Adee%l! seated
and violent,A it remaining on a %rofessional level"
Moreover, this Court %ointed out in the S# case that the %ertinent facts, i.e., the dates of actual cele&ration of the
marriage, issuance of the marriage certificate, and issuance of the marriage license, $ere undisputed" #he same cannot
&e said in the case at &ar" #hat M5C is a %u&lic utilit! is not an undis%uted fact, on the contrar!, the determination thereof
gives rise to a multitude of other :uestions of fact and la$" It is a mere deduction on the %art of the 6I4 Commissioner that
since the M5C is engaged in the generation of %o$er, it is a %u&lic utilit!" #he M5C contests this arguing that it is not a
%u&lic utilit! &ecause it sells its generated %o$er to <A5?C?4 exclusivel!, and not to the general %u&lic" It asserts that it
is su&*ect to VA# and that its sale of generated electricit! to <A5?C?4 is su&*ect to 8ero9rated VA#"
-u&stantial *ustice, in such a case, re:uires not the allo$ance of issues raised for the first time on a%%eal, &ut that the
issue of $hether M5C is a %u&lic utilit!, and the correlated issue of $hether M5C is su&*ect to VA# or franchise tax, &e
raised and threshed out in the first o%%ortunit! &efore the C#A so that either %art! $ould have full! %resented its evidence
and legal arguments in su%%ort of its %osition and to contravene or re&ut those of the o%%osing %art!"
In At"as Conso"idated Minin+ ; Deve"op(ent Corp. v. Co((issioner of Interna" Revenue,
;;
this Court held that it $as too
late for the 6I4 Commissioner to raise an issue of fact of %a!ment for the first time in his memorandum in the C#A and in
his a%%eal to this Court" If raised earlier, the matter ought to have &een seriousl! delved into &! the C#A" ?n this ground,
this Court $as of the o%inion that under all the attendant circumstances of the case, su&stantial *ustice $ould &e served if
the 6I4 Commissioner &e held as %recluded from attem%ting to raise the issue at this stage" Failure to assert a :uestion
$ithin a reasona&le time $arrants a %resum%tion that the %art! entitled to assert it either has a&andoned or declined to
assert it"
#herefore, the Court of A%%eals correctl! refused to consider the issues raised &! the 6I4 Commissioner for the first time
on a%%eal" Its discussion on $hether the M5C is a %u&lic utilit! and $hether it is su&*ect to VA# or franchise tax is nothing
more than o)iter dictu(" It is &est not at all to discuss these issues for the! do not sim%l! involve :uestions of la$, &ut
also closel!9related :uestions of fact
;/
$hich neither the Court of A%%eals nor this Court could %resume or garner from the
evidence on record"
II
3nput 4+* on capital goods and services $a' (e te su(1ect o& a clai$ &or re&und.
#he M5C &ases its claim for refund of its in%ut VA# on -ection 1'=2&3 of the #ax Code of 19)=, as amended &! 4e%u&lic
Act <o" 771=,
;>
$hich %rovides B
-ec" 1'=" Refunds or tax credits of credita)"e input tax. B
x x x x
2&3 Capita" +oods" 9 A VA#9registered %erson ma! a%%l! for the issuance of a tax credit certificate or refund of
in%ut taxes %aid on ca%ital goods im%orted or locall! %urchased, to the extent that such in%ut taxes have not &een
a%%lied against out%ut taxes" #he a%%lication ma! &e made onl! $ithin t$o 2;3 !ears, after the close of the taxa&le
:uarter $hen the im%ortation or %urchase $as made"
Ca%ital goods or %ro%erties, as defined in 4evenue 4egulations <o" 799@, the im%lementing rules on VA#, are Agoods and
%ro%erties $ith estimated useful life greater than one !ear and $hich are treated as de%recia&le assets under -ection
;92f3, used directl! or indirectl! in the %roduction or sale of taxa&le goods or services"A
;@
Contrar! to the argument of the 6I4 Commissioner, in%ut VA# on ca%ital goods is among those ex%ressl! recogni8ed as
credita&le in%ut tax &! -ection 1'>2a3 of the #ax Code of 19)=, as amended &! 4e%" Act <o" 771=,
;=
to $it B
-ec" 1'>" *ax Credits. 9 2a3 Credita)"e input tax" 9 An! in%ut tax evidenced &! a VA# invoice or official recei%t
issued in accordance $ith -ection 1') hereof on the follo$ing transactions shall &e credita&le against the out%ut
taxO
213 5urchase or im%ortation of goodsO
2A3 For sale, or
263 For conversion into or intended to form %art of a finished %roduct for sale including %ac+ing materials, or
2C3 For use as su%%lies in the course of &usiness, or
2D3 For use as materials su%%lied in the sale of service, or
2.3 5or use in trade or (usiness &or .ic deduction &or depreciation or a$orti6ation is allo.ed under tis
)ode0 e"cept auto$o(iles0 aircra&t and 'acts. J.m%hasis su%%lied"K
#hus, goods and %ro%erties used &! the tax%a!er in its VA#9taxa&le &usiness, su&*ect to de%reciation or amorti8ation in
accordance $ith the #ax Code, are considered ca%ital goods" In%ut VA# on the %urchase of such ca%ital goods is
credita&le against the tax%a!erNs out%ut VA#" #he tax%a!er is further given the o%tion, under -ection 1'=2&3 of the #ax
Code of 19)=, as amended &! 4e%u&lic Act <o" 771=, to claim refund of the in%ut VA# on its ca%ital goods, &ut onl! to the
extent that the said in%ut VA# has not &een a%%lied to its out%ut VA#"
#his Court, li+e$ise, $ill not give credence to the 6I4 CommissionerNs contention that the claim for refund of in%ut VA# on
ca%ital goods &! the M5C should &e denied for the latterNs failure to com%l! $ith the re:uirements for the refund of in%ut
VA# credits on 8ero9rated sales %rovided in -ection 1= of 4evenue 4egulations <o" @9)7, as amended &! 4evenue
4egulations <o" /9))" #he 6I4 Commissioner is a%%arentl! confused" M5C is claiming refund of the in%ut VA# it has %aid
on the %urchase of capital goods, it is not claiming refund of its in%ut VA# credits attri&uta&le to its 6ero-rated sales"
#hese are t$o different in%ut VA# credits, arising from distinct transactions, although &oth ma! &e the su&*ect of claims for
refund &! the tax%a!er"
;7
Indeed, the ver! same regulation invo+ed &! the 6I4 Commissioner, 4evenue 4egulations <o"
@9)7, as amended, distinguishes &et$een these t$o refunda&le in%ut VA# credits and discusses them in t$o se%arate
%aragra%hsO -ection 1=2a3 on 8ero9rated sales of goods and services, and -ection 1=2&3 on ca%ital goods" It is also $orth
noting that 4evenue 4egulations <o" 799@, issued on 9 Decem&er 199@, $hich consolidated all VA# regulations, alread!
su%erseded 4evenue 4egulations <o" @9)7" -till, 4evenue 4egulations <o" 799@ maintains the distinction &et$een these
t$o in%ut VA# credits, discussing the 8ero9rated sales of goods or %ro%erties or services in -ection >"1'=912a3, and ca%ital
goods in -ection >"1'=912&3"
Dence, the %resent claim for refund of in%ut VA# on ca%ital goods filed &! M5C need not com%l! $ith the re:uirements for
refund of in%ut VA# attri&uta&le to 8ero9rated sales"
III
*ere is no reason &or tis )ourt to distur( te &indings o& &act o& te )*+0 as a&&ir$ed (' te )ourt o& +ppeals.
0hile it is true, as the 6I4 Commissioner alleges, that the M5C has the &urden of %roving that it is entitled to the refund it
is claiming for, &oth the C#A and Court of A%%eals had ruled that the M5C %resented su&stantial evidence to su%%ort its
claim for refund of its in%ut VA# on ca%ital goods and services in the amount of5;),7>>,=;="9@"
#he C#A found that M5C is registered as a VA#9tax%a!er, as evidenced &! its Certificate of 4egistration, issued &! the
6I4 4evenue District ?ffice 24D?3 <o" =', on ;= anuar! 199=" #he 6I4 Commissioner does not contest this fact, and
does not offer an! ex%lanation as to $h! the 6I4 4D? had a%%roved the registration of M5C as a VA#9tax%a!er $hen, as
the 6I4 Commissioner is no$ asserting, the M5C is not su&*ect to VA# &ut to franchise tax" #he M5C had &een filing its
VA# Huarterl! 4eturns, including those for the %eriod covered &! its claim for refund, 1 A%ril 199= to /1 Decem&er 199=,
re%orting and reflecting therein the in%ut VA# it had %aid on its %urchase of ca%ital goods and services" #hese ca%ital
goods and services $ere necessar! in the construction of the %o$er %lant facilities used &! M5C in electric %o$er
generation"
#he VA# invoices and recei%ts su&mitted &! M5C, in su%%ort of its claim for refund, had &een examined and evaluated &!
an inde%endent auditor, as $ell as &! the C#A itself" #hus, from the original amount of5/9,//',@''")@ claimed &! M5C
for refund, the inde%endent auditor, -CV Q Co", found onl! the sum of5;),7>@,@';">' sufficientl! su%%orted &! valid
invoices and7or official recei%ts" Follo$ing its o$n examination and evaluation of the evidence su&mitted, the C#A further
reduced the amount refunda&le to 5;),7>>,=;="9@ after disallo$ing the in%ut VA# on the %urchase of Axerox and office
su%%lies $hich cannot &e ca%itali8ed and not necessar! in the construction of %o$er %lant facilities"A
;)
It is $orth noting that the foregoing findings &! the C#A $ere affirmed in totalit! &! the Court of A%%eals" Gi+e$ise, this
Court finds no reason to distur& the foregoing findings of the tax court"
Another $ell9settled %rinci%le in this *urisdiction is that this Court is &ound &! the findings of fact of the C#A" ?nl! errors of
la$, and not rulings on the $eight of evidence, are revie$a&le &! this Court" Findings of fact of the C#A are not to &e
distur&ed unless clearl! sho$n to &e unsu%%orted &! su&stantial evidence"
;9
Huite the reverse, the claim of M5C for
refund of in%ut VA# on its %urchase of ca%ital goods and services in the %resent case is found to &e su%%orted &!
su&stantial evidence, not *ust &! the C#A, &ut also &! the Court of A%%eals" #he 6I4 Commissioner failed to convince this
Court other$ise"
IV
*e 73R sould seriousl' stud' and consider eac and ever' application &or clai$ &or re&und pending (e&ore it.
As a final %oint, this Court $ould li+e to call the attention of the 6I4 Commissioner, as $ell as the res%onsi&le 6I4 officers,
to seriousl! stud! and consider each and ever! a%%lication for claim for refund filed &efore their office" It is ver! o&vious to
this Court that the Ans$er filed &! the 6I4 Commissioner &efore the Court of A%%eals, $hich it essentiall! re%roduced as
its Memorandum &efore the same court, %resented general and pro for(a arguments" #he 6I4 Commissioner onl! raised
&elatedl! &efore the Court of A%%eals the issues of $hether M5C is a %u&lic utilit! and $hether it is su&*ect to franchise
tax and not VA#" .ven then, his 5etition for 4evie$ &efore the a%%ellate court, num&ering onl! six %ages, $ith onl! one
%age devoted to a discussion of the merits of his 5etition, left much to &e desired and $ould hardl! %ersuade an! court"
-ince he re%resents the interest of the government in tax cases, the 6I4 Commissioner should exert more effort and
exercise more diligence in %re%aring his %leadings &efore an! court, he should not $ait to do so onl! u%on a%%eal of his
case to the higher court" #his Court ma! not al$a!s &e inclined to allo$ him to remed! his %ast laxit!"
IN VIE( O% THE %OREGOING, the instant 5etition is here&! DENIED. #he Decision, dated /' ul! ;''/, of the Court of
A%%eals in CA9C"4" -5 <o" ='7)/, $hich affirmed in toto the Decision, dated 11 ul! ;''', of the C#A in C#A Case <o"
@=@), is here&! $%%IRMED" #he 6I4 Commissioner is here&! ORDERED to issue in favor of M5C a tax credit certificate
in the amount of 5;),7>>,=;="9@ re%resenting in%ut VA# %aid on ca%ital goods and services for the %eriod of 1 A%ril 199=
to /1 Decem&er 199=" <o %ronouncement as to costs"
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 supplie
VAT Invoice and VAT Receipt (Kepco vs. CIR-November 24, 2010
EnderO #ax E%dates
#hursda!, an" '= ;'11
!nder t"e #a$, a VAT invoice is necessar% &or ever% sa#e, barter or e'c"an(e o& (oods or properties $"i#e a VAT o&&icia#
receipt proper#% pertains to ever% #ease o& (oods or properties, and &or ever% sa#e, barter or e'c"an(e o& services.)44* In
Commissioner o& Interna# Reven+e vs. ,ani#a ,inin( Corporation,)4-* t"e Co+rt distin(+is"ed an invoice &rom a receipt,
t"+s. A /01sa#es or commercia# invoice/02 is a $ritten acco+nt o& (oods so#d or services rendered indicatin( t"e prices
c"ar(ed t"ere&or or a #ist b% $"atever name it is 3no$n $"ic" is +sed in t"e ordinar% co+rse o& b+siness evidencin( sa#e
and trans&er or a(reement to se## or trans&er (oods and services. A /01receipt/02 on t"e ot"er "and is a $ritten
ac3no$#ed(ment o& t"e &act o& pa%ment in mone% or ot"er sett#ement bet$een se##er and b+%er o& (oods, debtor or
creditor, or person renderin( services and c#ient or c+stomer. In ot"er $ords, t"e VAT invoice is t"e se##er/04s best proo&
o& t"e sa#e o& t"e (oods or services to t"e b+%er $"i#e t"e VAT receipt is t"e b+%er/04s best evidence o& t"e pa%ment o&
(oods or services received &rom t"e se##er. 5ven t"o+(" VAT invoices and receipts are norma##% iss+ed b% t"e
s+pp#ier6se##er a#one, t"e said invoices and receipts, ta3en co##ective#%, are necessar% to s+bstantiate t"e act+a# amo+nt or
7+antit% o& (oods so#d and t"eir se##in( price (proo& o& transaction, and t"e best means to prove t"e inp+t VAT pa%ments
(proo& o& pa%ment.)48* 9ence, VAT invoice and VAT receipt s"o+#d not be con&+sed as re&errin( to one and t"e same
t"in(. Certain#%, neit"er does t"e #a$ intend t"e t$o to be +sed a#ternative#%.
TAMBUNTING PAWNSHOP, INC. VS. COMMISSIONER OF INTERNAL REVENUE- VALUE ADDED TAX,
DOCUMENTARY STAMP TAX
FACTS:
Petitioner was assessed for deficiency Value Added Tax and Documentary Stamp Tax on the premise that, for the Value
Added Tax, it was engaged in the sale of services.
ISSUES:
(1) Is Petitioner liable for the Value Added Tax?
(2) Can the imposition of surcharge and interest be waived on the imposition of deficiency Documentary Stamp Tax?
HELD:
(1) NO. Since Petitioner is considered a non-bank financial intermediary, it is subject to 10% VAT for the tax years 1996 to
2002 but since the collection of Value Added Tax from non-bank financial intermediaries was specifically deferred by law,
Petitioner is not liable for Value Added Tax during these tax years. With the full implementation of the Value Added Tax
system on non-bank financial intermediaries starting January 1, 2003, Petitioner is liable for 10% Value Added Tax for
said tax year. And beginning 2004 up to the present, by virtue of R.A. No. 9238, petitioner is no longer liable for VAT but it
is subject to percentage tax on gross receipts from 0% to 5%, as the case may be.
(2) YES. Petitioner's argument against liability for surcharges and interest that it was in good faith in not paying
documentary stamp taxes, it having relied on the rulings of respondent CIR and the CTA that pawn tickets are not subject
to documentary stamp taxes was found to be meritorious. Good faith and honest belief that one is not subject to tax on
the basis of previous interpretations of government agencies tasked to implement the tax law are sufficient justification to
delete the imposition of surcharges and interest.
"#$U%&'TA!( STA%P TA)
COMMISSIONER OF INTERNAL REVENUE VS. SM PRIME HOLDINGS, INC. - VALUE ADDED TAX ON CINEMAS
ISSUE:
Are the gross receipts derived by operators or proprietors of cinema/theater houses from admission tickets subject to
VAT?
HELD:
NO. While (1) the enumeration under Section 108 on the VAT-taxable services is not exhaustive and (2) the said list
includes the lease of motion picture films, films, tapes and discs, the said activity however is not the same as showing or
exhibition of motion pictures or films. Thus, since the showing or exhibition of motion pictures or films is not in the
enumeration, the CIR must show that it falls under the phrase similar services.
The repeal of the Local Tax Code by the LGC of 1991 is not a legal basis for the imposition of VAT on the gross receipts
of cinema/theater operators or proprietors derived from admission tickets. The removal of the prohibition (on the national
government to tax certain activities) under the Local Tax Code did not grant nor restore to the national government the
power to impose amusement tax on cinema/theater operators or proprietors. Neither did it expand the coverage of VAT
IR 8. $ICHI %ORGING COMP$N5 O% $SI$" INC.
G.R. No. 1848#3 O+,o-!. 6" #010
D!3 C:s,;33o" J.
Do+,.;!O
! *'e CIR 'as 1?G da#s, fro( t'e date of t'e su)(ission of t'e co(p"ete docu(ents &it'in &'ic' to +rant or den# t'e
c"ai( for refund<credit of input vat. In case of fu"" or partia" denia" )# t'e CIR, t'e taxpa#erHs recourse is to fi"e an appea"
)efore t'e C*A &it'in 3G da#s fro( receipt of t'e decision of t'e CIR. 9o&ever, if after t'e 1?G!da# period t'e CIR fai"s to
act on t'e app"ication for tax refund<credit, t'e re(ed# of t'e taxpa#er is to appea" t'e inaction of t'e CIR to C*A &it'in
3G da#s.
! A taxpa#er is entit"ed to a refund eit'er )# aut'orit# of a statute express"# +rantin+ suc' ri+'t, privi"e+e, or incentive in
'is favor, or under t'e princip"e of solutio inde(iti reAuirin+ t'e return of taxes erroneous"# or i""e+a""# co""ected. In )ot'
cases, a taxpa#er (ust prove not on"# 'is entit"e(ent to a refund )ut a"so 'is co(p"iance &it' t'e procedura" due
process.
! As )et&een t'e Civi" Code and t'e Ad(inistrative Code of 1986, it is t'e "atter t'at (ust prevai" )ein+ t'e (ore recent
"a&, fo""o&in+ t'e "e+a" (axi(, 8e" posteriori derogat priori.
! *'e p'rase I&it'in t&o >?@ #ears x x x app"# for t'e issuance of a tax credit certificate or refundJ under Su)section >A@ of
Section 11? of t'e 0IRC refers to app"ications for refund<credit fi"ed &it' t'e CIR and not to appea"s (ade to t'e C*A.
%:+,sO
5etitioner filed a claim of refund7credit of in%ut vat in relation to its 8ero9rated sales from ul! 1, ;''; to -e%tem&er /',
;'';" #he C#A ;nd Division %artiall! granted res%ondent(s claim for refund7credit"
5etitioner filed a Motion for 5artial 4econsideration, insisting that the administrative and the *udicial claims $ere filed
&e!ond the t$o9!ear %eriod to claim a tax refund7credit %rovided for under -ections 11;2A3 and ;;9 of the <I4C" De
reasoned that since the !ear ;''> $as a lea% !ear, the filing of the claim for tax refund7credit on -e%tem&er /', ;''> $as
&e!ond the t$o9!ear %eriod, $hich ex%ired on -e%tem&er ;9, ;''>" De cited as &asis Article 1/ of the Civil Code, $hich
%rovides that $hen the la$ s%ea+s of a !ear, it is e:uivalent to /=@ da!s" In addition, %etitioner argued that the
simultaneous filing of the administrative and the *udicial claims contravenes -ections 11; and ;;9 of the <I4C" According
to the %etitioner, a %rior filing of an administrative claim is a condition %recedent &efore a *udicial claim can &e filed"
#he C#A denied the M54 thus the case $as elevated to the C#A .n 6anc for revie$" #he decision $as affirmed" #hus
the case $as elevated to the -u%reme Court"
4es%ondent contends that the non9o&servance of the 1;'9da! %eriod given to the CI4 to act on the claim for tax
refund7credit in -ection 11;2D3 is not fatal &ecause $hat is im%ortant is that &oth claims are filed $ithin the t$o9!ear
%rescri%tive %eriod" In su%%ort thereof, res%ondent cited Co((issioner of Interna" Revenue v. Victorias Mi""in+ Co., Inc.
K13G %'i" 1? >1978@L $here it $as ruled that if the CI4 ta+es time in deciding the claim, and the %eriod of t$o !ears is
a&out to end, the suit or %roceeding must &e started in the C#A &efore the end of the t$o9!ear %eriod $ithout a$aiting the
decision of the CI4"
Issu!sO
1" 0hether or not the claim for refund $as filed $ithin the %rescri&ed %eriod
;" 0hether or not the simultaneous filing of the administrative and the *udicial claims contravenes -ection ;;9 of the
<I4C, $hich re:uires the %rior filing of an administrative claim, and violates the doctrine of exhaustion of administrative
remedies
H!3<O
1" 1es" As ruled in the case of Co((issioner of Interna" Revenue v. Mirant %a+)i"ao Corporation >3.R. 0o. 16?1?9,
Septe()er 1?, ?GG8@, the t$o9!ear %eriod should &e rec+oned from the close of the taxa&le :uarter $hen the sales $ere
made"
In Co((issioner of Interna" Revenue v. %ri(eto&n %ropert# 3roup, Inc >3.R. 0o. 17?1BB, Au+ust ?8, ?GG6, B31 SCRA
437@, $e said that as &et$een the Civil Code, $hich %rovides that a !ear is e:uivalent to /=@ da!s, and the Administrative
Code of 19)7, $hich states that a !ear is com%osed of 1; calendar months, it is the latter that must %revail &eing the more
recent la$, follo$ing the legal maxim, L!= 9os,!.;o.; <!.o>:, 9.;o.;"
#hus, a%%l!ing this to the %resent case, the t$o9!ear %eriod to file a claim for tax refund7credit for the %eriod ul! 1, ;'';
to -e%tem&er /', ;''; ex%ired on -e%tem&er /', ;''>" Dence, res%ondent(s administrative claim $as timel! filed"
;" 1es" 0e find the filing of the *udicial claim $ith the C#A %remature"
-ection 11;2D3 of the <I4C clearl! %rovides that the CI4 has 1;' da!s, from the date of the su&mission of the com%lete
documents in su%%ort of the a%%lication Jfor tax refund7creditK, $ithin $hich to grant or den! the claim" In case of full or
%artial denial &! the CI4, the tax%a!er(s recourse is to file an a%%eal &efore the C#A $ithin /' da!s from recei%t of the
decision of the CI4" Do$ever, if after the 1;'9da! %eriod the CI4 fails to act on the a%%lication for tax refund7credit, the
remed! of the tax%a!er is to a%%eal the inaction of the CI4 to C#A $ithin /' da!s"
-u&section 2A3 of -ection 11; of the <I4C states that an! VA#9registered %erson, $hose sales are 8ero9rated or
effectivel! 8ero9rated ma!, ?;,@; ,?o 4!:.s after the close of the taxa&le :uarter $hen the sales $ere made, :9934 1o.
,@! ;ssu:+! o1 : ,:= +.!<;, +!.,;1;+:,! o. .!1u< of credita&le in%ut tax due or %aid attri&uta&le to such sales" #he
%hrase $ithin t$o 2;3 !ears x x x a%%l! for the issuance of a tax credit certificate or refund refers to a%%lications for
refund7credit filed $ith the CI4 and not to a%%eals made to the C#A"
#he case of Co((issioner of Interna" Revenue v. Victorias Mi""in+, Co., Inc. is ina%%lica&le as the tax %rovision involved in
that case is -ection /'=, no$ -ection ;;9 of the <I4C" -ection ;;9 does not a%%l! to refunds7credits of in%ut VA#"
#he %remature filing of res%ondent(s claim for refund7credit of in%ut VA# &efore the C#A $arrants a dismissal inasmuch as
no *urisdiction $as ac:uired &! the C#A"
FI4-# DIVI-I?<
G.R. No. 17#378 J:u:.4 17" #011
SILICON PHILIPPINES" INC." 0%o.2!.34 INTEL PHILIPPINES M$NU%$CTURING" INC.7" 5etitioner,
vs"
COMMISSIONER O% INTERN$L REVENUE" 4es%ondent"
D . C I - I ? <
DEL C$STILLO" J.9
#he &urden of %roving entitlement to a refund lies $ith the claimant"
#his 5etition for 4evie$ on Certiorari under 4ule >@ of the 4ules of Court see+s to set aside the -e%tem&er /', ;''@
Decision
1
and the A%ril ;', ;''= 4esolution
;
of the Court of #ax A%%eals 2C#A3 -n 2anc"
5actual +ntecedents
5etitioner -ilicon 5hili%%ines, Inc", a cor%oration dul! organi8ed and existing under and &! virtue of the la$s of the
4e%u&lic of the 5hili%%ines, is engaged in the &usiness of designing, develo%ing, manufacturing and ex%orting advance
and large9scale integrated circuit com%onents or AIC(s"A
/
5etitioner is registered $ith the 6ureau of Internal 4evenue 26I43
as a Value Added #ax 2VA#3 tax%a!er
>
and $ith the 6oard of Investments 26?I3 as a %referred %ioneer enter%rise"
@
On May 21, 1999, petitioner filed with the respondent Commissioner of Internal Revenue (CIR), through the
One!top !hop Inter"gen#y $a% Credit and &uty &raw'a#( Center of the &epartment of )inan#e (&O)), an
appli#ation for #redit*refund of unutili+ed input ,"$ for the period O#to'er 1, 199- to &e#em'er .1, 199- in the
amount of /.1,902,102310, 'ro(en down as follows4
Amount
#ax 5aid on Im%orted7Gocall! 5urchased
Ca%ital .:ui%ment
5 1@,17',');"''
#otal VA# %aid on 5urchases %er Invoices
4eceived During the 5eriod for $hich
this A%%lication is Filed
1=,7/;,>;@"@'
Amount of #ax Credit74efund A%%lied For 5 /1,9';,@'7"@'
=

Proceedings (e&ore te )*+ :ivision
?n Decem&er ;7, ;''', due to the inaction of the res%ondent, %etitioner filed a 5etition for 4evie$ $ith the C#A Division,
doc+eted as C#A Case <o" =;1;" 5etitioner alleged that for the >th :uarter of 199), it generated and recorded 8ero9rated
ex%ort sales in the amount of 5/,';7,))',)1)">;, %aid to %etitioner in acce%ta&le foreign currenc! and accounted for in
accordance $ith the rules and regulations of the 6ang+o -entral ng 5ili%inas,
7
and that for the said %eriod, %etitioner %aid
in%ut VA# in the total amount of 5/1,9';,@'7"@',
)
$hich have not &een a%%lied to an! out%ut VA#"
9
#o this, res%ondent filed an Ans$er
1'
raising the follo$ing s%ecial and affirmative defenses, to $itO
)" #he %etition states no cause of action as it does not allege the dates $hen the taxes sought to &e
refunded7credited $ere actuall! %aid,
9" It is incum&ent u%on herein %etitioner to sho$ that it com%lied $ith the %rovisions of -ection ;;9 of the #ax
Code as amended,
1'" Claims for refund are construed strictl! against the claimant, the same &eing in the nature of exem%tion from
taxes 2Commissioner of Internal 4evenue vs" Gedesma, /1 -C4A 9@, Manila .lectric Co" vs" Commissioner of
Internal 4evenue, =7 -C4A /@3,
11" ?ne $ho claims to &e exem%t from %a!ment of a %articular tax must do so under clear and unmista+a&le
terms found in the statute 2Asiatic 5etroleum vs" Glanes, >9 5hil" >==, Enion Carment Co" vs" Court of #ax
A%%eals, > -C4A /'>3,
1;" In an action for refund, the &urden is u%on the tax%a!er to %rove that he is entitled thereto, and failure to
sustain the same is fatal to the action for refund" Furthermore, as %ointed out in the case of 0illiam Gi 1ao vs"
Collector 2G911)7@, Decem&er ;), 19=/3, amounts sought to &e recovered or credited should &e sho$n to &e
taxes $hich are erroneousl! or illegall! collected, that is to sa!, their %a!ment $as an inde%endent single act of
voluntar! %a!ment of a tax &elieved to &e due and collecti&le and acce%ted &! the government, $hich had therefor
&ecome %art of the -tate mone!s su&*ect to ex%enditure and %erha%s alread! s%ent or a%%ro%riated, and
1/" #axes %aid and collected are %resumed to have &een made in accordance $ith the la$ and regulations, hence
not refunda&le"
11
?n <ovem&er 1), ;''/, the C#A Division rendered a Decision
1;
%artiall! granting %etitioner(s claim for refund of unutili8ed
in%ut VA# on ca%ital goods" ?ut of the amount of 51@,17',');"'', onl! 59,)9),)=7"'' $as allo$ed to &e refunded
&ecause training materials, office su%%lies, %osters, &anners, #9shirts, &oo+s, and other similar items %urchased &!
%etitioner $ere not considered ca%ital goods under -ection >"1'=912&3 of 4evenue 4egulations 2443 <o" 799@
2Consolidated Value9Added #ax 4egulations3"
1/
0ith regard to %etitioner(s claim for credit7refund of in%ut VA# attri&uta&le
to its 8ero9rated ex%ort sales, the C#A Division denied the same &ecause %etitioner failed to %resent an Authorit! to 5rint
2A#53 from the 6I4,
1>
neither did it %rint on its ex%ort sales invoices the A#5 and the $ord A8ero9rated"A
1@
#hus, the C#A
Division dis%osed of the case in this $iseO
0D.4.F?4., in vie$ of the foregoing the instant %etition for revie$ is here&! 5A4#IAGG1 C4A<#.D" 4es%ondent is
?4D.4.D to I--E. A #AL C4.DI# C.4#IFICA#. in favor of %etitioner in the reduced amount of 59,)9),)=7"''
re%resenting in%ut VA# on im%ortation of ca%ital goods" Do$ever, the claim for refund of in%ut VA# attri&uta&le to
%etitionerNs alleged 8ero9rated sales in the amount of 51=,7/;,>;@"@' is here&! D.<I.D for lac+ of merit"
-? ?4D.4.D"
1=
<ot satisfied $ith the Decision, %etitioner moved for reconsideration"
17
It claimed that it is not re:uired to secure an A#5
since it has a A5ermit to Ado%t Com%uteri8ed Accounting Documents such as -ales Invoice and ?fficial 4ecei%tsA from
the 6I4"
1)
5etitioner further argued that &ecause all its finished %roducts are ex%orted to its mother com%an!, Intel
Cor%oration, a non9resident cor%oration and a non9VA# registered entit!, the %rinting of the $ord A8ero9ratedA on its ex%ort
sales invoices is not necessar!"
19
?n its %art, res%ondent filed a Motion for 5artial 4econsideration
;'
contending that %etitioner is not entitled to a
credit7refund of unutili8ed in%ut VA# on ca%ital goods &ecause it failed to sho$ that the goods im%orted7%urchased are
indeed ca%ital goods as defined in -ection >"1'=91 of 44 <o" 799@"
;1
#he C#A Division denied &oth motions in a 4esolution
;;
dated August 1', ;''>" It noted thatO
J5Ketitioner(s re:uest for 5ermit to Ado%t Com%uteri8ed Accounting Documents such as -ales Invoice and ?fficial 4ecei%t
$as a%%roved on August /1, ;''1 $hile the %eriod involved in this case $as ?cto&er /1, 199) to Decem&er /1, 199) x x
x" 0hile it a%%ears that %etitioner $as %reviousl! issued a %ermit &! the 6I4 Ma+ati 6ranch, such %ermit $as onl! limited
to the use of com%uteri8ed &oo+s of account x x x" It $as onl! on August /1, ;''1 that %etitioner $as %ermitted to
generate com%uteri8ed sales invoices and official recei%ts J%rovided that the 6I4 5ermit <um&er is %rintedK in the header
of the document x x x"
x x x x
#hus, %etitioner(s contention that it is not re:uired to sho$ its 6I4 %ermit num&er on the sales invoices runs counter to the
re:uirements under the said A5ermit"A #his court also $onders $h! %etitioner $as issuing com%uter generated sales
invoices during the %eriod involved 2?cto&er 199) to Decem&er 199)3 $hen it did not have an authorit! or %ermit"
#herefore, $e are convinced that such documents lac+ %ro&ative value and should &e treated as inadmissi&le,
incom%etent and immaterial to %rove %etitioner(s ex%ort sales transaction"
x x x x
ACC?4DI<CG1, the Motion for 4econsideration and the -u%%lemental Motion for 4econsideration filed &! %etitioner as
$ell as the Motion for 5artial 4econsideration of res%ondent are here&! D.<I.D for lac+ of merit" #he %ronouncement in
the assailed decision is 4.I#.4A#.D"
-? ?4D.4.D
;/
Ruling o& te )*+ ;n 7anc
Endaunted, %etitioner elevated the case to the C#A -n 2anc via a 5etition for 4evie$,
;>
doc+eted as .6 Case <o" ;/"
?n -e%tem&er /', ;''@, the C#A -n 2anc issued the assailed Decision
;@
den!ing the %etition for lac+ of merit" 5ertinent
%ortions of the Decision readO
#his Court notes that %etitioner raised the same issues $hich have alread! &een thoroughl! discussed in the assailed
Decision, as $ell as, in the 4esolution den!ing %etitionerNs Motion for 5artial 4econsideration"
0ith regard to the first assigned error, this Court reiterates that, the re:uirement of J%rintingK the 6I4 %ermit to %rint on the
face of the sales invoices and official recei%ts is a control mechanism ado%ted &! the 6ureau of Internal 4evenue to
safeguard the interest of the government"
#his re:uirement is clearl! mandated under -ection ;/) of the 1997 <ational Internal 4evenue Code, $hich %rovides thatO
-.C" ;/)" %rintin+ of Receipts or Sa"es or Co((ercia" Invoice. B All %ersons $ho are engaged in &usiness shall secure
from the 6ureau of Internal 4evenue an authorit! to %rint recei%ts or sales or commercial invoices &efore a %rinter can
%rint the same"
#he a&ove mentioned %rovision see+s to eliminate the use of unregistered and dou&le or multi%le sets of recei%ts &!
stri+ing at the ver! root of the %ro&lem S the %rinter >9. S. de .eon, *'e 0ationa" Interna" Revenue Code Annotated, 6t'
-d., p. 9G1@" And $hat &etter $a! to %rove that the re:uired %ermit to %rint $as secured from the 6ureau of Internal
4evenue than to sho$ or %rint the same on the face of the invoices" #here can &e no other valid %roof of com%liance $ith
the a&ove %rovision than to sho$ the Authorit! to 5rint 5ermit num&er J%rintedK on the sales invoices and official recei%ts"
0ith regard to %etitioner(s failure to %rint the $ord A8ero9ratedA on the face of its ex%ort sales invoices, it must &e
em%hasi8ed that -ection >"1')91 of 4evenue 4egulations <o" 799@ s%ecificall! re:uires that all value9added tax
registered %ersons shall, for ever! sale or lease of goods or %ro%erties or services, issue dul! registered invoices $hich
must sho$ the $ord A8ero9ratedA J%rintedK on the invoices covering 8ero9rated sales"
It is not enough that %etitioner %roveJsK that it is entitled to its claim for refund &! $a! of su&stantial evidence" 0ell settled
in our *uris%rudence JisK that tax refunds are in the nature of tax exem%tions and as such, the! are regarded as in
derogation of sovereign authorit! >Co((issioner of Interna" Revenue vs. .edes(a, 31 SCRA 9B@.#hus, tax refunds are
construed in strictissimi *uris against the %erson or entit! claiming the same >Co((issioner of Interna" Revenue vs.
%rocter ; 3a()"e %'i"ippines Manufacturin+ Corporation, ?G4 SCRA 366: Co((issioner of Interna" Revenue vs. *o8#o
S'ippin+ Co., .td., ?44 SCRA 33?@.
In this case, not onl! should %etitioner esta&lish that it is entitled to the claim &ut it must most im%ortantl! sho$ %roof of
com%liance $ith the su&stantiation re:uirements as mandated &! la$ or regulations"
#he rest of the assigned errors %ertain to the alleged errors of the First DivisionO in finding that the %etitioner failed to
com%l! $ith the su&stantiation re:uirements %rovided &! la$ in %roving its claim for refund, in reducing the amount of
%etitioner(s tax credit for in%ut vat on im%ortation of ca%ital goods, and in den!ing %etitioner(s claim for refund of in%ut vat
attri&uta&le to %etitioner(s 8ero9rated sales"
It is %etitioner(s contention that it has clearl! esta&lished its right to the tax credit or refund &! $a! of su&stantial evidence
in the form of material and documentar! evidence and it $ould &e im%ro%er to set aside $ith haste the claimed in%ut VA#
on ca%ital goods ex%ended for training materials, office su%%lies, %osters, &anners, t9shirts, &oo+s and the li+e &ecause
4evenue 4egulations <o" 799@ defines ca%ital goods as to include even those goods $hich are indirectl! used in the
%roduction or sale of taxa&le goods or services"
Ca%ital goods or %ro%erties, as defined under -ection >"1'=912&3 of 4evenue 4egulations <o" 799@, refer Ato goods or
%ro%erties $ith estimated useful life greater than one !ear and $hich are treated as de%recia&le assets under -ection ;9
2f3, used directl! or indirectl! in the %roduction or sale of taxa&le goods or services"A
Considering that the items 2training materials, office su%%lies, %osters, &anners, t9shirts, &oo+s and the li+e3 %urchased &!
%etitioner as reflected in the summar! $ere not dul! %roven to have &een used, directl! or indirectl!J,K in the %roduction or
sale of taxa&le goods or services, the same cannot &e considered as ca%ital goods as defined a&oveJ" Conse:uentl!,K the
same ma! not x x x then J&eK claimed as such"
0D.4.F?4., in vie$ of the foregoing, this instant 5etition for 4evie$ is here&! D.<I.D DE. C?E4-. and here&!
DI-MI--.D for lac+ of merit" #his CourtNs Decision of <ovem&er 1), ;''/ and 4esolution of August 1', ;''> are here&!
AFFI4M.D in all res%ects"
-? ?4D.4.D"
;=
5etitioner sought reconsideration of the assailed Decision &ut the C#A -n 2anc denied the Motion
;7
in a
4esolution
;)
dated A%ril ;', ;''="
Issu!s
Dence, the instant 5etition raising the follo$ing issues for resolutionO
213 $hether the C#A .n 6anc erred in den!ing %etitioner(s claim for credit7 refund of in%ut VA# attri&uta&le to its
8ero9rated sales in the amount of 51=,7/;,>;@"'' due to its failureO
2a3 to sho$ that it secured an A#5 from the 6I4 and to indicate the same in its ex%ort sales invoices, and
2&3 to %rint the $ord A8ero9ratedA in its ex%ort sales invoices"
;9
2;3 $hether the C#A .n 6anc erred in ruling that onl! the amount of 59,)9),)=7"'' can &e classified as in%ut VA#
%aid on ca%ital goods"
/'
Petitioner<s +rgu$ents
5etitioner %osits that the denial &! the C#A .n 6anc of its claim for refund of in%ut VA# attri&uta&le to its 8ero9rated sales
has no legal &asis &ecause the %rinting of the A#5 and the $ord A8ero9ratedA on the ex%ort sales invoices are not re:uired
under -ections 11/ and ;/7 of the <ational Internal 4evenue Code 2<I4C3"
/1
And since there is no la$ re:uiring the A#5
and the $ord A8ero9ratedA to &e indicated on the sales invoices,
/;
the a&sence of such information in the sales invoices
should not invalidate the %etition
//
nor result in the outright denial of a claim for tax credit7refund"
/>
#o su%%ort its %osition,
%etitioner cites Inte" *ec'no"o+# %'i"ippines, Inc. v. Co((issioner of Interna" Revenue,
/@
$here Intel(s failure to %rint the
A#5 on the sales invoices or recei%ts did not result in the outright denial of its claim for tax credit7refund"
/=
Although the
cited case onl! dealt $ith the %rinting of the A#5, %etitioner su&mits that the reasoning in that case should also a%%l! to
the %rinting of the $ord A8ero9rated"A
/7
Dence, failure to %rint of the $ord A8ero9ratedA on the sales invoices should not
result in the denial of a claim"
As to the claim for refund of in%ut VA# on ca%ital goods, %etitioner insists that it has sufficientl! %roven through testimonial
and documentar! evidence that all the goods %urchased $ere used in the %roduction and manufacture of its finished
%roducts $hich $ere sold and ex%orted"
/)
Respondent<s +rgu$ents
#o refute %etitioner(s arguments, res%ondent asserts that the %rinting of the A#5 on the ex%ort sales invoices, $hich
serves as a control mechanism for the 6I4, is mandated &! -ection ;/) of the <I4C,
/9
$hile the %rinting of the $ord
A8ero9ratedA on the ex%ort sales invoices, $hich see+s to %revent %urchasers of 8ero9rated sales or services from claiming
non9existent in%ut VA# credit7refund,
>'
is re:uired under 44 <o" 799@, %romulgated %ursuant to -ection ;>> of the
<I4C"
>1
0ith regard to the unutili8ed in%ut VA# on ca%ital goods, res%ondent counters that %etitioner failed to sho$ that
the goods it %urchased7im%orted are ca%ital goods as defined in -ection >"1'=91 of 44 <o" 799@"
>;
Ou. Ru3;>
#he %etition is &ereft of merit"
6efore us are t$o t!%es of in%ut VA# credits" ?ne is a credit7refund of in%ut VA# attri&uta&le to 8ero9rated sales under
-ection 11; 2A3 of the <I4C, and the other is a credit7refund of in%ut VA# on ca%ital goods %ursuant to -ection 11; 263 of
the same Code"
Credit<refund of input VA* on $ero!rated sa"es
In a claim for credit7refund of in%ut VA# attri&uta&le to 8ero9rated sales, -ection 11; 2A3
>/
of the <I4C la!s do$n four
re:uisites, to $itO
13 the tax%a!er must &e VA#9registered,
;3 the tax%a!er must &e engaged in sales $hich are 8ero9rated or effectivel! 8ero9rated,
/3 the claim must &e filed $ithin t$o !ears after the close of the taxa&le :uarter $hen such sales $ere made, and
>3 the credita&le in%ut tax due or %aid must &e attri&uta&le to such sales, exce%t the transitional in%ut tax, to the
extent that such in%ut tax has not &een a%%lied against the out%ut tax"
#o %rove that it is engaged in 8ero9rated sales, %etitioner %resented ex%ort sales invoices, certifications of in$ard
remittance, ex%ort declarations, and air$a! &ills of lading for the fourth :uarter of 199)" #he C#A Division, ho$ever, found
the ex%ort sales invoices of no %ro&ative value in esta&lishing %etitioner(s 8ero9rated sales for the %ur%ose of claiming
credit7refund of in%ut VA# &ecause %etitioner failed to sho$ that it has an A#5 from the 6I4 and to indicate the A#5 and
the $ord A8ero9ratedA in its ex%ort sales invoices"
>>
#he C#A Division cited as &asis -ections 11/,
>@
;/7
>=
and ;/)
>7
of the
<I4C, in relation to -ection >"1')91 of 44 <o" 799@"
>)
0e %artl! agree $ith the C#A"
5rinting the A#5 on the invoices or recei%ts is not re:uired
It has &een settled in Inte" *ec'no"o+# %'i"ippines, Inc. v. Co((issioner of Interna" Revenue
>9
that the A#5 need not &e
reflected or indicated in the invoices or recei%ts &ecause there is no la$ or regulation re:uiring it"
@'
#hus, in the a&sence of
such la$ or regulation, failure to %rint the A#5 on the invoices or recei%ts should not result in the outright denial of a claim
or the invalidation of the invoices or recei%ts for %ur%oses of claiming a refund"
@1
A#5 must &e secured from the 6I4
6ut $hile there is no la$ re:uiring the A#5 to &e %rinted on the invoices or recei%ts, -ection ;/) of the <I4C ex%ressl!
re:uires %ersons engaged in &usiness to secure an A#5 from the 6I4 %rior to %rinting invoices or recei%ts" Failure to do
so ma+es the %erson lia&le under -ection ;=>
@;
of the <I4C"
#his &rings us to the :uestion of $hether a claimant for unutili8ed in%ut VA# on 8ero9rated sales is re:uired to %resent
%roof that it has secured an A#5 from the 6I4 %rior to the %rinting of its invoices or recei%ts"
0e rule in the affirmative"
Ender -ection 11; 2A3 of the <I4C, a claimant must &e engaged in sales $hich are 8ero9rated or effectivel! 8ero9rated"
#o %rove this, dul! registered invoices or recei%ts evidencing 8ero9rated sales must &e %resented" Do$ever, since the
A#5 is not indicated in the invoices or recei%ts, the onl! $a! to verif! $hether the invoices or recei%ts are dul! registered
is &! re:uiring the claimant to %resent its A#5 from the 6I4" 0ithout this %roof, the invoices or recei%ts $ould have no
%ro&ative value for the %ur%ose of refund" In the case of Inte", $e em%hasi8ed thatO
It &ears reiterating that $hile the %ertinent %rovisions of the #ax Code and the rules and regulations im%lementing them
re:uire entities engaged in &usiness to secure a 6I4 authorit! to %rint invoices or recei%ts and to issue dul! registered
invoices or recei%ts, it is not s%ecificall! re:uired that the 6I4 authorit! to %rint &e reflected or indicated therein" Indeed,
$hat is im%ortant $ith res%ect to the 6I4 authorit! to %rint is that it has &een secured or o&tained &! the tax%a!er, and that
invoices or recei%ts are dul! registered"
@/
2.m%hasis su%%lied3
Failure to %rint the $ord A8ero9ratedA on the sales invoices is fatal to a claim for refund of in%ut VA#1a&p'i1
-imilarl!, failure to %rint the $ord A8ero9ratedA on the sales invoices or recei%ts is fatal to a claim for credit7refund of in%ut
VA# on 8ero9rated sales"
In %anasonic Co((unications I(a+in+ Corporation of t'e %'i"ippines >for(er"# Matsus'ita 2usiness Mac'ine
Corporation of t'e %'i"ippines@ v. Co((issioner of Interna" Revenue,
@>
$e u%held the denial of 5anasonic(s claim for tax
credit7refund due to the a&sence of the $ord A8ero9ratedA in its invoices" 0e ex%lained that com%liance $ith -ection >"1')9
1 of 44 799@, re:uiring the %rinting of the $ord A8ero ratedA on the invoice covering 8ero9rated sales, is essential as this
regulation %roceeds from the rule9ma+ing authorit! of the -ecretar! of Finance under -ection ;>>
@@
of the <I4C"
All told, the non9%resentation of the A#5 and the failure to indicate the $ord A8ero9ratedA in the invoices or recei%ts are
fatal to a claim for credit7refund of in%ut VA# on 8ero9rated sales" #he failure to indicate the A#5 in the sales invoices or
recei%ts, on the other hand, is not" In this case, %etitioner failed to %resent its A#5 and to %rint the $ord A8ero9ratedA on its
ex%ort sales invoices" #hus, $e find no error on the %art of the C#A in den!ing outright %etitioner(s claim for credit7refund
of in%ut VA# attri&uta&le to its 8ero9rated sales"
Credit7refund of in%ut VA# on ca%ital goods
Ca%ital goods are defined under -ection >"1'=912&3 of 44 <o" 799@
#o claim a refund of in%ut VA# on ca%ital goods, -ection 11; 263
@=
of the <I4C re:uires thatO
1" the claimant must &e a VA# registered %erson,
;" the in%ut taxes claimed must have &een %aid on ca%ital goods,
/" the in%ut taxes must not have &een a%%lied against an! out%ut tax lia&ilit!, and
>" the administrative claim for refund must have &een filed $ithin t$o 2;3 !ears after the close of the taxa&le
:uarter $hen the im%ortation or %urchase $as made"
Corollaril!, -ection >"1'=91 2&3 of 44 <o" 799@ defines ca%ital goods as follo$sO
ACa%ital goods or %ro%ertiesA refer to goods or %ro%erties $ith estimated useful life greater that one !ear and $hich are
treated as de%recia&le assets under -ection ;9 2f3,
@7
used directl! or indirectl! in the %roduction or sale of taxa&le goods
or services"
6ased on the foregoing definition, $e find no reason to deviate from the findings of the C#A that training materials, office
su%%lies, %osters, &anners, #9shirts, &oo+s, and the other similar items reflected in %etitioner(s -ummar! of Im%ortation of
Coods are not ca%ital goods" A reduction in the refunda&le in%ut VA# on ca%ital goods from51@,17',');"''
to 59,)9),)=7"'' is therefore in order"
0D.4.F?4., the 5etition is here&! D.<I.D" #he assailed Decision dated -e%tem&er /', ;''@ and the 4esolution
dated A%ril ;', ;''= of the Court of #ax A%%eals .n 6anc are here&! AFFI4M.D"
-? ?4D.4.D"
DIAZ VS. SECRETARY OF FINANCE- VALUE ADDED TAX (VAT)
May toll fees collected by tollway operators be subject to VAT?
YES.
(1) VAT is imposed on all kinds of services and tollway operators who are engaged in constructing, maintaining, and
operating expressways are no different from lessors of property, transportation contractors, etc.
(2) Not only do they fall under the broad term under (1) but also come under those described as all other franchise
grantees which is not confined only to legislative franchise grantees since the law does not distinguish. They are also not
a franchise grantee under Section 119 which would have made them subject to percentage tax and not VAT.
(3) Neither are the services part of the enumeration under Section 109 on VAT-exempt transactions.
(4) The toll fee is not a users tax and thus it is permissible to impose a VAT on the said fee. The MIAA case does not
apply and the Court emphasized that toll fees are not taxes since they are not assessed by the BIR and do not go the
general coffers of the government. Toll fees are collected by private operators as reimbursement for their costs and
expenses with a view to a profit while taxes are imposed by the government as an attribute of its sovereignty. Even if the
toll fees were treated as users tax, the VAT can not be deemed as a tax on tax since the VAT is imposed on the tollway
operator and the fact that it might pass-on the same to the tollway user, it will not make the latter directly liable for VAT
since the shifted VAT simply becomes part of the cost to use the tollways.
(5) The assertion that the VAT imposed is not administratively feasible given the manner by which the BIR intends to
implement the VAT (i.e., rounding off the toll rates and putting any excess collection in an escrow account) is not enough
to invalidate the law. Non-observance of the canon of administrative feasibility will not render a tax imposition invalid
except to the extent that specific constitutional or statutory limitations are impaired.
INTERNATIONAL EXCHANGE BANK v . COMMISSIONER OF INTERNAL REVENUE
To claim that time deposits evidenced by passbooks should not be subject to documentary stamp tax is a clear evasion of
the rule on equality and uniformity intaxation that requires the imposition of documentary stamp tax
on documentsevidencing transactions of the same kind, in this particular case, on all certificates of deposits drawing
interest.
T"e Internationa# 5'c"an(e :an3 (I5: persona##% received an assessment &orde&icienc% ;oc+mentar% <tamp Ta' (;<T
on its p+rc"ases o& sec+rities &rom t"e :an(3o <entra# n( =i#pinas (:<= or >overnment <ec+rities =+rc"ased-
ReverseRep+rc"ase A(reement (RR=A and its <avin(s Acco+nt- ?i'ed <avin(s ;eposit (?<; &or t"e ta'ab#e %ears 1@@8
and 1@@A. T"e I5: t"en &i#ed a protest #etter a##e(in( t"at its ?<; is not s+bBect to ;<T since it cannot be considered a
certi&icate o& deposit s+bBect to ;<T +nder <ection 1C0 o& t"e Ta' Code &or, +n#i3e a certi&icate o& deposit $"ic" is a
ne(otiab#e instr+ment, t"e passboo3 it iss+ed &or its ?<; $as not pa%ab#e to t"e order o& t"e depositor or to some ot"er
person as t"e deposit co+#d on#% be $it"dra$n b% t"e depositor or b% a d+#% a+t"oriDed representative. ?+rt"ermore, t"e
ban3 ar(+ed t"at deposits evidenced b% a passboo3 $"ic" "ave &eat+res a3in to a time deposit s+c" as petitionerEs ?<;, is
not s+bBect to ;<T +nder t"e Ta' Code and t"e NIRC.
ISSUE:
F"et"er or not t"e I5:Es ?i'ed <avin(s ;eposit evidenced b% a passboo3 is s+bBect to ;oc+mentar% <tamp Ta' &or t"e
%ears assessed
HELD:
A passboo3 representin( an interest earnin( deposit acco+nt iss+ed b% a ban3 7+a#i&ies as a certi&icate o& deposit dra$in(
interest. A doc+ment to be deemed a certi&icate o& deposit re7+ires no speci&ic &orm as #on( as t"ere is some $ritten
memorand+m t"at t"e ban3 accepted a deposit o& a s+m o& mone% &rom a depositor. F"at is important and contro##in( is
t"e nat+re or meanin( conve%ed b% t"e passboo3 and not t"e partic+#ar #abe# or nomenc#at+re attac"ed to it, inasm+c" as
s+bstance, not &orm, is paramo+nt. T"e ne(otiab#e c"aracter o& an% and a## doc+ments +nder <ection 1C0 is immateria# &or
p+rposes o& imposin( ;<T. Grders &or t"e pa%ment o& s+m o& mone% pa%ab#e at si("t or on demand are o& co+rse e'p#icit#%
e'empted &rom t"e pa%ment o& ;<T. T"+s, a re(+#arsavin(s acco+nt $it" a passboo3 $"ic" is $it"dra$ab#e at an% time is
not s+bBect to ;<T, +n#i3e a time deposit $"ic" is pa%ab#e on a &i'ed mat+rit% date.
As &or t"e I5:Es ar(+ment t"at its ?<; is simi#ar to a re(+#ar savin(s deposit beca+se it is evidenced b% a passboo3, t"e
same does not #ie.
T"e ?<;, #i3e a time deposit, provides &or a "i("er interest rate $"en t"e deposit is not $it"dra$n $it"in t"e re7+ired
&i'ed periodH ot"er$ise, it earns interest pertainin( to a re(+#ar savin(s deposit. 9avin( a &i'ed term and t"e red+ction o&
interest rates in case o& pre-termination are essentia# &eat+res o& a time deposit.
It bears emp"asis t"at ;<T is an e'cise ta' +pon t"e privi#e(e, opport+nit% or &aci#it% o&&ered at e'c"an(es &or t"e
transaction o& t"e b+siness. F"i#e ta' avoidance sc"emes and arran(ements are not pro"ibited, ta' #a$s cannot be
circ+mvented in order to evade pa%ment o& B+st ta'es. To c#aim t"at time deposits evidenced b% passboo3s s"o+#d not be
s+bBect to ;<T is a c#ear evasion o& t"e r+#e on e7+a#it% and +ni&ormit% in ta'ation t"at re7+ires t"e imposition o& ;<T
on doc+ments evidencin( transactions o& t"e same 3ind, in t"is partic+#ar case, on a## certi&icates o& deposits dra$in(
interest.