CIR v SAN ROQUE POWER CORPORATION;

GR No. 187485, February 12, 2013;

En Banc, Carpio, J:

FACTS:
On October 11, 1997, San Roque entered into a Power Purchase Agreement ("PPA")
with the NAPOCOR to develop hydro-potential of the Lower Agno River and generate
additional power and energy for the Luzon Power Grid, by building the San Roque
Multi-Purpose Project located in Pangasinan. During the cooperation period of twenty-
five (25) years commencing from the completion date of the Power Station, NPC will
take and pay for all electricity available from the Power Station.

San Roque allegedly incurred, excess input VAT in the amount of 559,709,337.54 for
taxable year 2001 which it declared in its Quarterly VAT Returns filed for the same
year. San Roque duly filed with the BIR separate claims for refund, in the total amount
of 559,709,337.54, representing unutilized input taxes as declared in its VAT returns
for taxable year 2001.

On March 28, 2003, San Roque filed amended Quarterly VAT Returns for the year 2001
since it increased its unutilized input VAT to the amount of 560,200,283.14.
Consequently, San Roque filed with the BIR on even date, separate amended claims
for refund.

ISSUE:
Whether or not San Roques claim for refund was prematurely filed.

HELD:
YES. It was premature.

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

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. In
proper cases, the Commissioner shall grant a refund or issue the tax credit
certificate for creditable input taxes within one hundred twenty (120) days
from the date of submission of complete documents in support of the
application filed in accordance with Subsection (A) and (B) hereof.

On 10 April 2003, a mere 13 days after it filed its amended administrative claim with
the Commissioner on 28 March 2003, San Roque filed a Petition for Review with the
CTA. From this we gather two crucial facts: first, San Roque did not wait for the 120-
day period to lapse before filing its judicial claim; second, San Roque filed its judicial
claim more than four (4) years before the Atlas doctrine, promulgated by the Court
on 8 June 2007.

Clearly, San Roque failed to comply with the 120-day waiting period, the time
expressly given by law to the Commissioner to decide whether to grant or deny San
Roques application for tax refund or credit. It is indisputable that compliance with the
120-day waiting period is mandatory and jurisdictional. The waiting period was
extended to 120 days effective 1 January 1998 under RA 8424 or the Tax Reform Act
of 1997. Thus, the waiting period has been in our statute books for more
than fifteen (15) years before San Roque filed its judicial claim. Failure to
comply with the 120-day waiting period violates a mandatory provision of law. It
violates the doctrine of exhaustion of administrative remedies and renders the
petition premature and thus without a cause of action, with the effect that the CTA
does not acquire jurisdiction over the taxpayers petition.

ACCENTURE, INC. VS. CIR;

G.R. No. 190102, July 11, 2012;
Second Division, Sereno, CJ:
Facts:
Accenture, Inc. (Accenture) is a corporation engaged in the business of providing
management consulting, business strategies development, and selling and/or
licensing of software. It is duly registered with the Bureau of Internal Revenue
(BIR) as a Value Added Tax (VAT) taxpayer or enterprise in accordance with
Section 236 of the National Internal Revenue Code (Tax Code)
On July 1, 2004, Accenture filed with the DOF a claim for the refund or the issuance of
a Tax Credit Certificate (TCC). But, the DOF did not act on the claim of Accenture.
Hence, on August 31, 2004, the latter filed a Petition for Review with the First Division
of the Court of Tax Appeals (Division), praying for the issuance of a TCC in its favor in
the amount of P35,178,844.21. The CTA however denied the petition of Accenture for
failing to prove that the latters sale of services to the alleged foreign clients qualified
for zero percent VAT. Accenture filed an MR but was denied. When it filed an appeal
before the CTA En Banc, it was also denied.
The CTA En Banc concluded that Accenture failed to discharge the burden of proving
the latters allegation that its clients were foreign-based. Resolute, Accenture filed a
Petition for Review with the CTA En Banc, but the latter affirmed the Divisions
Decision and Resolution. A subsequent MR was also denied. Hence, this Petition for
Review under Rule 45.
Issue:
Is the claim of Accenture for tax refund or credit tenable?
Ruling:
No. The Court ruled that the recipient of the service must be doing business
outside the Philippines for the transaction to qualify for zero-rating under Section
108(B) of the Tax Code.
The evidence presented by Accenture may have established that its clients are
foreign. This fact does not automatically mean, however, that these clients were
doing business outside the Philippines.
Consequently, to come within the purview of Section 108(B)(2), it is not enough that
the recipient of the service be proven to be a foreign corporation; rather, it must be
specifically proven to be a nonresident foreign corporation. A taxpayer
claiming a tax credit or refund has the burden of proof to establish the factual basis of
that claim. Tax refunds, like tax exemptions, are construed strictly against the
taxpayer.
Unfortunately, Accenture failed to discharge this burden. It alleged and presented
evidence to prove only that its clients were foreign entities. However, as found by
both the CTA Division and the CTA En Banc, no evidence was presented by Accenture
to prove the fact that the foreign clients to whom petitioner rendered its services were
clients doing business outside the Philippines. As ruled by the CTA En Banc, the
Official Receipts, Intercompany Payment Requests, Billing Statements, Memo
Invoices-Receivable, Memo Invoices-Payable, and Bank Statements presented by
Accenture merely substantiated the existence of sales, receipt of foreign currency
payments, and inward remittance of the proceeds of such sales duly accounted for in
accordance with BSP rules, all of these were devoid of any evidence that the clients
were doing business outside of the Philippines.
CIR vs. SEKISUI JUSHI PHILIPPINES, INC.;
G.R. No. 149671, July 21, 2006;
First Division, Panganiban, CJ:
FACTS:
Sekisui Jushi Phil., Inc (Sekisui) is a domestic corporation with principal office located
at the Special Export Processing Zone, Laguna. It is principally engaged in the
business of manufacturing, importing, exporting, buying, selling, or otherwise dealing
in, at wholesale such goods as strapping bands and other packaging materials and
goods of similar nature, and any and all equipment, materials, supplies used or
employed in or related to the manufacture of such finished products.

Having registered with the BIR as a VAT taxpayer, Sekisui filed its quarterly returns
with the BIR, for the period January 1 to June 30, 1997, reflecting therein input taxes in
the amount of P4,631,132.70 paid by it in connection with its domestic purchase of
capital goods and services. Said input taxes remained unutilized since Sekisui has not
engaged in any business activity or transaction for which it may be liable for output
tax and for which said input taxes may be credited.

On November 11, 1998, Sekisui filed two separate applications for tax credit/refund of
VAT input taxes paid for the period January 1 to March 31, 1997 and April 1 to June 30,
1997, respectively. There being no action on its application for tax credit/refund under
Section 112 (B) of the Tax Code, as amended, Sekisui filed, within the 2-year
prescriptive period under Section 229 of said Code, a petition for review with the
Court of Tax Appeals on March 26, 1999.

ISSUE:
WON Sekisui is entitled to the refund or issuance of tax credit certificate in the
amount of P4,377,102.26 as alleged unutilized input taxes paid on domestic purchase
of capital goods and services for the period covering Jan. 1 to June 30, 1997.

HELD:
Yes. An entity registered with the PEZA as an Eco zone may be covered by the VAT
system. Section 23 of Republic Act 7916, as amended, gives a PEZA-registered
enterprise the option to choose between two fiscal incentives: a) a 5% preferential tax
rate on its gross income under the said law; or b) an income tax holiday provided
under Executive Order No. 226 or the Omnibus Investment Code of 1987, as
amended. If the entity avails itself of the 5%preferential tax rate under the first
scheme, it is exempt from all taxes, including the VAT; under the second, it is exempt
from income taxes for a number of years, but not from other national internal revenue
taxes like the VAT.

The CA and CTA found that respondent had availed itself of the fiscal incentive of an
income tax holiday under EO No. 226. By availing itself of the income tax holiday,
Sekisui became subject to the VAT. It correctly registered as a VAT taxpayer, because
its transactions were not VAT-exempt.

Since 100 percent of the products of Sekisui are exported, all its transactions are
deemed export sales and are thus VAT zero-rated. It has been shown that Sekisui has
no output tax with which it could offset its paid input tax. Since the subject input tax it
paid for its domestic purchases of capital goods and services remained unutilized, it
can claim a refund for the input VAT previously charged by its suppliers. The amount
of P4,377,102.26 is excess input taxes that justify a refund.
CIR vs. Toshiba Information Eq.;
G.R. No. 150154, Aug. 9, 2005;
oshiba registered with the Philippine Economic Zone Authority (PEZA) as an ECOZONE
Export Enterprise and it registered with the Bureau of Internal Revenue (BIR) as a VAT
taxpayer
and a withholding agent
Toshiba filed its VAT returns for the first and second quarters of taxable year 1996,
reporting
input VAT in the amount of P13,118,542.00
7
and P5,128,761.94,
8
respectively, or a total of
P18,247,303.94. It alleged that the said input VAT was from its purchases of capital
goods and
services which remained unutilized since it had not yet engaged in any business
activity or
transaction for which it may be liable for any output VAT.
Toshiba filed with (DOF) applications for tax credit/refund of its unutilized input VAT. To
toll the
running of the two-year prescriptive period for judicially claiming a tax credit/refund
Toshiba, filed
with the CTA a Petition for Review.
CTA ordered CIR to refund, or in the alternative, to issue a tax credit certificate to
Toshiba in the
amount of P16,188,045.44. CA AFFIRMED.
ISSUE: is Toshiba is entitled to the tax credit/refund of its input VAT on its purchases of
capital
goods and services? YES
SC
An ECOZONE enterprise is a VAT-exempt entity. Sales of goods, properties, and
services by
persons from the Customs Territory to ECOZONE enterprises shall be subject to VAT at
zero
percent (0%).
It would seem that CIR failed to differentiate between VAT-exempt transactions from
VAT-
exempt entities.

Toshiba registered with the

Philippine Economic Zone
Authority (PEZA) as an
ECOZONE
Export Enterprise and it
registered with the Bureau of
Internal Revenue (BIR) as a VAT
taxpayer
and a withholding agent
Toshiba registered with the
Philippine Economic Zone
Authority (PEZA) as an
ECOZONE
Export Enterprise and it
registered with the Bureau of
Internal Revenue (BIR) as a VAT
taxpayer
and a withholding agent
FACTS:
Toshiba registered with the Philippine Economic Zone Authority (PEZA) as an
ECOZONE Export Enterprise and it registered with the Bureau of Internal
Revenue (BIR) as a VAT taxpayer and a withholding agent.

Toshiba filed its VAT returns for the first and second quarters of taxable year
1996, reporting input VAT in the amount of P13, 118,542.07 and P5,
128,761.94,8 respectively, or a total of P18, 247,303.94. It alleged that the said
input VAT was from its purchases of capital goods and services which remained
unutilized since it had not yet engaged in any business activity or transaction for
which it may be liable for any output VAT.

Toshiba filed with (DOF) applications for tax credit/refund of its unutilized input
VAT. To toll the running of the two-year prescriptive period for judicially claiming
a tax credit/refund Toshiba, filed with the CTA a Petition for Review.

CTA ordered CIR to refund, or in the alternative, to issue a tax credit certificate to
Toshiba in the amount of P16,188,045.44. CA AFFIRMED.

ISSUE:
WON is Toshiba is entitled to the tax credit/refund of its input VAT on its
purchases of capital goods and services?
 YES. No output VAT may be passed on to an ECOZONE enterprise since it is a
VAT-exempt entity. Even conceding, however, that respondent Toshiba, as a
PEZA-registered enterprise, is a VAT-exempt entity that could not have engaged
in a VAT-taxable business, this Court still believes, given the particular
circumstances of the present case, that it is entitled to a credit/refund of its input
VAT. The sale of capital goods by suppliers from the Customs Territory to Toshiba
took place way before the issuance of RMC No. 74-99, and when the old rule was
accepted and implemented by no less than the BIR itself. Since Toshiba opted to
avail itself of the income tax holiday under Exec. Order No. 226, as amended,
then it was deemed subject to the ten percent (10%) VAT. It was very likely
therefore that suppliers from the Customs Territory had passed on output VAT to
Toshiba, and the latter, thus, incurred input VAT.

Accordingly, this Court gives due respect to and adopts herein the CTAs findings
that the suppliers of capital goods from the Customs Territory did pass on output
VAT to Toshiba and the amount of input VAT which Toshiba could claim as
credit/refund.

Philippine Acetylene Co., Inc. v. CIR;

20 SCRA 1056, G.R. No. L-19707 August 17, 1967;
En Banc, Castro,J:

FACTS:
Philippine Acetylene Co Inc (PAC) is a corporation engaged in the manufacture and
sale of oxygen and acetylene gases. During the period from June 2, 1953 to June 30,
1958, it made various sales of its products to the National Power Corporation (NPC),
an agency of the PH Government, and to the Voice of America (VOA) an agency of the
US Government. The sales to the NPC amounted to P145,866.70, while those to the
VOA amounted to P1,683, on account of which the Commission of Internal Revenue
assessed against, and demanded from PAC, Inc the payment of P12,910.60 as
deficiency sales tax and surcharge, pursuant to Sec. 186 and Sec 183 of the NIRC
which involves the payment of percentage taxes.
Sec. 186. Percentage tax on sales of other articles.There shall be levied,
assessed and collected once only on every original sale, , intended to transfer
ownership of, or title to, a tax equivalent to seven per centum of the gross
selling price or gross value in money of the articles so sold, bartered exchanged,
or transferred, such tax to be paid by the manufacturer or producer: . . . .

ISSUE:
WON PAC is exempt from paying tax on sales it made to NPC and VOA because both
are exempt from taxation.

HELD:
No, PAC is not exempt.
The tax imposed by section 186 of the NIRC is a tax on the manufacturer or
producer and not a tax on the purchaser except probably in a very remote and
inconsequential sense. Accordingly, its levy on the sales made to tax-exempt entities
like the NPC is permissible. The sales to the VOA are subject to the payment of
percentage taxes under section 186 of the Code. Only sales made "for exclusive use in
the construction, maintenance, operation or defense of the bases," in a word, only
sales to the quartermaster, are exempt under article V from taxation. Sales of goods
to any other party even if it be an agency of the United States, such as the VOA, or
even to the quartermaster but for a different purpose, are not free from the payment
of the tax. Philippine Acetylene is thus liable for P12,910.60 as sales tax and
surcharge.

It may indeed be that the economic burden of the tax finally falls on the purchaser;
when it does the tax becomes a part of the price which the purchaser must pay. It
does not matter that an additional amount is billed as tax to the purchaser. The
method of listing the price and the tax separately and defining taxable gross receipts
as the amount received less the amount of the tax added, merely avoids payment by
the seller of a tax on the amount of the tax. The effect is still the same, namely, that
the purchaser does not pay the tax. He pays or may pay the seller more for the goods
because of the seller's obligation, but that is all and the amount added because of the
tax is paid to get the goods and for nothing else. (Philippine Acetylene Co. vs.
Blaquera, GR L-13728, 1962). But the tax burden may not even be shifted to the
purchaser at all. A decision to absorb the burden of the tax is largely a matter of
economics. Then it can no longer be contended that a sales tax is a tax on the
purchaser.

Phil. Natl Police Multi-Purpose Cooperative, Inc. v. CIR;

CTA Case No. 4845, March 10, 1994;

FACTS:
The petitioner, Philippine National Police Multi Purpose Cooperative, Inc. is a
cooperative composed solely of government employees organized under the
provisions of Republic Act (R.A.) No. 6938, otherwise known as the Cooperative Code
of the Philippines. Petitioner claims for refund of value added tax (VAT) in the
amount of P75, 110.88 for the purchases it had during the last quarter of 1991.

Petitioner filed before the respondent, Commissioner of Internal Revenue, a written

application of refund claiming it is not subject to any government tax under the
internal revenue code. Respondent denied the claim for refund stating that persons
liable to VAT are not the buyers / purchasers but the sellers of goods and those
performing services for fees. Since VAT is an indirect tax, it can be shifted to
customers as an additional cost and no longer a tax. Thus, the shifting of VAT to the
petitioner does not make them the liable thereof.

Petitioner filed an instant Petition for Review claiming that the respondent erred in
holding the refund of tax in his purchases.

ISSUE:
WON petitioner is entitled to refund of Input VAT for purchases it had for the last
quarter of 1991.

RULING:
NO. PNP Multi-Purpose Cooperative Inc. is not entitled to refund of input VAT for its
purchases.

Assuming that the petitioner is VAT exempt, its exemption is limited only to those for
which it is directly liable. Hence, it will be exempt from income tax, documentary
stamp tax, customs duties and even VAT output tax. In other words, petitioner is not
liable for VAT output tax on sales made to its members but is liable for VAT input
passed on to it by its suppliers.

The tax exemption from any government taxes or fees imposed under internal
revenue laws and other laws does not include indirect taxes such as VAT and sales
tax passed on by the seller to the buyer. For a taxpayer to be exempt from indirect
taxes, there must be a clear intention of the Legislature to grant such exemption.

Respondent is correct in saying that the persons liable for the VAT are not the buyers
or purchasers but the sellers or importers of goods or services for a fee. Being the
buyer or purchaser, petitioner has no legal standing to claim for the refund of the
input taxes it paid on its purchases.

TAMBUNTING PAWNSHOP, INC. VS. CIR;

G.R. No. 179085. January 21, 2010;
First Division, Carpio-Morales,J:
Facts:
CIR sent Tambunting Pawnshop, Inc. (Tambunting) an assessment notice for
P3,055,564.34 deficiency value-added tax, P406,092.50 deficiency documentary
stamp tax on pawntickets, P7,201.55 deficiency withholding tax on compensation,
and P21,723.75deficiency expanded withholding tax, all inclusive of interests and
surcharges for the taxable year 1999. Tambunting protested the assessment.
As the protest merited no response, it filed a Petition for Review with the CTA the
ground that Pawnshops are not subject to VAT pursuant to Sec 108 of the
NIRC, which states that a pawnshop is not enumerated as one of those engaged
in sale or exchange of services and Tambuntings pawn tickets are not subject to
documentary stamp tax pursuant to existing laws and jurisprudence.
Issue:
What are tax liabilities of pawnshops?
Ruling:
On the issue of whether pawnshops are liable to pay VAT, the Court finds that
pawnshops should have been treated as non-bank financial intermediaries from the
very beginning, subject to the appropriate taxes provided by law, thus
With no further deferments given by law, the levy, collection and assessment of
the 10% VAT on banks, non-bank financial intermediaries, finance companies,
and other financial intermediaries not performing quasi-banking functions were
finally made effective beginning January 1, 2003;
Finally, with the enactment of R.A. No. 9238 in 2004, the services of banks, non-
bank financial intermediaries, finance companies, and other financial
intermediaries not performing quasi-banking functions were specifically
exempted from VAT, 28 and the 0% to 5% percentage tax on gross receipts on
 other non-bank financial intermediaries was re-imposed under Section 122 of
the Tax Code of 1997.

Since Tambunting is a non-bank financial intermediary, it is subject to 10% VAT for the
tax years 1996 to 2002; however, with the levy, assessment and collection of VAT
from non-bank financial intermediaries being specifically deferred by law, then
Tambunting is not liable for VAT during these tax years. But with the full
implementation of the VAT system on non-bank financial intermediaries starting
January 1, 2003, Tambunting is liable for 10% VAT for said tax year. And beginning
2004 up to the present, by virtue of R.A. No. 9238, Tambunting 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. Since the imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, Tambunting is
not liable for VAT for the tax year 1999.

In dodging liability for documentary stamp tax on its pawn tickets,

Tambunting argues that such tickets are neither securities nor printed
evidence of indebtedness. The argument fails. True, the law does not consider said
ticket as an evidence of security or indebtedness. However, for purposes of taxation,
the same pawn ticket is proof of an exercise of a taxable privilege of concluding a
contract of pledge. There is therefore no basis in petitioner's assertion that a DST is
literally a tax on a document and that no tax may be imposed on a pawn ticket.