SUMMARY OF SIGNIFICANT CTA DECISIONS (JULY 2012)

1. Amounts reflected in the supporting documents must the same with the amount reported as zero-rated sales in its VAT Return for the period subject for refund. The taxpayer filed an appeal for the inaction of Commissioner of Internal Revenue over its administrative claim for tax refund or issuance of a tax credit certificate for its alleged excess and unutilized input value-added tax (VAT) paid on purchases of goods and services attributable to its zero-rated sales of services. To prove that it generated sales subject to 0%, it offered in evidence its statement of accounts, bank credit advices, bank statements, various official receipts issued to its client. The Honorable Court denied the refund and held that upon careful evaluation/verification of the said documents it shows that the amounts reflected thereon do not coincide with the amount reported as zero-rated sales in its VAT Return for the fourth quarter. Likewise, these documents cannot be given credence considering that the same were dated outside the period of claim. In other words, the documents presented may not actually correspond or pertain to the zero-rated sales reported in its Quarterly VAT Return. Accordingly, the Court cannot ascertain the existence of such zero-rated sales. In fine, without valid supporting documents, petitioner's alleged sales to its non-resident clients cannot qualify for VAT zero-rating under Section 1 08(8)(2) of the NIRC of 1997. (Harte-Hanks Philippines, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7975 & 7998, July 2, 2012) 2. Failure on the part of the taxpayer to comply with the 120-day period warrants the dismissal of the judicial claim for lack of jurisdiction as held by the Supreme Court in the Aichi case. Upon the filing of its administrative claim for refund before the Bureau of Internal Revenue on December 23, 2009, petitioner, after merely six (6) days or on December 29, 2009, filed the instant case before the Honorable Court without wait for the lapse of the 120-day period or for the decision of respondent before elevating its case with Court of Tax Appeals. The Honorable Court held that upon the submission of complete documents in support of its claim, the Commissioner of the Bureau of Internal Revenue is given a period of one hundred twenty (120) days within which to either grant or deny the taxpayer's claim for refund. Should the Commissioner deny or fail to act upon the taxpayer's claim, the taxpayer is given a period of thirty (30) days from the denial or inaction to appeal its case before this Court. Failure on the part of the taxpayer to comply with the 120-day period warrants the dismissal of the judicial claim for lack of jurisdiction as held by the Supreme Court in the Aichi case. (Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8017, July 03, 2012)

3. Power to declare a person in contempt of court must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment. The Court in Division dismissed the petition of Pilipinas Shell for indirect contempt in violation of Section 3, paragraphs (b) and (d), Rule 71 of the Rules of Court when they conducted the press conference and circulated the 'press statement' with the intent of bringing the legal battle to the media instead of legally before the Honorable Court in Division, thereby impeding, obstructing, and degrading the administration of justice, and in direct violation of the resolution by Honorable Court's in division refraining both parties from discussing the merits of the case in the media as it may be considered contemptuous by the Court. Thereafter, it filed a Motion for Reconsideration before the Honorable Court en Banc. The Court en Banc upheld the decision of the Court in Division and held that petitioner failed to prove, beyond reasonable doubt, that respondents are liable for indirect contempt. Equally settled is the rule that contempt is not presumed. The presumption of innocence can be overcome only by proof of guilt beyond reasonable doubt, which means proof to the satisfaction of the court and keeping in mind the presumption of innocence that precludes every reasonable hypothesis except that for which it is given. It bears stressing that the power to declare a person in contempt of court must be exercised on the preservative, not vindictive principle, and on the corrective and not retaliatory idea of punishment. (Pilipinas Shell Petroleum Corporation vs. Commissioner Napoleon Morales, as Commissioner of Customs, Juan N. Tan, as Collector of customs of the Port of Batangas, and Simplicio Domingo, CTA EB Case No. 851, July 5, 2012). 4. The word "may" in Section 112 of the 1997 NIRC, relates to the taxpayer's option to appeal or not to appeal, upon the denial of its claim for refund or after the expiration of the 120-day period. However, if the taxpayer opts to appeal, such claim must be filed within the 30-day period given from receipt of the denial or the expiration of the 120-day period. It is the option to appeal which is permissive, however, the period to appeal must be mandatorily complied with. The Court in Division dismissed the Petition for Review filed by the taxpayer praying for the refund of issuance of tax credit. The taxpayer filed a Petition for Review before the Court en Banc contending that that the word "may" in Section 112 of the 1997 NIRC has always been interpreted as being merely permissive and not mandatory. The Honorable Court en Banc held that while the taxpayer is correct that the word "may" is permissive, they do not agree that it relates to the period within which an appeal may be taken to this Court. As the provision is phrased, the word "may" relates to the taxpayer's option to appeal or not to appeal, upon the denial of its claim for refund or after the expiration of the 120-day period. However, if the tax payer opts to appeal, such claim must be filed within the 30-day period given from receipt of the denial or the expiration of the 120-day period. Thus, it is the option to appeal which is permissive, however, the period to appeal must be mandatorily complied with. (Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue, CTA EB Case No. 750, July 5, 2012)

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5. The taxpayer is charged with the burden of proving his entitlement to a claim for refund, failure to do so is lethal to the taxpayer's cause. This case involves taxpayer's claim for refund or issuance of Tax Credit Certificate (TCC) allegedly representing excess capital gains tax (CGT) it erroneously paid on the gain realized from the redemption of Series A Preferred shares by CE Philippines II, Inc. The Honorable Court denied both the petition and its motion for reconsideration which ruled that the taxpayer is charged with the burden of proving his entitlement to a claim for refund, failure to do so is lethal to the taxpayer's cause. Contrary to taxpayer's claim, the Court in Division scrupulously and fastidiously examined each and every piece of documentary evidence presented by petitioner precisely it was able to discern that the transaction was entered into and consummated using Philippine peso for its valuation. (CE Philippines LTD. vs. Commissioner of Internal Revenue, CTA EB Case No. 730, July 6, 2012) 6. In order to qualify for VAT zero-rating under Section 108(B)(7) of the NIRC, as amended, the taxpayer must be able to prove that it is a generation company and that it is engaged in the sale of power or fuel generated through renewable source of energy. The taxpayers Petition Review for the refund or issuance of a tax credit certificate for its excess and unutilized creditable input taxes attributable to zero-rated sales. However, the Honorable Court denied the petition for insufficiency of evidence which prompted the filing of a Motion for New Trial, on the ground that the taxpayer was not able to prove that it is a generation company qualified for VAT zero rating under Section 108(B)(7) of the 1997 NIRC, as amended by R.A. No. 9337, and in relation to Section 4.108-3 of RR No. 16-05 and Section 4, Rule 5 of the Implementing Rules and Regulations of R.A. No. 9136, particularly, its failure to submit its Energy Regulatory Commission (ERC) registration and Certificate of Compliance which will show that it is duly authorized by the ERC to operate facilities used in the generation of electricity. The Honorable Court ruled that in order to qualify for VAT zero-rating under Section 108(B)(7) of the NIRC, as amended, the taxpayer must be able to prove that it is a generation company and that it is engaged in the sale of power or fuel generated through renewable source of energy (Mindanao Geothermal Partnership vs. Commissioner of Internal Revenue, CTA Case No. 7801, July 10, 2012) 7. The deficiency interest should be computed from the date prescribed for the payment of the deficiency tax until full payment thereof. On the other hand, delinquency interest should be computed from the due date prescribed under the Assessment Notice until the full payment thereof. The Honorable Court in Division issued a decision ordering the taxpayer to pay deficiency interest at the rate of twenty percent (20%) per annum on the basic deficiency creditable withholding VAT computed from the date of the filing, until full payment thereof pursuant to Section 249(8) of the NIRC of 1997 and b delinquency interest at the rate of twenty percent (20%) per annum on the total deficiency taxes and on the 20% deficiency interest which have accrued computed from the receipt of the FDDA until full payment thereof, pursuant to Section 249(C) of the NIRC of 1997. However, the taxpayer alleges that deficiency interest under Section 249 (B) of the 1997 NIRC should be computed from date prescribed for the payment of deficiency tax until the last day to pay the same under the Assessment Notice. It also alleges that delinquency interest should be imposed from February 1, 2005 until full payment
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thereof. The Court en Banc affirmed the decision of the Court in Division and ruled that the deficiency interest should be computed from the date prescribed for the payment of the deficiency tax until full payment thereof. On the other hand, delinquency interest should be computed from the due date prescribed under the Assessment Notice until the full payment thereof.1 (Republic Cement Corporation (as surviving corporation in a merger involving FR Cement Corporation vs. Commissioner of Internal revenue, CTA EB Case No. 821, July 18, 2012) 8. A Motion for Reconsideration filed on the Amended Decision of the Court in Division is not a second motion for reconsideration, which is a proscribed under Section 7, Rule 15 of the CTA Rules, in relation to Section 2, Rule 52 of the 1997 Rules of Civil Procedure, as amended The Court in Division rendered a decision granting albeit partially petitioner's claim for refund or issuance of tax credit certificate in the reduced amount representing its unutilized input VAT attributable to zero-rated sales to NPC. Both parties filed their respective Motions for Partial Reconsideration. Thereafter, the Court in Division amended its decision and recalled and set aside its earlier decision and denied the Petition for Review on ground of prematurity. Also, the Court in Division denied taxpayer's Motion for Reconsideration of the amended decision on the ground that it was a second motion for reconsideration prohibited under Rule 15, Section 7 of the Revised Rules of the Court of Tax appeals. The Court En Banc held that Motion for Reconsideration of the amended decision is not the second motion for reconsideration proscribed in Section 7 Rule 15 of the Revised Rules of the Court of Tax Appeals. As the party aggrieved by the ruling laid down in the amended decision, taxpayer has the right to seek for a reconsideration of the adverse decision which effectively superseded the original decision. The alteration in the amended decision is so significant and substantial as to give rise to the corresponding right of petitioner to assail it through a motion for reconsideration. To immediately seek relief to the Court En Banc is to deprive the Court in Division the opportunity to correct itself, if warranted. The amended and clarified decision is an entirely new decision, which supersedes the original decision. Hence, petitioner's Motion for Reconsideration is not a second motion for reconsideration, which is a proscribed under Section 7, Rule 15 of the CTA Rules, in relation to Section 2, Rule 52 of the 1997 Rules of Civil Procedure, as amended.2 (Mirant (Navotas II) Corporation vs. Commissioner of Internal Revenue, CTA EB Case No. 783, July 18, 2012)
1

Honorable Presiding Justice Ernesto D. Acosta on the other hand disagrees with the manner the deficiency interest and delinquency interests are computed because it effectively results in the imposition of at least a 40% interest per annum on the deficiency withholding tax. Clearly, this is not the intent of the law. He argued that an imposition of at least a 40% per annum interest on any unpaid tax is grossly excessive and unjust, one that partakes the nature of an imposition that is penal, rather than compensatory. He believed that the imposition of 40% per annum interest on unpaid tax is grossly excessive and onerous. The proper computation should be that the 20% deficiency interest runs from the date prescribed for the payment of the unpaid or deficiency tax until only the date prescribed by the Final Assessment Notice (FAN) issued by the Commissioner of Internal Revenue. After which, only the delinquency interest (on the deficiency tax, deficiency interest and surcharge) is imposed on the taxpayer which will run until final payment of the total amount due.
2

In the separate opinion of Honorable Associate Lovell R. Bautista, he opined that the Motion for Reconsideration filed before the Court in Division constitutes a violation of Section 7 of Rule 15 of the Revised Rules of the Court of Tax Appeals. A perusal of the arguments in petitioner's Motion for Partial Reconsideration assailing the original decision and the Motion for Reconsideration assailing the amended decision shows that both are mere reiterations which have already been passed upon by the Court in Division. A second motion for reconsideration which contains mere iterations and reiterations of the same points and arguments over and over again becomes, m effect, a mere dilatory strategy and consequently nothing more than pro forma. And since Section 3(b) of Rule 8 of the Revised Rules of the Court of Tax Appeals only provides a party adversely affected by a decision or resolution of a Division of the Court on a Motion for Reconsideration- which in the case at bench
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9. Taxpayer is given a period of 30 days to administratively protest the assessment and 60 days from the filing of protest to submit relevant supporting documents. From receipt of an unfavorable ruling on the protest, the taxpayer may appeal before the CTA within a period of 30 days. In the event of inaction on the protest, the taxpayer may appeal within the same period from the lapse of the 180-day period. On March 18, 2004, the taxpayer protested the FAN and submitted substantial documents in support of its protest. Due to CIR's failure to act on the protest, a petition for review with the CTA's First Division on was filed November 25, 2004 to cancel and set-aside the assessment for the year 2000 which the Court in Division partially granted ordering the taxpayer to pay its 2000 EWT liabilities. The CIR appealed to the Court en Banc contending that the deficiency tax assessment is rendered final, executory and unappealable. The Honorable Court en Banc held that under the law, a taxpayer is given a period of 30 days to administratively protest the assessment and 60 days from the filing of protest to submit relevant supporting documents. From receipt of an unfavorable ruling on the protest, the taxpayer may appeal before the CTA within a period of 30 days. In the event of inaction on the protest, the taxpayer may appeal within the same period from the lapse of the 180day period. It affirmed the decision of the Court in Division which ruled that in view of such reservation to submit additional documents consistently made by petitioner and in accordance with Section 228 of the NIRC, the taxpayer had 60 days from March 18, 2004, or until May 17, 2004 to submit any additional documents, if required or it subsequently deemed necessary. Thereafter, respondent had 180 days, or until November 13, 2004 to rule on the protest. Only upon the lapse of the 180-day period and within the subsequent 30 days or until December 13, 2004, that the taxpayer could exercise its option to appeal respondent's inaction before this Court. Thus, the instant Petition was seasonably filed on November 25, 2004. (Commissioner of Internal Revenue vs. Covanta Energy Philippine Holdings, Inc., CTA EB Case No. 771, July 19, 2012) 10. In prosecution for violation of Section 3602 of the Tariff and Customs of the Philippines, in relation to Article 172 of the Revised Penal Code, it must prove beyond reasonable doubt that the accused in conspiracy with the other accused, made or attempted to make an entry of the alleged imported article through the filing of the said Import Entry at the Bureau of Customs. The accused was alleged to have violated Section 3602 of the Tariff and Customs of the Philippines, in relation to Article 172 of the Revised Penal Code via his conspiracy with two other in willfully, unlawfully and feloniously filing before the Bureau of Customs Import Entry prilled urea in bulk with the custom duties by means of fraudulent statement or declaration, making it appear that the subject shipment is exempt from payment of duties and taxes on the basis of a fraudulent Certificate of Eligibility purportedly issued by the Philippine Carabao Center in favor of Norsk Hydro, to avoid payment of rightful duties and taxes. The accused pleaded not guilty upon arraignment and filed a Motion to Submit Case for Decision based on insufficiency of prosecutions evidence as per records of the case. The Honorable Court held that in the prosecution of violation of Section 3602 of the Tariff and Customs of the Philippines, in relation to Article 172 of the Revised Penal Code, it
the amended decision, denying taxpayer's Motion for Partial Reconsideration filed which was filed fifteen days from receipt of the same within which to elevate the case to the Court En Banc, therefore, the Motion for Reconsideration filed assailing the amended decision did not toll the fifteen-day reglementary period to file its Petition for Review before this Court sitting En Banc. It follows then that the Petition for Review filed by taxpayer before the Court En Banc was appealed out of time.
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must prove beyond reasonable doubt that the accused in conspiracy with the other accused, made or attempted to make an entry of the alleged imported article through the filing of the said Import Entry at the Bureau of Customs. A perusal of the evidence presented by the prosecution would show that it failed to prove that accused Valic acted in conspiracy with the rest of the accused in the commission of the offense charged. The prosecution also failed to prove the existence of Import Entry that was allegedly filed at the Bureau of Customs, as no Import Entry or copy thereof was offered in evidence. Absent the said Import Entry, necessarily, the prosecution also failed to prove that there was an item or article imported in the amount stated in the Information. (People of the Philippines vs. Marivic Briones, David Banga, Benjamin Valic, CTA CRIM CASE NO. 0-158, July 23, 2012 ) 11. What is fatal to the taxpayer's cause is its failure to submit sufficient evidence such as invoices and receipts in support of its claim before the CTA and not its failure of to submit complete documents before the BIR and not before the CTA. The Honorable Court in Division granted the refund or issuance of a tax credit certificate of the taxpayer allegedly representing the 5% final VAT erroneously withheld by Overseas Workers Welfare Administration (OWWA) under the Charter Agreement. The CIR filed Petition for Review before the Court en Banc for failure to submit complete documentary evidence in filing its administrative claim for refund. The argument was anchored in the case of Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue. The Honorable Court en Banc held that upon examination of the Atlas case, the CIRs argument misplaced. In the said case, what the Supreme Court found fatal to the taxpayers cause was its failure to submit sufficient evidence such as invoices and receipts in support of its claim before the CTA. In contrast with the present case, petitioner's allegation was the failure of respondent to submit complete documents before the BIR and not before the CTA. (Commissioner of Internal Revenue vs. Philippine Airlines, Inc., CTA EB Case No. 775, July 24, 2012) 12. Failure of the taxpayer to present documents such as, but limited to, official receipts, sales invoices, detailed general ledger, sales register, reconciliation schedules or any other document whereby the income payments related to the claimed creditable withholding taxes may be traced and confirmed as forming part of the taxable gross income reflected in the Annual Income Tax Returns, is fatal to its claim. The taxpayer filed a Petition for Review before the Court of Tax Appeals for failure of the CIR to act on the its claim for refund of tis excess and unutilized creditable withholding tax for the calendar year 2007. The CIR claimed that alleged excess and unutilized creditable income taxes withheld for taxable year 2007 were not fully substantiated proper documentary evidence, such as, but not limited to certificates of income taxes withheld at source. The Honorable Court ruled that failure of taxpayer to present documents such as, but limited to, official receipts, sales invoices, detailed general ledger, sales register, reconciliation schedules or any other document whereby the income payments related to the claimed creditable withholding taxes may be traced and confirmed as forming part of the taxable gross income reflected in the Annual Income Tax Returns, is fatal to its claim. (Winebrenner & Inigo Insurance Brokers, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8072, July 24, 2012)
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13. The Aichi case merely clarified Section 112 of the NIRC of 1997, which had been in existence as early as January 1, 1998, the effectivity of the NIRC of 1997. The taxpayer filed a Petition for Review seeking the refund of its alleged excess and unutilized input value-added taxes (VAT). The taxpayer contends that the Aichi case should be given prospective application as its retroactive application will violate Article 4 in relation to Article 8 of the Civil Code. The Honorable Court finds no merit on petitioner's contention that the Aichi case should be given prospective application as its retroactive application will violate Article 4 in relation to Article 8 of the Civil Code. The Honorable Court did not apply the Aichi case retroactively. The Aichi case merely clarified Section 112 of the NIRC of 1997, which had been in existence as early as January 1, 1998, the effectivity of the NIRC of 1997. Since this case covers petitioner's judicial claim for refund or tax credit of its excess and unutilized input VAT for the periods of July 1, 2008 to September 30, 2008 and October 1, 2008 to December 31, 2008, which was filed before this Court on September 29, 2010, the Court should apply the law in force at the time petitioner filed its claim for refund or tax credit, that is, Section 112 of the NIRC of 1997, as amended. Consequently, the 120-day and 30-day periods prescribed under Section 112 of the 1997 NIRC, as amended, should have been observed by petitioner. Finally, the taxpayers claims that the retroactive application of the Aichi case will impair taxpayer's vested right to property without due process of law. Petitioner contends that since it has already acquired a right by relying in good faith on the ruling of the Supreme Court prior to the Aichi case that the 120-30 day rule is permissive, this right cannot be taken back without due process of law; otherwise, petitioner will be denied equal protection of the laws as enshrined under Article III of the 1987 Philippine Constitution.3 (Procter & Gamble Asia Pte. Ltd. vs. Commissioner of Internal Revenue, CTA Case No. 8164, July 25, 20114)

In the dissenting opinion of Honorable Associate Justice Lovell R. Bautista, he opined that the factual circumstances present in the case at bench supports the application of the then prevailing jurisprudence at the time the claim was made for where there has been justifiable reliance on Courts decisions, and those who have so relied may be substantially harmed if retroactive effect is given, where the purpose the new rule can be adequately effectuated without giving it retroactive operation, or where retroactive operation might greatly burden the administration of justice, then it is their duty to apply the new rule prospectively. When petitioner filed its claim for refund/ tax credit with respondent on December 9, 2009, and the consequent Petition for Review on September 29, 2010, the then controlling doctrine in this forum is that of the case of Commissioner of Internal Revenue v. Mirant Paghilao Corporation [Formerly Southern Energy Quezon, lnc.). It was merely unfortunate that during the pendency of the case at bench that the Supreme Court issued the case of Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. Albeit the latter ruling is more in accordance with the letter and spirit of Section 112 of the 1997 National Internal Revenue Code, as amended, it would be the height of injustice to impose a new ruling, on the basis of the so-called "adherence to precedence," for the latter doctrine is clearly promulgated after the taxpayer-claimant had faithfully relied and complied with the Court's former ruling.
4

Same ruling was enunciated by the Honorable Court and was also dissented by the Honorable Associate Justice Lovell R. Bautista in the case of Visayas Geothermal Power Company vs. Commissioner of Internal Revenue, CTA EB Case No. 761; The same decision was made in the case of Steag State Power, Inc. (Formerly State Power Development Corporation vs. Commissioner of Internal Revenue, CTA EB Case No. 710).
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14. The provisions of Revenue Memorandum Order No. 53-98 shows that a taxpayer must only submit the requirements which are relevant and applicable to its claim for refund. The Special First Division partially granted the taxpayers claim for refund. The CIR contended that the submission of the complete relevant supporting documents before the BIR in support of its claim for refund is a mandatory as provided in Section 112(D) of the NIRC of 1997. The non-submission of complete supporting documents will not commence the 120-day period for the CIR to decide and thus, it was premature for the taxpayer to bring the instant case to the Court of Tax Appeals and the failure to present evidence in the administrative claim merits the denial of the same through inaction. The Honorable Court en Banc ruled that a perusal of the prescribed requirements in RMO No. 53-98 shows that a taxpayer must only submit the requirements, which are relevant and applicable to its claim for refund. (Commissioner of Internal Revenue vs. Team Sual Corporation (Formerly: Mirant Sual Corporation), CTA EB Case No. 768, July 27, 2012) 15. While it appears that services of "all other franchise grantees" are subject to VAT, however, those transactions which are exempt by special laws to be exempt from VAT being included in the Exempt transactions shall be exempt from VAT and those services rendered to persons or entities whose exemption under special laws is subject to zero percent (0%) rate. The Commissioner of Internal Revenue filed a Petition for Review of the decision of the Court in Division cancelling the deficiency value-added tax of the taxpayers transaction with the Philippine Amusement and gaming Corporation (PAGCOR). The taxpayer claims that the transactions involve VAT at zero percent (0%) rate and that PAGCOR is a tax-exempt entity under special laws. Thus, PAGCOR being exempt from VAT, the taxpayer concludes that it extends to its transaction thereto. The CIR argues that PAGCOR, a holder of a franchise under Presidential Decree 186911 , was subjected to 1 0% VAT on sale or exchange of services by virtue of RA 7716 which amended Section 102 of the Old Tax Code. Accordingly, the CIR claims that RA 7716, which was later amended by R.A. 8241 12 and by the 1997 National Internal Revenue Code (NIRC), states that all LEGISLATIVE FRANCHISES become subject to the 1 0% VAT on sale or exchange of services, except only those franchise grantees of radio and television and broadcasting whose annual gross receipts of the preceding year does not exceed ten million pesos and which did not opt for VAT registration and electric, gas and water utilities. Thus, the services of the casino operation, being not included among the exceptions and that PAGCOR is included in services of "all other franchisee grantee", would be subject to VAT. Stated differently, exemption granted to PAGCOR with regard to VAT on sale or exchange of services is concerned. The Honorable Court en Banc held that while it appears that services of "all other franchise grantees" are subject to VAT, however, those transactions which are exempt by special laws to be exempt from VAT being included in the Exempt transactions shall be exempt from VAT and those services rendered to persons or entities whose exemption under special laws is subject to zero percent (0%) rate. The phrase "and all other franchise grantees", which is heavily relied upon by the CIR allegedly subjecting PAGCOR to VAT, must be read in conjunction with the provisions relating to "Transactions Subject to Zero Rate" and "Exempt Transactions". (CIR vs. Grand Plaza Hotel Corporation CTA EB Case No. 786 (CTA Case No. 7794, July 27, 2012)

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16. For actions for refund of excess corporate income tax, the two (2)-year prescriptive should be counted from the filing of the final adjustment return because it is only during that date that the exact tax liability or refundability of the tax can be determined. The taxpayer filed on April 14, 2012 a Petition for Review before the CTA for failure to act upon its administrative claim for refund or issuance of tax credit certificate for the alleged excess withholding tax for taxable years 2007 and 2008 which was filed on March 2010. The BIR contended that the petition must be dismissed for lack of cause of action on the part of the taxpayer for non-exhaustion of administrative remedies. Considering that the petition for review was filed on April 14, 2010 or after fourteen (14) days from March 31, 2010 when the application for tax refund/credit was filed, the taxpayer has not given the Commissioner the opportunity to decide on the claim.. The Honorable Court held that for actions for refund of excess corporate income tax, the two (2)-year prescriptive should be counted from the filing of the final adjustment return because it is only during that date that the exact tax liability or refundability of the tax can be determined. Applying the foregoing provisions in the case at bench, the present claim covers taxable years 2007 and 2008 for which petitioner filed its Annual Income Tax Returns on April 15, 2008 and April 17, 2009, respectively. Counting two years from these dates, taxpayer's administrative claim filed on March 31, 201030 and the subsequent appeal via a Petition for Review filed before this Court on April 14, 2010, were therefore timely filed within the two-year prescriptive period. (Mckinsey & Co., (Phils.) vs. Commissioner of Internal Revenue, CTA Case No. 8078, July 30, 2012) 17. A VAT-registered person claiming VAT zero-rated direct export sales must present at least three (3) types of documents, to wit: (a) the sales invoice as proof of sale of goods; (b) the export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and (c) bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services. The taxpayer filed an administrative for refund representing excess or unutilized input taxes for shipments of its mineral products to its foreign buyers. The CIR failed to act on its claim, thus a Petition for Review was filed before the Court of Tax Appeals. The CIR contended that in order to validly claim for tax refund, it is imperative for taxpayer to prove its compliance on the invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT pursuant to the provisions of Section 113 and 114 of the National Internal Revenue Code (NIRC) of 1997, as amended. Failure to comply with the invoicing requirements on the documents supporting the sale of goods and services will result in the disallowance of the claim for input tax. The Honorable Court ruled that Section 106 (A)(2)(a)(1) of the 1997 NIRC, should not be taken in isolation but should be read in conjunction with Section 113 of the same Code as implemented by Section 4.113-1 of Revenue Regulations (RR) No. 16-2005. Thus, pursuant to the said provisions, in relation to Section 113(A)(1), (B)(1)(2)(C)20 of the same Code and Sections 4.113-1(A)(1), B(1) and (2)(C) of Revenue Regulations No. 16-2005, any VAT-registered person claiming VAT zero-rated direct export sales must present at least three (3) types of documents, to wit: (a) the sales invoice as proof of sale of goods; (b) the export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and (c) bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable
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foreign currency or its equivalent in goods and services. (Philex Mining Corporation Inc. vs. Commissioner of Internal Revenue, CTA CASE NO. 8284, July 30, 2012) 18. Importer of petroleum products subsequently sold an exempt entity is not entitled for any claim for refund of the excise tax paid on the imported petroleum products. The taxpayer filed a Petition for Review seeking for the refund or issuance of Tax Credit Certificate (TCC) representing excise taxes allegedly paid on its importation of petroleum products which was subsequently sold to Clark Development Corporation (CDC) contending that excise tax, being an indirect tax, could be passed on to the customer or end-user except when the latter is by law granted tax exemptions from direct or indirect taxes pursuant to Section 135 of the NIRC of 1997, as amended. The CIR, on the other hand, counters that there is no provision in the NIRC of 1997, as amended, that expressly exempts importers of petroleum products from excise tax. Under the Tax Code, only locally produced or manufactured goods which are actually exported may be granted tax credit or refund for excise taxes paid thereon, but which circumstance is not obtaining in the case at bar. The Honorable Court ruled that importer of petroleum products subsequently sold an exempt entities is not entitled for any claim for refund of the excise tax paid on the imported petroleum products. Admittedly, the petroleum products sold by the taxpayer to CDC were not locally produced or manufactured but imported goods. The fact of importation is shown in all the importation documents presented by taxpayer itself to the Court. In other words, its claim for refund cannot be granted. (Chevron Philippines Inc. vs. Commissioner of Internal Revenue, CTA CASE NO. 7939, July 31, 2012)

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