Commissioner of Internal Revenue v.
Seagate Technology Respondent, as an exempt entity, can neither be directly charged
G.R. No. 153866. February 11, 2005
FACTS:
Respondent is a resident foreign corporation duly registered with
the Securities and Exchange Commission to do business in the
Philippines and is registered with the Philippine Export Zone
Authority (PEZA). The respondent is Value Added Tax-registered
entity and filed for the VAT returns. An administrative claim for
refund of VAT input taxes in the amount of P28,369,226.38 with
supporting documents (inclusive of the P12,267,981.04 VAT input
taxes subject of this Petition for Review), was filed on 4 October
1999 and no final action has been received by the respondent from
the petitioner on the claim for VAT refund. Hence, petitioner is
sued in his official capacity. The Tax Court rendered a decision
granting the claim for refund and CTA affirmed the decision.
Hence, the present petition for certiorari.
ISSUE:
Whether or not respondent is entitled to the refund or issuance of
Tax Credit Certificate in the amount of P12,122,922.66
representing alleged unutilized input VAT paid on capital goods
purchased for the period April 1, 1998 to June 30, 1999
HELD:
The Petition is unmeritorious. As a PEZA-registered enterprise
within a special economic zone, respondent is entitled to the fiscal
incentives and benefit provided for in either PD 66 or EO 226. It
shall, moreover, enjoy all privileges, benefits, advantages or
exemptions under both Republic Act Nos. (RA) 7227 and 7844.
Respondent as an entity is exempt from internal revenue laws and
regulations. This exemption covers both direct and indirect taxes,
stemming from the very nature of the VAT as a tax on
consumption, for which the direct liability is imposed on one
person but the indirect burden is passed on to another.
for the VAT on its sales nor indirectly made to bear, as added cost
to such sales, the equivalent VAT on its purchases. The exemption
is both express and pervasive, among other reasons, since RA
7916 states that no taxes, local and national, shall be imposed
on business establishments operating within the ecozone. Even
though the VAT is not imposed on the entity but on the
transaction, it may still be passed on and, therefore, indirectly
imposed on the same entity -- a patent circumvention of the law.
That no VAT shall be imposed directly upon business
establishments operating within the ecozone under RA 7916 also
means that no VAT may be passed on and imposed
indirectly. Quando aliquid prohibetur ex directo prohibetur et per
obliquum. When anything is prohibited directly, it is also
prohibited indirectly. Special laws expressly grant preferential tax
treatment to business establishments registered and operating
within an ecozone, which by law is considered as a separate
customs territory. As such, respondent is exempt from all internal
revenue taxes, including the VAT, and regulations pertaining
thereto. Thus, the petition is denied and the decision of lower
courts affirmed.
Mindanao II Geothermal
Partnership vs. CIR G.R.
193301, 11 March 2013
Facts:
Mindanao II Geothermal Partnership sold its fully depreciated Nissan
Patrol, CIR said that the sale is subject to VAT. Mindanao, in its defen
se, asserted that the sale is not incidental transaction in the course of it period for filing a tax refund or
s business, hence, an isolated transaction that should not have been su credit of unutilized input VAT as
bject to VAT. provided in Section 112 of the 1997 Tax
Code, as follows:
Issue:
Whether or not an isolated transaction can be an incidental transaction (1) An administrative claim must be filed with
for purposes of VAT liability. the CIR within two years after the close
of the taxable quarter when the zero-
rated or effectively zero-rated sales
Ruling:
were made.
Yes, just because a transaction is said to be an isolated one, it does not
follow that it cannot be an incidental transaction. (2) The CIR has 120 days from the date of
submission of complete documents in
Mindanao IIs business is to convert the steam supplied to it by PN support of the administrative claim
OC-EDC into electricity and to deliver the electricity to NPC. In the c within which to decide whether to grant a
ourse of business, Mindanao II bought and eventually sold a Nissan P refund or issue a tax credit
atrol. Prior to the sale, the Nissan Patrol was part of Mindanao IIs p certificate. The 120-day period may
roperty, plant and equipment. Therefore, the sale of the Nissan Patrol i extend beyond the two-year period
s an incidental transaction made in the course of business which shoul from the filing of the administrative
d be liable for VAT. claim if the claim is filed in the later
part of the two-year period. If the 120-
MINDANAO ll GEOTHERMAL PARTNERSHIP v. day period expires without any decision
COMMISSIONER OF INTERNAL REVENUE, G.R. from the CIR, then the administrative
No. 193301 and G.R. No. 194637, March claim may be considered to be denied by
11, 2013 inaction.

Taxation; prescriptive periods to file VAT (3) A judicial claim must be filed with the
refund. We summarize the rules on the CTA within 30 days from the receipt of
determination of the prescriptive the CIRs decision denying the
 VAT is a tax on transactions, imposed on every stage of distribution process on the
administrative claim or from the sale, barter, exchange of goods or property, and on the performance of services,
expiration of the 120-day period without even in the absence of profit attributable thereto.
any action from the CIR. NOTE: PERSON LIABLE TO VAT:

(4) All taxpayers, however, can rely on BIR Any person who in the course of trade or business, sells, barters,
exchanges, leases goods or properties, renders services, and any person who
Ruling No. DA-489-03 from the time of its imports goods. (Sec. 105 of NIRC)
issuance on 10 December 2003 up to its
reversal by this Court in Aichi on 6
October 2010, as an exception to the
mandatory and jurisdictional 120+30 day
DIAZ VS. SECRETARY OF
periods. FINANCE- Value Added Tax
COMMISIONER OF INTERNAL REVENUE vs. COURT OF APPEALS
G.R. No. 125355 March 30, 2000 (VAT)
Facts: May toll fees collected by tollway operators
The BIR issued an assessment to private respondent corporation for the deficiency be subject to VAT?
value-added tax for taxable year 1988. The corporation averred that since it was
not engaged in business, it was not liable to pay VAT. Furthermore, it contended
that the term in the course of trade or business required that the business
be carried on with a view of profit. Since the services it offers were on a non-
YES.
profit basis, thus, not engaged in business. The petitioner however avers that
VAT is a tax on the value added by the performance of the service. It is immaterial (1) VAT is imposed on all kinds of services and tollway operators
whether profit is derived in rendering the service. who are engaged in constructing, maintaining, and operating
Issue:
expressways are no different from lessors of property, transportation
contractors, etc.
Does the phrase in the course of trade or business imply that the transactions
should be motivated by profit?

Held:
No. The phrase in the course of trade or business means the regular conduct or
pursuit of a commercial or an economic activity, including transactions incidental
thereto, by any person regardless of whether or not the person engaged therein is a
non-stock, non-profit organization or government entity.
(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 HOLDINGS, INC. - Value
on VAT-exempt transactions.
Added Tax on Cinemas
(4) The toll fee is not a users tax and thus it is permissible to impose ISSUE:
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 Are the gross receipts derived by operators or proprietors of
the BIR and do not go the general coffers of the government. Toll fees cinema/theater houses from admission tickets subject to VAT?
are collected by private operators as reimbursement for their costs and
expenses with a view to a profit while taxes are imposed by the HELD:
government as an attribute of its sovereignty. Even if the toll fees
NO. While (1) the enumeration under Section 108 on the VAT-taxable
were treated as users tax, the VAT can not be deemed as a tax on tax
services is not exhaustive and (2) the said list includes the lease of
since the VAT is imposed on the tollway operator and the fact that it
motion picture films, films, tapes and discs, the said activity however
might pass-on the same to the tollway user, it will not make the latter
is not the same as showing or exhibition of motion pictures or films.
directly liable for VAT since the shifted VAT simply becomes part of
Thus, since the showing or exhibition of motion pictures or films is
the cost to use the tollways.
not in the enumeration, the CIR must show that it falls under the
phrase similar services.
(5) The assertion that the VAT imposed is not administratively
feasible given the manner by which the BIR intends to implement the
The repeal of the Local Tax Code by the LGC of 1991 is not a legal
VAT (i.e., rounding off the toll rates and putting any excess collection
basis for the imposition of VAT on the gross receipts of cinema/theater
in an escrow account) is not enough to invalidate the law. Non-
operators or proprietors derived from admission tickets. The removal
observance of the canon of administrative feasibility will not render a
of the prohibition (on the national government to tax certain
tax imposition invalid except to the extent that specific constitutional
activities) under the Local Tax Code did not grant nor restore to the
or statutory limitations are impaired.
national government the power to impose amusement tax on
cinema/theater operators or proprietors. Neither did it expand the
COMMISSIONER OF INTERNAL coverage of VAT.

REVENUE vs. SM PRIME

TAMBUNTING PAWNSHOP, INC. intermediaries starting January 1, 2003, Petitioner is liable for 10%
Value Added Tax for said tax year. And beginning 2004 up to the
vs. COMMISSIONER OF 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
INTERNAL REVENUE- Value 5%, as the case may be.

Added Tax, Documentary (2) YES. Petitioner's argument against liability for surcharges and
Stamp Tax 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
FACTS: that pawn tickets are not subject to documentary stamp taxes was
found to be meritorious. Good faith and honest belief that one is not
Petitioner was assessed for deficiency Value Added Tax and subject to tax on the basis of previous interpretations of government
Documentary Stamp Tax on the premise that, for the Value Added agencies tasked to implement the tax law are sufficient justification to
Tax, it was engaged in the sale of services. delete the imposition of surcharges and interest.

ISSUES: TAMBUNTING PAWNSHOP, INC. v.

(1) Is Petitioner liable for the Value Added Tax?
(2) Can the imposition of surcharge and interest be waived on the COMMISSIONER OF INTERNAL
imposition of deficiency Documentary Stamp Tax?
REVENUE. G.R. No. 179085.
HELD: January 21, 2010
(1) NO. Since Petitioner is considered a non-bank financial FACTS:
intermediary, it is subject to 10% VAT for the tax years 1996 to 2002 Petitioner was issued an assessment for deficiency VAT for the
but since the collection of Value Added Tax from non-bank financial taxable year of 1999. Petitioner, after his protest with the CIR
intermediaries was specifically deferred by law, Petitioner is not liable merited no response, it filed a Petition for Review with the CTA
for Value Added Tax during these tax years. With the full raising that pawnshops are not subject to VAT under the NIRC and
implementation of the Value Added Tax system on non-bank financial that pawn tickers are not subject to documentary stamp tax.
The CTA ruled that petitioner is liable for the deficiency VAT and
the documentary stamp tax.
The petitioner argues that a pawnshop is not enumerated as one
of those engaged in sale or exchange of services in Section 108 of
the National Internal Revenue Code and citing the case
of Commissioner of Internal Revenue v. Michel J. Lhuillier
Pawnshops, Inc. as basis.
ISSUE: Whether petitioner is liable for the deficiency VAT.
Whether the petitioner is liable for the documentary
stamp tax.
RULING:
YES. The Court cited the case of First Planters Pawnshop,
Inc. v. Commissioner of Internal Revenue. In the
foregoing case, since the imposition of VAT on
pawnshops, which are non-bank financial intermediaries,
was deferred for the tax years 1996 to 2002, petitioner
is not liable for VAT for the tax year 1999.
NO. Sections 195 of the NIRC provides that on the pledge
of personal property, there shall be collected a
documentary stamp tax. The Court held in Michel J.
Lhuillier Pawnshop, Inc. v. Commissioner of Internal
Revenue that the documentary stamp tax is an excise
tax on the exercise of a right or privilege and that pledge
is among the privileges, the exercise of which is subject
to documentary stamp taxes. For purposes of taxation,
pawn tickets are proof of an exercise of a taxable
privilege of concluding a contract of pledge.
COMMISSIONER OF INTERNAL
REVENUE v. PHILIPPINE
HEALTH CARE PROVIDERS,
INC. G.R. No. 168129.
April 24, 2007
FACTS:
On 1987, CIR issued VAT Ruling No. 231-88 stating that Philhealth,
as a provider of medical services, is exempt from the VAT
coverage. When RA 8424 or the new Tax Code was implemented it
adopted the provisions of VAT and E-VAT. On 1999, the BIR sent
Philhealth an assessment notice for deficiency VAT and
documentary stamp taxes for taxable years 1996 and 1997. After
CIR did not act on it, Philhealth filed a petition for review with the
CTA. The CTA withdrew the VAT assessment. The CIR then filed an
appeal with the CA which was denied.
ISSUES:
1. Whether Philhealth is subject to VAT.
2. Whether VAT Ruling No. 231-88 exempting Philhealth from
payment of VAT has retroactive application.
RULING:
 YES. Section 103 of the NIRC exempts taxpayers engaged in the
performance of medical, dental, hospital, and veterinary services
PHILIPPINE AMUSEMENT AND
from VAT. But, in Philhealth's letter requesting of its VAT-exempt
status, it was held that it showed Philhealth provides medical
GAMING CORPORATION VS
service only between their members and their accredited
hospitals, that it only provides for the provision of pre-need health
THE BUREAU OF INTERNAL
care services, it contracts the services of medical practitioners and
establishments for their members in the delivery of health REVENUE
services.
Thus, Philhealth does not fall under the exemptions provided in
The Philippine Amusement and Gaming Corporation (PAGCOR) was
Section 103, but merely arranges for such, making Philhealth not created by P.D. No. 1067-A in 1977. Obviously, it is a government
VAT-exempt. YES. Generally, the NIRC has no retroactive owned and controlled corporation (GOCC).
application except when:
In 1998, R.A. 8424 or the National Internal Revenue Code of 1997
1. where the taxpayer deliberately misstates or omits material facts
from his return or in any document required of him by the Bureau
(NIRC) became effective. Section 27 thereof provides that GOCCs
of Internal Revenue; are NOT EXEMPT from paying income taxation but it exempted the
2. where the facts subsequently gathered by the Bureau of Internal following GOCCs:
Revenue are materially different from the facts on which the ruling 1. GSIS
is based, or
3. where the taxpayer acted in bad faith. 2. SSS
3. PHILHEALTH
The Court held that Philhealth acted in good faith. The term health
maintenance organization was first recorded in the Philippine 4. PCSO
statute books in 1995. It is apparent that when VAT Ruling No. 5. PAGCOR
231-88 was issued in Philhealth's favor, the term health
maintenance organization was unknown and had no significance But in May 2005, R.A. 9337, a law amending certain provisions of
for taxation purposes. Philhealth, therefore, believed in good faith R.A. 8424, was passed. Section 1 thereof excluded PAGCOR from the
that it was VAT exempt for the taxable years 1996 and 1997 on the exempt GOCCs hence PAGCOR was subjected to pay income
basis of VAT Ruling No. 231-88. The rule is that the BIR rulings
have no retroactive effect where a grossly unfair deal would result taxation. In September 2005, the Bureau of Internal Revenue issued
to the prejudice of the taxpayer. the implementing rules and regulations (IRR) for R.A. 9337. In the
said IRR, it identified PAGCOR as subject to a 10% value added tax
(VAT) upon items covered by Section 108 of the NIRC (Sale of
Services and Use or Lease of Properties).
PAGCOR questions the constitutionality of Section 1 of R.A. 9337 as
well as the IRR. PAGCOR avers that the said provision violates the
equal protection clause. PAGCOR argues that it is similarly situated
with SSS, GSIS, PCSO, and PHILHEALTH, hence it should not be
excluded from the exemption.
ISSUE: Whether or not PAGCOR should be subjected to income
taxation.
HELD: Yes. Section 1 of R.A. 9337 is constitutional. It was the
express intent of Congress to exclude PAGCOR from the exempt
GOCCs hence PAGCOR is now subject to income taxation.
PAGCORs contention that the law violated the constitution is not
tenable. The equal protection clause provides that all persons or things
similarly situated should be treated alike, both as to rights conferred
and responsibilities imposed.
The general rule is, ALL GOCCs are subject to income taxation.
However, certain classes of GOCCs may be exempt from income
taxation based on the following requisites for a valid classification
under the principle of equal protection:
1) It must be based on substantial distinctions.
2) It must be germane to the purposes of the law.
3) It must not be limited to existing conditions only.
4) It must apply equally to all members of the class.
When the Supreme Court looked into the records of the deliberations
of the lawmakers when R.A. 8424 was being drafted, the SC found
out that PAGCORs exemption was not really based on substantial
distinctions. In fact, the lawmakers merely exempted PAGCOR from
income taxation upon the request of PAGCOR itself. This was
changed however when R.A. 9337 was passed and now PAGCOR is
already subject to income taxation.
Anent the issue of the imposition of the 10% VAT against PAGCOR,
the BIR had overstepped its authority. Nowhere in R.A. 9337 does it
state that PAGCOR is subject to VAT. Therefore, that portion of the
IRR issued by the BIR is void. In fact, Section 109 of R.A. 9337
expressly exempts PAGCOR from VAT. Further, PAGCORs charter
exempts it from VAT.
To recapitulate, PAGCOR is subject to income taxation but not to
VAT.
PHILIPPINE AMUSEMENT AND
GAMING CORPORATION VS.
BUREAU OF INTERNAL
REVENUE
ISSUE:
Is Republic Act 9337 constitutional insofar as it excluded PAGCOR
from the enumeration of GOCCs exempt from the payment of
corporate income tax?
HELD:
YES. The original exemption of PAGCOR from corporate income tax
was not made pursuant to a valid classification based on substantial
distinctions so that the law may operate only on some and not on all.
Instead, the same was merely granted due to the acquiescence of the
House Committee on Ways and Means to the request of PAGCOR.
The argument that the withdrawal of the exemption also violates the
non-impairment clause will not hold since any franchise is subject to
amendment, alteration or repeal by Congress.
However, the Court made it clear that PAGCOR remains exempt from
payment of indirect taxes and as such its purchases remain not subject
to VAT, reiterating the rule laid down in the Acesite case.
SILICON PHILIPPINES INTEL PHILIPPINES MANUFACTURING VS. CIR
Facts:
Silicon Philippines, Inc. is a corporation duly organized and existing
under the laws of the Philippines. It is registered with the BIR das a
VAT-taxpayer and with the BOI as a preferred pioneer enterprise.
Then, on May, 1999, Silicon filed with the CIR an application for
credit/refund of unutilized input VAT for the period of Oct. 1, 1998
to Dec. 31, 1998.
Due to the inaction of the CIR, Silicon, on Dec. 27, 2000, filed a
Petition for Review with the CTA Division. Silicon alleged that the
4th quarter of 1998, it generated and recorded zero-rated export
sales paid to Silicon in acceptable foreign currency and that for the
said period, Silicon paid input VAT in the total amount which have
not been applied to any output VAT.
The CIR, on the other hand, raised the defenses that: 1. Silicon did
not show that it complied with the provisions of Sec. 229 of the Tax
Code; 2. That claims for refund are construed strictly against the
claimant similar to the nature of exemption from taxes; and that
Silicon failed to prove that is entitled for refund.
The CTA Division granted Silicons claim for refund of unutilized
input VAT on capital goods. However, it denied Silicons claim for
credit/refund of input VAT attributable to its zero-rated export
sales. It is because Silicon failed to present an Authority to Print
(ATP) from the BIR neither did it print on its export sales invoices
the ATP and the word zero-rated.
Silicon moved for reconsideration claiming that it is not required to
secure an ATP since it has a Permit to Adopt Computerized
Accounting Documents such as Sales Invoice and Official Receipts
from the BIR. And that the printing of the word zero-rated on its
export sales invoices is not necessary because all its finished
products are exported to its mother company, Intel Corp., a non-
resident corporation and a non-VAT registered entity.
ISSUE:
W/N Silicon entitled to claim from refund of Input VAT attributable
to its zero-rated sales.
Ruling:
no.
There are two types of input VAT credits:
1. A credit/refund of input VAT attributable to zero-rated sales
under Sec. 112(A) of the NIRC; and
2. A credit/refund of input VAT on capital goods pursuant to
Sec. 112(B) of the same Code.
To claim for credit/refund of input VAT attributable to zero-rated
sales, Sec. 112(A) laid down 4 requisites:
1. The taxpayer must be a VAT-registered;
2. The taxpayer must be engaged in sales which are zero-
rated or effectively zero-rated;
3. The claim must be filed within 2 years after the close of the
taxable quarter when such sales were made; and
4. The creditable input tax due or paid must be attributable to
such sales, except the transitional input tax, to the extent
that such input tax has not been applied against the output
tax.
A. Printing the ATP on the invoices or receipts is not required.
In a case, the SC ruled that ATP need not be reflected or
indicated in the invoices or receipts because there is no law or
regulation requiring it.
Thus, failure to print the ATP on the invoices or receipts should
not result in the outright denial of a claim or the invalidation of
the invoices or receipts for purposes of claiming a refund.
B. ATP must be secured from the BIR
Sec. 238 of the NIRC expressly requires persons engaged in
business to secure an ATP from the BIR prior to printing
invoices or receipts. Failure to do so, makes the person liable
under Sec. 264 of the Tax Code.
W/N a claimant for unutilized input VAT on zero-rated sales is
required to present proof that it has secured an ATP from the BIR
prior to the printing of its invoices or receipts.
YES. Since ATP is not indicated in the invoices or receipts, the only
way to verify whether the invoices or receipts are duly registered is
by requiring the claimant to present its ATP from the BIR. Without
which, the invoices would have no probative value for the purpose
of refund.
Failure to print the word zero-rated on the sales invoices is fatal
to a claim for refund of input VAT.
In compliance with Sec. 4.108-1 of RR 7-95, requiring the printing
of the word zero-rated on the invoice covering zero-rate sales is
essential as this regulation proceeds from the rulemaking authority
of the Secretary of Finance under Sec. 244 of the NIRC.
In this case, Silicon failed to present its ATP and to print the word
zero-rated on its export sales invoices.
Thus, the claim for credit/refund of input VAT attributable to its
zero-rated sales must be denied.
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 supplies.