FORT BONIFACIO DEVELOPMENT CORPORATION v.

COMMISSIONER OF
INTERNAL REVENUE and REVENUE DISTRICT OFFICER
G.R. No. 175707 November 19, 2014

Facts:

The Court has consolidated these three petitions as they involve the same parties, similar facts
and common questions of law.

Petitioner FBDC is a domestic corporation duly registered and existing under Philippine laws. Its
issued and outstanding capital stock is owned in part by the Bases Conversion Development
Authority. FBDC and Commissioner entered into a Stipulation of Facts, Documents, and Issue
before the CTA for each case. It was established that petitioner is engaged in the development
and sale of real property. It is the owner of, and is developing and selling, parcels of land within
a "newtown" development area known as the Fort Bonifacio Global City located within the
former military camp known as Fort Bonifacio, Taguig, Metro Manila.

In May 1996, petitioner commenced developing the Global City, and since October 1996, had
been selling lots to interested buyers. At the time of acquisition, value-added tax (VAT) was not
yet imposed on the sale of real properties. Republic Act No. 7716(the Expanded Value-Added
Tax [E-VAT] Law), which took effect on January 1, 1996, restructured the VAT system by further
amending pertinent provisions of the National Internal Revenue Code (NIRC). Section 100 of
the old NIRC was so amended by including "real properties" in the definition of the term "goods
or properties," thereby subjecting the sale of "real properties" to VAT.

On the basis of Section 105 of the NIRC, petitioner claims a transitional or presumptive input tax
credit of 8% of P71,227,503,200.00, the total value of the real properties listed in its inventory,
or a total input tax credit of P5,698,200,256.00. After the value of the real properties was
reduced due to a reconveyance by petitioner to BCDA of a parcel of land, petitioner claims that
it is entitled to input tax credit in the reduced amount of P4,250,475,000.48.

What petitioner seeks to be refunded are the actual VAT payments made by it in cash, which it
claims were either erroneously paid by or illegally collected from it. Each Claim for Refund is
based on petitioner’s position that it is entitled to a transitional input tax credit under Section 105
of the old NIRC, which more than offsets the aforesaid VAT payments.
G.R. No. 180035

The facts are as follows:

Per VAT returns filed by petitioner with the BIR, for the second quarter of 1998, petitioner
derived the total amount of P903,427,264.20 from its sales and lease of lots, on which the
output VAT payable to the Bureau of Internal Revenue was P90,342,726.42.

The VAT returns filed by petitioner likewise show that to pay said amount of P90,342,726.42
due to the BIR, petitioner made cash payments totalling P77,151,020.46 and utilized its regular
input tax credit of P39,878,959.37 on purchases of goods and services.

On November 22, 1999, petitioner filed with the BIR a claim for refund of the amount of
P77,151,020.46 which it paid as value added tax for the first quarter of 1998.
Earlier, on October 8, 1998 and November 17, 1998, February 11, 1999, May 11, 1999, and
September 10, 1999, based on similar grounds, petitioner filed with the BIR claims for refund of
the amounts of P269,340,469.45, P359,652,009.47, P486,355,846.78, P347,741,695.74, and
P15,036,891.26, representing value-added taxes paid by it on proceeds derived from its sales
and lease of lots for the quarters ended December 31, 1996, March 31, 1997, June 30, 1997,
September 30, 1997, and December 31, 1997, respectively. After deducting these amounts of
P269,340,469.45, P359,652,009.47, P486,355,846.78, P347,741,695.74, and P15,036,891.26
from the total amount of P5,698,200,256.00 claimed by petitioner as input tax credit, the
remaining input tax credit more than sufficiently covers the amount of P77,151,020.46 subject of
petitioner’s claim for refund of November 22, 1999. But no action had been taken by CIR.

G.R. No. 181092

The facts summarized below are found in the parties’ Stipulation of Facts, Documents and Issue
in CTA Case No. 5694: Per VAT returns filed by petitioner with the BIR, for the fourth quarter of
1996, petitioner derived the total amount of P3,498,888,713.60 from its sales and lease of lots,
on which the output VAT payable to the Bureau of Internal Revenue wasP318,080,792.14.

The VAT returns filed by petitioner likewise show that to pay said amount of P318,080,792.14
due to the BIR, petitioner made cash payments sum of P269,340,469.45 and utilized (a) part of
the total transitional/presumptive input tax credit of P5,698,200,256.00 being claimed by it to the
extent of P28,413,783.00; and (b) its regular input tax credit of P20,326,539.69 on purchases of
goods and services.

On October 8, 1998 petitioner filed with the BIR a claim for refund of the amounts of
P269,340,469.45, which it paid as value added tax but still no action had been taken by CIR.

Issue:

Whether or not petitioner is entitled to a refund of the amounts of: 1) P486,355,846.78 in G.R.
No. 175707, 2) P77,151,020.46 for G.R. No. 180035, and 3) P269,340,469.45 in G.R. No.
181092, which it paid as value-added tax, or to a tax credit for said amounts.

Ruling:

As previously stated, the issues here have already been passed upon and resolved by this
Court En Banc twice, in decisions that have reached finality, and we are bound by the doctrine
of stare decisis to apply those decisions to these consolidated cases, for they involve the same
facts, issues, and even parties.

As regards the main issue, the Court conclusively held that petitioner is entitled to the 8%
transitional input tax on its beginning inventory of land, which is granted in Section 105 (now
Section 111[A]) of the NIRC, and granted the refund of the amounts petitioner had paid as
output VAT for the different tax periods in question.116

It is clear, that under RR 6-97, the allowable transitional input tax credit is not limited to
improvements on real properties. The particular provision of RR 7-95 has effectively been
repealed by RR 6-97 which is now in consonance with Section 100 of the NIRC, insofar as the
definition of real properties as goods is concerned. The failure to add a specific repealing clause
would not necessarily indicate that there was no intent to repeal RR 7-95. The fact that the
afore-quoted paragraph was deleted created an irreconcilable inconsistency and repugnancy
between the provisions of RR 6-97 and RR 7-95.

As pointed out in Our Decision of April 2, 2009, to give Section 105 a restrictive construction
that transitional input tax credit applies only when taxes were previously paid on the properties
in the beginning inventory and there is a law imposing the tax which is presumed to have been
paid, is to impose conditions or requisites to the application of the transitional tax input credit
which are not found in the law. The courts must not read into the law what is not there. To do so
will violate the principle of separation of powers which prohibits this Court from engaging in
judicial legislation.

Thus, we find that petitioner is entitled to a refund of the amounts of: 1) P486,355,846.78 in
G.R. No. 175707, 2) P77,151,020.46 in G.R. No. 180035, and 3) P269,340,469.45 in G.R. No.
181092, which petitioner paid as value-added tax, or to a tax credit for said amounts.
 Commissioner of Internal Revenue v. Toledo Power Company
G.R. Nos. 195175 & 199645, August 10, 2015

Facts:

Toledo Power Company filed a claim for refund with the Bureau of Internal Revenue (BIR),
Revenue District Office (RDO) No. 83, for alleged unutilized input VAT for the four quarters of
2004 on December 23, 2004. TPC, then elevated to the CTA its claim on April 24, 2006.

Issue:

Whether or not Toledo Power Company has timely filed its judicial claim on April 24, 2006
considering that the administrative claim was filed on December 23, 2004.

Ruling:

No. One of the requisites for claiming unutilized or excess input VAT is that the application and
the claim for refund have been filed within the prescribed period. In the case at bar, since the
filing of the administrative and judicial claims was done in 2004 and 2006, respectively, it would
seem that compliance with the prescriptive period in this case falls within the exception period
within which the Court recognizes the validity of BIR Ruling No. DA-489-03. TPC is not
compelled to observe the 120-day waiting period. Nevertheless, it should have filed the Petition
within 30 days after the expiration of the 120-day period.

TPC should have filed its judicial claim from 23 December 2004 until 22 May 2005; however, it
filed its Petition to the CTA only on 24 April 2006. Therefore, the CTA has no jurisdiction to
decide on its claim because of TPC’s belated filing.
 Edison (Bataan) Cogeneration Corporation v. Commissioner of Internal
Revenue/Republic of the Philippines represented by the Commissioner
of Internal Revenue v. Edison (Bataan) Cogeneration Corporation;
G.R. No. 201665/G.R. No. 201668; August 30, 2017

Facts:

On February 2, 2004, Edison (Bataan) Cogeneration Corporation [EBCC] received from the
Commissioner of Internal Revenue (CIR) a Formal Letter of Demand and Final Assessment
Notice dated January 23, 2004 assessing EBCC of deficiency income tax, Value Added Tax
(VAT), withholding tax on compensation, Expanded Withholding Tax (EWT) and Final
Withholding Tax (FWT) for taxable year 2000 in the total amount of P84,868,390.16. On March
3, 2004, EBCC filed with the CIR a letter-protest dated March 2, 2004 and furnished the CIR
with the required documents.

Due to the inaction of the CIR, EBCC elevated the matter to the CTA via a Petition for Review,
docketed as CTA Case No. 7104 and raffled to the Second Division of the CTA.

While the case was pending, EBCC availed itself of the Tax Amnesty Program under Republic
Act (RA) No. 9480.Thus, in a November 7, 2008 Resolution, the CTA Second Division deemed
the Petition partially withdrawn and the case closed and terminated with regard to EBCC’s
deficiency income tax and VAT for the year 2000.

On March 18, 2009, the CTA Second Division issued a Resolution setting aside the
assessments against EBCC for deficiency income tax and VAT for the taxable year 2000 in view
of its availment of the Tax Amnesty Program. The CIR filed a Motion for Reconsideration while
EBCC filed a Motion for Partial Reconsideration and/or Clarification. On April 7, 2011, the CTA
Former Second Division issued a Resolution denying both Motions. Both parties appealed to the
CTA En Banc.

On January 30, 2012, the CTA En Banc denied both appeals. It sustained the findings of the
CTA Former Second Division that the assessment over EBCC’s FWT on interest payments
arising from its loan from Ogden was without basis as EBCC had no obligation to withhold any
taxes on the interest payment for the year 2000. Under Revenue Regulation (RR) No. 02-98,
the obligation to withhold only accrues when the loan is paid or becomes payable or when it
becomes due, demandable or legally enforceable, whichever comes first. In this case, the
obligation to withhold the interest over the loan only commenced on June 1, 2002.

Issue:

1. Whether the CTA En Banc erred in not recognizing [the CIR’s] judicial admission that she
reduced her assessment for deficiency FWT for taxable year 2000 from [P]10,227,622[.]72 to
[P]7,384,922.52?

2. Whether x x x EBCC is liable for deficiency final withholding tax for the year 2000? and
Whether x x x Revenue Regulation No. 12-01 should be applied in this case?
Ruling:

1. The CIR made no judicial admission that EBCC remitted the amount of P2,842,630.20
as payment for its FWT for the year 2000.

Section 4 of Rule 129 of the Rules of Court states:

SEC. 4. Judicial Admissions. – An admission, verbal or written, made by a party in the course of
the proceedings in the same case, does not require proof. The admission may be contradicted
only by showing that it was made through palpable mistake or that no such admission was
made.

In this case, EBCC claims that the CTA En Banc erred in failing to consider the judicial
admission made by the CIR in her Memorandum that EBCC remitted FWT in the amount of
P2,842,630.20.

A careful reading of the Memorandum reveals that the alleged remittance of the amount of
P2,842,630.20 was based on a Memorandum Report prepared by the revenue officers
recommending the denial of EBCC’s protest, which was issued prior to EBCC’s filing of its
Petition for Review before the CTA. In fact, there was no mention of such remittance in the Joint
Stipulations of Facts and Issues by the parties and in the Answer filed by the CIR. Thus, we find
no error on the part of the CTA En Banc in not considering such statement as a judicial
admission.

2. RR No.02-98 provides that the term payable refers to the date the obligation becomes
due, demandable or legally enforceable.

Section 2.57.4 of Revenue Regulations No. 2-98 provides:

SEC. 2.57.4. Time of Withholding. – The obligation of the payor to deduct and withhold the tax
under Section 2.57 of these regulations arises at the time an income is paid or payable,
whichever comes first, the term ‘payable’ refers to the date the obligation becomes due,
demandable or legally enforceable.

In this case, the CIR insists that EBCC was liable to pay the interest from the date of the
execution of the contract on January 5, 2000, not from the date of the first payment on June 1,
2002.

Clearly, EBCC’s liability for interest payment became due and demandable starting June 1,
2002. And considering that under RR No. 02-98, the obligation of EBCC to deduct or withhold
tax arises at the time an income is paid or payable, whichever comes first, and considering
further that under the said RR, the term “payable” refers to the date the obligation becomes due,
demandable or legally enforceable, we find no error on the part of the CTA En Banc in ruling
that EBCC had no obligation to withhold any taxes on the interest payment for the year 2000 as
the obligation to withhold only commenced on June 1, 2002, and thus cancelling the
assessment for deficiency FWT on interest payments arising from EBCC’s loan from Ogden.
Neither do we find any reason for the retroactive application of RR No. 12-01, which provides
that the withholding of final tax commences “at the time an income payment is paid or payable,
or the income payment is accrued or recorded as an expense or asset, whichever is applicable
in the payor’s book, whichever comes first.” To begin with, this issue was never raised before
the CTA. Thus, we cannot rule on this matter now. It is a settled rule that issues not raised
below cannot be pleaded for the first time on appeal because a party is not allowed to change
his theory on appeal; to do so would be unfair to the other party and offensive to rules of fair
play, justice and due process.

All told, we find no reason to reverse the January 30, 2012 Decision and the April 17, 2012
Resolution of the CTA in CTA EB Case Nos. 766 and 769.

We need not belabor that “findings and conclusions of the CTA are accorded the highest
respect and will not be lightly set aside because by [its] very nature x x x, it is dedicated
exclusively to the resolution of tax problems and has accordingly developed an expertise on the
subject.”