SUMMARY OF SIGNIFICANT CTA DECISIONS (JULY 2012)

1. Amounts reflected in the supporting documents must the same with theamount reported as zero-rated sales in its VAT Return for the period subject forrefund.

The taxpayer filed an appeal for the inaction of Commissioner of Internal Revenueover its administrative claim for tax refund or issuance of a tax credit certificate for itsalleged excess and unutilized input value-added tax (VAT) paid on purchases ofgoods and services attributable to its zero-rated sales of services. To prove that itgenerated sales subject to 0%, it offered in evidence its statement of accounts, bankcredit advices, bank statements, various official receipts issued to its client. TheHonorable Court denied the refund and held that upon careful evaluation/verificationof the said documents it shows that the amounts reflected thereon do not coincidewith 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 samewere dated outside the period of claim. In other words, the documents presentedmay not actually correspond or pertain to the zero-rated sales reported in itsQuarterly VAT Return. Accordingly, the Court cannot ascertain the existence of suchzero-rated sales. In fine, without valid supporting documents, petitioner's allegedsales to its non-resident clients cannot qualify for VAT zero-rating under Section 108(8)(2) of the NIRC of 1997. (Harte-Hanks Philippines, Inc. vs. Commissioner ofInternal Revenue, CTA Case No. 7975 & 7998, July 2, 2012)

2. Failure on the part of the taxpayer to comply with the 120-day period warrantsthe dismissal of the judicial claim for lack of jurisdiction as held by theSupreme Court in the Aichi case.

Upon the filing of its administrative claim for refund before the Bureau of InternalRevenue on December 23, 2009, petitioner, after merely six (6) days or onDecember 29, 2009, filed the instant case before the Honorable Court without waitfor the lapse of the 120-day period or for the decision of respondent before elevatingits case with Court of Tax Appeals. The Honorable Court held that upon thesubmission of complete documents in support of its claim, the Commissioner of theBureau of Internal Revenue is given a period of one hundred twenty (120) dayswithin which to either grant or deny the taxpayer's claim for refund. Should theCommissioner deny or fail to act upon the taxpayer's claim, the taxpayer is given aperiod of thirty (30) days from the denial or inaction to appeal its case before thisCourt. Failure on the part of the taxpayer to comply with the 120-day period warrantsthe dismissal of the judicial claim for lack of jurisdiction as held by the Supreme Courtin the Aichi case. (Air Liquide Philippines, Inc. vs. Commissioner of InternalRevenue, CTA Case No. 8017, July 03, 2012)

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3. Power to declare a person in contempt of court must be exercised on thepreservative, not vindictive principle, and on the corrective and not retaliatoryidea of punishment.

The Court in Division dismissed the petition of Pilipinas Shell for indirect contempt inviolation of Section 3, paragraphs (b) and (d), Rule 71 of the Rules of Court whenthey conducted the press conference and circulated the 'press statement' with theintent of bringing the legal battle to the media instead of legally before the HonorableCourt in Division, thereby impeding, obstructing, and degrading the administration ofjustice, and in direct violation of the resolution by Honorable Court's in divisionrefraining both parties from discussing the merits of the case in the media as it maybe considered contemptuous by the Court. Thereafter, it filed a Motion forReconsideration before the Honorable Court en Banc. The Court en Banc upheld thedecision of the Court in Division and held that petitioner failed to prove, beyondreasonable doubt, that respondents are liable for indirect contempt. Equally settled isthe rule that contempt is not presumed. The presumption of innocence can beovercome only by proof of guilt beyond reasonable doubt, which means proof to thesatisfaction of the court and keeping in mind the presumption of innocence thatprecludes every reasonable hypothesis except that for which it is given. It bearsstressing that the power to declare a person in contempt of court must be exercisedon the preservative, not vindictive principle, and on the corrective and not retaliatoryidea of punishment. (Pilipinas Shell Petroleum Corporation vs. CommissionerNapoleon Morales, as Commissioner of Customs, Juan N. Tan, as Collector ofcustoms 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'soption to appeal or not to appeal, upon the denial of its claim for refund or afterthe 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 thedenial or the expiration of the 120-day period. It is the option to appeal which ispermissive, however, the period to appeal must be mandatorily complied with.

The Court in Division dismissed the Petition for Review filed by the taxpayer prayingfor the refund of issuance of tax credit. The taxpayer filed a Petition for Reviewbefore the Court en Banc contending that that the word "may" in Section 112 of the1997 NIRC has always been interpreted as being merely permissive and notmandatory. The Honorable Court en Banc held that while the taxpayer is correct thatthe word "may" is permissive, they do not agree that it relates to the period withinwhich 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 ofits 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 fromreceipt of the denial or the expiration of the 120-day period. Thus, it is the option toappeal which is permissive, however, the period to appeal must be mandatorilycomplied with. (Mindanao II Geothermal Partnership vs. Commissioner ofInternal 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 claimfor 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 onthe gain realized from the redemption of Series A Preferred shares by CE PhilippinesII, Inc. The Honorable Court denied both the petition and its motion forreconsideration which ruled that the taxpayer is charged with the burden of provinghis 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 fastidiouslyexamined each and every piece of documentary evidence presented by petitionerprecisely it was able to discern that the transaction was entered into andconsummated 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, asamended, the taxpayer must be able to prove that it is a generation companyand that it is engaged in the sale of power or fuel generated through renewablesource of energy.

The taxpayer’s Petition Review for the refund or issuance of a tax credit certificate forits excess and unutilized creditable input taxes attributable to zero-rated sales.However, the Honorable Court denied the petition for insufficiency of evidence whichprompted the filing of a Motion for New Trial, on the ground that the taxpayer was notable to prove that it is a generation company qualified for VAT zero rating underSection 108(B)(7) of the 1997 NIRC, as amended by R.A. No. 9337, and in relation toSection 4.108-3 of RR No. 16-05 and Section 4, Rule 5 of the Implementing Rulesand Regulations of R.A. No. 9136, particularly, its failure to submit its EnergyRegulatory Commission (ERC) registration and Certificate of Compliance which willshow that it is duly authorized by the ERC to operate facilities used in the generationof electricity. The Honorable Court ruled that in order to qualify for VAT zero-ratingunder Section 108(B)(7) of the NIRC, as amended, the taxpayer must be able toprove that it is a generation company and that it is engaged in the sale of power orfuel generated through renewable source of energy (Mindanao GeothermalPartnership vs. Commissioner of Internal Revenue, CTA Case No. 7801, July10, 2012)

7. The deficiency interest should be computed from the date prescribed for thepayment of the deficiency tax until full payment thereof. On the other hand,delinquency interest should be computed from the due date prescribed underthe Assessment Notice until the full payment thereof.

The Honorable Court in Division issued a decision ordering the taxpayer to paydeficiency interest at the rate of twenty percent (20%) per annum on the basicdeficiency creditable withholding VAT computed from the date of the filing, until fullpayment thereof pursuant to Section 249(8) of the NIRC of 1997 and b delinquencyinterest at the rate of twenty percent (20%) per annum on the total deficiency taxesand on the 20% deficiency interest which have accrued computed from the receipt ofthe 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 the1997 NIRC should be computed from date prescribed for the payment of deficiencytax until the last day to pay the same under the Assessment Notice. It also allegesthat 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 ruledthat the deficiency interest should be computed from the date prescribed for thepayment of the deficiency tax until full payment thereof. On the other hand,delinquency interest should be computed from the due date prescribed under theAssessment 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 inDivision is not a second motion for reconsideration, which is a proscribedunder Section 7, Rule 15 of the CTA Rules, in relation to Section 2, Rule 52 ofthe 1997 Rules of Civil Procedure, as amended

The Court in Division rendered a decision granting albeit partially petitioner's claimfor refund or issuance of tax credit certificate in the reduced amount representing itsunutilized input VAT attributable to zero-rated sales to NPC. Both parties filed theirrespective Motions for Partial Reconsideration. Thereafter, the Court in Divisionamended its decision and recalled and set aside its earlier decision and denied thePetition for Review on ground of prematurity. Also, the Court in Division deniedtaxpayer's Motion for Reconsideration of the amended decision on the ground that itwas a second motion for reconsideration prohibited under Rule 15, Section 7 of theRevised Rules of the Court of Tax appeals. The Court En Banc held that Motion forReconsideration of the amended decision is not the second motion forreconsideration proscribed in Section 7 Rule 15 of the Revised Rules of the Court ofTax 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 whicheffectively superseded the original decision. The alteration in the amended decisionis so significant and substantial as to give rise to the corresponding right of petitionerto assail it through a motion for reconsideration. To immediately seek relief to theCourt En Banc is to deprive the Court in Division the opportunity to correct itself, ifwarranted. The amended and clarified decision is an entirely new decision, whichsupersedes the original decision. Hence, petitioner's Motion for Reconsideration isnot a second motion for reconsideration, which is a proscribed under Section 7, Rule15 of the CTA Rules, in relation to Section 2, Rule 52 of the 1997 Rules of CivilProcedure, as amended.2 (Mirant (Navotas II) Corporation vs. Commissioner ofInternal 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 deficiencyinterest 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 animposition of at least a 40% per annum interest on any unpaid tax is grossly excessive and unjust, one thatpartakes the nature of an imposition that is penal, rather than compensatory. He believed that the imposition of40% per annum interest on unpaid tax is grossly excessive and onerous. The proper computation should be thatthe 20% deficiency interest runs from the date prescribed for the payment of the unpaid or deficiency tax untilonly 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 onthe 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 forReconsideration filed before the Court in Division constitutes a violation of Section 7 of Rule 15 of the RevisedRules of the Court of Tax Appeals. A perusal of the arguments in petitioner's Motion for Partial Reconsiderationassailing the original decision and the Motion for Reconsideration assailing the amended decision shows thatboth are mere reiterations which have already been passed upon by the Court in Division. A second motion forreconsideration which contains mere iterations and reiterations of the same points and arguments over and overagain becomes, m effect, a mere dilatory strategy and consequently nothing more than pro forma. And sinceSection 3(b) of Rule 8 of the Revised Rules of the Court of Tax Appeals only provides a party adversely affectedby 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 theassessment and 60 days from the filing of protest to submit relevantsupporting 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 eventof inaction on the protest, the taxpayer may appeal within the same periodfrom the lapse of the 180-day period.

On March 18, 2004, the taxpayer protested the FAN and submitted substantialdocuments in support of its protest. Due to CIR's failure to act on the protest, apetition for review with the CTA's First Division on was filed November 25, 2004 tocancel and set-aside the assessment for the year 2000 which the Court in Divisionpartially granted ordering the taxpayer to pay its 2000 EWT liabilities. The CIRappealed to the Court en Banc contending that the deficiency tax assessment isrendered final, executory and unappealable. The Honorable Court en Banc held thatunder the law, a taxpayer is given a period of 30 days to administratively protest theassessment and 60 days from the filing of protest to submit relevant supportingdocuments. From receipt of an unfavorable ruling on the protest, the taxpayer mayappeal before the CTA within a period of 30 days. In the event of inaction on theprotest, the taxpayer may appeal within the same period from the lapse of the 180-day period. It affirmed the decision of the Court in Division which ruled that in view ofsuch reservation to submit additional documents consistently made by petitioner andin accordance with Section 228 of the NIRC, the taxpayer had 60 days from March18, 2004, or until May 17, 2004 to submit any additional documents, if required or itsubsequently deemed necessary. Thereafter, respondent had 180 days, or untilNovember 13, 2004 to rule on the protest. Only upon the lapse of the 180-day periodand within the subsequent 30 days or until December 13, 2004, that the taxpayercould exercise its option to appeal respondent's inaction before this Court. Thus, theinstant Petition was seasonably filed on November 25, 2004. (Commissioner ofInternal Revenue vs. Covanta Energy Philippine Holdings, Inc., CTA EB CaseNo. 771, July 19, 2012)

10. In prosecution for violation of Section 3602 of the Tariff and Customs of thePhilippines, in relation to Article 172 of the Revised Penal Code, it must provebeyond reasonable doubt that the accused in conspiracy with the otheraccused, made or attempted to make an entry of the alleged imported articlethrough 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 ofthe Philippines, in relation to Article 172 of the Revised Penal Code via hisconspiracy with two other in willfully, unlawfully and feloniously filing before theBureau of Customs Import Entry prilled urea in bulk with the custom duties by meansof fraudulent statement or declaration, making it appear that the subject shipment isexempt from payment of duties and taxes on the basis of a fraudulent Certificate ofEligibility purportedly issued by the Philippine Carabao Center in favor of NorskHydro, to avoid payment of rightful duties and taxes. The accused pleaded not guiltyupon arraignment and filed a Motion to Submit Case for Decision based oninsufficiency of prosecution’s evidence as per records of the case. The HonorableCourt held that in the prosecution of violation of Section 3602 of the Tariff andCustoms 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 daysfrom receipt of the same within which to elevate the case to the Court En Banc, therefore, the Motion forReconsideration filed assailing the amended decision did not toll the fifteen-day reglementary period to file itsPetition for Review before this Court sitting En Banc. It follows then that the Petition for Review filed by taxpayerbefore 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 otheraccused, made or attempted to make an entry of the alleged imported article throughthe filing of the said Import Entry at the Bureau of Customs. A perusal of theevidence presented by the prosecution would show that it failed to prove thataccused Valic acted in conspiracy with the rest of the accused in the commission ofthe offense charged. The prosecution also failed to prove the existence of ImportEntry that was allegedly filed at the Bureau of Customs, as no Import Entry or copythereof was offered in evidence. Absent the said Import Entry, necessarily, theprosecution also failed to prove that there was an item or article imported in theamount 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 evidencesuch as invoices and receipts in support of its claim before the CTA and not itsfailure of to submit complete documents before the BIR and not before theCTA.

The Honorable Court in Division granted the refund or issuance of a tax creditcertificate of the taxpayer allegedly representing the 5% final VAT erroneouslywithheld by Overseas Workers Welfare Administration (OWWA) under the CharterAgreement. The CIR filed Petition for Review before the Court en Banc for failure tosubmit complete documentary evidence in filing its administrative claim for refund.The argument was anchored in the case of Atlas Consolidated Mining andDevelopment Corporation vs. Commissioner of Internal Revenue. The HonorableCourt en Banc held that upon examination of the Atlas case, the CIR’s argumentmisplaced. 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 insupport of its claim before the CTA. In contrast with the present case, petitioner'sallegation was the failure of respondent to submit complete documents before theBIR and not before the CTA. (Commissioner of Internal Revenue vs. PhilippineAirlines, Inc., CTA EB Case No. 775, July 24, 2012)

12. Failure of the taxpayer to present documents such as, but limited to, officialreceipts, sales invoices, detailed general ledger, sales register, reconciliationschedules or any other document whereby the income payments related to theclaimed creditable withholding taxes may be traced and confirmed as formingpart of the taxable gross income reflected in the Annual Income Tax Returns, isfatal to its claim.

The taxpayer filed a Petition for Review before the Court of Tax Appeals for failure ofthe CIR to act on the its claim for refund of tis excess and unutilized creditablewithholding tax for the calendar year 2007. The CIR claimed that alleged excess andunutilized creditable income taxes withheld for taxable year 2007 were not fullysubstantiated proper documentary evidence, such as, but not limited to certificates ofincome taxes withheld at source. The Honorable Court ruled that failure of taxpayerto present documents such as, but limited to, official receipts, sales invoices, detailedgeneral ledger, sales register, reconciliation schedules or any other documentwhereby the income payments related to the claimed creditable withholding taxesmay be traced and confirmed as forming part of the taxable gross income reflected inthe Annual Income Tax Returns, is fatal to its claim. (Winebrenner & InigoInsurance 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 hadbeen in existence as early as January 1, 1998, the effectivity of the NIRC of1997.

The taxpayer filed a Petition for Review seeking the refund of its alleged excess andunutilized input value-added taxes (VAT). The taxpayer contends that the Aichi caseshould be given prospective application as its retroactive application will violateArticle 4 in relation to Article 8 of the Civil Code. The Honorable Court finds no meriton petitioner's contention that the Aichi case should be given prospective applicationas its retroactive application will violate Article 4 in relation to Article 8 of the CivilCode. The Honorable Court did not apply the Aichi case retroactively. The Aichi casemerely clarified Section 112 of the NIRC of 1997, which had been in existence asearly as January 1, 1998, the effectivity of the NIRC of 1997. Since this case coverspetitioner's judicial claim for refund or tax credit of its excess and unutilized input VATfor the periods of July 1, 2008 to September 30, 2008 and October 1, 2008 toDecember 31, 2008, which was filed before this Court on September 29, 2010, theCourt should apply the law in force at the time petitioner filed its claim for refund ortax credit, that is, Section 112 of the NIRC of 1997, as amended. Consequently, the120-day and 30-day periods prescribed under Section 112 of the 1997 NIRC, asamended, should have been observed by petitioner. Finally, the taxpayer’s claimsthat the retroactive application of the Aichi case will impair taxpayer's vested right toproperty without due process of law. Petitioner contends that since it has alreadyacquired a right by relying in good faith on the ruling of the Supreme Court prior tothe Aichi case that the 120-30 day rule is permissive, this right cannot be taken backwithout due process of law; otherwise, petitioner will be denied equal protection ofthe 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)

3 In the dissenting opinion of Honorable Associate Justice Lovell R. Bautista, he opined that the factualcircumstances present in the case at bench supports the application of the then prevailing jurisprudence at thetime the claim was made for where there has been justifiable reliance on Court’s decisions, and those who haveso relied may be substantially harmed if retroactive effect is given, where the purpose the new rule can beadequately effectuated without giving it retroactive operation, or where retroactive operation might greatly burdenthe administration of justice, then it is their duty to apply the new rule prospectively. When petitioner filed its claimfor refund/ tax credit with respondent on December 9, 2009, and the consequent Petition for Review onSeptember 29, 2010, the then controlling doctrine in this forum is that of the case of Commissioner of InternalRevenue v. Mirant Paghilao Corporation [Formerly Southern Energy Quezon, lnc.). It was merely unfortunate thatduring the pendency of the case at bench that the Supreme Court issued the case of Commissioner of InternalRevenue v. Aichi Forging Company of Asia, Inc. Albeit the latter ruling is more in accordance with the letter andspirit of Section 112 of the 1997 National Internal Revenue Code, as amended, it would be the height of injusticeto impose a new ruling, on the basis of the so-called "adherence to precedence," for the latter doctrine is clearlypromulgated 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 AssociateJustice Lovell R. Bautista in the case of Visayas Geothermal Power Company vs. Commissioner of InternalRevenue, 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 CaseNo. 710).

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14. The provisions of Revenue Memorandum Order No. 53-98 shows that ataxpayer must only submit the requirements which are relevant and applicableto its claim for refund.

The Special First Division partially granted the taxpayer’s claim for refund. The CIRcontended that the submission of the complete relevant supporting documents beforethe BIR in support of its claim for refund is a mandatory as provided in Section112(D) of the NIRC of 1997. The non-submission of complete supporting documentswill not commence the 120-day period for the CIR to decide and thus, it waspremature for the taxpayer to bring the instant case to the Court of Tax Appeals andthe failure to present evidence in the administrative claim merits the denial of thesame through inaction. The Honorable Court en Banc ruled that a perusal of theprescribed requirements in RMO No. 53-98 shows that a taxpayer must only submitthe 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 toVAT, however, those transactions which are exempt by special laws to beexempt from VAT being included in the Exempt transactions shall be exemptfrom VAT and those services rendered to persons or entities whose exemptionunder special laws is subject to zero percent (0%) rate.

The Commissioner of Internal Revenue filed a Petition for Review of the decision ofthe Court in Division cancelling the deficiency value-added tax of the taxpayer’stransaction with the Philippine Amusement and gaming Corporation (PAGCOR). Thetaxpayer claims that the transactions involve VAT at zero percent (0%) rate and thatPAGCOR is a tax-exempt entity under special laws. Thus, PAGCOR being exemptfrom VAT, the taxpayer concludes that it extends to its transaction thereto. The CIRargues 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 7716which amended Section 102 of the Old Tax Code. Accordingly, the CIR claims thatRA 7716, which was later amended by R.A. 8241 12 and by the 1997 NationalInternal Revenue Code (NIRC), states that all LEGISLATIVE FRANCHISES becomesubject to the 1 0% VAT on sale or exchange of services, except only those franchisegrantees of radio and television and broadcasting whose annual gross receipts of thepreceding year does not exceed ten million pesos and which did not opt for VATregistration and electric, gas and water utilities. Thus, the services of the casinooperation, being not included among the exceptions and that PAGCOR is included inservices 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 servicesis concerned. The Honorable Court en Banc held that while it appears that servicesof "all other franchise grantees" are subject to VAT, however, those transactionswhich are exempt by special laws to be exempt from VAT being included in theExempt transactions shall be exempt from VAT and those services rendered topersons 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 uponby the CIR allegedly subjecting PAGCOR to VAT, must be read in conjunction withthe provisions relating to "Transactions Subject to Zero Rate" and "ExemptTransactions". (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)-yearprescriptive should be counted from the filing of the final adjustment returnbecause it is only during that date that the exact tax liability or refundability ofthe tax can be determined.

The taxpayer filed on April 14, 2012 a Petition for Review before the CTA for failureto act upon its administrative claim for refund or issuance of tax credit certificate forthe alleged excess withholding tax for taxable years 2007 and 2008 which was filedon March 2010. The BIR contended that the petition must be dismissed for lack ofcause of action on the part of the taxpayer for non-exhaustion of administrativeremedies. Considering that the petition for review was filed on April 14, 2010 or afterfourteen (14) days from March 31, 2010 when the application for tax refund/creditwas filed, the taxpayer has not given the Commissioner the opportunity to decide onthe claim.. The Honorable Court held that for actions for refund of excess corporateincome tax, the two (2)-year prescriptive should be counted from the filing of the finaladjustment return because it is only during that date that the exact tax liability orrefundability of the tax can be determined. Applying the foregoing provisions in thecase at bench, the present claim covers taxable years 2007 and 2008 for whichpetitioner filed its Annual Income Tax Returns on April 15, 2008 and April 17, 2009,respectively. Counting two years from these dates, taxpayer's administrative claimfiled on March 31, 201030 and the subsequent appeal via a Petition for Review filedbefore this Court on April 14, 2010, were therefore timely filed within the two-yearprescriptive period. (Mckinsey & Co., (Phils.) vs. Commissioner of InternalRevenue, CTA Case No. 8078, July 30, 2012)

17. A VAT-registered person claiming VAT zero-rated direct export sales mustpresent at least three (3) types of documents, to wit: (a) the sales invoice asproof of sale of goods; (b) the export declaration and bill of lading or airway billas proof of actual shipment of goods from the Philippines to a foreign country;and (c) bank credit advice, certificate of bank remittance or any otherdocument proving payment for the goods in acceptable foreign currency or itsequivalent in goods and services.

The taxpayer filed an administrative for refund representing excess or unutilized inputtaxes for shipments of its mineral products to its foreign buyers. The CIR failed to acton 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 fortaxpayer to prove its compliance on the invoicing and accounting requirements forVAT-registered persons, as well as the filing and payment of VAT pursuant to theprovisions of Section 113 and 114 of the National Internal Revenue Code (NIRC) of1997, as amended. Failure to comply with the invoicing requirements on thedocuments supporting the sale of goods and services will result in the disallowanceof the claim for input tax. The Honorable Court ruled that Section 106 (A)(2)(a)(1) ofthe 1997 NIRC, should not be taken in isolation but should be read in conjunctionwith Section 113 of the same Code as implemented by Section 4.113-1 of RevenueRegulations (RR) No. 16-2005. Thus, pursuant to the said provisions, in relation toSection 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 claimingVAT zero-rated direct export sales must present at least three (3) types ofdocuments, to wit: (a) the sales invoice as proof of sale of goods; (b) the exportdeclaration and bill of lading or airway bill as proof of actual shipment of goods fromthe Philippines to a foreign country; and (c) bank credit advice, certificate of bankremittance 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 CorporationInc. vs. Commissioner of Internal Revenue, CTA CASE NO. 8284, July 30, 2012)

18. Importer of petroleum products subsequently sold an exempt entity is notentitled for any claim for refund of the excise tax paid on the importedpetroleum products.

The taxpayer filed a Petition for Review seeking for the refund or issuance of TaxCredit Certificate (TCC) representing excise taxes allegedly paid on its importation ofpetroleum products which was subsequently sold to Clark Development Corporation(CDC) contending that excise tax, being an indirect tax, could be passed on to thecustomer or end-user except when the latter is by law granted tax exemptions fromdirect 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 excisetax. Under the Tax Code, only locally produced or manufactured goods which areactually 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 ruledthat importer of petroleum products subsequently sold an exempt entities is notentitled for any claim for refund of the excise tax paid on the imported petroleumproducts. Admittedly, the petroleum products sold by the taxpayer to CDC were notlocally produced or manufactured but imported goods. The fact of importation isshown in all the importation documents presented by taxpayer itself to the Court. Inother words, its claim for refund cannot be granted. (Chevron Philippines Inc. vs.Commissioner of Internal Revenue, CTA CASE NO. 7939, July 31, 2012)