Nippon Express vs CIR

GR No 196907
July 13, 2013
The Facts
For the calendar year 2000, petitioners gross receipts were primarily derived from rendering
its services to Philippine Economic Zone Authority (PEZA)-registered clients. Likewise, it
incurred total sales of P1,063,357,608.74, which as shown in petitioners Amended Quarterly
VAT Return, is made up of the following:chanRoblesvirtualLawlibrary
Also, for the same year, petitioner paid input taxes amounting to P31,846,253.57 and
apportioning this amount with its total sales above in accordance with Section 112 of the
1997 Tax Code, as amended; the amount of total sales attributable to zero-rated sales would
be
P24,826,667.61.
Under the premise that it is entitled to a refund of the amount of P24,826,667.61, petitioner
filed four separate applications for tax credit/refund with the One-Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center of the Department of Finance (OSSAC-DOF) on September
24,
2001.
Receiving no resolution from OSSAC-DOF, petitioner filed the instant petition for review on
April 24, 2002 pursuant to Section 112 in relation to Section 229 of the 1997 Tax Code, as
amended.6
Docketed as C.T.A. Case No. 6464, trial ensued having both parties submitted various
documentary and testimonial evidence during the proceedings, as well as rebuttal and surrebuttal evidence, in order to establish their respective claim.

Our Ruling

We summarize the rules on the determination of the prescriptive period for filing a tax
refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax
Code, as
follows:chanRoblesvirtualLawlibrary
(1) An administrative claim must be filed with the CIR within two years after the close of the
taxable quarter when the zero-rated or effectively zero-rated sales were made.
(2) The CIR has 120 days from the date of submission of complete documents in support of
the administrative claim within which to decide whether to grant a refund or issue a tax
credit certificate. The 120-day period may extend beyond the two-year period from the
filing of the administrative claim if the claim is filed in the later part of the two-year
period. If the 120-day period expires without any decision from the CIR, then the
administrative claim may be considered to be denied by inaction.
(3) A judicial claim must be filed with the CTA within 30 days from the receipt of
the CIRs decision denying the administrative claim or from the expiration of the
120-day
period
without
any
action
from
the
CIR.

(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of
its issuance on 10 December 2003 up to its reversal by this Court in Aichi on
October 6, 2010, as an exception to the mandatory and jurisdictional 120+30 day
periods.29(Emphasis supplied)
Certainly, it is evident from the foregoing jurisprudential pronouncements that a taxpayerclaimant only had a limited period of thirty (30) days from the expiration of the one hundred
twenty (120)-day period of inaction of the Commissioner of Internal Revenue (CIR) to file its
judicial claim with the CTA, with the exception of claims made during the effectivity of
Bureau of Internal Revenue (BIR) Ruling No. DA-489-03 (from 10 December 2003 to 5
October 2010).30 Failure to do so, the judicial claim shall prescribe or be considered as filed
out of time.
Applying the foregoing discussion to the present case, although it appears that petitioner
has indeed complied with the required two-year period within which to file a refund/tax
credit claim with the BIR (OSSAC-DOF in this case) by filing all its administrative claims on
24 September 2001 (within the period from the close of the taxable quarters for the year
2000, when the sales were made), this Court finds that petitioners corresponding judicial
claim was filed beyond the 30-day period.

G.R. No. 173425

September 4, 2012

FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE and REVENUE DISTRICT OFFICER, REVENUE DISTRICT NO.
44, TAGUIG and PATEROS, BUREAU OF INTERNAL REVENUE, Respondents.
Factual Antecedents
On January 1, 1996, RA 77168 restructured the Value-Added Tax (VAT) system by amending certain provisions
of the old National Internal Revenue Code (NIRC). RA 7716 extended the coverage of VAT to real properties
held primarily for sale to customers or held for lease in the ordinary course of trade or business. 9
On September 19, 1996, petitioner submitted to the Bureau of Internal Revenue (BIR) Revenue District No. 44,
Taguig and Pateros, an inventory of all its real properties, the book value of which
aggregated P71,227,503,200.10 Based on this value, petitioner claimed that it is entitled to a transitional input
tax credit of P5,698,200,256,11 pursuant to Section 10512 of the old NIRC.
In October 1996, petitioner started selling Global City lots to interested buyers.
For the first quarter of 1997, petitioner generated a total amount of P 3,685,356,539.50 from its sales and lease
of lots, on which the output VAT payable was P 368,535,653.95.14 Petitioner paid the output VAT by making
cash payments to the BIR totalling P 359,652,009.47 and crediting its unutilized input tax credit on purchases
of goods and services of P 8,883,644.48.15
Realizing that its transitional input tax credit was not applied in computing its output VAT for the first quarter of
1997, petitioner on November 17, 1998 filed with the BIR a claim for refund of the amount of P 359,652,009.47
erroneously paid as output VAT for the said period. 16
Our Ruling
The petition is meritorious.
The issues before us are no longer new or novel as these have been resolved in the related case of Fort
Bonifacio Development Corporation v. Commissioner of Internal Revenue.38
Prior payment of taxes is not required
for a taxpayer to avail of the 8%
transitional input tax credit
Section 105 of the old NIRC reads:
SEC. 105. Transitional input tax credits. A person who becomes liable to value-added tax or any person who
elects to be a VAT-registered person shall, subject to the filing of an inventory as prescribed by regulations, be
allowed input tax on his beginning inventory of goods, materials and supplies equivalent to 8% of the value of

such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher,
which shall be creditable against the output tax. (Emphasis supplied.)
Contrary to the view of the CTA and the CA, there is nothing in the above-quoted provision to indicate that prior
payment of taxes is necessary for the availment of the 8% transitional input tax credit. Obviously, all that is
required is for the taxpayer to file a beginning inventory with the BIR.

Eastern Telecommunications Philippines vs CIR

GR No. 168856
Aug. 29 2012
ETPI filed with the Bureau of Internal Revenue (BIR) an administrative claim for
refund and/or tax credit in the amount of P 23,070,911.75 representing excess input
VAT derived from its zero-rated sales for the period from January 1999 to December
1999.7 On March 26, 2001, without waiting for the decision of the BIR, ETPI filed a
petition for review before the Court of Tax Appeals (CTA) to toll the running of the
two-year prescriptive period.
In its Decision,9 dated December 12, 2003, the Division10 of the CTA (CTA-Division)
denied the petition for lack of merit, finding that ETPI failed to imprint the word
zero-rated on the face of its VAT invoices or receipts, in violation of Revenue
Regulations No. 7-95. In addition, ETPI failed to substantiate its taxable and exempt
sales, the verification of which was not included in the examination of the
commissioned independent certified public accountant. Aggrieved, ETPI elevated
the case to the CTA-En Banc, which promulgated its Decision11 on April 19, 2005
dismissing the petition and affirming the decision of the CTA-Division. The CTA-En
Banc ruled that in order for a zero-rated taxpayer to claim a tax credit or refund, the
taxpayer must first comply with the mandatory invoicing requirements under the
regulations. One such requirement is that the word zero-rated be imprinted on the
invoice or receipt. According to the CTA-En Banc, the purpose of this requisite is to
avoid the danger that the purchaser of goods or services may be able to claim input
tax on the sale to it by the taxpayer of goods or services despite the fact that no
VAT was actually paid thereon since the taxpayer is zero-rated. Also, it agreed with
the conclusion of the CTA-Division that ETPI failed to substantiate its taxable and
exempt sales. ETPI filed a motion for reconsideration, but it was denied by the CTAEn Banc in its July 8, 2005 Resolution.12
Section 244 of the NIRC explicitly grants the Secretary of Finance the authority to
promulgate the necessary rules and regulations for the effective enforcement of the
provisions of the tax code. Such rules and regulations deserve to be given weight
and respect by the courts in view of the rulemaking authority given to those who
formulate them and their specific expertise in their respective fields.19
Consequently, the following invoicing requirements enumerated in Section 4.108-1
of Revenue Regulations No. 7-95 must be observed by all VAT-registered taxpayers:
Sec. 4.108-1. Invoicing Requirements. All VAT-registered persons shall, for every
sale or lease of goods or properties or services, issue duly registered receipts or
sales or commercial invoices which must show: 1. the name, TIN and address of

seller; 2. date of transaction; 3. quantity, unit cost and description of merchandise

or nature of service; 4. the name, TIN, business style, if any, and address of the VATregistered purchaser, customer or client; 5. the word zero-rated imprinted on the
invoice covering zero-rated sales; and 6. the invoice value or consideration.
A consequence of failing to comply with the invoicing requirements is the denial of
the claim for tax refund or tax credit, as stated in Revenue Memorandum Circular
No. 42-2003, to wit: A-13: Failure by the supplier to comply with the invoicing
requirements on the documents supporting the sale of goods and services will result
to the disallowance of the claim for input tax by the purchaser-claimant.