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CIR vs AMERICAN EXPRESS INTERNATIONAL

Facts:
Respondent, a VAT taxpayer, is the Philippine Branch of AMEX USA and was tasked with servicing
a unit of AMEX-Hongkong Branch and facilitating the collections of AMEX-HK receivables from
card members situated in the Philippines and payment to service establishments in the Philippines.
It filed with BIR a letter-request for the refund of its 1997 excess input taxes, citing as basis Section
110B of the 1997 Tax Code, which held that xxx Any input tax attributable to the purchase of
capital goods or to zero-rated sales by a VAT-registered person may at his option be refunded or
credited against other internal revenue taxes, subject to the provisions of Section 112.
In addition, respondent relied on VAT Ruling No. 080-89, which read, In Reply, please be
informed that, as a VAT registered entity whose service is paid for in acceptable foreign currency
which is remitted inwardly to the Philippine and accounted for in accordance with the rules and
regulations of the Central Bank of the Philippines, your service income is automatically zero rated
xxx
Petitioner claimed, among others, that the claim for refund should be construed strictly against the
claimant as they partake of the nature of tax exemption.
CTA rendered a decision in favor of respondent, holding that its services are subject to zero-rate.
CA affirmed this decision and further held that respondents services were services other than the
processing, manufacturing or repackaging of goods for persons doing business outside the
Philippines and paid for in acceptable foreign currency and accounted for in accordance with the
rules and regulations of BSP.
Issue:
W/N AMEX Phils is entitled to refund
Held:
Yes. Section 102 of the Tax Code provides for the VAT on sale of services and use or lease of
properties. Section 102B particularly provides for the services or transactions subject to 0% rate:
(1) Processing, manufacturing or repacking goods for other persons doing business outside the
Philippines which goods are subsequently exported, where the services are paid for in acceptable
foreign currency and accounted for in accordance with the rules and regulations of the BSP;
(2) Services other than those mentioned in the preceding subparagraph, e.g. those rendered by
hotels and other service establishments, the consideration for which is paid for in acceptable foreign
currency and accounted for in accordance with the rules and regulations of the BSP

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Under subparagraph 2, services performed by VAT-registered persons in the Philippines (other than
the processing, manufacturing or repackaging of goods for persons doing business outside the
Philippines), when paid in acceptable foreign currency and accounted for in accordance with the
R&R of BSP, are zero-rated. Respondent renders service falling under the category of zero rating.
As a general rule, the VAT system uses the destination principle as a basis for the jurisdictional
reach of the tax. Goods and services are taxed only in the country where they are consumed. Thus,
exports are zero-rated, while imports are taxed.
In the present case, the facilitation of the collection of receivables is different from the utilization of
consumption of the outcome of such service. While the facilitation is done in the Philippines, the
consumption is not. The services rendered by respondent are performed upon its sending to its
foreign client the drafts and bulls it has gathered from service establishments here, and are therefore,
services also consumed in the Philippines. Under the destination principle, such service is subject to
10% VAT.
However, the law clearly provides for an exception to the destination principle; that is 0% VAT rate
for services that are performed in the Philippines, paid for in acceptable foreign currency and
accounted for in accordance with the R&R of BSP. The respondent meets the following
requirements for exemption, and thus should be zero-rated:
(1) Service be performed in the Philippines
(2) The service fall under any of the categories in Section 102B of the Tax Code
(3) It be paid in acceptable foreign currency accounted for in accordance with BSP R&R.

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

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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 deniedSilicons claim for credit/refund of input VAT attributable to itszero-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 theinvalidation of the invoices or receipts for purposes of claiming a refund.
B. ATP must be secured from the BIR

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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 dulyregistered 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 therulemaking authority
of the Secretary of Finance under Sec. 244of 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.

PANASONIC IMAGING CORP. VS. CIR, 612 SCRA 28

Abad, J

FACTS: Petitioner Panasonic Communications Imaging Corporation of the Philippines (Panasonic)

produces and exports plain paper copiers and their sub-assemblies, parts, and components. It is
registered with the Board of Investments as a preferred pioneer enterprise under the Omnibus
Investments Code of 1987. It is also a registered value-added tax (VAT) enterprise.

From April 1 to September 30, 1998 and from October 1, 1998 to March 31, 1999, petitioner
Panasonic generated export sales amounting to US$12,819,475.15 and US$11,859,489.78,
respectively, for a total of US$24,678,964.93. Believing that these export sales were zero-rated for
VAT under Section 106(A)(2)(a)(1) of the 1997 National Internal Revenue Code as amended
by Republic Act (R.A.) 8424 (1997 NIRC), Panasonic paid input VAT of P4,980,254.26
and P4,388,228.14 for the two periods or a total of P9,368,482.40 attributable to its zero-rated sales.
Claiming that the input VAT it paid remained unutilized or unapplied, on March 12, 1999 and July

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20, 1999 petitioner Panasonic filed with the Bureau of Internal Revenue (BIR) two separate
applications for refund or tax credit of what it paid.

ISSUE: WON PANASONIC IS ENTITLED TO THE REFUND CLAIMED.

HELD: NO.
Zero-rated transactions generally refer to the export sale of goods and services. The tax rate in this
case is set at zero. When applied to the tax base or the selling price of the goods or services sold,
such zero rate results in no tax chargeable against the foreign buyer or customer. But, although the
seller in such transactions charges no output tax, he can claim a refund of the VAT that his suppliers
charged him. The seller thus enjoys automatic zero rating, which allows him to recover the input
taxes he paid relating to the export sales, making him internationally competitive.

For the effective zero rating of such transactions, however, the taxpayer has to be VAT-registered
and must comply with invoicing requirements. Interpreting these requirements, respondent CIR
ruled that under Revenue Memorandum Circular (RMC) 42-2003, the taxpayers failure to comply
with invoicing requirements will result in the disallowance of his claim for refund. RMC 42-2003
provides:

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.

If the claim for refund/TCC is based on the existence of zero-rated sales by the taxpayer but it fails
to comply with the invoicing requirements in the issuance of sales invoices (e.g., failure to indicate
the TIN), its claim for tax credit/refund of VAT on its purchases shall be denied considering that
the invoice it is issuing to its customers does not depict its being a VAT-registered taxpayer whose
sales are classified as zero-rated sales. Nonetheless, this treatment is without prejudice to the right of
the taxpayer to charge the input taxes to the appropriate expense account or asset account subject to
depreciation, whichever is applicable. Moreover, the case shall be referred by the processing office
to the concerned BIR office for verification of other tax liabilities of the taxpayer.

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This Court held that, since the BIR authority to print is not one of the items required to be indicated
on the invoices or receipts, the BIR erred in denying the claim for refund. Here, however, the
ground for denial of petitioner Panasonics claim for tax refund the absence of the word zerorated on its invoices is one which is specifically and precisely included in the above
enumeration. Consequently, the BIR correctly denied Panasonics claim for tax refund.

Ruling: Wherefore, the petition is DENIED for lack of merit. Cost against petitioner. SO
ORDERED.

J.R.A. PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

G.R. No. 177127 October 11, 2010
Del Castillo, J.
Doctrine:
The absence of the word zero rated on the invoices/receipts is fatal to a claim for credit/refund of input VAT.
Stare decisis et non quieta movere. Courts are bound by prior decisions. Thus, once a case has been
decided one way, courts have no choice but to resolve subsequent cases involving the same issue in the same manner.
Facts:
Petitioner, a PEZA Corporation, filed applications for tax credit/refund of unutilized input VAT on
its zero-rated sales for the taxable quarters of 2000. The claim for credit/refund, however, remained
unacted by the respondent. Hence, petitioner was constrained to file a petition before the CTA.
The CTA eventually denied the petition for lack of the word zero-rated on the invoices/receipts.
Issue:
Whether or not the failure to print the word zero-rated on the invoices/receipts is fatal to a claim
for credit/ refund of input VAT on zero-rated sales
Held:
Yes. The absence of the word zero rated on the invoices/receipts is fatal to a claim for
credit/refund of input VAT. This has been squarely resolved in Panasonic Communications Imaging
Corporation of the Philippines (formerly Matsushita Business Machine Corporation of the Philippines) v.
Commissioner of Internal Revenue (G.R. No. 178090, 612 SCRA 28, February 8, 2010). In that case, the
claim for tax credit/refund was denied for non-compliance with Section 4.108-1 of Revenue
Regulations No. 7-95, which requires the word zero rated to be printed on the invoices/receipts
covering zero-rated sales.
From the abovementioned decision, the Court ruled that the appearance of the word zero-rated
on the face of invoices covering zero-rated sales prevents buyers from falsely claiming input VAT

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from their purchases when no VAT was actually paid. If, absent such word, a successful claim for
input VAT is made, the government would be refunding money it did not collect.
Stare decisis et non quieta movere. Courts are bound by prior decisions. Thus, once a case has
been decided one way, courts have no choice but to resolve subsequent cases involving the same
issue in the same manner [Agencia Exquisite of Bohol, Incorporated v. Commissioner of Internal Revenue, G.R.
Nos. 150141, 157359 and 158644, February 12, 2009, 578 SCRA 539, 550].

MINDANAO ll GEOTHERMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL

REVENUE, G.R. No. 193301 and G.R. No. 194637, March 11, 2013
Taxation; prescriptive periods to file VAT refund. 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:
(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 6 October 2010, as an exception to
the mandatory and jurisdictional 120+30 day periods.

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MINDANAO I GEOTHERMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL

REVENUE
G.R. Nos. 193301, 194637
March 11, 2013
Carpio, J.
Petition for Review
DOCTRINE: SUMMARY OF RULES ON PRESCRIPTIVE PERIODS INVOLVING VAT
(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 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 6 October
2010, as an exception to the mandatory and jurisdictional 120+30 day periods.
FACTS: Mindanao I and II (Mindanao) are value-added taxpayers, and Block Power
Production Facilities accredited by the Department of Energy. They had a BuildOperate-Transfer contract with the Philippine National Oil CorporationEnergy
Development Company (PNOC-EDC), whereby Mindanao converts steam supplied to it
by PNOC-EDC into electricity, and then delivers the electricity to the National Power
Corporation (NPC) in behalf of PNOC-EDC.
The Electric Power Industry Reform Act of 2000 (EPIRA, RA 9136), amended the
Tax Reform Act of 1997 (RA 8424), when it decreed that sales of power by generation
companies shall be subjected to a zero rate of VAT. Pursuant to EPIRA, Mindanao I
and II filed their claims for the issuance of tax credit certificates on unutilized or excess
input taxes from their sales of generated power and delivery of electric capacity and
energy to NPC.
The CTA En Banc denied Mindanao IIs claims for refund tax credit for the first
and second quarters of 2003, and Mindanao Is claims for refund/tax credit for the first,
second, third, and fourth quarters of 2003, for being filed out of time.
The following are relevant dates:

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CTA
Case
No.

Period
Covered by
VAT Sales
in 2003

MINDANAO II
7227 1st Quarter
7287

2nd Quarter

7317

3rd and 4th

Quarters

MINDANAO I
7228 1st Quarter
7286
7318

2nd Quarter
3rd and 4th
Quarters

Close of
quarter
when sales
were
made

Last day for

filing
application
of tax refund /
tax credit
certificate with
the CIR

Actual date
of filing
application
for tax
refund /
credit
(admin
claim)

Last day for

filing case
with CTA

Actual Date
of filing
case with
CTA
(judicial
claim)

12 Sept
2005
12 Sept
2005
12 Sept
2005

22 April
2005
7 July 2005

22 April
2005
7 July 2005
9 Sept 2005

31 March
2003
30 June 2003

31 March 2005

13 April 2005

30 June 2005

13 April 2005

30 Sept 2003

30 Sept 2005

13 April 2005

31 Dec. 2003

2 Jan. 2006 (31

Dec. 2005 being
a Saturday)

31 March
2003
30 June 2003
30 Sept 2003

31 March 2005

4 April 2005

1 Sept 2005

30 June 2005
30 Sept 2005

4 April 2005
4 April 2005

1 Sept 2005
1 Sept 2005

31 Dec. 2003

2 January 2006
(31 Dec. 2005
being a Saturday)

9 Sept 2005

CTA (En Banc):

Mindanao IIs judicial claims were filed beyond the period allowed in Sec. 112(A), by
which the reckoning of the two-year prescriptive period for filing the application for refund or
credit of input VAT attributable to zero-rated sales or effectively zero-rated sales shall be
counted from the close of the taxable quarter when the sales were made (regardless of whether
the tax was actually paid), according to CIR v. Mirant Pagbilao Corporation (Mirant). Also, the
sale of the fully-depreciated Nissan Patrol is incidental to Mindanao IIs VAT zero-rated
transactions and is VATable pursuant to Sec. 105.
Mindanao Is claims for the first, second, third and fourth quarters of 2003 were filed out
of time. Section 229 is inapplicable in light of Mirant. Moreover, the procedure prescribed under
Section 112(C) should be followed first before the CTA En Banc can act on Mindanao Is claim.
Mindanao I and II went up to the Supreme Court arguing that their claims were timely
filed pursuant to the case of Atlas, which was then the controlling ruling at the time of the filing.
The Mirant case, which uses the close of the taxable quarter when the sales were made as the
reckoning date in counting the two-year prescriptive period, cannot be applied retroactively to
their prejudice.
[1] ISSUE: Whether the reckoning date for counting the two-year prescriptive period in Section
112 should be counted from the end of the taxable quarter when the sales were made (Mirant)
or the date of filing the return (Atlas)?

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HELD: Neither Atlas nor Mirant applies, because when Mindanao II and Mindanao I filed their
respective administrative and judicial claims in 2005, neither case had been promulgated. Atlas
was promulgated on 8 June 2007, Mirant on 12 September 2008. Besides, Atlas merely stated
that the two-year prescriptive period should be counted from the date of payment of the output
VAT, not from the close of the taxable quarter when the sales involving the input VAT were
made. The Atlas doctrine did not interpret, expressly or impliedly, the 120+30 day periods.
Prescriptive Period for the Filing of Administrative Claims
Section 112(A) of the 1997 Tax Code was the applicable law at the time of filing of the
claims in issue, therefore the claims needed to have been filed within two (2) years after the
close of the taxable quarter when the sales were made. Mindanao I and IIs administrative
claims for the first quarter of 2003 had prescribed, but their claims for the second, third and
fourth quarters of 2003 were filed on time.
Prescriptive Period for the Filing of Judicial Claims
In determining whether the claims for the second, third and fourth quarters of 2003 had
been properly appealed, there is still see no need to refer to either Atlas or Mirant, or even to
Sec. 229. The second paragraph of Sect. 112(C) is clear that the taxpayer can appeal to the
CTA within thirty (30) days from the receipt of the decision denying the claim or after the
expiration of the one hundred twenty day-period.
The 120+30 day periods are mandatory and jurisdictional. The taxpayer cannot simply
file a petition with the CTA without waiting for the Commissioners decision within the 120-day
period, because otherwise there would be no decision or deemed a denial decision for the
CTA to review. Moreover, Sec. 112(C) expressly grants a 30-day period to appeal to the CTA,
and this period need not necessarily fall within the two-year prescriptive period, as long as the
administrative claim is filed within such time. The said prescriptive period does not refer to the
filing of the judicial claim with the CTA, but to the administrative claim with the Commissioner.
San Roque: Recognition of BIR Ruling No. DA-489-03
BIR Ruling No. DA-489-03 provided that the taxpayer-claimant need not wait for the
lapse of the 120-day period before it could seek judicial relief with the CTA. In the consolidated
cases of CIR v. San Roque, however, the Supreme Court En Banc held that the taxpayer
cannot simply file a petition with the CTA without waiting for the Commissioners decision within
the 120-day jurisdictional period. Notwithstanding, the Court also held in San Roque that BIR
Ruling No. DA-489-03 constitutes equitable estoppel in favor of taxpayers. Being a general
interpretative rule, it can be relied on by all taxpayers from the time of its issuance on 10
December 2003 up to its reversal by the Court in Commissioner of Internal Revenue v. Aichi
Forging Company of Asia, Inc. (Aichi) on 6 October 2010, where this Court held that the
120+30 day periods are mandatory and jurisdictional.
Mindanao II filed its administrative claims for the second, third, and fourth quarters of
2003 on 13 April 2005. Counting 120 days after filing of the administrative claim (11 August
2005) and 30 days after the CIRs denial by inaction, the last day for filing a judicial claim
with the CTA for the second, third, and fourth quarters of 2003 was on 12 September 2005.
However, the judicial claim could not be filed earlier than 11 August 2005, which was the
expiration of the 120-day period for the Commissioner to act.

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Mindanao II filed its judicial claim for the second quarter before the expiration of the
120-day period; it was thus prematurely filed. However, pursuant to San Roque, the claim
qualifies under the exception to the strict application of the 120+30 day periods. Its judicial
claims for the third quarter and fourth quarter of 2003 were filed on time.
Mindanao I filed its administrative claims for the second, third, and fourth quarters of
2003 on 4 April 2005. Counting 120 days after filing of the administrative claim with the CIR
(2 August 2005) and 30 days after the CIRs denial by inaction, the last day for filing a
judicial claim was on 1 September 2005. However, the judicial claim cannot be filed earlier
than 2 August 2005, which is the expiration of the 120-day period for the Commissioner to
act on the claim. Mindanao I prematurely filed its judicial claim for the second quarter of
2003 but claim qualifies under the exception in San Roque. Its judicial claims for the third
and fourth quarters of 2003, however, were filed after the prescriptive period.
[2] ISSUE: Whether the sale of the fully-depreciated Nissan Patrol is a one-time transaction not
incidental to the VAT zero-rated operation of Mindanao II, thus not VATable?
Mindanao II asserts that the sale of a fully depreciated Nissan Patrol is not an incidental
transaction in the course of its business but an isolated transaction that should not have been
subject to 10% VAT. It does not follow that an isolated transaction cannot be an incidental
transaction for purposes of VAT liability. Indeed, a reading of Section 105 would show that a
transaction in the course of trade or business includes transactions incidental thereto. In the
course of its business, Mindanao II bought and eventually sold a Nissan Patrol. Prior to the sale,
the Nissan Patrol was part of Mindanao IIs property, plant, and equipment. Therefore, the sale
of the Nissan Patrol is an incidental transaction made in the course of Mindanao IIs business
which should be liable for VAT.
DISPOSITION: Petitions partially granted. The claim of Mindanao II for the first quarter of 2003
is DENIED, while its claims for the second, third, and fourth quarters of 2003 are GRANTED.
The claims of Mindanao I for the first, third, and fourth quarters of 2003 are DENIED while its
claim for the second quarter of 2003 is GRANTED.