KAPATIRAN NG MGA NAGLILINGKOD SA PAMAHALAAN VS.

TAN 1998
163 SCRA 371
Petitioners: HERMINIGILDO C. DUMLAO, GERONIMO Q. QUADRA, and MARIO
C. VILLANUEVA
Respondents: HON. BIENVENIDO TAN, as Commissioner of Internal Revenue
FACTS:
EO 372 was issued by the President of the Philippines which amended the
Revenue Code, adopting the value-added tax (VAT) effective January 1, 1988.
Four petitions assailed the validity of the VAT Law from being beyond the
President to enact; for being oppressive, discriminatory, regressive and
violative of the due process and equal protection clauses, among others, of
the Constitution. The Integrated Customs Brokers Association particularly
contend that it unduly discriminate against customs brokers (Section 103r)
as the amended provision of the Tax Code provides that service performed
in the exercise of profession or calling (except custom brokers) subject to
occupational tax under the Local Tax Code and professional services
performed by registered general professional partnerships are exempt from
VAT.
ISSUE:
Whether the E-VAT law is void for being discriminatory against customs
brokers
RULING:
No. The phrase except custom brokers is not meant to discriminate against
custom brokers but to avert a potential conflict between Sections 102 and
103 of the Tax Code, as amended. The distinction of the customs brokers
from the other professionals who are subject to occupation tax under the
Local Tax Code is based on material differences, in that the activities of
customs partake more of a business, rather than a profession and were thus
subjected to the percentage tax under Section 174 of the Tax Code prior to
its amendment by EO 273. EO 273 abolished the percentage tax and
replaced it with the VAT. If the Association did not protest the classification of
customs brokers then, there is no reason why it should protest now.

TOLENTINO VS. SECRETARY OF FINANCE

235 SCRA 630
PETITIONERS: ARTURO M. TOLENTINO
RESPONDENTS: THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE
FACTS:
RA 7716, otherwise known as the Expanded Value-Added Tax Law, is an act
that seeks to widen the tax base of the existing VAT system and enhance its
administration by amending the National Internal Revenue Code. There are
various suits questioning and challenging the constitutionality of RA 7716 on
various grounds.
Tolentino contends that RA 7716 did not originate exclusively from the House
of Representatives but is a mere consolidation of HB. No. 11197 and SB. No.
1630 and it did not pass three readings on separate days on the Senate thus
violating Article VI, Sections 24 and 26(2) of the Constitution, respectively.
Art. VI, Section 24: All appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills shall
originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.
Art. VI, Section 26(2): No bill passed by either House shall become a law
unless it has passed three readings on separate days, and printed copies
thereof in its final form have been distributed to its Members three days
before its passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon the last
reading of a bill, no amendment thereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and the yeas and nays
entered in the Journal.

ISSUE:
Whether or not RA 7716 violated Art. VI, Section 24 and Art. VI, Section 26(2)
of the Constitution.
HELD: No. The phrase originate exclusively refers to the revenue bill and
not to the revenue law. It is sufficient that the House of Representatives
initiated the passage of the bill which may undergo extensive changes in the
Senate. SB. No. 1630, having been certified as urgent by the President need
not meet the requirement not only of printing but also of reading the bill on
separate days.
ABAKADA Guro Party List vs. Ermita
469 SCRA 9357
PETITIONERS: SAMSON S. ALCANTARA and ED VINCENT S. ALBANO
RESPONDENTS: EDUARDO ERMITA; CESAR PURISIMA; and GUILLERMO
PARAYNO, JR
FACTS:
Before R.A. No. 9337 took effect, petitioners ABAKADA GURO Party List, et al.,
filed a petition for prohibition on May 27, 2005 questioning the
constitutionality of Sections 4, 5 and 6 of R.A. No. 9337, amending Sections
106, 107 and 108, respectively, of the National Internal Revenue Code
(NIRC). Section 4 imposes a 10% VAT on sale of goods and properties,
Section 5 imposes a 10% VAT on importation of goods, and Section 6
imposes a 10% VAT on sale of services and use or lease of properties. These
questioned provisions contain a uniformp ro v is o authorizing the President,
upon recommendation of the Secretary of Finance, to raise the VAT rate to
12%, effective January 1, 2006, after specified conditions have been
satisfied. Petitioners argue that the law is unconstitutional.
ISSUES:
1. Whether or not there is a violation of Article VI, Section 24 of the
Constitution.
2. Whether or not there is undue delegation of legislative power in violation
of Article VI Sec 28(2) of the Constitution.

3. Whether or not there is a violation of the due process and equal protection
under Article III Sec. 1 of the Constitution.
RULING:
1. Since there is no question that the revenue bill exclusively originated in
the House of Representatives, the Senate was acting within its constitutional
power to introduce amendments to the House bill when it included provisions
in Senate Bill No. 1950 amending corporate income taxes, percentage, and
excise and franchise taxes.
2. There is no undue delegation of legislative power but only of the discretion
as to the execution of a law. This is constitutionally permissible. Congress
does not abdicate its functions or unduly delegate power when it describes
what job must be done, who must do it, and what is the scope of his
authority; in our complex economy that is frequently the only way in which
the legislative process can go forward.
3. The power of the State to make reasonable and natural classifications for
the purposes of taxation has long been established. Whether it relates to the
subject of taxation, the kind of property, the rates to be levied, or the
amounts to be raised, the methods of assessment, valuation and collection,
the States power is entitled to presumption of validity. As a rule, the
judiciary will not interfere with such power absent a clear showing of
unreasonableness, discrimination, or arbitrariness.

ATLAS CONSOLIDATED MINING DEVT CORP vs. CIR

524 SCRA 73, 103
PETITIONERS: ATLAS CONSOLIDATED MINING AND DEVELOPMENT
CORPORATION
RESPONDENTS: COMMISSIONER OF INTERNAL REVENUE
FACTS: Petitioner corporation, a VAT-registered taxpayer engaged in mining,
production, and sale of various mineral products, filed claims with the BIR for
refund/credit of input VAT on its purchases of capital goods and on its zerorated sales in the taxable quarters of the years 1990 and 1992. BIR did not
immediately act on the matter prompting the petitioner to file a petition for
review before the CTA. The latter denied the claims on the grounds that for
zero-rating to apply, 70% of the company's sales must consists of exports,
that the same were not filed within the 2-year prescriptive period (the claim
for 1992 quarterly returns were judicially filed only on April 20, 1994), and
that petitioner failed to submit substantial evidence to support its claim for
refund/credit.
The petitioner, on the other hand, contends that CTA failed to consider the
following: sales to PASAR and PHILPOS within the EPZA as zero-rated export
sales; the 2-year prescriptive period should be counted from the date of filing
of the last adjustment return which was April 15, 1993, and not on every end
of the applicable quarters; and that the certification of the independent CPA

attesting to the correctness of the contents of the summary of suppliers

invoices or receipts examined, evaluated and audited by said CPA should
substantiate its claims.
ISSUE: Did the petitioner corporation sufficiently establish the factual bases
for its applications for refund/credit of input VAT?
HELD:
No. Although the Court agreed with the petitioner corporation that the twoyear prescriptive period for the filing of claims for refund/credit of input VAT
must be counted from the date of filing of the quarterly VAT return, and that
sales to PASAR and PHILPOS inside the EPZA are taxed as exports because
these export processing zones are to be managed as a separate customs
territory from the rest of the Philippines, and thus, for tax purposes, are
effectively considered as foreign territory, it still denies the claims of
petitioner corporation for refund of its input VAT on its purchases of capital
goods and effectively zero-rated sales during the period claimed for not
being established and substantiated by appropriate and sufficient evidence.
Tax refunds are in the nature of tax exemptions. It is regarded as in
derogation of the sovereign authority, and should be construed in strictissimi
juris against the person or entity claiming the exemption. The taxpayer who
claims for exemption must justify his claim by the clearest grant of organic or
statute law and should not be permitted to stand on vague implications.

CIR vs. Pilipinas Shell Petroleum Corporation

478 SCRA 61

FACTS: Shell filed a claim for refund for excise taxes it paid on sales of gas
and fuel oils to various international carriers. The Court initially denied the
claims but the respondent filed a Motion for Reconsideration.

ISSUE: Whether or not Shell is entitled to refund for payment of the excise
taxes

RULING: Yes. Section 135 is concerned with the exemption of the article itself
and not the ostensible exemption of the international carrier-buyer. In
addition, the failure to grant exemption will cause adverse impact on the
domestic oil industry (similar to the practice of tankering) as well as result
to violations of international agreements on aviation. Thus, respondent, as

the statutory taxpayer who is directly liable to pay the excise tax, is entitled
to a refund or credit for taxes paid on products sold to international carriers.

Fort Bonifacio Dev. Corp. vs. CIR

583 SCRA 168
Petitioner: FORT BONIFACIO DEVELOPMENT CORPORATION
Respondents: OMMISSIONER OF INTERNAL REVENUE AND REVENUE DISTRICT
OFFICER, REVENUE DISTRICT NO. 44, TAGUIG AND PATEROS, BUREAU OF
INTERNAL REVENUE
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 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 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 VATregistered persons, whether or not they previously paid taxes in the
acquisition of their beginning inventory of goods, materials and supplies.
CIR vs. Aichi Fong Company of Asia
632 SCRA 422
CIR v. AICHI FORGING COMPANY OF ASIA, INC.

Facts:
Petitioner filed a claim of refund/credit of input vat in relation to its zerorated sales from July 1, 2002 to September 30, 2002. The CTA 2nd Division
partially granted respondents claim for refund/credit. Petitioner filed a

Motion for Partial Reconsideration, insisting that the administrative and the
judicial claims were filed beyond the two-year period to claim a tax
refund/credit provided for under Sections 112(A) and 229 of the NIRC. He
reasoned that since the year 2004 was a leap year, the filing of the claim for
tax refund/credit on September 30, 2004 was beyond the two-year period,
which expired on September 29, 2004. He cited as basis Article 13 of the
Civil Code, which provides that when the law speaks of a year, it is
equivalent to 365 days. In addition, petitioner argued that the simultaneous
filing of the administrative and the judicial claims contravenes Sections 112
and 229 of the NIRC. According to the petitioner, a prior filing of an
administrative claim is a condition precedent before a judicial claim can be
filed. The CTA denied the MPR thus the case was elevated to the CTA En Banc
for review. The decision was affirmed. Thus the case was elevated to the
Supreme Court. Respondent contends that the non-observance of the 120day period given to the CIR to act on the claim for tax refund/credit in
Section 112(D) is not fatal because what is important is that both claims are
filed within the two-year prescriptive period. In support thereof, respondent
cited Commissioner of Internal Revenue v. Victorias Milling Co., Inc. [130 Phil
12 (1968)] where it was ruled that if the CIR takes time in deciding the
claim, and the period of two years is about to end, the suit or proceeding
must be started in the CTA before the end of the two-year period without
awaiting the decision of the CIR.

Issues:
1. Whether or not the claim for refund was filed within the prescribed period
2. Whether or not the simultaneous filing of the administrative and the
judicial claims contravenes Section 229 of the NIRC, which requires the prior
filing of an administrative claim, and violates the doctrine of exhaustion of
administrative remedies

Held:
1. Yes. As ruled in the case of Commissioner of Internal Revenue v. Mirant
Pagbilao Corporation (G.R. No. 172129, September 12, 2008), the two-year
period should be reckoned from the close of the taxable quarter when the
sales were made.

In Commissioner of Internal Revenue v. Primetown Property Group, Inc (G.R.

No. 162155, August 28, 2007, 531 SCRA 436), we said that as between the
Civil Code, which provides that a year is equivalent to 365 days, and the
Administrative Code of 1987, which states that a year is composed of 12
calendar months, it is the latter that must prevail being the more recent law,
following the legal maxim, Lex posteriori derogat priori. Thus, applying this to
the present case, the two-year period to file a claim for tax refund/credit for
the period July 1, 2002 to September 30, 2002 expired on September 30,
2004. Hence, respondents administrative claim was timely filed.
2. Yes. We find the filing of the judicial claim with the CTA premature.
Section 112(D) of the NIRC clearly provides that the CIR has 120 days, from
the date of the submission of the complete documents in support of the
application [for tax refund/credit], within which to grant or deny the claim.
In case of full or partial denial by the CIR, the taxpayers recourse is to file an
appeal before the CTA within 30 days from receipt of the decision of the CIR.
However, if after the 120-day period the CIR fails to act on the application for
tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the
CIR to CTA within 30 days.
Subsection (A) of Section 112 of the NIRC states that any VAT-registered
person, whose sales are zero-rated or effectively zero-rated may, within two
years after the close of the taxable quarter when the sales were made, apply
for the issuance of a tax credit certificate or refund of creditable input tax
due or paid attributable to such sales. The phrase within two (2) years x x
x apply for the issuance of a tax credit certificate or refund refers to
applications for refund/credit filed with the CIR and not to appeals made to
the CTA. The case of Commissioner of Internal Revenue v. Victorias Milling,
Co., Inc. is inapplicable as the tax provision involved in that case is Section
306, now Section 229 of the NIRC. Section 229 does not apply to
refunds/credits of input VAT.
The premature filing of respondents claim for refund/credit of input VAT
before the CTA warrants a dismissal inasmuch as no jurisdiction was acquired
by the CTA.

COMMISSIONER OF INTERNAL REVENUE vs. SM PRIME HOLDINGS, INC.

ISSUE:

Are the gross receipts derived by operators or proprietors of cinema/theater

houses from admission tickets subject to VAT?

HELD:
NO. While (1) the enumeration under Section 108 on the VAT-taxable services
is not exhaustive and (2) the said list includes the lease of motion picture
films, films, tapes and discs, the said activity however is not the same as
showing or exhibition of motion pictures or films. Thus, since the showing or
exhibition of motion pictures or films is not in the enumeration, the CIR must
show that it falls under the phrase similar services. The repeal of the Local
Tax Code by the LGC of 1991 is not a legal basis for the imposition of VAT on
the gross receipts of cinema/theater operators or proprietors derived from
admission tickets. The removal of the prohibition (on the national
government to tax certain activities) under the Local Tax Code did not grant
nor restore to the national government the power to impose amusement tax
on cinema/theater operators or proprietors. Neither did it expand the
coverage of VAT.