Toshiba Information Equipment (Phils.) Inc. v. CIR, G.R. No.

157594, 09 March 2010

FACTS
Toshiba is a domestic corporation registered with the Philippine
Economic Zone Authority (PEZA) as an Economic Zone
(ECOZONE) export enterprise.It filed two separate applications for
tax credit/refund of its unutilized input VAT payments. The CIR
denied the application. On appeal, the CTA ruled that Toshiba is
entitled to the credit/refund of the input VAT paid on its purchases
of goods and services relative to such zero-rated export sales. The
Court of Appeals reversed the decision of the CTA in the petition
for review stating that Toshiba is a tax exempt entity under R.A.
No. 7916 thus not entitled to refund the VAT payments made in the
domestic purchase of goods and services.

ISSUE
Is Toshiba entitled to VAT refund?

HELD
YES. Such export sales took place before October 15, 1999, when
the old rule on the VAT treatment of PEZA-registered enterprises
still applied. Under this old rule, it was not only possible, but even
acceptable, for Toshiba, availing itself of the income tax holiday
option under Section 23 of Republic Act No. 7916, in relation to
Section 39 of the Omnibus Investments Code of 1987, to be subject
to VAT, both indirectly (as purchaser to whom the seller shifts the
VAT burden) and directly (as seller whose sales were subject to
VAT, either at ten percent [10%] or zero percent [0%])