COMMISSIONER OF INTERNAL REVENUE v.

MANILA MINING CORPORATION 468 For a judicial claim for refund to prosper, however, MMC must not only prove that
SCRA 571 (2005) it is a VAT registered entity and that it filed its claims within the prescriptive period.
It must substantiate the input VAT paid by purchase invoices or official receipts. It is
For a judicial claim for refund to prosper, the party must not only prove that it is a required that a photocopy of the purchase invoice or receipt evidencing the value
VAT registered entity, it must substantiate the input VAT paid by added tax paid shall be submitted together with the application. This MMC failed to
purchase invoices or official receipts. do.

Respondent Manila Mining Corporation (MMC), a VAT-registered enterprise, filed

its VAT Returns for the year of 1991 with the BIR. MMC, relying on Sec. 2 of
Executive Order (E.O.) 581 as amended which provides that gold sold to the Central
Bank is considered an export sale which under Section 100(a)(1) of the NIRC, as
amended by E.O. 273, is subject to zero-rated if such sale is made by a VAT-
registered person, filed an application for tax refund/credit of the input VAT it paid
from such year. The Commissioner of Internal Revenue (CIR) failed to act upon
MMC’s application within sixty (60) days from the dates of filing. MMC was then
filed a Petition for Review against the CIR before the Court of Tax Appeals (CTA)
seeking the issuance of tax credit certificate or refund. The CIR specifically denied
the veracity of the amounts stated in MMC’s VAT returns and application for
credit/refund as the same continued to be under investigation. However, such was
not verified prompting MMC to file a “SUPPLEMENT (To Annotation of Admission)”
alleging that as the reply was not under oath, “an implied admission of its requests
arose” as a consequence thereof. The CTA granted MMC’s Request for Admissions
and denied the CIR’s Motion to Admit Reply. The CTA denied MMC’s claim for
refund of input VAT for failure to prove that it paid the amounts claimed as such for
the year 1991, no sales invoices, receipts or other documents as required having
been presented. Upon appeal of MMC to the Court of Appeals (CA), it reversed the
decision of the CTA and granted MMC’s claim for refund or issuance of tax credit
certificates on the ground that there was no need for MMC to present the
photocopies of the purchase invoices or receipts evidencing the VAT paid and the
best evidence rule is misplaced since this rule does not apply to matters which have
been judicially admitted.

ISSUE: Whether or not MMC adduced sufficient evidence to prove its claim for
refund of its input VAT for taxable year 1991.

HELD: As export sales, the sale of gold to the Central Bank is zero-rated, hence,
no tax is chargeable to it as purchaser. Zero rating is primarily intended to be
enjoyed by the seller – MMC, which charges no output VAT but can claim a refund
of or a tax credit certificate for the input VAT previously charged to it by suppliers.
NORTHERN MINDANAO POWER CORPORATION, Petitioner VS. COMMISSIONER OF
INTERNAL REVENUE, Respondent (G.R. No. 185115, February 18, 2015)
FACTS:
 Petitioner is engaged in the production sale of electricity as an independent
power producer and sells electricity to National Power Corporation (NPC). It
allegedly incurred input value-added tax (VAT) on its domestic purchases of goods
and services that were used in its production and sale of electricity to NPC. For the
3rd and the 4th quarters of taxable year 1999, petitioner’s input VAT totaled to
P2,490,960.29, while that incurred for all the quarters of taxable year 2000
amounted to P3,920,932.55.
 Petitioner filed an administrative claim for a refund on 20 June 2000 for the 3rd
and the 4th quarters of taxable year 1999, and on 25 July 2001 for taxable year
2000 in the sum of P6,411,892.84.
 Alleging inaction of respondent on these administrative claims, petitioner filed a
Petition with the CTA on 28 September 2001. The CTA First Division denied the
Petition and the subsequent Motion for Reconsideration for lack of merit. The Court
in Division found that the term "zero-rated" was not imprinted on the receipts or
invoices presented by petitioner in violation of Section 4.108-1 of Revenue
Regulations No. 7-95. Petitioner failed to substantiate its claim for a refund and to
strictly comply with the invoicing requirements of the law and tax regulations.
 On appeal to the CTA En Banc, the Petition was likewise denied. The court ruled
that for every sale of services, VAT shall be computed on the basis of gross receipts
indicated on the official receipt. Official receipts are proofs of sale of services and
cannot be interchanged with sales invoices as the latter are used for the sale of
goods.
ISSUE:
1.) Whether or not the CTA acquired jurisdiction over the claim for a refund of input
VAT covering the 3rd and the 4th quarters of taxable year 1999 and on 25 July 2001
covering all the quarters of taxable year 2000?
2.) Whether or not Section 4.108-1 of Revenue Regulations (RR) No. 7- 95 which
expanded the statutory requirements for the issuance of official receipts and
invoices found in Section 113 of the 1997 Tax Code by providing for the additional
requirement of the imprinting of the terms “zero-rated” is constitutional?
RULING:
The CTA did not acquire jurisdiction over the claim for a refund of input VAT
covering the 3rd and the 4th quarters of taxable year 1999 and taxable year 2000.
Pursuant to Section 112(D) of the NIRC of 1997, CIR had 120 days from the date of
submission of complete documents in support of the application within which to
decide on the administrative claim. The burden of proving entitlement to a tax
refund is on the taxpayer. Absent any evidence to the contrary, it is presumed that
in order to discharge its burden, petitioner attached to its applications complete
supporting documents necessary to prove its entitlement to a refund. Thus, the
120-day period for the CIR to act on the administrative claim commenced on 20
June 2000 and 25 July 2001.
Both judicial claims must be disallowed.
* Claim for a refund of input VAT covering the 3rd and the 4th quarters of taxable
year 1999: Counting 120 days from 20 June 2000, the CIR had until 18 October 2000
within which to decide on the claim of petitioner for the period covering the 3rd
and the 4th quarters of taxable year 1999. If after the expiration of that period
respondent still failed to act on the administrative claim, petitioner could elevate
the matter to the court within 30 days or until 17 November 2000.
Petitioner belatedly filed its judicial claim with the CTA on 28 September 2001.
Petitioner’s claim for the 3rd and the 4th quarters of taxable year 1999 was filed
319 days after the expiration of the 30-day period. It already lost its right to claim a
refund or credit of its alleged excess input VAT attributable to zero-rated or
effectively zero-rated sales for the 3rd and the 4th quarters of taxable year 1999 by
virtue of its own failure to observe the prescriptive periods.
* Claim for the refund of input VAT covering all quarters of taxable year 2000:
For the year 2000, records show that petitioner filed its Petition with the CTA on 28
September 2001 without waiting for the expiration of the 120-day period. Barely 64
days had lapsed when the judicial claim was filed with the CTA. On 28 September
2001
– the date on which petitioner filed its judicial claim for the period covering taxable
year 2000 - the 120+30 day mandatory period was already in the law and BIR Ruling
No. DA-489-03 had not yet been issued. Considering this fact, petitioner did not
have an excuse for not observing the 120+30 day period. The judicial claim was thus
prematurely filed for failure of petitioner to observe the 120- day waiting period.

Revenue Regulations (RR) No. 7-95 is constitutional. In fact, this Court has
consistently held as fatal the failure to print the word "zero-rated" on the VAT
invoices or official receipts in claims for a refund or credit of input VAT on zero-
rated sales, even if the claims were made prior to the effectivity of R.A. 9337.
Clearly then, the present Petition must be denied.

A VAT invoice is the seller's best proof of the sale of goods or services to the buyer,
while a VAT receipt is the buyer's best evidence of the payment of goods or services
received from the seller. A VAT invoice and a VAT receipt should not be confused
and made to refer to one and the same thing. Certainly, neither does the law intend
the two to be used alternatively.

QUESTIONS:

a.) What are the information(s) contained in the VAT invoice or VAT official receipt?
Cite your legal basis.

b.) If in case, the taxpayer claiming refund failed to print the needed information in
the VAT invoice or VAT official receipt, will it cause dismissal of the claim? Explain
your answer.
Contex Corporation vs Commissioner of Internal Revenue favor of the government. Otherwise stated, any exemption from the payment of a
tax must be clearly stated in the language of the Law, it cannot be merely implied
(G.R. No.151135, July 2, 2004) therefrom. In the case of the VAT, Section 109, RA 8424, clearly enumerates the
transactions exempted from VAT. The services rendered by COMASERCO do not fall
FACTS: Petitioner Contex Corporation (CONTEX) is a domestic corporation engaged
within the exemptions.
in the business manufacturing hospital textiles and garments and other hospital
supplies for export. Petitioner’s place of business is at the Subic Bay Freeport Zone
(SBFZ). It is duly registered with the Subic Bay Metropolitan Authority (SBMA) as a
Subic Freeport Enterprise, pursuant to the provisions of RA 7227. As an SBMA-
registered firm, petitioner is except from all local and national international
revenue taxes except for the 5% preferential tax provided in RA 7227. Petitioner
also registered with the BIR as a The Court of Appeals reversed the CTA’s ruling,
hence, this petition.

Issues: Was COMASERCO engaged in the sale of services, and thus, liable to pay
VAT?

HELD: Yes. Section 99 of the National Internal Revenue Code of 1986 provides
that: “any person who, in the course of trade or business sells, barters or
exchanges goods, renders services, or engages in similar transactions and any
person, who, imports goods shall be subject to VAT imposed in Sections 100 to 102
of this Code. The Higher Court clarified the meaning of the term “in the course of
trade or business” by citing Section 105 of RA 8424 which took effect on January 1,
1998.

The phrase “in the course of trade or business” means the regular conduct or
pursuit of a commercial or an economic activity, including transactions incidental
thereto, by any person regardless of whether or not the person engaged therein is
a non-stock non-profit organization (irrespective of the disposition of its net income
and whether or not it sells exclusively to members or their guests) or government
entity.

It is immaterial whether the primary purpose of a corporation indicates that

it receives payments for services rendered to its affiliates on a reimbursement-of-
cost basis only, without realizing profit, for purposes of determining liability for VAT
on services rendered. As long as the entity provides services for a fee, remuneration
or consideration, then the service rendered is subject to VAT.

Secondly, it is a rule that business taxes are the lifeblood of the nation, statutes
that allow exemptions are construed strictly against the grantee and liberally in