TEAM ENERGY CORPORATION (FORMERLY: MIRANT PAGBILAO CORPORATION AND

SOUTHERN ENERGY QUEZON, INC.), Petitioner, v. COMMISSIONER OF INTERNAL

REVENUE,

FACTS: Team Energy is a VAT-registered entity engaged in power generation and electricity sale to
National Power Corporation (NPC)

November 13, 2002, Team Energy filed with the (BIR) "an Application for Effective Zero-Rate of its supply
of electricity to the NPC, which was subsequently approved."6

For the year 2003, Team Energy filed its Original and Amended Quarterly VAT Returns. On December 17,
2004, Team Energy filed with the Revenue District Office No. 60 in Lucena City a claim for refund of
unutilized input VAT in the amount of P83,465,353.50, for the first to fourth quarters of taxable year 2003.10

On April 22, 2005, Team Energy appealed before the Court of Tax Appeals its 2003 first quarter VAT
claim of PI 5,085,320.31. The appeal was docketed as CTA Case No. 7229.11

Opposing the appeal, the Commissioner averred that the amount claimed by Team Energy was not properly
documented and that NPC's exemption from taxes did not extend to its electricity supplier such as Team
Energy.12

On July 22, 2005, Team Energy appealed its VAT refund claims for the second to fourth quarters of 2003
in the amount of P68,380,033.19, docketed as CTA Case No. 7298.13

The Court of Tax Appeals First Division partially granted Team Energy's petition.16 It held that NPC's
exemption from direct and indirect taxes had long been resolved by this Court.17 Consequently, NPC's
electricity purchases from independent power producers, such as Team Energy, were subject to 0% VAT

The Court of Tax Appeals First Division further ruled that P20,986,302.67 out of the reported zero-rated
sales of P12,208,805,373.67 must be excluded for Team Energy's failure to submit the corresponding
official receipts, leaving a balance of P12,187,819,071.00 as substantiated zero-rated sales.19Consequently,
only 99.83%20 of the validly supported input VAT payments being claimed could be considered.

Finally, on the issue of prescription, the Court of Tax Appeals First Division held that "[t]he reckoning of
the two-year prescriptive period for the filing of a claim for input VAT refund starts from the date of filing
of the corresponding quarterly VAT return."24 Accordingly, Team Energy's administrative claim filed on
December 17, 2004, and judicial claims filed on April 22, 2005 and July 22, 2005 were well within the two
(2)-year prescriptive period.27

Court of Tax Appeals En Banc promulgated its Decision, partially granting Team Energy's petition. It
held that Team Energy's judicial claim for refund for the second, third, and fourth quarters of 2003 was
filed only on July 22, 2005 or beyond the 30-day period prescribed under Section 112(D)33 of the 1997
NIRC.

ISSUE:

First, whether or not the Court of Tax Appeals erred in disallowing Team Energy Corporation's claim for
tax refund of its unutilized input VAT for the second to fourth quarters of 2003 on the ground of lack of
jurisdiction;
Second, whether or not the Court of Tax Appeals erred in failing to recognize the interchangeability of
VAT invoices and VAT official receipts to comply with the substantiation requirements for refunds of
excess or unutilized input tax under Sections 110 and 113 of the 1997 National Internal Revenue Code,
resulting in the disallowance of P258,874.55; and

I-no

The text of the law is clear that resort to an appeal with the Court of Tax Appeals should be made within
30 days either from receipt of the decision denying the claim or the expiration of the 120-day period given
to the Commissioner to decide the claim.

In this case, Team Energy's judicial claim was filed beyond the 30-day period required in Section 112(D).
The administrative claim for refund was filed on December 17, 2004.49 Thus, BIR had 120 days to act on
the claim, or until April 16, 2005. Team Energy, in turn, had until May 16, 2005 to file a petition with the
Court of Tax Appeals but filed its appeal only on July 22, 2005, or 67 days late. Thus, the Court of Tax
Appeals En Banc correctly denied its claim for refund due to prescription.

Team Energy's contention that denial of its duly proven refund claim would constitute unjust enrichment
on the part of the government is misplaced.

"Excess input tax is not an excessively, erroneously, or illegally collected tax."64 A claim for refund of this
tax is in the nature of a tax exemption, allowing VAT-registered persons to recover the excess input taxes
they have paid in relation to their zero-rated sales. "The term 'excess' input VAT simply means that the
input VAT available as [refund] credit exceeds the output VAT, not that the input VAT is excessively
collected because it is more than what is legally due."65

II-NO

claim a refund of unutilized or excess input VAT, purchase of goods or properties must be supported by
VAT invoices, while purchase of services must be supported by VAT official receipts.

Strict compliance with substantiation and invoicing requirements is necessary considering VAT's nature
and VAT system's tax credit method, where tax payments are based on output and input taxes and where
the seller's output tax becomes the buyer's input tax that is available as tax credit or refund in the same
transaction.

It should be noted that the seller will only become liable to pay the output VAT upon receipt of payment
from the purchaser. If we are to use sales invoice in the sale of services, an absurd situation will arise when
the purchaser of the service can claim tax credit representing input VAT even before there is payment of
the output VAT by the seller on the sale pertaining to the same transaction. As a matter of fact[,] if the seller
is not paid on the transaction, the seller of service would legally not have to pay output tax while the
purchaser may legally claim input tax credit thereon. The government ends up refunding a tax which has
not been paid at all. Hence, to avoid this, VAT official receipt for the sale of services is an absolute
requirement.90

In conjunction with this rule, Revenue Memorandum Circular No. 42-0391 expressly provides that an
"invoice is the supporting document for the claim of input tax on purchase of goods whereas official receipt
is the supporting document for the claim of input tax on purchase of services.
If the claim for refund/[tax credit certificate] 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.

WHEREFORE, the Petitions are DENIED. The April 8, 2011 Decision and July 7, 2011 Resolution of
the Court of Tax Appeals En Banc in CTA EB No. 603 are AFFIRMED.

COMMISSIONER OF INTERNAL REVENUE, v. COVANTA ENERGY PHILIPPINE

HOLDINGS, INC.,

FACTS: CIR issued Formal Letters of Demand and Assessment Notices against CEPHI for deficiency
(VAT) and expanded withholding tax (EWT). The deficiency assessments were respectively in the amounts
of P465,593.21 and P288,903.78, or an aggregate amount of P754,496.99, representing CEPHI's VAT and
EWT liabilities for the taxable year 2001.5

CEPHI protested the assessments by filing two (2) separate Letters of Protest on January 19, 2005.
However, the CIR issued another Formal Letter of Demand and Assessment Notice dated January 11, 2005,
assessing CEPHI for deficiency minimum corporate income tax (MCIT) in the amount of P467,801.99,
likewise for the taxable year 2001. This assessment lead to CEPHI filing a Letter of Protest on the MCIT
assessment on February 16, 2015.6

The protests remained unacted upon. Thus, CEPHI filed separate petitions before the CTA, seeking the
cancellation and withdrawal of the deficiency assessments. The petitions were filed on October 10, 2005,
for the deficiency VAT and EWT, and on November 9, 2005, for the deficiency MCIT,

Ruling of the CTA Second Division

CEPHI is liable to pay the amount of P131,791.02 for the deficiency EWT assessment, plus additional
deficiency and delinquency interest. The dispositive portion of this decision states:12

Ruling of the CTA En Banc-Affimed

Prompted by the denial of their petition for review and motion for reconsideration, the CIR elevated the
matter to this Court, by again assailing the validity of CEPHI's tax amnesty. The CIR reiterated its argument
that CEPHI's failure to provide complete information in its Statement of Assets, Liabilities and Net worth
(SALN), particularly the columns requiring the Reference and Basis of Valuation, is sufficient basis to
disqualify CEPHI from the tax amnesty program.25 The CIR also alleged that there is no period of limitation
in challenging CEPHI's compliance with the requirements of the tax amnesty program.26
ISSUE:
WON CEPHI is entitled to the immunities and privileges of the tax amnesty program upon full
compliance with the requirements of RA No. 9480

Ruling of this Court

YES

R.A. No. 9480 governs the tax amnesty program for national internal revenue taxes for the taxable year
2005 and prior years.27 Subject to certain exceptions,28 a taxpayer may avail of this program by complying
with the documentary submissions to the Bureau of Internal Revenue (BIR) and thereafter, paying the
applicable amnesty tax.29

In this case, it is undisputed that CEPHI submitted all the documentary requirements for the tax amnesty
program.35 The CIR argued, however, that CEPHI cannot enjoy the privileges attendant to the tax amnesty
program because its SALN failed to comply with the requirements of R.A. No. 9480. The CIR specifically
points to CEPHI's supposed omission of the information relating to the Reference and Basis for
Valuation columns in CEPHI's original and amended SALNs.36

It is evident from CEPHI's original and amended SALN that the information statutorily mandated in R.A.
No. 9480 were all reflected in its submission to the BIR. While the columns for Reference and Basis for
Valuation were indeed left blank, CEPHI attached schedules to its SALN (Schedules 1 to 7), both
original and amended, which provide the required information under R.A. No. 9480 and its
implementing rules and regulations.38 A review of the SALN form likewise reveals that the information
required in the Reference and Basis for Valuation columns are actually the specific description of the
taxpayer's declared assets. As such, these were deemed filled when CEPHI referred to the attached
schedules in its SALN.
More importantly, CEPHI's SALN is presumed true and correct, pursuant to Section 4 of R.A. No.
9480.39This presumption may be overturned if the CIR is able to establish that CEPHI understated its net
worth by the required threshold of at least 30%.

However, aside from the bare allegations of the CIR, there is no evidence on record to prove that the amount
of CEPHI's net worth was understated.

This clarification, however, does not mean that the amnesty taxpayers would go scot-free in case they
substantially understate the amounts of their net worth in their SALN. The 2007 Tax Amnesty Law
imposes a resolutory condition insofar as the enjoyment of immunities and privileges under the law is
concerned. Pursuant to Section 4 of the law, third parties may initiate proceedings contesting the declared
amount of net worth of the amnesty taxpayer within one year following the date of the filing of the tax
amnesty return and the SALN. Section 6 then states that "All these immunities and privileges shall not
apply x x x where the amount of networth as of December 31, 2005 is proven to be understated to the extent
of thirty percent (30%) or more, in accordance with the provisions of Section 3 hereof." Accordingly,
Section 10 provides that amnesty taxpayers who willfully understate their net worth shall be (a) liable for
perjury under the Revised Penal Code; and (b) subject to immediate tax fraud investigation in order to
collect all taxes due and to criminally prosecute those found to have willfully evaded lawful taxes due.41

Considering that CEPHI completed the requirements and paid the corresponding amnesty tax, it is
considered to have totally complied with the tax amnesty program. As a matter of course, CEPHI is entitled
to the immediate enjoyment of the immunities and privileges of the tax amnesty program. 42Nonetheless,
the Court emphasizes that the immunities and privileges granted to taxpayers under R.A. No. 9480
is not absolute. It is subject to a resolutory condition insofar as the taxpayers' enjoyment of the
immunities and privileges of the law is concerned. These immunities cease upon proof that they
underdeclared their net worth by 30%.

Unfortunately for the CIR, however, there is no such proof in CEPHI's case. The Court, thus, finds it
necessary to deny the present petition. While tax amnesty is in the nature of a tax exemption, which is
strictly construed against the taxpayer,43 the Court cannot disregard the plain text of R.A. No. 9480.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Decision dated
March 30, 2012 and Resolution dated August 16, 2012 of the CTA en banc in CTA EB Case No. 713
are AFFIRMED.

COMMISSIONER OF INTERNAL REVENUE,

vs.
LANCASTER PHILIPPINES, INC.

THE FACTS

Petitioner (CIR) is authorized by law, among others, to investigate or examine and, if necessary, issue
assessments for deficiency taxes.

On the other hand, respondent Lancaster Philippines, Inc. (Lancaster) is a domestic corporation established
in 1963 and is engaged in the production, processing, and marketing of tobacco.

In 1999, the (BIR) issued Letter of Authority authorizing its revenue officers to examine Lancaster's books
of accounts and other accounting records for all internal revenue taxes due from taxable year 1998 to an
unspecified date.

After the conduct of an examination pursuant to the LOA, the BIR issued a Preliminary Assessment Notice
(PAN)8which cited Lancaster for:

1) overstatement of its purchases for the fiscal year April 1998 to March1999; and 2) noncompliance with
the generally accepted accountingprinciple of proper matching of cost and revenue.9 More concretely, the
BIR disallowed the purchases of tobacco from farmers covered by Purchase Invoice Vouchers (PIVs) for
the months of February and March 1998 as deductions against income for the fiscal year April
1998 to March 1999.

Lancaster replied11 to the PAN contending, among other things, that for the past decades, it has used an
entire 'tobacco-cropping season' to determine its total purchases covering a one-year period from 1
October up to 30 September of the followingyear that it has been adopting the 6~month timing difference
to conform to the matching concept (of cost and revenue); and that this has long been installed as part of
the company's system and consistently applied in its accounting books.12

Subsequently on 6 November 2002, Lancaster received from the BIR a final assessment
notice (FAN),16 captioned Formal Letter of Demand andAudit Result/Assessment which assessed
Lancaster's deficiency income tax amounting to Pl l,496,770.18,

Lancaster duly protested17 the FAN. There being no action taken by the Commissioner on its protest,
Lancaster filed on 21 August 2003 a petition for review18 before the CTA Division.

The Proceedings before the CTA

In its petition before the CTA Division, Lancaster essentially reiterated its arguments in the protest against
the assessment, maintaining that the tobacco purchases in February and March 1998 are deductible in its
fiscal year ending 31 March 1999.

After trial, the CTA Division granted the petition of Lancaster.

CTA En Banc found no reversible error in the CTA Division's ruling, thus, it affirmed the cancellation of
the assessment against Lancaster.

ISSUE:

WON REVENUE OFFICERS EXCEEDED THEIR AUTHORITY TO INVESTIGATE THE PERJOD

NOT COVERED BY THEIR LETTER OF AUTHORITY.(YES)

II.

WON CTA can resolve an issue that was not raised by the parties.(YES)26

THE COURT'S RULING

A. The Jurisdiction of the CTA

The law vesting unto the CTA its jurisdiction is Section 7 of Republic Act No. 1125 (R.A. No. 1125),27

Under the aforecited provision, the jurisdiction of the CTA is not limited only to cases which involve
decisions or inactions of the CIR on matters relating to assessments or :refunds but also includes other cases
arising from the NIRC or related laws administered by the BIR. 28 Thus, for instance, we had once held that
the question of whether or not to impose a deficiency tax assessment comes within the purview of the
words "othermatters arising under the National Internal Revenue Code."[[29]

the NIRC authorizes the CIR to examine any book, paper, record, or data of any person. 32 The powers
granted by law to the CIR are intended, among other things, to determine the liability of any person for any
national internal revenue tax.

It is pursuant to such pertinent provisions of the NIRC conferring the powers to the CIR that the petitioner
(CIR) had, in this case, authorized its revenue officers to conduct an examination of the books of account
and accounting records of Lancaster, and eventually issue a deficiency assessment against it.

From the foregoing, it is clear that the issue on whether the revenue officers who had conducted the
examination on Lancaster exceeded their authority may be considered as covered by the terms "other
matters" under Section 7 of R.A. No. 1125 or its amendment, R.A. No. 9282. The authority to make an
examination or assessment, being a matter provided for by the NIRC, is well within the exclusive and
appellate jurisdiction of the CTA.

On whether the CTA can resolve an issue which was not raised by the parties, we rule in the affirmative.

Under Section 1, Rule 14 of A.M. No. 05-11-07-CTA, or the Revised Rules of the Court of Tax
Appeals,33 the CT A is not bound by the issues specifically raised by the parties but may also rule upon
related issues necessary to achieve an orderly disposition of the case.

On the basis thereof, the CTA Division was, therefore, well within its authority to consider in its decision
the question on the scope of authority of the revenue officers who were named in the LOA even though the
parties had not raised the same in their pleadings or memoranda. The CTA En Banc was likewise correct
in sustaining the CTA Division's view concerning such matter.
B. The Scope of the Authority
of the Examining Officers

The audit process normally commences with the issuance by the CIR of a Letter of Authority. The LOA
gives notice to the taxpayer that it is under investigation for possible deficiency tax assessment; at the same
time it authorizes or empowers a designated revenue officer to examine, verify, and scrutinize a taxpayer's
books and records,

In this case, period of examination is the taxable year 1998.

Even though the date after the words "taxable year 1998 to" is unstated, it is not at all difficult to discern
that the period of examination is the whole taxable year 1998. This means that the examination of Lancaster
must cover the FY period from 1April1997 to 31March1998. It could not have contemplated a longer
period. The examination for the full taxable year 1998 only is consistent with the guideline in Revenue
Memorandum Order (RMO) No. 43-90, dated 20 September 1990, that the LOA shall cover a taxable
period not exceeding one taxable year.35 In other words, absent any other valid cause, the LOA issued in
this case is valid in all respects.

Nonetheless, a valid LOA does not necessarily clothe validity to an assessment issued on it, as when the
revenue officers designated in the LOA act in excess or outside of the authority granted them under said
LOA. Recently in CIR v. De La Salle University, Inc.36 we accorded validity to the LOA authorizing the
examination of DLSU for "Fiscal Year Ending 2003and Unverified Prior Years" and correspondingly held
the assessment fortaxable year 2003 as valid because this taxable period is specified in the LOA. However,
we declared void the assessments for taxable years 2001 and 2002 for having been unspecified on separate
LOAs as required under RMO No. 43-90.

we affirmed the cancellation of a deficiency VAT assessment because, while the LOA covered "the period
1997and unverified prior years, " the said deficiency was arrived at based on the records of a later year,
from January to March 1998, or using the fiscal year which ended on 31March1998. We explainedthat the
CIR knew which period should be covered by the investigation and that if the CIR wanted or intended the
investigation to include the year 1998, it would have done so by including it in the LOA or by issuing
another LOA.38

1âwphi1

The taxable year covered by the assessment being outside of the period specified in the LOA in this case,
the assessment issued against Lancaster is, therefore, void.

This point alone would have sufficed to invalidate the subject deficiency income tax assessment, thus,
obviating any further necessity to resolve the issue on whether Lancaster erroneously claimed the February
and March 1998 expenses as deductions against income for FY 1999.

WHEREFORE, the petition is DENIED. The assailed 30 April 2008 Decision and 24 June 2008
Resolution of the Court of Tax Appeals En Banc are AFFIRMED. No cost
PROCTER & GAMBLE ASIA PTE LTD., Petitioner, v. COMMISSIONER OF INTERNAL
REVENUE, Respondent.

Facts

P&G is a foreign corporation duly organized and existing under the laws of Singapore and is maintaining
a Regional Operating Headquarter in the Philippines.4 It is a VAT-registered taxpayer

P&G filed its Monthly VAT Declarations and Quarterly VAT Returns

On March 22, 2007 and May 2, 2007, P&G filed applications and letters addressed to the BIR Revenue
District Office requesting the refund or issuance of tax credit certificates (TCCs) of its input VAT
attributable to its zero-rated sales covering the taxable periods of January 2005 to March 2005, and April
2005 to June 2005.9

On March 28, 2007, P&G filed a petition for review with the CTA seeking the refund or issuance of TCC
in the amount of P23,090,729.17 representing input VAT paid on goods or services attributable to its zero-
rated sales for the first quarter of taxable year 2005.

On June 8, 2007, P&G filed with the CTA another judicial claim for refund or issuance of TCC in the
amount of P19,006,753.58 representing its unutilized input VAT paid on goods and services attributable to
its zero-rated sales for the second quarter of taxable year 2005.

October 6, 2010, while P&G's claim for refund or tax credit was pending before the CTA Division, this
Court promulgated Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.14 (Aichi). In
that case, the Court held that compliance with the 120-day period granted to the CIR, within which to act
on an administrative claim for refund or credit of unutilized input VAT, as provided under Section 112(C)
of the National Internal Revenue Code of 1997 is mandatory and jurisdictional in filing an appeal with the
CTA.

In a Decision15 dated November 17, 2010, the CTA Division dismissed P&G's judicial claim, for having
been prematurely filed.16

CTA En Banc affirming in toto

February 12, 2013, this Court decided the consolidated cases of Commissioner of Internal Revenue v. San
Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex
Mining Corporation v. Commissioner of Internal Revenue26(San Roque), where the Court recognized BIR
Ruling No. DA-489-03 as an exception to the mandatory and jurisdictional nature of the 120-day waiting
period.

On March 27, 2013, P&G filed the present petition.27

Issue

whether the CTA En Banc erred in dismissing P&G's judicial claims for refund on the ground of
prematurity.
P&G avers that its judicial claims for tax refund/credit was filed with the CTA Division on March 28, 2007
and June 8, 2007, after the issuance of BIR Ruling No.DA-489-03 on December 10, 2003, but before the
adoption of the Aichi doctrine on October 6, 2010. Accordingly, pursuant to the Court's ruling in San
Roque, its judicial claims with the CTA was deemed timely filed.28 .

The Court's Ruling

The Court finds the petition meritorious.

Exception to the mandatory and jurisdictional 120+30-day periods under Section 112(C) of the NIRC

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected may,
within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one
hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals.

There is no dispute that the 120-day period is mandatory and jurisdictional, and that the CTA does not
acquire jurisdiction over a judicial claim that is filed before the expiration of the 120-day period. There are,
however, two exceptions to this rule. The first exception is if the Commissioner, through a specific ruling,
misleads a particular taxpayer to prematurely file a judicial claim with the CTA. Such specific ruling is
applicable only to such particular taxpayer. The second exception is where the Commissioner, through
a general interpretative rule issued under Section 4 of the Tax Code, misleads all taxpayers into filing
prematurely judicial claims with the CTA. In these cases, the Commissioner cannot be allowed to
later on question the CTA's assumption of jurisdiction over such claim since equitable estoppel has
set in as expressly authorized under Section 246 of the Tax Code.

Clearly, BIR Ruling No. DA-489-03 is a general interpretative rule. Thus, all taxpayers 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, where this Court held that the 120+30 day periods are
mandatory and jurisdictional.32

For clarity and guidance, the Court deems it proper to outline the rules laid down in San Roque with regard
to claims for refund or tax credit of unutilized creditable input VAT.

1. When to file an administrative claim with the CIR:

a. General rule - Section 112(A) and Mirant,

Within 2 years from the close of the taxable quarter when the sales were made. .

b. Exception - Atlas

Within 2 years from the date of payment of the output VAT, if the administrative
claim was filed from June 8, 2007 (promulgation of Atlas) to September 12, 2008
(promulgation of Mirant).

2. When to file a judicial claim with the CTA:

a. General rule - Section 112(D); not Section 229
 i. Within 30 days from the full or partial denial of the administrative
claim by the CIR; or

ii. Within 30 days from the expiration of the 120-day period provided to
the CIR to decide on the claim. This is mandatory and jurisdictional
beginning January 1, 1998 (effectivity of 1997 NIRC).

b. Exception - BIR Ruling No. DA-489-03

The judicial claim need not await the expiration of the 120-day period,
if such was filed from December 10, 2003 (issuance of BIR Ruling No.
DA-489-03) to October 6, 2010 (promulgation oi Aichi).34 (Emphasis
and underscoring supplied)

In this case, records show that P&G filed its judicial claims for refund on March 28, 2007 and June 8, 2007,
respectively, or after the issuance of BIR Ruling No. DA-489-03, but before the date when Aichiwas
promulgated. Thus, even though P&G filed its judicial claim without waiting for the expiration of the 120-
day mandatory period, the CTA may still take cognizance of the case because the claim was filed within
the excepted period stated in San Roque. In other words, P&G's judicial claims were deemed timely filed
and should not have been dismissed by the CTA.

COMMISSIONER OF INTERNAL REVENUE, Petitioner,

vs.
PHILIPPINE-ALUMINUM WHEELS, INC.,,

The Facts

Respondent is a corporation organized and existing under Philippine laws which engages in the
manufacture, production, sale, and distribution of automotive parts and accessories. On 16 December 2003,
(BIR) issued a Preliminary Assessment Notice (PAN) against respondent covering deficiency taxes for the
taxable year 2001.4 On 28 March 2004, the BIR issued a Final Assessment Notice (FAN) against respondent
in the amount. On 23 June 2004, respondent requested for reconsideration of the FAN issued by the BIR.
On 8 November 2006, the BIR issued a Final Decision on Disputed Assessment (FDDA) and demanded
full payment of the deficiency tax assessment from respondent.6 On 12 April 2007, the FDDA was served
through registered mail.

On 19 July 2007, respondent filed with the BIR an application for the abatement of its tax liabilities under
Revenue Regulations No. 13-2001 for the taxable year 2001.7 In a letter dated 12 September 2007,8 the BIR
denied respondent's application for tax abatement on the ground that the FDDA was already issued by the
BIR and that the FDDA had become final and executory due to the failure of the respondent to appeal the
FDDA with the CTA. The BIR contended that the FDDA had been sent through registered mail on 12 April
2007 and that the FDDA had become final, executory, and demandable because of the failure of the
respondent to appeal the FDDA with the CTA within thirty (30) days from receipt of the FDDA.
 respondent informed the BIR that it already paid its tax deficiency on withholding tax through the
Electronic Filing and Payment System of the BIR and that if was also in the process of availing of
the Tax Amnesty Program under Republic Act No. 9480 to settle its deficiency tax assessment for the
taxable year 2001. On 21 September 2007, respondent complied with the requirements of RA 9480 which
include: the filing of a Notice of Availment, Tax Amnesty Return and Payment Form, and remitting the tax
payment. BIR denied respondent's request and ordered respondent to pay the deficiency tax assessment

BIR reiterated that the FDDA had become final and executory for the failure of the respondent to appeal
the FDDA with the CTA within the prescribed period of thirty (30) days. respondent filed a Petition for
Review with the CTA assailing the letter of the BIR dated 16 July 2008.

The Decision of the CTA First Division

CTA granted respondent's Petition for Review and set aside the assessment in view of respondent's
availment of a tax amnesty under RA 9480.

The Decision of the CTA En Banc

CTA En Banc held that a qualified tax amnesty applicant who has completed the requirements of RA 9480
shall be deemed to have fully complied with the Tax Amnesty Program.

The Issue-Whether respondent is entitled to the benefits of the Tax Amnesty Program under RA 9480.

The Decision of this Court

A tax amnesty is a general pardon or intentional overlooking by the State of its authority to impose penalties
on persons otherwise guilty of evasion or violation of a revenue or tax law. It partakes of an absolute
forgiveness or waiver by the government of its right to collect what is due it and to give tax evaders who
wish to relent a chance to start with a clean slate. A tax amnesty, much like a tax exemption, is never favored
nor presumed in law. The grant of a tax amnesty, similar to a tax exemption, must be construed strictly
against the taxpayer and liberally in favor of the taxing authority.18

RA 9480-Court held that the taxpayer's completion of the requirements under RA 9480, as implemented by
DO 29-07, will extinguish the taxpayer's tax liability, the law mandates that the taxpayer shall thereafter be
immune from the payment of taxes, and additions thereto, as well as the appurtenant civil, criminal or
administrative penalties under the NIRC

The CIR contends that respondent is disqualified to avail of the tax amnesty under RA 9480. The CIR
asserts that the finality of its assessment, particularly its FDDA is equivalent to a final and executory
judgment by the courts.

The CIR is wrong. only persons with "tax cases subject of final and executory judgment by the courts" are
disqualified to avail of the Tax Amnesty Program under RA 9480. There must be a judgment promulgated
by a court and the judgment must have become final and executory. Obviously, there is none in this
case. The FDDA issued by the BIR is not a tax, case "subject to a final and executory judgment by the
courts" as contemplated by Section 8(f) of RA 9480. The determination of the tax liability of respondent
has not reached finality and is still not subject to an executory judgment by the courts as it is the issue
pending before this Court.
NORTHERN MINDANAO POWER CORPORATION,
vs.
COMMISSIONER OF INTERNAL REVENUE

THE 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 ₱2,490,960.29, while that incurred for all the quarters of taxable year 2000 amounted to
₱3,920,932.55.4

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 ₱6,411,892.84.5

Thereafter, alleging inaction of respondent on these administrative claims, petitioner filed a

Petition6 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. Petitioner failed to substantiate its claim for a refund and to strictly
comply with the invoicing requirements of the law and tax regulations. Dissenting Opinion, however,
then Presiding Justice Ernesto D. Acosta opined that the Tax Code does not require that the word
"zero-rated" be imprinted on the face of the receipt or invoice.

On appeal to the CTA En Banc, The court ruled that for every sale of services, VAT shall be
computed on the basis of gross receipts indicated on the official receipt. Further, the requirement of
issuing duly registered VAT official receipts with the term "zero-rated" imprinted is mandatory under
the law and cannot be substituted, Then Presiding Justice Acosta maintained his dissent.

ISSUES

WON CTA acquired jurisdiction over the claim for refund.

Section 113 of the 1997 Tax Code by providing for the additional requirement of the imprinting of the
terms "zero-rated" is unconstitutional.

Company invoices are sufficient to establish the actual amount of sale of electric power services to
the National Power Corporation and therefore sufficient to substantiate Petitioner’s claim for refund.9

THE COURT’S RULING

In the consolidated tax cases Commissioner of Internal Revenue v. San Roque Power Corporation,
Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v.
Commissioner of Internal Revenue11 (hereby collectively referred to as San Roque), the Court
clarified that the two-year period refers to the filing of an administrative claim with the BIR.

In this case, petitioner had until 30 September 2001 and 31 December 2001 for the claims covering
the 3rd and the 4th quarters of taxable year 1999; and 31 March, 30 June, 30 September and 31
December in 2002 for the claims covering all four quarters of taxable year 2000 −or the close of the
taxable quarter when the zero-rated sales were made −within which to file its administrative claim for
a refund. On this note, we find that petitioner had sufficiently complied with the two-year prescriptive
period when it filed its administrative claim for a refund on 20 June 2000 covering the 3rd and the 4th
quarters of taxable year 1999 and on 25 July 2001covering all the quarters of taxable year 2000.

Pursuant to Section 112(D) of the NIRC of 1997, respondent had one hundred twenty (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.12 Thus, the 120-day period for the CIR to act on the administrative claim
commenced on 20 June 2000 and 25 July 2001.

As laid down in San Roque, judicial claims filed from 1 January 1998 until the present should strictly
adhere to the 120+30-day period referred to in Section 112 of the NIRC of 1997.The only exception
is the period 10 December 2003 until 6 October 2010. Within this period, BIR Ruling No. DA-489-03
is recognized as an equitable estoppel, during which judicial claims may be filed even before the
expiration of the 120-day period granted to the CIR to decide on a claim for a refund.

For the claims covering the 3rd and the 4th quarters of taxable year 1999 and all the quarters of
taxable year2000, petitioner filed a Petition with the CTA on 28 September 2001.

Both judicial claims must be disallowed.

a) 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 an input VAT refund attributable to its zero-rated sales 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. Just like in Philex,
this was a case of late filing. The Court explained thus:

Unlike San Roque and Taganito, Philex’s case is not one of premature filing but of late filing. Philex
did not file any petition with the CTA within the 120-day period. Philex did not also file any petition
with the CTA within 30 days after the expiration of the 120-day period. Philex filed its judicial claim
long after the expiration of the 120-day period, in fact 426 days after the lapse of the 120-day period.
In any event, whether governed by jurisprudence before, during, or after the Atlas case, Philex’s
judicial claim will have to be rejected because of late filing. Whether the two-year prescriptive period
is counted from the date of payment of the output VAT following the Atlas doctrine, or from the close
of the taxable quarter when the sales attributable to the input VAT were made following the Mirant
and Aichi doctrines, Philex’s judicial claim was indisputably filed late.

The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of the
Commissioner on Philex’s claim during the 120-day period is, by express provision of law, "deemed
a denial" of Philex’s claim. Philex had 30 days from the expiration of the 120-day period to file its
judicial claim with the CTA. Philex’s failure to do so rendered the "deemed a denial" decision of the
Commissioner final and inappealable. The right to appeal to the CTA from a decision or "deemed a
denial" decision of the Commissioner is merely a statutory privilege, not a constitutional right. The
exercise of such statutory privilege requires strict compliance with the conditions attached by the
statute for its exercise. Philex failed to comply with the statutory conditions and must thus bear the
consequences.

xxxx

Philex’s situation is not a case of premature filing of its judicial claim but of late filing, indeed very
late filing. BIR Ruling No. DA-489-03 allowed premature filing of a judicial claim, which means non-
exhaustion of the 120-day period for the Commissioner to act on an administrative claim. Philex
cannot claim the benefit of BIR Ruling No. DA-489-03 because Philex did not file its judicial claim
prematurely but filed it long after the lapse of the 30-day period following the expiration of the 120-
day period. In fact, Philex filed its judicial claim 426 days after the lapse of the 30-day
period.13 (Emphasis in the original)

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. To reiterate, the right to appeal is a mere statutory privilege that
requires strict compliance with the conditions attached by the statute for its exercise. Like Philex,
petitioner failed to comply with the statutory conditions and must therefore bear the consequences. 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.

b) Claim for the refund of input

VAT covering all quarters of
taxable year 2000

For the year 2000, petitioner timely filed its administrative claim on 25 July 2001within the two-year
period from the close of the taxable quarter when the zero-rated sales were made. Pursuant to
Section 112(D) of the NIRC of 1997, respondent had 120 days or until 22 November 2001 within
which to act on petitioner’s claim. It is only when respondent failed to act on the claim after the
expiration of that period that petitioner could elevate the matter to the tax court. Records show,
however, 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. The Court in San Roquehas already settled that failure of the petitioner to observe the
mandatory 120-day period is fatal to its judicial claim and renders the CTA devoid of jurisdiction over
that claim. 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. Again, as enunciated in San Roque, it is only the
period between 10 December 2003 and 6 October 2010 that the 120-day period may not be
observed. While the ponente had disagreed with the majority ruling in San Roque, the latter is now
the judicial doctrine that will govern like cases.

The judicial claim was thus prematurely filed for failure of petitioner to observe the 120-day waiting
period. The CTA therefore did not acquire jurisdiction over the claim for a refund of input VAT for all
1âwphi 1

the quarters of taxable year 2000.

In addition, the issue of the requirement of imprinting the word "zero-rated" has already been settled
by this Court in a number of cases. In Western Mindanao Power Corporation v. CIR,14 we ruled:
RR 7-95, which took effect on 1 January 1996, proceeds from the rule-making authority granted to
the Secretary of Finance by the NIRC for the efficient enforcement of the same Tax Code and its
amendments. In Panasonic Communications Imaging Corporation of the Philippines v.
Commissioner of Internal Revenue, we ruled that this provision is "reasonable and is in accord with
the efficient collection of VAT from the covered sales of goods and services." Moreover, we have
held in Kepco Philippines Corporation v. Commissioner of Internal Revenue that the subsequent
incorporation of Section 4.108-1 of RR 7-95 in Section 113 (B) (2) (c) of R.A. 9337 actually
confirmed the validity of the imprinting requirement on VAT invoices or official receipts – a case
falling under the principle of legislative approval of administrative interpretation by reenactment.

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.

Finally, as regards the sufficiency of a company invoice to prove the sales of services to NPC, we
find this claim is without sufficient legal basis. Section 113 of the NIRC of 1997 provides that a VAT
invoice is necessary for every sale, barter or exchange of goods or properties, while a VAT official
receipt properly pertains to every lease of goods or properties; as well as to every sale, barter or
exchange of services.

The Court has in fact distinguished an invoice from a receipt m Commissioner of Internal Revenue v.
Manila Mining Corporation:15

A "sales or commercial invoice" is a written account of goods sold or services rendered indicating the
prices charged therefor or a list by whatever name it is known which is used in the ordinary course of
business evidencing sale and transfer or agreement to sell or transfer goods and services.

A "receipt" on the other hand is a written acknowledgment of the fact of payment in money or other
settlement between seller and buyer of goods, debtor or creditor, or person rendering services and
client or customer.

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.16 WHEREFORE, premises
considered, the instant Petition is DENIED.

SO ORDERED.