ABAKADA Guro Party List vs.

Ermita
G.R. No. 168056 September 1, 2005


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.





Issue: Whether or not the RA 9337's stand-by authority to the Executive to increase the VAT rate, especially on account of the recommendatory power granted
to the Secretary of Finance, constitutes undue delegation of legislative power? NO

Held: The powers which Congress is prohibited from delegating are those which are strictly, or inherently and exclusively, legislative. Purely legislative power
which can never be delegated is the authority to make a complete law- complete as to the time when it shall take effect and as to whom it shall be applicable,
and to determine the expediency of its enactment. It is the nature of the power and not the liability of its use or the manner of its exercise which determines the
validity of its delegation.

The exceptions are:

(a) delegation of tariff powers to President under Constitution
(b) delegation of emergency powers to President under Constitution
(c) delegation to the people at large
(d) delegation to local governments
(e) delegation to administrative bodies

For the delegation to be valid, it must be complete and it must fix a standard. A sufficient standard is one which defines legislative policy, marks its limits, maps
out its boundaries and specifies the public agency to apply it.

In this case, it is not a delegation of legislative power BUT a delegation of ascertainment of facts upon which enforcement and administration of the increased
rate under the law is contingent. The legislature has made the operation of the 12% rate effective January 1, 2006, contingent upon a specified fact or condition.
It leaves the entire operation or non-operation of the 12% rate upon factual matters outside of the control of the executive. No discretion would be exercised by
the President. Highlighting the absence of discretion is the fact that the word SHALL is used in the common proviso. The use of the word SHALL connotes a
mandatory order. Its use in a statute denotes an imperative obligation and is inconsistent with the idea of discretion.

Thus, it is the ministerial duty of the President to immediately impose the 12% rate upon the existence of any of the conditions specified by Congress. This is a
duty, which cannot be evaded by the President. It is a clear directive to impose the 12% VAT rate when the specified conditions are present.

Congress just granted the Secretary of Finance the authority to ascertain the existence of a fact--- whether by December 31, 2005, the VAT collection as a
percentage of GDP of the previous year exceeds 2 4/5 % or the national government deficit as a percentage of GDP of the previous year exceeds one and 1%. If
either of these two instances has occurred, the Secretary of Finance, by legislative mandate, must submit such information to the President.

In making his recommendation to the President on the existence of either of the two conditions, the Secretary of Finance is not acting as the alter ego of the
President or even her subordinate. He is acting as the agent of the legislative department, to determine and declare the event upon which its expressed will is to
take effect. The Secretary of Finance becomes the means or tool by which legislative policy is determined and implemented, considering that he possesses all
the facilities to gather data and information and has a much broader perspective to properly evaluate them. His function is to gather and collate statistical data
and other pertinent information and verify if any of the two conditions laid out by Congress is present.

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.

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 did not
delegate the power to tax but the mere implementation of the law.

FORT BONIFACIO DEVELOPMENT CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE- Transitional Input Value Added Tax

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 (i) 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 (ii) 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 VAT-registered persons, whether or not they previously paid taxes in the acquisition of their beginning inventory of
goods, materials and supplies.

CIR v. Aichi Forging Company of Asia, Inc.

Doctrine:
- The CIR has 120 days, from the date of the submission of the complete documents within which to grant or deny the claim for refund/credit of input vat. 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.

- A taxpayer is entitled to a refund either by authority of a statute expressly granting such right, privilege, or incentive in his favor, or under the principle of
solutio indebiti requiring the return of taxes erroneously or illegally collected. In both cases, a taxpayer must prove not only his entitlement to a refund but also
his compliance with the procedural due process.

- As between the Civil Code and the Administrative Code of 1987, it is the latter that must prevail being the more recent law, following the legal maxim, Lex
posteriori derogat priori.

- The phrase within two (2) years x x x apply for the issuance of a tax credit certificate or refund under Subsection (A) of Section 112 of the NIRC refers to
applications for refund/credit filed with the CIR and not to appeals made to the CTA.

Facts:
Petitioner filed a claim of refund/credit of input vat in relation to its zero-rated 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 120-day 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.

CIR vs San Roque
The Court reiterated in San Roque Power Corporation v. Commissioner of Internal Revenue[3] the following criteria governing claims for refund or tax credit
under Section 112(A) of the NIRC:
(1) The taxpayer is VAT-registered;
(2) The taxpayer is engaged in zero-rated or effectively zero-rated sales;
(3) The input taxes are due or paid;
(4) The input taxes are not transitional input taxes;
(5) The input taxes have not been applied against output taxes during and in the succeeding quarters;
(6) The input taxes claimed are attributable to zero-rated or effectively zero-rated sales;
(7) For zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly
accounted for in accordance with BSP rules and regulations;
(8) Where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable
to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and
(9) The claim is filed within two years after the close of the taxable quarter when such sales were made.

CIR vs Mindanao II

Value-added tax; refund of input value-added tax;; prescriptive period for judicial and administrative claims. Under Section 112 of the National Internal Revenue
Code (NIRC), it is only the administrative claim for refund of input value-added tax (VAT) that must be filed within the two-year prescriptive period; the judicial
claim need not fall within the two-year prescriptive period. Subsection (A) of the said provision states that any VAT-registered person whose sales are 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 Commissioner of Internal Revenue (CIR) and not to appeals made to the Court of Tax Appeals (CTA). This is
apparent in the first paragraph of subsection (D) of the same provision which states that the CIR has 120 days from the submission of complete documents in
support of the application filed in accordance with Subsections (A) and (B) within which to decide on the claim. Commissioner of Internal Revenue vs. Mindanao
II Geothermal Partnership, G.R. No. 191498, January 15, 2014.

Value-added tax; refund of input value-added tax; prescriptive period; reckoning point for two-year prescriptive period. The doctrine in the case of Atlas
Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, which held that claims for refund or credit of input VAT must comply
with the two-year prescriptive period under Section 229, should be effective only from its promulgation on June 8, 2007 until its abandonment on September 12,
2008 in the case of Commissioner of Internal Revenue vs. Mirant Pagbilao Corporation. The Atlas doctrine was limited to the reckoning of the two-year
prescriptive period from the date of payment of the output VAT. Prior to the Atlasdoctrine, the two-year prescriptive period for claiming refund or credit of input
VAT should be governed by Section 112(A) following the verba legis rule. TheMirant ruling, which abandoned the Atlas doctrine, adopted the verba legis rule,
thus applying Section 112(A) in computing the two-year prescriptive period in claiming refund or credit of input VAT. In this case, the claim for refund was filed
on October 6, 2005. Thus, it is covered by the rule prior to the advent of eitherAtlas or Mirant. Therefore, the proper reckoning date as provided in Section
112(A) of the NIRC is the close of the taxable quarter when the relevant sales were made. Commissioner of Internal Revenue vs. Mindanao II Geothermal
Partnership.

Value-added tax; refund of input value-added tax; prescriptive period; 30-day period also applies to appeals from inaction. Section 112(D) of the NIRC speaks of
two periods: the period of 120 days, which serves as a waiting period to give time for the CIR to act on the administrative claim for refund or credit, and the
period of 30 days, which refers to the period for interposing an appeal with the CTA. The 30 day period applies not only to instances of actual denial by the CIR of
the claim for refund or tax credit, but to cases of inaction by the CIR as well. The taxpayer can file the appeal in one of two ways: (1) file the judicial claim within
thirty days after the Commissioner denies the claim within the 120-day period, or (2) filed the judicial claim within thirty days from the expiration of the 120-day
period if the Commissioner does not act within the 120-day period.Commissioner of Internal Revenue vs. Mindanao II Geothermal Partnership.

Value-added tax; refund of input value-added tax; prescriptive period; 30-day period to appeal is mandatory and jurisdictional; exception. The 30-day period to
appeal to the CTA, as provided in the case of Commissioner of Internal Revenue vs. San Roque Power Corporation, is both mandatory and jurisdictional. The law
states that a 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 CTA. However, there is an exception to this rule. Bureau of Internal Revenue (BIR) Ruling No. DA-
489-03 dated December 10, 2003 declared that a taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the
CTA by way of petition for review. Thus, in cases of premature filing, taxpayers can rely on the BIR ruling from the time of its issuance, December 10, 2003 until
its reversal by the Supreme Court on October 6, 2010, when the 120+30 day periods were held to be mandatory and jurisdictional. However, late filing is
absolutely prohibited even during the time when the BIR ruling was in force.


CIR vs. Ironcon Builders and Development Corp.G.R. No. 180042 , February 8, 2010
Facts:
Respondent Ironcon Builders and Development Corporation (Ironcon) sought the refund by the Bureau of Internal Revenue (BIR) of its income tax overpayment
and excess creditableVAT. The Commissioner continued not to act on its claims which made Ironcon to bring it up toCTA for review. CTA 2
nd
Division held that
taxpayers have the option to either carry over theexcess credit or ask for a refund, as regards with the overpayment. Apparently, the respondentfiled two
income tax returns for the year 2000, an original and an amended one. AlthoughIroncons amended return indicated a preference for refund of the overpaid
tax, the CTA ruledthat respondents original choice is regarded as irrevocable, pursuant to Sec.76 of R.A. No. 8424,and moreover found out that Ironcon actually
carried over the credit from the overpayment andapplied it to the tax due for 2001, and hence, denied Ironcons claim for the refund.As to the claim for VAT
refund, CTA found that by the end of 2000, respondent hadexcess tax credit carried over from 1999, an allowable input tax and a 6% creditable VAT,withheld
and remitted by its clients, which are deductible from Ironcons total output VATliability of P20+M. The CTA ruled that respondent had no more output VAT
against which theexcess creditable VAT withheld may be applied or credited, the VAT withheld had beenexcessively paid. Because Ironcon did not present its
VAT returns for the succeeding quarters of 2001, 2
nd
Division denied the refund. Upon MfR of respondent, now attaching the required VATreturns, CTA then
granted the application having found that Ironcon sufficiently proved that itsexcess creditable VAT withheld was not carried over or applied to any input VAT for
2001. CIR filed its own MfR for the amended decision, which CTA denied, and CTA en banc denied.Petitioner CIRs main contention is that, since these amounts
were withheld inaccordance with what the law provides, they cannot be regarded as erroneously or illegallycollected as contemplated in Sections 204(C) and
229 of the NIRC.Petitioner CIR also points outthat since the NIRC does not specifically grant taxpayers the option to refund excess creditableVAT withheld, it
follows that such refund cannot be allowed. Excess creditable VAT withheld ismuch unlike excess income taxes withheld.
Issue:
Whether or not creditable VAT withheld from a taxpayer in excess of its output VATliability may be the subject of a tax refund in place of a tax credit.
Held:
YES.In the latter case, Sections 76 and 58(D) of the NIRC specifically make the option toseek a refund available to the taxpayer. The CIR submits thus that the
only option available totaxpayers in case of excess creditable VAT withheld is to apply the excess credits to succeedingquarters. But the amounts involved in this
case are creditable withholding taxes, not final taxessubject to withholding. As the CTA correctly points out, taxes withheld on certain payments under the
creditable withholding tax system are but intended to approximate the tax due from the payee.The withheld taxes remitted to the BIR are treated as deposits or
advances on the actual taxliability of the taxpayer, subject to adjustment at the proper time when the actual tax liability can be fully and finally determined.Even
if the law does not expressly state that Ironcons excess creditable VAT withheldis refundable, it may be the subject of a claim for refund as an erroneously
collected tax under Sections 204(C) and 229. Even if the law does not expressly state that Ironcons excess creditableVAT withheld is refundable, it may be the
subject of a claim for refund as an erroneouslycollected tax under Sections 204(C) and 229. The rule is that before a refund may be granted,respondent Ironcon
must show that it had not used the creditable amount or carried it over tosucceeding taxable quarters.Substantial justice dictates that the government should
not keep money that does not belong to it at the expense of citizens. Since he ought to know the tax records of all taxpayers, petitioner CIR could have easily
disproved the claimants allegations.That he chose not toamounts to a waiver of that right. Also, the CIR failed in this case to make a timely objection to or
comment on respondent Ironcons offer of the documents in question despite an opportunity to doso.
Taking all these circumstances together, it was sufficiently proved that Ironcons excesscreditable VAT withheld was not carried over to succeeding taxable
quarters.


Commissioner of Internal Revenue v. Court of Appeals and Commonwealth Management and Services Corporation


Section 105 of the National Internal Revenue Code of 1997, as amended, provides: "SECTION 105. Persons Liable. Any Income Tax -- The amounts paid in as
dues or fees by members and tenants of a condominium corporation form part of the gross income of the latter subject to income tax. This is because a
condominium corporation furnishes its members and tenants with benefits, advantages, and privileges in return for such payments. For tax purposes, the
association dues, membership fees, and other assessments/charges collected by a condominium corporation constitute income payments or compensation for
beneficial services it provides to its members and tenants. The previous interpretation that the assessment dues are funds which are merely held in trust by a
condominium corporation lacks legal basis and is hereby abandoned. Moreover, since a condominium corporation is subject to income tax, income payments
made to it are subject to applicable withholding taxes under existing regulations.Value-Added Tax (VAT) Association dues, membership fees, and other
assessments/charges collected by a condominium corporation are subject to VAT since they constitute income payment or compensation for the beneficial
services it provides to its members and tenants.Tax Digest - Volume 5, Series 333 Revenue Memorandum Circular No. 65-2012 person who, in the course of
trade or business, sells, barters, exchanges, leases goods or properties, renders services, and any person who imports goods shall be subject to the
value-added tax (VAT) imposed in Sections 106 to 108 of this Code. xxx
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, nonprofit private organization (irrespective of the disposition of
its net income and whether or not it sells exclusively to members or their guests), or government entity.

The above provision is clear -- even a non-stock, non-profit organization or government entity is liable to pay VAT on the sale of goods or services. This
conclusion was affirmed by the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals and Commonwealth Management and Services
Corporation, G.R. No. 125355, March 30, 2000. In this case, the Supreme Court held:

(E)ven a non-stock, non-profit organization or government entity, is liable to pay VAT on the sale of goods or services.
VAT is a tax on transactions, imposed at every stage of the distribution process on the sale, barter, exchange of goods
or property, and on the performance of services, even in the absence of profit attributable thereto. The term" in the
course of trade or business" requires the regular conduct or pursuit of a commercial or an economic activity, regardless
of whether or not the entity is profit-oriented.

The definition of the term "in the course of trade or business" incorporated in the present law applies to all transactions even to those made prior to its
enactment.Executive Order No. 273 stated that any person who, in the course of trade or business, sells, barters or exchanges goods and services, was already
liable to pay VAT. The present law merely stresses that even a nonstock, nonprofit organization or government entity is liable to pay VAT for the sale of goods
and services.

Section 108 of the National Internal Revenue Code of 1997 defines the phrase "sale of services" as the "performance of all kinds of services for others for a fee,
remuneration or consideration." It includes "the supply of technical advice, assistance or services rendered in connection with technical management or
administration of any scientific, industrial or commercial undertaking or project."