TAXATION LAW BAR 2018

LAST MINUTE TIPS

ATTY. PIERRE MARTIN REYES

Q. Is an assessment based merely on a Letter Notice it is included in “other matters” arising under the NIRC or
(LN) valid? other laws administered by the BIR. (Banco de Oro v.
Republic, G.R. No. G.R. No. 198756, January 13, 2015.)
A. No. An assessment based only on a LN is void. A Letter
of Authority (LOA) cannot be dispensed with just because Q. When does the 120-day period begin to run?
none of the financial books or records being physically A distinction must be made between claims filed before
kept was examined. The SC opined that the statutory June 14, 2014 and claims filed on June 14, 2014 to
requirement of a LOA is not dependent on whether the present.
taxpayer may be required to physically open his books or
financial records but only on whether a taxpayer is being Claims filed prior to June Claims filed on June 14,
subject to examination. A LN is issued only for the 14, 2014 (RMC 49- 2003 – 2014 to present (RMC 54-
purpose of notifying the taxpayer that a discrepancy is prevailing rule) 2014 prevailing rule)
found based on the BIR’s RELIEF System and nothing
1. The CIR has 120 days
more.
from the date of submission
Revenue Memorandum Order (RMO) No. 32- 2005 states of complete documents to
that in case the discrepancies shown in the LN remained decide a claim for tax credit
unresolved within 120 days from issuance of the LN, the or refund. Pursuant to RMC 1. As it now stands, RMC
revenue officer shall recommend the issuance of a LOA No. 49-2003, from the date 54-2014 dated June 11,
to replace the LN. Due process requires that the revenue an administrative claim for 2014 mandates that the
officer should secure first a LOA before proceeding with excess unutilized VAT is application for VAT
the further examination and assessment of a taxpayer. filed, a taxpayer has 30 refund/tax credit must be
The Court cannot convert or treat the LN into the LOA days within which to submit accompanied by
required under the law. If no LOA is secured, the the documentary complete supporting
assessment on the basis of a LN is void. (Medicard requirements sufficient to documents.
Philippines v. Commissioner of Internal Revenue, G.R. support his claim. 2. Under the current rule,
No. 222743, April 5, 2017)
2. If in the course of the the reckoning of the 120-
Q. Discuss the remedy to question the validity of: investigation and day period has been
processing of the claim, withdrawn from the
(a) TRAIN Law taxpayer by RMC 54-
additional documents are
(b) R.R. 16-2018 required for the proper 2014, since it requires
determination of the him at the time he files his
(c) BIR Ruling No. 370-2011 claim to complete his
legitimacy of the claim, the
taxpayer- claimants shall supporting documents
A. For (a) & (b), the proper remedy is a special civil actions
submit such documents and attest that he will no
for certiorari under Rule 65 of the Rules of Court to be filed
within thirty (30) days from longer submit any other
with the CTA. (Banco de Oro v. Republic, G.R. No. G.R.
No. 198756, January 13, 2015.) The CTA has jurisdiction request of the document to prove his
investigating/processin g claim. Further, the
and may take cognizance of cases directly challenging
office. Notice, by way of a taxpayer is barred from
the constitutionality or validity of a tax law, regulation or
request from the tax submitting additional
administrative issuance (such as revenue order, revenue
memorandum circular, and ruling). Sec. 7 of R.A. 1125, collection authority to documents after he has
produce the complete filed his administrativ e
as amended by RA 9282, is explicit that except for local
documents in these cases, claim. Thus, the 120-day
taxes, appeals from the decisions of quasi-judicial
is essential. has to be counted from
agencies (CIR, Commissioner of Customs, Secretary of
the filing of the
Finance, Central Board of Assessment Appeals,
3.Then, upon filing by the administrativ e claim.
Secretary of Trade and Industry) on tax-related problems
taxpayer of his complete (Pilipinas Total Gas v.
must be brought exclusively to the CTA. (XDe Oro v.
documents to support his Commissioner of Internal
Republic, G.R. No. 198756, August 16, 2016).
application, or expiration of Revenue, G.R. No.
For (c), the adverse BIR Ruling is subject to review by and the period given, the BIR has 207112, December 8,
appealable to the Secretary of Finance within thirty (30) 120 days within which to 2015)
days from receipt thereof. Thereafter, if the Secretary of decide the claim for tax credit
Finance affirms the said adverse ruling, such review by or refund.
the Secretary of Finance is appealable to the CTA within
30 days. The CTA has jurisdiction over the appeal from 4.Should the taxpayer, on the
the Secretary of Finance’s review of rulings of the CIR as date of filing, manifest that he
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 TAXATION LAW BAR 2018
LAST MINUTE TIPS
ATTY. PIERRE MARTIN REYES
no longer wishes to submit
any other additional
documents to complete his
administrative claim, the 120-
day period allowed to the BIR
begins to run from the date of
filing.
5.In all cases, whatever
documents a taxpayer
intends to file to support his
claim must be completed
within the 2-year period
under Section 112(A) of the
NIRC.
Thus, for claims filed prior to June 14, 2014, the 120-day
period begins to run from the date of submission of
complete documents supporting the administrative claim.
If there is no evidence showing that the taxpayer was
required to submit – or actually submitted – additional
documents after the filing of the administrative claim, it is
presumed that the complete documents accompanied the
claim when it was filed. (Silicon Philippines v.
Commissioner of Internal Revenue, G.R. No. 182737,
March 2, 2016)
Failure of the taxpayer to submit all relevant documents is
not fatal to its claim for refund or tax credit of unutilized
input VAT. If the taxpayer indeed failed to submit the
complete documents in support of its application, the CIR
could have informed the taxpayer of its failure.
(Commissioner of Internal Revenue v. Toledo Power
Company, G.R. No. 196415 & 196451, December 2,
2015; Pilipinas Total Gas v. Commissioner of Internal
Revenue, G.R. No. 207112, December 8, 2015)
Q. The City of Manila assessed ABC local business
taxes. ABC protested the assessment arguing that it
constitutes as double taxation. ABC tendered
payment of what they believe to be the correct
computation of their local business tax. The payment
was refused by the City Treasurer. ABC also received
a letter from the City Treasurer denying their protest.
ABC then paid the assessment and filed a claim for
refund with the Office of the City Treasurer raising the
same grounds in their protest. ABC then filed its
refund with the RTC of Manila. The City of Manila
argues that the assessment against ABC became
final and executory when the latter effectively
abandoned its protest and instead sued in court for
the refund of the assessed taxes. Is the City of Manila
correct?
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A. No. A taxpayer who had protested and paid an
assessment is not precluded from later on instituting an
action for refund or credit.
While Section 196 does not expressly mention an
assessment made by the local treasurer, this simply
means that its applicability does not depend upon the
existence of an assessment notice. By consequence, a
taxpayer may proceed to the remedy of refund of taxes
even without a prior protest against an assessment that
was not issued in the first place. This is not to say that an
application for refund can never be precipitated by a
previously issued assessment, for it is entirely possible
that the taxpayer, who had received a notice of
assessment, paid the assessed tax, fee or charge
believing it to be erroneous or illegal. Thus, under such
circumstance, the taxpayer may subsequently direct his
claim pursuant to Section 196 of the LGC.
When a taxpayer is assessed a deficiency local tax, fee
or charge, he may protest it under Section 195 even
without making payment of such assessed tax, fee or.
charge. This is because the law on local government
taxation, save in the case of real property tax, does not
expressly require ''payment under protest" as a procedure
prior to instituting the appropriate proceeding in court.
This implies that the success of a judicial action
questioning the validity or correctness of the assessment
is not necessarily hinged on the previous payment of the
tax under protest. Needless to say, there is nothing to
prevent the taxpayer from paying the tax under protest or
simultaneous to a protest.
Thus, a taxpayer facing an assessment may protest it and
alternatively: (1) appeal the assessment in court, or (2)
pay the tax and thereafter seek a refund.
Note that in option 2 where an assessment is issued, the
taxpayer cannot choose to pay the assessment and
thereafter seek a refund at any time within the full period
of two years from the date of payment as Section 196 may
suggest. If refund is pursued, the taxpayer must
administratively question the validity or correctness of the
assessment in the 'letter claim for refund' within 60 days
from receipt of the notice of assessment, and thereafter
bring suit in court within 30 days from either decision or
inaction by the local treasurer. (City of Manila v. Cosmos
Bottling Corporation, G.R. No. 196681, June 27, 2018)
Q. Can a waiver of the statute of limitations which
does not comply with the requirements specified
under RMO No. 20- 90 and RDAO No. 01-05 become
valid?
A. Yes. Generally, a waiver of the statute of limitations that
does not comply with the requisites for its validity specified
under RMO No. 20-90 and RDAO 01-05 is invalid, but
 TAXATION LAW BAR 2018
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ATTY. PIERRE MARTIN REYES
may still be valid due to peculiar circumstances. In
Commissioner of Internal Revenue v. Next Mobile, G.R.
No. 212825, December 7, 2015, five (5) waivers were
executed by the taxpayer and the BIR. The CTA found the
following defects: (1) they were executed without a
notarized board authority; (2) the dates of acceptance by
the BIR were not indicated therein; and (3) the fact of
receipt by respondent of its copy of the Second Waiver
was not indicated on the face of the original Second
Waiver.
The Court ruled that, due to peculiar circumstances and
as exception to the general rule, the supposedly invalid
waivers may be considered valid for the following
reasons:
1. If the parties are in pari delicto or “in equal fault” and
thus they shall have no action against each other.
Taxpayer violated RMO No. 20-90 which states that in
case of a corporate taxpayer, the waiver must be signed
by its responsible officials and RDAO 01-05 which
requires the presentation of a written and notarized
authority to the BIR. Similarly, BIR violates its own rules
when it did not ensure that the waiver is duly signed by an
authorized representative and by not ensuring that the
delegation of authority is in writing and duly notarized.
2. Parties who do not come to Court with clean hands
cannot be allowed to benefit from their own wrongdoing.
Taxpayer should not be allowed to benefit from the flaws
in its own waivers and successfully insist on their invalidity
in order to evade its responsibility to pay taxes.
3. Taxpayer is estopped from questioning the validity of
its waivers. The taxpayer executed 5 waivers and
delivered them to the BIR and did not raise any objection
against their validity until the BIR assessed taxes against
it. In its Letter Protest to the BIR, respondent did not even
question the validity of the Waivers or call attention to their
alleged defects.
4. The Court cannot tolerate a highly suspicious situation.
In this case, after the taxpayer voluntarily executing the
waivers, insisted on their invalidity by raising the very
same defects it caused. On the other hand, the BIR
miserably failed to exact from the taxpayer compliance
with its rules. The BIR’s negligence in the compliance of
its duties was so gross such that it seemed that it
consented to the mistakes in the waivers. Such a situation
is dangerous and open to abuse by unscrupulous
taxpayers who intend to escape their responsibility to pay
taxes by mere expedient of hiding behind technicalities.
Further, the Court said that while the BIR was also at fault
here because it was careless in complying with the
requirements of RMO No. 20-90 and RDAO 01-05, such
negligence may be addressed by enforcing the provisions
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imposing administrative liabilities upon the officers
responsible for these errors. The BIR's right to assess and
collect taxes should not be jeopardized merely because
of the mistakes and lapses of its officers, especially in
cases like this where the taxpayer is obviously in bad faith.
(Commissioner of Internal Revenue v. Next Mobile, G.R.
No. 212825, December 7, 2015)
Q. A law was passed granting income tax exemption
for minimum wage earners (MWE) as well as increase
in personal and additional exemptions. The law
became effective on July 6, 2008. The BIR issued a
revenue regulation providing for (a) the prorated
application of the personal and additional exemptions
for taxable year 2008 and for the period of
applicability of the MWE exemption for taxable year
2008 to begin only on 6 July 2008; and (b) the
disqualification of MWEs who earn purely
compensation income, whether in the private or
public sector, from the privilege of availing
themselves of the MWE exemption in case they
receive compensation related benefits exceeding the
statutory ceiling of P30,000 (now P82,000). Is the
revenue regulation valid?
A. No. The personal and additional exemptions should be
applied to the entire taxable year 2008. The test is
whether the new set of personal and additional
exemptions was available at the time of the filing of the
income tax return. In other words, while the status of the
individual taxpayers is determined at the close of the
taxable year, their personal and additional exemptions -
and consequently the computation of their taxable income
- are reckoned when the tax becomes due, and not while
the income is being earned or received. As in the case of
the adjusted personal and additional exemptions, the
MWE exemption should apply to the entire taxable year
2008, and not only from 6 July 2008 onwards.
The revenue regulations adds a requirement not found in
the law by effectively declaring that an MWE who receives
other benefits in excess of the statutory limit is no longer
entitled to the exemption provided by the law. To be
exempt, one must be an MWE, a term that is clearly
defined. Section 22(HH) says he/she must be one who is
paid the statutory minimum wage if he/she works in the
private sector, or not more than the statutory minimum
wage in the non-agricultural sector where he/she is
assigned, if he/she is a government employee. Thus, one
is either an MWE or he/she is not. Simply put, MWE is the
status acquired upon passing the litmus test - whether one
receives wages not exceeding the prescribed minimum
wage. (Soriano v. Secretary of Finance, G.R. Nos.
184450, 184508, 184538, and 185234, January 24,
2017).
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Q. The Philippine Ports Authority (PPA) received a
letter from the City Assessor for the assessment and
collection of real property taxes against its
administered properties. It appealed the assessment
to the Local Board of Assessment Appeals (LBAA)
through the Office of the City Treasurer. While the
case was pending, the City of Davao posted a notice
of sale of delinquent real properties including the
properties of the PPA. The LBAA dismissed the
appeal. The PPA appealed before the Central Board of
Assessment Appeals (CBAA) and was denied. Thus,
it filed an appeal with the CTA. The PPA claimed it did
not receive any warrant of levy and thus it filed a
Petition for Certiorari with the Court of Appeals (CA).
The CTA ruled in favor of the PPA declaring the
properties as exempt from real property tax and
declaring void the assessments issued. The CA, on
the other hand, dismissed the petition ruling that the
CTA has exclusive jurisdiction and said that the PPA
should have applied for issuance of a writ of
injunction or prohibition. PPA filed a Motion for
Reconsideration with the CA and was denied. Hence,
the PPA filed a Petition for Review with the Supreme
Court. Does the CA have jurisdiction to issue the
injunctive relief prayed for by PPA?
A. No. When a tax case is pending on appeal with the
CTA, the CTA has exclusive jurisdiction to enjoin the levy
of taxes and auction of the taxpayer’s properties in
relation to that case. Section 7(a)(5) of RA No. 1125, as
amended by RA No. 9282 provides that the CTA has
exclusive appellate jurisdiction over decisions of the
CBAA in the exercise of its appellate jurisdiction over
cases involving the assessment and taxation of real
property originally decided by the provincial or city board
of assessment appeals.
The CTA has the power to determine whether or not there
has been grave abuse of discretion in cases falling within
its exclusive appellate jurisdiction and its power to issue
writs of certiorari.
The Court of Tax Appeals had jurisdiction over PPA’s
appeal to resolve the question of whether or not it was
liable for real property tax. The real property tax liability
was the very reason for the acts which petitioner wanted
to have enjoined. It was, thus, the Court of Tax Appeals,
and not the Court of Appeals, that had the power to
preserve the subject of the appeal, to give effect to its final
determination, and, when necessary, to control auxiliary
and incidental matters and to prohibit or restrain acts
which might interfere with its exercise of jurisdiction over
petitioner's appeal.
Even if the law had vested the Court of Appeals with
jurisdiction to issue injunctive relief in real property tax
cases such as this, the Court of Appeals was still correct
4
in dismissing the petition before it. Once a court acquires
jurisdiction over a case, it also has the power to issue all
auxiliary writs necessary to maintain and exercise its
jurisdiction, to the exclusion of all other courts. Thus, once
the Court of Tax Appeals acquired jurisdiction over
petitioner's appeal, the Court of Appeals would have been
precluded from taking cognizance of the case. (Philippine
Ports Authority v. The City of Davao, G.R. No. 190324,
June 6, 2018)
Q. The taxpayer initially opted to be refunded of its
excess creditable tax for 2006 through the issuance
of a tax credit certificate. The taxpayer subsequently
indicated in its 2007 ITR that it carried over the 2006
excess creditable tax and applied the same against
income tax due for 2007. The taxpayer filed with the
BIR a claim for refund and/or issuance of a TCC for
the alleged excess credit for 2006. This was later
elevated to the Court of Tax Appeals (CTA). Both CTA
Division and CTA En Banc ruled that the taxpayer
effectively exercised the carry-over option when it
included the excess tax credit for 2006 in the original
ITR for 2007. The taxpayer, on the other hand,
contended that the option to be refunded through the
issuance of a TCC is irrevocable. Thus, when it
indicated in its annual ITR for 2006 the option “To be
issued a Tax Credit Certificate,” such choice
precluded the other option to carry over. Is the
taxpayer correct?
A. No. The irrevocability rule is limited only to the option
of carry-over. There is nothing in the law which prevents
the taxpayer who originally opted for a refund or TCC to
shift to the carry-over of the excess creditable taxes to the
taxable quarters of the succeeding taxable years.
However, if the taxpayer decides to shift its option to
carry-over, it may no longer revert to its original choice
due to the irrevocability rule. Here, the taxpayer is barred
from recovering its excess creditable tax for 2006 through
refund or TCC since it constructively chose the option of
carry-over when, despite its initial option to refund, it
subsequently indicated in its 2007 ITR that it carried over
the 2006 excess creditable tax and applied the same
against income tax due for 2007. (University Physicians
Services, Inc. – Management, Inc. v. Commissioner of
Internal Revenue, G.R. No. 205955, 7 March 2018)
Q. The BIR contends that the 20-lender rule should
not strictly apply to issuances of government debt
instruments, which by nature, are borrowings from
the public. Considering that the PEACe Bonds were
intended to be freely tradable in the secondary market
to 20 or more lenders/investors, they, like other
similarly situated government securities-awarded to
19 or less Government Securities Eligible Dealers
(GSEDs) in the primary market but freely tradable to
20 or more lenders/investors in the secondary market
should be treated as deposit substitutes subject to
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ATTY. PIERRE MARTIN REYES
the 20% final withholding tax. Is the BIR’s contention
correct?
A. No. The definition of deposit substitutes in Section
22(Y) specifically defined "public" to mean "twenty (20) or
more individual or corporate lenders at any one time."
Hence, reckoning of whether there are 20 or more
individuals or corporate lenders is crucial in determining
the tax treatment of the yield from the debt instrument. In
other words, if there are 20 or more lenders, the debt
instrument is considered a deposit substitute and subject
to 20% final withholding tax. The existence of 20 or more
lenders should be reckoned at the time when the
successful GSED bidder distributes (either by itself or
through an underwriter) the government securities to final
holders. When the GSED sells the government securities
to 20 or more investors, the government securities are
deemed to be in the nature of a deposit substitute, taxable
as such. (Banco de Oro v. Republic, G.R. No. 198756,
August 16, 2016).
Q. (1) What is the consequence if a FAN does not
contain a definite due date for payment by the
taxpayer? (2) Can the reckoning date of the accrual of
the penalties and surcharges be considered as the
due date for payment?
A. (1) A Final Assessment Notice that does not contain a
definite due date for payment by the taxpayer is void.
(2) The reckoning date of the accrual of penalties and
surcharges cannot be considered as the due date for
payment of tax liabilities In the absence of an actual due
date, a FAN does not contain a definite and actual
demand to pay. (Commissioner of Internal Revenue v.
Fitness by Design, Inc., G.R. No. 215957, November 9,
2016).
Q. What are the elements of failure to file a return
under Sec 255 of the NIRC?
1. The accused was a person required to make or file a
return;
2. He failed to make or file such return at the time required
by law; and
3. The failure to make or file the return was willful.
(People vs Joel Mendez CTA EB CRIM. NO. 039).
Q. The governments of Japan and the PH executed an
Exchange of Notes, whereby Japan agreed to extend
a loan to PH for the implementation of a thermal
power plant project. In Paragraph 5 (2) of the
Exchange of Notes, the PH Government, by itself or
through its executing agency, i.e. National Power
Corporation, undertook to assume all taxes imposed
by the Philippines on Japanese contractors, i.e.
Mitsubishi Corporation, engaged in the Project.
Mitsubishi Corporation included in its income tax
payments to the BIR income pertaining to the
Japanese Government-funded portion of the project.
Thus, Mitsubishi filed for a claim for refund. The BIR
argues that (a) Mitsubishi is not entitled to the refund
as the Exchange of Notes cannot be read as a treaty
validly granting tax exemption considering the lack of
Senate concurrence; and (b) that, based on a revenue
memorandum circular it issued, the proper remedy of
Mitsubishi is to recover or obtain a refund from the
National Power Corporation, the executing agency. Is
the BIR correct?
A. No. The subject taxes was erroneously collected from
the taxpayer, considering that the obligation to pay the
same had already been assumed by the Philippine
5
Government by virtue of its Exchange of Notes with the
Japanese Government. Case law explains that an
exchange of notes is considered as an executive
agreement, which is binding on the State even without
Senate concurrence.
Further, the Tax Code vests upon the CIR, being the head
of the BIR, the authority to credit or refund taxes which are
erroneously collected by the government. This specific
statutory mandate cannot be overridden by adverse
interpretations made through mere administrative
issuances, which - as argued by the CIR - shifts to the
executing agencies the power to refund the subject taxes.
(Mitsubishi Corporation – Manila Branch v.
Commissioner of Internal Revenue, G.R. No. 175772,
June 29, 2017).
Q. Is the prior application for an ITAD ruling pursuant
to RMO No. 1-2000 necessary before a taxpayer can
avail of the preferential tax rates under income tax
treaties entered into by the Philippines with other
countries?
A. No. Treaties have the force and effect of law. The
obligation to comply with a tax treaty must take
precedence over the objective of RMO No. 1-2000. Not
only is the requirement illogical, but it is also an imposition
that is not found at all in the applicable tax treaties. The
BIR should not impose additional requirements that would
negate the availment of the reliefs provided for under
international agreements, especially since said tax
treaties do not provide for any prerequisite at all for the
availment of the benefits under said agreements. The
application for a tax treaty relief from the BIR should
merely operate to confirm the entitlement of the taxpayer
to the relief. So long as the taxpayer requests for
confirmation before it filed its administrative claim for
refund, the same should be deemed substantial
compliance with RMO No. 1-2000 (Deutsche Bank AG
Manila v. Commissioner of Internal Revenue, G.R. No.
188550, August 19, 2013; CBK Power Company Limited
v. CIR, G.R. No. 193383-84 and G.R. No. 193407-08,
January 15, 2015).
Q. Whether transitional input tax is limited to
improvements to real properties.
A. No. There is nothing in the law that prohibits the
inclusion of real properties, together with the
improvements thereon, in the beginning inventory of
goods, materials and supplies, based on which inventory
the transitional input tax credit is computed. Further, there
is nothing in the law that indicates that prior payment of
taxes is necessary for the availment of the transitional
input tax credit. All that is required is for the taxpayer to
file a beginning inventory with the BIR. (Fort Bonifacio
Development Corporation v CIR, G.R. Nos. 175707,
180035, and 181092, November 19, 2014).
Q. On 26 December 1992, the Sangguniang Bayan of
the Municipality of Pasig enacted Ordinance No. 25
which imposed a franchise tax on all business
venture operations carried out through a franchise
within the municipality. On 25 January 1995, the
Municipality of Pasig was converted into a highly
urbanized city now known as the City of Pasig. The
City Treasurer assessed the Manila Electric Company
for deficiency franchise taxes for the period 1996 to
1999 pursuant to Municipal Ordinance No. 25. Does
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the City of Pasig have valid basis for its imposition of

franchise tax for the period 1996 to 1999?
A. No. The power to impose franchise tax belongs to the
province by virtue of Section 137 of the Local Government
Code. On the other hand, Section 142 of the Code
provides that the municipalities are prohibited from
levying the taxes specifically provided to provinces.
Section 151 empowers the cities to levy taxes, fees and
charges allowed to both provinces and municipalities.
Unlike a city, a municipality is bereft of authority to levy
franchise tax, thus, the ordinance enacted for that
purpose is void.

The ordinance in question was enacted in 1992 when the

local government of Pasig was still a municipality and, as
such, had no authority to levy franchise tax. The
conversion of the municipality into a city does not lend
validity to the void ordinance. The ordinance is void for
being in direct contravention with Section 142 of the Local
Government Code. Being void, it cannot be given any
legal effect. An assessment and collection pursuant to the
said ordinance is legally infirm. (City of Pasig v. Manila
Electric Company, G.R. No. 181710, March 7, 2018).

Q. Who may file a MR or MNT?

A. Any aggrieved party may seek a reconsideration or
new trial of any decision, resolution or order of the court.
Note:
(1) The period to file the MR or MNT is 15 days.
(2) No second MR or MNT is allowed (see Section 7, Rule
15, RRCTA)
Note, however, that a Motion for Reconsideration filed on
the Amended Decision of the Court in Division is not a
second motion for reconsideration, which is a proscribed
under Section 7, Rule 15 of the CTA Rules, in relation to
Section 2, Rule 52 of the 1997 Rules of Civil Procedure,
as amended. (Mirant (Navotas II) Corporation vs.
Commissioner of Internal Revenue, CTA EB Case No.
783, July 18, 2012).
Q. Invoking Section 108(B)(2) of the Tax Code, a
business process outsourcing company filed a claim
for refund or credit of input VAT attributable to zero-
rated sales of its call services to foreign corporations.
Is it indispensable that the said company prove that
the recipient of its call services are foreign
corporations doing business outside the Philippines?
A. Yes. An essential condition to qualify for zero-rating
under Section 108(B)(2) of the Tax Code is that the
service-recipient must be doing business outside the
Philippines. A taxpayer claiming for a VAT refund or credit
under Section 108(B)(2) has the burden to prove not only
that the recipient of the service is a foreign corporation,
but also that said corporation is doing business outside
the Philippines. (Sitel v. Commissioner of Internal
Revenue, G.R. No. 201326, February 8, 2017).