| [ZERO-RATED SALES OF FUEL TO INTERNATIONAL SHIPPING REQUIRE STRICT DOCUMENTARY COMPLIANCE] [INPUT VAT REFUND CLAIMS ARE PARTLY GRANTED WHEN ONLY SUBSTANTIATED SALES ARE PROVEN] Petitioner Petrotrade Philippines, Inc. filed a Petition for Review seeking a refund of Php 92,856,719.67 unutilized input Value-Added Tax (VAT) attributable to zero-rated sales of bunker fuel to international shipping vessels for the second quarter of taxable year 2020. The Respondent Commissioner of Internal Revenue (CIR) denied the administrative claim, prompting the Petitioner to elevate the case to the CTA. Petitioner argued that it had valid zero-rated sales, timely filed its claim, and that its input VAT credits were allocable to such sales. On the other hand, the Respondent countered that the claim was unsubstantiated and that the Petitioner failed to comply with invoicing requirements under the Tax Code and Revenue Regulations. In ruling, the Court PARTLY GRANTED the Petition, allowing only the substantiated portion of the claim. Out of Php 877M declared zero-rated sales, only the portion duly supported by invoices and records was recognized. The Court emphasized that VAT refund claims are in the nature of tax exemptions, strictly construed against taxpayers, and compliance with the invoicing and substantiation rules under Sections 112, 113, 237, and 238 of the Tax Code and Revenue Regulations (RR) No. 16-2005 is mandatory. [PETROTRADE PHILIPPINES, INC. VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 10884, APRIL 23, 2026] [ISSUANCE OF MOA DOES NOT HAVE THE SAME WEIGHT OF AUTHORITY AS LOA] [LACK OF AUTHORITY OF A REVENUE OFFICER IS EQUIVALENT TO THE ABSENCE OF LOA, RENDERING THE ASSESSMENT VOID] Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse and set aside the CTA 1st Division’s Decision, which cancelled the alleged deficiency tax assessment of the Respondent NCR Corporation Philippines, for being void ab initio. The Petitioner argues that the Respondent can no longer question the authority of the assigned Revenue Officer (RO) and the alleged defects in the assessment, having failed to raise these issues at the administrative level. Also, a Letter of Authority (LOA) is not a requirement when the audit is conducted by the Office of the CIR, and the issuance of Memorandum of Assignment (MOA) was issued assigning RO Cayabyab to continue the investigation. It maintains that the audit was validly conducted under proper authority, that the Respondent was afforded due process through the issuance of assessment notices and the opportunity to protest, and that the Court in Division erred in restraining tax collection despite the absence of a final ruling or an approved Motion to Suspend Collection. On the other hand, the Respondent maintains that the assessment is void because RO Cayabyab was not authorized under a valid LOA and that the Respondent's right to due process was violated, consistent with the CIR vs Avon case. In ruling, the Court held that the audit conducted by RO Cayabyab was unauthorized due to the absence of a new or amended LOA following her reassignment, rendering the assessment invalid. Likewise, the Petitioner violated the Respondent’s right to due process by merely repeating the findings in the Preliminary Assessment Notice (PAN) in the Formal Letter of Demand (FLD) without addressing the respondent’s explanations citing the Supreme Court landmark case of CIR vs. Avon. Consequently, the Petition is DENIED for lack of merit. [COMMISSIONER OF INTERNAL REVENUE VS. NCR CORPORATION PHILIPPINES, CTA EN BANC CASE NO. 2967, MARCH 23, 2026] [STRICT COMPLIANCE WITH DUE PROCESS REQUIRES PROOF OF THE TAXPAYER’S RECEIPT OF ASSESSMENT NOTICES] [COLLECTIONS ARISING FROM VOID ASSESSMENTS ARE CONSIDERED NULLITIES]
The Petitioner, Mac Graphics Carranz International Corporation (MGCIC), filed a Petition for Review assailing the deficiency tax assessments for taxable year 2018 and the subsequent Warrant of Distraint and/or Levy (WDL) issued by the Respondent Commissioner of Internal Revenue (CIR). Petitioner argued that it never received the Preliminary Assessment Notice (PAN) nor the Formal Letter of Demand/Final Assessment Notice (FLD/FAN), and that Respondent failed to present evidence proving actual receipt of said notices. On the other hand, the Respondent countered that the PAN and FLD/FAN were duly issued and served via registered mail, and that the assessments had become final and executory due to the Petitioner’s failure to protest. In ruling, the Court held that under Section 228 of the 1997 Tax Code, as amended, strict compliance with due process requires proof that the taxpayer actually received the assessment notices. The testimonies of the BIR’s witnesses only confirmed issuance but not receipt, and no documentary evidence was presented to establish delivery to the Petitioner. The absence of such receipt is a violation of due process, rendering the assessments void ab initio, and any collection efforts based on them—including the WDL—were likewise nullities. Thus, the Petition was GRANTED, and the assessment was CANCELLED. [MAC GRAPHICS CARRANZ INTERNATIONAL CORPORATION VS. COMMISSIONER OF INTERNAL REVENUE, CTA CASE NO. 11150, MARCH 18, 2026] [RENEWABLE ENERGY DEVELOPERS REGISTERED PROJECTS ARE ENTITLED TO VAT ZER0-RATING UNDER THE RENEWABLE ENERGY ACT OF 2008] [COURT CLOSURES DUE TO THE COVID-19 PANDEMIC ARE CONSIDERED IN DETERMINING THE TIMELY FILING OF VAT REFUND CLAIMS] Petitioner Air Drilling Associates Pte. Ltd. filed a Petition for Review seeking a refund of its unutilized creditable input Value-Added Tax (VAT) paid attributable to its zero-rated sales for taxable year (TY) 2019. Petitioner argued that its claims were timely filed, that it is a VAT-registered entity engaged in zero-rated sales to Energy Development Corporation (EDC), and that its input VAT was duly substantiated with supporting documents. Further, the input VAT was attributable solely to its zero-rated transactions and had not been applied against output VAT in subsequent periods. On the other hand, the Respondent Commissioner of Internal Revenue (CIR) countered that the Petition was filed out of time and the Petitioner failed to fully substantiate its refund claim, particularly that its sales to EDC were not zero-rated. It emphasized that tax refunds are strictly construed against taxpayers, requiring clear and convincing proof of entitlement. In ruling, the Court held that the Petition was timely filed, considering the suspension of court deadlines during the COVID-19 pandemic. The Petitioner’s VAT registration was also recognized, and it was confirmed that its services to EDC, a renewable energy developer, were covered by VAT zero-rating under Section 108(B)(3) of the Tax Code of 1997, as amended, and Section 15(g) of the Renewable Energy Act of 2008. However, the Court stressed that strict compliance with substantiation and invoicing requirements is mandatory in VAT refund claims. Not all input taxes due or paid by the Petitioner during the second quarter of TY 2019 are valid and duly substantiated. While the Petition was partly meritorious, the Court limited the refund to amounts duly supported by proper documentation, denying portions of the claim that failed to meet evidentiary requirements. Thus, the Petition was PARTIALLY GRANTED, and the Respondent is ORDERED TO REFUND the Petitioner a reduced amount. [AIR DRILLING ASSOCIATE PTE. LTD VS. COMMISSIONER ON INTERNAL REVENUE, CTA CASE NO. 10608, MARCH 16, 2026] | |
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