Exempt entities and exempt transactions defined

[88]

A registered export enterprise is one that is registered with the PEZA, and that engages in manufacturing activities within the purview of the PEZA aw for the exportation of its production! "#!i, $u e %, Part % of the $u es and $egu ations to %mp ement $epu& ic Act 'o! ()*+, otherwise ,nown as -.he /pecia Economic Zone Act of *))0!1

If at the end of a taxable quarter the output taxes [38] charged by a seller[39] are equal to the input taxes[40] passed on by the suppliers, no payment is required %t is when the output taxes exceed the input taxes that the excess has to &e paid [4!] If, ho"e#er, the input taxes exceed the output taxes, the excess shall be carried o#er to the succeeding quarter or quarters [4$] %hould the input taxes result from &ero'rated or effecti#ely &ero'rated transactions or from the acquisition of capital goods,[43] an2 excess over the output taxes sha instead &e refunded [33] to the taxpa2er or credited[4(] against other internal re#enue taxes [4)] .4%$5 5%6%/%7' [ 8!$! '7! *098++, :e&ruar2 **, #;;0 ] <7==%//%7'E$ 7: .E<4'7>78@ 5E<%/%7' PA'8A'%CA', D!E *usiness companies registered in and operating from the %pecial +conomic ,one in -aga, .ebu '' li/e herein respondent '' are entities exempt from all internal re#enue taxes and the implementing rules rele#ant thereto, including the #alue'added taxes or 012 1lthough export sales are not deemed exempt transactions, they are nonetheless &ero'rated 3ence, in the present case, the distinction bet"een exempt entities and exempt transactions has little significance, because the net result is that the taxpayer is not liable for the 012 4espondent, a 012'registered enterprise, has complied "ith all requisites for claiming a tax refund of or credit for the input 012 it paid on capital goods it purchased 2hus, the .ourt of 2ax 1ppeals and the .ourt of 1ppeals did not err in ruling that it is entitled to such refund or credit .he <ase *efore us is a 5etition for 4e#ie" [!] under 4ule 4( of the 4ules of .ourt, see/ing to set aside the 6ay $7, $00$ 8ecision[$] of the .ourt of 1ppeals 9.1: in .1';4 %5 -o ))093 2he decretal portion of the 8ecision reads as follo"s< =>3+4+?@4+, foregoing premises considered, the petition for re#ie" is 8+-I+8 for lac/ of merit A[3] %'.E$'A> $E6E'?E, PE.%.%7'E$, AP4%>%PP%'E/B, 6/! /EA8A.E $E/P7'5E'.!

.he :acts 2he .1 quoted the facts narrated by the .ourt of 2ax 1ppeals 9.21:, as follo"s< =1s Bointly stipulated by the parties, the pertinent facts x x x in#ol#ed in this case are as follo"s< ! [4espondent] is a resident foreign corporation duly registered "ith the %ecurities and +xchange .ommission to do business in the 5hilippines, "ith principal office address at the ne" .ebu 2o"nship @ne, %pecial +conomic ,one, *arangay .antao'an, -aga, .ebuC $ [5etitioner] is sued in his official capacity, ha#ing been duly appointed and empo"ered to perform the duties of his office, including, among others, the duty to act and appro#e claims for refund or tax creditC 3 [4espondent] is registered "ith the 5hilippine +xport ,one 1uthority 95+,1: and has been issued 5+,1 .ertificate -o 97'044 pursuant to 5residential 8ecree -o )), as amended, to engage in the manufacture of recording components primarily used in computers for export %uch registration "as made on ) Dune !997C 4 [4espondent] is 012 [90alue 1dded 2ax:]'registered entity as e#idenced by 012 4egistration .ertification -o 97'083'000)00'0 issued on $ 1pril !997C ( 012 returns for the period ! 1pril !998 to 30 Dune !999 ha#e been filed by [respondent]C ) 1n administrati#e claim for refund of 012 input taxes in the amount of 5$8,3)9,$$) 38 "ith supporting documents 9inclusi#e of the 5!$,$)7,98! 04 012 input taxes subBect of this 5etition for 4e#ie":, "as filed on 4 @ctober !999 "ith 4e#enue 8istrict @ffice -o 83, 2alisay .ebuC 7 -o final action has been recei#ed by [respondent] from [petitioner] on [respondentEs] claim for 012 refund =2he administrati#e claim for refund by the [respondent] on @ctober 4, !999 "as not acted upon by the [petitioner] prompting the [respondent] to ele#ate the case to [the .21] on Duly $!, $000 by "ay of 5etition for 4e#ie" in order to toll the running of the t"o'year prescripti#e period =?or his part, [petitioner] x x x raised the follo"ing %pecial and 1ffirmati#e 8efenses, to "it< ! [4espondentEs] alleged claim for tax refundFcredit is subBect to administrati#e routinary in#estigationFexamination by [petitionerEs] *ureauC $ %ince Gtaxes are presumed to ha#e been collected in accordance "ith la"s and regulations,E the [respondent] has the burden of proof that the taxes sought to be refunded "ere erroneously or illegally collected x x xC 3 In Citibank, N.A. vs. Court of Appeals , $80 %.41 4(9 9!997:, the %upreme .ourt ruled that< =1 claimant has the burden of proof to establish the factual basis of his or her claim for tax creditFrefund A 4 .laims for tax refundFtax credit are construed in Gstrictissimi BurisE against the taxpayer 2his is due to the fact that claims for refundFcredit [parta/e of] the

nature of an exemption from tax 2hus, it is incumbent upon the [respondent] to pro#e that it is indeed entitled to the refundFcredit sought ?ailure on the part of the [respondent] to pro#e the same is fatal to its claim for tax credit 3e "ho claims exemption must be able to Bustify his claim by the clearest grant of organic or statutory la" 1n exemption from the common burden cannot be permitted to exist upon #ague implicationsC ( ;ranting, "ithout admitting, that [respondent] is a 5hilippine +conomic ,one 1uthority 95+,1: registered +co&one +nterprise, then its business is not subBect to 012 pursuant to %ection $4 of 4epublic 1ct -o 9[41]: 79!) in relation to %ection !03 of the 2ax .ode, as amended 1s [respondentEs] business is not subBect to 012, the capital goods and ser#ices it alleged to ha#e purchased are considered not used in 012 taxable business 1s such, [respondent] is not entitled to refund of input taxes on such capital goods pursuant to %ection 4 !0) ! of 4e#enue 4egulations -o 9[44]:7'9(, and of input taxes on ser#ices pursuant to %ection 4 !03 of said regulations ) [4espondent] must sho" compliance "ith the pro#isions of %ection $04 9.: and $$9 of the !997 2ax .ode on filing of a "ritten claim for refund "ithin t"o 9$: years from the date of payment of tax E =@n Duly !9, $00!, the 2ax .ourt rendered a decision granting the claim for refund A[4] $u ing of the <ourt of Appea s 2he .1 affirmed the 8ecision of the .21 granting the claim for refund or issuance of a tax credit certificate 92..: in fa#or of respondent in the reduced amount of 5!$,!$$,9$$ )) 2his sum represented the unutili&ed but substantiated input 012 paid on capital goods purchased for the period co#ering 1pril !, !998 to Dune 30, !999 2he appellate court reasoned that respondent had a#ailed itself only of the fiscal incenti#es under +xecuti#e @rder -o 9+@: $$) 9other"ise /no"n as the @mnibus In#estment .ode of !987:, not of those under both 5residential 8ecree -o 958: )), as amended, and %ection $4 of 41 79!) 4espondent "as, therefore, considered exempt only from the payment of income tax "hen it opted for the income tax holiday in lieu of the ( percent preferential tax on gross income earned 1s a 012'registered entity, though, it "as still subBect to the payment of other national internal re#enue taxes, li/e the 012 6oreo#er, the .1 held that neither %ection !09 of the 2ax .ode nor %ections 4 !0)'! and 4 !03'! of 44 7'9( "ere applicable 3a#ing paid the input 012 on the capital goods it purchased, respondent correctly filed the administrati#e and Budicial claims for its refund "ithin the t"o'year prescripti#e period %uch payments "ere '' to the extent of the refundable #alue '' duly supported by 012 in#oices or official receipts, and "ere not yet offset against any output 012 liability 3ence this 5etition [(] /o e %ssue 5etitioner submits this sole issue for our consideration< =>hether or not respondent is entitled to the refund or issuance of 2ax .redit .ertificate in the amount of 5!$,!$$,9$$ )) representing alleged unutili&ed input 012 paid on capital goods purchased for the period 1pril !, !998 to Dune 30, !999 A [)] .he <ourt1s $u ing

2he 5etition is unmeritorious /o e Entitlement of a VAT-Registered a Refund of or Credit for Input VAT PEZA %ssueE Enterprise to

-o doubt, as a 5+,1'registered enterprise "ithin a special economic &one, [7] respondent is entitled to the fiscal incenti#es and benefits [8] pro#ided for in either 58 ))[9] or +@ $$) [!0] It shall, moreo#er, enBoy all pri#ileges, benefits, ad#antages or exemptions under both 4epublic 1ct -os 941: 7$$7 [!!] and 7844 [!$] Preferential Under Tax Special Treatment La s

If it a#ails itself of 58 )), not"ithstanding the pro#isions of other la"s to the contrary, respondent shall not be subBect to internal re#enue la"s and regulations for ra" materials, supplies, articles, equipment, machineries, spare parts and "ares, except those prohibited by la", brought into the &one to be stored, bro/en up, repac/ed, assembled, installed, sorted, cleaned, graded or other"ise processed, manipulated, manufactured, mixed or used directly or indirectly in such acti#ities [!3] +#en so, respondent "ould enBoy a net'operating loss carry o#erC accelerated depreciationC foreign exchange and financial assistanceC and exemption from export taxes, local taxes and licenses [!4] .omparati#ely, the same exemption from internal re#enue la"s and regulations applies if +@ $$)[!(] is chosen Hnder this la", respondent shall further be entitled to an income tax holidayC additional deduction for labor expenseC simplification of customs procedureC unrestricted use of consigned equipmentC access to a bonded manufacturing "arehouse systemC pri#ileges for foreign nationals employedC tax credits on domestic capital equipment, as "ell as for taxes and duties on ra" materialsC and exemption from contractorsE taxes, "harfage dues, taxes and duties on imported capital equipment and spare parts, export taxes, duties, imposts and fees, [!)] local taxes and licenses, and real property taxes [!7] 1 pri#ilege a#ailable to respondent under the pro#ision in 41 7$$7 on tax and duty'free importation of ra" materials, capital and equipment [!8] '' is, ipso facto, also accorded to the &one[!9] under 41 79!) ?urthermore, the latter la" '' not"ithstanding other existing la"s, rules and regulations to the contrary '' extends [$0] to that &one the pro#ision stating that no local or national taxes shall be imposed therein [$!] -o exchange control policy shall be appliedC and free mar/ets for foreign exchange, gold, securities and future shall be allo"ed and maintained [$$] *an/ing and finance shall also be liberali&ed under minimum *ang/o %entral regulation "ith the establishment of foreign currency depository units of local commercial ban/s and offshore ban/ing units of foreign ban/s
[$3]

In the same #ein, respondent benefits under 41 7844 from negotiable tax credits [$4] for locally'produced materials used as inputs 1side from the other incenti#es possibly already granted to it by the *oard of In#estments, it also enBoys preferential credit facilities[$(] and exemption from 58 !8(3 [$)] ?rom the abo#e'cited la"s, it is immediately clear that petitioner enBoys preferential tax treatment [$7] It is not subBect to internal re#enue la"s and regulations and is e#en entitled to tax credits 2he 012 on capital goods is an internal re#enue tax from "hich petitioner as an entity is exempt 1lthough the transactions in#ol#ing such tax are not exempt, petitioner as a 012'registered person, [$8] ho"e#er, is entitled to their credits

!ature t"e

of Tax

t"e Credit

VAT

and #et"od

0ie"ed broadly, the 012 is a uniform tax ranging, at present, from 0 percent to !0 percent le#ied on e#ery importation of goods, "hether or not in the course of trade or business, or imposed on each sale, barter, exchange or lease of goods or properties or on each rendition of ser#ices in the course of trade or business [$9] as they pass along the production and distribution chain, the tax being limited only to the #alue added [30] to such goods, properties or ser#ices by the seller, transferor or lessor [3!] It is an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of the goods, properties or ser#ices [3$] 1s such, it should be understood not in the context of the person or entity that is primarily, directly and legally liable for its payment, but in terms of its nature as a tax on consumption [33] In either case, though, the same conclusion is arri#ed at 2he la"[34] that originally imposed the 012 in the country, as "ell as the subsequent amendments of that la", has been dra"n from the tax credit met"od [3(] %uch method adopted the mechanics and self'enforcement features of the 012 as first implemented and practiced in +urope and subsequently adopted in -e" ,ealand and .anada [3)] Hnder the present method that relies on in#oices, an entity can credit against or subtract from the 012 charged on its sales or outputs the 012 paid on its purchases, inputs and imports [37] If at the end of a taxable quarter the output taxes [38] charged by a seller[39] are equal to the input taxes[40] passed on by the suppliers, no payment is required It is "hen the output taxes exceed the input taxes that the excess has to be paid [4!] If, ho"e#er, the input taxes exceed the output taxes, the excess shall be carried o#er to the succeeding quarter or quarters [4$] %hould the input taxes result from &ero'rated or effecti#ely &ero' rated transactions or from the acquisition of capital goods, [43] any excess o#er the output taxes shall instead be refunded[44] to the taxpayer or credited[4(] against other internal re#enue taxes [4)] Zero-Rated Zero-Rated and Effecti$el% Transactions

1lthough both are taxable and similar in effect, &ero'rated transactions differ from effecti#ely &ero'rated transactions as to their source ,ero'rated transactions generally refer to the export sale of goods and supply of ser#ices [47] 2he tax rate is set at &ero [48] >hen applied to the tax base, such rate ob#iously results in no tax chargeable against the purchaser 2he seller of such transactions charges no output tax,[49] but can claim a refund of or a tax credit certificate for the 012 pre#iously charged by suppliers +ffecti#ely &ero'rated transactions, ho"e#er, refer to the sale of goods [(0] or supply of ser#ices[(!] to persons or entities "hose exemption under special la"s or international agreements to "hich the 5hilippines is a signatory effecti#ely subBects such transactions to a &ero rate [($] 1gain, as applied to the tax base, such rate does not yield any tax chargeable against the purchaser 2he seller "ho charges &ero output tax on such transactions can also claim a refund of or a tax credit certificate for the 012 pre#iously charged by suppliers Zero Exemption Rating and

In terms of the 012 computation, &ero rating and exemption are the same, but the extent of relief that results from either one of them is not

App 2ing the destination principle[(3] to the exportation of goods, automatic &ero rating[(4] is primarily intended to be enBoyed by the seller "ho is directly and legally liable for the 012, ma/ing such seller internationally competiti#e by allo"ing the refund or credit of input taxes that are attributable to export sales [((] +ffecti#e &ero rating, on the contrary, is intended to benefit the purchaser "ho, not being directly and legally liable for the payment of the 012, "ill ultimately bear the burden of the tax shifted by the suppliers In both instances of &ero rating, there is total relief for the purchaser from the burden of the tax [()] *ut in an exemption there is only partial relief,[(7] because the purchaser is not allo"ed any tax refund of or credit for input taxes paid [(8] Exempt and Exempt Transaction Part%

2he obBect of exemption from the 012 may either be the transaction itself or any of the parties to the transaction [(9] 1n exempt transaction, on the one hand, in#ol#es goods or ser#ices "hich, by their nature, are specifically listed in and expressly exempted from the 012 under the 2ax .ode, "ithout regard to the tax status ''012'exempt or not '' of the party to the transaction [)0] Indeed, such transaction is not subBect to the 012, but the seller is not allo"ed any tax refund of or credit for any input taxes paid 1n exempt party, on the other hand, is a person or entity granted 6A. exemption under the 2ax .ode, a special la" or an international agreement to "hich the 5hilippines is a signatory, and by #irtue of "hich its taxable transactions &ecome exempt from the 6A. [)!] %uch party is also not subBect to the 012, but may be allo"ed a tax refund of or credit for input taxes paid, depending on its registration as a 012 or non'012 taxpayer 1s mentioned earlier, the 012 is a tax on consumption, the amount of "hich may be shifted or passed on by the seller to the purchaser of the goods, properties or ser#ices [)$] >hile the liability is imposed on one person, the burden may be passed on to another 2herefore, if a special la" merely exempts a party as a seller from its direct liability for payment of the 012, but does not relie#e the same party as a purchaser from its indirect burden of the 012 shifted to it by its 012'registered suppliers, the purchase transaction is not exempt 1pplying this principle to the case at bar, the purchase transactions entered into by respondent are not 012'exempt %pecial la"s may certainly exempt transactions from the 012 [)3] 3o"e#er, the 2ax .ode pro#ides that those falling under 58 )) are not 58 )) is the precursor of 41 79!) '' the special la" under "hich respondent "as registered 2he purchase transactions it entered into are, therefore, not 012'exempt 2hese are subBect to the 012C respondent is required to register Its sales transactions, ho"e#er, "ill either be &ero'rated or taxed at the standard rate of !0 percent,[)4] depending again on the application of the destination principle [)(] If respondent enters into such sales transactions "ith a purchaser '' usually in a foreign country '' for use or consumption outside the 5hilippines, these shall be subBect to 0 percent [))] If entered into "ith a purchaser for use or consumption in the 5hilippines, then these shall be subBect to !0 percent, [)7] unless the purchaser is exempt from the indirect burden of the 012, in "hich case it shall also be &ero'rated %ince the purchases of respondent are not exempt from the 012, the rate to be applied

is &ero Its exemption under both 58 )) and 41 79!) effecti#ely subBects such transactions to a &ero rate,[)8] because the eco&one "ithin "hich it is registered is managed and operated by the 5+,1 as a separate customs territor% [)9] 2his means that in such &one is created the legal fiction of foreign territory [70] Hnder the cross&order principle[7!] of the 012 system being enforced by the *ureau of Internal 4e#enue 9*I4:,[7$] no 012 shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority If exports of goods and ser#ices from the 5hilippines to a foreign country are free of the 012, [73] then the same rule holds for such exports from the national territory '' except specifically declared areas '' to an eco&one %ales made by a 012'registered person in the customs territory to a 5+,1'registered entity are considered exports to a foreign countryC con#ersely, sales by a 5+,1' registered entity to a 012'registered person in the customs territory are deemed imports from a foreign country [74] 1n eco&one '' indubitably a geographical territory of the 5hilippines '' is, ho"e#er, regarded in la" as foreign soil [7(] 2his legal fiction is necessary to gi#e meaningful effect to the policies of the special la" creating the &one [7)] If respondent is located in an export processing &one [77] "ithin that eco&one, sales to the export processing &one, e#en "ithout being actually exported, shall in fact be #ie"ed as constructively exported under +@ $$) [78] .onsidered as export sales, [79] such purchase transactions by respondent "ould indeed be subBect to a &ero rate [80] Tax 'road and Exemptions Express

1pplying the special la"s "e ha#e earlier discussed, respondent as an entity is exempt from internal re#enue la"s and regulations 2his exemption co#ers both direct and indirect taxes, stemming from the #ery nature of the 012 as a tax on consumption, for "hich the direct liability is imposed on one person but the indirect burden is passed on to another 4espondent, as an exempt entity, can neither be directly charged for the 012 on its sales nor indirectly made to bear, as added cost to such sales, the equi#alent 012 on its purchases Ubi lex non distinguit, nec nos distinguere debemus >here the la" does not distinguish, "e ought not to distinguish 6oreo#er, the exemption is both express and per#asi#e for the follo"ing reasons< First, 41 79!) states that =no taxes, local and national, shall be imposed on business establishments operating "ithin the eco&one A [8!] %ince this la" does not exclude the 012 from the prohibition, it is deemed included xceptio firmat regulam in casibus non exceptis 1n exception confirms the rule in cases not exceptedC that is, a thing not being excepted must be regarded as coming "ithin the pur#ie" of the general rule 6oreo#er, e#en though the 012 is not imposed on the entity but on the transaction, it may still be passed on and, therefore, indirectly imposed on the same entity '' a patent circum#ention of the la" 2hat no 012 shall be imposed directly upon business establishments operating "ithin the eco&one under 41 79!) also means that no 012 may be passed on and imposed indirectly !uando ali"uid prohibetur ex directo prohibetur et per obli"uum >hen anything is prohibited directly, it is also prohibited indirectly #econd, "hen 41 8748 "as enacted to amend 41 79!), the same prohibition applied, except for real property taxes that presently are imposed on land o"ned by de#elopers [8$] 2his similar and repeated prohibition is an unambiguous ratification of the la"Es intent in not imposing local or national taxes on business enterprises "ithin the eco&one

$hird, foreign and domestic merchandise, ra" materials, equipment and the li/e =shall not be subBect to x x x internal re#enue la"s and regulationsA under 58 )) [83] '' the original charter of 5+,1 9then +5,1: that "as later amended by 41 79!) [84] -o pro#isions in the latter la" modify such exemption 1lthough this exemption puts the go#ernment at an initial disad#antage, the reduced tax collection ultimately redounds to the benefit of the national economy by enticing more business in#estments and creating more employment opportunities [8(] Fourth, e#en the rules implementing the 5+,1 la" clearly reiterate that merchandise '' except those prohibited by la" '' =shall not be subBect to x x x internal re#enue la"s and regulations x x xA[8)] if brought to the eco&oneEs restricted area [87] for manufacturing by registered export enterprises,[88] of "hich respondent is one 2hese rules also apply to all enterprises registered "ith the +5,1 prior to the effecti#ity of such rules [89] Fifth, export processing &one enterprises registered [90] "ith the *oard of In#estments 9*@I: under +@ $$) patently enBoy exemption from national internal re#enue taxes on imported capital equipment reasonably needed and exclusi#ely used for the manufacture of their productsC[9!] on required supplies and spare part for consigned equipmentC[9$] and on foreign and domestic merchandise, ra" materials, equipment and the li/e '' except those prohibited by la" '' brought into the &one for manufacturing [93] In addition, they are gi#en credits for the #alue of the national internal re#enue taxes imposed on domestic capital equipment also reasonably needed and exclusi#ely used for the manufacture of their products, [94] as "ell as for the #alue of such taxes imposed on domestic ra" materials and supplies that are used in the manufacture of their export products and that form part thereof [9(] #ixth, the exemption from local and national taxes granted under 41 7$$7 [9)] are ipso facto accorded to eco&ones [97] In case of doubt, conflicts "ith respect to such tax exemption pri#ilege shall be resol#ed in fa#or of the eco&one [98] 1nd seventh, the tax credits under 41 7844 '' gi#en for imported ra" materials primarily used in the production of export goods, [99] and for locally produced ra" materials, capital equipment and spare parts used by exporters of non'traditional products [!00] ''shall also be continuously enBoyed by similar exporters "ithin the eco&one [!0!] Indeed, the latter exporters are li/e"ise entitled to such tax exemptions and credits Tax Tax Refund as Exemption

2o be sure, statutes that grant tax exemptions are construed strictissimi %uris[!0$] against the taxpayer[!03] and liberally in fa#or of the taxing authority [!04] 2ax refunds are in the nature of such exemptions [!0(] 1ccordingly, the claimants of those refunds bear the burden of pro#ing the factual basis of their claimsC [!0)] and of sho"ing, by "ords too plain to be mista/en, that the legislature intended to exempt them [!07] In the present case, all the cited legal pro#isions are teeming "ith life "ith respect to the grant of tax exemptions too #i#id to pass unnoticed In addition, respondent easily meets the challenge 4espondent, "hich as an entity is exempt, is different from its transactions "hich are not exempt 2he end result, ho"e#er, is that it is not subBect to the 012 2he non' taxability of transactions that are other"ise taxable is merely a necessary incident to the tax exemption conferred by la" upon it as an entity, not upon the transactions themsel#es [!08] -onetheless, its exemption as an entity and the non'exemption of its transactions lead to the same result for the follo"ing considerations<

First, the contemporaneous construction of our tax la"s by *I4 authorities "ho are called upon to execute or administer such la"s [!09] "ill ha#e to be adopted 2heir prior tax issuances ha#e held inconsistent positions brought about by their probable failure to comprehend and fully appreciate the nature of the 012 as a tax on consumption and the application of the destination principle [!!0] 4e#enue 6emorandum .ircular -o 946.: 74'99, ho"e#er, no" clearly and correctly pro#ides that any 012'registered supplierEs sale of goods, property or ser#ices from the customs territory to any registered enterprise operating in the eco&one '' regardless of the class or type of the latterEs 5+,1 registration ''is legally entitled to a &ero rate [!!!] #econd, the policies of the la" should pre#ail &atio legis est anima 2he reason for the la" is its #ery soul In 58 )), the urgent creation of the +5,1 "hich preceded the 5+,1, as "ell as the establishment of export processing &ones, see/s =to encourage and promote foreign commerce as a means of x x x strengthening our export trade and foreign exchange position, of hastening industriali&ation, of reducing domestic unemployment, and of accelerating the de#elopment of the country A [!!$] 41 79!), as amended by 41 8748, declared that by creating the 5+,1 and integrating the special economic &ones, =the go#ernment shall acti#ely encourage, promote, induce and accelerate a sound and balanced industrial, economic and social de#elopment of the country x x x through the establishment, among others, of special economic &ones x x x that shall effecti#ely attract legitimate and producti#e foreign in#estments A [!!3] Hnder +@ $$), the =%tate shall encourage x x x foreign in#estments in industry x x x "hich shall x x x meet the tests of international competiti#eness[,] accelerate de#elopment of less de#eloped regions of the country[,] and result in increased #olume and #alue of exports for the economy A [!!4] ?iscal incenti#es that are cost'efficient and simple to administer shall be de#ised and extended to significant proBects =to compensate for mar/et imperfections, to re"ard performance contributing to economic de#elopment,A[!!(] and =to stimulate the establishment and assist initial operations of the enterprise A[!!)] >isely accorded to eco&ones created under 41 79!) [!!7] "as the go#ernmentEs policy '' spelled out earlier in 41 7$$7 '' of con#erting into alternati#e producti#e uses [!!8] the former military reser#ations and their extensions, [!!9] as "ell as of pro#iding them incenti#es[!$0] to enhance the benefits that "ould be deri#ed from them [!$!] in promoting economic and social de#elopment [!$$] ?inally, under 41 7844, the %tate declares the need =to e#ol#e export de#elopment into a national effortA[!$3] in order to "in international mar/ets *y pro#iding many export and tax incenti#es,[!$4] the %tate is able to dri#e home the point that exporting is indeed =the /ey to national sur#i#al and the means through "hich the economic goals of increased employment and enhanced incomes can most expeditiously be achie#ed A [!$(] 2he 2ax .ode itself see/s to =promote sustainable economic gro"th x x xC x x x increase economic acti#ityC and x x x create a robust en#ironment for business to enable firms to compete better in the regional as "ell as the global mar/et A [!$)] 1fter all, international competiti#eness requires economic and tax incenti#es to lo"er the cost of goods produced for export %tate actions that affect global competition need to be specific and selecti#e in the pricing of particular goods or ser#ices [!$7] 1ll these statutory policies are congruent to the constitutional mandates of pro#iding incenti#es to needed in#estments, [!$8] as "ell as of promoting the preferential use of domestic materials and locally produced goods and adopting measures to help ma/e these competiti#e [!$9] 2ax credits for domestic inputs strengthen bac/"ard lin/ages

4ightly so, =the rule of la" and the existence of credible and efficient public institutions are essential prerequisites for sustainable economic de#elopment A [!30] VAT for Indispensa&le Registration( Effecti$e to !ot Zero VAT Application Rating( Refund

4egistration is an indispensable requirement under our 012 la" [!3!] 5etitioner alleges that respondent did register for 012 purposes "ith the appropriate 4e#enue 8istrict @ffice 3o"e#er, it is no" too late in the day for petitioner to challenge the 012' registered status of respondent, gi#en the latterEs prior representation before the lo"er courts and the mode of appeal ta/en by petitioner before this .ourt 2he 5+,1 la", "hich carried o#er the pro#isions of the +5,1 la", is clear in exempting from internal re#enue la"s and regulations the equipment '' including capital goods '' that registered enterprises "ill use, directly or indirectly, in manufacturing [!3$] +@ $$) e#en reiterates this pri#ilege among the incenti#es it gi#es to such enterprises [!33] 5etitioner merely asserts that by #irtue of the 5+,1 registration alone of respondent, the latter is not subBect to the 012 .onsequently, the capital goods and ser#ices respondent has purchased are not considered used in the 012 business, and no 012 refund or credit is due [!34] 2his is a non sequitur *y the 012Es #ery nature as a tax on consumption, the capital goods and ser#ices respondent has purchased are subBect to the 012, although at &ero rate 4egistration does not determine taxability under the 012 la" 6oreo#er, the facts ha#e already been determined by the lo"er courts 3a#ing failed to present e#idence to support its contentions against the income tax holiday pri#ilege of respondent,[!3(] petitioner is deemed to ha#e conceded It is a cardinal rule that =issues and arguments not adequately and seriously brought belo" cannot be raised for the first time on appeal A[!3)] 2his is a =matter of procedureA [!37] and a =question of fairness A [!38] ?ailure to assert ="ithin a reasonable time "arrants a presumption that the party entitled to assert it either has abandoned or declined to assert it A [!39] 2he *I4 regulations additionally requiring an appro#ed prior application for effecti#e &ero rating[!40] cannot pre#ail o#er the clear 012 nature of respondentEs transactions 2he scope of such regulations is not ="ithin the statutory authority x x x granted by the legislature [!4!] First, a mere administrati#e issuance, li/e a *I4 regulation, cannot amend the la"C the former cannot purport to do any more than interpret the latter [!4$] 2he courts "ill not countenance one that o#errides the statute it see/s to apply and implement [!43] @ther than the general registration of a taxpayer the 012 status of "hich is aptly determined, no pro#ision under our 012 la" requires an additional application to be made for such taxpayerEs transactions to be considered effecti#ely &ero'rated 1n effecti#ely &ero'rated transaction does not and cannot become exempt simply because an application therefor "as not made or, if made, "as denied 2o allo" the additional requirement is to gi#e unfettered discretion to those officials or agents "ho, "ithout fluid consideration, are bent on denying a #alid application 6oreo#er, the %tate can ne#er be estopped by the omissions, mista/es or errors of its officials or agents [!44] #econd, grantia argumenti that such an application is required by la", there is still the presumption of regularity in the performance of official duty [!4(] 4espondentEs registration carries "ith it the presumption that, in the absence of contradictory e#idence, an application for effecti#e &ero rating "as also filed and appro#al thereof gi#en *esides, it is also presumed that the la" has been obeyed [!4)] by both the administrati#e officials and the applicant

$hird, e#en though such an application "as not made, all the special la"s "e ha#e tac/led exempt respondent not only from internal re#enue la's but also from the regulations issued pursuant thereto Ieniency in the implementation of the 012 in eco&ones is an imperati#e, precisely to spur economic gro"th in the country and attain global competiti#eness as en#isioned in those la"s 1 012'registered status, as "ell as compliance "ith the in#oicing requirements, [!47] is sufficient for the effecti#e &ero rating of the transactions of a taxpayer 2he nature of its business and transactions can easily be perused from, as already clearly indicated in, its 012 registration papers and photocopied documents attached thereto 3ence, its transactions cannot be exempted by its mere failure to apply for their effecti#e &ero rating @ther"ise, their 012 exemption "ould be determined, not by their nature, but by the taxpayerEs negligence '' a result not at all contemplated 1dministrati#e con#enience cannot th"art legislati#e mandate Tax Credit Refund in or )rder

3a#ing determined that respondentEs purchase transactions are subBect to a &ero 012 rate, the tax refund or credit is in order 1s correctly held by both the .1 and the 2ax .ourt, respondent had chosen the fiscal incenti#es in +@ $$) o#er those in 41 79!) and 58 )) It opted for the income tax holiday regime instead of the ( percent preferential tax regime 2he latter scheme is not a perfunctory aftermath of a simple registration under the 5+,1 la",[!48] for +@ $$)[!49] also has pro#isions to contend "ith 2hese t"o regimes are in fact incompatible and cannot be a#ailed of simultaneously by the same entity >hile +@ $$) merely exempts it from income taxes, the 5+,1 la" exempts it from all taxes 2herefore, respondent can be considered exempt, not from the 012, but only from the payment of income tax for a certain number of years, depending on its registration as a pioneer or a non'pioneer enterprise *esides, the remittance of the aforesaid ( percent of gross income earned in lieu of local and national taxes imposable upon business establishments "ithin the eco&one cannot outrightly determine a 012 exemption *eing subBect to 012, payments erroneously collected thereon may then be refunded or credited +#en if it is argued that respondent is subBect to the ( percent preferential tax regime in 41 79!), %ection $4 thereof does not preclude the 012 @ne can, therefore, counterargue that such pro#ision merely exempts respondent from taxes imposed on business 2o repeat, the 012 is a tax imposed on consumption, not on business 1lthough respondent as an entity is exempt, the transactions it enters into are not necessarily so 2he 012 payments made in excess of the &ero rate that is imposable may certainly be refunded or credited Compliance for it" VAT Refund All or Re*uisites Credit

1s further enunciated by the 2ax .ourt, respondent complied "ith all the requisites for claiming a 012 refund or credit [!(0] First, respondent is a 012'registered entity 2his fact alone distinguishes the present case from Contex, in "hich this .ourt held that the petitioner therein "as registered as a non'012 taxpayer [!(!] 3ence, for being merely 012'exempt, the petitioner in that case cannot claim any 012 refund or credit

#econd, the input taxes paid on the capital goods of respondent are duly supported by 012 in#oices and ha#e not been offset against any output taxes 1lthough enterprises registered "ith the *@I after 8ecember 3!, !994 "ould no longer enBoy the tax credit incenti#es on domestic capital equipment '' as pro#ided for under 1rticle 399d:, 2itle III, *oo/ I of +@ $$)[!($] '' starting Danuary !, !99), respondent "ould still ha#e the same benefit under a general and express exemption contained in both 1rticle 779!:, *oo/ 0I of +@ $$)C and %ection !$, paragraph $ 9c: of 41 7$$7, extended to the eco&ones by 41 79!) 2here "as a #ery clear intent on the part of our legislators, not only to exempt in#estors in eco&ones from national and local taxes, but also to grant them tax credits 2his fact "as re#ealed by the sponsorship speeches in .ongress during the second reading of 3ouse *ill -o !4$9(, "hich later became 41 79!), as sho"n belo"< A64 4+.2@ x x x %ome of the incenti#es that this bill pro#ides are exemption from national and local taxesC x x x tax credit for locally'sourced inputs x x x = xxx xxx xxx

A64 8+I 614 x x x 2o ad#ance its cause in encouraging in#estments and creating an en#ironment conduci#e for in#estors, the bill offers incenti#es such as the exemption from local and national taxes, x x x tax credits for locally sourced inputs x x x = [!(3] 1nd third, no question as to either the filing of such claims "ithin the prescripti#e period or the #alidity of the 012 returns has been raised +#en if such a question "ere raised, the tax exemption under all the special la"s cited abo#e is broad enough to co#er e#en the enforcement of internal re#enue la"s, including prescription [!(4] /ummar2 2o summari&e, special la"s expressly grant preferential tax treatment to business establishments registered and operating "ithin an eco&one, "hich by la" is considered as a separate customs territory 1s such, respondent is exempt from all internal re#enue taxes, including the 012, and regulations pertaining thereto It has opted for the income tax holiday regime, instead of the ( percent preferential tax regime 1s a matter of la" and procedure, its registration status entitling it to such tax holiday can no longer be questioned Its sales transactions intended for export may not be exempt, but li/e its purchase transactions, they are &ero'rated -o prior application for the effecti#e &ero rating of its transactions is necessary *eing 012'registered and ha#ing satisfactorily complied "ith all the requisites for claiming a tax refund of or credit for the input 012 paid on capital goods purchased, respondent is entitled to such 012 refund or credit >3+4+?@4+, the pronouncement %@ #andoval()utierre*, Corona, Carpio(+orales and )arcia, ,,., concur
[!]

5etition

is

+E!IE+ as

and

the

8ecision to

A,,IR#E+ -o costs @48+4+8

4ollo,

pp

8'$0

[$]

Id , pp $!'30 2hirteenth 8i#ision 5enned by Dustice 6ercedes ;o&o'8adole, "ith the concurrence of Dustices %al#ador D 0alde& Dr 9chair: and 1melita ; 2olentino 9member:
[3]

.1 8ecision, p .1 8ecision,

!0C rollo, p pp $'4C

30

*old types and caps in the original pp $$'$4 .itations omitted

[4]

rollo,

[(]

2he 5etition "as deemed submitted for decision on 1pril 3, $003, upon receipt by the .ourt of petitionerEs 6emorandum, signed by 1ssistant %olicitors ;eneral .ecilio @ +stoesta and ?ernanda Iampas 5eralta and 1ssociate %olicitor 4omeo 8 ;al&ote 4espondentEs 6emorandum, signed by 1ttys 8ennis ; 8imagiba and ?ran/lin 1 5restousa, "as filed on 6arch 7, $003
[)]

5etitionerEs

6emorandum,

(C

rollo,

99

@riginal

in

upper

case

[7]

4eferred to as eco&one, it is a selected area "ith highly de#eloped, or "hich has the potential to be de#eloped into, agro'industrial, industrial, touristFrecreational, commercial, ban/ing, in#estment and financial centers J49a:, .hapter I of 41 79!), other"ise /no"n as =2he %pecial +conomic ,one 1ct of !99( A
[8]

J3(,

.hapter

III

of

41

79!)

[9]

58 )) is the la" creating the +xport 5rocessing ,one 1uthority or +5,1 #ee !st paragraph of J$3, .hapter III of 41 79!)
[!0]

+@ $$), in 1rticle ! thereof, is also /no"n as the =@mnibus In#estments .odeA of !987 #ee !st paragraph of J$3, .hapter III of 41 79!)
[!!]

41 7$$7, in J! thereof, is also /no"n as the =*ases .on#ersion and 8e#elopment 1ct of !99$ A #ee J(!, .hapter 0I of 41 79!)
[!$]

41 7844, in J! thereof, is also /no"n as the =+xport 8e#elopment 1ct of !994 A #ee $nd paragraph of J$3, .hapter III of 41 79!)
[!3]

J!79!: J!8 1rticle 779!:,

of of *oo/ 0I

58 58 of +@

)) )) $$)

[!4]

[!(]

[!)]

1rticle 39 of +@ $$), certain paragraphs of "hich are expressly repealed by the $nd paragraph of J$0 of 41 77!), other"ise /no"n as the =+xpanded 0alue 1dded 2ax Ia",A deemed effecti#e 6ay $7, !994 %ee Commissioner of Internal &evenue v. +ichel ,. -huillier .a'nshop, Inc. , 40) %.41 !78, !87, Duly !(, $003
[!7]

1rticle 9b: of J(!, J(!, 9c: 9d: of of the the the $nd .hapter .hapter $nd $nd

78 paragraph 0I 0I paragraph paragraph

of of of of of of J!$ J!$ J!$

+@ of 41 41 of of 41 41 41

$$) 7$$7 79!) 79!) 7$$7 7$$7

[!8]

[!9]

[$0]

[$!]

[$$]

[$3]

4eferred to as the .entral *an/ under 9e: of the $nd paragraph of J!$ of 41 7$$7 J!7 J!) of 41 7844 of 41 7844

[$4]

[$(]

#ee $nd paragraph of J$3, .hapter III of 41 79!)

[$)]

58 !8(3 "as the la" that too/ effect in !983, requiring deposits of duties upon the opening of letters of credit to co#er imports
[$7]

$nd

paragraph

of

J4,

.hapter

of

41

79!)

[$8]

1 =012'registered personA is a taxable person "ho has registered for 012 purposes under J$3) of the 2ax .ode 8eoferio and 6amalateo, $he /alue Added $ax in the .hilippines 9!st ed , $000:, p $)( #ee 9th paragraph of J4 !07'!9a: of 4e#enue 4egulations -o 944: 7'9(, implemented beginning Danuary !, !99), as amended by J) of 44 )'97, effecti#e Danuary !, !997
[$9]

JJ!0( to !09 of 41 84$4, as amended, other"ise /no"n as the 2ax .ode

[30]

0apatiran ng mga Naglilingkod sa .amahalaan ng .ilipinas, Inc. , !)3 %.41 37!, 378'379, Dune 30, !988
[3!]

8e

Ieon, $nd

$he

Fundamentals of

of

$axation J!0( of

9!$th

ed , the

!998:, 2ax

!3! .ode

[3$]

paragraph

[33]

8eoferio Dr and 6amalateo, $he /alue Added $ax in the .hilippines 9!st ed , $000:, pp 33 K 3)
[34]

+@

$73

[3(]

0itug, D and 1costa, $ax -a' and ,urisprudence 9$nd ed , $000:, p $$7

#ee J!939d: of the -ational Internal 4e#enue .ode of !977 as further amended by J! of 5res 8ecree -o !3(8 dated 1pril $!, !978, "herein the tax credit method, instead of the cost deduction method, "as mandated to be applied in computing the 012 due
[3)]

8eoferio

Dr Id ,

and

6amalateo, pp

supra,

34 34'3(

[37]

[38]

=@utput taxesA refer to the 012 due on the sale or lease of taxable goods, properties or ser#ices by a 012'registered or 012'registrable person #ee last paragraph of J!!091:93: and J$3) of the 2ax .ode
[39]

5resumed

to

be

012'registered

[40]

*y =input taxesA is meant the 012 due from or paid by a 012'registered person in the course of trade or business on the importation of goods or local purchases of goods or ser#ices, including the lease or use of property from a 012'registered person #ee penultimate paragraph of J!!091:93: of the 2ax .ode
[4!]

J!!09*:

of

the

2ax

.ode

012'registered persons shall pay the 012 on a monthly basis J!!491: of the 2ax .ode
[4$]

J!!09*:

of

the

2ax

.ode

[43]

2hese are goods or properties "ith estimated useful li#es greater than one year and "hich are treated as depreciable assets under J349?: [formerly J$99f:] of the 2ax .ode, used directly or indirectly in the production or sale of taxable goods or ser#ices 3rd paragraph of J4 !0)'!9b: of 44 7'9(

2hese goods also refer to =capital assetsA as this term is defined in J3991:9!: of the 2ax .ode
[44]

8e 8eoferio Dr and

Ieon, 6amalateo,

p supra, p

!3( $44

[4(]

[4)]

%ubBect to the pro#isions of JJ!0), !08 and !!$ of the 2ax .ode 8e 8eoferio 8e J!0)91:9$:9c: J!089*:93: 8eoferio Dr and of of Dr and Ieon, 6amalateo, Ieon, the the 6amalateo, p supra, p 2ax 2ax supra, p p !33 !90 !33 .ode .ode $!(

[47]

[48]

[49]

[(0]

[(!]

[($]

[(3]

Hnder this principle, goods and ser#ices are taxed only in the country "here these are consumed 2hus, exports are &ero'rated, but imports are taxed Id , p 43
[(4]

In business parlance, =automatic &ero ratingA refers to the standard &ero rating as pro#ided for in the 2ax .ode
[((]

8eoferio

Dr Id , Id ,

and

6amalateo, p p pp !33

supra,

!89 43 !$!

[()]

[(7]

[(8]

8e 8eoferio Dr

Ieon, and Id , Id , 8e

K supra, p

!3( !!8 !3$ !3$'!33

[(9]

6amalateo, p pp Ieon,

[)0]

[)!]

[)$]

p the 2ax supra, p p

!3$ .ode !87 )9 2ax 2ax 2ax .ode .ode .ode 41 79!)

[)3]

J!099q: 8eoferio Dr Id , J!0)91:9$: J!0)91:9!: J!0)91:9$:9c: !st paragraph of

of and

[)4]

6amalateo,

[)(]

[))]

of of of J8,

the the the .hapter I

[)7]

[)8]

[)9]

of

1 =customs territoryA means the national territory of the 5hilippines outside of the proclaimed boundaries of the eco&ones, except those areas specifically declared by other la"s andFor presidential proclamations to ha#e the status of special economic &ones andFor free ports J$ g, 4ule !, 5art I of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA
[70]

8eoferio

Dr

and

6amalateo,

supra,

$$7

[7!]

2his principle is not clearly defined by any la" or administrati#e issuance #ee Id , p $$7
[7$]

J$ of 4e#enue 6emorandum .ircular -o 946.: 74'99 dated @ctober !(, !999

2his circular is an example of an agency statement of general applicability that ta/es the form of a re#enue tax issuance =bearing on internal re#enue tax rules and regulations A Commissioner of Internal &evenue v. CA , 3$9 5hil 987, !009, 1ugust $9, !99), per 0itug, , , citing 46. !0'8) %ee J$9$:, .hapter !, *oo/ 0II of +xecuti#e @rder -o 9+@: $9$, other"ise /no"n as the =1dministrati#e .ode of !987A dated Duly $(, !987
[73]

J!0)91:9$:9a: #ee 8eoferio Dr

of and

the 6amalateo,

2ax supra, p

.ode $0!

[74]

[7(]

2his &one is a/in to the former army bases or installations "ithin the 5hilippines #aura Import and xport Co., Inc. v. +eer , 88 5hil !99, $0$, ?ebruary $), !9(!
[7)]

8eoferio

Dr

and

6amalateo,

supra,

!99

[77]

1n =export processing &oneA is a speciali&ed industrial estate located physically andFor administrati#ely outside customs territory, predominantly oriented to export production, and may be contained in an eco&one J49a: and 9d:, .hapter I of 41 79!)
[78]

1rticle $3, .hapter I, 2itle I, *oo/ I of +@ $$) #ee J$ mm $:, 4ule I, 5art I of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA
[79]

1rticle

779$:,

*oo/ of III

0I the of

of 2ax 41

+@

$$) .ode 79!)

[80]

J!0)91:9$:9a:9(: J$4, .hapter

[8!]

[8$]

J$4, .hapter III of 41 79!), as amended by J4 of 41 8748 dated Dune !, !999 J!79!: of 58 ))

[83]

[84]

state of #alud ,imene* v. .hilippine xport .rocessing 1one , 349 %.41 $40, $)0' $)!, Danuary !), $00! %ee 4th paragraph, J!!, .hapter II of 41 79!)
[8(]

Commissioner of Customs v. .hilippine .hosphate Fertili*er Corp. , ;4 -o !44440, %eptember !, $004, p 7

[8)]

J!, 4ule 0III, 5art 0 and 4ule L0 of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA
[87]

1 =restricted areaA is a specific area "ithin an eco&one that is classified andFor

fenced'in as an export processing &one J$ h, 4ule I, 5art I of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA
[88]

1 =registered export enterpriseA is one that is registered "ith the 5+,1, and that engages in manufacturing acti#ities "ithin the pur#ie" of the 5+,1 la" for the exportation of its production J$ i, 4ule I, 5art I of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA
[89]

J!, 4ule LL0 of the =4ules and 4egulations to Implement 4epublic 1ct -o 79!), other"ise /no"n as G2he %pecial +conomic ,one 1ct of !99( EA #ee J(), .hapter 0I of 41 79!)
[90]

1rticle

!!,

.hapter

I,

*oo/

of

+@

$$)

[9!]

1rticle 399c:, 2itle III, *oo/ I of +@ $$), expressly repealed by the $nd paragraph of J$0 of 41 77!) .onsequently, enterprises registered "ith the *@I after 8ecember 3!, !994 "ill no longer enBoy the incenti#es pro#ided under said article starting Danuary !, !99)
[9$]

1rticle 1rticle

399m:, 779!:,

2itle

III, *oo/

*oo/ 0I

I of

of

+@ +@

$$) $$)

[93]

[94]

1rticle 399d:, 2itle III, *oo/ I of +@ $$), also expressly repealed by the $nd paragraph of J$0 of 41 77!) .onsequently, enterprises registered "ith the *@I after 8ecember 3!, !994 "ill no longer enBoy the incenti#es pro#ided under said article starting Danuary !, !99)
[9(]

1rticle !st J(!, $nd J!)9c:, J!)9e:, $nd

399/:, paragraph

2itle of

III,

*oo/ J!$9c: 0I of J!$9c: III III of of

I of

of

+@ 41 41

$$) 7$$7 79!) 7$$7 7844 7844

[9)]

[97]

.hapter paragraph 1rticle 1rticle of J$3, of

[98]

of

41 41 41

[99]

[!00]

[!0!]

paragraph

.hapter

III

of

41

79!)

[!0$]

Commissioner of Internal &evenue v. )eneral Foods 2.hils.3, Inc. , 40! %.41 (4(, ((0, 1pril $4, $003
[!03]

Commissioner of Internal &evenue v. #olidbank Corp. , 4!) %.41 43), 4)!, -o#ember $(, $003
[!04]

1gpalo, 4.I -easing

#tatutory Corp. v.

Construction CA, 4!)

9$nd %.41 4,

ed , !4,

!990:, -o#ember

p !8,

$!7 $003

[!0(]

[!0)]

.aseo &ealty 5 6evelopment Corp. v. CA, ;4 -o !!9$8), @ctober !3, $004, p !4 #urigao Consolidated +ining Co., Inc. v. Collector of Internal &evenue , !!9 5hil 33,

[!07]

37,
[!08]

8ecember 8eoferio Dr 1gpalo, 8eoferio J393: of JJ! $nd paragraph $ !, $ 3, $ 8, .hapter CA, 3)! paragraph and 5hil Dr 4e#enue and of J$, .hapter .hapter .hapter 0I $$9, of !( and and 6amalateo, supra, 6amalateo,

$), supra, pp supra, -o p 946.: 58 I of of of of $4$, J$, of of 41 +@ +@ +@ 41 Danuary 41 41 $0, p

!9)3 !(( 8$'83 $!8 74'99 )) 79!) $$) $$) $$) 79!) !999 7$$7 7$$7

[!09]

[!!0]

[!!!]

6emorandum $

.ircular of

[!!$]

[!!3]

.hapter I I I

[!!4]

1rticle 1rticle 1rticle J(!, $iu v. !st JJ!$

[!!(]

[!!)]

[!!7]

[!!8]

[!!9]

[!$0]

[!$!]

,ohn 7ay .eoples Alternative Coalition v. -im , 4!4 %.41 3(), 3)9, @ctober $4, $003
[!$$]

$nd !st JJ49c: $nd

paragraph paragraph of 1rticle of of I J$, , J$,

of 1rticle !), and 1rticle

J$, I !7 I of

41 41 of of 41 41

7$$7 7844 7844 7844

[!$3]

[!$4]

[!$(]

paragraph

[!$)]

J$ of the 2ax .ode, as amended by 41 87)! effecti#e Danuary !, $000C and by 41 90!0, the effecti#ity of "hich has been retroacted to Danuary !, $00!
[!$7]

1merican %ociety of International Ia" 5roceedings, = Indigenous .eople and the )lobal $rade &egime,A 9) 1silproc $79, $8!, 6arch !), $00$
[!$8]

J$0

of

1rticle

II

of

the

!987

.onstitution

[!$9]

$nd paragraph of J! and J!$ of 1rticle LII of the !987 .onstitution

[!30]

%ch"ab, extract from the 5reface of the )lobal Competitiveness &eport 899:(899; , """ "eforum org, last #isited Danuary $7, $00(, 9<0(am 5%2
[!3!]

J$3) J!79!: of 58 ))

of and J(),

the .hapter 0I

2ax 0I of of 41 +@

.ode 79!) $$)

[!3$]

[!33]

1rticle

779!:,

*oo/

[!34]

5etitionerEs .1 8ecision, p

6emorandum, 7C rollo, p

9C

rollo,

p (, rollo, p

!03 3(

[!3(]

$7C and .21 8ecision, p

[!3)]

+agnolia 6airy .roducts Corp. v. N-&C, 3$$ 5hil (08, (!7, per ?rancisco, ,

[!37]

Commissioner of Internal &evenue v. .rocter 5 )amble .hilippine +anufacturing Corp., $04 %.41 377, 383, 8ecember $, !99!, per ?eliciano, ,
[!38]

Ibid %ee Advertising Associates, Inc. v. Collector of Internal &evenue , 97 5hil )3), )4!, %eptember 30, !9((
[!39]

Atlas Consolidated +ining 5 6evelopment Corp. v. Commissioner of Internal &evenue, !0$ %.41 $4), $(9, Danuary $7, !98!, per 8e .astro, D
[!40]

J4 !07'!9d:

of

44

7'9( 448, per ,. () (7 !(

[!4!]

Commissioner of Internal &evenue v. #olidbank Corp , supra, p 5anganiban,

[!4$]

0itug

and Id ,

1costa,

supra, p

[!43]

[!44]

#pouses +orandarte v. CA, ;4 -o J39m: J39ff: of of J!!391: J$4, !st .hapter III of 41 4ule 4ule !3! !3! of 79!), as of of

!$3(8), 1ugust !$, $004, p the the the amended III by 4ules 4ules 2ax J4 of of 41 41 of of

[!4(]

.ourt .ourt .ode 8748 79!)

[!4)]

[!47]

[!48]

[!49]

paragraph,

J$3,

.hapter

[!(0]

1s a matter of principle, it is inad#isable to set aside such a conclusion, because by the #ery nature of its functions and sans abuse or impro#ident exercise of its authority, the 2ax .ourt is =dedicated exclusi#ely to the study and consideration of tax problems and has necessarily de#eloped an expertise on the subBect x x x A .aseo &ealty 5 6evelopment Corp. v. CAC supra, per 2inga, ,., p 8
[!(!]

Contex Corp. v. 7on. Commissioner of Internal &evenue , ;4 -o !(!!3(, Duly $, $004, p !!

[!($]

2his pro#ision has been expressly repealed by the $nd paragraph of J$0 of 41 77!) %ee note 94
[!(3]

Iegislati#e 1rchi#es, .ommittee 4eport -o 0!0$7, 3ouse of 4epresentati#es, 8ecember !4, !994, pp 00!3$ K 00!4!
[!(4]

Commissioner of Customs v. .hilippine .hosphate Fertili*er Corp C supra, pp 9'!0