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TAX CASES VAT

ABAKADA GURO PARTY LIST VS EXECUTIVE SECRETARY

Motion for Reconsideration by petitioners Association of Pilipinas

Shell Dealers, Inc. in G.R. No. 16861, on the !ro"nds that#

I. $his %onorable &o"rt erred in "pholdin! the constit"tionality of

Section 11'(A)(*) and Section 11'(+) of the NIR&, as aended

by the -A$ /a0, iposin! liitations on the ao"nt of inp"t

A$ that ay be claied as a credit a!ainst o"tp"t A$, as 0ell

as Section 11(&) of the NIR&, as aended by the -A$ /a0,

re"irin! the !o2ernent or any of its instr"entalities to

0ithhold a 34 5nal 0ithholdin! A$ on their !ross payents on

p"rchases of !oods and ser2ices, and 5ndin! that the "estioned

pro2isions#

A. are not arbitrary, oppressi2e and cons5scatory as to ao"nt

to a depri2ation of property 0itho"t d"e process of la0 in2iolation of Article III, Section 1 of the 187 Philippine

&onstit"tion

+. do not 2iolate the e"al protection cla"se prescribed "nder

Article III, Section 1 of the 187 Philippine &onstit"tion and

&. apply "niforly to all those belon!in! to the sae class and

do not 2iolate Article I, Section *8(1) of the 187 Philippine

&onstit"tion.

II. $his %onorable &o"rt erred in "pholdin! the constit"tionality

of Section 11'(+) of the NIR&, as aended by the -A$ /a0,

iposin! a liitation on the ao"nt of inp"t A$ that ay be

claied as a credit a!ainst o"tp"t A$ not0ithstandin! the

5ndin! that the ta9 is not pro!ressi2e as e9horted by Article I,

Section *8(1) of the 187 Philippine &onstit"tion.

Petitioner Garcia reply#

the no pass-onprovision for the sale of service for power generation

because both the Senate and the House were in agreement that the

VAT burden for the sale of such service shall not be passed on to theend-consumer. As to the no pass-onprovision for sale of petroleum

products, petitioners argue that the fact that the presence of such

a no pass-onprovision in the House version and the absence thereof

in the Senate Bill means there is no conflict because "a House

provision cannot be in conflict with something that does not eist.

&o"rt:s R"lin!#

It is incorrect to concl"de that there is no clash bet0een

t0o opposin! forces 0ith re!ard to the no pass-

onpro2ision for A$ on the sale of petrole" prod"cts

erely beca"se s"ch pro2ision e9ists in the %o"se2ersion 0hile it is absent in the Senate 2ersion. It is

precisely the absence of s"ch pro2ision in the Senate bill

and the presence thereof in the %o"se bills that ca"ses

the con;ict. $he absence of the pro2ision in the Senate

bill sho0s the Senate:s disa!reeent to the intention of

the %o"se of Representati2es acons"er.

OTHER TAX RELATED ISSUES IN THE CASE

As to the other National Internal Re2en"e &ode (NIR&)

pro2isions fo"nd in Senate +ill No. 13', i.e., percenta!e

ta9es, franchise ta9es, a"seent and e9cise ta9es,

these pro2isions are needed so as to c"shion the e=ects

of A$ on cons"ers. As 0e said in o"r decision, certain

!oods and ser2ices 0hich 0ere s"b?ect to percenta!e ta9and e9cise ta9 0o"ld no lon!er be A$ e9ept, th"s, the

cons"er 0o"ld be b"rdened ore as they 0o"ld be

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payin! the A$ in addition to these ta9es. $h"s, there is

a need to aend these sections to soften the ipact of

A$. $he &o"rt 5nds no reason to re2erse the earlier

r"lin! that the Senate introd"ced aendents that are

!erane to the s"b?ect atter and p"rposes of the

ho"se bills

Petitioners also reiterate their ar!"ent that the inp"t

ta9 is a property or a property ri!ht. In the sae breath,

the &o"rt reiterates its 5ndin! that it is not a property ora property ri!ht, and a A$>re!istered person:s

entitleent to the creditable inp"t ta9 is a ere

stat"tory pri2ile!e.

$he ri!ht to credit inp"t ta9 as a!ainst the o"tp"t ta9 is

clearly a pri2ile!e created by la0, a pri2ile!e that also

the la0 can liit. It sho"ld be stressed that a person

has no 2ested ri!ht in stat"tory pri2ile!es.

+"t, as the state is free to distrib"te the b"rden of a ta9

0itho"t re!ard to the partic"lar p"rpose for 0hich it is

to be "sed, there is no 0arrant in the &onstit"tion forsettin! the ta9 aside beca"se a co"rt thinA$ /a0 is ascertainable 0ithatheatical certainty.o As I aintained in y Dissenting Opinion, a ta9

eas"re ay be 2alidly challen!ed and stricA$ /a0, the State reco!niCes that the persons

0ho pre>pay that inp"t A$, "s"ally the dealers or

retailers, are not the persons 0ho are liable to payfor the ta9. $he A$ syste, as ipleented

thro"!h the pre2io"s A$ la0 and the ne0 ->A$

/a0, s"arely holds the end cons"er as the

ta9payer liable to sho"lder the inp"t A$.

Nonetheless, "nder the echanis foisted in the

ne0 ->A$ /a0, the dealer or retailer 0ho pre>pays

the inp"t A$ is 2irt"ally precl"ded fro reco2erin!

the pre>paid inp"t A$, since the la0 only allo0s

s"ch reco2ery "pon the cessation of the b"siness.

Indeed, the only 0ay said class of ta9payers canreco2er this pre>paid inp"t A$ 0as if it 0ere to

cease operations at the end of e2ery "arter.o It is not tr"e then that the inp"t A$ prepaid for the 5rst

"arter can be reco2ered in the second, third or fo"rth

"arter of that year, or at any tie in the ne9t year for

that atter since the ao"nt of prepaid inp"t A$

acc""lates 0ith e2ery s"cceedin! prepayent of inp"t

A$. Moreo2er, the acc""lation of the prepaid inp"t A$

diinishes the act"al 2al"e of the ref"ndable ao"nts,

considerin! the established principle of Btie>2al"e ofoneyB, as e9plained in y Dissenting Opinion.

COMMISSIONER OF INTERNAL REVENUE vs. SEAGATE

TECHNOLOGY (PHILIPPINES)

+"siness copanies re!istered in and operatin! fro

the Special -conoic one in Na!a, &eb" E liadded ta9es or A$.

Altho"!h e9port sales are not deeede9ept transactions, they are nonetheless Cero>rated.

%ence, in the present case, the distinction bet0een

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e9ept entitiesand e9ept transactionshas little

si!ni5cance, beca"se the net res"lt is that the

ta9payer is not liable for the A$. Respondent, a A$>

re!istered enterprise, has coplied 0ith all re"isites

for claiin! a ta9 ref"nd of or credit for the inp"t A$ it

paid on capital !oods it p"rchased. $h"s, the &o"rt of

$a9 Appeals and the &o"rt of Appeals did not err in

r"lin! that it is entitled to s"ch ref"nd or credit.

FRespondent is a resident forei!n corporation d"lyre!istered 0ith the Sec"rities and -9chan!e

&oission to do b"siness in the Philippines, 0ith

principal oHce address at the ne0 &eb" $o0nship @ne,

Special -conoic one, +aran!ay &antao>an, Na!a,

&eb"

*. FPetitioner is s"ed in his oHcial capacity, ha2in!

been d"ly appointed and epo0ered to perfor the

d"ties of his oHce, incl"din!, aon! others, the d"ty

to act and appro2e clais for ref"nd or ta9 credit

. FRespondent is re!istered 0ith the Philippine -9port

one A"thority (P-A) and has been iss"ed P-A

&erti5cate No. 7>' p"rs"ant to Presidential Decree

No. 66, as aended, to en!a!e in the an"fact"re of

recordin! coponents priarily "sed in cop"ters for

e9port. S"ch re!istration 0as ade on 6 "ne 17

-ADSIa

. FRespondent is A$ F(al"e Added $a9)>re!isteredentity as e2idenced by A$ Re!istration &erti5cation

No. 7>'8>'''6''> iss"ed on * April 17

3. A$ ret"rns for the period 1 April 18 to ' "ne

1 ha2e been 5led by Frespondent

6. An adinistrati2e clai for ref"nd of A$ inp"t ta9es

in the ao"nt of P*8,6,**6.8 0ith s"pportin!

doc"ents (incl"si2e of the P1*,*67,81.' A$ inp"t

ta9es s"b?ect of this Petition for Re2ie0), 0as 5led on @ctober 1 0ith Re2en"e District @Hce No. 8,

$alisay &eb"

7. No 5nal action has been recei2ed by Frespondent

fro Fpetitioner on FrespondentJs clai for A$

ref"nd.

&lais for ta9 ref"ndKta9 credit are constr"ed in

Jstrictissimi jurisJ a!ainst the ta9payer. $his is d"e to

the fact that clais for ref"ndKcredit Fparta

re!istered entity, tho"!h, it 0as still s"b?ect to thepayent of other national internal re2en"e ta9es,

liyear prescripti2e period. S"ch

payents 0ere E to the e9tent of the ref"ndable

2al"e E d"ly s"pported by A$ in2oices or oHcial

receipts, and 0ere not yet o=set a!ainst any o"tp"t

A$ liability.