JULY 2023 COURT OF TAX APPEALS DECISIONS

 TAX ASSESSMENTS

 

FINAL ASSESSMENT NOTICE (FAN) ISSUED BEFORE THE EXPIRATION OF 15-DAYS FROM RECEIPT OF PAN TO RESPOND THERETO IS VOID. The Bureau of Internal Revenue (BIR) or his duly authorized representative is duty bound to wait for the expiration of fifteen (15) days from the date of receipt of the PAN before issuing the FLD/FAN. As a corollary, the taxpayer has fifteen (15) days from date of receipt of the PAN to respond to the said notice. Here, without giving opportunity to the petitioner to respond to the PAN, respondent BIR already issued the FAN before the expiration of the above-stated fifteen (15)-day period. Such being the case, there is a clear violation of petitioner’s right to due process in the issuance of the subject tax assessments (Misnet Education, Inc. v. Commissioner of Internal Revenue, C.T.A. Case No. 9941, July 3, 2023; Bright Alliance Enterprises Corp. v. Commissioner of Internal Revenue, C.T.A. Case No. 9696 (Resolution), July 25, 2023; Hi-Stakes Gaming Incorporated v. Commissioner of Internal Revenue, CTA Case. No 10172, July 28, 2023).

 

A FAN IS VOID FOR LACK OF DUE DATE. A FAN must not only indicate the legal and factual bases of the assessment but must also state a clear and categorical demand for payment of the computed tax liabilities within a specific period. Absent such demand, as in this case, the FANs are fatally infirm. In this case, a perusal of the FLD/FAN issued reveals that BIR failed to demand payment of the taxes due within a specific period. While the BIR demanded payment for the alleged deficiency taxes in the FLD, the period upon which respondent should pay was not indicated therein. Being a void assessment, the FANs bear no fruit and must be slain at sight (Commissioner of Internal Revenue v. Ecotechnovations, Inc., C.T.A. EB Case No. 2564, C.T.A. Case No. 9701, July 3, 2023; Zenorex Marketing Corp. v. Commissioner of Internal Revenue, C.T.A. Case No. 10175, July 10, 2023;  People of the Philippines vs. Enrico Candelaria Tuazon, CTA Crim. Case. No. O-895, July 31, 2023).

 

WHO MAY ISSUE LETTER OF AUTHORITY (LOA) IN ORDER THAT THE EXAMINATION BE VALID. For the examination to be valid, an LOA must be issued either by the Commissioner of Internal Revenue (CIR) himself or herself or by his or her duly authorized representative. The CIR’s duly authorized representatives are: (1) Regional Directors; (2) Deputy Commissioners; (3) Assistant Commissioner/Head Revenue Executive Assistants (for Large Taxpayers); and, (4) other officials but only upon prior authorization by the CIR himself or herself. In this case, the referral letter and Memorandum of Assignment relied upon by examiner as his authority to conduct the examination were both executed by Revenue District Officer, a subordinate official who is not authorized to issue LOAs. Thus, the investigation and subsequent assessment of petitioner’s tax deficiency could not be sanctioned (Zenorex Marketing Corp. v. Commissioner of Internal Revenue, C.T.A. Case No. 10175, July 10, 2023).

 

AN EXAMINATION MADE BY A REVENUE OFFICER NOT NAMED IN THE LOA IS INVALID. The LOA is the concrete manifestation of the grant of authority bestowed by the CIR or his authorized representatives to the revenue officers. Naturally, this grant of authority is issued or bestowed upon an agent of the BIR, i.e., a revenue officer. Hence, the BIR is mistaken to characterize the LOA as a document “issued” to the taxpayer, and that once so issued, “any” revenue officer may then act pursuant to such authority. In this case, the revenue officer who undertook the actual examination of respondent Company and recommended the issuance of a PAN and FLD against it was RO Nazario, and RO is not named in the LOA dated October 30, 2014. Since the examination conducted on respondent is invalid, petitioner’s FLD/FAN and his deficiency tax assessments against respondent is also void (Commissioner of Internal Revenue v. Exclusive Networks-PH, Inc., C.T.A. EB Case No. 2536, C.T.A. Case No. 9689), July 4, 2023;  Zenorex Marketing Corp. v. Commissioner of Internal Revenue, C.T.A. Case No. 10175, July 10, 2023; Commissioner of Internal Revenue v. Casas + Architects, C.T.A. EB Case No. 2589, C.T.A. Case No. 9960, July 28, 2023).

 

AN ASSESSMENT BASED ON THIRD-PARTY INFORMATION IS VOID IF NOT VALIDATED. An assessment should not be based on presumption but on facts. Here, the subject assessment was a result of a computerized matching conducted by the BIR from the information/data provided by third-party sources. However, the assigned Revenue Officer admitted that although they attempted to validate such third-party information through the issuance of confirmation letters, there were no responses from the alleged third parties. It is clear therefore that they failed to validate the information provided by such computerized matching. Thus, the assessment was null and void pursuant to Section 228 of the 1997 NIRC, as amended (De Quinto v. Bureau of Internal Revenue, C.T.A. Case No. 9623, July 4, 2023).

 

 

THE CTA HAS NO JURISDICTION ON REGULATORY FEES BUT ONLY ON LOCAL TAXES. The CTA has jurisdiction over  local tax. The Supreme Court has ruled that local tax cases consist of cases arising from local business tax and real property tax. Here, the petitioner was assessed for regulatory fees by the respondents.  Said assessment was then appealed to the CTA. Thus, not being local taxes, the Court in Division correctly ruled that the CTA has no jurisdiction on regulatory fees assessed by respondents (NLEX Corp. v. Municipality of Guiguinto, Bulacan, C.T.A. EB Case No. 2514 (C.T.A. AC No. 217), July 19, 2023).

 

NOTICE OF DESIGNATION AS WITHHOLDING AGENT SERVED TO THE TAXPAYER’S ACCOUNTING CLERK IS VALID. The law and BIR issuances are silent on how to serve the “Notice of Designation as Withholding Agent.” Simply put, there is no law or rule which unequivocally states who can receive the said notice in case of corporate taxpayers. All the same, the Court recognizes the importance of the “Notice of Designation as Withholding Agent” and as such shall apply the same rules on service of a notice of assessment under RR No. 12-99.  Section 3.1.4 of RR No. 12-99 provides that the assessment shall be sent to the taxpayer either by personal delivery or registered mail. Additionally, if personal delivery was made, the person receiving should note his or her (a) name; (b) signature; (c) designation and authority to act for and in behalf of the taxpayer; and (d) date of receipt.  Here, the Notice of Designation was received by the accounting clerk. As an accounting clerk, it is high likely that she knows and would be able to appreciate the significance of a letter/notice from the BIR and her receipt thereof. Therefore, there was a valid personal delivery (Donato C. Cruz Trading Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2573 (C.T.A. Case No. 9721), July 25, 2023).

TIMELY FILING OF AN APPEAL BEFORE THE CTA IS JURISDICTIONAL. The CTA can only acquire jurisdiction over a deficiency tax assessment case if the taxpayer timely files an appeal before the CTA within thirty (30) days from receipt of the adverse decision by the CIR or from the lapse of the one hundred eighty (180) days given to the CIR to decide on disputed tax assessment cases.  Here, the petitioner claims that he received two (2) copies of the FDDA, first FDDA on 22 September 2017 and the second FDDA on 19 October 2017. The petitioner further claims that the Petition for Review was timely filed before the CTA on 23 October 2017.  The CTA ruled that the FDDA was actually received by petitioner on 14 September 2017. Therefore, when petitioner filed the Petition for Review before the CTA on 23 October 2017, he was already nine (9) days late. Consequently, since the timely filing of an appeal before the CTA is jurisdictional, the Court in Division did not acquire jurisdiction over the present issue (Torregosa v. Regional Director Bureau of Internal Revenue Davao City Revenue Region No. 19, C.T.A. EB Case No. 2520, C.T.A. Case No. 9703, July 26, 2023; Commissioner of Internal Revenue v. Casas + Architects, C.T.A. EB Case No. 2589, C.T.A. Case No. 9960, July 28, 2023).

CRIMINAL VIOLATION OF TAX CODE

CRIME OF FAILURE TO PAY TAX REQUIRES PROOF THAT THE FAN/FLD HAS BEEN SERVED TO THE TAXPAYER.  The crime of failure to pay tax was committed only after receipt of the final notice and demand for payment coupled with the willful refusal to pay the taxes due within the allotted period. Here, the FAN/FLD was sent to the accused through registered mail but it failed to submit any proof that they were received by the accused.  Absent proof of receipt, these assessments could not have attained finality; hence there is no willful failure to pay tax and there is insufficiency to show that the accused sought to be arrested probably committed the crime charged (People of the Philippines v. Justbest Sales Corporation and Angeles G. Manuel, CTA Crim. Case No O-1060, July 14, 2023;  People of the Philippines v Scott James of Rivera and Mark Joseph A. De Guia, CTA Crim. Case. No. O-1028;  People of the Philippines vs Ronaldo Sta. Maria Manalo, RS Manalo Enterprises, CTA Crim. Case. No. O-1027).

DISCREPANCY IN THE NAME OF THE ACCUSED CORPORATION IN THE ASSESSMENTS AND THE INFORMATION WARRANTS THE DISMISSAL OF THE CASE. The prosecution is burdened to prove the corpus delicti beyond reasonable doubt either by direct evidence or by circumstantial or presumptive evidence. Corpus delicti consists of two things: first, the criminal act and second, accused’s agency in the commission of the act. Establishing the identity of the accused is, therefore, of paramount importance because the prosecution has to prove beyond reasonable doubt the fact that the accused corporation was culpable as the perpetrator of the crime penalized in Section 255 of the NIRC.

• Here, prior to the institution of the criminal cases, the BIR issued the following documents in connection with the investigation, audit and assessment of Great Domestic Insurance Company of the Philippines, Inc. (GDICPI) for all internal revenue taxes.  Yet, in all the four (4) Information filed by the prosecution, the corporation that was ultimately named and charged was Great Domestic Insurance Company of the Philippines (GDICP), without the “Inc.”
• This discrepancy between the name of the corporation that was audited and assessed by the BIR and the name of the corporation that was indicted in court brings into question the identity of the accused corporation.
• The discrepancy casts doubt into which corporate taxpayer properly underwent investigation, audit and assessment and was found to be liable for deficiency taxes by the BIR and which one was eventually indicted for failure to pay its tax liabilities. On the whole, the pieces of evidence offered during trial, precisely because of this discrepancy, do not fulfill the test of moral certainty and, therefore, are insufficient to support a judgment of convict. Therefore, the case would warrant the dismissal in the interest of justice (People v. Great Domestic Insurance Co. of the Philippines, C.T.A. EB Crim. Case No. 094, C.T.A. Crim. Case Nos. O-741 to O-744, July 10, 2023).

AN INVALID ASSESSMENT NEGATES THE ALLEGED CRIME OF WILLFUL FAILURE TO PAY TAXES. In the absence of a valid assessment for deficiency tax, accused cannot be said to have failed to pay the assessed taxes, much more to have done so willfully, as required under the Section 255 of the Tax Code.  Here, the FLD/FAN are void for failing to indicate the due date for payment.  Therefore, the case against the accused is dismissed (People of the Philippines vs. Enrico Candelaria Tuazon, CTA Crim. Case. No. O-895, July 31, 2023).

 

REFUND OF ERRONEOUSLY OR ILLEGALLY ASSESSED OR COLLECTED TAX

• There must be an erroneous or illegal collection of tax, or a penalty collected without authority, or sum excessively or wrongfully collected;
  • • The excise tax rate of P25.03 per liter imposed by CIR on Company’s beer products during the period from January 1, 2018 to December 31, 2018, is directly contradictory to and inconsistent with, and violative of, the express provisions of the eleventh paragraph of Section 143 of the NIRC, as amended by RA No. 10351. Moreover, the previous tax rates of P20.57, P21.39, P22.25, P23.14, and P24.07 from which it is derived were based on Revenue Memorandum Circular (RMC) No. 90-2012 and Revenue Regulations (RR) No. 17-2012, which RMC and RR are directly contradictory to and inconsistent with, and violative of, the express provisions of the relevant paragraphs of Section 143 of the NIRC, as amended. Here, the excise tax rate that should have been imposed for 2018 is only P24.44 68 per liter instead of P25.03 per liter. Hence, it is evident that the difference between the said amounts, i.e., P0.59 per liter, has been erroneously, illegally, excessively and/or wrongfully collected from petitioner by the BIR. (San Miguel Brewery Inc. v. CIR, CTA Case No. 10223, July 05, 2023)
    • Alkylate does not fall under the category of “other similar products of distillation” and hence, not subject to excise tax. Thus, the imposition of excise taxes on petitioner’s alkylate importation on December 29, 2014 is erroneous.  (Petron Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2615 (C.T.A. Case No. 9512, July 7, 2023)

 

• The administrative claim for refund must be filed with the Commissioner, within two (2) years after the payment of tax or penalty (San Miguel Brewery Inc. v. CIR, CTA Case No. 10223, July 05, 2023; Petron Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2615 (C.T.A. Case No. 9512), July 7, 2023;  Commissioner of Internal Revenue v. Casas+Architects, Inc., C.T.A. EB Case No. 2601 (C.T.A. Case No. 10058), July 7, 2023; Rodriguez v. Commissioner of Internal Revenue, C.T.A. Case No. 10151, July 20, 2023);

 

• The judicial claim requires that (1) administrative claim must be filed first, and (2) the judicial claim must be filed within two (2) years from the date of payment of the tax or penalty (San Miguel Brewery Inc. v. CIR, CTA Case No. 10223, July 05, 2023; Petron Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2615 (C.T.A. Case No. 9512), July 7, 2023; Commissioner of Internal Revenue v. Casas+Architects, Inc., C.T.A. EB Case No. 2601 (C.T.A. Case No. 10058), July 7, 2023; Rodriguez v. Commissioner of Internal Revenue, C.T.A. Case No. 10151, July 20, 2023).

 

• Proof of remittance of creditable withholding tax to the BIR is not a condition for a claim of refund of unutilized tax credits. The certificate of creditable tax withheld at source is the competent proof to establish the fact that taxes are withheld. It is not necessary for the person who executed and prepared the certificate of creditable tax withheld at source to be presented and to testify personally to prove the authenticity of the certificates (Commissioner of Internal Revenue v. Casas+Architects, Inc., C.T.A. EB Case No. 2601 C.T.A. Case No. 10058), July 7, 2023).

 

 

REFUND OF EXCESS INPUT VAT ON ZERO-RATED SALES

 

Certain requisites must be complied with by the taxpayer-applicant to successfully obtain a credit/refund of input VAT related to zero-rated sales. Said requisites are classified into certain categories, to wit:

As to the timeliness of the filing of the administrative and judicial claims:

1. The claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made(Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2608 (C.T.A. Case No. 9811; Advanced World System, Inc. v. Commissioner of Internal Revenue, C.T.A. Case No. 9983, July 11, 2023; Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

1. That in case of full or partial denial of the refund claim rendered within a period of 120 (now 90) days from the date of submission of the official receipts or invoices and other documents in support of the application, the judicial claim shall be filed with the Court of Tax Appeals (CTA) within thirty (30) days from receipt of the decision made (Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2608 (C.T.A. Case No. 9811) , July 11, 2023; Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).
   • The 120 (now 90) + 30-day periods to appeal are both mandatory and jurisdictional. After the lapse of the 120 (now 90)-day period, petitioner had 30 days to elevate its claim to the CTA. The claimant need not wait for the decision of the BIR after the 120-(now 90) day waiting period. It should file a judicial claim for refund with the CTA. A waiting period of only 120 (now 90) days and respondent’s inaction within the said period is deemed a denial of the claim (Advanced World System, Inc. v. Commissioner of Internal Revenue, C.T.A. Case No. 9983, July 11, 2023)

With reference to the taxpayer’s registration with the BIR:

3. The taxpayer is a VAT-registered person(Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2608 (C.T.A. Case No. 9811) , July 11, 2023; Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

In relation to the taxpayer’s output VAT:

4. The taxpayer is engaged in zero-rated or effectively zero-rated sales(Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2608 (C.T.A. Case No. 9811) , July 11, 2023; Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

1.  For zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b), and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations (Melco Resorts Leisure (PHP) Corp. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2608 (C.T.A. Case No. 9811) , July 11, 2023; Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023);

 

1. • Re. sales of goods abroad, in order for an export sale to qualify as zero-rated, the following essential elements must be present:
     • the sale was made by a VAT registered person (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023);
     • there was sale and actual shipment of goods from the Philippines to a foreign country, as evidenced by the following:
       • sales invoice as proof of sales of goods; the invoice must comply with the invoicing requirements (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).
       • Export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023);
       • Bank credit advice, certificate of bank remittance or any document proving payment of the goods in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023.

 

1. • Re. sales of goods to PEZA and BOI-registered entities – Certifications to the effect that the taxpayer’s customers are BOI-registered manufacturers/producers are 100% exported are required (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023).

 

1. • Renewable Energy Developers are entitled to VAT zero-rating treatment of its sale of fuel or power generated from renewable sources of energy; and on its purchases of local goods, properties and services needed for the development, construction and installation of its plant facilities (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023);
     • For a sale transaction to an RE Developer to qualify for VAT zero-rating, the taxpayer must be able to present the following documents of the RE Developer:
       • Department of Energy (DOE) Certificate of Registration;
       • Registration with the Board of investments; and
       • DOE Certificate of Endorsement before any importation is made or before the actual commercial operation of the concerned generation facility; on a per transaction basis (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).
         • Certificate of Endorsement issued by Department of Energy is not required in order for an RE Developer to enjoy zero-rated VAT rate.  Before a new generation company may commence its commercial operation, it must first secure a Certificate of Registration from the Energy Regulatory Commission to carry out such operation. Otherwise, it cannot be considered as a generation company as contemplated under the law and thus not entitled to claim for refund (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

o   Re. sales of services, certain essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0%), to wit:

1. • • The services fall under any of the categories under Section 108(B)(2), or simply, the services rendered should be other than ”processing, manufacturing or repacking of goods”
     • The service must be performed in the Philippines by a VAT-registered person (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).
     • The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023
     • The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a nonresident person not engaged in and business who is outside the Philippines when the services were performed (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).
       • In order to be considered as a non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both a Certification of Non- Registration of Corporation/Partnership issued by the Philippine Securities and Exchange Commission (SEC), and proof of incorporation/registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate), and there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023).

 

As regards the taxpayer’s input VAT being refunded:

 

6. The input taxes are not transitional input taxes. Transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

1. The input taxes are due or paid (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

1. The input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume (Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

1. Input tax must comply with invoicing requirements (Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023; Halliburton Worldwide Limited-Philippine Branch v. Commissioner of Internal Revenue, C.T.A. Case No. 10139, July 26, 2023).

 

10. Input taxes have not been applied against output taxes during and in the succeeding quarters(Maxima Machineries, Inc. v. Commissioner of Internal Revenue, C.T.A. EB Case No. 2590 (C.T.A. Case No. 9453), July 18, 2023).