Case Digest (G.R. No. 158053) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007, the petitioner is the Commissioner of Internal Revenue and the respondent is Burmeister and Wain Scandinavian Contractor Mindanao, Inc. Respondent, a domestic corporation organized under Philippine law with address at Daruma Building, Lanang, Davao City, was formed by a foreign consortium to subcontract the operation and maintenance of two power barges owned by the National Power Corporation (NAPOCOR). The consortium’s capacity and energy fees were paid in Deutsche Marks, Japanese Yen, and Philippine Pesos; the non-Peso portion was remitted abroad while the Peso component was deposited locally. Respondent received its fees in foreign currency inwardly remitted through the Bangko Sentral ng Pilipinas (BSP)–regulated banking system. In February 1995, respondent secured BIR Ruling No. 023-95, which held that its services were zero-rated for Value-Add... Case Digest (G.R. No. 158053) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Parties and Contractual Arrangement
- Petitioner is the Commissioner of Internal Revenue; respondent is Burmeister and Wain Scandinavian Contractor Mindanao, Inc. (“BWSCMI”), a domestic corporation.
- A foreign consortium (BWSC-Denmark, Mitsui Engineering & Shipbuilding Ltd., Mitsui & Co., Ltd.) entered into a 15-year contract with NAPOCOR for the operation and maintenance of two power barges. BWSC-Denmark formed respondent as subcontractor for actual operations in the Philippines.
- Financial Transactions and VAT Registration
- NAPOCOR paid capacity and energy fees in Mark, Yen, and Peso; non-Peso proceeds were remitted abroad, Pesos in a special local account. The consortium paid respondent in foreign currency inwardly remitted.
- Respondent sought and received BIR Ruling No. 023-95 (Feb. 14, 1995) declaring its services zero-rated if paid in foreign currency and accounted under BSP rules. Respondent registered as a VAT taxpayer (May 26, 1995) and filed 1996 quarterly VAT returns showing zero-rated sales of ₱147.3 million and input VAT of ₱3.36 million.
- Voluntary Assessment and Payment of VAT
- Respondent entered the BIR’s Voluntary Assessment Program, misapplying RR No. 5-96 by subjecting April–December 1996 sales to 10% VAT (₱10.36 million output), zero-rating January–March sales. It paid ₱6.99 million (output minus input).
- In January 1999, VAT Ruling No. 003-99 reconfirmed BIR Ruling No. 023-95. Respondent filed for issuance of a tax credit certificate (April 22, 1999) and a CTA petition (Dec. 27, 1999) to toll prescription.
- Lower Courts’ Decisions
- The CTA (Aug. 8, 2001) ordered issuance of a tax credit certificate for ₱6.99 million, applying solutio indebiti and BIR rulings.
- The Court of Appeals (Apr. 16, 2002) affirmed, rejecting petitioner’s argument that zero-rating under RR 5-96 required consumption abroad or services of specified types, and held that administrative provisions adding requirements beyond the Tax Code were void.
Issues:
- Whether respondent is entitled to refund (via tax credit certificate) of ₱6,994,659.67 paid as output VAT for 1996.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)