Facts:

• The case involves the Commissioner of Internal Revenue (petitioner) and the Philippine Long Distance Telephone Company (PLDT) (respondent).
• PLDT filed a claim for tax refund/credit against the Bureau of Internal Revenue (BIR) for taxes paid on imported equipment, machineries, and spare parts from October 1, 1992, to May 31, 1994.
• PLDT, operating under a franchise granted by Republic Act No. 7082, paid a total of P164,510,953.00 in various taxes, including compensating tax, advance sales tax, and other internal revenue taxes.
• Additionally, PLDT paid P116,041,333.00 in value-added tax (VAT) for similar importations during the same period.
• On March 15, 1994, PLDT sought a ruling from the BIR regarding its tax exemption privileges under Section 12 of R.A. 7082, which states that the grantee is liable for certain taxes but exempt from others, specifically mentioning the 3% franchise tax on gross receipts.
• The BIR issued Ruling No. UN-140-94, confirming PLDT's exemption from VAT on its necessary importations.
• On December 2, 1994, PLDT filed a claim for tax credit/refund for the taxes paid, which the BIR did not address.
• To avoid the expiration of the prescriptive period, PLDT filed a petition with the Court of Tax Appeals (CTA), which ruled in favor of PLDT on February 18, 1998, granting a refund of P223,265,276.00.
• The BIR's motion for reconsideration was denied, leading to an appeal to the Court of Appeals (CA), which affirmed the CTA's decision on September 17, 1999.
• The BIR subsequently sought a review from the Supreme Court.

Issue:

• (Unlock)

Ruling:

• The Supreme Court partially granted the petition, modifying the CA's decision.
• The Court ordered the Commissioner of Internal Revenue to issue a Tax Credit Certificate or refund PLDT the amount of P94,673,422.00, representing the advance sales tax a...(Unlock)

Ratio:

• The Supreme Court held that the phrase "in lieu of all taxes" in Section 12 of R.A. 7082 does not include indirect taxes such as VAT, compensating tax, and advance sales tax.
• The Court emphasized that tax exemptions must be strictly construed against the taxpayer, and the burden of proof for entitlement to such exemptions lies with the taxpayer.
• The "in lieu of...continue reading