G.R. No. 127843 - People vs. Bato

Commissioner of Internal Revenue (CIR) is the petitioner, represented by the Office of the Solicitor General, challenging the decision of the Court of Tax Appeals (CTA).
Vestas Services Philippines, Inc. (VSPI), a domestic corporation and VAT-registered taxpayer, is the respondent seeking a refund or issuance of a tax credit certificate for its unutilized input VAT.
VSPI, having amended its corporate purpose in 2013 to engage in installation, construction, and related services—particularly for renewable energy projects—entered into an Onshore Engineering, Procurement and Construction Contract with EDC Burgos Wind Power Corporation, an export-oriented renewable energy developer.

VSPI claimed a refund/tax credit certificate amounting to PHP 41,659,221.63 as accrued input VAT for the fourth quarter of calendar year (CY) 2013.
The claim stemmed from the fact that VSPI generated gross receipts amounting to PHP 546,196,162.22 from zero-rated sales, exclusively rendered to EDC Burgos under provisions of RA 9513 (Renewable Energy Act of 2008) in correlation with Sec. 108(B)(3) of the Tax Code.
VSPI contended that, due to its exclusive zero-rated sales, it accumulated input VAT that had not been set off against any output VAT liability.

VSPI filed its administrative claim for refund on March 20, 2014.
It subsequently submitted additional supporting documents (notably a Transmittal Letter dated April 11, 2014), within the 30-day period prescribed under Revenue Memorandum Circular (RMC) No. 49-2003, thereby triggering the 120-day evaluation period for the Bureau of Internal Revenue (BIR).
The BIR, however, issued a Letter Denial on August 4, 2014 which VSPI received on August 6, 2014.

VSPI elevated its claim by filing a petition for review with the CTA Division on September 5, 2014—arguably within the 30-day period allowed after the BIR’s denial.
The CTA Division initially dismissed the claim for lack of jurisdiction based on the alleged timeliness defect.
VSPI filed a Motion for Reconsideration—including supplemental evidence identifying the timeliness of its judicial claim—to rectify the alleged lapse.

Supplemental evidence, including the Transmittal Letter, was submitted by VSPI to prove that it had indeed filed its administrative claim and completed its documents within the prescribed period.
The CTA Division admitted the supplemental evidence and gave VSPI a further opportunity to present oral testimony and documentary exhibits, notably the testimony of Mary Anne U. Murphy.
VSPI’s motion for reconsideration was partially granted, with the CTA Division determining that only a portion of the claimed input VAT (PHP 4,390,198.45) could be sustained based on the valid zero-rated sales (PHP 156,148,192.97).

VSPI maintained that both its administrative and judicial claims were filed timely.
The CIR argued that VSPI’s claim was belated and questioned the proper compliance with evidentiary rules, particularly criticizing the admission of supplemental evidence and alleging procedural shortcomings.
The CIR also contended that any tax refund was similar in nature to a tax exemption and, therefore, such claims should be strictly construed against the taxpayer.

Whether VSPI’s administrative filing, supporting document submission, and subsequent judicial petition were filed within the periods prescribed by the Tax Code and relevant Revenue Memoranda.
Whether the submission of supplemental evidence (specifically the Transmittal Letter) was proper and sufficient to establish that VSPI complied with the 30-day and 120-day operative periods.

Whether the CTA Division erred in admitting the supplemental evidence offered by VSPI, despite the CIR’s claim that such evidence was a photocopy and not accompanied by timely objections or supporting affidavits.
Whether the failure of the CIR to file a timely memorandum opposing the supplemental evidence itself precluded the proper application of technical evidentiary rules.

Whether VSPI substantiated its entitlement, by showing that only the valid portion of its zero-rated sales corresponded to a mere PHP 4,390,198.45 of input VAT subject to refund or credit.
Whether the CTA’s findings on the application of the zero-rating provisions and the computation of valid input VAT were supported by substantial evidence.