G.R. No. 79255 - Union of Filipro Employees vs. Benigno Vivar Jr. and Nestle Philippines, Inc.

Petitioner: Fort Bonifacio Development Corporation (FBDC), a domestic corporation engaged in real property development and sales.
Respondents: Commissioner of Internal Revenue (CIR) and Revenue District Officer, RDO No. 44, Taguig and Pateros, Bureau of Internal Revenue.

Bases Conversion and Development Authority (BCDA) owns 45% of FBDC; Bonifacio Land Corporation consortium owns 55%.
Under RA 7227 and EO 40 (1992), FBDC purchased a portion of the Fort Bonifacio military reservation—now Fort Bonifacio Global City—on February 8, 1995.

RA 7716 (effective January 1, 1996) restructured the VAT system, extending VAT to real properties held for sale or lease.
On September 19, 1996, FBDC filed its beginning inventory with BIR RDO No. 44, valuing its real properties at ₱71,227,503,200.10, and claimed an 8% transitional input tax credit (TITC) of ₱5,698,200,256 under Section 105 of the old NIRC.
October 1996: FBDC commenced sales of Global City lots.
First quarter 1997: Output VAT on sales and leases amounted to ₱368,535,653.95; FBDC paid ₱359,652,009.47 in cash and credited ₱8,883,644.48 of input tax.

November 17, 1998: FBDC filed a refund claim with the BIR for ₱359,652,009.47 allegedly erroneously paid as output VAT.
February 24, 1999: Due to CIR’s inaction, FBDC elevated the matter to the CTA via Petition for Review.
CTA (October 12, 2000): Denied refund—held that TITC requires prior payment of business taxes; sale to FBDC VAT-free; RR 7-95 limited TITC to improvements constructed after January 1, 1988.
CA (July 7, 2006): Dismissed FBDC’s petition for review—affirmed CTA’s ruling that TITC is available only if taxes were paid and passed on; upheld validity of RR 7-95 under the CIR’s rule-making power (Section 245 old NIRC).

Whether FBDC is entitled to a refund or credit of ₱359,652,009.47 erroneously paid as output VAT for Q1 1997, based on the 8% TITC under Section 105 of the old NIRC.

Whether Revenue Regulations No. 6-97 repealed or repudiated RR 7-95’s limitation of TITC to improvements on real property.
Whether RR 7-95 validly implements Section 105 of the old NIRC.
Whether RR 7-95, and the CTA and CA’s validation thereof, violated the separation of powers by adding conditions not in the statute.
Whether Section 105 of the old NIRC requires prior payment of business taxes on property acquired before claiming TITC.
Whether CTA and CA misconstrued the purpose of TITC and speculated beyond Section 105’s clear language.
Whether the economic and social objectives of FBDC’s acquisition from government bear on TITC entitlement.