Case Summary (G.R. No. 261171)
Petitioner
Commissioner of Internal Revenue, responsible for assessment and collection of internal revenue taxes, seeking to overturn the CTA rulings
Respondent
BW Shipping Philippines, Inc., TIN 000‐160‐779‐000, engaged in recruitment and placement of Filipino seafarers for foreign‐based shipping companies
Key Dates
• Taxable Year (TY) 2014 – period when respondent rendered zero-rated manning services and incurred input VAT
• March 30, 2016 – respondent filed administrative claim for refund or issuance of Tax Credit Certificate (TCC)
• August 22, 2016 – BIR denial of administrative claim
• August 20, 2016 – respondent’s petition filed with CTA First Division
• September 23, 2019 – CTA First Division Decision partially granting refund claim (PHP 5,503,628.95)
• February 19, 2020 – CTA First Division Resolution denying CIR’s motion for reconsideration
• October 29, 2021 – CTA En Banc Decision affirming the First Division
• May 30, 2022 – CTA En Banc Resolution denying CIR’s motion for reconsideration
• October 4, 2023 – Supreme Court Decision resolving the petition
Applicable Law
• 1987 Philippine Constitution (since decision is post-1990)
• National Internal Revenue Code of 1997, as amended by Republic Act No. 9337 – Sections 108(B)(2) (zero-rating of services) and 112(A) (refund of input tax)
• Rules of Court, Rule 45 – petition for review on certiorari
• Migrant Workers and Overseas Filipinos Act of 1995, as amended – definitions of “principal” and “agent” in Omnibus Rules and POEA Rules
Facts
BW Shipping Philippines, Inc. recruited Filipino seafarers and provided crewing services to shipping companies organized and doing business abroad. It generated zero-rated receipts of PHP 129,866,272.96 and paid input VAT of PHP 7,346,268.45 on domestic purchases and imports. Unutilized input VAT was neither credited against output tax nor refunded, prompting respondent to seek an administrative refund or TCC. The BIR denied the claim, leading respondent to file a petition with the CTA.
Procedural History
- CTA First Division granted refund in part (PHP 5,503,628.95) for unutilized input VAT attributable to zero-rated sales of TY 2014, finding that respondent complied with registration, zero-rating requisites, documentation, and timeliness.
- CIR’s motion for reconsideration before the Division was denied.
- CTA En Banc affirmed the Division’s Decision and Resolution, rejecting CIR’s argument that the foreign shipping companies were doing business in the Philippines.
- CIR filed a petition for review on certiorari under Rule 45 with the Supreme Court.
Issue
Whether respondent is entitled to refund or issuance of a tax credit certificate for its excess/unutilized input VAT attributable to zero-rated sales for the four quarters of TY 2014.
Ruling
The Supreme Court denied the petition, affirming the CTA rulings. It applied Section 108(B)(2) and Section 112(A) of the NIRC, as amended, holding that respondent satisfied all zero-rating requisites:
- Services rendered were “other than processing, manufacturing or repacking of goods.”
- Services were performed in the Philippines.
- Recipients were foreign corporations not engaged in business in the Philippines, as evidenced by SEC Certificates of Non-Registration and consularized foreign incorporation documents.
- Consideration was in acceptable foreign currency, duly remitted and accounted for under BSP regulations.
On CIR’s contention that Mannin
...continue readingCase Syllabus (G.R. No. 261171)
Facts
- BW Shipping Philippines, Inc. (respondent) is a Philippine corporation engaged in shipping, manning and crewing services, carriage of passengers, freight, mail, livestock, and other merchandise; registered as a VAT taxpayer (TIN 000-160-779-000).
- For taxable year (TY) 2014, respondent rendered manning services paid in foreign currency to shipping companies outside the Philippines, qualifying its sales for 0% VAT.
- Respondent generated zero-rated receipts of PHP 129,866,272.96 and incurred input VAT of PHP 7,346,268.45, which remained unutilized in the same quarter and subsequent periods.
- On March 30, 2016, respondent filed an administrative claim with the BIR for refund or Tax Credit Certificate (TCC) of the unutilized input VAT; BIR denied the claim by letter dated August 16, 2016.
- Respondent then filed a Petition for Review with the Court of Tax Appeals (CTA) on August 20, 2016.
Procedural History
- CTA First Division Decision (September 23, 2019): Partially granted respondent’s petition, ordering refund/TCC of PHP 5,503,628.95.
- CTA First Division Resolution (February 19, 2020): Denied CIR’s motion for reconsideration.
- CIR petitioned CTA En Banc; CTA En Banc Decision (October 29, 2021): Affirmed First Division rulings.
- CTA En Banc Resolution (May 30, 2022): Denied CIR’s motion for reconsideration.
- CIR elevated the case to the Supreme Court via Rule 45 Petition for Review on Certiorari.
Issue
- Whether the CTA En Banc correctly affirmed the refund or issuance of a TCC to respondent for its excess/unutilized input VAT attributable to zero-rated sales in TY 2014.
Applicable Law
- Section 108(B) of the National Internal Revenue Code (NIRC), as amended by RA 9337: Zero-percent VAT rate on services performed in the Philippines for foreign business or nonresidents, paid in acceptable foreign currency and remitted in accordance with BSP rules.
- Section 112(A) of the NIRC, as amended by RA 93