fort bonifacio vs cir

7/24/2019 Fort Bonifacio vs CIR

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FIRST DIVISION

G.R. No. 175707, November 19, 2014

FORT BONIFACIO DEVELO!ENT CORORATION, Petitioner, v.CO!!ISSIONER OF INTERNAL

REVEN"E AND REVEN"E DISTRICT OFFICER, REVEN"E DISTRICT NO. 44, TAG"IG AND ATEROS,B"REA" OF INTERNAL REVEN"E, Respondents.

G.R. NO. 1#00$

FORT BONIFACIO DEVELO!ENT CORORATION, Petitioner, v.CO!!ISSIONER OF INTERNALREVEN"E AND REVEN"E DISTRICT OFFICER, REVEN"E DISTRICT NO. 44, TAG"IG AND ATEROS,

B"REA" OF INTERNAL REVEN"E, Respondents.

G.R. No. 1#1092

5 FORT BONIFACIO DEVELO!ENT CORORATION, Petitioner, v.CO!!ISSIONER OF INTERNALREVEN"E AND REVEN"E DISTRICT OFFICER, REVEN"E DISTRICT NO. 44, TAG"IG AND ATEROS,

B"REA" OF INTERNAL REVEN"E, Respondents.

D E C I S I O N

LEONARDO%DE CASTRO,J.&

The Court has consolidated these three petitions as they involve the same parties, similar facts and common

questions of law. This is not the first time that Fort Bonifacio Development Corporation (FBDC) has come tothis Court about these issues aainst the very same respondents, and the CourtEn Banc has resolved themin two separate, recent cases!that are applicable here for reasons to be discussed below.

G.R. No. 175707is an appeal by certioraripursuant to "ule #$ of the !%%& "ules of Civil 'rocedure from(a) the De'()(o*dated pril , **+ of the Court of ppeals in CA%G.R. S No. +151+()m())(*-FBDCs 'etition for "eview with reard to the Decision of the Court of Ta- ppeals (CT) datedctober !+, *** in CTA C)e No. 5##5, and from (b) the Court of ppeals Re)o/(o*+dated /ovember

+*, **0 denyingits 1otion for "econsideration.

G.R. No. 1#00$5is li2ewise an appeal by certioraripursuant to "ule #$ from (a) the Court ofppeals De'()(o*#dated pril +*, **& in CA%G.R. S No. 7+540 e*(*-FBDCs 'etition for "eview with

respect to the CT Re)o/(o*$dated 1arch 3, **+ in CTA C)e No. +021, and from (b) the Court ofppeals Re)o/(o*0dated ctober 3, **& e*(*-its 1otion for "econsideration.

The CT "esolution reconsidered and reversed its earlier De'()(o*&dated 4anuary +*, ** orderinrespondents in CT Case /o. 0*! to refund or issue a ta- credit certificate in favor of petitioner in theamount of '&&,!$!,**.#0, representin 56T erroneously paid by or illeally collected from petitioner for

the first quarter of !%%3, and instead denied petitioners Claim for "efund therefor.73

G.R. No. 1#1092is also an appeal by certioraripursuant to "ule #$ from the Court ofppealsDe'()(o*%dated December 3, **& in CA%G.R. S No. +115#dismissin FBDCs petition for

review with respect to the CT Decision!*dated 8eptember %, *** in CTA C)e No. 5+94. The aforesaid

CT Decision, which the Court of ppeals affirmed, e*(epetitioners Claim for "efund in the amount of'0%,+#*,#0%.#$, representin 56T erroneously paid by or illeally collected from petitioner for the fourthquarter of !%%0.7!!

The facts are not in dispute.

'etitioner FBDC (petitioner) is a domestic corporation duly reistered and e-istin under 'hilippine laws. 9ts

issued and outstandin capital stoc2 is owned in part by the Bases Conversion Development uthority, awholly:owned overnment corporation created by "epublic ct /o. && for the purpose of 5acceleratin the

conversion of military reservations into alternative productive uses and raisin funds throuh the sale of


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portions of said military reservations in order to promote the economic and social development of thecountry in eneral.7! The remainin fifty:five per cent ($$;) is owned by Bonifacio ach Claim for "efund is based on petitionersposition that it is entitled to a transitional input ta- credit under 8ection !*$ of the old /9"C, which morethan offsets the aforesaid 6T payments.

G.R. No. 175707

'etitioners 6T returns filed with the B9" show that for the second quarter of !%%&, petitioner received thetotal amount of '$,*!#,&$$,3&.#* from its sales and lease of lots, on which the output 6T payable was

'$*!,#&$,$3..0 The 6T returns li2ewise show that petitioner made cash payments totalin'#30,+$$,3#0.&3 and utiliEed its input ta- credit of '!$,!!%,03!.%0 on purchases of oods and services.&


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n February !!, !%%%, petitioner filed with the B9" a '/(m or re*of the amount of '#30,+$$,3#0.&3

which it paid in cash as 6T for the second quarter of !%%&.3

n 1ay !, !%%%, petitioner filed with the CT a petition for review%by way of appeal, doc2eted as CTCase /o. $33$, from the alleed inaction by respondents of petitioners claim for refund with the B9". nctober !, !%%%, the parties submitted to the CT a 8tipulation of Facts, Documents and 9ssue.+* n

ctober !+, ***, the CT issued its Decision+!

in CT Case /o. $33$ denyin petitioners claim for refundfor lac2 of merit.

n /ovember +, ***, petitioner filed with the Court of ppeals a 'etition for "eview of the aforesaid CTDecision, which was doc2eted as C:=." 8' /o. 0!$!0. n pril , **+, the C issued its

Decision+dismissin the 'etition for "eview. n /ovember +*, **0, the Court of ppeals issued its"esolution++denyin petitioners 1otion for "econsideration.

n December !, **0, this 'etition for "eview was filed.

'etitioner submitted its 1emorandum+#on /ovember &, **3 while respondents filed their 5Comment7+$on1ay #, **%.+0

n December , **%, petitioner submitted a 8upplement+&to its 1emorandum dated /ovember 0, **3,statin that the said case is intimately related to the cases of "ort Bonifacio #evelop!ent $orporation v.

$o!!issioner of %nternal Revenue& =.". /o. !$333$, and "ort Bonifacio #evelop!ent $orporation v.$o!!issioner of %nternal Revenue&'=.". /o. !&*03*, which were already decided by this Court, and which

involve the same parties and similar facts and issues.+3

E6'e3 or e mo*) o 6 re* be(*- '/(me * e 3er(o) 'overe or e' '/(m, e') (* () ')e * (* e oer o 'o*)o/(e ')e) be/o re e )me. Te 3r(e)e*ere (*o )(m(/r S(3/(o*) (* e oer o ')e) 'o*)o/(e ere.+%

G.R. No. 1#00$5

e quote relevant portions of the parties 8tipulation of Facts, Documents and 9ssue in CT Case /o.0*!#*below

1.11. er VAT rer*) (/e b 3e((o*er ( e BIR, or e )e'o* 8rer o 199#, 3e((o*erer(ve e o/ mo* o 90$,427,2+4.20 rom () )/e) * /e)e o /o), o* (' e o3

VAT 3b/e o e Bre o I*er*/ Reve*e ) 90,$42,72+.42.

1.12. Te VAT rer*) (/e b 3e((o*er /(e()e )o o 3 )( mo* o90,$42,72+.42 e o e BIR, 3e((o*er me ') 3me*) o//(*- 77,151,020.4+ *

(/(:e () re-/r (*3 6 're( o $9,#7#,959.$7 o* 3r')e) o -oo) * )erv('e).

1.1$. O* November 22, 1999, 3e((o*er (/e ( e BIR '/(m or re* o e mo* o77,151,020.4+ (' ( 3( ) v/e%e 6 or e (r) 8rer o 199#.

!.!#. >arlier, on ctober 3, !%%3 and /ovember !&, !%%3, February !!, !%%%, 1ay !!, !%%%, and

8eptember !*, !%%%, based on similar rounds, petitioner filed with the B9" claims for refund of theamounts of '0%,+#*,#0%.#$, '+$%,0$,**%.#&, '#30,+$$,3#0.&3, '+#&,!,0%$., and '!$,*+0,3%!.0,

representin value:added ta-es paid by it on proceeds derived from its sales and lease of lots for thequarters ended December +!, !%%0, 1arch +!, !%%&, 4une +*, !%%&, 8eptember +*, !%%&, and December

+!, !%%&, respectively. fter deductin these amounts of '0%,+#*,#0%.#$, '+$%,0$,**%.#&,'#30,+$$,3#0.&3, '+#&,!,0%$., and '!$,*+0,3%!.0 from the total amount of '$,0%3,**,$0.**claimed by petitioner as input ta- credit, the remainin input ta- credit more than sufficiently covers theamount of '&&,!$!,**.#0 subAect of petitioners claim for refund of /ovember , !%%%.

!.!$. s of the date of the 'etition, no action had been ta2en by respondents on petitioners claim for refundof /ovember , !%%%.#!(>mphases ours.)

The petition in =.". /o. !3**+$ 5see2s to correct the unauthoriEed limitation of the term real properties toimprovements thereon by "evenue "eulations &:%$ and the error of the Court of Ta- ppeals and Court of


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ppeals in sustainin the aforesaid "eulations.7# This theory of petitioner is the same for all three casesnow before us.

n 1arch !#, *!+, petitioner filed a 1otion for Consolidation#+of =.". /o. !3**+$ with =.". /o. !&$&*&.

'etitioner submitted its 1emorandum##on 8eptember !$, **% while respondents filed theirs on 8eptember, **%.#$

G.R. No. 1#1092

The facts summariEed below are found in the parties 8tipulation of Facts, Documents and 9ssue in CT Case/o. $0%##0

1.09.'er 6T returns filed by petitioner with the B9", for the or 8rer o 199+, petitioner derivedthe total amount of $,49#,###,71$.+0from its sales and lease of lots, on which the o3 VAT

3b/eto the Bureau of 9nternal "evenue was$1#,0#0,792.14.

!.!*. The 6T returns filed by petitioner li2ewise show that to pay said amount of '+!3,*3*,&%.!# due tothe B9", petitioner made cash payments totallin '0%,+#*,#0%.#$ and utiliEed (a) part of the total

transitionalGpresumptive input ta- credit of '$,0%3,**,$0.** bein claimed by it to the e-tent of'3,#!+,&3+.**H and (b) its reular input ta- credit of '*,+0,$+%.0% on purchases of oods and services.

1.11. O* O'ober #, 199# 3e((o*er (/e ( e BIR '/(m or re* o e mo*) o2+9,$40,4+9.45, (' ( 3( ) v/e%e 6.

!.!. s of the date of the 'etition, no action had been ta2en by respondents on petitioners claim forrefund.#&(>mphases ours.)

'etitioner submitted its 1emorandum#3on 4anuary !3, *!* while respondents filed theirs on ctober !#,*!*.#%

n 1arch !#, *!+, petitioner filed a 1otion for Consolidation$*of =.". /o. !3!*% with =.". /o. !&$&*&.

n 4anuary +, *!#, petitioner filed a !o(o* o Re)o/ve$!these consolidated cases, allein that theparties had already filed their respective memorandaH and, more importantly, that the principal issue in

these cases, whether petitioner is entitled to the 3; transitional input ta- ranted in 8ection !*$ (now

8ection !!!?@) of the /9"C based on the value of its inventory of land, and as a consequence, to a refundof the amounts it paid as 6T for the periods in question, had already been resolved by the 8upremeCourt En Bancin its Decision dated pril , **% in =.". /os. !$333$ and !&*03*, as well as its Decisiondated 8eptember #, *! in =.". /o. !&+#$. 'etitioner further allees that said decided cases involve thesame parties, facts, and issues as the cases now before this Court.$

T;EOR< OF ETITIONER

'etitioner claims that 5the !*; value:added ta- is based on the ross sellin price or ross value in money

of the -oo) sold, bartered or e-chaned.7$+ 'etitioner li2ewise claims that by definition, the term 5oods7was limited to 5movable, tanible obAects which is appropriable or transferable7 and that said term did notoriinally include 5real property.7$# 9t was previously defined as follows under "evenue "eulations /o. $:3&

(p) Goods'means any movable, tanible obAects which is appropriable or transferrable.

"epublic ct /o. &&!0 (>:6T


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8>C. !*$.Transitional %nput Tax $redits. person who becomes liable to value:added ta- or any personwho elects to be a 6T:reistered person shall, subAect to the filin of an inventory as prescribed by

reulations, be allowed input ta- on his beinnin inventory of oods, materials and supplies equivalent to3; of the value of such inventory or the actual value:added ta- paid on such oods, materials and supplies,

whichever is hiher, which shall be creditable aainst the output ta-.

ccordin to petitioner, the >:6T CT9/ #.!*#:!. $redits for input tax. 4

%nput tax' !eans t)e value-added tax due fro! or paid ,y a VAT-registered person on i!portation ofgoods or local purc)ases of goods or services& including lease or use of property& fro! anot)er VAT-

registered person in t)e course of )is trade or ,usiness. %t s)all also include t)e transitional or presu!ptiveinput tax deter!ined in accordance +it) Section 125 of t)e $ode.

- - - -

8>CT9/ #.!*$:!. Transitional input tax on ,eginning inventories. 4Ta-payers who became 6T:reistered

persons upon effectivity of " /o. &&!0 who have e-ceeded the minimum turnover of '$**,***.** or who

voluntarily reister even if their turnover does not e-ceed '$**,***.** shall be entitled to a presumptiveinput ta- on the inventory on hand as of December +!, !%%$ on the followinH (a) oods purchased for salein their present conditionH (b) materials purchased for further processin, but which have not yet underone

processinH (c) oods which have been manufactured by the ta-payerH (d) oods in process and supplies, allof which are for sale or for use in the course of the ta-payerIs trade or business as a 6T:reistered person.

;oever, (* e ')e o re/ e)e e/er), e b)() o e 3re)m3(ve (*3 6 )// be e

(m3roveme*), )' ) b(/(*-), ro), r(*-e ))em), * oer )(m(/r )r're),'o*)r'e o* or er ee'(v( o E.O. 27$ =>*r 1, 19##?.

The transitional input ta- shall be 3; of the value of the inventory or actual 6T paid, whichever is hiher,


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which amount may be allowed as ta- credit aainst the output ta- of the 6T:reistered person.

The value allowed for income ta- purposes on inventories shall be the basis for the computation of the 3;e-cludin oods that are e-empt from 6T under 8>CT9/ !*+. nly 6T:reistered persons shall be

entitled to presumptive input ta- credits.

- - - -

TRA6S%T7R8 PR7V%S%76S

(a) Presu!ptive %nput Tax $redits

(i) For oods, materials or supplies not for sale but purchased for use in

business in their present condition, which are not intended forfurther processin and are on hand as of December +!, !%%$, a

presumptive input ta- equivalent to 3; of the value of the oods or

properties shall be allowed.(ii) For oods or properties purchased with the obAect of resale in their

present condition, the same presumptive input ta- equivalent to 3;

of the value of the oods unused as of December +!, !%%$ shall beallowed, which amount may also be credited aainst the output ta-

of a 6T:reistered person.(iii) For real estate dealers, the presumptive input ta- of 3; of the boo2

value of improvements constructed on or after 4anuary !, !%33 (theeffectivity of >.. &+) shall be allowed.

For purposes of sub:pararaph (i), (ii) and (iii) above, an inventory as of December +!, !%%$ of such oodsor properties and improvements showin the quantity, description, and amount should be filed with the "Dnot later than 4anuary +!, !%%0. (>mphases supplied.)

'etitioner arues that 8ection #.!**:! of "evenue "eulations /o. &:%$ e-plicitly limited the term 5oods7as reards real properties to 5improvements, such as buildins, roads, drainae systems, and other similarstructures,7 thereby e-cludin the real property itself from the coverae of the term 5oods7 as it is used in

8ection !*$ of the /9"C. This has brouht about, as a consequence, the issues involved in the instant case.

'etitioner claims that the 5Court of ppeals erred in not holdin that "evenue "eulations /o. 0:%& haseffectively repealed or repudiated "evenue "eulations /o. &:%$ insofar as the latter limited the

transitionalGpresumptive input ta- credit which may be claimed under 8ection !*$ of the /9"C to theimprovements on real properties.7$$ 'etitioner arues that the provision in 8ection #.!*$:! of "evenue"eulations /o. &:%$ statin that in the case of real estate dealers, the basis of the input ta- credit shall bethe improvements, has been deleted by "evenue "eulations /o. 0:%&, dated 4anuary , !%%&, which

amended "evenue "eulations /o. &:%$. "evenue "eulations /o. 0:%& was issued to implement "epublicct /o. 3#! (the law amendin "epublic ct /o. &&!0, the >:6T


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thereof.7$0

'etitioner contends that the relevant provision now states that 5?t@he transitional input ta- credit shall beeiht percent (3;) of the value of the ,eginning inventory - - - on such oods, materials and supplies.7 9t

no loner limits the allowable transitional input ta- credit to 5improvements7 on the real properties. Theamendment reconiEes that the basis of the 3; input ta- credit should not be confined to the value of theimprovements. 'etitioner further contends that the Commissioner of 9nternal "evenue has in fact corrected

the mista2e in "evenue "eulations /o. &:%$.$&

'etitioner arues that "evenue "eulations /o. 0:%&, bein beneficial to the ta-payer, should be iven aretroactive application.$3 'etitioner states that the transactions involved in these consolidated cases too2place after "evenue "eulations /o. 0:%& too2 effect, under the provisions of which the transitional input ta-

credit with reard to real properties would be based on the value of the land inventory and not limited to thevalue of the improvements.

'etitioner assins another error the Court of ppeals erred in holdin that "evenue "eulations /o. &:%$ is

a valid implementation of the /9"C and in accordin it reat respect, and should have held that the same isinvalid for bein contrary to the provisions of 8ection !*$ of the /9"C.$%

'etitioner contends that "evenue "eulations /o. &:%$ is not valid for bein contrary to the e-press

provisions of 8ection !*$ of the /9"C, and in fact amends the same, for it limited the scope of 8ection !*$5to less than what the law provides.70* 'etitioner elaborates

?"evenue "eulations /o. &:%$@ illeally constricted the provisions of the aforesaid section. 9t delimited thecoverae of 8ection !*$ and practically amended it in violation of the fundamental principle that

administrative reulations are subordinate to the law. Based on the numerous authorities cited above,8ection #.!*$:! and the Transitory 'rovisions of "evenue "eulations /o. &:%$ are invalid and ineffective

insofar as they limit the input ta- credit to 3; of the value of the 5improvements7 on land, for beincontrary to the e-press provisions of 8ection !*$, in relation to 8ection !**, of the /9"C, and the Court of

ppeals should have so held.0!

'etitioner li2ewise raises the followin aruments

The rule that the construction iven by the administrative aency chared with the

enforcement of the law should be accorded reat weiht by the courts, does not apply

here.0

- - - 8ection #.!*$:! of "evenue "eulations /o. &:%$ neither e-clude?s@ nor prohibit?s@

that the 3; input ta- credit may also ?be@ based on the ta-payers inventory of land.0+

The issuance of "evenue "eulations /o. &:%$ by the ?B9"@, which chaned the statutory

definition of 5oods7 with reard to the application of 8ection !*$ of the /9"C, and thedeclaration of validity of said reulations by the Court of ppeals and Court of Ta- ppeals,

was in violation of the fundamental principle of separation of powers.0#

- - - -

9nsofar, therefore, as "evenue "eulation?s@ /o. &:%$ limited the scope of the term 5oods7 under 8ection

!*$, to 5improvements7 on real properties, contrary to the definition of 5oods7 in 8ection !**, ?""@ /o. &:%$ decreed 5what the law shall be7, now 5how the law may be enforced7, and is, consequently, of no effect

because it constitutes undue deleation of leislative power.

- - - -

?T@he transression by the B9" and the CT and C of the basic principle of separation of powers, includinthe fundamental rule of non:deleation of leislative power, is clear.0$

Furthermore, petitioner claims that


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F ''> CL"T F TM ''>"'">T /D C/8T"L> TJ> 81>.00

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'etitioner insists that there was no basis and necessity for the B9", the CT, and the Court of ppeals tointerpret and construe 8ections !** and !*$ of the /9"C because 5where the law spea2s in clear and

cateorical lanuae, or the terms of the statute are clear and unambiuous and free from doubt, there isno room for interpretation or construction and no interpretation or construction is called forH there is only

room for application.703 'etitioner asserts that leislative intent is determined primarily from the lanuae ofthe statuteH leislative intent has to be discovered from the four corners of the lawH and thus, where noambiuity appears, it may be presumed conclusively that the clear and e-plicit terms of a statute e-pressthe leislative intention.0%

8o loo2in at the cases now before us, petitioner avers that the Court of ppeals, the CT, and the B9" didnot merely interpret and construe 8ection !*$, and that they virtually amended the said section, for it isalleedly clear from 8ection !*$ of the old /9"C, in relation to 8ection !**, that 5leislative intent is to the

effect that the ta-payer is entitled to the input ta- credit based on the value of the beinnin inventory ofland, not merely on the improvements thereon, and irrespective of any prior payment of sales ta- or 6T.7&*

T;EOR< OF RESONDENTS

'etitioners claims for refund were consistently denied in the three cases now before us. >ven if in one case,=.". /o. !3**+$, petitioner succeeded in ettin a favorable decision from the CT, the rant of refund orta- credit was subsequently reversed on respondents 1otion for "econsideration, and such denial of

petitioners claim was affirmed by the Court of ppeals.

"espondents reasons for denyin petitioners claims are summariEed in their Comment in =.". /o. !&$&*&,and we quote

REASONS @;< ETITION S;O"LD BEDENIED OR DIS!ISSED

!. The 3; input ta- credit provided for in 8ection !*$ of the /9"C, in relation to 8ection !**

thereof, is based on the value of the improvements on the land.

. The ta-payer is entitled to the input ta- credit provided for in 8ection !*$ of the /9"C only

if it has previously paid 6T or sales ta-es on its inventory of land.

+. 8ection #.!*$:! of "evenue "eulations /o. &:%$ of the B9" is valid, effective and has theforce and effect of law, which implemented 8ection !*$ of the /9"C.&!

9n respondents Comment&dated /ovember +, **3 in =.". /o. !3**+$, they averred that petitionersclaim for the 3; transitionalGpresumptive input ta- is 5inconsistent with the purpose and intent of the law inrantin such ta- refund or ta- credit.7&+ "espondents raise the followin aruments

!. The transitional input ta- provided under 8ection !*$ in relation to 8ection !** of the Ta-Code, as amended by > /o. &+ effective 4anuary !, !%33, is subAect to certain conditionswhich petitioner failed to meet.

. The claim for petitioner for transitional input ta- is in the nature of a ta- e-emption whichshould be strictly construed aainst it.&$

+. "evenue "eulations /o. &:%$ is valid and consistent with provisions of the /9"C.&0


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1oreover, respondents contend that

5?'@etitioner is not leally entitled to any transitional input ta- credit, whether it be the 3; presumptiveinput ta- credit or any actual input ta- credit in respect of its inventory of land brouht into the 6T reime

beinnin 4anuary !, !%%0, in view of the followin

V! free ac"uisition of the raw land.O petitioner purchased and acquired, from the =overnment, theaforesaid raw land under a 6T:free sale transaction. The =overnment, as a vendor, was ta-:e-empt andaccordinly did not pass on any 6T or sales ta- as part of the price paid therefor by the petitioner.

#o transitory input ta$ on in%entory of land is allowed. 8ection !*$ of the Code, as amended by"epublic ct /o. &&!0, and as implemented by 8ection #.!*$:! of "evenue "eulations /o. &:%$, e-presslyprovides that no transitional input ta- credit shall be allowed to real estate dealers in respect of theirbeinnin inventory of land brouht into the 6T reime beinnin 4anuary !, !%%0 (supra).


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credit had such oods been acquired durin the effectivity of the 6T :6T


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"espondent apparently chaned his (sic) course when it declared that real estate dealers are only entitled tothe 3; of the value of the improvements. This larin inconsistency between the two provisions prove that

"evenue "eulations /o. &:%$ was not a result of an intensive study and analysis and may have beenhaphaEardly formulated.%#

The CT held that the implementin reulation, which provides that the 3; transitional input ta- shall be

based on the improvements only of the real properties, is neither valid nor effective.%$ The CT also

sustained petitioners arument that "evenue "eulations /o. &:%$ provides no specific date as to when theinventory list should be submitted. The relevant portion of the CT decision reads

The only requirement is that the presumptive input ta- shall be supported by an inventory of oods as

shown in a detailed list to be submitted to the B9". 1oreover, the requirement of filin an inventory ofoods not later than 4anuary +!, !%%0 in the transitory provision of the same reulation refers to the

reconition of presumptive input ta- on oods or properties on hand as of December +!, !%%$ of ta-payersalready liable to 6T as of that date.

Clearly, 'etitioner is entitled to the presumptive input ta- in the amount of '$,0%3,**,$0.**, computed asfollows

Boo2 6alue of 9nventory - - - '&!,&,$*+,**.**

1ultiply by 'resumptive9nput Ta- rate 3;vailable 'resumptive 9nput Ta- '$,0%3,**,$0.**The failure of the 'etitioner to consider the presumptive input ta- in the computation of its output ta-

liability for the !st quarter of !%%3 results to overpayment of the 6T for the same period.

To prove the fact of overpayment, 'etitioner presented the oriinal 1onthly 6T Declaration for the month of4anuary !%%3 showin the amount of '&&,!$!,**.#0 as the cash component of the value:added ta-es paid

(>-hibits >:!# P >:!#:) which is the subAect matter of the instant claim for refund.

9n 'etitioners amended quarterly 6T return for the !st quarter of !%%3 (>-hibit D:!), 'etitioner deductedthe amount of '&&,!$!,**.#0 from the total available input ta- to show that the amount bein claimed

would no loner be available as input ta- credit.

9n conclusion, the 'etitioner has satisfactorily proven its entitlement to the refund of value:added ta-es paidfor the first quarter of ta-able year !%%3.

@;EREFORE, in view of the foreoin, the 'etition for "eview is GRANTED. "espondents arehereby ORDEREDto REF"NDor issue a TA CREDIT CERTIFICATEin favor of the 'etitioner the totalamount of '&&,!$!,**.#0 representin the erroneously paid value:added ta- for the first quarter of !%%3.%0

CTA C)e No. +021 Re)o/(o* =!r' 2#, 200$?The CT rever)eits earlier rulin upon respondents motion for reconsideration and thus denied

petitioners claim for refund. The CT reasoned and concluded as follows

The vorte- of the controversy in the instant case actually involves the question of whether or not 8ection

#.!*$:! of "evenue "eulations /o. &:%$, issued by the 8ecretary of Finance upon recommendation of theCommissioner of 9nternal "evenue, is valid and consistent with and not violative of 8ection !*$ of the Ta-Code, in relation to 8ection !** (a)(!)().

- - - -

e aree with the position ta2en by the respondents that "evenue "eulations /o. &:%$ is not contrary tothe basic law which it see2s to implement. s clearly worded, 8ection !*$ of the Ta- Code provides that a

person who becomes liable to value:added ta- or any person who elects to be a 6T:reistered person shallbe allowed 3; transitional input ta- subAect to the filin of an inventory as prescribed by reulations.

8ection !*$, which requires the filin of an inventory for the rant of the transitional input ta-, is couched in

a manner where there is a need for an implementin rule or reulation to carry its intendment. True to its


12/23

wordins, the B9" issued "evenue "eulations /o. &:%$ (specifically Section 9.125-1) which succinctlymentioned that the basis of the presumptive input ta- shall be the improvements in case of real estate

dealers.%&

- - - -

@;EREFORE, in view of the foreoin, the instant 1otion for "econsideration filed by respondents is

hereby GRANTED. ccordinly, petitioners claim for refund of the alleed overpaid 6alue:dded Ta- in theamount of '&&,!$!,**.#0 coverin the first quarter of !%%3 is hereby D>/9>D for lac2 of merit.%3

+. CA%G.R. S No. 7+540 De'()(o* =A3r(/ $0, 2007?

The Court of ppeals affirmed the CTs "esolution denyin petitioners claim for refund, and we quote

portions of the discussion from the Court of ppeals decision below

To ur mind, the 2ey to resolvin the Auular issue of this controversy involves a deeper analysis on how the

much:contested transitional input ta- credit has been encrypted in the countrys value:added ta- (6T)system.

- - - -

- - - ?T@he Commissioner of 9nternal "evenue promulated Reve*e Re-/(o*) No. 7%95which laid

down, amon others, the basis of the transitional input ta- credit for real estate dealers%%

- - - -

The "eulation unmista2ably allows credit for transitional input ta- of any person who becomes liable to 6Tor who elects to be a 6T:reistered person. 1ore particularly, real estate dealers who were beforehand notsubAect to 6T are allowed a ta- credit to cushion the staerin effect of the newly imposed !*; output6T liability under " /o. &&!0.

Bearin in mind the purpose of the transitional input ta- credit under the 6T system, e find it inconruousto rant petitioners claim for ta- refund. e ta2e note of the fact that petitioner acquired the =lobal Citylots from the /ational =overnment. The transaction was not subAect to any sales or business ta-. 8ince the

seller did not pass on any ta- liability to petitioner, the latter may not claim ta- credit. Clearly then,petitioner cannot simply demand that it is entitled to the transitional input ta- credit.

- - - -

Anot)er point. 8ection !*$ of the /ational 9nternal "evenue Code, as amended by > /o. &+, e-plicitly

provides that the transitional input ta- credit shall be based on 5the beinnin inventory of oods, materialsand supplies or the actual value:added ta- paid on such oods, materials and supplies, whichever is hiher.7

/ote that the law did not simply say O the transitional input ta- credit shall be 3; of the beinnininventory of oods, materials and supplies.

9nstead, lawma2ers went on to say that the creditable input ta- shall be +)ic)ever is )ig)erbetween thevalue of the inventory and the actual 6T paid. /ecessarily then, a comparison of these two fiures wouldhave to be made. This strenthens ur view that previous payment of the 6T is indispensable to

determine the actual value of the input ta- creditable aainst the output ta-. 8o too, this is in consonance

with the present ta- credit method adopted in this Aurisdiction whereby an entity can credit aainst orsubtract from the 6T chared on its sales or outputs the 6T paid on its purchases, inputs and imports.

:e proceed to traverse anot)er argu!ent raised in t)is controversy.'etitioner insists that the term 5oods7which was one of the bases in computin the transitional input ta- credit must be construed so as toinclude re/ 3ro3er(e) e/ 3r(mr(/ or )/e o ')omer). 'etitioner posits that respondentCommissioner practically rewrote the law when it issued "evenue "eulations /o. &:%$ which limited the

basis of the 3; transitional input ta- credit to the value of i!prove!entsalone.

Petitioner is clearly !ista/en.


13/23

The term 5oods7 has been defined to mean any movable or tanible obAects which are appreciable ortanible. 1ore specifically, the word 5oods7 is always used to desinate wares, commodities, and personal

chattelsH and does not include c)attels real. 5"eal property7 on the other hand, refers to land, and enerallywhatever is erected or rowin upon or affi-ed to land. 9t is therefore quite absurd to equate 5oods7 as

bein synonymous to 5properties7. The vast difference between the terms 5oods7 and 5real properties7 isso obvious that petitioners assertion must be struc2 down for bein utterly baseless and specious.

lon this line, e uphold the validity of "evenue "eulations /o. &:%$. The authority of the 8ecretary ofFinance, in conAunction with the Commissioner of 9nternal "evenue, to promulate all needful rules andreulations for the effective enforcement of internal revenue laws cannot be controverted. /either can it bedisputed that such rules and reulations, as well as administrative opinions and rulins, ordinarily shoulddeserve weiht and respect by the courts. 1uch more fundamental than either of the above, however, is

that all such issuances must not override, but must remain consistent and in harmony with, the law theysee2 to apply and implement. dministrative rules and reulations are intended to carry out, neither tosupplant nor to modify, the law. "evenue "eulations /o. &:%$ is clearly not inconsistent with the prevailinstatute insofar as the provision on transitional input ta- credit is concerned.!**

CA%G.R. S No. 7+540 Re)o/(o* =O'ober #, 2007?

9n this "esolution, the Court of ppeals denied petitioners 1otion for "econsideration of its Decision datedpril +*, **&.

G.R. No. 1#1092

CTA C)e No. 5+94 De'()(o* =Se3ember 29, 2000?

The CT ruled that petitioner is not automatically entitled to the 3; transitional input ta- allowed under8ection !*$ of the Ta- Code based solely on its inventory of real properties, and cited the rule on uniformity

in ta-ation duly enshrined in the Constitution.!*! ccordin to the CT

s defined under the above 8ection !*# of the Ta- Code, an 5input ta-7 means the 6T paid by a 6T:

reistered person in the course of his trade or business on importation of oods or services from a 6T:reistered personH and that such ta- shall include t)e transitional input taxdetermined in accordance with

8ection !*$ of the Ta- Code, supra.!*

pplyin the rule on statutory construction that particular words, clauses and phrases should not be studiedas detached and isolated e-pressions, but the whole and every part of the statute must be considered in

fi-in the meanin of any of its parts in order to produce a harmonious whole, the phrase 5transitional inputta-7 found in 8ection !*$ should be understood to encompass oods, materials and supplies which aresubAect to 6T, in line with the conte-t of 5input ta-7 as defined in 8ection !*#, most especially that thelatter includes, and immediately precedes, the former under its statutory meanin. 'etitioners contention

that the 3; transitional input ta- is statutorily presumed to the e-tent that its real properties which havenot been subAected to 6T are entitled thereto, would directly contradict 5input ta-7 as defined in 8ection!*# and would invariably cause disharmony.!*+

The CT held that the 3; transitional input ta- should not be viewed as an outriht rant or presumptionwithout need of prior ta-es havin been paid. >-poundin on this, the CT said

The simple instance in the aforesaid pararaphs of requirin the ta- on the materials, supplies or oodscomprisin the inventory to be currently unutiliEed as deferred sales ta- credit before the 3; presumptiveinput ta- can be enAoyed readily leads to the inevitable conclusion that such 3; ta- cannot be Aust rantedto any 6T liable person if he has no priorly paid creditable sales ta-es.


14/23

evident from the alternative modes of acquirin the proper amount of transitional input ta- under 8ection!*$, supra. ne is by ettin the equivalent amount of 3; ta- based on the beinnin inventory of oods,

materials and supplies and the other is by the actual 6T paid on such oods, materials and supplies,whichever is hiher.

s it is supposed to wor2, the transitional input ta- should answer for the !*; output 6T liability that a6T:reistered person will incur once he starts business operations. hile a 6T:reistered person who is

allowed a transitional input ta- based on his actual payment of !*; 6T on his purchases can utiliEe thesame to pay for his output 6T liability, a similar 6T:reistered person li2e herein 'etitioner, when allowedthe alternative 3; transitional input ta-, can offset his output 6T liability equally throuh such 3; ta-even without havin paid any previous ta-. This obvious inequity that may arise could not have been theintention and purpose of the lawma2ers in rantin the transitional input ta- credit. - - -!*$

>vidently, 'etitioner is not similarly situated both as to privilees and liabilities to that of a 6T:reisteredperson who has paid actual !*; input 6T on his purchases of oods, materials and supplies. The latterperson will not earn anythin from his transitional input ta- which, to emphasiEe, has been paid by him

because the same will Aust offset his !*; output 6T liability. n the other hand, herein 'etitioner willearngratisthe amount equivalent to !*; output 6T it has passed on to buyers for the simple reason that ithas never previously paid any input ta- on its oods. 9ts ain will be facilitated by herein claim for refund ifever ranted. This is the reason why we do not see any inconruity in 8ection #.!*$:! of "evenue

"eulations /o. &:%$ as it relates to 8ection !*$ of the !%%0 Ta- Code, contrary to the contention of'etitioner. 8ection #.!*$:! (supra), which bases the transitional input ta- credit on the value of the

improvements, is consistent with the purpose of the law - - -.!*0

CA%G.R. S No. +115# De'()(o* =De'ember 2#, 2007?

The Court of ppeals affirmed the CTs denial of petitioners claim for refund and upheld the validity of the

questioned "evenue "eulation issued by respondent Commissioner of 9nternal "evenue, reasonin asfollows

8ec. !*$ of the /9"C, as amended, provides that the allowance for the 3; input ta- on the beinnininventory of a 6T:covered entity is 5subAect to the filin of an inventory as prescribed by reulations.7 This

means that the leislature left to the B9" the determination of what will constitute the beinnin inventoryof oods, materials and supplies which will, in turn, serve as the basis for computin the 3; input ta-.

hile the power to ta- cannot be deleated to e-ecutive aencies, details as to the enforcement and

administration of an e-ercise of such power may be left to them, includin the power to determine thee-istence of facts on which its operation depends - - -. Jence, there is no ainsayin that the C9" and the8ecretary of Finance, in limitin the application of the input ta- of real estate dealers to improvementsconstructed on or after 4anuary !, !%33, merely e-ercised their deleated authority under 8ec. !*$, id., to

promulate rules and reulations definin what should be included in the beinnin inventory of a 6T:reistered entity.

- - - -

9n the instant case, e find that, contrary to petitioners attac2s aainst its validity, the limitation on thebeinnin inventory of real estate dealers contained in 8ec. #.!*$:! of "" /o. &:%$ is reasonable andconsistent with the nature of the input 6T. - - -.

Based on the foreoin antecedents, it is clear why the second pararaph of 8ec. #.!*$:! of "" /o. &:%$limits the transitional input ta-es of real estate dealers to the value of improvements constructed on or after

4anuary !, !%33. 8ince the sale of the land was not subAect to 6T or other sales ta-es prior to theeffectivity of "ep. ct /o. &&!0, real estate dealers at that time had no input ta-es to spea2 of. ith this inmind, the C9" correctly limited the application of the 3; transitional input ta- to improvements on real

estate dealers constructed on or after 4anuary !, !%33 when the 6T was initially implemented. This is, as itshould be, for to rant petitioner a refund or credit for input ta-es it never paid would be tantamount to

unAust enrichment.

s petitioner itself observes, the input ta- credit provided for by 8ec. !*$ of the /9"C is a mechanism usedto rant some relief from burdensome ta-es. 9t follows, therefore, that not havin been burdened by 6T orany other sales ta- on its inventory of land prior to the effectivity of "ep. ct /o. &&!0, petitioner is notentitled to the relief afforded by 8ec. !*$, id.!*&


15/23

The Court of ppeals ruled that petitioner is not similarly situated as those business entities which previously

paid ta-es on their inputs, and stressed that 5a ta- refund or credit - - - is in the nature of a ta- e-emptionwhich must be construed strictissi!i urisaainst the ta-payer - - -.7!*3

T;IS CO"RTS R"LING

s previously stated, the issues here have already been passed upon and resolved by this Court EnBanctwice, in decisions that have reached finality, and we are bound by the doctrine of stare decisisto applythose decisions to these consolidated cases, for they involve the same facts, issues, and even parties.

Thus, we find for the petitioner.

DISC"SSION

The errors assined by petitioner to the Court of ppeals and the aruments offered by respondents to

support the denial of petitioners claim for ta- refund have already been dealt with thorouhly by theCourtEn Bancin "ort Bonifacio #evelop!ent $orporation v. $o!!issioner of %nternal Revenue&G.R. No).15###5and 170+#0(Decision : pril , **%H "esolution : ctober , **%)H and "ort Bonifacio#evelop!ent $orporation v. $o!!issioner of %nternal Revenue&G.R. No. 17$425(Decision : 8eptember #,

*!H "esolution : 4anuary , *!+).

The Court En Bancdecided on the followin issues in =.". /os. !$333$ and !&*03*

!. 9n determinin the !*; value:added ta- in 8ection !** of the ?ld /9"C@ on the sale ofreal properties by real estate dealers, is the 3; transitional input ta- credit in 8ection !*$applied only to the improvements on the real property or is it applied on the value of the

entire real propertyQ

. re 8ection #.!*$.! and pararaph (a)(999) of the Transitory 'rovisions of "evenue

"eulations /o. &:%$ valid in limitin the 3; transitional input ta- to the improvements onthe real propertyQ

8ubsequently, in =.". /o. !&+#$, the Court resolved issues that are identical to the ones raised here by

petitioner,!*%thus

+.*$.a.hether "evenue "eulations /o. 0:%& effectively repealed or

repudiated "evenue "eulations /o. &:%$ insofar as the latter limitedthe transitionalGpresumptive input ta- credit which may be claimed

under 8ection !*$ of the /ational 9nternal "evenue Code to the

5improvements7 on real properties.+.*$.b.hether "evenue "eulations /o. &:%$ is a valid implementation of

8ection !*$ of the /ational 9nternal "evenue Code.+.*$.c.hether the issuance of "evenue "eulations /o. &:%$ by the Bureau

of 9nternal "evenue, and declaration of validity of said "eulations by

the Court of Ta- ppeals and Court of ppeals, ?were@ in violation ofthe fundamental principle of separation of powers.

+.*$.d.hether there is basis and necessity to interpret and construe theprovisions of 8ection !*$ of the /ational 9nternal "evenue Code.

+.*$.e.hether there must have been previous payment of business ta-?sales ta- or value:added ta-@!!*by petitioner on its land before it

may claim the input ta- credit ranted by 8ection !*$ of the /ational

9nternal "evenue Code.


16/23

+.*$.f. hether the Court of ppeals and Court of Ta- ppeals merelyspeculated on the purpose of the transitionalGpresumptive input ta-

provided for in 8ection !*$ of the /ational 9nternal "evenue Code.+.*$..hether the economic and social obAectives in the acquisition of the

subAect property by petitioner from the =overnment should be ta2en

into consideration.!!!

The Courts pronouncements in the decided cases reardin these issues are discussed below. The doctrine

of stare decisis et non *uieta !overe, which means 5to abide by, or adhere to, decided cases,7!!compels usto apply the rulins by the Court to these consolidated cases before us. Lnder the doctrine of stare decisis,5when this Court has once laid down a principle of law as applicable to a certain state of facts, it will adhereto that principle, and apply it to all future cases, where facts are substantially the sameH reardless of

whether the parties and property are the same.7!!+ This is to provide stability in Audicial decisions, as heldby the Court in a previous case

8tand by the decisions and disturb not what is settled. Stare decisis simply means that for the sa2e ofcertainty, a conclusion reached in one case should be applied to those that follow if the facts aresubstantially the same, even thouh the parties may be different. 9t proceeds from the first principle ofAustice that, absent any powerful countervailin considerations, li2e cases ouht to be decided ali2e.!!#

1ore importantly, we cannot depart from the leal precedents as laid down by the Court En Banc. 9t isprovided in the Constitution that 5*o o'r(*e or 3r(*'(3/e o / /( o* b e 'or (* e'()(o*re*ere en bancor (* (v()(o* m be mo((e or rever)e e6'e3 b e 'or )((*- en

banc.7!!$

hat is left for this Court to do is to reiterate the rulins in the aforesaid leal precedents and apply them tothese consolidated cases.

s reards the main issue, the Court conclusively held that petitioner is entitled to the 3; transitional inputta- on its beinnin inventory of land, which is ranted in 8ection !*$ (now 8ection !!!?@) of the /9"C,and ranted the refund of the amounts petitioner had paid as output 6T for the different ta- periods in

question.!!0

@eer e r*)((o*/3re)m3(ve

(*3 6 're( *er Se'(o* 105 o eNIRC m be '/(me o*/ o* e(m3roveme*) o* re/ 3ro3er(e).

The Court held in the earlier consolidated decision, =.". /os. !$333$ and !&*03*, as follows

O* () 'e, ere () *o(*- (* Se'(o* 105 o e O/ NIRC 3ro(b() e (*'/)(o* o re/3ro3er(e), o-eer ( e (m3roveme*) ereo*, (* e be-(**(*- (*ve*or o -oo),

mer(/) * )33/(e), b)e o* (' (*ve*or e r*)((o*/ (*3 6 're( () 'om3e.9tcan be conceded that when it was drafted 8ection !*$ could not have possibly contemplated concerns

specific to real properties, as real estate transactions were not oriinally subAect to 6T. t the same time,when transactions on real properties were finally made subAect to 6T beinnin with "ep. ct /o. &&!0, nocorrespondin amendment was adopted as reards 8ection !*$ to provide for a differentiated treatment inthe application of the transitional input ta- credit with respect to real properties or real estate dealers.

9t was 8ection !** of the ld /9"C, as amended by "ep. ct /o. &&!0, which made real estate transactionssubAect to 6T for the first time. 'rior to the amendment, 8ection !** had imposed the 6T 5on every sale,barter or e-chane of oods7, without however specifyin the 2ind of properties that fall within or under the

eneric class 5oods7 subAect to the ta-.

Re3. A' No. 771+, (' )(-*(('*/ () /)o *o* ) e E63*e V/e%Ae T6 =EVAT?/, e63*e e 'over-e o e VAT b me*(*- Se'(o* 100 o e O/ NIRC (* )ever/

re)3e'), )ome o (' e (// e*mere. F(r), ( me ever )/e, brer or e6'*-e o-oo) or 3ro3er(e) )be' o VAT. Se'o*, ( -e*er// e(*e -oo) or 3ro3er(e) ) //*-(b/e * (**-(b/e obe') (' re '3b/e o 3e'*(r e)(m(o*. T(r, ( (*'/e


17/23

*o*%e6'/)(ve e*mer(o* o vr(o) obe') // *er e '/)) -oo) or 3ro3er(e))be' o VAT, (*'/(*- rHe/ 3ro3er(e) e/ 3r(mr(/ or )/e o ')omer) or e/ or /e)e

(* e or(*r 'or)e o re or b)(*e)).

From e)e me*me*) o Se'(o* 100, () ere * (ere*(e VAT reme* o* re/3ro3er(e) or re/ e)e e/er) o/ )( e )--e)e /(m((o*) o* e 33/('(o* oe r*)((o*/ (*3 6 o* em @e )ee *o*e.

Re3. A' No. 771+ '/r((e) ( () e re/ 3ro3er(e) e/ 3r(mr(/ or )/e o ')omer) ore/ or /e)e (* e or(*r 'or)e o re or b)(*e)) re )be' o e VAT, * *oe* e re/ e)e r*)'(o*) re e*--e (* b 3er)o*) o o *o )e// or /e)e 3ro3er(e)(* e or(*r 'or)e o re or b)(*e)). I () '/er o)e re-/r/ e*--e (* e re/

e)e b)(*e)) re ''ore e )me reme* ) e mer'*) o oer -oo) or 3ro3er(e)v(/b/e (* e mre. I* e )me m(//(*er 'o*)(er) ) ) () -oo) * r*'er 'o*)(er) '/e ) () -oo), re/ e)e e/er o/) re/ 3ro3er, eer or *o ('o*(*) (m3roveme*), ) () -oo).!!&(Citations omitted, emphasis added.)

- - - -

Lnder 8ection !*$, the beinnin inventory of 5oods7 forms part of the valuation of the transitional input

ta- credit. =oods, as commonly understood in the business sense, refers to the product which the 6T:reistered person offers for sale to the public. ith respect to real estate dealers, it is the real properties

themselves which constitute their 5oods7. 8uch real properties are the operatin assets of the real estatedealer.

8ection #.!**:! of "" /o. &:%$ itself includes in its enumeration of 5oods or properties7 such 5real

properties held primarily for sale to customers or held for lease in the ordinary course of trade or business.78aid definition was ta2en from the very statutory lanuae of 8ection !** of the ld /9"C. B /(m((*- ee(*((o* o -oo) o (m3roveme*) (* Se'(o* 4.105%1, e BIR *o o*/ 'o*rve*e ee(*((o* o -oo) ) 3rov(e (* e O/ NIRC, b /)o e e(*((o* (' e )me reve*e

re-/(o* ()e/ ) 3rov(e.!!3(>mphasis added.)

The Court then emphasiEed in its "esolution in =.". /o. !$333$ and =.". /o. !&*03* that 8ection !*$ ofthe old /9"C, on the transitional input ta- credit, remained intact despite the enactment of "epublic ct /o.

&&!0. 8ection !*$ was amended by "epublic ct /o. 3##, and the provisions on the transitional input ta-credit are now embodied in 8ection !!!() of the new /9"C, which reads

8ection !!!. Transitional0Presu!ptive %nput Tax $redits.

() Transitional %nput Tax $redits. person who becomes liable to value:added ta- or any person whoelects to be a 6T:reistered person shall, subAect to the filin of an inventory according to rules and

regulations prescri,ed ,y t)e Secretary of ;"


18/23

9t is correct, as pointed out by the CT, that upon the shift from sales ta-es to 6T in !%3& newly:6Treistered people would have been preAudiced by the inability to credit aainst the output 6T their

payments by way of sales ta- on their e-istin stoc2s in trade. Ket that inequity was precisely addressed bya transitory provision in >.. /o. &+ found in 8ection $ thereof. Te 3rov()(o* or(:e VAT%

re-()ere 3er)o*) o (*voe 3re)m3(ve (*3 6 e8(v/e* o #J o e v/e o e(*ve*or ) o De'ember $1, 19#7 o mer(/) * )33/(e) (' re *o or )/e, e 6 o*(' ) *o e* 3 or '/(me ) eerre )/e) 6 're(, * )(m(/r 3re)m3(ve (*3

6 e8(v/e* o #J o e v/e o e (*ve*or ) o De'ember $1, 19#7 o -oo) or )/e, e6 o* (' ) *o e* 3 or '/(me ) eerre )/e) 6 're(.!! (>mphasis ours.)

@eer ere m) ve bee* 3rev(o)3me* o )/e) 6 or v/e%e 6

b 3e((o*er o* () /* beore 3e((o*erm '/(m e (*3 6 're( -r*e bSe'(o* 105 =*o Se'(o* 111AH? o eNIRC.

The Court discussed this matter lenthily in its Decision in =.". /os. !$333$ and !&*03*, and we quote

8ection $ of >.. /o. &+ perfectly remedies the problem assumed by the CT as the basis for theintroduction of transitional input ta- credit in !%3&. 9f the core purpose of the ta- credit is only, as hinted by

the CT, to allow for some mode of accreditation of previously:paid sales ta-es, then 8ection $ alone wouldhave sufficed.


19/23

affordin the opportunity to offset the losses incurred throuh the remittance of the output 6T at a staewhen the person is yet unable to credit input 6T payments.

There is another point that weihs aainst the CTIs interpretation. Lnder 8ection !*$ of the ld /9"C, the

rate of the transitional input ta- credit is 53; of the value of such inventory or the actual value:added ta-paid on such oods, materials and supplies, whichever is hiher.7 I (*ee e r*)((o*/ (*3 6're( () 3rem()e o* e 3rev(o) 3me* o VAT, e* ( oe) *o me )e*)e o or e

63er e be*e( o )' 're( b)e o* #J o e v/e o )' (*ve*or )o/ e )me3rove (-er * e '/ VAT 3(.This intent that the CT alluded to could have been implementedwith ease had the leislature shared such intent by providin the actual 6T paid as the sole basis for therate of the transitional input ta- credit.

The CT harped on the circumstance that FBDC was e-cused from payin any ta- on the purchase of itsproperties from the national overnment, even claimin that to allow the transitional input ta- credit is5tantamount to ivin an undeserved bonus to real estate dealers similarly situated as ?FBDC@ which the=overnment cannot afford to provide.7


20/23

3e((o*er () e*(/e o (, e)3(e e ' 3e((o*er '8(re e G/ob/ C( 3ro3er *er 6%ree r*)'(o*.!$ The Court En Bancheld

Contrary to the view of the CT and the C, there is nothin in the abovequoted provision to indicate thatprior payment of ta-es is necessary for the availment of the 3; transitional input ta- credit. bviously, all

that is required is for the ta-payer to file a beinnin inventory with the B9".

To require prior payment of ta-es - - - is not only tantamount to Audicial leislation but would also rendernuatory the provision in 8ection !*$ of the old /9"C that the transitional input ta- credit shall be 53; ofthe value of ?the beinnin@ inventory or the actual ?6T@ paid on such oods, materials and supplies,whichever is hiher7 because the actual 6T (now !;) paid on the oods, materials, and supplies would

always be hiher than the 3; (now ;) of the beinnin inventory which, followin the view of 4usticeCarpio, would have to e-clude all oods, materials, and supplies where no ta-es were paid. Clearly, limitinthe value of the beinnin inventory only to oods, materials, and supplies, where prior ta-es were paid,was not the intention of the law. therwise, it would have specifically stated that the beinnin inventory

e-cludes oods, materials, and supplies where no ta-es were paid.!0

@eer Reve*e Re-/(o*) No. 7%95 () v/( (m3/eme*(o* o Se'(o* 105 o

e NIRC.

9n the pril , **% Decision in =.". /os. !$333$ and !&*03*, the Cor )r' o* Se'(o* 4.105%1o Reve*e Re-/(o*) No. 7%95 or be(*- (* 'o*/(' ( e /.!& The decision reads in part as

follows

?There@ is no loic that coheres with either >.. /o. &+ or "ep. ct /o. &&!0 which supports the restriction

imposed on real estate bro2ers and their ability to claim the transitional input ta- credit based on the valueof their real properties. 9n addition, the very idea of e-cludin the real properties itself from the beinnininventory simply runs counter to what the transitional input ta- credit see2s to accomplish for personsenaed in the sale of oods, whether or not such 5oods7 ta2e the form of real properties or more

mundane commodities.

Lnder 8ection !*$, the beinnin inventory of 5oods7 forms part of the valuation of the transitional inputta- credit. =oods, as commonly understood in the business sense, refers to the product which the 6T:

reistered person offers for sale to the public. ith respect to real estate dealers, it is the real propertiesthemselves which constitute their 5oods7. 8uch real properties are the operatin assets of the real estate

dealer.

8ection #.!**:! of "" /o. &:%$ itself includes in its enumeration of 5oods or properties7 such 5realproperties held primarily for sale to customers or held for lease in the ordinary course of trade or business.7

8aid definition was ta2en from the very statutory lanuae of 8ection !** of the ld /9"C. By limitin thedefinition of oods to 5improvements7 in 8ection #.!*$:!, the B9" not only contravened the definition of5oods7 as provided in the ld /9"C, but also the definition which the same revenue reulation itself hasprovided.

The Court of Ta- ppeals claimed that under 8ection !*$ of the ld /9"C the basis for the inventory ofoods, materials and supplies upon which the transitional input 6T would be based 5shall be left toreulation by the appropriate administrative authority7. This is based on the phrase 5filin of an inventory as

prescribed by reulations7 found in 8ection !*$. /onetheless, 8ection !*$ does include the particularproperties to be included in the inventory, namely oods, materials and supplies. 9t is questionable whetherthe C9" has the power to actually redefine the concept of 5oods7, as she did when she e-cluded real

properties from the class of oods which real estate companies in the business of sellin real properties mayinclude in their inventory. The authority to prescribe reulations can pertain to more technical matters, suchas how to appraise the value of the inventory or what papers need to be filed to properly itemiEe thecontents of such inventory. But such authority cannot o as far as to amend 8ection !*$ itself, which theCommissioner had unfortunately accomplished in this case.

9t is of course a-iomatic that a rule or reulation must bear upon, and be consistent with, the provisions of

the enablin statute if such rule or reulation is to be valid. 9n case of conflict between a statute and anadministrative order, the former must prevail. 9ndeed, e CIR ) *o 3oer o /(m( e me*(*- *

'over-e o e erm -oo) (* Se'(o* 105 o e O/ NIRC b)e* )or or( or b)()


21/23

o me * )( )' /(m((o*. A 'o*rr 'o*'/)(o* o/ me* e CIR 'o/ ver e//moo e / or rro-e /e-()/(ve or( *o (m)e/ b re(*(*- )o/e ()'re(o* o 3rov(e

e e(*((o* * )'o3e o e erm -oo).!3 (>mphasis added.)

Furthermore, in =.". /o. !&+#$, the Court held

Se'(o* 4.105%1 o RR 7%95 ()(*'o*)()e* ( Se'(o* 105o e o/ NIRC

s reards 8ection #.!*$:! of "" &:%$ which limited the 3; transitional input ta- credit to the value of the

improvements on the land, the same contravenes the provision of 8ection !*$ of the old /9"C, in relation to8ection !** of the same Code, as amended by " &&!0, which defines 5oods or properties,7 to wit

- - - -

I* ', (* or Re)o/(o* e O'ober 2, 2009, (* e re/e ')e o &ort (onifacio, e r/e Se'(o* 4.105%1 o RR 7%95, (*)or ) ( /(m() e r*)((o*/ (*3 6 're( o e v/eo e (m3roveme* o e re/ 3ro3er(e), () *//(. 'ertinent portions of the "esolution read

s mandated by rticle & of the Civil Code, an administrative rule or reulation cannot contravene the law

on which it is based. "" &:%$ is inconsistent with 8ection !*$ insofar as the definition of the term 5oods7 isconcerned. This is a leislative act beyond the authority of the C9" and the 8ecretary of Finance. The rulesand reulations that administrative aencies promulate, which are the product of a deleated leislativepower to create new and additional leal provisions that have the effect of law, should be within the scope ofthe statutory authority ranted by the leislature to the obAects and purposes of the law, and should not be

in contradiction to, but in conformity with, the standards prescribed by law.

To be valid, an administrative rule or reulation must conform, not contradict, the provisions of the enablinlaw. n implementin rule or reulation cannot modify, e-pand, or subtract from the law it is intended to

implement. ny rule that is not consistent with the statute itself is null and void.

hile administrative aencies, such as the Bureau of 9nternal "evenue, may issue reulations to implementstatutes, they are without authority to limit the scope of the statute to less than what it provides, or e-tend

or e-pand the statute beyond its terms, or in any way modify e-plicit provisions of the law. 9ndeed, a quasi:Audicial body or an administrative aency for that matter cannot amend an act of Conress. Jence, in caseof a discrepancy between the basic law and an interpretative or administrative rulin, the basic law prevails.

To recapitulate, "" &:%$, insofar as it restricts the definition of goods'as basis of transitional input ta-credit under 8ection !*$ is a nullity.

s we see it then, the 3; transitional input ta- credit should not be limited to the value of the

improvements on the real properties but should include the value of the real properties as well. !%(Citationsomitted, emphasis ours.)

@eer e ())*'e o Reve*e

Re-/(o*) No. 7%95 b e BIR, *e'/r(o* o v/(( o )( Re-/(o*)b e CTA * e Cor o A33e/),) (* v(o/(o* o e *me*/

3r(*'(3/e o )e3r(o* o 3oer).

9n the "esolution dated ctober , **% in =.". /os. !$333$ and !&*03* the Court denied the respondents1otion for "econsideration with finality and held

?The pril , **% Decision@ held that the C9" had no power to limit the meanin and coverae of theterm goods'in 8ection !*$ of the ld /9"C sans statutory authority or basis and Austification to ma2e such

limitation. This it did when it restricted the application of 8ection !*$ in the case of real estate dealers onlyto improvements on the real property belonin to their beinnin inventory.


22/23

- - - -

The statutory definition of the term 5oods orproperties7 leaves no room for doubt. 9t states chanroblesvirtuallawlibrary58ec. !**. Value-added tax on sale of goods or properties. (a) "ate and base of ta-. - - -

(!) The term oods or properties shall mean all tanible and intanible obAects which are capable ofpecuniary estimation and shall include chanroblesvirtuallawlibrary

() "eal properties held primarily for sale to customers or held for lease in the ordinary course of trade orbusinessH - - -.7

The amendatory provision of 8ection !*$ of the /9"C, as introduced by " &&!0, states

58ec. !*$. Transitional %nput ;T &+ (4anuary !, !%33).7

A) m*e b Ar('/e 7 o e C(v(/ Coe, * m(*()r(ve r/e or re-/(o* '**o'o*rve*e e / o* (' ( () b)e. RR 7%95 () (*'o*)()e* ( Se'(o* 105 (*)or ) ee(*((o* o e erm goods() 'o*'er*e. T() () /e-()/(ve ' beo* e or( o e

CIR * e Se'rer o F(**'e. Te r/e) * re-/(o*) m(*()r(ve -e*'(e)3rom/-e, (' re e 3ro' o e/e-e /e-()/(ve 3oer o 'ree *e * ((o*//e-/ 3rov()(o*) ve e ee' o /, )o/ be ((* e )'o3e o e )or or(-r*e b e /e-()/re o e obe') * 3r3o)e) o e /, * )o/ *o be (*

'o*r('(o* o, b (* 'o*orm( (, e )*r) 3re)'r(be b /.

To be valid, an administrative rule or reulation must conform, not contradict, the provisions of the enablinlaw. n implementin rule or reulation cannot modify, e-pand, or subtract from the law it is intended to

implement. ny rule that is not consistent with the statute itself is null and void.

hile administrative aencies, such as the Bureau of 9nternal "evenue, may issue reulations to implementstatutes, they are without authority to limit the scope of the statute to less than what it provides, or e-tend

or e-pand the statute beyond its terms, or in any way modify e-plicit provisions of the law. 9ndeed, a quasi:Audicial body or an administrative aency for that matter cannot amend an act of Conress. Jence, in case

of a discrepancy between the basic law and an interpretative or administrative rulin, the basic law prevails.

To re'3(/e, RR 7%95, (*)or ) ( re)r(') e e(*((o* o -goods-) b)() o r*)((o*/(*3 6 're( *er Se'(o* 105 () *//(.

n 4anuary !, !%%&, "" 0:%& was issued by the Commissioner of 9nternal "evenue. "" 0:%& was basically areiteration of the same 8ection #.!*$:! of "" &:%$, e-cept that the "" 0:%& e/ee the followinpararaph chanroblesvirtuallawlibrary

>o+ever& in t)e case of real estate dealers& t)e ,asis of t)e presu!ptive input tax s)all ,e t)ei!prove!ents& suc) as ,uildings& roads& drainage syste!s& and ot)er si!ilar structures& constructed on orafter t)e effectivity of E.7. 3?@ (anuary 1& 1CC.'

9t is clear, therefore, that under "" 0:%&, the allowable transitional input ta- credit is not limited to

improvements on real properties. The particular provision of "" &:%$ has effectively been repealed by "" 0:%& which is now in consonance with 8ection !** of the /9"C, insofar as the definition of real properties asoods is concerned. The failure to add a specific repealin clause would not necessarily indicate that there


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was no intent to repeal "" &:%$. The fact that the aforequoted pararaph was deleted created anirreconcilable inconsistency and repunancy between the provisions of "" 0:%& and "" &:%$.

- - - -

s pointed out in ur Decision of pril , **%, to ive 8ection !*$ a restrictive construction thattransitional input ta- credit applies only when ta-es were previously paid on the properties in the beinnin

inventory and there is a law imposin the ta- which is presumed to have been paid, is to impose conditionsor requisites to the application of the transitional ta- input credit which are not found in the law. The courtsmust not read into the law what is not there. To do so will violate the principle of separation of powers whichprohibits this Court from enain in Audicial leislation.!+* (>mphases added.)

s the Court En Bancheld in =.". /o. !&+#$, the issues in this case are not novel. These same issues havebeen squarely ruled upon by this Court in the earlier decided cases that have attained finality.!+!

9t is now this Courts duty to apply the previous rulins to the present case. nce a case has been

decided one way+ any other case in%ol%ing e$actly the same point at issue+ as in the presentcase+ should be decided in the same manner.!+

Thus, we find that petitioner is entitled to a refund of the amounts of 1? 4#+,$55,#4+.7# (* G.R. No.

175707, 2? 77,151,020.4+ (* G.R. No. 1#00$5, * $? 2+9,$40,4+9.45 (* G.R. No. 1#1092,(' 3e((o*er 3( ) v/e%e 6, or o 6 're( or )( mo*).

@;EREFORE, in view of the foreoin, the consolidated petitions are hereby GRANTED. The followin

are REVERSEDand SET ASIDE&

!) Lnder G.R. No. 175707, the De'()(o*dated A3r(/ 22, 200$of the

Court of ppeals inCA%G.R. S No. +151+and its

subsequent Re)o/(o*dated November $0, 200+H) Lnder G.R. No. 1#00$5, the De'()(o*dated A3r(/ $0, 2007of the

Court of ppeals inCA%G.R. S No. 7+540and itssubsequent Re)o/(o*dated O'ober #, 2007H and

+) Lnder G.R. No. 1#1092, the De'()(o*dated De'ember 2#,

2007of the Court of ppeals in CA%G.R. S No. +115#.

"espondent Commissioner of 9nternal "evenue is ordered to REF"ND, OR, IN T;E ALTERNATIVE, TOISS"E A TA CREDIT CERTIFICATEto petitioner Fort Bonifacio Development Corporation, the followinamounts

!) 4#+,$55,#4+.7#paid as output value:added ta- for the )e'o*8rer o 1997 =G.R. No. 175707?K

) 77,151,020.4+paid as output value:added ta- for the (r)8rer o 199# =G.R. No. 1#00$5?H and

+) 2+9,$40,4+9.45paid as output value:added ta- for the or

8rer o 199+=G.R. No. 1#1092?.

SO ORDERED.