G.R. No. 175707 , G.R. No. 180035, G.R. No. 181092 November 19, 2014
FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE and REVENUE DISTRICT OFFICER, REVENUE DISTRICT NO. 44, TAGUIG and PATEROS, BUREAU OF INTERNAL REVENUE, Respondents.

FACTS

Petitioner Fort Bonifacio Development Corporation (FBDC) is a domestic corporation engaged in the development and sale of real property within the Fort Bonifacio Global City. The National Government conveyed the parcels of land to FBDC on February 8, 1995. With the effectivity of Republic Act No. 7716 (the E-VAT Law) on January 1, 1996, the sale of real properties became subject to Value-Added Tax (VAT). FBDC became a VAT-registered taxpayer. On September 19, 1996, FBDC submitted an inventory list of its properties as of February 29, 1996, with a total book value of ₱71,227,503,200.00. FBDC claimed a transitional or presumptive input tax credit of 8% of this value under Section 105 of the National Internal Revenue Code (NIRC), amounting to ₱5,698,200,256.00 (later reduced to ₱4,250,475,000.48). FBDC sought refunds for actual VAT payments made in cash for specific quarters, arguing these payments were erroneously paid or illegally collected because they were more than offset by its claimed transitional input tax credit. The claims were denied by the Court of Tax Appeals (CTA) and the Court of Appeals (CA). The three consolidated petitions involve claims for refund for: the second quarter of 1997 ( G.R. No. 175707 ), the first quarter of 1998 (G.R. No. 180035), and the fourth quarter of 1996 (G.R. No. 181092).

ISSUE

The core legal issue is whether FBDC is entitled to a refund of the VAT it paid in cash for the specified quarters, based on its claim of a transitional input tax credit under Section 105 of the NIRC.

RULING

The Supreme Court DENIED the petitions and AFFIRMED the assailed Court of Appeals Decisions and Resolutions. The Court held that FBDC is not entitled to the claimed refunds. The ruling is based on the doctrine of stare decisis, as the issues involved are identical to those already definitively settled by the Court En Banc in two prior cases: Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue (G.R. Nos. 158885 & 170680, October 2, 2009) and Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue ( G.R. No. 173425 , September 4, 2012). In those cases, the Court En Banc ruled that FBDC is not entitled to a transitional input tax credit under Section 105 because the provision applies only to a VAT-registered person whose beginning inventory of goods for sale arose from transactions that were not subject to VAT (i.e., non-VAT transactions). The Court found that FBDC’s beginning inventory of real properties was acquired from the National Government through a transaction that was not subject to any business tax (VAT or percentage tax) at the time of acquisition. Since no tax was paid on the acquisition, there is no creditable input tax to speak of, and the transitional input tax credit mechanism, which is meant to prevent double taxation, does not apply. Therefore, FBDC cannot use a non-existent transitional input tax credit to offset its output VAT liability or claim a refund for VAT paid.