GR 271261; (April, 2025) (Digest)
G.R. No. 271261 , April 02, 2025
MELCO RESORTS LEISURE (PHP) CORPORATION, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
FACTS
Melco Resorts Leisure (PHP) Corporation (Melco) is a domestic corporation engaged in developing and operating tourist facilities, including casino entertainment complexes, and holds a gaming license from PAGCOR. For the first quarter of 2016, Melco paid PHP 81,119,005.84, representing input VAT on purchases attributable to its gaming revenues, which it claimed was erroneously or illegally collected and passed on. Melco filed its quarterly VAT return on April 25, 2016, and later filed an administrative claim for refund with the BIR on December 19, 2017. The BIR denied the claim, citing RMC No. 33-2013, which states that income from gaming activities is subject to 12% VAT and not entitled to an input tax refund. Aggrieved, Melco filed a Petition for Review before the Court of Tax Appeals (CTA). The CTA First Division denied the petition, ruling that Melco was not engaged in zero-rated activities and failed to prove its claim. The CTA En Banc affirmed, holding that Melco’s sales of gaming services are VAT-exempt under Section 109 of the Tax Code, not zero-rated, and thus it cannot claim a refund of input VAT under Section 112. The CTA En Banc also ruled that Melco’s claim under Section 229 for erroneously paid taxes was not proven to be timely filed, as the two-year prescriptive period should be reckoned from the date Melco’s suppliers filed their VAT returns and paid the tax, not from the date Melco filed its own return.
ISSUE
Whether Melco is entitled to a refund or tax credit of the input VAT it paid on purchases attributable to its gaming revenues.
RULING
No. The Supreme Court denied the petition. Melco is not entitled to a refund under Section 112 of the Tax Code because its sales of gaming services are exempt from VAT under Section 109, not zero-rated. A VAT-exempt taxpayer cannot claim a refund of input taxes. Furthermore, Melco’s claim for refund under Section 229 for erroneously paid taxes fails because it did not prove that its claim was filed within the two-year prescriptive period, which, pursuant to jurisprudence, should be counted from the date its suppliers filed their VAT returns and paid the tax, not from the date Melco filed its own return. The records were bereft of evidence showing when Melco’s suppliers filed their returns and paid the VAT passed on to Melco. Therefore, the CTA correctly denied the claim for refund.