SC upholds grant of P360M tax refund to Fort Boni Dev’t

The Supreme Court denied with finality an appeal from the Bureau of Internal Revenue (BIR) which sought the reversal of a decision that awarded property developer Fort Bonifacio Development Corp. (FBDC) nearly P360 million as refund for erroneous tax collection.

Voting 10-4, the justices meeting en banc affirmed their Sept. 4, 2012, ruling that found the BIR liable to FBDC to the tune of P359,652,009.47, which was erroneously paid by the company as output value added tax for the first quarter of 1997.

The 2012 decision gave the BIR the option to refund the amount or issue a tax credit certificate in favor of FBDC.

Earlier, the Court of Tax Appeals (CTA) denied FBDC’s claim for a refund, saying “the benefit of transitional input tax credit comes with the condition that business taxes should have been paid first.”

The Court of Appeals affirmed the decision of the CTA, claiming no VAT was paid when FBDC bought the Bonifacio Global City.

The Supreme Court, however, found merit in FBDC’s petition for review and reversed the appellate court’s decision.

It noted that Section 105 of the old National Internal Revenue Code makes no mention “that prior payment of taxes is necessary for the availment of the 8-percent transitional input tax credit.”

In a resolution dated Jan. 22 and penned by Justice Mariano del Castillo, the high court noted that the “same issues presented have been squarely ruled upon” by the tribunal in a previous case involving FBDC and that “no substantial argument had been adduced to warrant the reconsideration sought.”

The majority justices were referring to the 2009 case of FBDC vs Commissioner of International Revenue (CIR) and the 2005 case of CIR vs. Central Luzon Drug Corp., wherein the Supreme Court maintained that prior payment of taxes was not necessary before a taxpayer can avail of the 8-percent transitional input tax credit.

All that is required by Section 105 to avail of the refund or tax credit was for the taxpayer to file a beginning inventory with the BIR, the court said.