THE Supreme Court (SC) has ruled that the two-year period to claim a refund for erroneously paid value added tax (VAT) starts from the date the taxpayer actually paid the tax to the Bureau of Internal Revenue (BIR), and not from when the supplier remitted it.
The SC First Division made the ruling as it held that Melco Resorts Leisure is not entitled to an P81 million VAT refund from the government.
The SC division decision was promulgated on April 2, 2025 through Associate Justice Ramon Paul Hernando.
Court records showed that Melco, which operates casino games allowed by the Philippine Amusement and Gaming Corporation (Pagcor), as well as tourist facilities, filed the claim in 2017 seeking a VAT refund collected from its gaming revenues for the first quarter of 2016.
In filing its claim, Melco said the VAT was erroneously passed on to them.
The BIR denied the claim, prompting the company to elevate the case to the Court of Tax Appeals, which affirmed the BIR’s ruling.
The CTA also held that it was unclear if Melco filed the claim within the period required by law.
After losing its case with the tax court, Melco elevated the matter to the SC.
In its ruling, the High Court held that Melco filed its refund claim on time, saying that the two-year period should be counted from the date it actually paid the VAT and not from when its suppliers remitted the tax to the BIR.
“The CTA did not err in ruling that Melco was not entitled to the refund or the issuance of tax credit certificate in the total amount of P81,119,005.84. Applying the law and jurisprudence, Melco’s payment of the said amount was not erroneous and illegal, hence, not refundable. Instead, such payment represented and formed part of the purchase price it paid to its suppliers,” the SC held.
“However, the CTA erred in ruling that Melco failed to timely file its administrative and judicial claims for refund and in reckoning the two-year period from the date of payment to the BIR of the VAT passed on to Melco by its suppliers,” it said.
“Melco Resorts Leisure Corporation timely filed its administrative and judicial claims for refund,” it added.
The SC explained that while Melco is a VAT-exempt entity, its transactions with its suppliers are not considered zero-rated or effectively zero-rated sales under the Tax Code.
