Eastern Telecommunications Philippines v. Revenue

MENDOZA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure assailing the April 19, 2005 Decision1 and the July 8, 2005 Resolution2 of the Court of Tax Appeals En Bane (CTA-En Bane) in CTA E.B. No. 11 (CTA Case No. 6255) entitled "Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue." The Facts Petitioner Eastern Telecommunications Philippines, Inc. (ETPI) is a duly authorized corporation engaged in telecommunications services by virtue of a legislative franchise. It has entered into various international service agreements with international non-resident telecommunications companies and it handles incoming telecommunications services for non-resident foreign telecommunication companies and the relay of said international calls within the Philippines.

In addition, to broaden the coverage of its distribution of telecommunications services, it executed several interconnection agreements with local carriers for the receipt of foreign calls relayed by it and the distribution of such calls to the intended local end-receiver.3 From these services to non-resident foreign telecommunications companies, ETPI generates foreign currency revenues which are inwardly remitted in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas to its US dollar accounts in banks such as the Hong Kong and Shanghai Banking Corporation, Metrobank and Citibank. The manner and mode of payments follow the international standard as set forth in the Blue Book or Manual prepared by the Consultative Commission of International Telegraph and Telephony.4 ETPI seasonably filed its Quarterly Value-Added Tax (VAT) Returns for the year 1999, but these were later amended on February 22, 2001, to wit: Quarter VAT Output Zero-Rated Sales Exempt Sales VAT Input Domestic Excess Input VAT