The court en banc affirmed the resolution of its First Division that the Bureau of Internal Revenue had no legal basis to collect the tax from Mysolid Technologies and Devices Corporation.
The BIR came out with the assessment after the Myphone cellphone manufacturer applied the unused input VAT of Mytel Mobility Solutions following their merger in 2012. The BIR disallowed the surviving firm Mysolid to use the unspent input VAT of the absorbed Mytel, saying it was not notified about the merger as required under Sections 235 and 236 of the Tax Code.Instead, the court cited in its 18-page verdict a provision in the Corporation Code that “all the rights, properties, and liabilities are acquired by the surviving corporation.”
It added that unused input VAT and other assets of the absorbed company belonged to the surviving corporation. It said the application of the unused input VAT was valid as the Securities and Exchange Commission had approved the merger in May 2012.