CTA Case No. 5219 (Decision)

REPUBLIC OF THE PHILIPPINES COURT Of TAX APPEALS QUEZON CITY ... TOWA INUUSTR Y, INC. , Petitioner, - v er s us - C.T.A. CASE NO. 5219 COUUISSIONEH OF INTERNAL ProMuIga�ted a REVENUE, MAY 1 3 199 Respondent. X- l:.)EC IS ON Before Us Is a petition seeking for a refund or '. Issuance of a tax oredlt certificate In the amount of P1,873,093.35 representing alleged excess credita ble VAT Input taxes covering the pe r iod J a nuary 1, 1993 to fJeoembet' 31, 1994. lhe antecedent facts of the case are as fol lows1 Petitioner i s a VAT and HOI-registered domestic corporation organized and existing under the laws of the Aepubl lc of th e PhiI ip plnes . On March 10, 1995, peti t ione r fl led Its amended quarterly VAT r e t u r n s for the following perlodsc Period Covered CuMulative Creditable Jnput Tax ----- - P1 o-t, 696. 96 January 1 to March 31, 1993 364,186.90 Apr I I 1 to June 30, 1993 Subsequently, on March 23, 1995, petitioner fl led the f ollow i ng additional aMended qua r t erly VAT returnsc 482 U' -- -- - -- -------- ---

DECISION C.T.A. CASE NO. 5219 -2- Pe r i od Cov e r e d Cu�ulatlve Creditable Input Tax July 1 to Sept ember 30, 1993 p 530,088.48 October �t to December 31, 1993 568,628.50 January 1 to Maroh 31, 1994 845,561.28 Apr I I 1 to June 30, 1994 July 1 to September 30, 1994 1,115,590.51 October 1 to December 31, 1994 1,428,427.67 1 '8 ., 3' 093. 36 Being a zero-rated taxpayer, petit i one r Incurred no VAl output as all its s a le s were export sales, res u lting to a total creditable VAr Input of P1,873,093.35 for the period January 1, 1993 to (Jeoember 31, 1994. On Maroh 2 7, 1996, petitioner filed Its appl loation tor tax credit/refund of the aforestated cumulative VAT Input payments with the Tax and Revenue Group of the One- Stop-Shop Inter-Agency lax Credit and Duty Drawback Center of the Department of Flnanoe. <Exhibit "A") Considering that the two-year period m andat e d by law under Sections 204 and 230 of the Tax Code Is about to expIre, InactIon of the respondent on the aforementIoned olalm prompted the petitione r to fl le the Instant petition before Ue on Maroh 31, 1995. On July 10, 1996, respondent's o ounsel manifested In o o urt that a partial refund had already been granted and furnished the petitioner with a oopy of the l etter of the Department ot Flnan o e, dated January 17, 1996 (p.82, CTA reo.>. addressed to the C ommis s ioner of Cust oms on the &41d approval of olaiM for refund. This faot urged the 4G3

DECISION C.T.A. CASE NO. 5219 - 3 -- petitioner to fl Je a Manifestation and Motion for leave of Court tor the Admission of Amended Petition for Review on August I, 1996 Cpp. 78-80, CTA reos. l for the purpose of impleading the Commissioner of Custon1s as an indispensable party to the oase considering that he Is the pe r so n who has the authority to Issue the tax oredlt oertifloate and therefore necessary to a OOtllp I ete de t erm I n a t I on o r� s e t t I em e n t of the q u e s t I ons I nvo I ved In the oase. On August 30, 1996, this Court through a Resolution Cp. 111. CTA reos.) denied the foregoing motion flled by the petitioner on the ground that" "x x x In the original petition for review, as wet I as In the amended petition tor review, the amount be ing prayed for to be refunded Is the same wi tho ut taking Into consideration the tax credit already granted to the petitioner by the r e s ponden t Commissioner of Internal Revenue, the balanoe that stl 1 I has to be I ltigated and the portion of the olalm that pe r t ain s to the Bureau of Customs. On September 23, 1996, respondent tlled a Motion to OlsRi j ss (pp. 113-115, CTA reos.) on the ground that the olal for refund had already been approved and granted by the respondent In the amount of P1,606,651.02, computed as f o I I ows a

DECISION C.T.A. CASE NO. 5219 -4 - DoMestic lllportatlons Purchases Amount of Claim P1,421,368.03 P451,725.32 P1,873,093.35 Add: Output P1,421,368.03 P45 1 , 7 2 5 . 32 P1,873,093.35 raxes App I i ed Less1 '� 0 Isal I owed I nput Taxes 201 , 15 . 16 65,227.17 226,442.33 Refund 220, Appi'OVed 152.87 �'3 8 6,49 8 . 15 P1 ,606,651.02 Respondent further maintained that the Bureau of Internal Revenue already Issued TCC SN 006137 In the amount ot P1,220,152.8"1 (p. 150, BIR recs. > and with respeot to the taxes paid on importations, the Bureau of Customs has the authority to Issue the tax oredlt thereon. And slnoe the principal Issue of the case has become moot and academia, the case must be dismissed. Petition er fl led an Opposition to Motion to Dismiss on October 3, 1996 (pp. 117-122, CTA recs.) arguing that since petitioner's olalm for refund has not been fully satisfied as a result of dlsallowance of a portion of Its creditable value added tax I n put In the amount of P226r,442.33, the motion to di smiss Ia d ev oid of Merit. This court resolved (Resolution, pp.124-125, CTA reca. > to deny the Motion to Dismiss tlled by the respondent on the ground that since there was only prtlal grant of the ref und request e d , the case should 4Ct5

DECISION C.T.A. CASE NO. 5219 -6 - eubalstwlth regard to the Input taxes disallowed by the respondent In the total amount of P266,442.33. Considering alI that transpired during the trial of this case, the lone Issue tha t remains to be resolved Is whether or� not the petItIoner� is entitled to the unapproved balance of c la im for refund a mount i n g to P266,442.33. After oarerul examination of the evldenoes presented by the petitioner before this Court, We are oo nvln oed that the said olalm for r�etund should be denied . t/rax refunds ar'e in the nature of tax exempt Ions. As suoh, they are regarded as In d erogation of sovereign authority and to be construed l!_tr.!_ot/ssimi juris ag a inst the person or e nt i ty olalming the exemption. The burden of proof Is upon him who oialms the exemption In his favor and he must be able to justify h i s olalm by the olearest grant of organlo or statute law and oannot be permitted to exist upon vague lmplloatlons <Aetatlo PetroleuM Co. v. Llanes, 49 Phil. 466; Northern Phil. T obao oo Corp. v. Uun. of Agoo, La Union, 31 SCRA 304a Reagan v. CoMMAsaloner, 30 SCRA 968; Asturias Sugar Central, lno. v. CoMMissioner of CustoMs, 29 SCRA 6171 Oavao Light nd Power Co. I no. v. CoMMissioner of Cuat,OMs, 44 SCRA \ / 122).Thus, when tax exempt I on Is _ otalmed, It must be shown undubltably to exist, for e very i 486 I \

�' DECISION C.T.A. CASE NO. 5219 -6- preaum tlon Is against It, and a wei I founded doubt Ia fatal to the olalm (Farrington v. Tennessee a Country Shelby, 95 U.S. 679, 686; Manila Eleotrlo Co. v. Vera , L- 29987, Oct. 22, 1975; M an i l a Eleotrlo Co. v. Tablos, l- r, 23847, Oct. 22, 197b, 67 SCRA 351). In the case at bar, petitioner failed to prove and �, substantiate the amount of Its input tax otalm, tor It merely presented its Amended Value Added Tax Returns for the quarters ooverlng the period January 1, 199a to December 31 , 1994, where the amount of cumulative creditable Input taxes ar e reported. It did not submit In Cour-t the Invoices, official receipts or ot h er documents corresponding to the Input taxes claimed whloh would have served as basis for the refund/credit. WHEREFORE, In view of aI I the foregoing, petitioner 's olaim for Issuance of tax oredlt oertlfloate or refund for the unapproved balance of P266,442.33 Is hereby DEN IED tor laok of merit. No pronouncement as to oosts. SO ORDERED. -Q__ ERNESTO D. ACOSTA Presiding Judge 1 4.G'( i ' i

DECISION C.T.A. CASE NO. 5219 - 7- WE v:: l, V'A HAMON 0. DE As soc I ate ,Jud.J' I t- C E A ..�.. I F I C A �r I 0 N hereby oertlfy that this deolslon was reached aft$r due consultation among the members of the Court of Tax Appeals In accordance with Section 13, Art tole VI I I of the Constitution. - m - ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 48E