CTA Case No. 4948 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY RNSCOR HAGEDORN SECURITIES, INC.~ Petitioner, - versus - C. T. A. CASE NO. 4948 COMMISSIONER OF INTERNAL REVENUE, Promulgated : ( Respondent. JAN 301996~ )( - - - - - - - - - - - - - - - - - - - - - - - - - - )( DECISION This is a petition for refund of Rnscor Hagedorn Securities, Inc. in the a11ount of P87,S46.96 as erroneously paid value added taK for the first quarter of 1'391. Petitioner is a licensed broker/dealer of securities rendet~ing .services to and non-resident investors. Whenever it purchases shares of stocks in behalf of its non-resident clients, the latter �ake inward remittances. of fbreign currency in payment of the purchase price and commission due to ~etitioner. And when it sells shares of stocks, it remits to its foreign clients the proceeds net of commissions and taxes. 116

-~- I I / DECISION - C.T.A. Case No. 4948. - 2- During the fir~t quarter of 1991, that January 1, 1991 to March 31, 1991, petitioner earned of P2,G3G,034.95. On Ap�~i l 23, 1991, it filed its VAT return and computed the VAT due a~ follow~: Co��i~~ion lnco�e P2,G3G,034.97 Multiplied by 1/11 VAT Payable p 239,639.55 Less: Input TaK 6,086.08 P 233,5G3.47 For the sa�e quarter reported, petitioner derived broker's co��ission fro� buying and selling of shares of stocks for and in behalf of non-resident clients in the a�ount of P936,016.45. This a�ount was included in the total co��ission income of P2,636,034.95 thereby erroneously subjecting said brokers co��ission to 10~ VAT. Petitioner believe~ that it~ broker'~ commission income is subject to zero per cent <O~> rate of VAT pur~uant to Section 102 (a) <2> of the Tax Code- which provides: "Section 102. v.illuE>-added tax on salE> oF services - <a> Rate and .base of tax - There shall be levied, asse~sed and collected, a val~e added tax equipment to 10 percent of gross receipts derived by any person engaged in the sale of service~. xxx Provided that the following sales by VAT- registered pers~ns shall be subject to 0~: (1) X X X 117

DECISION - C.T.A. Case No. 4948. - 3- (2) Services other than those �entioned in the preceding sub-paragraph, the consideration for which is paid for in acceptable foreign currency which is remitted inwardly to the Philippines and accounted for in accordance.with the rules and regulations of the Central Bank of the Philippines. (3) )C )C >e" Upon ,~eal i zing that erroneous of VAT, on September 2G, 1991' petitioner filed a written claim for refund with the B.l.R. in the of P87, 54&. 9G, computed hereunder pursuant to Revenue Regulations No. 5-89. Thus: Commission income from P2,&3G,034.97 sale of services 9&3,016.45 Less zero-rated sale P1,673,018.52 of services p 152,092.59 Amount of Commission subject to 10% VAT VAT payable <Multiplied by 1/11> The alleged overpayment is arrived at as follows: VAT actually paid to BIR P23'3,63'3.55 VAT due under RR 5-87 152,092.59 Overpayment p 87,546.'36 Petitioner's claim remains unacted upon up to January 22, 1993, the date of filing the instant petition for review with this Court. ln his answer filed on February 11, 1993, respondent raised the following as his special and affirmative defenses: 118

DECISION - C.T.A. Case No. 4948. 4- "1. Petitioner's claim for tax credit/refund is still pending investigation. administrative 2. The alleged zero-rated sale of services performed by the petitioner is not substantiated by proper documents. 3. Petitioner has not shown that the taxes allegedly to be refunded have been withheld by or re�itted to respondent. Even granting arguendo that said taxes have been withheld by or remitted to respondent, the presumption is that they were collected in accordance with law and existing regulations. 4. Petitioner must show compliance with the provisions of Section 204 in relation to Section 230 of the National Internal Revenue Code, as amended. 5. Since a claim for tax credit/refund partakes of the nature of a tax exemption, said claim is construed strictly against the cl~imant <Resins, Inc. vs. Auditor General, 25 SCRA 754>." The facts of the case at bar fall squarely with the facts of CTA Case Nos. 4657 and 4785 involving claims for refund/tax credit also of petitioner for erroneously paid value-added taxes for the taxable years 1989 and 1990, respectively. Naturally, it follows that the sa�e issues resolved by this Court in said cases will also be tackled in the instant case. The issues are as �entioned below: 1. Whether or not petitioner's co��ission income qualify for the zero rate of VAT; and 2. Whether or not the requirements for claim for t~efund have been complied with by petit i oneJ~. 119

DECISION - C.T.A. Case No. 4948. - 5- Pt.n~suant to 2 sub-pal~agl~aph of Section 102 (a), there are three (3) with in order to qualify for the zero percent <O~> of VAT. These are: 1. The considet~ation for their services rendered is acceptable foreign paid for in ct..n~,~ency; 2. The foreign currency is remitted inwardly to the Philippines; and 3. The re�ittance �ust be accounted for in accordance with the rules and regulations of the Central Bank of the Philippines. To co�ply with the above require�ents, petit i onet~ for�ally offered as its evidence the following docu�ents, to wit: Exhibits Nature Description "A" to "A-52" Petit i one�~' s Sales To prove that fot~ tht> 1st Invoices for the 1st q-.sart t>r 1991, petit i one,~ Qt.~artt>r 1991 effecting sold, thro\sgh tht> I'Jakati tht> salt> of shart>s of Stock Exchangt>, tht> stock ownt>d by its shart>s of stocks owned by fort>ign clients its foreign clients tht~OII.tgh tht> Makati Stock Exchange "B" to "B-~3" Petit i onet~' s. l='urchase To pl~ove that for tht> 1st quaJ~t .;,~ 1991 pt>t it i ont>J~ Invoices for 1~t bo11.tght shaJ~es of stocks Qll.tartt>r 1991 effecting at the Makati Stocks purchases of stocks in Exchange for tht> acco\mt of its foreign clit>nts the Kakati Stock Exchange for its foJ~l"i gn eli ent s 120

DECISION - - 6- C.T.A. Ca5e No. 4948. Description Exhibits "C" to "C-3&" Bank Credit Advices To provP that for on foreign exchange services rendered re�ittance to petitioner receivPd as petitioner for the co�pensat ion US doll al~s 1st quarter 1991 re�itt~d through thP banking systP� and accountPd for in accordancP with CB Rules and Regulations "0" to "0-23" CB FEOU For�s To prove that petitioner No. 1 (May 1'3, 1'386) filed with the Central acco�plished and filed Bank the sale of by petitioner with the Philippine stocks to CB for its purchases non-residents and was of stocks for its granted authority to foreign clients for transfer outward the 1st se�ester, 1'3'31 cor�respond ing stock certificates to its foreign clients "E" to "E-38" CB's Authority To prove that the CB allowed certain banks to allowing certain banks r�e� it foreign cur�rency to non-r�es ident clients of to re�it foreign petitioner currency "F" Petitioner's VAT To prove that petitioner Registration Certifi is a VAT register�ed cate No. 32-'3-000381 enterprise "G" to "G-2" Petitioner's 1st se�., To prove that petitioner 1'3'31 VAT r�eturn filed on April 22, 1'3'31 its VAT l'!it '!ie�. 1'3'31 r�eturn� To pl~ovP that petitioner declared as nPt payable as VAT output tax the su� of V233,553.49 which included co��issions it earned on the sale and p\trchases of stocl�s. ftw 121

DECISION - C.T.R. Case No. 4~48. 7- Exhibits Nature Dt!s~:Tiption its. foJ~l'i gn eli �>nts. which Wl'J~l' paid in f oJ~l'i gn curr�>ncy re�itted in th�> banking s.ys.te� and acco1.mt ed f oJ~ in accordanc�> with CB Rules and R�>gulations "G-3" CB Confir�ation To prove that petitioner Receipt No. paid the su� of 822471156 in the su� P2JJ,SSJ.47 as its VAT of P2JJ,SSJ.47 dated output taM for lst se�,. 4-22-'31 in the 1'3'31 petitioner's na�e "H" to "H- J" Petitioner's clai� for To prove that on refund dated 25 Septe�ber 26, 1'3'31 Septe�ber 1'3'31 signed petitioner filed its by R. F. Yap and E. B. c1ai� for ref�Jnd of Pal�aria (2) pages overpaid VAT for 1st quarter 1'391 with the BIR Appellate Division <pp. 56-5 7 CTa records) A careful perusal of the above�entioned docu�ents sub�itted as evidence, revealed that petitioner received inward re�ittances of foreign currency only in cases where petitioner bought shares of stocks for its non- resident clients. It did not receive inward reMittance of foreign currency, whenever it sold shares of stocks owned by its non-resident clients. In cases of sales, it was petitioner who re�itted abroad to its non-resident clients the proceeds of its sales paid for in local c�J.rrency, net of its co�mission Pursuant to 122

DECISION - C.T.R. Case No. 4948. - 8- Section 8 (c) (3) of Revenue Regulations No. 5-87, commission income fro� said sales which are paid for in local currency shall not be subject to zero rate but to 10~ rate of VAT: Thus, the law provides: "Section 8 - Zero-,~ating <a> In general. - >< >< x (b) Zero-rated sale of goods. - >< >< >< <c> Zero-rated sale of services. The following services rendered by VAT registered persons are zero-rated : (1) X XX (2) X X X (3) Services perforaed in the Philippines other than those �entioned in subparagraph (1) above which are paid for by the person or entity to whom the service is rendered in acceptable foreign currency inwardly re�itted and duly accounted for in accordance with Central Bank regulations. Where the contract involves pay�ents in both foreign and local currency, only the service corespondent to that paid in foreign currency shall enjoy zero- rating. The portion paid for in local currency shall be subject to VAT at the rate of 10~. (d) >e><><" <Underscoring supplied> As hereinbefore stated, sales of securities by petitioner do not qualify for zero rate of VAT for two (2) reasons. First, their proceeds were not paid for in foreign currency, but in local currency. Second, such proceeds were not inwardly remitted, but were remitted abroad to its non-resident clients net of petitioner's 123

DECISION - C.T.A. Case No. 4948. - 9- commission income. Such sales of securities were covered by various invoices, details of which are as tabulated hereunder: SALES OF SECURJTJES .,n 0 i c e Allount� No. D.lte Securit, C.. inion llqtharized for Sold Client Jncoae hh. Outward ~�ittancr Ellh. 0022089A 01-02-131 Ja1es Cape I (fEI San Miguel -8 8,888.66 A J, 537,687.68 E 00221S1A Ol-o6-91 Berludoi Phil. Lrpanto Con!". tlhg-B 7,875..00 A-1 S1S,81Z.50 long-Trra Equity 37.50 A-2 �7,443. 75 E-1 OOZZ160A 01-09-91 Baring�Srcuritirs Phil. Rlty &Hldg!". B OOZZZ01A 01-17-91 TyJidiiJJ Pacific 84,645.00 A-3 5,~,247.50 E-2 OOCZZ16A OJ-17-91 TpdaJJ Pacific Phil. Nat' 1 Bank 9,660.00 A-4 &JZ, 130. 00 E-2 OOCZZJJA 01-18-91 Tp~MJJ PK-ific San "igurl - B 57,750.00 A-S oc.lZZZZM 01-21-91 l pdaJJ Paci he Salt "igurl - B 51,264.00 A-6 3, 782,625.00 E-3 00lZ207A 01-.18-91 Jiat!". CaprJ lFEJ Sill� ~gurl - B 3,357, 792.00 E-3 OOCZZ46A 01-24-91 lpdaJJ Pacific Phil. Nat' 1 Bank 90.00 A-7 ~ 01-25-91 l,_JJ Pacific 1,505.40 A-8 17,865.00 E-4 tWZ251A 01-25-91 Jaar!". Caprl lFEJ Phil. Rlty &Hldg!". B 19,448.ZS A-9 98,603.70 E-5 OOZZ262A 01-28-91 Jaars Caprl lFEJ 2,545.00 A-10 1' l73, 1160. 37 E-5 OOZZZ86A 01-30-91 Jatf!; Caprl lFEJ Si1JJ "igurl - B 5,928.75 A-ll 505,182.50 E-6 OOCZZ7~ 01-~91 latr!"o Capt) (FEJ Jlrtro Drug - B 1Z,~OO A-12 1,176,15.87 E-6 "'tro Drug - B 2,446,S1Z.50 E-7 002Z171A 01-1o-91 Baript Srcuritirs �tro Drug - B 233.75 A-13 46,~37 E-7 OOZZ301A 01-31-91 T,..Jl First Jlrtro Drug - B 4,950.00 A-14 9BZ, 575.. 00 E-8 Salt "igurJ - B Phil. 1�'� lru!".t 53,700.00 A-15 3,517,350.00 E-9 91 FUJid - B 00i?Zll7A 02-ol-91 Tpdall First 49,4ZS.OO A-16 3,237,337.50 E-9 Phi). )BY. lru!"ot 91 FUJid- B 13,717.50 A-17 2,722,923.75 E-10 Robins� lillld - B 2,153.50 A-18 002ZZ87A 01-30-91 Jaars Caprl lFEJ Robinson lillld - B 7,594.00 A-19 4l7,469.7S E-JJ OOZzml 01-31-91 Jaars Caprl lFEJ Robin!".Dn liiJJd - B 15,606.00 A-ZO 1,507,409.00 E-ll OOZZ31SA or-01-91 Jaars taprl lFEJ Siwt "igurl - B Z,007.50 A-ZJ 1,0ZZ,193.00 E-12 OOZZZZ!Il 01-22-91 lpdaJJ Pacific ~pprl PhiJs.. - B 6,0!a00 A-22 002ZZ9M 01-30-91 S.itb.., Cturt Robin!".PA laRd - B 198, 9lt). 00 002Z326A or-04-91 Jaars Caprl lFEJ 39,600.00 A-23 J,Z10,453.00 E-13 002Z~ ~91 l,..JJ Fir!".t 91 Fund- B 109,687.50 A-24 2,593,800.00 E-14 Phil. lnv. lru!".t 91 FUJid- B 8,337.50 A-ZS 00i?ZJ19A 02-4)7-91 Tfl'd.lll First San "igurl - B Z,850.00 A-26 7, J84,53J.ZS E-15 lrp;llnto C..!". tlhg -B 10,800.00 A-CI 1' 654, 993. 7S E-16 Phil. JnY. lru!".t Robin!".� liiJJd '"B'" JJ,96Z.50 A-28 OOZZ382A 02-07-91 Stitb ... Cturt RobinsDn liiJJd '"B" 565,725.00 E-17 00f!Z40M Ol-08-91 Jaar!". Caprl lFEJ OOlZ~ ~20-91 Ja~rs Caprl lFEJ z, 143,800.00 E-18 (l(tZZS(I3A or-21-91 Jaars Caprl lFEJ Z,374,556.ZS E-19 124

DECISION - C.T.A. Case No. 4948. - 10 - Allount� nvoice Security Co11i'SSion Authorized for Sold No. Date )JICOIP Ellh. OutNiiMI RP1iUant'r bh. 0022SJ2A 02~-91 Jaus Capel (fEI Robinson land �a� &w289.00 A-29 1161tS.J66.SO E-19 0022Sfi2A Jues Capel (fEI 11 750.00 A-JO Jlt7,l7S.OO E-iO 002257SA 02-26-91 Jaus Capel (fEI Phil. Nat' l Bank l6w812.SO A-ll 0022576A 02-27-91 Ja1es Capel (fEI Phi 1. Nat' l Bank Sw 129. SO A-32 J.JJ71C!&l.ZS E-iO 0022517A 02-27-91 Baring Securities 2,577.\\ A-JJ l1 0l8w205. 7S E-iO 0022SJ6A 02-21-91 Baring Securities Robinson land �a� 0022S16A 02-22-91 Baring Securities 27\,70 A-l\ 511,613. 90 E-21 0022S8SA 02-21-91 Jaus Capel (fEI Phil. Rlty &Hldgs B 82.SO A-JS S\1Si!7.9S E-21 0022610A 02-28-91 Hoare Govett Phil. Rlty &Hldgs 8 601898.00 A-.16 16wl7'-ZS E~ Jaus Capel (fEI 11800.00 A-l7 lit, 7S6.S6S.SO E-2.1 ~ Ol~-91 Credit Lyonnais Anglo-Phil. Oil 6wl%.ZS A-J8 JS71 JOO.OO E~ Credit Lyonnais S\1 1ZS. 00 A-39 1,269,655.62 E....ZS 0022601A Ol-o1-91 Ja1es Capel (fEI San Miguel - B 12,651.60 A-\0 0022617A Ol-o1-91 Jaus Capel (fEI 6w 000. 00 A-41 10, nJ.812.SO E-ai 0022657A Ol-o\-91 Baring Securities Belle Mng &Oil-8 7, ~J. 76 A-42 2, 511, Jlt2. 60 E-ai 0022678A Ol-o7-91 Jaus Capel (fEI 8w 2SO. 00 A-4l 1,191,000.00 E-27 0022668A Ol-11-91 Baring Securities San Miguel - 8 9, 7SO. 00 A-4\ l,J98w 186..16 E-ai 002272ftA OJ-o&-91 Ja1es Capel (fEI San Miguel - B 2, 750. 00 A-45 1,637,625.00 E-29 0022681A OJ-l\-91 Jaus Capel (fEI San Miguel - 8 717.SO A-46 1,9JS. llS. 00 E-JO 002269JA Ol-11-91 J.a~es Capel (fEI Sani..ares Mfg Corp. 5,~.oo A-47 0022691A Ol-12-91 Credit lyOCtuis Jardine Davies 1,625.00 A-48 S\Sw87S.OO E-ll 00226':Bl OJ-12;..91 HNre Govett San Miguel - 8 12. SOO. 00 A-49 OJ-12-91 JoiHS Capel (fEI Sani..ares Mfg Corp. 90.00 A-SO 1ft2w lt2J. 7S E-J2 00228Ql OJ-ai-91 ~ Govett San Miguel - 8 28.20 A-51 l,OOO.W)..OO E-32 OJ-�i-91 PLOT- C l,ltSO.OO A-Si! 0022626A OJ-ai-91 J2l..:R.SO E-JJ OJ-18-91 Jardine Davies 8?8,71'-26 2.1t81,2SO.OO E-llt ~71)7A Petrofield EKpl.-8 ~7\lA 17,865.00 E-JS Ayal� Corp. -8 S.S'J7. 70 E-.16 Belle Mng & OH-8 6�1t,8i!S.OO E-l7 8?, 820, 16~ 12 Ph H. Mat' l Bank Belle Mng &Oil-8 On the other hand, only the co�mission inco�e, derived from petitioner's purchase of securities, which qualifies for zero rate of VAT. The reason is obvious. The commissions are paid for in foreign currency inwat"'dly remitted to petitioner. Said purchase of securities transactions were also covered by various invoices whose details are listed hereinbelow: 125

DECISION - C.T.A. Case No. 4948. - 11 - PlJilRiE lF ~IT lES n' oi c r Smlrity Couission Aaoum JJJNardly Purtflasrd No. htr ]JIClllf Ellh. Rnittrd Ellh. 001~500 01-G2-91 J...n Cipel (fEI San Mi!rJel-8 0.888.66 8 J. 564, JSJ. 66 c 001'lo\66A 01~-91 Ja~es Cipe1 (fEI Si~e Oorbv lnt l Tire z..~.~ 8-1 4'l8,560.~ C-l 0019461A 01~-91 Ja~n Cipel (fEI San Mig�~e 1-8 2, 'JS6. ')8 8-2 5941 JSl. ')8 C-1 001~ 01~-91 Ja~es Cipe1 (fEI Ara1a Prop. llen.-8 89.60 8-3 1&.001.60 C-1 001'MC!A 01-G7-91 J.-es Cipe1 tFEI Ara1a Prop. lien. -8 652.80 B-It 131,212.80 C-2 001CJ49JA 01...00-91 Ja~es Cipe1 (fEI Si1e Darby lntl Tire 16.~ 8-7 3,2%..~ c-s 001'li15A 01-"-91 J.-es Cipel tFEI Si�e Darby lat1 Tire JO.OO 8-t G.OJO.oo c-s 001'3SOSA OHQ-91 Ja1es C.pel lFEI Arala Prop. Yen. -8 610.00 8-9 122,610.00 C-6 001'mA 01-10-91 Ja~es Cipel tFEI llhilea Mi.ning Corp-8 %.00 8-10 19,2%.00 C-1 001CJ491A 01...00-91 Ja~es Cipel (fEI Ayala Prop. Yen. -8 001~1CJ9A 01-G9-91 Ja1es C.pel (fEI Afala Prop. Ven. -B 11557.60 B-11 313,077.60 c-a 1,197.00 8-12 2~,:m.oo c-e 00194~ 01-o&-91 Ja1es C.pel (fEI Philex Mining Corp-8 637.50 8-13 120.137.50 C-'1 0019SOOA 01-G'l-91 Ja1es Cclpel (fEI Philex Mining Corp-8 930. 7S 8-14 187,000. 7S C-9 0019529A 01-17-91 Baring Securities Phil. Nat1 1. Bank 29,284.85 8-15 5,886,254.85 C-10 001~ 01-21-91 &.ring Securities Phil. Nat'l. Bank 2,246. 90 8-16 451,6Z6. '10 C-11 00l%66A 02-G7-91 Jaus C.pel (fEI Cebu Shipyard-�&� 71200. 00 8-20 1,447,200.00 C-14 001972'Jl 02-11-91 Ja1es C.pel lFEI PLOT - C 1,286.25 8-21 258..536.25 C-15 0019601A 02-20-91 Baring Securities PLOT - C 10,177.75 8-23 2,045,727.75 C-17 0019800A ~-20-91 Baring Securities Robinson Land �9� J. 225. 00 8-24 64&.225.00 C-17 00199100 02-GB-91 Jaus C.pel (fEI San Miguel - 8 1J.37S.OO B-25 S.J63.37S.OO C-18 001991SA 02-28-'U S1ith Net~ Court San Miguel - 8 40, lC!'S. 00 8-29 0.065,125.00 C-22 0019927A OJ-G1-91 Baring Securities San Miguel - 8 16,385.13 8-JO J.29J.U0.13 C-23 0019949A 03-G4-91 Baring Securities San Mi!l"el - 8 l0,19e.OO 8-31 2, 04&. S'R. 00 c-24 001m<JA 03-QS-91 Tyndall First Phil. lnv. Trust San Migurl - B &8,913.00 B-32 4,663,Jl3.00 C-25 0019963A 03-06-91 Jaars Capel IFEJ Phil. Nat'l. Bank 3,624.13 B-33 728,41J9.13 C-Zb 0019991A 03-Jl-91 S1ith Nrw Court Jardinr Da�irs 7,056.00 B-34 1,418,256.00 C-Z7 OOZ001ZA 03-12-91 S.ith lllrw Court Jardi�r DaYirs 5,~0.00 B-~ 1,013,~.00 C-28 00200e5A 03-12-91 Baring Srcvritirs Sim "igurJ - B 1,0&8. 75 B-36 214,818.75 C-29 3,990.00 B-31 OO'i'(I(51A 03-13-91 Baring Srcuritirs San MigurJ - B J, 971J.OO B-39 801,990.00 C-30 OOZOO'!JIJI 03-15-91 Baring Srcvriti rs Sim MigurJ - B 3'9Eo, n4.00 c-32 002011ZA 03-18-91 Baring Srcuritirs Sim "igurJ - B 58..00 B-40 ll,658.00 C-33 002017ZA 03-25-91 Bariag Srcvritirs Sim "igurJ - B 250.75 B-41 002013\A 03-2'0-91 Bariag Smlritirs Sim MigurJ - B 857.73 B-42 50, 400.75 c-34 205, sez. 73 c-35 (JQ2(tCJOA 03-Z7-91 Jurs Capel IF�) Robinson Lilld "B" 7,238.50 B-43 1,454, 938.50 C-36 ?S3. 712.43 ~?'U,707.4l Based on the foregoing segregation of co��ission income, derived from sales of securities and those earned from purchases of the same, the Court recomputes the refundable output tax in the following manner: 12G

DECISION - C.T.A. Case No. 4948. - 12 - Co~�ission inco�e fro� P2,636,034.97 sale of sel~vices 253,712.43 Less : sale of services subject t o zero-J~ating P2,382,322.54 1/11 Amount of commission income subject to 10~ VAT p 216,574.78 233.553.47 Multiply by VAT payable <P 16,978.69> Less payment <Exh. "G-3") Refundable out tax VAT was not billed separately in the invoices. The Court did not include in the above co�putation, the documents which were denied in its Resolution dated January 6, 1995 ( p. 65, CTA >. recot~ds These were described in petitioner's formal offer as Bank Credit Advices on foreign exchange <p. 56, CTA records> , and were marked as Exhibits "C-3", "C-4", "C-16", "C-19", "C- 20", "C-21" and "C-31 ". Thus, commission pertaining to these inward remittances and covered by petitioner's purchase invoices marked as Exhibits "B-5", "B-6", "B-22", "B-27", "B-28" �and "B-38" cannot be allowed for zero-rating of VAT. Also excluded from the computation were the commission incoae from Exhibits "B- 17" and "B-2G" which al~e not legible. Likewise excluded was Exhibit "B-18", "which has no proof of inward re�ittance. To recapitulate, therefore, on the first issue, only the sale of securities transactions in the total amount of -P253,712.43 qualified for the zero percent rate of 127

DECISION - C.T.R. Case No. 4948. - 13 - VAT. And after applying the formula or computation earlier presented, only the amount of P16,978.G9 maybe allowed as refundable output tax. We now consider the second issue which deals on whether or not the requir~�ents for claim for refund have been complied with by petitioner. It is beyond question, that petitioner is this case has substantiated its claim although only to the limited amount found by this Court as refundable. Related to the second issue is the special and affirmative defense of t~espondent, stating that "petiti~ner must show compliance with the provisions of Section 204 in relation to Section 230 of the National Internal Revenue Code, as amended�. Section 204 of the Tax code speaks of the filing of a written cla~m for refund with the BIR within two years from the date of payments of the tax. While Section 230 talks of the filing of judicial claim also within two years from the date of of tax. As We have repeatedly emphasized, in Our decfsions on similar cases/claims for refund of petitioner, involving facts and issues identical to the case at bar, the Court begs to disagree with respondent everytime the latter asserts that the two-year prescriptiv~ period should be counted from the 128

DECISION - C.T.R. Case No. 4948. - 14 - dates of payment, as mandated by Section 230. consistent with Our stand that it should be Section lOG (b) which should apply as this case involves refund of VAT on zero-rated sales. Said law provides: "Section 10&. Rerunds or tax credits or input tax. - (a) Export Sales. - xxx (b) Zero-rated or effectively zero-rated sales. Any person, except those covered by paragraph (a) above, whose sales are zero-rated or are effectively zero-rated, may within two years after the close of the quarter when such sales were �ade, apply for the issuance of a tax credit certificate or refund of the input taxes attributable to such input tax has not been applied against output tax." <Underscoring supplied> Going back to the list of invoices covering purchase of secc..trities, it will be noted that all the payments were made during the first quarter of 1991, that is from January 2, 1991 to March 27, 1991. For this quarter of payments, the two-year period commenced from April 1, 1991 and expired on March 31, 1993. The ad�inistrative claim in this case was filed on September 26, 1991, while the judicial claim was filed on 1993. Obviously, the two dates of filing the clai� were well within the two year prescriptive period of April 1' 1991 to March 31, 1993. The payments therefore, that were found qualified for zero rate of VAT, did not prescribe. 129

DECISION - C.T.A. Case No. 4948. - 15 - WHEREFORE, in view of all the foregoing, clai� fol~ refund is GRANTED but only in the amount of P16,978.69. Respondent is hereby ordered to REFUND to petitioner the said amount of P16,978.69 as the latter's erroneous payment of ten percent value added tax for the first quarter of 1991. SO ORDERED. f__.c- lQ. Q.voc-A_ ERNESTO D. ACOSTA Presiding J1,1dge WE CONCUR: GRUBA Judge 130

---------- ---- DECISION - C.T.A. Case No. 4948. - lG - CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 181 Article VIII of the Constitution. g_ ..i;. ;) ... ~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 131