CTA Case No. 5192 (Decision)

REPUBLIC OF TH E PHILIPPIN ES COURT OF TAX APPEALS QUEZON CITY SAKAMOTO ORIENT CH EMI CALS CORPORATION, Petitioner, - versus - C.T.A. CASE NO. 5192 COMMISSIONER OF INTERNAL REVENU E , Respondent. X- - - - - - DECISION This is a petition seeking for the refund of the amount of P385,340.55 allegedly representing unutilized input tax payments made during the year 1993. The facts of the case are as follows: Petitioner is a corporation duly organized and existing under and by virtue of Philippine laws. It is registered with the Bureau of Internal Revenue as a VAT taxpayer under VAT Certificate of Registration No. 32-9- 004698 (Exhs. A and S). Likewise, it is duly registered with the Board of Investments (BOI) as a non-pioneer export producer of refined glycerine under BOI Certificate of Registration No. EP 88-872 issued on December 27, 1988 (Exh. B). For taxable year 1993, petitioner filed its q u arterly VAT returns as follows:

DECISION - C.T.A. CASE NO. 5192 - 2- Period Covered Date Input Tax Exh. Filed Payments D Jan.-Mar. 1993 4-20-93 .p 87,390.99 E Apr.-June 1993 7-20-93 177,678.46 F July-Sept. 1993 10-20-93 41,355.82 G Oct.-Dec. 1993 1-20-94 46,947.62 On the basis of Sections 100 and 106(a) of the Tax Code, to wit: 11 SECTION 100. Value-added t:ax on sale o t= goods. (a) Rat:e and base of t:ax. There shall be levied, assessed and collected on every sale, barter or exchange of goods, a value-added tax equivalent to 10% of the gross selling price or gross value in money of the goods sold, bartered or exchanged, such tax to be paid by the seller or transferor: Provided, that the following sales by VAT-registered persons shall be subject to 0%: (1) Export sales. x x x." 11 SECTION 106. Re t=unds or t:ax cred.i t:s o t= .input: t:ax. (a) Export: Sales. - An exporter who is a VAT-registered person may within two years from the date of exportation, apply for the issuance of a tax credit certificate or refund of the input tax attributable to the goods exported, to the extent that such input tax has not been applied to output tax and upon presentation of proof that the foreign exchange proceeds has been accounted for in accordance with the regulations of the Central Bank of the Philippines. x x x " , petitioner, on August 23, 1994, filed with the BIR a written application for the refund of the amount of P-385,340.55, representing its unutilized input VAT for the year 1993 (Exh. Z). As t h ere was no immediate action on the said claim, the instant petition was filed on

DECISION - C.T.A. CASE NO. 5192 - 3- February 2. 1995 to toll the running of the two-year prescriptive period. In her Answer, respondent raised the following Special and Affirmative Defenses: 5. The petition states no cause of action as it does not allege the date/s when the taxes sought to be refunded were actually paid. (Manufacturer's Bank and Trust Company as Trustee of Gen. Trust Plan vs. Commissioner of Internal Revenue, CTA Case No. 1953, November 29, 1965); 6. Petitioner's claim for refund of alleged excess VAT input taxes is still under investigation by Respondent's bureau; 7. Petitioner has failed to show compliance with the provisions of Section 16(c)(3) of Revenue Regulations No. 5-87 as amended by Revenue Regulations No. 3-88 which provide as follows: "Section 1 6 � Refunds or Tax Credit on input tax. X X X. XXX XXX XXX "(c) Claims for tax credit/refund. Application for tax credit/refund of value added tax paid (BIR Form No. 2552) shall be filed with the Revenue District Office of the City or Municipality where the principal place of business of the applicant is located or directly with the Commissioner, Attention: VAT Division. A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be submitted together with the application. The original copy of the said invoice/receipt however, shall be presented for cancellation prior to the issuance of the Tax Credit Certificate or refund.

DECISION - C.T.A. CASE NO. 5192 -4 In addition the following documents shall be attached whenever applicable." XXX XXX XXX (3) Effectively zero-rated sale of goods and services. (i) Photocopy of approved application for zero for the first time. rate if filing (ii) Sales invoice or receipt showing name of person or entity to whom the sale of goods or services were delivered, date of delivery amount of consideration and description of goods or services." 8. The input taxes allegedly paid on its local purchases are not supported by invoices pursuant to Section 108 of the Tax Code. 9. Claims for refund are construed strictly against the claimant, the same being in the nature of exemption from taxes. (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95, 1970; Manila Electric Co. vs. Commissioner of Internal Revenue, 67 SCRA 35, 1979); 10. A taxpayer who claims to be exempt from the payment of a particular tax must do so under clean and unmistakable terms found in the statute (Asiatic Petroleum vs. Llanes, 49 Phil. 466-477; Union Garment Co., Inc. vs. Court of Tax Appeals, 4 SCRA 304, 1962; Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, 20 SCRA 1056, 1967) which is not so in this case; 11. All told, the petition does not state a cause of action. That petitioner is a duly registered exporter subject to zero rate on taxable sales is not controverted (Exh. 2).

DECISION - C.T.A. CASE NO. 5192 - 5- The lone issue, therefore, is whether or not petitioner was able to fully substantiate its claim so as to be entitled to the relief sought. To support its case, petitioner presented the following: Exhs. Description Purpose A& VAT Registration To prove that petitio- S Certificate bearing ner is registered as a Reg. No. 32-9-004698 VAT taxpayer and is, of Sakamoto Orient therefore, entitled to Chemicals ("Sakamoto" claim an input tax for brevity) credit on purchase attributable to its zero-rated export sales B BOI Certificate of To prove that petitio- Registration of ner is registered with Sakamoto, bearing the BOI as an export no. EP 88-872 producer of refined glycerine C to Quarterly VAT Re- To prove the amount of turns of petitioner input tax refundable G for 1993 by petitioner for the quarter G-1 Quarterly VAT Re- To prove that petitio- ner did not apply the to turns of petitioner unutilized input VAT being claimed for 1993 G-4 for 1994 H Application for To prove that petitio- Tax Credit/Refund duly filed said appli- of VAT of Sakamoto cation within the two- signed by Simon year period required Cezar F. Cabanas by law I to Schedules of Input To prove the input VAT payments made for each R VAT Payments month T Certificate of Re- To prove that petitio- gistration (BIR ner is a VAT-registered Form 1556) of Sa- taxpayer kamoto, bearing

DECISION - C.T.A. CASE NO. 5192 -6 ROO Control No. 94-500-000285 U to Certifications To prove that petitio- issued by various ner earned specified y banks stating that amounts as export pro- Sakamoto has coursed ceeds which were in- through them the ex- wardly remitted thru port proceeds the Philippine ban- king system in accor- z Letter dated August dance with CB rules & regulations 23, 1994 of Mr. Simon To prove that petitio- Cezar F. Cabanas to ner filed an adminis- trative claim for re- the Revenue District fund with the BIR within the two-year Officer, ROO No. 32, period prescribed by law BIR East Makati G-5 Quarterly VAT Re- To prove that petitio- to turns of petitioner ner did not apply the G-8 for 1995 unutilized input VAT being claimed for 1993 Official To prove the fact of receipts & payment of input VAT invoices Respondent, on her part, offered the following evidence: Exh. 1 - Letter of Authority dated October 12, 1994 Exh. 2 - (p. 640, BIR Records) Memorandum Report dated January 9' 1995 (p. 659, BIR Records). After an examination of the aforesaid evidence and the BIR Records of this case, We are convinced that petitioner is entitled to a refund. Petitioner has complied with the rules and regulations prescribed by the Central Bank in reference to the foreign currency

DECISIO N - C.T.A. CASE NO. 5192 - 7- payments inwardly remitted to the country (Ex h s. U to Y) � Petitioner ' s clai m was likewise filed within the two-year prescriptive period and was duly supported by invoices a n d receipts. And significantly, respondent herself reco mm en d ed a refund to petitioner althoug h subject to certain adj u st ments. Thus, We are constrained to grant a red u ce d amount to petitioner, after taking into consideration the following disallowances made by herein respondent. Reference Input Tax Remarks Claimed 93- 7 p. 157.64 1992 transaction/purchas e 93- 47 1992 transaction/purchase 93-48 836.36 1992 (Sept.) Security s ervices 93-79 Not valid VAT invoice/delivery receipt only 93-96 4,304 . 73 No date of invoice/undated tran s action 93-119 No VAT no. indicated/no TIN 93-120 51.82 93-1 29 93-153 218 . 42 93- 156 93- 157 81.82 93- 158 93-223 981.82 Prov. receipt/not valid VAT invoice 93-291 545.45 VAT No./TIN not stamped handwritten only 93-303 227.09 Sales returns unaccounted 30,454.55 1989 purchase - 2 year period expired 30,909.00 - do - 39,090.91 - do - ; 1991 purchas e No BIR permit 1,485.45 Input tax claimed based on net payment 3 ,409 . 09 (Depos it deducted) 4,304.73 Billing for 1994 ; OR dated 2-2 4- 94 P.117,058.88 (p. 639 , BIR record s ) We also agree with respondent's findings (p. 733, BIR records) that there was an overstatement of claim as follows: Per VAT Returns P-353,372.90 Per Application 385,340.55 Overstatement .p 31,967.65

DECISION - C.T.A. CASE NO. 5192 - 8- WHEREFOR E, in view of the foregoing, respondent is hereby ORDERED to REFUND to petitioner the a mount of P236,314.02, computed as follows: Amou n t of clai m P117,058.88 P.385,340.55 Less: Disallowances 31,967.65 149,026.53 Overstatement P236,314.02 Amount Refundable SO ORD ERED. WE CONCUR: / I CERTI F ICATION I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. ERNESTO D. ACOS TA Presiding Judge