PHILIPPINE MINING SERVICE CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

CTA Fonn No. 8 (For DCC) 111111111111 1111111111 111111111111111 1111111111111111111111111 111111111111111111 20-000066-0076 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION CTA CASE NO. 10261 PHILIPPINE MINING SERVICE CORPORATION, Petitioner, -versus- NOTICE OF RESOLUTION COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Lcgazpi Village, Makati City ATTY. AYESHA HANIA B. GUlLING-MATANOG ATTY. CLARISSA J. VIRTUDES-BABARAN Bureau of Internal Reve nue Room 703, Liti gation Di vis ion, BIR National Office Building Sen. Miriam P. Defensor-Santiago Avenue Dil iman, Quezon City PLATON MARTINEZ FLORES SAN PEDRO & LEANO 6th Floor, Tuscan Building 11 4 V.A. Rufino St., Legaspi Village Makati City GREETINGS: You are hereby notified by these presents that on July 3, 2024, a Resolution was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, July 4, 2024. Page 1 of l

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION PHILIPPINE MINING SERVICE CTA Case No. 10261 CORPORATION, Petitioner, Members: -versus- DEL ROSARIO, P.J., Chairperson, MANAHAN, and REYES-FAJARDO, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. X----------------------------- RESO LU T I O MANAHAN, J.: For resolution of the Court is respondent's Motion for Partial Reconsideration (Re: Decision promulgated 13 March 2024) filed on March 26, 2024, with petitioner's Comment (to Respondent's Motion for Partial Reconsideration dated 25 March 2024) filed on April 24, 2024. For easy reference, the dispositive portion of the assailed Decision reads: "Accordingly, the instant Petition for Review is PARTIALLY GRANTED . Respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the amount of P18,951,788.25, representing petitioner's unutilized input VAT attributable to its zero-rated sales for the CY 2018. SO ORDERED."l In his motion, respondent argues that based on Pilipinas Total Gas) Inc. v. Commissioner ofInternal Revenue,2 the judicial review should be confined to the same documents submitted at ' Decis ion , Docket , Vol. II, p . 1095. 2 G.R. No. 207 11 2 , December 8, 2 016.~

RESOLUTION CTA Case No. 10261 Page 2 of4 the administrative level, and this Court's jurisdiction becomes strictly appellate in nature. Moreover, respondent asserts that petitioner is not entitled to its refund claim. On its part, petitioner counters that the Pi.lipinas Total Gas case is inapplicable to the instant case. Further, petitioner asserts that it fully substantiated its refund claim. After careful consideration of the above-arguments, the Court finds the instant motion unmeritorious. With respect to the applicability of the Pi.lipinas Total Gas case, suffice it to state that respondent failed to specify the findings and conclusions in the assailed decision which are not supported by evidence. As such, the said case is inapplicable to this case. With respect to petitioner's entitlement to its claim for refund, respondent asserts that petitioner failed to show that it rendered services to affiliates outside and not doing business in the Philippines, pursuant to the ruling of the Court of Tax Appeals (CTA) En Bane ruling in Deutsche Knowledge Services Pte. Ltd. v. Commissioner ofInternal Revenue.3 In Deutsche, petitioner's claim is anchored on Section 108(B)(2) of the 1997 National Internal Revenue Code (NIRC). 4 It provides: "SEC. 108. Value-Added Tax on Sale ofServices and Use or Lease of Properties.- XXX XXX XXX (B) Transactions Subject to Zero Percent (0%) Rate.- The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate: XXX XXX XXX (2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in 3 CTA EB No. 1742, November 4, 2019. 4 Prior to the amendments introduced by the Tax Reform for Acceleration and Inclusion (TRAIN) Act. ~

RESOLUTION CTA Case No. 10261 Page 3 of4 business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" In contrast, petitioner's claim m the present case 1s anchored on Section 106(A)(2)(a)(1) of the 1997 NIRC, as amended. It provides: "SEC. 106. Value-Added Tax on Sale of Goods or Properties . - (A) Rate and Base of Tax. - xxx (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales . -The term "export sales" means: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)." In relation to the above-provision, petitioner must prove the following elements: 1) The sale was made by a VAT registered person; 2) There was sale and actual shipment of goods from the Philippines to foreign country; and, 3) The sale was paid for in acceptable foreign currency accounted for m accordance with the rules and regulations of the BSP. In other words, Section 106 (A)(2 )(a)( 1) of the NIRC of 1997, as amended, does not require petitioner to show that the recipient of the exported goods are non-resident foreign corporations doing business outside the Philippines. This requirement is only applicable to services rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the ~

RESOLUTION CTA Case No. 10261 Page 4 of4 Philippines when the services are performed, pursuant to Section 108(B)(2) of the 1997 NIRC, as amended. Considering the foregoing, the Court finds no reason to deviate from its previous ruling. Hence, the denial ofthe present motion is in order. FOR THESE REASONS, respondent's Motion for Partial Reconsideration (Re: Decision promulgated 13 March 2024) is DENIED for lack of merit. SO ORDERED. c~.r, ~.......'"""""'----- CATHERINE T. MANAHAN Associate Justice WE CONCUR: Presiding Justice ~ ~ IT~ -r~'r;,..~ MARIAN Iv\4-. REY~-FAJARDO Associate Justice