CTA Case No. 3411 (Decision)

REPUBLIC OF THE Pill IPPINES COURT OF TAX APPEALS QUEZON CITY FILIPINAS SYNTHETIC FIBER CORP. � Petitioner, - vers~s - C.T.A. CASE NO. 3411 THE con"ISSIONER OF INTERNAL REVENUE. Respondent. X- - - - - - - - - - - ~ - X DEC I s I 0 N Petitioner, Filipinas Synthetic Fiber Corporation, is a domestic corporalion registered with the Board of Investment <herein after referred to as the Board) as a preferred pioneer e nter prise. <Exh. "A". It seeks to avail a tax credit :for alleged erroneously paid and collected percentage, advance sales and compensating taxes for the year 1980. Petitioner declared that on the basis of a 100~ tax exemption granted by the Board pursuant to the provision o:f Section 8(a) of Republic Act No. 5186 696

DECISION C.T.A. CASE NO. 341 -2- <Inv st me nt Incentives Act ), as amend ed , it is deemed to be exempt from all internal revenue taxes excluding the income tax. Section 8<a>, as amended, provides for the 100X exemption from all taxes under the National Internal Revenue Code , except income tax, for the first five <5> years of the grant. In a lett11r dated April 8, 1981, filed on April 10, 1981, petitioner applied with the Board for a tax credit on percentage, advance sales and compensating taxes paid for the year 1980 totalling P10,077,032.00. <Exh. "c". A similar request, dat e d April 30, 1981, .this time for a refun d, was filed on May 8, 1981 with the Bureau of Internal Revenue <BIR>. On June '5, 1981, petitioner filed a letter dated June 1, 1981, in addition to the previous request of P10,077,032.00, for the additional refund of This later request for P7,071, 140.00 <Exh. "E" >. refund pertains to the additional advance sales and compensating taxes paid for 1980 amounting to P6,779,367.00 and P291,773.00, respectively. To recapitulate, petitioner seeks the refund <actually a tax credit) of P17,148,172.00, computed as follows: 697

.) DECISION C.T.A. CASE HO. 3411 -3- Letter Letter Total Tax dtd. 4/8/81 dtd. 6/1/81 Credit Percentage tax p 3,889,048 p 3,889,048 P6,779,367 12,708,501 Advance sales tax 5,929,134 ....- ..-�~�~1 ' �7]-;J_ .........~~Q,__�:?~. Compensating tax --�-�-��-��-~-~~.1.-..~~.9. T 0 T AL On January 11, 1982, petitioner, thru its auditing firm,' requested anew for the refund of P10,077,032.00 with the . BIR <Exh. "F" >. Without waiting for respondent's decision petitioner brought the matter up to this Court by filing a petition for review praying for the refund of P10, 077, 032. 00 in order to toll the two year prescriptive period within which to file a suit for the recovery of erroneously paid tax. Prior to the filing of an answer, petitioner filed on January 15, 1982 an amended petition in order to reflect the additional P7,071,140.00 claimed as tax credit <not refund) per its request of June 1, 1981. Thus, as a whole petitioner prays for the issuance of a tax credit in the amount of P17,148,172.00 (not P17,148,272.00 as alleged in the amended petition>. Petitioner relies on the tax exemptions, except the income tax, granted to it by the BOI per its letters dated October 10, 1980 ( Exh. "B" > and March 698

DECISION C.T.A. CASE NO. 3411 - 4- 30, 1981 <Exh. "B - 1" >. In the October 10, 1980 letter, the Board resolved to extend the period o:f the incentives granted to petitioner subject to the :following conditions, namely: a. That you will acquire :full ownership o:f Lakeview Industrial Corporation, under conditions satis:factory to the BOI: I b. That you commit to expand to a world- sized unit, as �may be mutually agreed with the BOI; and c. That you agree to o:f:fer equity in your expanded company to the textile millers, under terms and conditions to be mutually agreed with the BOI. In a letter dated March 30, 1981, the Board issued a certi:fication attesting that petitioner has complied with the conditions for the extension o:f the incentives for a period of five <5> years b~g~r.JI!.!J}.g, Respondent, in his answer, contends that the burden of proof in an action :for re:fund is on the taxpayer to show that it is entitled to the re:fund sought. This is especially so when the basis for claiming a refund stands on a tax exemption privilege. Failure to overcome this burden would be :fatal to the claim for refund . It is an elementary rule that taxes are presumed to have been paid and collected in accordance with law. 699

DECISION C.T.A. CASE NO. 3411 -5- Respondent adds that assuming petitioner was granted an extension of its lOOY. tax exemption privileges, except the income tax, the reckoning period should start on !1._l3J::.9 .h __~_Q.1___ .!.<,3~,1._ , the date when the BOI confirmed petitioner's compliance with the conditions set in its letter of October 10, 1980, and not on January , !, 1980. Thus, petitioner will not be .entitled to a tax credit for tax payments prior to March 30, 1981. If at all petitioner would be granted a tax credit (not a refund), as provided in Sec. 3(j), R.A. 5186, the advance sales tax payments, from January 3 to January 14, 1980, totalling P485, 248.00, itemized as follows: Official 1-14 -80 p 186,207.00 F~-c~.i.P-t No. 1 - 11 - 80 228,053.00 1 - 4-80 3,898.00 1. 0056311 1 - 7-80 24,066. 00 2. 2512700 1 -3-80 33,058.00 3. 0072474 1 -7-80 4. 0032672 ........._._,,....~.t.....'2..9._�_.__QQ_ 5. 0032474 6. 0032670 T0 T AL have already prescribed since the amended petition was filed only on January 15, 1982, beyond the two - year prescriptive period within which to file a suit for the recovery of an erroneously paid tax. 700

DECISION C.T.A. CASE HO. 3411 -6- After petitioner has presented its evidence in support of its case, respondent submitted the case based on the pl eadi ngs and the BIR re cords ~.CiD..~. any memorandum. During the trial, petitioner's counsel manifested in open court that respondent had already granted a par,tial refund in favor of petitioner. However, it was only on September 8, 1992, after this case has already been submitted for decision, did petitioner formally filed a written manifestation stating that the amount of P6,779,367.00 has already been granted by respondent in the form of a tax credit issued on November 6, 1987. <See Tax Credit Certificate No. 00194, Annex "A", Manifestation of I Thereafter, on Petitioner dated September 7, 1992. November 5, 1992, petitioner filed a supplemental manifestation stating that a partial tax credit of P6,779,367.00, pertaining to the 5Y. advance sales tax payments, out of the total P12,708,501.00 claimed has already been awarded by the issuance of a Tax Credit Certificate No. 00914. The sole issue to be resolved is whether or not petitioner is entitled to the remaining tax credit for erroneously paid percentage, advance sales and compensating taxes amounting to P10,368,805.00. 701

DECISION C.T.A. CASE NO. 3411 -7- The incentives granted to petitioner as a preferred pioneer enterpris e was extende d for a five ~ year term beginning January 1, 1980, as shown in the letters, dated October 10, 1980 and March 31, 1981, issued by the Board in favor of petitioner. Perhaps it is hardly necessary to stress what has already been decided by this Court involving the same .parties and issue in C.T.~. Case No. 3420 promulgated on August 7, 1992. We find no room for ambiguity arising from the tenor of the Board's letters of October 10, 1980 and March 30, 1981. The point is that the tax exemption privileges of petitioner should be reckoned on January 1, 1980 and not March 30, 1981 as emphasized by respondent. On the contention that the claim for tax credit of advance sales tax payments made on January 3 to January 14, . 1980, amounting to P485, 248. 00, � has al re ady ~rescribed on the ground that the amended petition was filed only on January 15, 1982, the Court cannot strip itself of the fact that jurisdiction has been acquired from the time the original petition for review, stating a cause of act i on, was filed. The filing of an amended petition, in order to conform to the evidence, merely changes the allegation stated in the original petition without 702

DECISION C.T.A. CASE NO. 3411 -8- necessarily altering petitioner's cause of action. "Where the original declaration states a cause of action, but does it imperfectly, and afterward an amended declaration is filed, correcting the defect, the plea of th~ statute of limitations will relate to the filing of the original declaration." <Pangasinan Transportation Co. v. PhiL Far�ing Co. Ltd., 81 Phil. 273. ) Thus, the amount of P485,248.00, representing advance sales taxes paid from January 3, 1980 to January 14, 1980, had not yet prescribed. Based on the foregoing, We hold that petitioner is entitled to the remaining tax credit in the sum of P10,368,805.00. Petitioner was able to substantiate its claim b~ presenting documentary evidence such as Central Bank Confirmation Receipts, BIR Revenue Tax Receipts, Central Bank Official Receipts, Customs Official Receipts and Schedule of Payments for Percentage, Advance Sales and Compensating Taxes �for the year 1980. The Court has prepared in tabular form the following schedules showing petitioner's entitlement to the tax credit claimed. 703

DECISION C.T.A. CASE NO. 3411 -9- FILIPIMAS SYNTHETIC FIBER CORPORATION SCHEDULE OF PERCENTAGE TAXES PAID AMD TAX CREDIT DUE For thP yPar ending DecPibPr 31, 1980 PPrcPntage ~Ml~..!. fartj9..!JJ.!f.J ~~' __!~~--''-~.!.~ D-1 First Ouart~r: 04/21/80 P2,561,226 D-1-a Confir�ation RecPipt Ko. 40958261 D-3 Revenue Tax Receipt Mo. 4487,891 03/06/80 53,160 Tax Debit Certificate Mo. 072 Second Quarter: D-2 Tax Debit Certificate lo. 0223 f!T/17/80 459,806 D-4 Third Quarter: 10/20/80 451,851 D-5 Tax Pebit Certificate lo. 0297 10/20/80 3,198 D-5-a Confir�ation Receipt lo. 51569431 04/01180 Revenue Tax Receipt Mo. 49585101 359r80'l Tax Debit Certificate Mo. 0108 ~~-~ 88.~~~48 IBIR Folder IV, p. 4531 TOTAL AftOURT CREDITABLE FILIPIRAS SYNTHETIC FIBER CORPORATION SCHEDULE OF ADVAICE SALES TAXES PAID AMD TAX CREDIT DUE For the year ending Dece�ber 31, 1980 Advance 5% AST Altount Sales Tax PD 1352 Returnable ~!h~!. _f!r..g_gy_~ars O.R. No. __!!~~- Paid JJ.Q9.!_.~!.~_1pJJ (P..!.fference I Pure Terephtha1ic 915052 02/f!T/80 p 515,389 p 271,258 p 244,131 Acid 0084408 02/11/80 85,503 45,001 40,502 890253 02/26/80 386,580 203,463 183,117 D-6-a BIR Folder IV, p.537 889518 02/04/80 200,471 105,511 94,960 D-6-b BIR Folder IV, p.539 D-6-c BIR Folder IV, p.537 BIR Folder IV, p.537 704

DECISION C.T.A. CASE HO. 3411 - 10 - .) Dillethyl Terephthalate D-6-e BIR Folder IV, p.536 0027684 02/28/80 294,483 154,991 139,492 06/16/80 396,569 208,721 187,848 D-6-f 942276 06/J0/80 156,842 82,548 74,294 06/lJ/80 235,210 123,795 111,415 D-6-g 964065 08/08/80 179,9051 08/19/80 99,395 87,467 D-6-h 963968 07/24/80 6,9571 08/07/80 194,3351 107,367 94,483 D-6-i 969269 06/J0/80 193,983 174,585 - 07/07/80 7,5151 199,598 179,6j! D-6-i -1 255203 07/24/80 368,568 08/14/80 379,235 199,743 175,773 D-6- j 22j!fJ1 07/18/80 361,5341 08/07/80 13,9821 202,239 177,fJ71 D-6- j-1 250910 09/10/80 366,0531 99,473 87,537 08/08/80 14,1571 D-6-11: 208910 08/19/80 187,010 107,673 94,751 08/26/80 194,8871 187,344 164,863 D-6-l 221942 08/28/80 187,344 164,863 09/04/80 7,537) 191,315 168,357 D-6-� 223796 09/10/80 352,207 76,560 67,j!3 06/30/80 352,207 117,209 105,488 D-6- � - 1 254831 09/01/80 359,672 114,812 101,034 08/27/80 143,933 D-6-n 223222 09/15/80 222,697 191,315 168,357 10/17/80 215,846 179,208 145,159 . D:-6-n-1 250911 10/29/80 347,832) 188,750 152,887 10/02/80 11, 928) 188,564 152,7j! D-6-o 992895 09/23/80 347,998 188,415 165,805 12/12/80 341,637 179,538 145,427 D-6-p 969270 12/01/80 3U,301 105,171 . 85,189 354,220 D-6-p-1 255202 324,965 190,360 D-6-q fJ72710 D-6-r 944456 D-6-s 925477 D-6-t 925613 D-6-u BIR Folder IV, p.536 185187 D-6-v 925362 D-6-t 256126 D-6-t -1 277230 D-6-x BIR Folder IV, p. 536 . 0055963 D-6-y 320560 BIR Folder IV, p.536 0055763 D-6-aa 277993 D-6-bb 1010106 D-6-cc BIR Folder IV, p.537 1032650 llonoethy1ene Glycol D-6-dd BIR Folder IV, p.527 2513249 04/18/80 333,9261 132585 05/06/80 7,5991 D-6-dd-1 - do - 142853 04/25/80 179,750 161,775 132974 07/18/80 355,186 186,940 168,246 D-6-ee 132816 06/13/80 318,814 176,140 142,674 186W 06/18/80 450,968 W,352 213,616 D-6-ff � BIR Folder IV, p.527 133029 07/J0/80 395,747 208,288 187,459 256533 08/29/80 332,888 183,916 148,fJ72 D-6-gg - do - 0056311 01114/80 343,705 182,822 160,883 100672 02/21/80 325,2191 D-6-hh 2512700 01111/80 28,575) 186,207 167,587 2512782 01/24/80 410,4951 D-6-ii BIR Folder IV, p.527 296283 12/18/80 22, 805) 228,053 205,247 250,455 138,j!3 112,082 D-6- j j D-6-kk D-6-kk-1 D-6-11 BIR Folder IV, p.527 D-6-11-1 - do - D-6-n - do - 705

. ----------- ------ DECISION C.T.A. CASE NO. 3411 - 11 - Oiling Agents &Catalysts D-6-nn 0032671 01/07/80 7,017 3,898 3,119 142963 04/25/80 D-6-oo 181917 05/12/80 50,196) 25,079 143726 05/02/80 D-6-oo-1 181845 05/12/80 ' 1,3021 26,419 80,161 185958 06/16/80 30,694 D-6-pp 222703 07/15/80 168,748) 48,814 222520 07/11/80 5,822 BIR Folder IV, p.539 222521 07/11/80 4811 89,068 8,751 287792 10/10/80 14,722 . D-6-qq 322141 11/18/80 64,798 34,104 20,055 0032672 01/07/80 19,252 D-6-rr 0032474 01/03/80 103,053 54,239 26,447 0032670 01/07/80 D-6-ss 0083188 01/28/80 12,291 6,469 8,963 349081 12/08/80 D-6-tt 369270 01112/81 18,475 9,724 33,212 D-6-uu BIR Folder IV, p.539 32,887 18,165 ~~--=9.~Jt~ I D-6-vv 44,814 24,759 D-6-n 43,3i8 24,066 D-6-xx 59,505 33,058 D~6- yy 17,938) _BIR �Folder IV, p.539 990) 9,966 D-6-zz 67,489) BIR Folder IV, p.539 3, 010) ~187 PARTIAL TAX CREDIT GRARTED ITCC I 001941 P6,n9,367 TOTAL AftOURT STILL CREDITABLE FILIPIRAS SYNTHETIC FIBER CORPORATION SCHEDULE OF CO"PERSATIRG TAXES PAID ARD TAX CREDIT DUE For the year ending Oece1ber 31, 1980 Coapen- Without SX CT sating BOI PD 1352 t.llb~-~ Q.._8!.._JJ1.!. ~lL Tax Paid _f:xe�.LtiQ!I (1001 Exe!P!J Difference D-7-A 105625 03/13/80 p 9661 1,037 p 9,861 p 8,874 D-7-B 0056689 01116/80 17,7491 7,448 1,340 1,206 D-7-C 902944 3,583 11,120 9,415 8,473 D-7-D 144765 02107180 25,155 4,470 4,023 D-7-e 896009 04/10/80 19,613 415 591 532 D-7-f 913808 02114/80 1, 537 2,191 1,973 D-7-g 928161 02/28/80 4,164 593 15,682 14,114 D-7-h 917089 05/19/80 29, 796 i1port duty 8,146 7,331 D-7-i 921483 02/28/80 16,070 D-7- j 256319 04/01/80 49,249 10,567 13,072 11,766 D-7-j -1 276121 09/03/80 24,838 3,295 2,965 D-7-k 917238 09/04/80 16,827 03/20/80 706

DECISION C.T.A. CASE NO. 3411 - 12 - D-7-1 141260 04/15/80 20,264 10,665 9,599 04/21/80 5,038 2,652 2,386 D-7-� 928101 05/09/80 7,581 3,990 3,591 09/05/80 16,224 8,539 7,&85 D-7-n 945135 05/22/80 3,007 1,583 1,425 05/28/80 25,395 5,129 4,616 D-7-o 992152 05/23/80 9,983 4,979 4,481 05/23/80 4,256 2,240 2,016 D-7-p 944051 05/26/80 12,063 5,332 4,798 06/02/80 14,130 5,087 4,578 D-7-q 953894 07/14/80 22,838 15,650 10,085 9,077 9,537 523 4,704 4,233 D-7-r 926831 07/~1/80 4,880 2,696 2,184 35,777 1,933 19,766 16,011 D-7-s 944056 08/22/80. 16,055 4,465 6,&89 5,418 08/06/80 7,585 3,676 3,763 3,386 D-7-t 922872 08/18/80 25,015 13,166 11,849 09/24/80 29,895 600 15,734 14,161 D-7-u 184278 09/09/80 51,102 26,896 24,206 09/15/80 1,264 3,948 D-7-v 968194 10/22/80 12,938 435 502 452 05/19/80 10,533 6,887 5,578 D-7-w 942370 08/14/80 15,823 310 5,544 4,989 11/19/80 20,683 473 5,317 4,785 D-7-x 969470 11/04/80 14,796 10,886 9,797 11/07/80 15,319 5,721 6,697 6,028 D-7-y 250647 11/21180 24,137) 8,014 7,212 12/04/80 1, 739 2,071 13,335 11,503 D-7-z 944314 08/21/80 1,200) 93 108122/80 D-7-aa 993354 09/04/80 9029 i�port duty 02/29/80 12,868 D-7-bb 276520 10/15/80 2,656 83 02/26/80 10 D-7-cc 277256 78 D-7-dd 289830 D-7-ee 926763 D-7-ff 944292 D-7-gg 1011910 D-7-hh 1024155 D-7-ii 321159 D-7-jj 1011926 D-7-kk 1032693 D-7-11 255413 D-7-11-1 255676 D-7-11-2 276201 D-7- 917092 4, 709 4,237 6,768 6,090 D-7-nn 973818 1,222 __ jL~ D-7-oo 917077 ~~~~ ~2-~,~:!.~~ T0 T AL P5501623 '� TOTAL AROUIT CREDITABLE CP291,773 � P258,8501 TAX CREDIT GRAN.TEP.. Percentage tax ...�..��... P 3,889,048.00 Advance sales tax .�.�..�� 5,929,134.00 Compensating tax ...��.��� ____�p_Q, 623. 00 TOTAL TAX CREDIT DUE P10,368,805.00 707

DECISION C.T.A. CASE NO. 3411 - 13 - WHEREFORE, the instant petition for review is hereby GRANTED. Respondent, Commissioner of Internal Revenue, is ordered to issue in favor of petitioner, Filipinas Synthetic Fiber Corporation, a tax credit certificate in the amount of ?10,368,805.00, representing erroneously paid percentage, advance sales and comp~nsating taxes for the year 1980. No pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila, November 16, 1992. ~\QcG:~ ERHESTO D. ACOSTA Presiding Judge WE CONCUR: ' / ~~ p_,J.r / RAI!ON 0. DE V A Associate Jud I' t 708 J

- - - - - - - - - - - - - - - - - - �-- - - - - - - - - - ---�--�- -�-�--�------ - - -- - - - -- DECISipN . C.T.A. CASE NO. 3411 - 14 - 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 13, Article VIII of the Constitution. I ~\.,-~Q-.~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 709