CTA Case No. 3411

DECISION

C.T.A. CASE NO. 341 - 2 - <Inv st me nt Incentives Act ), as amended , 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 refund, 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 P7,071, 140.00 <Exh.

"E" >.

This later request for 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 Percentage tax Advance sales tax Compensating tax

T 0 T A L

On January ' - 3 - Letter Letter dtd. 4/8/81 dtd. 6/1/81 Total Tax Credit p 3,889,048 5,929,134 --·- ·-··-··-~-~~.1.-.. ~~.9. 11, 1982, P6,779,367 .... - .. -·~·~1 ' · 7]-;J_ petitioner, p 3,889,048 12,708,501 ......... ~~Q, __ §:?~ .

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 .)

- 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

- 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:

1.

2.

3.

4.

5.

6.

Official F~-c~.i.P-t No.

0056311 2512700 0072474 0032672 0032474 0032670

T 0 T A L

1-14-80 1 - 11 - 80 1 - 4-80 1 - 7-80 1 -3-80 1 -7-80 p 186,207.00 228,053.00 3,898.00 24,066. 00 33,058.00 ......... _._,, .... ~.t ... ..'2..9._§_. __ QQ_ 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 submit ted the case based on the pleadings and the BIR records ~ .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 Petitioner dated September 7, 1992.

Thereafter, on 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

- 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 already ~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

- 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

FILIPINAS SYNTHETIC FIBER CORPORATION

SCHEDULE OF PERCENTAGE TAXES PAID

AND TAX CREDIT DUE

For the year ending Decerber 31, 1980 Percentage Exhe. Particulars Date ax, Paid First Quarter:

D-1 Confirmation Receipt No. 4095826) D-i-a Revenue Tax Receipt No. 4487989) 04/21/80 P2, 561, 226 0-3 Tax Debit Certificate No. 072 03/06/80 53, 160 Second Quarter:

D-2 Tax Debit Certificate No. 0223 07/17/80 459, 806 Third Quarter:

D-4 Tax Debit Certificate No. 0297 10/20/80 451, 85! D-5 Confirmation Receipt No. 5156943) D-5-a Revenue Tax Receipt No. 4958510) 10/20/80 3, 198 Tax Debit Certificate No. 0108 (BIR Folder IV, p. 453) 04/01/80 ___ 399, 807 TOTAL AMOUNT CREDITABLE | P3, 889, 048

FILIPINAS SYRTHETIC FIBER CORPORATION

SCHEDULE OF ADVANCE SALES TAXES PAID

AND TAX CREDIT DUE

For the year ending December 31, 1980 Advance 3% AST Awount Sales Tax PD 1352 Returnable Exhe, §§ _Particulars, Q.R. Wo. _ Date _ Paid (100% Exewpt) (Difference) Pure Terephthalic Acid D-6-a BIR Folder IY, p.537 915052 02/07/80 P 515,389 P 271,258 P 244,131 D-6-b BIR Folder IV, p.539 0084408 02/11/80 85, 503 45, 001 40, 502 D-6-c BIR Folder IV, p.537 890253 02/26/80 386,580 203, 463 183, 117 BIR Folder IV, p.537 889518 02/04/80 200,47) 105, Sil 34, 960 704 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 D-6-f 942276 06/16/80 396,569 208,721 187,848 D-6-g 964065 06/J0/80 156,842 82,548 74,294 D-6-h 963968 06/lJ/80 235,210 123,795 111,415 D-6-i 969269 08/08/80 179,9051 D-6-i-1 255203 08/19/80 6,9571 99,395 87,467 D-6-j 22j!fJ1 07/24/80 194,3351 D-6-j-1 250910 08/07/80 7,5151 107,367 94,483 D-6-11:

208910 06/J0/80 368,568 193,983 174,585 - D-6-l 221942 07/07/80 379,235 199,598 179,6j!

D-6-• 223796 07/24/80 361,5341 D-6-•-1 254831 08/14/80 13,9821 199,743 175,773 D-6-n 223222 07/18/80 366,0531 D:-6-n-1 250911 08/07/80 14,1571 202,239 177,fJ71 D-6-o 992895 09/10/80 187,010 99,473 87,537 D-6-p 969270 08/08/80 194,8871 D-6-p-1 255202 08/19/80 7,537) 107,673 94,751 D-6-q fJ72710 08/26/80 352,207 187,344 164,863 D-6-r 944456 08/28/80 352,207 187,344 164,863 D-6-s 925477 09/04/80 359,672 191,315 168,357 D-6-t 925613 09/10/80 143,933 76,560 67,j!3 D-6-u BIR Folder IV, p.536 185187 06/30/80 222,697 117,209 105,488 D-6-v 925362 09/01/80 215,846 114,812 101,034 D-6-t 256126 08/27/80 347,832) D-6-t -1 277230 09/15/80 11, 928) 191,315 168,357 D-6-x BIR Folder IV, p. 536 . 0055963 10/17/80 347,998 179,208 145,159 .

D-6-y 320560 10/29/80 341,637 188,750 152,887 BIR Folder IV, p.536 0055763 10/02/80 3U,301 188,564 152,7j!

D-6-aa 277993 09/23/80 354,220 188,415 165,805 D-6-bb 1010106 12/12/80 324,965 179,538 145,427 D-6-cc BIR Folder IV, p.537 1032650 12/01/80 190,360 105,171 . 85,189 llonoethy1ene Glycol D-6-dd BIR Folder IV, p.527 2513249 04/18/80 333,9261 D-6-dd-1 - do - 132585 05/06/80 7,5991 179,750 161,775 D-6-ee 142853 04/25/80 355,186 186,940 168,246 D-6-ff · BIR Folder IV, p.527 132974 07/18/80 318,814 176,140 142,674 D-6-gg - do - 132816 06/13/80 450,968 W,352 213,616 D-6-hh 186W 06/18/80 395,747 208,288 187,459 D-6-ii BIR Folder IV, p.527 133029 07/J0/80 332,888 183,916 148,fJ72 D-6-jj 256533 08/29/80 343,705 182,822 160,883 D-6-kk 0056311 01114/80 325,2191 D-6-kk-1 100672 02/21/80 28,575) 186,207 167,587 D-6-11 BIR Folder IV, p.527 2512700 01111/80 410,4951 D-6-11-1 - do - 2512782 01/24/80 22, 805) 228,053 205,247 D-6-n - do - 296283 12/18/80 250,455 138,j!3 112,082 705 DECISION C.T.A.

D-6-nn D-6-00 D-6-co0-1 D-6-pp D-6-qq D-6-rr D-6-ss D-6-tt D-6-uv D-6-vv D-6-vv¥ D-6-xx D-6-yy D-6-zz CASE NO.

Oiling Agents & Catalysts BIR Folder IV, BIR Folder IV, BIR Folder IV, BIR Folder IV,

p. 539 p.939

p. 939 3411 0032671 142963 181917 143726 181845 185958 222703 222520 222521 287792 322141 0032672 0032474 0032670 0083188 349081 369270 11 - 01/07/80 7,017 3, 898 04/25/80 30, 196) 05/12/60 =. 1,302) 26, 419 05/02/80 168,748) 05/12/80 481) 89, 068 06/16/80 64, 798 34, 104 07/15/80 = 103,053 34, 239 07/11/80 12, 291 6, 469 07/11/80 18, 475 9,724 10/10/80 32, 887 18, 165 11/18/80 4 01/07/80 4 4,814 24,759 3, 318 24, 066 01/03/80 59, 505 33, 058 01/07/80 17,938) 01/28/80 12/08/80 6 01/12/81

PARTIAL TAX CREDIT GRANTED (TCC # 00194)

TOTAL AMOUNT STILL CREDITABLE

O..R.. No.

105625 0056689 902944 144765 896009 913808 926161 917089 921483 296319 276121 917238 990) 9, 966 7,489) 3,010) 37,287 P6, 779, 367

FILIPINAS SYNTHETIC FIBER CORPORATION

SCHEDULE OF CONPENSATING TAXES PAID

ARD TAX CREDIT DUE

For the year ending December 31, 1960 __Date 03/13/80 01/16/80 02/07/80 04/10/80 02/14/80 02/28/80 05/19/80 02/28/80 04/01/80 09/03/80 09/04/80 03/20/60 C 8 ompen- ating Tax Paid P 966) 17,749) 3, 583 25, 155 19, 613 1,537 4, 164 29, 796 16,070 49, 249 24, 838 16, 827 Without BOI 1,037 7, 448 11, 120 415 593 isport duty 10, 567 706

5% CT

PD 1352

(100% Exempt) P 9,861 1,340 9, 415 4,470 591 2,191 15, 682 8, 146 13,072 3,295 Difference P 8,874 1, 206 8, 473 4,023 532 1,973 14, 114 7,31 11,766 2, 965

- 12 - D-7-1 141260 04/15/80 20,264 10,665 9,599 D-7-• 928101 04/21/80 5,038 2,652 2,386 D-7-n 945135 05/09/80 7,581 3,990 3,591 D-7-o 992152 09/05/80 16,224 8,539 7,&85 D-7-p 944051 05/22/80 3,007 1,583 1,425 D-7-q 953894 05/28/80 25,395 15,650 5,129 4,616 D-7-r 926831 05/23/80 9,983 523 4,979 4,481 D-7-s 944056 05/23/80 4,256 2,240 2,016 D-7-t 922872 05/26/80 12,063 1,933 5,332 4,798 D-7-u 184278 06/02/80 14,130 4,465 5,087 4,578 D-7-v 968194 07/14/80 22,838 3,676 10,085 9,077 D-7-w 942370 07/~1/80 9,537 600 4,704 4,233 D-7-x 969470 08/22/80.

4,880 2,696 2,184 D-7-y 250647 08/06/80 35,777 19,766 16,011 D-7-z 944314 08/18/80 16,055 3,948 6,&89 5,418 D-7-aa 993354 09/24/80 7,585 435 3,763 3,386 D-7-bb 276520 09/09/80 25,015 13,166 11,849 D-7-cc 277256 09/15/80 29,895 15,734 14,161 D-7-dd 289830 10/22/80 51,102 26,896 24,206 D-7-ee 926763 05/19/80 1,264 310 502 452 D-7-ff 944292 08/14/80 12,938 473 6,887 5,578 D-7-gg 1011910 11/19/80 10,533 5,544 4,989 D-7-hh 1024155 11/04/80 15,823 5,721 5,317 4,785 D-7-ii 321159 11/07/80 20,683 10,886 9,797 D-7-jj 1011926 11/21180 14,796 2,071 6,697 6,028 D-7-kk 1032693 12/04/80 15,319 93 8,014 7,212 D-7-11 255413 08/21/80 24,137) 13,335 11,503 D-7-11-1 255676 108122/80 1, 739 i•port duty D-7-11-2 276201 09/04/80 1,200) D-7- 917092 02/29/80 9029 83 4, 709 4,237 D-7-nn 973818 10/15/80 12,868 10 6,768 6,090 D-7-oo 917077 02/26/80 2,656 78 __ jL~ 1,222

T 0 T A L

~2-~,~:!.~~ ~~~~ TOTAL AROUIT CREDITABLE CP291,773 • P258,8501 P5501623

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 '• ' I t

- 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.

CONCUR: '

/ ~~ p_,J.r / RAI!ON 0. DE V A Associate Jud 708 ~\QcG:~ ERHESTO D. ACOSTA Presiding Judge J ------------------ ·--------------·--·- -·-·--·--------------- DECISipN .

- 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 709 ~\.,-~Q-.~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals