Medical Services of America, Inc., et al. vs. Commissioner of Int Rnal Revenue

DECISION -

-2- Under Section 103<1> of the National Internal Revenue Code <NI RC >, persons rendering Medical, dental, hospital and veterinary services of which category petitioner value-added t )(.

This is admitted by respondent in his Answer.

Petitioner erroneously filed valu~t-added returns for the quart rs corresponding to January 1 to April 30, 1989;

May 1 to July 31, 1988; August 1 t 0 October 31, 1989; November 1, 1988 to January 31' 1989;

F bruary 1 to April 30, 1989; May 1 to July 31, 1989;

August 1 to Octob•r 31, 1989;

November 1, 1989 to January 31, 1990, and paid the corresponding ta~ due thereon in th total aMount of P530,S29 .. 00, as v lue-added t )( based on its gro ss recei pt s ~ rom render ing medical serv ices. On Fe b Y'uar y 1990, Pt!?titioner, thr u its e><ternal udi+.:or, Joaquin Cun.anan & Co . , communi cated with Res pond etnt, requ sting 'for con'firm tion th t it is e><empt 'from va lue-added t a><.

Respondent in hi VAT Ru l ing No. 103<1> - 000- 000-132-90, dated May 14, 1990, categorically stated that P titioner is "e><em pt from va lue-added ta><," pursuant to Section 103<1> of the NIRC, as amended by E><ecut i ve Order No. 2 73. •I -

-3- On October 3, 1990, Petitioner filed a clai111 for refund with the Respondent in the amount of P530,529.00 corresponding to the value-added tax the former erroneously filed and paid for the quarters January to April 30, 1988; May to July 31, 1988; August to October 31, 1988; November 1, 1988 to January 31, 1989;

Febru ry t o April 30, 1989;

May to July 31, 1989; Augus t t o October 31, 1989 and Novemb r 1989 to January 31, 1990. Respondent did not ct o n the cl im ~or refund.

H nc , th pr s nt Petition ~iled on D e t o b r 1 1 , 1 990.

During th p ndency of this cas•, Petitioner, through coun 1 , m nif'est d in op•n court that i t intendttd to pursue its c • in the admini tr tive lev el, ev n a lle ging that a BIR examiner to whom the case was re fun d with th ppro val of hi s ect ion chief" which manifestation w s not di put£Od by Respond.-..nt.

Later, P tition r' co uns 1 m ni~est d that although Respond nt had grant d t h e refund in ~ vor o f the P titioner, the same wa s n ot acceptable b ecause of an i position of 35~ t x on the r f"und.

Th e Court order -d th r spond nt to submit th• report of the refund gr nted wi th the 35~ tax wi th the end i n view of limiting t he is ue to the 35~ 7 ti tJ -

-4- tax imposed.

Until the cas was submitted for decision, Respo ndent failed to s ubmit the rep~rt as suggested by the Court ..

Neither did Respondent pre nt ny evidenee in upport of its case.

Inste d, Respond nt submitt -d his c se based on the pleadings <T .. S.N~, August 3. 1992>.

The only i su• to b resolv ed by this Court is whether or not P tition r timely filed this judici 1 proc ~tding paid value- dded tax 'for the qu rters corresponding to January 1, 19SB to .January 31, 1990, inclusive, as provid d und r Section 230 of the NIRC. We find for the Petition r, with ~edification. Based on the law and evidence on r cord, ' ...

Petitioner i exempt fro m value-added tax <Exh. M>. It erroneously paid valu -added tax for the following p riods with the corr spending mounts.

Jan.'88- Apr. ' 88 <E:xh.

D- 1>

May '88- July'88 <Exh. E- 1) Aug.'88-0ct.'28 <Exh. F- 1 > Nov.•aa-Jan.•eg <Exh. G- 1 ) Feb.'89- Apr.'S9 <Exh. H-1) May '89- July'89 <Exh.

I - 1 >

onfiY'aation R ipt No. & Date 14888883;5/19/88 15579885;8/22/88 15584054;11/21/88 15584684;2/20/89 17309325;5/22/89

18011 2 SG 18/21/89

756 p 22,651.30 p 51,207.50 p 50,155.30 p 55,314.00 p 80,450.00 p 98,158.1 5 -

Aug.'89-0ct.'89 <Exh. J-1> Nov.'89-Jan.'90 <Exh. K-1> -s- 18574024;11/20/89 18809236;2/20/90 Total Value-Added TaKes Paid The evidenc 'further hawed P109,557.75 p 63,035.00 PS30,S29.00 =========== that on October 3, 1990, Petitioner 'filed a 'formal claim f"or re'fund with R spond nt in th tot 1 amount o'f provided 'for und r S ction 230 o'f the NIRC.

How ..., r, Re pond nt 'failed to act/respond to this cl im.

tat d earlier, the suit be'fo r this Court w c comme n ced by P titione r in order to b t th two-y r prescriptive p riod as provided for in S ction 230 o'f thR NIRC. S ction 2 30 o~ th• NlRC prov ides thu•• ''Sec. 230.

fJ_e p_ ve.~f ronl!ousl y or .!:.J l_~!l~.Ll_y ___ c; p_J._!J!: .. t;.l..!'.t!... -No s u i t o r p r o c e e d i n g s h a 1 1 be maintain d in ny court for the r covery of any national inte n 1 r evenue tax hereaft r alleg d to have been e rroneously or ill gally assessed or collected, or of any penalty claimed to have be n collected without authority or of any sum alleged to have been exce s sive or in any m nner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner;

but such suit or proceeding may be m intained, whether or not such tax, penalty, or sum has been paid under protest or duress.

In any case, no uch suit or proceeding shall be begun fter th xpiration of two years from the date of payment of the tax or pen lty regardless of any supervening cause that may arise after payment:

prov idee!, how~t:,, that the Commissioner may, even without a written claim therefor, refund or credit any t ~, where on the face of the return upon which p yment was made, such pa yment app r c le rly to have been erroneously paid." <underscoring upplied> - - 6 - "The reasons for requiring the 'fil ing o'f a claim for refund of ta~ befor~ recourse to court is had ar the 'fol low ing:

<1> To afford the Comm iss ioner of Internal Revenue a n opportunity to .correct t he action of subordinate officers; and <2> To notify the Government that suc h taxes have been questioned , and the not ic e should then be borne in mind i n e s timati ng the revenue ava il able for expenditure." <Bermejo vs Collector, L-3028, July 29, 1950) . "The two-year period in S ect io n 2 43 <now 230) of' the NI RC, is .!.ft~Q...ti!t ory. If the Commissioner o'f Internal Revenue denies the cla im f or refund, there is n o quest i on that the ta~payer can ap p eal to the Court of T a~ Appeals.

But i f the Commissioner fails t o act on the refund and the two-year period is about to lapse, should ins t it ute the app a l to the Co u ..-t of T ~ App als, wi thout waiting for th deci ion or- the Co mmis si on ..-. This is so because of the positi ve req uir e ment of Secti on 243 ('f\OW a30) nd the doctrine that delay of the Com mi ss ioner in rend ri ng th decisi on does not e~te nd the p r mptor-y p r-iod f' i~ed by the statute."

<Gibbs vs Collect or, L-1 3453, February 29, 1960; also Commissioner or Internal Revenue v s Victorias Millin g Inc. , 22 SCR~ 12; underscoring supplied). 75 c~ -

-7- Section 110 of the NIRC provides: "$..E.!..r:;P.._;j_gn l_J_g~---..B.E.!..~ .. ~r:..'L..~Jlt!~y_~E.!..rJL_.o ~a 1 ue- add~f!..._.!!.!!!.!!!..= <a> ~blt'.:" .. !L!.

... Q.. file ~he r~turn and pay th~.--t~. - Every perso n subj ect to va lue - added tax shall file a quarterly r turn of his gross sales or receipts and pay the tax due th ereon t o a bank duly accredited by the Commissioner located in the revenue district wher such per son i s r e gistered or req u ired to be regi s tered.

However, in cases where there are no duly a ccredit d agent banks within the c ity or muni c ipalit y, the return shal l be filed n d a ny amount due s hal l be paid to any duly accr - dited bank within th e district, or to the Rev nue Oi trict Officer, Coll ection Ag ent or duly authori~ed Treasurer of the city or municipality where uch tax payer has his principal place of busi n ess.

Only on e c on solidat ed return shall be filed by the taxpa yer for all th e branches and l ines of business subject to value- added tax.

If no ta x is payable because the amount of input ta x and any mount authorized to be offset against the output tax is equa l to or is in excess of the output tax due on the retu r n, the taxpayer shall fi le th e return with the Revenue District Officer, Collection Agent or a uthor ized municipal treasurer where the t axpayer's pr i ncipal place of business is locat ed . <b) I.t!_. ___ .f .. g.r.._fj,_J..!.!I.!l.....Y..L :.!...t.M.OJ_~_n...c:Lp~.Y-~.ent__Q_{ ~a~.

The return shall be filed a nd the ta~ paid within 20 days following the end of ach quarter specifically prescribed for a VAT-register ed person under reg ulations to be promulgated by the Secretary of Fin nee:

P ro~i ded , how•~r , That any person who s e registrat ion is- c ncell ed in accordance with paragraph ( e) o f Section 107 shall file a re turn withi n 20 day s f r o m the cance l lation of s uch registratio n. (undersc ori ng supplied> >i X X X )( The f'ormal cl im f' o r re~u n d o¥ Peti tioner for erron eously paid value - added t a)( c ommencing from January 1999 up to Jan uary 1990 7 w s file d and receive d b y the Bureau I nte rnal Revenue on .., ( - -

- a- October 3., 1990 <Exh .

N> and the Pet i tion for Review before this Court was initiated o n October 11., 1990.

For erroneously paid Value-Added Tax filed for th e quarters pertaining to January 1 to April 1988 in the amount of P22.,651.30 under Confirmation Receipt No.

14888883., dated May 19, 1988;

and May 1 to July, 1988., in the amount of P51,207.50 under Confirmation Receipt No.

15579885 , dated August 22., 1988, the prescriptive p e riod had already set in, the claim for refun d in the ad ministrat ive level and t he judicial s ui t having been mainta i ned beyond th e t wo - year period from the p a yment thereof.

Petitioner is therefore entitled to t he refund of the erroneously p a id VAT for the f ollowing periods with their corresponding amounts: CONFIRMATION QUARTER RECEIPT NO.

-------------- --------------- Au g.'88- 0c t.'88 , CR No. 15584654 Nov.'88 - J a n.'89 , CR No.

1558 4684

Feb. ' 89- Apr .'89, CR No.

17309325 May '89- Jul y' 89, CR No .

18011 286 Aug.'89- 0 c t.'89, CR No. 18574024 Nov.'89- Jan.'90, CR No. 188092 36 Total A•ount Refundable 7 .n AMOUNT p 50, 155.30 55, 3 14. 00 8 0 , 450.00 98,158.15 109, 557.75 63, 0 35 .00 p 456.,670.20 ------------ ------------ -

- 9-

WHEREFORE, in view of . all the foregoing, Respondent is hereby ordered to refund to the Petitioner the amount of P456,670.20 representing erroneously paid value-added taxes for the quarters corresponding to August 1, 1988 to January 31, 1990, inclusive. No pronouncement as to costs.

WE CONCUR:

~(Q,~ ERNESTO D. ACOSTA Presiding Jud ge GRUBA Judge / 78 • I ..

-

·-10- CERTIFICRTICJN This is to certiFy that this decision was reached aFter due consultation among the members oF the Court oF Tax ~ppeals in accordance with Section 13, ~rticle VIII oF the Constitution.

~~'~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals 762 )