Sakamoto Orient Ch Emi Cals Corporation vs. Commissioner Revenu E, et al.

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 uarterly VAT returns as follows:

- 2 - Date Input Tax Period Covered Filed Payments Exh.

Jan.-Mar. 1993 4-20-93 .p 87,390.99 D Apr.-June 1993 7-20-93 177,678.46 E July-Sept. 1993 10-20-93 41,355.82 F Oct.-Dec. 1993 1-20-94 46,947.62 G 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 - 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

- 4 In addition the documents shall be attached applicable."

XXX XXX following whenever XXX (3) Effectively zero-rated of goods and services. sale (i) Photocopy application for zero for the first time.

of approved 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).

- 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

A &

VAT Registration S Certificate bearing Reg. No. 32-9-004698 of Sakamoto Orient Chemicals ("Sakamoto" for brevity) B C to G G-1 to G-4 H I to R T BOI Certificate of Registration of Sakamoto, bearing no. EP 88-872 Quarterly VAT Re- turns of petitioner for 1993 Quarterly VAT Re- turns of petitioner for 1994 Application for Tax Credit/Refund of VAT of Sakamoto signed by Simon Cezar F.

Cabanas Schedules of Input VAT Payments Certificate of Re- gistration (BIR Form 1556) of Sa- kamoto, bearing Purpose To prove that petitio- ner is registered as a VAT taxpayer and is, therefore, entitled to claim an input tax credit on purchase attributable to its zero-rated export sales To prove that petitio- ner is registered with the BOI as an export producer of refined glycerine To prove the amount of input tax refundable by petitioner for the quarter To prove that petitio- ner did not apply the unutilized input VAT being claimed for 1993 To prove that petitio- duly filed said appli- cation within the two- year period required by law To prove the input VAT payments made for each month To prove that petitio- ner is a VAT-registered taxpayer

U to y z G-5 to G-8 - 6 ROO Control No.

94-500-000285 Certifications issued by various banks stating that Sakamoto has coursed through them the ex- port proceeds Letter dated August 23, 1994 of Mr. Simon Cezar F. Cabanas to the Revenue District Officer, ROO No. 32, BIR East Makati Quarterly VAT Re- turns of petitioner for 1995 Official receipts & invoices Respondent, on her part, To prove that petitio- ner earned specified amounts as export pro- ceeds which were in- wardly remitted thru the Philippine ban- king system in accor- dance with CB rules & regulations To prove that petitio- ner filed an adminis- trative claim for re- fund with the BIR within the two-year period prescribed by law To prove that petitio- ner did not apply the unutilized input VAT being claimed for 1993 To prove the fact of payment of input VAT offered the following evidence:

the Exh. 1 - Letter of Authority dated (p. 640, BIR Records) October 12, 1994 Exh.

2 - Memorandum Report dated January (p. 659, BIR Records). 9' 1995 After an examination of the aforesaid evidence and 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 -

- 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 stments. 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.

Input Tax Reference Claimed 93- 7 p.

157.64 93- 47 836.36 93-48 4,304 . 73 93-79 51.82 93-96 218 . 42 93-119 81.82 93-120 981.82 93-129 545.45 93-153 227.09 93- 156 30,454.55 93- 157 30,909.00 93- 158 39,090.91 93-223 1,485.45 93-291 3 ,409 . 09 93-303 4,304.73 P.117,058.88 Remarks 1992 transaction/purchas e 1992 transaction/purchase 1992 (Sept.) Security s ervices Not valid VAT invoice/delivery receipt only No date of invoice/undated trans action No VAT no. indicated/no TIN Prov. receipt/not valid VAT invoice VAT No./TIN not stamped handwritten only Sales returns unaccounted 1989 purchase - 2 year period expired - do - - do - ; 1991 purchas e No BIR permit Input tax claimed based on net payment (Depos it deducted) Billing for 1994 ; OR dated 2-24- 94 (p. 639 , BIR records ) We also agree with respondent's findings (p.

733, BIR records) that there was an overstatement of claim as follows:

Per VAT Returns Per Application Overstatement P-353,372.90 385,340.55 .p 31,967.65

- 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 Less:

Disallowances Overstatement Amount Refundable SO ORD ERED.

WE CONCUR:

/ P117,058.88 31,967.65 P.385,340.55 149,026.53 P236,314.02 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. ACOSTA Presiding Judge