CTA Case No. 5449

DECISION -

C. T.A. CASE NO. 5449 gooas, pr··op!:'r~ties or~ ·:;el--·vices at ~ne effectivity of tnis Act.

X X X

X X

X t11e t11ne }( }( >< {italics a no emphas 1s suppi1ed) ~3uch amount l.S clet ey·m 1 neo of uy imposition of either 10% or 0% rate on the g r··oss sell1ng value in money of the goods sold, bartered or exchanged; on the total value or·· land ea cos·c plus exc1se ta><, 11 any , 111 case o'l lmpot~G.::n;ion of goods; or, on the gross receipts derived from th e sale or e>-:change of set-·vices, J.ncluding the use lease of properties .

<Sections 100 - 102, Ta x Code, as amended) receipts d e rived b y the Petit1oner from tne sale ot~ of -co PHbLur<, 1n accordance w1tn Sect1on 102 (b) (3) of the Tax Code , as amended, which states , thus:

Sect 1 o n l (!2 ( i:J) :

~3> Set'vic::es t'end e r ed to pet' Sons Ot' e nt i t ie s whose e x e mption under speci a l laws 01.-.

1nternat1onal agreements to which the Phillppi n e':; is a sJ.gnatOl·''y' e Ffectively subjects the supply of such set'vices to zero t'at e .

(~~ai1cs and emphas1s supplled) l-'el.1t1oner· has presen1;ed convinc1ng evid e nce showing an namelv ' ' Pr'es1dent ial Decr··ee No.

18b·:3, Whlch categorically maKes 1t exempt from the payment o f all ta><es, after pay1ng a L•EC 1 S J.tJI\1 - L.T.A.

C~d~ NG.

~~43 Dll !;;woss or~ eat'nings

I' J '

and U.

Hence, by said the services rendered by the Petitioner ~o PAGCOR are effectively subject to zero rate. to 'tne above pr·'oVISions Petit1oner mistakenly oelieveo tnat 1ts ~ransact1ons wi~n ~AGCUR were subJect to tne 10~ ra~e.

~e~1t1oner suppor~s GillS oi::Jser·vat ion by its alleged "advanced " payment of nerein amount or ~VHf 1n ques~1on ~o the Respondent's accot'o 1 ng 1 y prays for the refund of sa1o raiilng ~o snift ana collect ~ne same lnexplicaoly no~ know1ng ~nat the transactions 1nvo lved are subj ect to zero rate. We now therefore go 1nto a br1ef d1scuss1on of the ·::;econd 1ssue on wne~ner Petit1oner 15 enti~led to 1 t s claim for' r'efund based on the ev1oence pt'esenteo.

we part1a11y rule In its ravor. we can only lui~ EVAT on Pet 1 t i oner'' s Income from PAGCOR amounting to ~7,927,313.92.

~er s~a~emen~ of Accoun~ ~b-0~1, .t ';1 :1b basic rental cnarges to PAGCOR 1U, 1 '::1':36 to (-i~wi l l u, l '3'37 amounted to P79,273, 139.18 of which 10~ EVAT was paid to "esponuent. ~ s Bur'ea'-' on iYJay 21, 1'3':36 ttlt'ough a separ'ate unJ.y F'Ti, 2':3J., 310.55 (net 2.5~ w1thholding tax) was paid by PAGCOR for said rental DEC 1 S H.li\1 - C. i.~. LRSE NO.

~449 - 8 - ollJ.lny Rece 1 pl.:

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l/43 dated Apr~ i l 10, 19':36 and 11' 1 '396, respec~ively <Exhib1ts G and H). As regards Petitioner's refund cla1m for-· the EVAT p;:1.yment s on its other sales ~o ~AGCOR of ~6,~78,~~6. 11, additional source documents neec1 to oe ::>UOITll·cteO to validate such particular portion of its claim, namely: b)

1. e. , ~on~n1y total sales summary rood, bever~age, minibat~ and ror room occupancy, other~ cnar~ges \to be suppor·teLI by "::><::ues i!tvo.i.cl:-!s/SGaGemen~:;s o ·r- accoun ·cs, guests folios) in order to confirm the fact that the amount being refunded by Petit1oner corresponds only to the sales from PAGCOR. i"lOtl"Ghly PAoLUR food, bever~age, sales ·;:;ummar·"l m1n1bar~ and for room occupancy, other cnarges with a r .. n·ea.Kciown ot ·cne tJas1c cnar·ges, ser~vlce cnar-·ges, local tax, d1scounts and the 10~ EVAT per PAGCOR customers (to be suppported by sales Invoices/statements of accounts, gues1.:s folios). Based on tne exam1na~ion ot tne eVldence on PRGCGR's payment sutnmat'.tes, Pet1t1oner~~ s receipts and bta.tement of Accounts and Schedules ~-~ (Exhibit IYJ, Hlclusive), this Cour~t could nut de~erm1ne wnether PAGCOR has already paid Petitioner tne 10~ ~VAT on notel charges for food~ beve~~age, mi.nibar·· and otner-· cnar·yes~ except fo~~ r·oom occupancy ci···;ay·ges. -c:ne lacK of afor~ement 10neo documents has pl·~event ed this Couy··t knowing altogether, inclus1ve of room occupancy charges, serv1ces oy the ~etit1oner were spec1·flca11y D i:::.C L:3 i G ~~ C. 1.A. CASE NO. 5449 - '::3 - made to PAGCOR clients or whether the alleged EVAT payments from PAGCOR were indeed included in the payments mach~ by tile J.n eacn of monthly EVAT l n sum, there is a need to ver1fy tne alleged EVAT payments with the abovestated source documents ~"'i1 ich, unfol·~tunately, Petitioner f a iled to submit before tnis Lour·t.

Such inaovertence proves fatal ~o hereln of 1~s claim.

Pr··esci nd i n g aoove , We no~e tna~ Respondent's contention in -~~he /··.if"/ l ll ppllll;:' f.h::.·t:•t y lene c·ompany case is inapplicable .::~t bar·.

We simply observe that the fax Code , as amended, clearly make~; t:he par~t icular· tr ar1~~act J.ons be~ween Pe~itioner and PAGCOR as Thus , to adhere to Respondent's view ~hat tne amount of 10% E~A1 cannot b e refunoed oecause it i1ad become a par~t of uy PAGCOR and not as a t:ax is manifestly wrong oc-~cause no matt el·' h o~'\1 at i i.:, a 10% EV~H has ueen imposed on the ~ransactions wh i ch tne law only a11ows a zer·u-rat~.

Besi d es , insofar~ as the pOl·~t ion of Petitioner's cla1m is concerned, it has been proven that PAGCOR has n o t made any payment of the iO't. EVAT to the Hence, any d1scuss1on on tne EVAf becomJ.ng a part of the cost is simply illogical ano unavail1ng .

DECIS igN — c.7.€. CASE NO. 3449 Even af We assume, ex gratia argumenti, that FPhalippine Acetylene Cumpany case 18 relevant to nmerein CASE, suosequent case of Maceda vs. Macaraig, Jr., 197 SCRA 771 at p. 779, when the Supreme Court, sitting en bane, declared that the rule on strict tne same has Deen wodlrirted ana quaiifilea ain granting tax exemptions does not apply in tne case exemptions in favor ofr a ur anstrumentality, such as PAGCURK in this case. pNuUss Moreover, it is a recognized principle that the rule on strict aunterpretation does not appiy in the case of exemptions ain favor of a government poiiticai SUDGLVISiON or LNSTTUMENTALITY.

'The basis for applying tne ruie of strict construction to statutory provisions granting tax exemptions or deductions, even more obvious than with reference to the affirmative or levying provisions of tax statutes, is to minimize difterential treatment and Foster impartiality, Tairness, and equality of treatment among tax payer's.

The reason for the rule does not apply in tne case of exetipcions running to tne oenefit or tne government itself or ai1ts agencies. In Suen Case tne practical efrect of an exemption 1s merely to reduce the amount of money that has to be handied by government in the course of its) operations. For these reasons, provisions granting exemptions to yovernment agencies may be construeqa iiberaliy, in favor oF non tax-ialability of such agencies. "

in tne case of property owned by the state or acuity or other public corporations, tne express exemption should not be construed with the same deyree of strictness tnat applies to exemptions contrary to tne policy of the state, sance as to such property “exemption 1s tne rue and taxation the exception.’ ‘ construction of statutes government political subdivision vevLaSilon — ue fe A. CASE NO. 5449

WHEREFORE, in view of the -oregoing, tne instant Fetitcion Tor Review is nereby PARTIALLY GRANTED. Accordingly, Respondent as hereby ORDERED to REFUND tne amount of P7, 927,313.92 to the Petitioner immediately.

50 ORDERED.

WE CONCUR:

ERNESTO BD. ACOSTA Fresiding Judge CEeERTITFTCATIT ON 1 hereby certify tnat tne above aecision was reacnea after due CoMeUALACLON Wath the metuers or bie Course uf Tax Appeals in accordance with Section ig, Article VIII of the Constitution.

/ XT Ox ERNESTO D. ACUSTA Presiding Judge 077