Roiii\1 Apollo Si~ I\Iiconih I Ctor Piiilii'I'I Nes, Inc., et al. vs. IIONOH.AULE Col\'Imissioner of Internal Revenue

DECISION

This is a judicial clain1 for rcl"und or issuance of' a tax credit certificate in the amount of P30.359.6 15.40 alleged ly representing unutilized input value-added taxes paid on capital goods purchased for the months of .July <md 1\ugust. 2000. Petitioner is a domestic corporation dul y registered with the Securities and L:-.;clwnge Commi ssion. On May I 0. 2000. it \\"as registered \\ ith the 13ureau or ltttern;d ReH'nuc (131R) as a \'aluc-addcd ta :-.; (V/\T) taxpayer (Lxhihit C). 011 September 18. 2000. petitioner was like\Yi sc registered with the Philippine Economic lone Authori ty (PEl/\) as an "Ecozonc [:-.;port [nterprise .. pursuant to the provisions of· Republic J\ct No. 79 16. to engage in the manufacture of' semiconductor products. particularly microc hip transistors and tantalium capacitors at the People"s Technology Complex -Special Economic Zone. I3o. l'vladuya. C<Irmona. Cavite (Er:hihits D & E). Petiti oner started its commercial operations on September 1. 2001. as shown in the "Notice or /\pprov;d of' sco No. 2002-014 .. issued by PEZ/\ Oil .IUIIC 20. 2002 (1:\ hihit F). llowcver. prior to sa id date. or on about .June 2000. petitioner contracted

DEC ISION-

\TA CASE NO. 653.t I'A <;E 2 the services o f' Shimi 7.u Philippine Cont ractors. Inc. (hereinalier reiCrred to as ··~ himi :;. u '") for the constructi on or its lilctory huildill !_!. ( 1:\ hihit II) . For services rendered by Shim i7.ll. petitioner made initial payments on .Jul y ~ , 2000 and /\ugust 3. 2000 in the respectiYe amounts or P llJ8.55 1 ,884.28 and [> 132.3G7.923.58 I both inclusive or I 0% v /\T and net or I% \Yithholding tax I (Exhihits I to L).

lk liev ing that the aforesaid payments qualify as capital goods purchases, petitioner filed an application for tax credit/refund of the input V /\T payments correspondillg thereto in the SUill or P30.359.G 15.40 \\"ith the BIR O il December II . 2000 (F.xhihit X).

On /\ugust G. 200 1. petitioner sent a Collo\'v-up letter to the 81R reiterating its request fo r the rerund/tax credit of the alleged unutilized input V /\T of P30.359.G 15.40 (Erhihit }).

/\ga i11. on /\ugust 29. 200 I. petitioner sent another letter to the 131 R info rming the latter that it \\'as submi tting the necessary documents relati ve to its rerund claim (Frhihit %).

Since respondent had not acted on its claim <uH.I the t\vo-year prescripti ve period for filing a j udicial claim was about to lapse. ;1ctitioner instituted the present appeal on September 11. 2002.

Respondent. in hi s /\nswer fil ed on October II . 2002. interposed by way of Spec ial <md Artirmati ve Dcrenses the !"olln\Ying:

4. Petitioner being allegedly regist12red \Yith the Philippine Economic 7.one /\uthority is exempt rrom all taxes. including value-added tax, pursuant to Section 24 of' Republic /\ct No. 79 1 G. lienee, petitioner is not entitled to refund of' input tax on capital goods pursuant to Sections 4.1 OG- 1 and 4.103-1 o f' Revenue Regulations

DECISION-

CTi\ Ci\SE NO. (,5J4 l'i\(;I~ J No. 7-95.

Its alleged registration as a V /\T taxpayer was.

thcrcl'orc. erroneous:

5.

Petitioner" s allcg<:d clain1 !'or rcl'und is subject to ml!ninistr<ltivc routitwry in\cstigation/<::\<llllitlation by rcspond<:nt"s 13urcau: ().

The atnoutlt ol' 1'30.359.6 15.40 b<:ing cl: imcd by p<:titiuncr as alleged unutilizcd input taxes paid in the pur<:lwsc of <:apital goods l<.)r the period July and August 2000 \Yas not properly do<:umcntcd; 7.

In an action 1<.)1" refund/credit. the burden or proof is on the ta:-;payer to establi sh its ri ght to rcl"und. and failure to sustain the burden is fatal to the claim for refuml/ncdit:

8.

Petitioner must show that it has complied \Yith the provtstons or Sections 204(C) and 229 of the 1997 Tax Code on the prcscripti\'e period for <:!aiming tax refund/credit: and 9.

Claims l<.)r refund are construed strictly against the claimant lor the same partake the nature of exemption from taxation (Commissioner of Internal Ren·nue vs. Ledesma, 31 SCRA 95) and as such. they are looked upon with disravor (\Vestem Minolco Coq>. YS. Commissimtet· of Internal Revenue, 124 SCRA 1211 ).

On October 30. 2002. petitio11er filed a Reply to respondent's /\tJswer, rel'uting the latter's assertions.

In their Joint Stipulation or Facts and Statement of Issues lilcd on December

5. 2002 and approved by this court on December 12. 2002. the parties presented the l'ollowing issues lor resolution:

1. Whether or not the purchase or services by the petitioner from Shimizu ralls within the purview of "purchase or capital goods" 111 relation to Section 11 2( B) or the 1997 Ta:-; f"odc: 2.

Whether or nut the petitioner availed or the bcnelits (5% gross income tax) under Section 24 of Republic /\ct No. 79 16, otherwise known as Special Economi<: Zone /\ct or 1995:

3.

Whether or nut the petitioner \Yas granted an income tax holiday under Section 6. Rule

~-: V or the Rules and Regulations to

lmplemetlt R./\ . 7916:

DECISION-

CTi\ CASE NO. C.5J.t I';\(; r. .t 4.

Whether or tlllt the at1wunt of PESOS:

TIIIRTY MILLION

Tl IRU : llli NDRFD FIFTY NINI: TIIOl iSJ\ ND SIX IIUNDRI ~ D FIFTEEN AND 40/ 100 (P30.359.Gl5.40) being claimed by the petitioner as rel'und and/or issuance of TCC is correct ami properl y doCUillL'IltCd: ;tttd 5.

Whether or not the petitioner is entitled to ;1 rcl"und or issuance of l'CC under the circutnst;lllces.

To support its claim.

p ~ titioner presented documentary and testimonial e\· idetlce.

Respondent. on the other hand. submitted his case lor decision without presenting any e\·idencc (C '7>1 Records. ;)(tge 13Y). Al'ter the parties had filed their respecti\ e metnorandunL the case was submitted for decision on NoYember 12. 2003 .

We lind it nppropriate to first di scuss the second and third issues as the reso I uti on of the same prcdetcrm i ncs \\ hether or not the other issues st iII deserve our COilS i dcra t i Oil.

In his Answer to the Petition for Revie\\' and f'vlemorandum. respondent <trgued tlwt petitioner. heit1g a 1'1:/.A-rcgistcred et1tcrprisc. is not subject to VAT pursw111t to Section 24 oi' IZ./\. 79 I G.\\ llich pro,·idcs in part. thus: "Sfi:CTION 24. Exemptiou .fi'om Taxes Uuder tlte Natioua/ luterua/ Ret•euue Code. - Any provision of existing laws. rules and regul<ltions to the contrary IIOt\Yithst;lllding. no taxes. local ami nationaL sh<tll be imposed on ],usitless establishments operating within the ECOZON I ~ . In li eu of paying taxes. 11\·e percent (5%) of the gross income earned by all businesses and enterprises \Yithin the ECOZONE shall be remitted to the tutional gowrnmenl. x x x·· According to respondent. petitioner is exempt from VAT because the exemption from national and local taxes in the above pro,·ision of Section 24 or R.A . 79 16 includes V /\T.

Consequently. petitioner's t:·ililsactions. being exempt !'rom internal rcvctlltc taxes by ,·irtuc of R.i\. 79 I(, l~ tll under the phrase "Tr<tnsactions

DECISION-

CTA CASE NO. 6534

I'AGE 5

\\hich me exempt Llllder special l<m s." under SL·ction 103(q) or the Tax Code I prior to its amendment under the Tax Rdorm Act or llJ<17 1. to \Yit: "Sl~ CT I ON IIU.

Exempt Tm 11.wctions. - The following sklll be excn1pt r·roln the , · ~ llue-addL·d t ~1 x:

(q) Trnnsactio11S \\ hich arc exempt under special lmYs. except those granted umler Presidential Decree Nos. 66. 529. 972. 1491. ami 1590. and non-electric coopcrati,·cs under Republic Act No. 6938. or iii!cm ~ltion a l ngi-ccnicnts to \\hich the Philippines is a signatory ... Respondent averred that since petitioncr·s business is not subject to VAT. the capital goods it purchased arc considered not used in VAT taxable business. and therefore. it is not entitled to rcl'uml or input taxes on such capital goods pursuant to Section 4.106-1 and 4.1 OJ - I or RcH~Illle Regulations No. 7-95. Respondent l"urthcr alleged tlwt pctitioiicr· s V 1\T regi stratilln \\ <lS CITonclHIS ami did not confer upon it any right to recognize input tax credit.

llpo11 the other halllL pctitio11er.

111 its I~eply to rcspollllent's Answer.

mnintaincd that:

3. xxx. it is a !"act that petitioner-corporation is a VAT registered entity as shown in its I3 IR Certificate or Registration attached as 1\nncx "(_'" in the Petition.

And it is al so a f~tct that petitioner-corporation is a Phiiippi1tc Lconomic !.tmc Authority (Pl ~7A) registered entity as shm\11 by 1\nncx ·'[)" attached to the Petition.

ll oweYer, it is not true that petitioner availed of the benefi ts offered by Section 24 of Repu blic Act No. 7916 (The Special Economic Zone Act of 1995). Instead, petitioner opted to avail of the benefits of Section 6, Rule X"V of the Rules ami Regulations to Implement Repuhlic Act 79 i6 in relation to PEZA IVIcmot·atu.lum Circulat· No. 2002-007 and PEZA Board Resolution No. 0 1-161:

3.1 With the ath'Cnt or R.A. 79 16 ''hi ell took crrcct on June

12. I 995. newly regi stered or expanding PEZA enterprises were allotted to m·ai l lirst or the Income Tax lloliday il" qualili ed allll then t h e)<~-;, prclcrcntiai tax which is based on

DECISION-

CTA CASE NO. 65.3-t I'A(;E (, .., 7 _l __ gross iiiCOille eamcd <llld IS Ill lieu of <Ill\" llatiollai ur JocaJ taxes:

i'<lr<lgr<tph 7 or 1'1-:l!\ 13uard Res.1lution No. 01-161 st<ltcs that: ··Fo1· LJUI"{Jose.\ o/ (/1'oilment o · lri I incenti1·es l!.J.Il{e_[_thes('__:SUideline.\. catifit·ution o/the 1'/:Z:I Director Cienerul on the dote of the sturt o/ col!/1/laciu/ operulions

(SCO)

shu// he _0..J.!}}icient.:

(italics ami underscoring supplied):

3.3 The CertiJication or the PEl./\ Director C:ieneral on the date or the start or COllllllerciaJ operations issued to the petitioner-corporation is attached in tile Petition as /\1mex

-T-·:

3.4 l11 V /\T ruling 037-LJS. 131R ruled that: "x x x.

in occonlunce 1rith IJPIJJ ·.., FEZ. I Certificufe o/ R.e!!,istmfiun und its cuncumifunt Registrution .-lgreemenl ll'ith the J)EZA. DPD/Iws been amnted IIICU/11(' rux 1/o/idur ((Jr (/period o/ (imr (-/} 1·eurs. that. ufier this -l-1·eur Income Tux 1/o/idu) ·. if shu// hencefiHth he e.rempt ti'olll ullnufiunul und lucul tuxes and in lieu thereof. if shu// he suhiect to tux of the mfe o( ~ercenf (5 %). hosed 011 gross income eurned In riell ', thereof. please he infimned !hut during this -1-reur income Tux Jlolidur. DP J)f shu// onlr he exempt (i·om income tax. 1/(J\I'I!l'er. f)f)f)J shu// he suhiecl to other intemct! rerenue fares {J/'Ol'ided under the Nutionul lnternul Rerenue Code. such us hut not limited to. mlue-uddi!d tux. x x x" (ita lics and underscori11 !-'- supplied):

3.5 /\gain in V /\T Ruling 027-LJLJ. L31R ruled that: ".r x x. please be inf(;nned thut since G'OJJ is enfot·ing the income Tux I/o/ida)' incenlil'l! and not the 5% tinct! tux on gmss /u.wh/e income eumed in lieu o/ all tu.res under Section 2-1 o/R. .. I. IY/o (/'/:Z,J LUlr). it ((;//ems t!J.v1...J.!..!!.· lu.r tJIII'J)Oses. GOJI is still goJ·emed hr the pro1·ision.l o/the Notional Jntemul Rerenue Code (,\'JRCJ.

7here(iJre.

the

I A 7'

pro1·isions of the Code ore optJiicuble to it. x x x

GUll's

purclwse of seJTices (i·om its I ':1 ?'-registered building con/roc/or. (ur the construction u[its ({teton building comes \l'ifhin the tJIIITiell' of u tmrclwse o( capital ~.?,oods, hence. GO.J/ nun• UJJtJ!r (iJ!· the is.\UWICe o(u tux credit certi(icute or re(imd o/the illtml tuxes {}(tssed nn hr the said con/rue/or. fJIII'SUWII to Sec/ion 1/ 2(/J}. 1\'/RC o( I YY I. pml·ided such upp/icution is I!Wde ll'ithin fli'(J (2) rears u(ier the close of the tuxuhle lfl/Urfer in lt'hich such tmrclwse li'US mude, urorided. /itrther. tho! such intJUI tuxes hu1·e not heen

I>FCISION -

CTA Ci\SF NO. (,5J-t I'At;E 7 applied against (/(}.//'.\ out;mt tuxes ... (italics and umkrscori11g supplied):

_j.(, h-en assumi11g arguendo that petitioner-corporation Pptcd to (1\'ail or the benefits or Section 24 orR./\. 79 16. and not the bCIICiits or the Income Tax lloliday. petitioner can still he considered as engaged in V ;\T taxable business. V J\T is a rorm ol· indirect tax.

But I here is no existing pro,·ision under R.J\. 79 1 (J that Pl::/.1\-registcred enterprises. maybe considered exempt l'rom ·'indirect taxes ... The 5% tax on such enterpri ses. in I ieu or a II taxes othenYise d i reel I y due thercrrom. is a direct l<lX in clwractcr. (V J\T Ruling 055-98): J. 7 In other \Yords. as a Pl ~ l.J\- reg i stc red entity. petitioner- corporation \\'as not di,·ested ur its ch<l!'acter as VAT- regi stered.

It is not erroneous to allege therelore. that petitioner is a V 1\ T-registered entity in contrast with the allegation under Paragraph 4 of the respondent's "Answer''. Procecdi11g no\\ to the issue or '' hether or not petitioner availed or the hl'llCiits (5% gross illCOilll' l<lX) under Scctitlll 2-l ur Republic Act No. 79 I (J. othcnvise kiHl\\11 as Special Fconomic lPilC Act or 1995. thi s cu·:.rt rules ill the ltegative. Although it is prO\ idcd under Section 24 or RJ\ No. 7916 that PEl./\ registered enterprises arc subject to 5';;, l<tx on gruss income i11 lieu or national allll local 1<1xcs including V 1\T. it is incorrect ror the respondent to automatically assume that petitioner is subject to the 5% tax Pn gross illCUill C. This court had already ruled un sc\-cral occasions that there me l\\o sets or li sc<ll incenti,·es ava il <1hle to a Pl ~ ZJ\ registered enterprise. 1Wn1ely: I) incenti,·es under Presidential Decree No. (>6. as amended. and Section 24 orR/\ No 79 I G. \Yhich include the S'Yu prel'crential tax rate on gross income earned in li eu or national and l()e<ll taxes: and 2) incentives under 13ook VI ol· Executive Order ( U)) Nu. 22(J. as amended. '' hich include income tax lwliday for 4 to 6 years. depending on \Yhethcr the enterprise is registered as pio11ecr tlr llOn-pionccr. These t\\'0 sets or inccnli\'CS arc in the <litcrnativc and cannot be <I\ ailed or <II tile S<llllC time by a IT/.;\ regi stered enterprise (llitaclii Computer

DECI SION -

CTA CASE NO. 6534

PAG E 8

Pmducts Asia (Asia) Co11Joration vs. Commissioner l~llntemal Revenue, CTA Case No. 5943, A ugust 6, 2001 as affirmed by tlte Court l~lAppeals in Commissioner of • lntemal Revenue I'S. 1/itaclti Computer Produc:ts (Asia) Corporation, CA-G.R. SP. No. 66342, April 25, 2003 ).

In the present case. petitioner m·ailed of the income tax holiday incenti ve effective September I. 200 I as can be seen from the Notice of Approval of SCO No. 2002-0 14 dated .June 20. 2002 issued by PEZJ\ to petitioner (Exhibit F). lienee, it is only exempt from income tax and is still liable to pa:v .,ther national internal revenue taxes as may be imposed upon it by la\Y.

Inasmuch as petitioner is registered as a V J\T entity. it is subject to V J\T. Contrary to respondent 's claim. petitioner's V J\T registration was not erroneous and petitioner may claim refund/tax credit o f' the unutilized input V J\T it paid on capital goods purchased upon compliance with certain requirements provided fo r by law.

We now determine whether or not petitioner· s purchase of services from Shimizu fa lls within the purview o f' "purchase o f' capital goods" under Section li 2(B) ofthe National Internal Revenue Code (N lRC) of' 1997. Section 4. 1 OG- 1 (b) o f' Revenue Regulations No. 7-95 1n implementing said Section 11 2( 11) defines capital goods as follows: "Capital goods or proprrties" refer to goods or properties with estimated useful li fe greater tnan one year and which are treated as depreciable assets under Section 29 (f). used directly or indirectly in the production or sale of taxable goods or services. (Under] ining ours.) lt has already been settled that the cost of services is within the scope and meaning 0 r the term "capital goods., i r the same forms part 0 r the cost 0 f a capital asset.

In the case or 1-/opewe/1 Po11•er (Piti/ippines) CoqJ. vs. Commissioner ~l Iutemal Revenue, CTA Case No. 5389, Jauum:l' 4, 1999 /affirmed by tlte Court lif I>F.CISION - CTA CASE NO. 653-t

I'AGElJ

Appeals 111 lite case of Commissio11er of l11temal Rel'e/lue I'S. /-/opeJVe/1 PoJVer (Piii/s.) Corp .• CA-G.R. SP No. 51617, Marclt /7, 200/f. this court ruled that the • purchases made by llopC\\CII consisting mostly or engineering and structural services !( 11· the construction or its po\\er plant arc considered as capital goods. In determining \\hat constitutes capital goods. courts \Yill look to the origin and character of the ex penditure to determine whether it is a capital asset. This court found that llopewell cxpcmlcd l·or engineering and structural services l(n the purpose or constructing power plant facilities needed in the production or electricity. \\'hich is llopewell's main product. Thus. it was held that se1id ex penses are necessary and should form part or the cost or the power plant facilities.

The present petition is no di ITcrcnt from the alorecitcd case. The Cottstructiun Letter ol' Intent (Erhihir /!). billings dated l'vlay 20. 2000 and Jul y 24. 2000 (F~x hihits I & 1\.) as \\ell as the orlicial receipts (Lxhihits.! & U !'rom Shimizu proved that the services paid lor by petitioner to the l(mncr pertained to the construction or its factory building. Undoubtedly. the said construction services shall lorm part of' the cost ol' the !~1ctor y building.

Pursuant to Section 4.106.1(b) of Revenue Regulations 7-95. the 1~1C t01'} ' building 1~1 11 S \Yithin the definition or capital goods because: I) it has an estimated use ful life of more than one year: 2) it is to be used by petitioner in its manul:1cturc Pi' microchip transistors and titalium products (TSN. .Jamtmy 16. 2003. puge I Y) and 3) it is subject to depreciation under Section 34(f) of the NIRC or 1997.

Anent the fo urth and firth issues. Section 11 2(13) or the 1997 Tax Code reads as l(>llows:

"SEC. J 12. ReJimds or Tax Credits of l11put Tax. -

I>FCISION-

CTi\ Ci\SF NO. f•='.\.1

I'ACF 10

"( L3) C 'aJJitul Goods. - !\ VAT-registered person may apply lor the issuance p(' a tax credit certificate or refund or input taxes paid on capital goods imported or locally purchased. to the extent that such input taxes have not been applied <tgainst output taxes. The application may be made only within t\Hl (2) years alter the close or the taxable qumter \VItcn the importation or purchase was made." Relati\ e thereto. Sections 4.106-l(b) and 4.104-5 of'Rncnue Regulations No. "SEC. 4.106-1. Re.fimds or tax credits of input tax. -

(a) xxx

(h) Capital Goods. - Only a V /\T-rcgistcrcd person may apply lor the issuance or a tax credit certificate or refund or input taxes paid on capital goods imported or locally purchased. The rcl'und shall be allowed to the extent that such input ta xc~. have not been applied against output taxes. The application should be made within two (2) years alter the close or the taxable quarter when the importation or purchase was made.

Refund or input taxes on capital goods shall be allowed only to the extent that such capital goods arc used in V /\T taxable business. I r it is <tiso used itt e:-;entpt opcr<~lion s . tlte input l<t'\ refundable slwll on ly be tltc ntl<thlc portion corresponding to tlte ta:-;able operations. "SEC. 4.1 0-'-5. Substantiation of claims for input tax ct·cdit. -

(a) Input taxes shall be alllmnl only if' the domestic purchase of goods. properties or services is made in the course or trade or business. The in put tax should be su pportcd by an i m oi cc or receipt showing the information as required under Section I 08 (a) and 238 or the Code. Input tax on purchases or real property should be supported by a copy or the public instrument i.e. deed or absolute sale. deed or conditional sale. contract/agreement to sell. etc .. together \Yilh the V /\T receipt issued by the seller.

'\XX '\XX

(b) Input ta:-; on importations shall l•e supported with the import entry or other equivalent document shoh ing actual payment or VAT on the imported goods:· Clearly. from the foregoing provisions. in order to he entitled to a refund/tax credit or input V /\T paid on capital goods purchased. peti t i'.• •cr must prove that: I) it is a V /\T registered entity:

DFCISJON-

CTA CASE NO. 6534 I'A<;FJI 2 ) it paid input V /\T on capital goods purchased: 3) its input V /\T payments on capital goods arc dul y supported by V /\T invoices and/or of"licial receipts:

4) it did not o l"fsct or app] y the claimed input V /\T payments on capital goods against any output V i\T liability: and 4 5) the claim for rel.und \Yas filed \\ ilhin the 1\\ o-ycar prescripti ve period both in the mlministrati,·e and judicial le\-cl s (Te/eco1111111111icatio11s Tecltllologies P!tilippilles, l11c. l'S. Commissio11er l~/"lllfemal Reve/lue, C TA Case No. 60 I 8, Nol·ember 24, 2003 ).

i\s stated earlier. petitioner is a V i\T registered entity. Likewise, it was sho\\ n that the claimed input V ;\T pay1ncnt o l" 1'30.359.(, 15.40 was dul y covered by va lid V i\T o l"l"icial receipts issued by Shi1nizu to petitioner on .luly 7 and i\ugust 3, 2000. The factory building. Cor \Vhich the said input V /\T of P30.359.6 15.40 was incurred/paid. fall s " ·ithin the definiti on or capital goods under Section 4. 106-1 (b) or Revenue Regulations No. 7-95. as earlier di scussed. Also. it \\ as established that petitioner's claim lo r refund/tax credit \Yas timely filed both in the administrati ve and In compliance \\i th the fourth requisite. petitioner sub1nittcd i11 evidence its 1\ lonthly Va lue-i\dded Tax Declarations lo r .luly. i\ugust. October and November, 2000 (Erhihits 0. P. R & S) and Quarterl y Value-Added Tax Returns fo r the third and fourth quarters or 2000 (f.rhihits (j & T) which rellected no output V /\T liability <1ga insl which the claimed input V ;\T or J>30.359.6 15AO may be applied or credited. llowever. thi s court linds the preceding docume!lLS insul'licient. It is to be emphasized that during the alo resaid periods. petitioner had no output V i\T liability simply because it had not started its commercial operations. Petitioner should have submitted at the very least its VAT rd urn Cor the third quarter or 200 I. considering that the e iTecti vity date or its commercial operations was on September I. 200 I, in order lo r thi s court to veri l'y \Yith certainty that it did nut carry-over/apply the claimed I>F.CISION - CTA CASE NO. (•53-t I'A<;EJ2 input t<t.\es to the said qLwrter or other succeeding quarters. 1\ loreover. thi s court noted that the claimed excess input V ;\T for the third quarter ol· 2000 was forwarded ~ to the succeeding Cuurth quarter of' 2000 (l:xhihi/.1 (j & 7} /\!though under Section 110(13) ol'the NIRC Pi' 1997. petitioner is allo\\ed to cmry-0\er the excess input V/\T ul· a gi \'en q u<t rter to the succeeding quarter( s ). petitioner should hcl\'C dcd ucted the claimed input taxes !'rom its accumu lated input V ;\T <lS or the quarter when it opted tu file a claim therel\.1r as prt1\'ided under Section II O(C) ol' the Nl RC of' 1997. to wit: "SEC. II 0. Tax Credits.- :xn

XXX

XXX

"(C) Determination o(Credituh/e Input Tux. - The sum of' the excess input tax carried O\'er f'rom the precedinL'. month or quarter ami the input tax creditable to a V 1\T-reL'.istered person durinL'. the taxable month or quarter shall be reduced bv the amount or claim lor rerund or tax credit lor value-added tax ami other adjustments. such as purchase returns or allmYanccs and input t<JX attributable to exempt sale. "The claim ll.ll· tax credit re!Crred tt' ;,1 the l'oregoing paragraph shall include not on ly those filed \\ith the nurcau or lntemal l~ e\'eJ1Ue but also those filed \\ith other gu,·ernment agencies. such as the 13oard or ln\'Cstments :111d the Bureau oi' Customs ... (Underlining supplied) The reason 1\.)r the deduction is to assure that the claimed input VAT shall not be applied against any 1\tture output V 1\T liability. To grant petitioner's claim for ref'und. \Yithout proof' ol· deduction or the corresponding amount. would be d<utgerous and tantamount to granting twice the refund herein sought to be ref'unded. to the prejudice or the Govenunent (IJASF P!tilippines, Inc. I'S. Commissioner (~llntema/ Rel'ei/Ue, CTA Case No. 6175, Marc!t 20, 2002; lnte/1'/tilippines Malll~fiu:turing, Inc. vs. Commissiouer of lntemal Re1·enue, CT/-t Case Nos. 5760 & 5902, FebmmJ' 5, 2002; AMI Philippines, Inc. I'S. Commissioner t~f'lntemal Re1·enue, CTA Case

DEC ISION-

CTA CASE NO. ()::;_q No. 5304, Ja/ltUII:I' 20, /91.)8; AJl/1 1'/tilippilles. /11c. !'S. Commis.\io11er t~f'lntemal Rel'e/lue, CTA Case Nos. 5187 & 511.)9, October 2, 1997). • IN VIEW OF ALL TilE FOREGOING. the instant petition !'or review is hcrclw DI ~ N II ~ D !'or lack ol'lllerit.

CERTIFICATION

I herclw certil'\ that the abl)\'e dec ision \\aS reached al'ter due consultation with .

.

the members ol' the Court ol' Tn;-; Appeals in accordance \\ith Section 13. Article VIII of the Constitution.

L~.~ ERNESTO 0 . ACOSTA Presiding .Justice