Sakamoto Orient Chemicals Corp. v. Commissioner of Internal Revenue

[C.T.A. CASE NO. 5192. January 4, 1999.] SAKAMOTO ORIENT CHEMICALS CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N 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). cdll For taxable year 1993, petitioner filed its quarterly VAT returns as follows: Date Input Tax Period Covered Filed Payments Exh. Jan.-Mar. 1993 4-20-93 P87,390.99 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: "SECTION 100. Value-added tax on sale of goods . (a) Rate and base of tax . 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. . . ." "SECTION 106. Refunds or tax credits of input tax . (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. . . .", petitioner, on August 23, 1994, filed with the BIR a written application for the refund of the amount of P385,340.55, representing its unutilized input VAT for the year 1993 (Exh. Z). As there was no immediate action on the said claim, the instant petition was filed on 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 16. Refunds or Tax Credit on input tax . . . . xxx xxx xxx "(c) Claims for tax credit/refund . Application for tax credit/refund of value added tax paid (BIR Form No. 2552) shall be filed with the Revenue District Office of the City or Municipality where the principal place of business of the applicant is located or directly with the Commissioner, Attention: VAT Division. A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be submitted together with the application. The original copy of the said invoice/receipt however, shall be presented for cancellation prior to the issuance of the Tax Credit Certificate or refund. In addition the following documents shall be attached whenever applicable." xxx xxx xxx (3) Effectively zero-rated sale of goods and services. (i) Photocopy of approved application for zero rate if filing for the first time. (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). 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 Purpose A & S VAT Registration Certificate bearing To prove that petitioner is Reg. No. 32-9-004698 of Sakamoto registered as a VAT taxpayer Orient Chemicals ("Sakamoto" for and is, therefore, entitled to brevity) claim an input tax credit on purchase attributable to its zero-rated export sales B BOI Certificate of Registration of To prove that petitioner is Sakamoto, bearing no. EP 88-872 registered with the BOI as an export producer of refined glycerine C to G Quarterly VAT Returns of To prove the amount of input petitioner for 1993 tax refundable by petitioner for the quarter G-1 Quarterly VAT Returns of To prove that petitioner did not to petitioner for 1994 apply the unutilized input VAT G-4 being claimed for 1993 H Application for Tax Credit/Refund To prove that petitioner duly of VAT of Sakamoto signed by filed said application within the Simon Cezar F. Cabaas two-year period required by law I to R Schedules of Input VAT Payments To prove the input VAT payments made for each month T Certificate of Registration (BIR To prove that petitioner is a Form 1556) of Sakamoto, bearing VAT-registered taxpayer RDO Control No. 94-500-000285 U to Y Certifications issued by various To prove that petitioner earned banks stating that Sakamoto has specified amounts as export coursed through them the export proceeds which were inwardly proceeds remitted thru the Philippine banking system in accordance with CB rules & regulations Z Letter dated August 23, 1994 of To prove that petitioner filed Mr. Simon Cezar F. Cabaas to the an administrative claim for Revenue District Officer, RDO refund with the BIR within the No. 32, BIR East Makati two-year period prescribed by law G-5 Quarterly VAT Returns of To prove that petitioner did not to petitioner for 1995 apply the unutilized input VAT G-8 being claimed for 1993 Official receipts & To prove the fact of payment invoices of input VAT Respondent, on her part, offered the following evidence: Exh. 1 - Letter of Authority dated October 12, 1994 (p. 640, BIR Records) Exh. 2 - Memorandum Report dated January 9, 1995 (p. 659, BIR Records). After an examination of the aforesaid evidence and the 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 payments inwardly remitted to the country (Exhs. U to Y). Petitioner's claim was likewise filed within the two-year prescriptive period and was duly supported by invoices and receipts. And significantly, respondent herself recommended a refund to petitioner although subject to certain adjustments. Thus, We are constrained to grant a reduced amount to petitioner, after taking into consideration the following disallowances made by herein respondent. cdll Input Tax Reference Claimed Remarks 93-7 P157.64 1992 transaction/purchase 93-47 836.36 1992 transaction/purchase 93-48 4,304.73 1992 (Sept.) Security services 93-79 51.82 Not valid VAT invoice/delivery receipt only 93-96 218.42 No date of invoice/undated transaction 93-119 81.82 No VAT no. indicated/no TIN 93-120 981.82 Prov. receipt/not valid VAT invoice 93-129 545.45 VAT No./TIN not stamped handwritten only 93-153 227.09 Sales returns - unaccounted 93-156 30,454.55 1989 purchase - 2 yr. period expired 93-157 30,909.00 1989 purchase - 2 yr. period expired 93-158 39,090.91 1991 purchase - 2 yr. period expired 93-223 1,485.45 No BIR permit 93-291 3,409.09 Input tax claimed based on net payment (Deposit deducted) 93-303 4,304.73 Billing for 1994; OR dated 2-24-94 P117,058.88 (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 P353,372.90 Per Application 385,340.55 Overstatement P31,967.65 ========= WHEREFORE, in view of the foregoing, respondent is hereby ORDERED to REFUND to petitioner the amount of P236,314.02, computed as follows: Amount of claim P385,340.55 Less: Disallowances P117,058.88 Overstatement 31,967.65 149,026.53 Amount Refundable P236,314.02 ========= SO ORDERED. (SGD.) AMANCIO Q. SAGA Associate Judge WE CONCUR: (SGD.) ERNESTO D. ACOSTA Presiding Judge (SGD.) RAMON O. DE VEYRA Associate Judge