G.R. No. 205055, July 18, 2014
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. TEAM SUAL CORPORATION (FORMERLY MIRANT SUAL CORPORATION), Respondent.
D E C I S I O N
Zero-Rated Sales/ Receipts
1. That there must be zero-rated or effectively zero-rated sales;
2. That input taxes were incurred or paid;
3. That such input taxes are attributable to zero-rated sales or effectively zero-rated sales;
4. That the input taxes were not applied against any output VAT liability; and
5. That the claim for refund was filed within the two-year prescriptive period.7
WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in the amount of SEVENTY EIGHT MILLION NINE THOUSAND EIGHT HUNDRED NINETY ONE PESOS AND 56/100 (P78,009,891.56) to petitioner, representing unutilized excess input VAT attributable to its effectively zero-rated sales to NPC for the four quarters of taxable year 2004.
WHEREFORE, premises considered, respondent’s “Motion for Partial Reconsideration” is hereby DENIED for lack of merit while petitioner’s “Motion for Partial Reconsideration” is hereby PARTIALLY GRANTED.
Accordingly, petitioner’s claim for refund or issuance of tax credit certificate representing unutilized input VAT for taxable year 2004 is GRANTED in the total adjusted amount of NINETY SIX MILLION EIGHT HUNDRED FORTY SIX THOUSAND AND TWO HUNDRED THIRTY FOUR PESOS AND 31/100 (P96,846,234.31) or an additional EIGHTEEN MILLION EIGHT HUNDRED THIRTY SIX THOUSAND AND THREE HUNDRED FORTY TWO PESOS AND 75/100 (P18,836,342.75) on its previously granted claim of SEVENTY EIGHT MILLION NINE THOUSAND EIGHT HUNDRED NINETY ONE PESOS AND 56/100 (P78,009,891.56).
WHEREFORE, premises considered, the present Petition for Review is hereby DENIED DUE COURSE, and, accordingly DISMISSED for lack of merit. The Amended Decision dated April 5, 2011 is hereby AFFIRMED.
THE [CTA EB] GRAVELY ERRED IN DENYING DUE COURSE TO [CIR]’S PETITION FOR REVIEW IN [CTA] EB NO. 768 AND IN AFFIRMING THE DECISION OF ITS SPECIAL FIRST DIVISION THAT [TSC] IS ENTITLED TO A REFUND OR TAX CREDIT CERTIFICATE IN THE AMOUNT OF P96,846,234.31 BECAUSE IT WAS ABLE TO SUBMIT THE LEGALLY REQUIRED DOCUMENTS IN ITS APPLICATION FOR REFUND.13
Sec. 112. Refunds or Tax Credits of Input Tax. —
(A) Zero-rated or Effectively Zero-rated Sales—Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero- rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales
x x x x
(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. — In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals.14
SECTION 2. Section 16 of Revenue Regulations 5-87 is hereby amended to read as follows:
SECTION 16. Refunds or tax credits of input tax. –
x x x x
(c) Claims for tax credits/refunds. – 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:
x x x x
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 the 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 delivered. iii) evidence of actual receipt of goods or services.
x x x x
5. In applicable cases, where the applicant’s zero-rated transactions are regulated by certain government agencies, a statement therefrom showing the amount and description of sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold, and date of transaction shall also be submitted.
In all cases, the amount of refund or tax credit that may be granted shall be limited to the amount of the value-added tax (VAT) paid directly and entirely attributable to the zero-rated transaction during the period covered by the application for credit or refund.
Where the applicant is engaged in zero-rated and other taxable and exempt sales of goods and services, and the VAT paid (inputs) on purchases of goods and services cannot be directly attributed to any of the aforementioned transactions, the following formula shall be used to determine the creditable or refundable input tax for zero-rated sale:
Amount of Zero-rated Sale
Total Amount of Input Taxes
x x x x
1. BIR Certificate of Registration (Annex “A”, Petition for Review, CTA Case No. 7470, vol. 1, p. 13);
2. Quarterly VAT returns for the first, second, third and fourth quarters of 2004 (Exhibits “D”, “E”, “F”, “G”, & “H”);
3. Summary of Input Tax Payments for the first, second, third and fourth quarters of 2004 showing details of purchases of goods and service as well as the corresponding input tax paid (Exhibits “D” to “D-
3”, “E” to “E-5-b”, “F” to “F-4-b”, “H-3” to “H-4-c”);
4. VAT official receipts and invoices for the first, second, third and fourth quarters of 2004 (Exhibits “QQ”-7” to “QQ-21-d”, “RR-17”, “SS-1” to “SS-19” & “TT-1” to TT-18”);
5. Approved Certificate for Zero-Rate (Exhibit “A”); and
6. Application for Tax Credit/Refund (BIR Form 1914) (Exhibit “B-3”)18
1 Under Rule 45 of the 1997 Rules of Civil Procedure. Rollo, pp. 9-32.
2 Penned by Associate Justice Olga Palanca-Enriquez, with Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Pabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco Manalastas, concurring. Id. at 39-51.
3 Id. at 176-178.
4 Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta and Associate Justice Caesar A. Casanova, concurring. ld. at 97-115.
5 Petitioner was originally registered with the Securities and Exchange Commission (SEC) under the name "Pangasinan Electric Corporation." Over the years, petitioner changed its name to “Southern Energy Pangasinan, Inc.” on 17 August 1999; “Mirant Sual Corporation” on 28 June 2001; and Team Sual Corporation on 23 July 2007. Id. at 78.
6 Penned by Associate Justice Lovell R. Bautista, with Presiding Justice Ernesto D. Acosta and Associate Justice Caesar A. Casanova, concurring. Id. at 77-96.
7 Id. at 82.
8 Id. at 94. Computed as follows:
Declared Zero-Rated Sales/Receipts P14,915,836,460.42 Less: Sales to entities other than NPC 568,628,238.98 Less: Zero-Rated Sales covered by OR dated outside the period of claim 2,430,229,567.30 Adjusted Valid Zero-Rated Sales P11,916,978,654.14 Total Input VAT Claim P103,302,627.88 Less: Disallowances (Per ICPA) 1,092,317.62 (Per this Court’s further verification) 4,398,315.03 Adjusted Valid Input VAT: P 97,811,995.23 Less: Output VAT: 171,240.93 Valid Excess Input VAT P 97,640,754.30 Valid Zero-Rated Sales/Receipts P 11,916,978,654.14 Divided by Total Reported Zero-Rated Sales/ Receipts ÷ P14,915,836,460.42 Multiplied by Valid Excess Input VAT x P 97,640,754.30 Excess Input VAT attributable to the Valid Zero-Rated Sales/Receipts P 78,009,891.56
9 Id. at 95-96.
10 Id. at 113. Computed as follows:
Declared Zero-Rated Sales/ Receipts P14,915,836,460.42 Less: Sales to entities other than NPC 568,628,238.98 Less: Zero-Rated Sales covered by OR dated outside the period of claim 7,232,794.92 Adjusted Valid Zero-Rated Sales P14,339,975,426.52 Total Input VAT Claim P103,302,627.88 Less: Disallowances (Per ICPA) 1,092,317.62 (Per this Court’s further verification) 4,398,315.03 Add: Substantiated input VAT 3,094,606.10 Adjusted Valid input VAT P 100,906,601.33 Less: Output VAT 171,240.93 Adjusted Excess Valid Input VAT P 100,735,360.40 Adjusted Valid Zero-Rated [S]ales P14,339,975,426.52 Divided by total declared zero-rated sales ÷ P14,915,836,460.42 Multiplied by adjusted excess valid input VAT x P 100,735,360.40 Adjusted excess input VAT attributable to zero-rated sales P 96,846,234.31
11 Id. at 114.
12 Id. at 50.
13 Id. at 16.
14 National Internal Revenue Code of 1997, as amended by Republic Act No. 9337, Section 112.
15Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, 550 Phil. 751 (2007).
16Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 159471, 26 January 2011, 640 SCRA 504; Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, 560 Phil. 322 (2007); Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, 551 Phil. 519 (2007); Commissioner of Internal Revenue v. Manila Mining Corp., 505 Phil. 650 (2005).
17 G.R. No. 182364, 3 August 2010, 626 SCRA 567.
18Rollo, p. 49.
19Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, G.R. No. 193301, 11 March 2013, 693 SCRA 49.
20Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 168856, 29 August 2012, 679 SCRA 305; Microsoft Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 180173, 6 April 2011, 647 SCRA 398.
21Panasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue, G.R. No. 178090, 8 February 2010, 612 SCRA 28.
22 Annex B of RMO 53-98 provides:
x x x x
A) Requirements from Taxpayers
1) Proof of claimed tax credits; 2) Proof of Tax Compliance Certificates applied; 3) Xerox copy of used Tax Credit Certificate (TCC) with annotation of issued TDM at the back, if applicable;
4) Proof of payment of deficiency tax, if any: a) current year/period; b) previous year/period;
5) Certification of the appropriate government agency as to taxpayer’s entitlement to tax incentives, if applicable; 6) Xerox copies of the Official Receipts evidencing VAT payment on imported purchases, if applicable; 7) Proof of exemption under special law, if applicable;
8) Certification of the appropriate regulatory agency as to the exempt or zero-rated sales of the taxpayer under its regulatory supervision, if applicable; 9) Certificate of Registration issued by the appropriate regulatory agency, together with the conditions attached to such registration, if applicable; 10) Proof of “Approval for Effective Zero-Rating of Sales”, if applicable; 11) Sample invoice/s for “Export/Exempt Sales”, if applicable; 12) Proof that the acceptable foreign currency exchange proceeds on export sales/foreign currency denominated sales had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP), if applicable. (Emphasis supplied)
ANNEX B-1 of the RMO 53-98 provides:
VALUE-ADDED TAX (For audit involving Claim for Refund/TCC)
A.) Requirements from Taxpayer
I. Requirements mentioned in Annex B
II. Additional General Requirements
1) 3 copies of “Application for VAT Credit/Refund”; 2) Summary List of Local Purchases specifying the following: x x x; 3) Photocopies of VAT purchase invoices for purchase of goods and official receipts for purchase of services. (The invoices/official receipts must be arranged according to the summary list); 4) Summary of importations made during the period with the following details: x x x; 5) Photocopies of invoices, import entry documents, official receipts or confirmation receipts evidencing payment of VAT. x x x; 6) VAT Returns filed for the quarter showing that the amount applied for refund/TCC has been reflected as a deduction from the total available input tax, as well as VAT Return for the succeeding quarter; 7) Certification of taxpayer showing the amount of Zero-rated Sales, Taxable Sales and Exempt Sales; 8) A statement showing the amount and description of the sale of goods and services, name of persons or entities (except in case of exports) to whom the goods or services were sold and date of the transaction, where the applicant’s zero-rated transactions are regulated by certain government agency; 9) Articles of Incorporation — for first time filers; 10) Sales Contract/Agreement; 11) BOI Certificate of Registration; 12) BIR Certificate of Registration; 13) Certification from BOI, DOF, BOC, EPZA, etc., that subject taxpayer has not filed similar claim for refund covering the same period; 14) Sworn statement that ending inventory as of the close of the period covered by the claim has been used directly or indirectly in the products subsequently exported as supported by export documents, if the applicant is 100% exporter; 15) Documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70% of which has been actually exported, if the applicant is an indirect exporter; 16) Copy of the ITR and Certified Financial Statements, if applicable; 17) Beginning and ending inventory of raw materials, work- in-process, finished goods, supplies and materials x x x.
23 RMC 42-03 provides:
Subject: Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS) by Direct Exporters.
x x x x
Q-16: Can the TCC processing office accept supporting documents of claimant companies which were issued denial letters, or letters of denial of claim due to absence of certain documents? A-16: Taxpayers whose claims were denied due to failure to submit supporting documents are given a period of thirty (30) days from receipt of the letter of denial to file a request for reconsideration and to submit the required documents to the Tax and Revenue Group, OSS-DOF or to other concerned BIR offices which issued the denial letter. x x x.
24 The charter of the CTA, RA 1125, as amended, provides: Section 7. Jurisdiction. — The CTA shall exercise:
(1) x x x x
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; x x x x (Emphasis supplied)
25Commissioner of Internal Revenue v. San Roque Power Corporation, G.R. No. 187485, 12 February 2013, 690 SCRA 336.