THIRD DIVISION
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AT&T COMMUNICATIONS SERVICES PHILIPPINES, INC., Petitioner, |
G.R. No. 182364 Present: |
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- versus - COMMISSIONER OF INTERNAL REVENUE, |
CARPIO MORALES, J.,
Chairperson, BRION, BERSAMIN, ABAD,* and VILLARAMA, JR., JJ. |
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Respondent. |
Promulgated: August 3, 2010 |
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D E C I S I O N
CARPIO
MORALES, J.,
AT&T
Communications Services Philippines, Inc. (petitioner) is a domestic
corporation primarily engaged in the business of providing information,
promotional, supportive and liaison services to foreign corporations such as AT&T
Communications Services International Inc., AT&T Solutions, Inc., AT&T
Singapore, Pte. Ltd.,, AT&T Global Communications Services, Inc. and Acer,
Inc., an enterprise registered with the Philippine Economic Zone Authority
(PEZA).
Under
Service Agreements forged by petitioner with the above-named corporations,
remuneration is paid in U.S. Dollars and inwardly remitted in accordance with
the rules and regulations of the Bangko
Sentral ng Pilipinas (BSP).
For the calendar year 2002, petitioner
incurred input VAT when it generated and recorded zero-rated sales in connection with its Service
Agreements in the peso equivalent of P56,898,744.05. Petitioner also
incurred input VAT from purchases of
capital goods and other taxable goods and services, and importation of capital
goods.
Despite the application of petitioner’s
input VAT against its output VAT, an excess of unutilized input VAT in the
amount of P2,050,736.69 remained. As petitioner’s unutilized input VAT could
not be directly and exclusively attributed to either of its zero-rated sales or
its domestic sales, an allocation of the input VAT was made which resulted in
the amount of P1,801,826.82 as petitioner’s claim attributable to its
zero-rated sales.
On P1,801,826.82.[1]
To prevent the running of the
prescriptive period, petitioner subsequently filed a petition for review with
the Court of Tax Appeals (CTA) which was docketed as CTA Case No. 6907 and
lodged before its First Division.
In support of its claim, petitioner
presented documents including its Summary of Zero-Rated Sales (Exhibit “DD”)
with corresponding supporting documents; VAT invoices on which were stamped
“zero-rated” and bank credit advices (Exhibits “EE-1” to “EE-56”); copies of
Service Agreements (Exhibits “N” to “Q”); and report of the commissioned
certified public accountant (Exhibit “AA” to “AA-22”).
After petitioner presented its evidence,
respondent did not, despite notice, proffer any opposition to it. He was eventually declared to have waived his
right to present evidence.
By Decision of
In
reiteration, considering that the subject revenues pertain to gross receipts
from services rendered by petitioner, valid
VAT official receipts and not mere sales invoices should have been submitted in support thereof. Without proper VAT
official receipts, the foreign currency payments received by petitioner from
services rendered for the four (4) quarters of taxable year 2002 in the sum of
US$1,102,315.48 with the peso equivalent of P56,898,744.05 cannot
qualify for zero-rating for VAT purposes. Consequently, the claimed input VAT
payments allegedly attributable thereto in the amount of P1,801,826.82
cannot be granted. It is clear from the provisions of Section 112 (A) of the
NIRC of 1997 that there must be zero-rated or effectively zero-rated sales in
order that a refund of input VAT could prosper.
x x
x x[3] (emphasis and underscoring supplied)
The
CTA First Division, relying on Sections 106[4]
and 108[5] of
the Tax Code, held that since petitioner is engaged in sale of services, VAT Official Receipts should
have been presented in order to substantiate its claim of zero-rated sales, not
VAT invoices which pertain to sale of goods or properties.
On petition for review, the CTA En
Banc, by Decision of
The petition is impressed with merit.
A taxpayer engaged in zero-rated
transactions may apply for tax refund or issuance of tax credit certificate for
unutilized input VAT, subject to the following requirements: (1) the taxpayer
is engaged in sales which are zero-rated (i.e.,
export sales) or effectively zero-rated; (2) the taxpayer is VAT-registered;
(3) the claim must be filed within two years after the close of the taxable
quarter when such sales were made; (4) the creditable input tax due or paid
must be attributable to such sales, except the transitional input tax, to the
extent that such input tax has not been applied against the output tax; and (5)
in case of zero-rated sales under Section 106 (A) (2) (a) (1) and (2), Section
106 (B) and Section 108 (B) (1) and (2), the acceptable foreign currency
exchange proceeds thereof have been duly accounted for in accordance with BSP
rules and regulations.[7]
Commissioner of Internal Revenue v.
Seagate Technology (
Zero-rated transactions generally refer to the export sale of goods and supply of services. The tax rate is set at zero. When applied to the tax base, such rate obviously results in no tax chargeable against the purchaser. The seller of such transactions charges no output tax but can claim a refund or a tax credit certificate for the VAT previously charged by suppliers. x x x
Applying the destination principle to the exportation of goods, automatic zero rating is primarily intended to be enjoyed by the seller who is directly and legally liable for the VAT, making such seller internationally competitive by allowing the refund or credit of input taxes that are attributable to export sales. (emphasis and underscoring supplied)
Revenue Regulation No. 3-88 amending
Revenue Regulation No. 5-87 provides the requirements in claiming tax
credits/refunds:
Sec. 2. Section 16 of Revenue Regulations 5-87 is hereby amended to read as follows: 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. x x x (emphasis and underscoring supplied)
Section 113 of the Tax Code does not
create a distinction between a sales invoice and an official receipt.
Sec. 113. Invoicing and Accounting Requirements for
VAT-Registered Persons. –
(A) Invoicing Requirements. – A VAT-registered
person shall, for every sale, issue an invoice or receipt. In addition to the information required under
Section 237, the following information shall be indicated in the invoice or
receipt:
(1) A statement that the seller is a VAT-registered person,
followed by his taxpayer’s identification number (TIN); and
(2) The total amount which the purchaser pays or is
obligated to pay to the seller with the indication that such amount includes
the value-added tax. (emphasis, italics and underscoring supplied)
Section 110 of the 1997 Tax Code in
fact provides:
Section 110. Tax Credits –
A. Creditable Input Tax. –
(1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax:
(b) Purchase of services on which a value-added tax has actually been paid. (emphasis, italics and underscoring supplied)
Parenthetically, to determine the
validity of petitioner’s claim as to unutilized input VAT, an invoice would
suffice provided the requirements under Sections 113 and 237 of the Tax Code are
met.
Sales invoices are recognized
commercial documents to facilitate trade or credit transactions. They are
proofs that a business transaction has been concluded, hence, should not be
considered bereft of probative value.[9] Only the preponderance of evidence threshold
as applied in ordinary civil cases is needed to substantiate a claim for tax
refund proper.[10]
IN
FINE, the Court finds that petitioner has complied with the substantiation
requirements to prove entitlement to refund/tax credit. The Court is not a
trier of facts, however, hence the need to remand the case to the CTA for determination and computation of
petitioner’s refund/tax credit.
WHEREFORE, the petition is GRANTED. The
Decision of
SO
ORDERED.
CONCHITA
CARPIO MORALES
Associate
Justice
Chairperson
WE CONCUR:
|
ARTURO D. BRION Associate Justice |
LUCAS P. BERSAMIN Associate Justice |
|
ROBERTO A. ABAD Associate Justice |
MARTIN S. VILLARAMA, JR. Associate Justice |
ATTESTATION
I attest
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court’s
Division.
CONCHITA CARPIO MORALES
Associate
Justice
Chairperson
CERTIFICATION
Pursuant to
Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
RENATO
C. CORONA
Chief Justice
* Designated
as Additional Member, per Special Order No. 843 (
[1] Rollo, p. 19.
[2] Penned by Associate Justice Caesar A. Casanova with the dissent of Presiding Justice Ernesto D. Acosta and the concurrence of Associate Justice Lovell R. Bautista, id. at 172-186.
[3]
[4] Sec. 106. Value-added Tax on
(D) Determination of the Tax –
(1) The tax shall be computed by multiplying the total amount in the invoice by one-eleventh (1/11).
[5] Sec. 108. Value-added Tax on
(C) Determination of the Tax – The tax shall be computed by multiplying the total amount indicated in the official receipt by one-eleventh (1/11).
[6] Rollo, pp. 63-82.
[7] Intel Technology Philippines,
Inc. v. Commissioner of Internal Revenue, G.R. No. 166732,
[8] G.R. No. 153866,
[9] Seaoil Petroleum Corporation v. Autocorp Group, G.R. No. 164326, October 17, 2008, 569 SCRA 387, 396.
[10] Commissioner of Internal Revenue v. Mirant Pagbilao Corporation, G.R. No. 172129, September 12, 2008, 565 SCRA 154, 166.