Tax Case Digest: Chevron Holdings, Inc. v. CIR, CTA EB No. 1895/1896, March 9, 2020

Chevron Holdings, Inc. v. CIR
CTA EB No. 1895/1896, March 9, 2020.

CTA En Banc
Castaneda, Jr., J.:

Lessons Applicable: filing of the complete supporting documents by the taxpayer in connection with an administrative claim for VAT refund
Laws Applicable: Section 112 (C) of the NIRC of 1997

FACTS:

• October 31, 2013: Chevron Holdings, Inc. (CHI) filed with the Department of Finance One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (DOF-OSS) an administrative claim for refund or issuance of TCC for unutilized input VAT for the 1st quarter of CY 2012 in the total amount of P16,165,791.62.
• January 16, 2014: CHI filed with DOF-OSS an administrative claim for refund or issuance of TCC for unutilized input VAT for the 2nd quarter of CY 2012 in the total amount of P19,732,044.98.
• February 17 and 27, 2014: CHI submitted additional documents required under the First Notice attached to the Letter of Authority (LOA) No.  LOA-311-2013-0000050327 dated November 28, 2013.
• March 14, 2014: CHI received LOA No. LOA-411-2014-00000015 dated March 10, 2014.
• Due to CIR’s inaction on its administrative claims for refund, it filed a Petition for Review on March 28, 2014 for CTA Case No. 8790 and June 13, 2014 for CTA Case No. 8835.
• January 18 and July 10, 2018: CTA 1st Division issued the assailed decision
• August 14, 2018: CHI filed its Petition for Review in CTA EB No. 1895 and CIR filed his Petition for Review in CTA EB No. 1896. 

ISSUES:
1.    W/N CTA has jurisdiction
2.    W/N CHI is entitled to its entire refund claim.

HELD: Dismissed.
1.    NO.  CHI complied with the thirty (30) day period from the request of the BIR dated February 7, 2014 when it submitted its last batch of supporting documents on February 27, 2014.  But, failed to observe the unqualified provision of law regarding the 120-day period which commences from the taxpayer’s submission of complete documents.  In other words, while Chevron’s due process were observed following the pronouncement of the Supreme Court in the Total case, Chevron completely disregarded the BIR’s right to be afforded opportunity to review its claims.  Thus, Chevron’s haste in elevating the instant case to the CTA is a blatant violation of the doctrine of exhaustion of administrative remedies as pronounced in the San Roque case.

• Subject provision works to protect both the taxpayer and the BIR from belated resolution of the claim and from prematurity of elevating the same to the proper courts, respectively.
• To be sure, it is the taxpayer who ultimately determines when complete documents have been submitted for the purpose of commencing and continuing the running of the 120-day period.  Nevertheless, the Supreme Court also emphasized that the forgoing benefit given to taxpayer is not unbridled and, as such, is subject to limitations.  Hence, based on the above-quoted portion of Pilipinas Total Gas, the filing of the complete supporting documents by the taxpayer in connection with an administrative claim for VAT refund is subject to the following rules:

a.    Upon filing of his application for tax credit or refund for excess creditable input taxes, the taxpayer-claimant is given thirty (30) days within which to complete the required documents within thirty (30) days from request of the investigation/processing unit. 
b.    If in the course of the investigation and processing of the claim, additional documents are required for the proper determination of the legitimate amount of the claim, the taxpayer-claimants shall submit such documents within thirty (30) days from request of the investigation/processing unit.  Notice of the request for the submission of additional supporting document is required.
c.    It is only upon the submission of the taxpayer that the 120-day period would begin to run.
d.    In all cases, whatever documents a taxpayer intends to file to support his claim must be completed within the two-year period under Section 112 (A) of the NIRC.

2.    NO.

• Chevon’s presentation of its clients’ (1) SEC Certificates of Non-Registration (2) screenshots of Chevron Subsidiary governance website and (3) Service Agreements, may have sufficed to prove that they were foreign corporations.  However, these pieces of evidence are insufficient to prove that they are doing business outside the Philippines.
• Even if RMC No. 42-03 allows out-of-period claims of input VAT, the same cannot be adhered to, as it contravenes Section 110 (A)(2) of the NIRC OF 1997, as amended.  It is clear from the foregoing provision that for purchases of goods, the corresponding input value added taxes of which is creditable to the purchaser upon the issuance of the corresponding invoice.  On the other hand, for purchases of services, the corresponding input value added taxes of which is creditable to the purchaser upon payment of compensation, rental, royalty or fee, that is, upon the date of official receipt.  Section 110 (A) is explicit – upon consummation, in the case of domestic purchases of goods, and upon payment, in the case of purchases of services.  It does not provide any qualification.

Tax Case Digest: Macquarie Offshore Services v. CIR CTA Case No. 9722, March 12, 2020.

Macquarie Offshore Services v. CIR
CTA Case No. 9722, March 12, 2020.

CTA Second Division
Mindaro-Grulla, J.:

Lessons Applicable: VAT refund claim, zero-rated sales
Laws Applicable: Section 112 (A) and (C) of the NIRC of 1997, Sections 106(A)(2)(1) and (2); 106(B) and 108(B)(1) and (2)

FACTS:

• June 29, 2017: Macquarie Offshore Services Pty Ltd. (Philippines Branch) (MOS) filed with the BIR an Application for Tax Credits / Refunds with corresponding Checklist of Mandatory Requirements for Claims for VAT Credit/Refund, and the letter dated June 29, 2017, applying for refund of its alleged excess and unutilized input VAT in the total amount of P85,098,492.89 for the 1st to 4th quarters of the FY 2016.
• November 24, 2017: MOS filed the instant Petition for Review

ISSUE: W/N  VAT credit or claim should be allowed

HELD: Denied.

NO.

• Based on Section 112 (A) and (C) of the NIRC of 1997, as amended by RA 9337, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully obtain a credit/refund of input VAT – classified into certain categories, to wit:

1.    As to the timeliness of the filing of the administrative and judicial claims: - met

• a.    Claim is filed with the BIR within 2 years after the close of the taxable quarter when the sales were made – filed June 29, 2017
• b.    In case of full or partial of the Commissioner to act on the said claim within a period of 120 days, the judicial claim has been filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period – filed on November 24, 2017

2.    With reference to the taxpayer’s registration with the BIR

• a.    Taxpayer is a VAT-registered person – met since BIR Payment Forms, standing alone, may be considered as evidence of VAT registration

3.    In relation to the taxpayer’s output VAT

• a.    Taxpayer is engaged in zero-rated or effectively zero-rated sales
• b.    For zero-rated sales under Sections 106(A)(2)(1) and (2); 106(B) and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations
• Essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0%), under Section 108(B)(2) of the NIRC of 1997:
• 1)    The services fall under any of the categories under Section 108(B)(2) or simply, the services rendered should be other than “processing, manufacturing or repacking goods. - met
• 2)    Services must be performed in the Philippines by a VAT-registered person
• 3)    Recipient of the services is a foreign corporation, and the said corporation is            doing business outside the Philippines or is a non-resident person not engaged in business who is outside the Philippines when the services were performed; -    not met since the documents presented: (1) Certification of Non-Registration of Company issued by the SEC, (2) Certificate/Articles of Foreign Incorporation/Registration and (3) Minor Services Agreements, standing alone is inadequate proof that its client is a non-resident doing business outside the Philippines.
• 4)    The payment for such services should be in acceptable foreign currency    accounted for in accordance with BSP rules

4.    As regards taxpayer’s input VAT being refunded
a.    Input taxes are not transitional input taxes
b.    Input taxes are due or paid
c.    Input taxes have not been applied against output taxes during and n the succeeding quarters
d.    Input taxes claimed are attributable to zero-rated or effectively zero-rated sales.  However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the sales volume