TAKENAKA CORPORATION-PHILIPPINE BRANCH v. CIR
G.R. No. 193321, October 19, 2016
FACTS:
Respondent Takenaka, as a subcontractor, entered into an On-Shore Construction Contract with Philippine Air Terminal Co., Inc. (PIATCO) for the purpose of constructing the NAIA Terminal 3.
PIATCO is a corporation duly organized and existing under the laws of the Philippines and was duly registered with the PEZA as an Ecozone Developer/Operator under RA 7916.
The BIR issued VAT Ruling No. 011-03 which states that the sales of goods and services rendered by respondent Takenaka to PIATCO are subject to zero-percent (0%) VAT and requires no prior approval for zero rating based on Revenue Memorandum Circular 74-99.
The BIR failed to act on its claim, hence, Takenaka filed a Petition for Review.
A Decision was rendered partly granting the Petition for Review and ordering herein petitioner CIR to refund to respondent Takenaka the reduced amount of P53,374,366.52.
The petitioner now appeals before the Court the adverse decision whereby the CTA En Banc respectively denied its claim for refund of excess input value-added tax (VAT) arising from its zero-rated sales of services for taxable year 2002, and denied its ensuing motion for reconsideration.
ISSUE:
Whether or not the sales invoices are sufficient as evidence to prove its zero-rated sale of services to PIATCO, thereby entitling it to claim the refund of its excess input VAT for taxable year 2002.
RULING:
We deny the appeal.
In Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, the Court has underscored that:
| An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. |
| The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction. |
| A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR. |
| All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception to the mandatory andjurisdictional 120+30 day periods. |
The petitioner’s situation is actually a case of late filing and is similar with the case of Philex Mining Corporation in Commissioner of Internal Revenue v. San Roque Power Corporation.
The petitioner timely filed its administrative claim within the two-year prescriptive period after the close of the taxable quarter when the zero-rated sales were made. The respondent had 120 days, or until August 9, 2003, to decide the petitioner’s claim. Considering that the respondent did not act on the petitioner’s claim on or before August 9, 2003, the latter had until September 8, 2003, the last day of the 30-day period, within which to file its judicial claim.
However, it brought its petition for review in the CTA only on March 10, 2004, or 184 days after the last day for the filing. Clearly, the petitioner belatedly brought its judicial claim for refund, and the CTA did not acquire jurisdiction over the petitioner’s appeal.
Petitioner’s judicial claim was brought well within the two-year prescriptive period. Yet, it must be stressed that the two-year prescriptive period refers to the period within which the taxpayer can file an administrative claim, not the judicial claim with the CTA.
The CTA did not err in denying the claim for refund on the ground that the petitioner had not established its zero-rated sales of services to PIATCO through the presentation of official receipts.
In this regard, as evidence of an administrative claim for tax refund or tax credit, there is a certain distinction between a receipt and an invoice.
The Court has reiterated the distinction in Northern Mindanao Power Corporation v. Commissioner of Internal Revenue in this wise:
Section 113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter or exchange of goods or properties, while a VAT official receipt properly pertains to every lease of goods or properties; as well as to every sale, barter or exchange of services.
The Court has in fact distinguished an invoice from a receipt in Commissioner of Internal Revenue v. Manila Mining Corporation:
A “sales or commercial invoice” is a written account of goods sold or services rendered indicating the prices charged therefor or a list by whatever name it is known which is used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods and services.
A “receipt” oh the other hand is a written acknowledgment of the fact of payment in money or other settlement between seller and buyer of goods, debtor or creditor, or person rendering services and client or customer.
A VAT invoice is the seller’s best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer’s best evidence of the payment of goods or services received from the seller. A VAT invoice and a VAT receipt should not be confused and made to refer to one and the same thing. Certainly, neither does the law intend the two to be used alternatively.
The petitioner submitted sales invoices, not official receipts, to support its claim for refund. In light of the aforestated distinction between a receipt and an invoice, the submissions were inadequate for the purpose thereby intended.
“[W]ithout proper VAT official receipts issued to its clients, the payments received by respondent Takenaka for providing services to PEZA-registered entities cannot qualify for VAT zero-rating. Hence, it cannot claim such sales as zero-rated VAT not subject to output tax.”
Under VAT Ruling No. 011-03, the sales of goods and services rendered by the petitioner to PIATCO were subject to zero-percent (0%) VAT, and required no prior approval for zero rating based on Revenue Memorandum Circular 74-99.
This notwithstanding, the petitioner’s claim for refund must still be denied for its failure as the taxpayer to comply with the substantiation requirements for administrative claims for tax refund or tax credit.
The Court explains why in Western Mindanao Power Corporation v. Commissioner of Internal Revenue:
In a claim for tax refund or tax credit, the applicant must prove not only entitlement to the grant of the claim under substantive law. It must also show satisfaction of all the documentary and evidentiary requirements for an administrative claim for a refund or tax credit. Hence, the mere fact that petitioner’s application for zero-rating has been approved by the CIR does not, by itself, justify the grant of a refund or tax credit. The taxpayer claiming the refund must further comply with the invoicing and accounting requirements mandated by the NIRC, as well as by revenue regulations implementing them. (Bold underscoring supplied for emphasis)
NORTHERN MINDANAO POWER CORPORATION, v. CIR
G.R. No. 185115, February 18, 2015
FACTS:
Petitioner is engaged in the production sale of electricity as an independent power producer and sells electricity to National Power Corporation (NPC). It allegedly incurred input VAT on its domestic purchases of goods and services that were used in its production and sale of electricity to NPC. For the 3rd and the 4th quarters of taxable year 1999, petitioner’s input VAT totaled to P2,490,960.29, while that incurred for all the quarters of taxable year 2000 amounted to P3,920,932.55.
Petitioner filed an administrative claim for a refund on 20 June 2000 for the 3rd and the 4th quarters of taxable year 1999, and on 25 July 2001 for taxable year 2000 in the sum of P6,411,892.84. nroblesvirtuallawlibrary
Alleging inaction of respondent, petitioner filed a Petition with the CTA.
The CTA First Division denied the Petition and the subsequent MR for lack of merit.
The Court in Division found that the term “zero-rated” was not imprinted on the receipts or invoices presented by petitioner in violation of Section 4.108-1 of Revenue Regulations No. 7-95. Petitioner failed to substantiate its claim for a refund and to strictly comply with the invoicing requirements of the law and tax regulations.
The CTA En Banc likewise denied the petition. The court ruled that for every sale of services, VAT shall be computed on the basis of gross receipts indicated on the official receipt. Official receipts are proofs of sale of services and cannot be interchanged with sales invoices as the latter are used for the sale of goods. Further, the requirement of issuing duly registered VAT official receipts with the term “zero-rated” imprinted is mandatory under the law and cannot be substituted, especially for input VAT refund purposes.
Hence, this appeal before us.
ISSUES:
- Whether or not Section 4.108-1 of Revenue Regulations (RR) No. 7-95 which expanded the statutory requirements for the issuance of official receipts and invoices found in Section 113 of the 1997 Tax Code by providing for the additional requirement of the imprinting of the terms “zero-rated” is unconstitutional.
- Whether or not invoices are sufficient to establish the actual amount of sale of electric power services to the National Power Corporation and therefore sufficient to substantiate Petitioner’s claim for refund.
RULING:
- The issue of the requirement of imprinting the word “zero-rated” has already been settled by this Court in a number of cases. In Western Mindanao Power Corporation v. CIR:RR 7-95, which took effect on 1 January 1996, proceeds from the rule-making authority granted to the Secretary of Finance by the NIRC for the efficient enforcement of the same Tax Code and its amendments.In Panasonic Communications Imaging Corporation of the Philippines v. CIR, we ruled that this provision is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and services. Moreover, we have held in Kepco Philippines Corporation v. CIR that the subsequent incorporation of Section 4.108-1 of RR 7-95 in Section 113 (B) (2) (c) of R.A. 9337 actually confirmed the validity of the imprinting requirement on VAT invoices or official receipts a case falling under the principle of legislative approval of administrative interpretation by reenactment.
In fact, this Court has consistently held as fatal the failure to print the word “zero-rated” on the VAT invoices or official receipts in claims for a refund or credit of input VAT on zero-rated sales, even if the claims were made prior to the effectivity of R.A. 9337. Clearly then, the present Petition must be denied.
- As regards the sufficiency of a company invoice to prove the sales of services to NPC, we find this claim is without sufficient legal basis. Section 113 of the NIRC of 1997 provides that a VAT invoice is necessary for every sale, barter or exchange of goods or properties, while a VAT official receipt properly pertains to every lease of goods or properties; as well as to every sale, barter or exchange of services.The Court has in fact distinguished an invoice from a receipt in CIR v. Manila Mining Corporation:
A sales or commercial invoice is a written account of goods sold or services rendered indicating the prices charged therefor or a list by whatever name it is known which is used in the ordinary course of business evidencing sale and transfer or agreement to sell or transfer goods and services.
A receipt on the other hand is a written acknowledgment of the fact of payment in money or other settlement between seller and buyer of goods, debtor or creditor, or person rendering services and client or customer.
A VAT invoice is the seller’s best proof of the sale of goods or services to the buyer, while a VAT receipt is the buyer’s best evidence of the payment of goods or services received from the seller. A VAT invoice and a VAT receipt should not be confused and made to refer to one and the same thing. Certainly, neither does the law intend the two to be used alternatively.