Title
AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue
Case
G.R. No. 182364
Decision Date
Aug 3, 2010
AT&T Philippines sought a tax refund for unutilized input VAT from zero-rated sales. The Supreme Court ruled VAT invoices suffice for substantiation, reversing CTA's denial and remanding for computation.
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Case Digest (G.R. No. 182364)

Facts:

1. Parties Involved:

  • Petitioner: AT&T Communications Services Philippines, Inc., a domestic corporation providing information, promotional, supportive, and liaison services to foreign corporations.
  • Respondent: Commissioner of Internal Revenue.

2. Nature of Business:

  • Petitioner is engaged in zero-rated sales under Service Agreements with foreign corporations, including AT&T Communications Services International Inc., AT&T Solutions, Inc., AT&T Singapore, Pte. Ltd., AT&T Global Communications Services, Inc., and Acer, Inc.
  • Remuneration for services is paid in U.S. Dollars and remitted in accordance with Bangko Sentral ng Pilipinas (BSP) rules.

3. Tax Issue:

  • For the calendar year 2002, petitioner incurred input VAT from zero-rated sales and purchases of capital goods, resulting in an unutilized input VAT of P2,050,736.69.
  • After allocation, petitioner claimed P1,801,826.82 as input VAT attributable to zero-rated sales.
  • On March 26, 2004, petitioner filed for a tax refund/credit of the unutilized input VAT.

4. Procedural History:

  • Petitioner filed a petition for review with the Court of Tax Appeals (CTA) to prevent the running of the prescriptive period.
  • The CTA First Division denied the claim, citing lack of substantiation, as petitioner submitted VAT invoices instead of VAT official receipts.
  • The CTA En Banc affirmed the denial.

Issue:

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Ruling:

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Ratio:

  1. Requirements for Tax Refund/Credit:

    • A taxpayer engaged in zero-rated transactions may claim a refund or tax credit for unutilized input VAT if:
      a. The taxpayer is engaged in zero-rated or effectively zero-rated sales.
      b. The taxpayer is VAT-registered.
      c. The claim is filed within two years after the close of the taxable quarter.
      d. The input VAT is attributable to zero-rated sales.
      e. Foreign currency exchange proceeds are accounted for under BSP rules.
  2. Substantiation of Zero-Rated Sales:

    • The Court ruled that VAT invoices are sufficient to substantiate zero-rated sales, provided they comply with Sections 113 and 237 of the Tax Code.
    • The distinction between VAT invoices (for goods) and VAT official receipts (for services) is not absolute. Sales invoices are recognized commercial documents that prove business transactions.
  3. Preponderance of Evidence:

    • The standard of proof for tax refund claims is preponderance of evidence, not strict compliance with formal requirements.
    • Petitioner submitted sufficient evidence, including Service Agreements, VAT invoices, and bank credit advices, to support its claim.
  4. Remand to CTA:

    • The Supreme Court remanded the case to the CTA for the computation of the refund/credit, as it is not a trier of facts.


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