Case Digest (G.R. No. 184450)
Facts:
In Chevron Holdings, Inc., a Delaware-organized corporation licensed as a Regional Operating Headquarter in the Philippines and registered as a VAT taxpayer, rendered services in 2006 to its foreign affiliates at the zero percent rate and to its Philippine affiliates at the regular twelve percent rate. It incurred substantial input VAT on its local purchases, proportionately allocated to zero-rated and VAT-able sales, and reported an input tax carryover of ₱55,784,357.71 from the fourth quarter of 2005. On March 28, 2008, Chevron filed an administrative claim for refund or issuance of a tax credit certificate for its unutilized input VAT attributable to zero-rated sales. After the Commissioner of Internal Revenue (CIR) failed to act, Chevron petitioned the Court of Tax Appeals (CTA) Division on April 24, 2008 (Q1) and July 23, 2008 (Q2-Q4) for judicial relief. The CTA Division dismissed both petitions as prematurely filed. On May 6, 2014, the CTA En Banc reversed the dismissal,Case Digest (G.R. No. 184450)
Facts:
- Corporate Profile and VAT Registration
- Chevron Holdings, Inc. (“Chevron”) is a Delaware corporation licensed as a Regional Operating Headquarters (ROHQ) in the Philippines, registered with the Bureau of Internal Revenue (BIR) as a VAT taxpayer.
- For taxable year 2006, it rendered various administrative, planning, logistics, R&D, technical support and other services to its affiliates in the Philippines (subject to 12% VAT) and abroad (zero-rated).
- Sales, Input Taxes, and Administrative Claims
- Quarterly sales and input-VAT data (2006):
- 1st Q: Zero-rated P308.48 M, VAT-able P4.69 M; input tax P5.47 M (allocated 98.5% to zero-rated).
- 2nd Q: Zero-rated P237.01 M, VAT-able P35.39 M; input tax P6.84 M (allocated 87.01%).
- 3rd Q: Zero-rated P271.10 M, VAT-able P28.41 M; input tax P7.14 M (allocated 90.52%).
- 4th Q: Zero-rated P459.97 M, VAT-able P41.18 M; input tax P20.69 M (allocated 91.78%).
- Chevron carried over large excess input taxes from 2005 and 2006 quarters.
- On March 28, 2008, filed administrative claim for refund/TCC of unutilized input VAT attributable to zero-rated sales (Jan–Dec 2006). CIR’s inaction led to petitions before CTA Divisions (CTA Cases Nos. 7776 & 7813), later consolidated as CTA EB No. 940.
- CTA Proceedings and En Banc Decisions
- CTA Division (June 6, 2012) dismissed petitions as premature (failure to await 120-day period).
- On reconsideration denied, prompting elevation to CTA En Banc.
- CTA En Banc (May 6, 2014) reversed Division, granted refund of P15,085.24 (1st Q 2006) after disallowing unsubstantiated clients, inward remittances and invoices for P10 M+ and P24.6 M+.
- Amended Decision (Oct 28, 2014) increased refund to P47,409.24 for 1st Q 2006.
- Chevron then filed before the Supreme Court raising four issues.
Issues:
- Do Chevron’s services to foreign affiliates qualify as zero-rated under Section 108(B)(2) of the 1997 NIRC?
- Was the P10,025,869.35 in sales proceeds paid in acceptable foreign currency and inwardly remitted?
- Must prior-quarter excess input VAT carry-over (P55,784,357.71) be substantiated to claim refund of unutilized input VAT?
- Did the CTA En Banc err by first offsetting validated input VAT against output VAT and refunding only the resulting excess?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)