SC partially grants Chevron Holdings’ refund claim


The Supreme Court (SC) has partially granted Chevron Holdings, Inc.’s tax refund claim to the modified amount of P1.14 million representing its excess input value-added tax (VAT) traced to zero-rated sales for the fiscal year 2006.

In a 30-page decision dated July 5 last year and made public on Jan. 25, the SC full court said the holding firm failed to prove that some of its services to foreign companies doing business outside the Philippines qualified for a 0% VAT rating.

“Thus, the Court agrees with the observation of the CTA (Court of Tax Appeals) en banc that some foreign affiliate clients were not adequately supported by both Securities and Exchange Commission (SEC) certificates of non-registration and certificates of foreign incorporation,”

SEC certificates of non-registration prove that entities are foreign corporations, while articles or certificates of foreign incorporation prove that the clients did not engage in trade or business in the Philippines at the time the sales took place, the tribunal said.

Chevron Holdings sought for the High Court to overturn the CTA decision that only granted a P47,409.24 refund out of its initial claim worth P55.8 million.

It modified the tax court’s ruling as it found the firm was able to prove its entitlement of zero-rated sales worth P1.14 million for the four quarters of 2006.

The court ordered the commissioner of internal revenue to refund or issue a tax credit certificate in the said amount to Chevron Holdings.

A tax credit certificate is a document reflecting the amount due to a taxpayer from an overpayment or erroneous payment of taxes.

“In the present case, Chevron Holdings sufficiently proved compliance with all the requisites for entitlement to a refund or credit of unutilized input tax allocable to zero-rated sales under the tax code,” the High Court said.

Under the country’s tax code, taxpayers that engage with foreign firms doing business outside the Philippines are entitled to zero-rated sales that do not translate to output tax.

The term “zero-rated sale” must be written on the company’s official receipts.

Sales that qualify for 0% VAT include services other than processing, manufacturing, or repacking of goods; services performed in the Philippines by VAT-registered persons and sales paid in acceptable foreign currency in line with the central bank’s rules.

“When the claim for refund has a clear legal basis and is sufficiently supported by evidence, as in the present case, then the court shall not hesitate to grant the refund,” the Supreme Court said. — John Victor D. Ordo?ez

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