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    Case #38 - CIR vs. United Cadiz Sugar

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    Jeffrey Magada
    1) The court ruled that UCSFA-MPC, an agricultural cooperative, is exempt from paying value-added tax (VAT) in advance on the sale of refined sugar, as their exemption from VAT necessarily includes exemption from advance VAT payments. 2) The court also ruled that UCSFA-MPC is entitled to a refund for amounts paid in advance VAT from November 2007 to February 2009, as these payments were illegally and erroneously collected given the cooperative's VAT exemption. 3) The court denied the petition of the Commissioner of Internal Revenue and affirmed the decision of the CTA en banc granting UCSFA-MPC's exemption from advance VAT payments and right to claim a refund.

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    Case #38 - CIR vs. United Cadiz Sugar

    Uploaded by

    Jeffrey Magada
    1K views2 pages
    1) The court ruled that UCSFA-MPC, an agricultural cooperative, is exempt from paying value-added tax (VAT) in advance on the sale of refined sugar, as their exemption from VAT necessarily includes exemption from advance VAT payments. 2) The court also ruled that UCSFA-MPC is entitled to a refund for amounts paid in advance VAT from November 2007 to February 2009, as these payments were illegally and erroneously collected given the cooperative's VAT exemption. 3) The court denied the petition of the Commissioner of Internal Revenue and affirmed the decision of the CTA en banc granting UCSFA-MPC's exemption from advance VAT payments and right to claim a refund.

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    Tax Review

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    Case #38_CIR Vs. United Cadiz Sugar

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    1) The court ruled that UCSFA-MPC, an agricultural cooperative, is exempt from paying value-added tax (VAT) in advance on the sale of refined sugar, as their exemption from VAT necessarily includes exemption from advance VAT payments. 2) The court also ruled that UCSFA-MPC is entitled to a refund for amounts paid in advance VAT from November 2007 to February 2009, as these payments were illegally and erroneously collected given the cooperative's VAT exemption. 3) The court denied the petition of the Commissioner of Internal Revenue and affirmed the decision of the CTA en banc granting UCSFA-MPC's exemption from advance VAT payments and right to claim a refund.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views2 pages

    Case #38 - CIR vs. United Cadiz Sugar

    Uploaded by

    Jeffrey Magada
    1) The court ruled that UCSFA-MPC, an agricultural cooperative, is exempt from paying value-added tax (VAT) in advance on the sale of refined sugar, as their exemption from VAT necessarily includes exemption from advance VAT payments. 2) The court also ruled that UCSFA-MPC is entitled to a refund for amounts paid in advance VAT from November 2007 to February 2009, as these payments were illegally and erroneously collected given the cooperative's VAT exemption. 3) The court denied the petition of the Commissioner of Internal Revenue and affirmed the decision of the CTA en banc granting UCSFA-MPC's exemption from advance VAT payments and right to claim a refund.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    COMMISSIONER OF INTERNAL REVENUE, Petitioner,

    vs.
    UNITED CADIZ SUGAR FARMERS ASSOCIATION MULTI-PURPOSE COOPERATIVE, Respondent.
    G.R. No. 209776, December 07, 2016

    Facts:

    In November 2007, BIR Regional Director Rodita B. Galanto of BIR Region 12 - Bacolod City required
    UCSFA-MPC to pay in advance the value-added tax (VAT) before her office could issue the Authorization
    Allowing Release of Refined Sugar (AARRS) from the sugar refinery/mill. This was the first instance that
    the Cooperative was required to do so. This prompted the cooperative to confirm with the BIR whether
    it is exempt from the payment of VAT pursuant to Section 109(1) of the National Internal Revenue Code
    (NIRC).

    The BIR responded favorably to UCSFA-MPC's query. In BIR Ruling No. ECCP-015-08, the CIR ruled that
    the cooperative "is considered as the actual producer of the members' sugarcane production, because it
    primarily provided the various inputs (fertilizers), capital, technology transfer, and farm management."
    The CIR thus confirmed that UCSFA-MPC's sale of produce to members and non-members is exempt
    from the payment of VAT.

    As a result, Regional Director Galanto no longer required the advance payment of VAT from UCSFA-MPC
    and began issuing AARRS in its favor, thereby allowing the cooperative to withdraw its refined sugar
    from the refinery. But, in November 2008, the administrative legal opinion notwithstanding, Regional
    Director Galanto, again demanded the payment of advance VAT from UCSFA-MPC. Unable to withdraw
    its refined sugar from the refinery/mill for its operations, UCSFA-MPC was forced to pay advance VAT
    under protest.

    On November 11, 2009, UCSFA-MPC filed an administrative claim for refund with the BIR, asserting that
    it had been granted tax exemption under Article 61 of Republic Act No. ( RA) 6938, otherwise known as
    the Cooperative Code of the Philippines (Cooperative Code), and Section 109(1) of the NIRC.

    On November 16, 2009, it likewise filed a judicial claim for refund before the CTA division. During the
    trial, UCSFA-MPC presented, among other documents, its Certificates of Registration and Good Standing
    issued by the CDA; Certificate of Tax Exemption, and BIR Ruling No. ECCP-015-08 issued by the BIR, as
    well as its Summary of VAT Payments Under Protest, Certificates of Advance Payment, official receipts,
    and payment forms to substantiate its claim.

    Issues:

    1. Whether or not the exemption from VAT on sale of refined sugar by an agricultural cooperative
    includes the exemption from the requirement of advance payment thereof.
    2. Whether or not UCSFA-MPC has the right to claim for a refund for the amounts it had paid from
    November 15, 2007 to February 13, 2009.

    Held:

    1. The CTA en banc ruled that the cooperative is exempted from the payment of advance VAT. It
    also ruled that the exemption from the payment of VAT on sales necessarily includes the
    exemption from the payment of advance VAT.

    Under, RR Nos. 6-2007 and 13-2008, VAT on the sale of refined sugar that, under regular
    circumstances, is payable within the month following the actual sale of refined sugar, shall
    nonetheless be paid in advance before the refined sugar can even be withdrawn from the sugar
    refinery/mill by the sugar owner. Any advance VAT paid by sellers of refined sugar shall be
    allowed as credit against their output tax on the actual gross selling price of refined sugar.

    Hence, once the cooperative has sufficiently shown that it has satisfied the requirements under
    Section 109(1) of the NIRC for the exemption from VAT on its sale of refined sugar ( i.e., that it is
    duly registered with the CDA and it is the producer of the sugar cane from which refined sugar is
    derived), its exemption from the advance payment of VAT should automatically be granted and
    recognized.

    On these bases, we reject the CIR's insistence that RR No. 13-2008 requires the submission of a
    certificate of good standing as a condition to a cooperative's exemption from the requirement of
    advance payment of VAT. In the same vein, the petitioner's argument that the submission of
    monthly VAT declarations and quarterly VAT returns is essential to a claim for tax refund must
    also fail.

    2. Being exempt from VAT on the sale of refined sugar and the requirement of advance payment of
    VAT, the amounts that UCSFA-MPC had paid from November 15, 2007 to February 13, 2009,
    were illegally and erroneously collected. Accordingly, a refund is in order.

    Thus, the petition of the CIR has been denied and accordingly AFFIRM the June 5, 2013 decision and the
    October 30, 2013 resolution of the CTA en banc in CTA EB No. 846.

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