THE Commission on Audit (COA) has granted a P115.06 million tax refund claim by a government supplier against the Bureau of Fire Protection (BFP).
In a 12-page majority decision, COA chairperson Gamaliel A. Cordoba and Commissioner Mario G. Lipana ruled in favor of the petition filed by the Joint Venture of Kolonwel Trading and Hubei Jiangnan Special Automobile Co. Ltd. seeking refund of the value-added tax imposed on the procurement of 469 units of firetrucks worth P2.577 billion in 2015.
Commissioner Roland Café Pondoc, in his 13-page Dissenting Opinion, voted to dismiss the joint venture’s claim on two grounds: first, lack of jurisdiction by the COA because the power to decide a claim for tax refund is vested with the Commissioner of the Bureau of Internal Revenue (BIR); and second, because the money claim for VAT refund had already been decided by the Court of Tax Appeals (CTA) which denied it.
He pointed out that the said decision of the tax court had already attained finality.
“The Commission on Audit (COA) has no jurisdiction over the JV’s Petition for Money Claim. The subject money claim for VAT refund has already been decided and denied by the CTA pursuant to its exclusive appellate jurisdiction. Notably, the CTA Decision has already attained finality,” he pointed out.
Furthermore, in filing the same claim with the COA and the CTA, Pondoc said the joint venture also violated the rule against forum shopping.
Records showed the BFP and the JV of Kolonwel and Hubei signed a contract for the supply and delivery of 244 units of 1,000-gallon firetrucks and 225 units of 500-gallon firetrucks on February 2, 2015.
The equipment were delivered from May 20, 2015 to February 25, 2016.
BFP paid the joint venture the total amount of P2.44 billion excluding the 15 percent advance payment of P386.59 million, one percent withholding tax (P23.01 million), and the five percent VAT (P115.057 million).
The supplier filed a Claim for Refund before the BIR on July 19, 2017.
In 2019, the claimant filed a Petition for Review with the CTA noting that the BIR had failed to resolve its claim almost two years after it was filed.
On November 20, 2020, the CTA issued a ruling denying the petition for lack of merit. Without any appeal from the petitioner after denial of Kolonwel’s motion for reconsideration, the ruling became final and executory on May 20, 2021.
A notice of Entry of Judgment was issued on February 14, 2022.
The CTA clarified that the BFP was correct in withholding the five percent VAT because its transaction was in the nature of a “sale.”
The court explained that a tax subsidy would have applied only if it was the BFP funds that were used in the “importation” of firetrucks.
This same stand was echoed by the supervising auditor and the audit team leader assigned to the BFP in their memorandum dated July 8, 2023 stating: “To avail of the Tax Expenditure Subsidy, the importer of the firetrucks should have been the BFP, as stated in CTA Case No. 9748 Decision. In this case, the JV was the importer and supplier of the fire trucks while the BFP was the procuring entIty.”
The COA’s majority ruling acknowledged the existence of the decision of the CTA First Division as well as the fact that it “involves the same transaction subject of this money claim.”
However, it pointed out that the BFP did not even pose any challenge or opposition to the supplier’s claim, merely notifying the COA that it is submitting “the resolution of the petition to the sound, fair, and reasonable judgment of this Commission.”
