DOLE Philippines, Inc. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 8665. July 18, 2016.] DOLE PHILIPPINES, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION BAUTISTA , J p : For resolution are: 1. Petitioner's "Motion for Partial Reconsideration" filed on April 6, 2016, without any comment from respondent despite notice; and 2. Respondent's "Motion for Partial Reconsideration'' filed by registered mail on April 21, 2016, with petitioner's "Comment/Opposition (to: Respondent's Motion for Partial Reconsideration) " filed on May 6, 2016. The parties move for the reconsideration of the Decision 1 of the Court dated March 18, 2016, which partially granted the Petition for Review, the dispositive portion of which states: 2 WHEREFORE ,premises considered, the Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO ISSUE A TAX REFUND/TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of SIX HUNDRED TWENTY FIVE MILLION TWO HUNDRED SEVENTY NINE THOUSAND ONE HUNDRED SEVENTY FIVE PESOS AND FOURTEEN CENTAVOS (Php625,279,175.14) ,representing the unutilized input taxes, for taxable year 2011. SO ORDERED. Petitioner's Motion for Partial Reconsideration Petitioner avers that the additional Php52,592,467.00 disallowances/exceptions made by the Court contain reasons for disallowance similar to that noted by the ICPA, which are, but not limited to the following, "out of period," "Non-VAT documents," "incorrect supporting documents," "without supporting documents or documentary evidence," etc.; that the additional disallowances/exceptions failed to provide details as to what particular exhibits and/or documents they relate to; that the Court failed to provide the basis or specifications of those input VAT which are said to have failed to meet the substantiation requirements under Section 4.110-8 of Revenue Regulations ("RR") No. 16-2005 ;that it would not be able to appreciate the correctness and basis of the new and recent disallowances and exceptions declared by the Court absent any specifics on the documents presented. It prays for the Court to reconsider the disallowances/exceptions and grant it as an addition to its claim for refund. CAIHTE Respondent's Motion for Partial Reconsideration Respondent alleges that the Court should review, re-evaluate, revisit and take a second look at the Decision dated March 18, 2016; that the Court erred in partially granting petitioner's claim for input VAT refund; that petitioner's invoices and official receipts failed to comply with the mandatory invoicing requirements under Sections 110 (A), 113 (A) (B) and 237 of the 1997 National Internal Revenue Code ("NIRC") ,as amended, in relation to Sections 4.110-1, 4.110-8 and 4.113-1 of RR No. 16-05 and Revenue Memorandum Circular ("RMC") No. 42-2003 ; that they have no probative value and must be treated as immaterial and irrelevant to prove that petitioner complied with the invoicing requirements mandated by law; that the documentary exhibits of petitioner should not be given weight for being hearsay evidence pursuant to Section 36, Rule 130 of the Rules of Court; and that tax refunds are in the nature of tax exemptions and should be construed strictissimi juris against the person or entity claiming the exemption. On the other hand, petitioner counter-argues that the arguments raised by respondent in her Motion for Partial Reconsideration are sweeping general statements; that respondent had the opportunity to question petitioner's invoices and official receipts during the trial and the presentation thereof, but it did not do so; that petitioner's compliance of the invoicing requirements and all other requirements by the laws and rules and regulations for VAT refund/claim was even confirmed by her own witnesses and their Memorandum Report which was offered in evidence by the respondent. The Court will now proceed to resolve the parties' respective Motions for Partial Reconsideration. The Court finds no compelling reason to reverse or to modify the assailed Decision. Anent petitioner's Motion for Partial Reconsideration, petitioner avers that Court failed to provide details, i.e. ,exhibits and/or documents, regarding the Php52,592,467.00 additional disallowances/exceptions. It goes on to say that the Court failed to provide the basis for the disallowance; that the reasons cited in the assailed Decision are similar to that noted by the ICPA. In the assailed Decision, the Court held that petitioner is entitled to a tax refund/tax credit certificate in the reduced amount of Php625,279,175.14. The Court disallowed claimed input VAT amounting to Php52,592,467.00 for failure to meet the substantiation requirements under Section 4.110-8 of RR No. 16-2005 .The additional disallowances is summarized as follows: Input VAT Invoice indicates "Not a Valid Source of Input Tax" Php1,239.43 Out of Period Claim 10,957,679.06 Supported by "TIN V" Invoice 490,302.56 Supported by "TIN V" Official Receipt 4,181,150.10 Supported by NON-VAT Invoice 1,709,952.60 Supported by NON-VAT OR 812,354.04 Supported by NV Invoice 33,401.38 Supported by NV OR 336,403.42 Supported by Official Receipt without Supplier's TIN 53,016.56 Supported by OR not in the petitioner's name 3,387.09 Supported by OR without petitioner's TIN and Address 366,895.08 Supported by pre-printed NV Invoice, stamped 194,009.65 VAT but without authorized countersignature Supported by pre-printed NV OR, stamped VAT 71,970.21 but without authorized countersignature Supported by pre-printed NV OR, stamped VAT registered 126,779.54 but without authorized countersignature Supported by Statement of Account 4,964.55 VAT not Separately Indicated 9,954,145.01 With noted alterations or additions in the supporting Invoice 721,286.80 without countersignature of the authorized representative of the supplier With noted alterations or additions in the supporting Official 6,288,947.54 Receipt without countersignature of the authorized representative of the supplier With noted handwritten alterations or additions in the 8,926,911.17 computerized Invoice without countersignature of the authorized representative of the supplier With noted handwritten alterations or additions in the 2,489,324.86 computerized supporting OR without countersignature of the authorized representative of the supplier With noted supplier's TIN alteration in the supporting Invoice 2,867,559.60 without countersignature of the authorized representative of the supplier With noted supplier's TIN alteration in the supporting Official 289,018.30 Receipt without countersignature of the authorized representative of the supplier Without Supporting Documents 1,711,768.45 Grand Total Php52,592,467.00 ============== Petitioner claims that the Court failed to provide details regarding the particular exhibits and/or documents, and that the Court failed to provide the basis for the disallowance. DETACa Basic is the rule in taxation that tax refunds, being in the nature of tax exemptions, are construed in strictissimi juris against the taxpayer and liberally in favor of the government. Accordingly, it is a claimant's burden to prove the factual basis of a claim for refund or tax credit. 3 In the instant case, petitioner's Formal Offer of Evidence consists of twenty two boxes of documentary evidence consisting of sales invoices and official receipts. The Court, in the exercise of its jurisdiction, can make its own findings based on the evidence on record and does not just rely on the report submitted by the ICPA. Annex "A" contains a more detailed list of Exhibits that failed meet the substantiation requirements. Thus, petitioner's Motion for Partial Reconsideration must necessarily fail for lack of merit. Anent respondent's Motion for Partial Reconsideration, respondent wants the court to "review, re-evaluate, revisit and take a second look at the Decision dated March 18, 2016." According to respondent, the Court erred in partially granting petitioner's claim for input VAT refund since petitioner failed to comply with the substantiation requirements provided under Sections 110 (A), 113 (A) (B) and 237 of the 1997 National Internal Revenue Code ("NIRC") ,as amended, in relation to Sections 4.110-1, 4.110-8 and 4.113-1 of RR No. 16-05 and Revenue Memorandum Circular ("RMC") No. 42-2003. The Court does not agree. Records disclose that respondent's witnesses, Revenue Officer Cherryl Anne M. Adapon and Group Supervisor Frances E. Leonida, through their Joint Judicial Affidavit, 4 stated that after their factual investigation, they found out that petitioner is entitled to a tax refund/credit in the reduced amount of Php747,577,710.82. Pertinent portion of the Joint Judicial Affidavit is quoted hereunder, to wit: 22. Q: What action did you do next after you received from petitioner the documents in support of its claim for tax refund? A: We verified and evaluated the said supporting documents submitted by petitioner to the BIR LT Division-Makati, to determine whether it is entitled to its claimed tax refund in the total amount of Php778,786,831.34, representing its unutilized input VAT paid on local purchases of taxable goods and services attributable to its zero-rated sales for the period covering January to December 31, 2011, and subsequently, we prepared a Memorandum report dated August 6, 2013, showing the result of our factual investigation, the basis of disallowing certain amount from the total claimed input VAT, and our recommendations for issuance of tax refund/credit in the reduced amount of Php747,577,710.82 only, representing petitioner's substantiated input VAT credit for the period covering January to December 31, 2011. After the presentation of respondent's witnesses on October 30, 2014, the parties, through their respective counsels, filed a Manifestation with Supplemental to Joint Stipulation of Facts 5 ("JSFI"),wherein they stipulated that the only issue left for the Court to resolve is the amount of tax refund that is due to petitioner. The testimony of the respondent's witnesses are judicial admissions made during the trial of the case, respondent is therefore bound by such admissions. In the case of Alfelor vs. Halasan ,the Supreme Court held that: A party who judicially admits a fact cannot later challenge that fact as judicial admissions are a waiver of proof; production of evidence is dispensed with. A judicial admission also removes an admitted fact from the field of controversy. Consequently, an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to such party, and all proofs to the contrary or inconsistent therewith should be ignored, whether objection is interposed by the party or not. The allegations, statements or admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a position contrary of or inconsistent with what was pleaded. In this case, the right of petitioner to a tax refund/tax credit certificate was admitted by respondent's witnesses, and since the respondent has not proven that they were made through palpable mistake, the admissions are conclusive as to the respondent. Thus, respondent's Motion for Partial Reconsideration must fail. WHEREFORE ,premises considered, Petitioner's "Motion for Partial Reconsideration" and Respondent's "Motion for Partial Reconsideration" are hereby DENIED for lack of merit. Consequently, the Decision dated May 18, 2016 is hereby UPHELD and AFFIRMED. SO ORDERED. (SGD.) LOVELL R. BAUTISTA Associate Justice Esperanza R. Fabon-Victorino and Ma. Belen M. Ringpis-Liban, JJ., concur. ANNEX A Registered Name's Footnotes 1. Records, CTA Case No. 8665, Decision ,pp. 2897-2923. 2. Id. , Decision ,p. 4744. 3. Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue ,G.R. No. 183531, March 25, 2015. 4. BIR Records, Exhibit "R-7," pp. 285-292. 5. Records, Vol. 5 ,pp. 2838-2841.