CE Casecnan Water and Energy Company, Inc. v. Commissioner of Internal Revenue

SECOND DIVISION [C.T.A. CASE NO. 8041. November 29, 2012.] CE CASECNAN WATER AND ENERGY COMPANY, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . [C.T.A. CASE NO. 8111. November 29, 2012.] CE CASECNAN WATER AND ENERGY COMPANY, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION CASTAEDA, JR. , J p : For resolution is respondent's "Motion for Reconsideration" filed on September 26, 2012 of the Decision dated September 11, 2012; with petitioner's "Comment (on Respondent's Motion for Reconsideration)" filed on November 9, 2012. The dispositive portion of the assailed Decision is hereunder quoted, to wit: " WHEREFORE , the instant consolidated case is hereby PARTIALLY GRANTED . Accordingly, respondent Commissioner of Internal Revenue is hereby ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in the amount of P19,219,165.31 to petitioner, representing unutilized input VAT attributable to its zero-rated sales to NIA for taxable year 2008. SO ORDERED ." Respondent, in its Motion for Reconsideration, ascribes to the Court an error in partially granting petitioner's claim for unutilized input value-added tax (VAT) attributable to zero-rated sales for taxable year 2008 in the amount of P19,219,165.31. Respondent maintains that pursuant to Section 112 (C) [formerly 112 (D)] of the National Internal Revenue Code of 1997, as amended, petitioner must submit the complete documents to support its administrative claim for refund or tax credit of input taxes attributable to zero-rated sales filed with the Bureau of Internal Revenue (BIR) before the 120-day period shall apply; otherwise, there will be no sufficient compliance with the filing of an administrative claim, which is a condition sine qua non prior to the filing of judicial claim. Respondent also posits that petitioner must prove that it complied or submitted all necessary and evidentiary documents pursuant to Revenue Memorandum Order (RMO) No. 53-98 to support its administrative claim. Respondent asserts that the request for refund lacks the necessary supporting documents, such as, proof that it has no tax liabilities or deficiencies as reflected in the Tax Compliance Certificates, the certifications from the Board of Investment and Bureau of Customs that it has not filed any similar claims for refund covering the same period, and the xerox copies of the Official Receipts evidencing VAT payments on imported purchases, to warrant the granting thereof. HCSDca On the other hand, in its Comment ( On Respondent's Motion for Reconsideration ) petitioner counters that while the BIR can always inform or request the taxpayer to submit additional documents, albeit, it cannot demand what type of supporting documents should be submitted, respondent, in this case, never required or requested petitioner to submit additional documents listed in RMO No. 53-98 to supplement the supporting documents already attached to its administrative claims for input VAT refund. Petitioner states that the alleged non-submission of complete documents will not and does not, bar this Court from receiving, evaluating and appreciating evidence submitted before it, and that the question of whether or not the evidence submitted by a party is sufficient to warrant the granting of a claim for refund lies within the discretion and judgment of this Court. Petitioner argues that RMO No. 53-98 does not impose a requirement on taxpayers to submit the documents listed therein for purposes of filing administrative claims for input VAT refund, but it is merely an issuance addressed to BIR examiners providing directives or instructions, prescribing guidelines, and outlining processes, operations, activities, workflows, methods and procedures necessary in the implementation of stated policies, goals, objectives, plans and programs of the BIR in all areas of operations, except auditing. According to petitioner, the said RMO informs the BIR examiners of the documents that may be required or requested from a taxpayer during the conduct of an audit related to applications for input VAT refund, and it is not a directive addressed to taxpayer. The Court finds no merit in the instant Motion for Reconsideration. Nothing on record would reveal that respondent required petitioner to submit additional documents to support the application for refund. Even assuming that respondent required petitioner to submit additional documents, and petitioner failed to submit the said documents, the same would not be fatal to petitioner's case. This Court finds it instructive the ruling in the consolidated cases of Team Sual Corporation (formerly: Mirant Sual Corporation) vs. Commissioner of Internal Revenue , and Commissioner of Internal Revenue vs. Team Sual Corporation (formerly Mirant Sual Corporation) , 1 where the Court En Banc held as follows: " The contention of the Commissioner that the law requires the submission of complete documents in support of the application filed with the BIR before the 120-day period shall apply, and before the taxpayer could avail of judicial remedies as provided for in the law, deserves scant consideration. This issue boils down to the proper interpretation of the term "complete documents" under Section 112 (D) of the N I RC of 1997. In the case of Commissioner of Internal Revenue vs.First Express Pawnshop Company, Inc. , the Supreme Court ruled: DHcEAa ' The term 'relevant supporting documents' should be understood as those documents necessary to support the legal basis in disputing a tax assessment as determined by the taxpayer. The BIR can only inform the taxpayer to submit additional documents. The BIR cannot demand what type of supporting documents should be submitted. Otherwise, a taxpayer will be at the mercy of the BIR, which may require the production of documents that a taxpayer cannot submit .' Although the foregoing ruling refers to the interpretation of the term 'relevant supporting documents' under Section 228 of the N I RC of 1997 pertaining to 'Protesting of Assessment', We find no reason why the same doctrine cannot be applied in the interpretation of 'complete documents' referred to under Section 112(D) of the sameCode, for the following reasons: 1. If the determination of the completeness of the documents depends on the BIR, the concerned taxpayer will also be at the mercy thereof; and 2. It has been held that the Commissioner ought to know the tax records of all taxpayers, and thus, the Commissioner can easily decide whether or not to grant the concerned taxpayer's administrative claim for refund or tax credit certificate. In this connection, nothing in RMO No.53-98 mandates that the list of documents therein stated, insofar as the VAT is concerned, should be submitted in connection with an application for refund or tax credit certificate under the said Section 112, upon the filing thereof. Furthermore, said RMO is explicit, in its subject and objective, that it provides a checklist of documents to be submitted 'upon Audit', and that it was issued to '(i)dentify the documents to be required from a taxpayer during audit', respectively. In this case, it was not shown that the audit was ever conducted by the BIR in connection with Team Sual's application for refund or tax credit certificate. This is manifested by the lack of BIR Records transmitted to this Court, and by the absence of any 'report of investigation' concerning Team Sual's administrative claim for refund or tax credit certificate. But even if We are to assume that an audit was made, it was never established that the Commissioner ever required Team Sual to submit the documents stated in the said RMO. Accordingly, the term 'complete documents' under Section 112(D) of the N I RC of 1997 should be understood as those documents necessary to support the application for refund or tax credit certificate as determined by the taxpayer. Thus, should the taxpayer decide to submit only certain documents, or should the taxpayer fail, or opted not, to submit any document at all, in support of its application for refund or tax credit certificate under Section 112 of the NIRC of 1997, it is reasonable and logical to conclude that the reckoning date of the 120-day period thereunder, should be reckoned from the filing of the said application. " (Citations omitted and emphasis supplied) Moreover, in Commissioner of Internal Revenue vs. Toledo Power Company 2 (Toledo Power case) , the Court En Banc ruled that: " In a VAT refund case such as the present case, the alleged non-submission of complete documents at the administrative level is not fatal to a claim for refund in the judicial level as held in several CTA En Banc cases one of which is Commissioner of Internal Revenue vs.CELuzon Geothermal Power Company, Inc. It will not bar the CTA from receiving, evaluating, and appreciating evidence submitted before it. Once the claim for refund has been evaluated to the CTA, the admissibility, materiality, relevancy, probative value and weight of evidence presented therein become subject to the Rulesof Court. The question of whether or not the evidence submitted by a party is sufficient to warrant the granting of a claim for refund lies within the sound discretion and judgment of the Court ." (Emphasis supplied) Clearly, in a refund case, the completeness of documents to support a claim is determined by a taxpayer. The duty of the BIR, under Section 112 (C), is to act on the claim within the 120-day period from the date of submission of complete documents. As earlier emphasized, should the taxpayer decides to submit only certain documents, or should the taxpayer fail, or opted not, to submit any document at all, in support of its application for refund under Section 112, the 120-day period should be reckoned from the filing of the said application. In this case, the Court notes that petitioner already enclosed its supporting documents to its administrative claims, 3 and absent any proof that petitioner submitted additional supporting documents as required by respondent after the filing of the claims, the 120-day period is reckoned from the filing of the said administrative claims. TcCDIS Moreover, the alleged non-submission of complete documents at the administrative level is not fatal to a claim for refund in the judicial level. As emphasized in the Toledo Power case, the Court is not barred from receiving, evaluating, and appreciating evidence submitted before it. Once the claim is elevated to this Court, the admissibility, materiality, relevancy, probative value and weight of evidence presented become subject to the Rules of Court. The question of whether or not the evidence submitted by a party is sufficient to warrant the granting of a claim for refund lies within the sound discretion and judgment of the Court. Thus, in the assailed Decision, this Court finds, based on the evidence presented, that petitioner is entitled to a refund or issuance of tax credit certificate of its unutilized input VAT in the reduced amount of P19,219,165.31. In view of the foregoing, this Court sees no cogent reason or overriding justification to disturb the assailed Decision. WHEREFORE , premises considered, respondent's Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED . (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Caesar A. Casanova and Cielito N. Mindaro-Grulla, JJ., concur. Footnotes 1. CTA EB Nos. 649 and 651, Resolution dated March 21, 2012. 2. CTA EB Case No. 589, Resolution dated January 12, 2011. 3. Exhibits "P" and "Q".