Total (Phils.) Corp. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NOS. 8056 and 8163. May 26, 2014.] TOTAL (PHILIPPINES) CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION FABON-VICTORINO , J p : The following are for the determination of the Court: 1. Petitioner's Motion for Reconsideration/New Trial 1 filed on February 13, 2014, with respondent's Opposition thereto filed on March 6, 2014; and 2. Petitioner's Supplemental Motion for Reconsideration/New Trial filed on March 14, 2014, sans any comment/opposition thereto despite due notice to respondent. In the present incidents, petitioner assails the Decision dated January 28, 2014, which denied for lack of merit its claim for refund or issuance of a tax credit certificate representing unutilized input value-added tax (VAT) attributable to zero-rated sales for the taxable year 2008 in the aggregate amount of Php187,554,770.69, on the grounds that: 1) the amount of Php59,191,588.71 are not properly substantiated by VAT invoices or official receipts in accordance with Sections 110 (A) and 113 (A) and (B) of the National Internal Revenue Code (NIRC) of 1997, as amended, and as implemented by Sections 4.110-8 and 4.113-1 of Revenue Regulations (RR) No. 16-2005, as amended; IEHScT 2) petitioner's input VAT claim on importation of goods amounting to Php2,083,964,047.62 have no supporting Import Entry and Internal Revenue Declarations (IEIRDs), Bureau of Customs or bank official receipts or are supported by IEIRDs but with no machine validation pursuant to Section 110 (A) (1) (b) of the NIRC of 1997, as amended, and Section 4.110-8 (a) (1) of RR No. 16-2005, as amended; and 3) there is no excess input VAT which may be the subject of a claim for refund or issuance of tax credit certificate under Section 112 (A) of the NIRC of 1997, as amended. Petitioner prays that the Court reconsider its Decision and grant a new trial for the presentation of supporting documents. Petitioner inferred that denial of its claim for refund was primary due to the disallowance of input taxes on importation amounting to Php2,083,964,047.62, which either have no supporting IEIRDs or supported by IEIRDs but with no machine validation. Petitioner claims that it was unfortunate that it relied on the ICPA's representation that all the faithful reproduction of the IEIRD were all submitted to the Court. Further, the ICPA actually marked and identified these IEIRDs as Exhibits FFFF-1.1 to FFFF-1.226 without exceptions as indicated in his Judicial Affidavit dated September 12, 2011. Much to its surprise only the front pages were photocopied without the back pages which contain the data machine validations. According to petitioner, the lapses on the part of the ICPA should not adversely affect its case. THCSEA Further, considering the voluminous documents involved in the cases, it could not verify if all the documentary evidence were submitted by the ICPA to the Court. Attached to the motion as Annex A is the Affidavit of Merit of Dennis Odra stating that the instant motion arose from petitioner's mistake in relying on the ICPA report that all the supporting documents and exhibits for the year 2008 were presented and duly submitted to the Court, and that there were newly discovered evidence to support petitioner's claim. Petitioner likewise attached to the motion the originals of the subject IEIRDs. In its Supplemental Motion for Reconsideration/New Trial , petitioner clarifies that the IEIRD of a particular bulk shipment, which is common in their industry, usually covers three (3) stages of payment. Bulk shipments involve hefty purchase price and that gasoline products may contract or expand during shipment that final billing, if based on quantity, can only be determined upon actual arrival of the product. Thus, it is common that the billings issued to petitioner are in three (3) or multiple stages, first, the advance/initial billing; second, the temporary final billing; and the final and adjusted billing. These three billings pertain to an importation reflected only in a single IEIRD. IEIRD is usually released at the last stage of billing. However, in instances when only two billings are made ( i.e. , initial and temporary final billings), only BOC Form No. 38-A is presented to indicate payments of the taxes and customs charges and duties. The IEIRDs in relation to these importations are particularly referred to in the BOC forms in the "Entry No. & Series" section of the BOC Form. There are also instances when the BOC form covers two or more IEIRDs specially when payments were made at the same time for different IEIRDs. DECcAS Respondent vehemently objects on petitioner's request for new trial for the presentation of documents in support of its 2008 claim for refund. She argues that: 1) petitioner had the opportunity to present the alleged documents during the trial for the evaluation of the Court; 2) it was not deprive of its day in court; and 3) petitioner belatedly realized its mistake after the assailed decision has been rendered. Further, petitioner's failure to present the subject documents was due to the negligence of its counsel and such negligence should not be countenanced. Petitioner should not be allowed to belatedly submit documentary evidence which could have been timely offered and admitted had it exercised even ordinary prudence and diligence. The Court finds merit in petitioner's motion . Section 1 of Rule 37 of the 1997 Rules of Civil Procedure enumerates the grounds for filing a motion for new trial, thus: SEC. 1. Grounds of and period for filing motion for new trial or reconsideration . Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or HICSTa (b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result. Within the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded are excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary to law. Conspicuously, there was an honest mistake on the part of petitioner when it relied heavily on the representation of the ICPA that all the documents in support of its claim for refund for 2008 were photocopied and submitted to the Court. It was incumbent upon the ICPA, upon his commission as an officer of the court, to certify that he examined the original documents pertinent to the case and photocopied them for the submission to the Court. It is the very essence of his oath of office. Relevantly, in the case of BPI Family Savings Bank, Inc. vs. Court of Appeals , 2 the Supreme Court allowed the appreciation of document which was attached in the motion for reconsideration. In the said case, the Highest Tribunal pointed out that the law creating the Court of Tax Appeals specifically provides that proceedings before it shall not be governed strictly by the technical rules of evidence; and that the paramount consideration remains the ascertainment of truth. This is in line with the avowed policy that the Rules shall be liberally construed in order to promote their objective of securing a just, speedy and inexpensive determination of every action and proceeding before the Court. 3 HTCAED However, it is also settled that court considers no evidence which has not been formally offered. 4 Thus, in the interest of substantial justice, and if only to give petitioner the final opportunity to prove its claim for refund, petitioner is allowed to present and formally offer, the documents mentioned and attached to the instant motion , subject to this Court's final evaluation and/or appreciation of the same. WHEREFORE , let the case be set for hearing for the presentation of the documents cited and attached to its motions on July 3, 2014, at 9:00 a.m. Meanwhile, the resolution of petitioner's Motion for Reconsideration is held in abeyance. SO ORDERED . (SGD.) ESPERANZA R. FABON-VICTORINO Associate Justice Lovell R. Bautista and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. Docket, pp. 801-819. 2. G.R. No. 122480, April 12, 2000. 3. Section 2 Rule 1, Revised Rules of the Court of Tax Appeals. 4. Sec. 34, Rule 132 of the Rules of Court; Dizon vs. Court of Tax Appeals , G.R. No. 140944, April 30, 2008.