Phil. Gold Processing & Refining Corp. v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [C.T.A. CASE NOS. 8327 & 8328. January 14, 2014.] PHIL. GOLD PROCESSING & REFINING CORP. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . RESOLUTION COTANGCO-MANALASTAS , J p : For resolution is petitioner's Omnibus Motion for Reconsideration 1 filed on November 21, 2013 with respondent's Comment/Opposition (Re: Omnibus Motion for Reconsideration) 2 filed on December 9, 2013. Petitioner seeks reconsideration of the following: DcAEIS a. Court's Resolution 3 dated October 14, 2013 denying petitioner's Motion to Re-open; and b. Court's Decision 4 dated October 22, 2013 denying petitioner's claim for refund or issuance of tax credit certificate representing unutilized input value-added tax (VAT) arising from petitioner's importation of goods and domestic purchases of goods and services attributable to its zero-rated sales for the fourth quarter of fiscal year (FY) ending June 30, 2009 to the second quarter of FY ending June 30, 2010. On December 26, 2013, petitioner filed its Reply to respondent's comment/opposition which was received by this Court on January 3, 2014. For the proper adjudication of petitioner's Omnibus Motion for Reconsideration, the said Reply is hereby NOTED and ADMITTED by the Court. However, We observed that, in its Reply, petitioner merely reiterated, if not substantially copied in verbatim, the very same arguments already raised in its Omnibus Motion for Reconsideration. The Court will now proceed to resolve the issues raised in petitioner's Omnibus Motion for Reconsideration. Court's Resolution dated October 14, 2013 Petitioner argues that justice dictates that these cases should be reopened. This Court's Resolution denying the Motion to Re-open was released just a week before the Decision was rendered by this Court. Petitioner received a copy of the Resolution the same day it received a copy of the Decision denying the claim for refund. When the Court proceeded to decide the cases without affording petitioner the opportunity to question the Resolution, there was a clear breach of petitioner's right to due process. In its Motion to Re-open, petitioner proposes to submit its sales invoices for exportation made from July 1, 2009 to December 31, 2009 and other supporting documents to support its claim for refund. Since the Court notes petitioner's submission of provisional invoices (instead of the "actual" invoices), petitioner begs this Court to admit the invoices attached to its Motion to Re-open and other supporting documents if only to satisfy itself as to the completeness of the documents supporting petitioner's claim for refund. Petitioner however maintains that the submission of sales invoices is not required by law in order to prove entitlement of petitioner to the refund claimed. Respondent counter-argues that petitioner had every opportunity to present the sales invoices for the Court's evaluation. Neither was petitioner deprived of its day in court. 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. Petitioner's failure to present the same was due to the negligence of its counsel and such negligence should not be countenanced by the Court. Petitioner should not be allowed, in the guise of equity, to benefit from its own negligence. After weighing the arguments of the parties, this Court stands by its ruling denying petitioner's Motion to Re-open, considering that no new or substantial matter was raised by petitioner in its Omnibus Motion for Reconsideration to merit a reversal or modification of the assailed Resolution. Since the matters raised in petitioner's Motion to Re-open had already been thoroughly discussed and disposed of in the assailed Resolution, the Court deems it unnecessary to discuss it in detail once more. To reiterate, the presentation of additional evidence is allowed when it is newly discovered, or where it has been omitted through inadvertence or mistake, or where the purpose of the evidence is to correct evidence previously offered. 5 However, the reasons offered by petitioner for wanting to reopen this case did not even allege any of the grounds enumerated above. Petitioner admitted that the sales invoices were not submitted owing to the sufficiency of the documents submitted. Despite this, petitioner seeks to present additional evidence. The Court cannot accept petitioner's justification for presenting additional evidence, to wit: "if only to settle all questions on the completeness of its claim for refund". Likewise, the Court refuses to give credence to petitioner's allegation that the original copies of the airway bills, bar lists and packing lists were not available at the time of trial due to the resignation of its senior accountant and general accountant. HEDCAS Anent petitioner's argument that there was a breach of petitioner's right to due process when the Court proceeded to decide the cases without affording petitioner the opportunity to question the Resolution, needless to say, there was no deprivation of due process. Notably, these cases were already submitted for decision on March 26, 2013. It was only on August 1, 2013, when petitioner filed its Motion to Re-open. The mere filing of a motion to reopen a case must not in any way automatically vacate an agreement and order submitting the case for decision. While the court may reopen a case for reception of further evidence after the parties have closed their evidence, such action is addressed to the sound discretion of the court, to be exercised only on valid and justifiable reasons 6 which were inexistent in this case. Since these cases were already submitted for decision, the Constitution mandates that these cases must be decided within twelve months from date of submission. 7 Hence, the Court acted in accordance with the mandate of the Constitution when it rendered a decision on the case. Therefore, it was erroneous for petitioner to claim that it was deprived of its right to due process when the Court proceeded to decide the cases without affording petitioner the opportunity to question the Resolution. Nevertheless, petitioner was not denied an opportunity to file its motion for reconsideration on the Court's resolution denying its Motion to Re-open, as in fact, petitioner did, which unfortunately, did not raise any new or substantial matter. Court's Decision dated October 22, 2013 Invoicing Requirement Petitioner likewise seeks a reconsideration of this Court's Decision. Petitioner contends that it submitted sufficient proof to prove its zero-rated sales. Sales invoices are not indispensable in proving entitlement to refund as they do not prove actual export of petitioner's products. Petitioner avers that the Court's Decision denying its claim for refund covering the quarters July to September 2009 and October to December 2009 is non-compliance with invoicing requirements. However, compliance with invoicing requirements is not mandated by the law in order that a taxpayer may successfully prove entitlement to a refund of unutilized input VAT attributable to export sales. Petitioner argues, among others, that nowhere in Revenue Regulations No. 16-2005 was it provided that the taxpayer must comply with the invoicing requirement under Section 113 of the National Internal Revenue Code (NIRC) of 1997, as amended, to be entitled to a claim for refund. Neither does it say that the taxpayer needs to present sales invoices to prove actual exportation of its goods. The Court cannot give too much importance on export sales invoices which are just some of the written accounts used to document sales to a customer. These invoices are not conclusive confirmations that goods were actually shipped out of the country. ASaTCE Hence, export sales invoices alone are insufficient evidence. The other evidence presented by petitioner taken together are the best proof that actual exportations were made and these were paid for in acceptable foreign currency. This is supported by Revenue Memorandum Circular (RMC) No. 42-03 where the Bureau of Internal Revenue (BIR) conceded that zero-rated sales may be established by other proofs or documents such as Audited Financial Statements, Bills of Lading or Airway Bills, etc. This is further supported by BIR Ruling No. DA-375-03 where the BIR itself declared that non-indication of information required by Section 113 of the NIRC in the Official Receipt should not warrant the dismissal of the claim for refund. Petitioner also argues that compliance with the invoicing requirements can be dispensed with as petitioner's customer is a non-resident foreign corporation who will not be claiming input VAT arising from petitioner's transactions. In Microsoft Phil., Inc. vs. Commissioner of Internal Revenue, 8 the Supreme Court explained the rationale of requiring the imprinting of the words "zero-rated" in the invoices was to prevent buyers from falsely claiming input VAT from their purchasers when no VAT is actually paid. Hence, the fear of claiming input taxes from zero-rated sales is not applicable in this case. Petitioner likewise stresses that the issuance of BIR Ruling DA-VAT 073-09 confirmed the approval by respondent CIR of the zero-rating of petitioner's sales. After a careful evaluation of the arguments raised by both parties, this Court finds no compelling reason to reverse or modify the assailed Decision. In RMC No. 42-03, 9 the BIR clarified that the taxpayer's failure to comply with invoicing requirements will result in the disallowance of its claim for refund, to wit : Q-13: Should penalty be imposed on TCC application for failure of claimant to comply with certain invoicing requirements, ( e.g. , sales invoices must bear the TIN of the seller)? A-13: Failure by the supplier to comply with the invoicing requirements on the documents supporting the sale of goods and services will result to the disallowance of the claim for input tax by the purchaser-claimant. If the claim for refund/TCC is based on the existence of zero-rated sales by the taxpayer but it fails to comply with the invoicing requirements in the issuance of sales invoices ( e.g. , failure to indicate the TIN), its claim for tax credit/refund of VAT on its purchases shall be denied considering that the invoice it is issuing to its customers does not depict its being a VAT-registered taxpayer whose sales are classified as zero-rated sales . . . . (Emphasis supplied) Moreover, the Supreme Court has consistently ruled that failure to comply with the invoicing requirements such as printing the word "zero-rated" on the invoices or receipts is fatal to a claim for refund or credit of input VAT on zero-rated sales. 10 A VAT-registered taxpayer is required to comply with all the VAT invoicing requirements to be able to file for a claim for input taxes attributable to zero-related sales. 11 CTDacA In this case, petitioner's provisional invoices do not bear petitioner's Taxpayer Identification Number (TIN) followed by the word "VAT" and the word "zero-rated" was also not written or printed on the invoices. Moreover, the provisional invoices were not duly registered with the BIR. Consequently, petitioner's claim for refund must necessarily fail. Well-settled in this jurisdiction is the fact that actions for tax refund, as in this case, are in the nature of a claim for exemption and the law is construed in strictissimi juris against the taxpayer. The pieces of evidence presented entitling a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven. 12 Reckoning of the 120+30 Day Period With regard to the claim for the 4th quarter of 2009 (CTA Case No. 8327), petitioner argues that it was timely filed. In denying the claim for the quarter April to June 2009, the Court reckoned the "120+30 day" period from March 25, 2011, which is the original date of the filing of the administrative claim for refund. However, on April 13, 2011, petitioner filed its Amended Quarterly VAT Return for the quarter April to June 2009 (Exhibit "K"). It was only from said date that petitioner completed its submission of necessary documents to support its claim for refund. Respondent counter-argues that since petitioner did not submit complete documents in support of its administrative claim for refund, the 120-day period started on March 25, 2011, the date when it filed its administrative claim. This Court has consistently ruled that the term 'complete documents' under Section 112 (C) of the NIRC of 1997, as amended, should be understood as those documents necessary to support the application for refund or tax credit certificate as determined by the taxpayer. 13 However, after reviewing the evidence on record, the Court cannot give credence to petitioner's claim that the Amended Quarterly VAT Return for the quarter April to June 2009 was submitted as additional document in support of its administrative claim for refund and thus the counting of the 120-day period should be reckoned from the filing of said amended return. An examination of the Amended Quarterly VAT Return for the quarter April to June 2009 (Exhibit "K") shows that the same was stamped received by the BIR on April 13, 2011. However, there was no covering or transmittal letter stating that the same is being submitted as additional document in support of petitioner's claim for refund. Consequently, the Court cannot determine, by merely looking at the amended return, if it was petitioner's intention to submit the same as additional document in support of its claim for refund. Moreover, by petitioner's own allegation and declaration in its pleadings, it reckoned the counting of the 120+30 day period on March 25, 2011, the date when it filed its administrative claim. First, in its Petition for Review, 14 petitioner alleged that "[c]onsidering the filing of the petitioner of its administrative case with respondent on 25 March 2011, and the filing of this Petition, petitioner has claimed its established certificate of credit within the reglementary period as provided by law." Second, in its Offer of Exhibits, the purpose of the Amended Quarterly VAT Return for the 4th Quarter of FY ending June 30, 2009 (Exhibit "K") did not state that it was likewise being presented to prove that it was submitted as additional supporting documents to the administrative claim for refund. 15 Finally, in the Judicial Affidavit of petitioner's witness, Ms. Juanita Lilet Dato-Abuel, the reason stated for petitioner's filing of an Amended Quarterly VAT Return was to reflect the adjustment on its unapplied creditable input taxes for the same quarter, 16 there was no mention that it was also being submitted as additional supporting document on its administrative claim for refund. The foregoing belies petitioner allegation that it submitted the Amended Quarterly VAT Return as additional supporting documents in support of its administrative claim for refund, hence, the 120+30 day period should be reckoned from the filing of the said administrative claim. DcCITS WHEREFORE , premises considered, the instant Omnibus Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED . (SGD.) AMELIA R. COTANGCO-MANALASTAS Associate Justice Lovell R. Bautista, J., concurs. Footnotes 1. Docket, pp. 1215-1228. 2. Docket, pp. 1231-1240. 3. Docket, pp. 1193-1199. 4. Docket, pp. 1201-1213. 5. Lopez vs. Liboro , G.R. No. L-1787, August 27, 1948. 6. People of the Philippines vs. Gole Cruz , G.R. No. L-69251, September 13, 1989. 7. Section 15 (1), Article VIII, 1987 Constitution. 8. G.R. No. 180173, April 6, 2011. 9. Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax (VAT) Credit/Refund, Including Those Filed with the Tax and Revenue Group, One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, Department of Finance (OSS) by Direct Exporters. 10. Panasonic Communications Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue , G.R. No. 178090, February 8, 2010; J.R.A. Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 177127, October 11, 2010; Hitachi Global Storage Technologies Philippines Corp. (formerly Hitachi Computer Products (Asia) Corporation) vs. Commissioner of Internal Revenue , G.R. No. 174212, October 20, 2010; Kepco Philippines Corporation vs. Commissioner of Internal Revenue , G.R. No. 181858, November 24, 2010; Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 168856, August 29, 2012; Western Mindanao Power Corporation vs. Commissioner of Internal Revenue , G.R. No. 181136, June 13, 2012. 11. Microsoft Philippines, Inc. vs. Commissioner of Internal Revenue , G.R. No. 180173, April 6, 2011. 12. Kepco Philippines Corporation vs. Commissioner of Internal Revenue , G.R. No. 179961, January 31, 2011. 13. Diageo Philippines, Inc. vs. Commissioner of Internal Revenue , CTA Case Nos. 7846 and 7865, January 16, 2012; 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) , CTA EB Nos. 649 and 651, Resolution dated March 21, 2012; CE Casecnan Water and Energy Company, Inc. vs. Commissioner of Internal Revenue , CTA Case No. 8245, May 10, 2013. 14. Par. 17, Petition for Review, docket, p. 12. 15. Docket, p. 1030. 16. Exhibit "A", Q44 & A44, docket, p. 426.