Commissioner of Internal Revenue v. Negros Del Norte Planters Association Multi-Purpose Cooperative

EN BANC [C.T.A. EB CASE NO. 1012. January 13, 2015.] (C.T.A. Case No. 8287) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . NEGROS DEL NORTE PLANTERS ASSOCIATION MULTI-PURPOSE COOPERATIVE , respondent . RESOLUTION MINDARO-GRULLA , J p : Before the Court En Banc is a Motion for Reconsideration 1 filed by the Commissioner of Internal Revenue (CIR) seeking to set aside this Court's Decision promulgated on August 14, 2014, 2 the dispositive portion of which reads: " WHEREFORE , the assailed Decision dated January 30, 2013 and Resolution dated April 18, 2013 is hereby MODIFIED . Accordingly, Commissioner of Internal Revenue is hereby ORDERED TO REFUND in favor of Negros Del Norte Planters Association Multi-Purpose Cooperative the amount of eight million seven hundred thirty three thousand four hundred forty four pesos (P8,733,444.00), representing erroneously paid advance VAT for the period covering May 15, 2009 to November 25, 2009. SO ORDERED ." In its motion, CIR insists that Negros del Norte Planters Association Multi-Purpose Cooperative (NDNPAMPC) failed to present clear and convincing evidence to prove that it is not engaged in the purchase of sugarcane produced by non-members. CIR points out that it is imperative to present the Listing/Abstract of Official Warehouse Receipt Quedan of the raw sugar issued by sugar mills as required by Revenue Regulations (RR) No. 13-2008. Likewise, CIR contends that NDNPAMPC failed to present convincing evidence to prove that it is the principal provider of the various production inputs (fertilizers), capital, technology transfers and farm management as production cost. ScaEIT In its Opposition, 3 NDNPAMPC claims that when the Revenue District Officer (RDO) issues the Authorization Allowing the Release of Refined Sugar (AARRS), there is a presumption that all the requirements for the release of the AARS have been submitted. The main thrust of CIR's argument lies on whether NDNPAMPC is entitled to claim for tax refund and/or credit. The motion is bereft of merit. Section 3 of RR No. 13-2008 provides that before the issuance of Certificate of Advance Payment of VAT, the owner/seller shall submit a Listing/Abstract of Official Warehouse Receipt Quedan. Moreover, Section 5 of the same revenue regulation requires the submission of the same document before issuance of AARRS. In the instant case, NDNPAMPC presented various Certificates of Advance Payment of VAT (Authorizing the Release of Refined Sugar subject to the Advance VAT). 4 This means that NDNPAMPC was able to submit the said document because of the existence of the said Certificates of Advance Payment of VAT. As We have ruled in the case of Commissioner of Internal Revenue vs. Negros Sugar Farmers Multi-Purpose Cooperative : 5 ". . . [I]t is worth emphasizing that Section 3 of RR 13-2008 provides for the requirement to 'pay in advance Value Added Tax (VAT) on sale of refined sugar.' It also specified the documentary requirements to be submitted or filed prior to the issuance of Certificate of Advance Payment of VAT. In the instant case, petitioner presented in evidence Exhibits 'I' to 'X-3,' which include said Certificates. This implies that it had already previously submitted the documentary requirements before the issuance of said Certificates; otherwise, the said Certificates would not have been issued in its favor." On the issue that NDNPAMPC failed to present convincing evidence to prove that it is the principal provider of the various production inputs (fertilizers), capital, technology transfers and farm management as production cost, this Court in Division 6 has already ruled that: "[NDNPAMPC] is supplying various production inputs such as fertilizers, capital, technology transfer, and farm management to its members. . . . 7 These facts were never contested to by respondent as no evidence was ever presented. Based on Rule 9, Section 1 of the Rules of Court, defenses and objections not pleaded are deemed waived. Thus, petitioner is considered as the actual producer of the members' sugarcane production as it primarily provided the various production inputs (fertilizers), capital, technology transfer and farm management ." (Underlining Supplied) Worthy to note that BIR Ruling No. ECCP-001-2008 expressly states that: ". . . Notwithstanding that NDNPAMPC is not the owner of the land and the actual tiller of the land, it is considered as the actual producer of the members' sugarcane production because it primarily provided the various productions inputs (fertilizers), capital, technology transfer and farm management. . . ." Also, BIR Ruling No. ECCP-007-99/ECCP-032-99 dated October 07, 1999 provides: "Based on the foregoing and since you are an agricultural multi-purpose cooperative transacting business with members only , you are exempt from all taxes and fees imposed under the internal revenue laws and other tax laws , pursuant to Article 61 of the Cooperative Code." (Emphasis supplied) DEacIT These BIR Rulings were not contested before the Secretary of Finance. Therefore, unless and until reversed, these rulings stand and there is no choice for this Court but to observe the same. As We reiterate our statement in the assailed Decision: "No other than the BIR itself, through Assistant Commissioner James H. Roldan, states that NDNPAMPC is the actual producer of its refined sugar, through BIR Ruling No. ECCP-001-2008. As stated by the Special Third Division, no evidence to the contrary was ever presented by petitioner. Unless and until the Secretary of Finance reverses or modifies the ruling of the CIR, BIR Rulings shall be considered valid with full force and effect. 8 Moreover, as properly observed by NDNPAMPC, no investigation report was ever presented in Court that would nullify the said BIR Ruling." That being said, this Court will not disturb the findings in the assailed Decision. WHEREFORE , premises considered, the Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED . (SGD.) CIELITO N. MINDARO-GRULLA Associate Justice Court of Tax Appeals Roman G. del Rosario, P.J., Juanito C. Castaeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Amelia R. Cotangco-Manalastas and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. En Banc Docket, pp. 123-128. 2. Id. , at pp. 100-122. 3. En Banc docket, pp. 129-132. 4. Division Docket, Exhibits "G-1-a" to "G-32-a", pp. 22-53. 5. CTA EB Case No. 877, February 14, 2013. 6. Decision, CTA Case No. 8287, January 30, 2013. 7. Exhibit "H," Division Docket, p. 151. 8. Delta Airlines, Inc. vs. Hon. Sec. Cesar V. Purisima (in his capacity as Incumbent Secretary of the Department of Finance) and Hon. Com. Kim S. Jacinto-Henares (in her capacity as Incumbent Commissioner of Internal Revenue) , CTA Case No. 8360, August 15, 2013.