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

EN BANC [C.T.A. EB CASE NO. 1072. August 26, 2014.] (C.T.A. Case No. 8245) COMMISSIONER OF INTERNAL REVENUE , petitioner , vs . CE CASECNAN WATER AND ENERGY COMPANY, INC. , respondent . RESOLUTION CASTAEDA, JR. , J p : For resolution are a) petitioner's Motion for Reconsideration of the assailed Decision dated April 28, 2014 dismissing the Petition for Review; and b) respondent's Comment (Re: Petitioner's Motion for Reconsideration dated May 26, 2014). In the Motion for Reconsideration, petitioner raises the following grounds: 1. Mandatory compliance of the rules prescribing the presentation of evidence to support an administrative claim is confirmed in the case of Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue . 1 2. In RMO No. 53-98, as amended by RMO No. 16-2007, the documents required are listed with definiteness, and not subject to taxpayer's discretion. 3. This case is not a refund claim of erroneously paid taxes under Section 229 of the 1997 NIRC where taxpayers have the discretion to submit documents to substantiate their refund claim. aIcDCH 4. Respondent has failed to satisfy the statutory and administrative requirement under Section 112 (C) of the 1997 NIRC. Thus, respondent's hurried recourse before the Court in Division, in effect deprived petitioner the functions to correct, modify or affirm the findings of her subordinates. 5. Exhaustion of available remedies is a condition precedent before taking judicial action. In its Comment, respondent alleges that compliance with RMO No. 53-98 is not one of the indispensable requisites for the recovery of excess and unutilized input taxes, and is not a necessary pre-condition for a judicial claim for refund. Respondent further asserts that the determination of sufficiency of evidence lies within the Court's sound judgment. In the absence of a judicially-recognized list of complete supporting documents, the taxpayer is authorized to ascertain which relevant documents are to be submitted relative to its refund claim. Petitioner's failure to request additional supporting documents, despite ample opportunity, should not prejudice respondent's right to seek judicial recourse to recover excess and unutilized input VAT. Petitioner's Motion for Reconsideration is unmeritorious. The grounds interposed by petitioner in the Motion for Reconsideration have been fully explained in the assailed Decision. We reiterate the following salient points: 1. The term 'complete documents' under Section 112 (D) of the NIRC of 1997 should be understood as those documents necessary to support the application for refund or tax credit certificate as determined by the taxpayer. 2 2. In the case of Commissioner of Internal Revenue v. First Express Pawnshop, Inc. , 3 the Supreme Court defined the term 'relevant supporting documents' "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." (Emphasis supplied.) 3. Although pertaining to assessment, the Supreme Court case of Commissioner of Internal Revenue v. First Express Pawnshop, Inc. 4 should be applied by analogy to the case at bar in the determination of completeness of documents in relation to Section 112 of the Tax Code. 4. In its administrative claim embodied in the letter dated November 10, 2010 addressed to the BIR, respondent mentioned having submitted the following documents, namely: CSHDTE In support of our request, we enclose the following documents for your perusal: 1. Duly accomplished BIR Form No. 1914 Application for Tax Credits/Refunds 2. SEC certificate of registration and articles of incorporation 3. BIR certificate of registration 4. BOI certificate of registration 5. DOE certificate of accreditation 6. VAT registration payment for the year 2009 7. Project Agreement between CE Casecnan and NIA 8. General Information Sheet 9. Annual Income Tax return for taxable year ended December 31, 2009 together with the audited financial statements 10. Monthly and Quarterly VAT returns for first to fourth quarters 11. Schedule of purchases and importations for first to fourth quarters 12. Schedule of sales for first to fourth quarters 13. Summary of actual input VAT attributable to sale of power 14. Zero-rated sales invoices issued to NIA 15. Zero-rated official receipts issued to NIA 16. VAT sales invoices issued to NIA 17. VAT official receipts issued to NIA 18. Withholding VAT returns for first to fourth quarters 19. Copy of BIR Authority to print official receipts/sales invoices and use computerized accounting system 20. Photocopy of inventory of used official receipts/sales invoices for the calendar year 2009 duly received by the BIR 21. Official receipts/sales invoices issued by local supplier of goods and services 22. Import entry internal revenue declarations and/or official receipts issued by the Bureau of Customs 23. Soft copy of the detailed schedule of input VAT on local purchases of goods and services and importations We shall await the issuance of the necessary authorization for your revenue officers to conduct the required audit to process our claim. We trust that the foregoing merits your favorable consideration. 5 (Emphasis supplied.) 5. Petitioner never required respondent to submit additional documents if she deems insufficient the documents submitted by respondent in support of its refund claim. 6. The Supreme Court even allowed submission of documents in support of the refund claim under Section 112 (C) of the 1997 NIRC, as amended, beyond the 120-day period as echoed in the consolidated cases of Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, Philex Mining Corporation v. Commissioner of Internal Revenue . 6 7. The law does not require the taxpayer to submit the documents prescribed by RMO 53-98, as amended by RMO No. 16-2007 as a precondition to the refund claim of unutilized input VAT payments. 7 8. Respondent timely filed an appeal to this Court and complied with the administrative process under Section 112 of the Tax Code. Thus, this Court has jurisdiction to rule on the refund claim. 9. The Court in Division correctly ordered petitioner to grant the refund or the issuance of the tax credit certificate in favor of the respondent in the amount of P16,101,029.44 representing unutilized input VAT attributable to its zero-rated sales to National Irrigation Administration ("NIA") for taxable year 2009. WHEREFORE , premises considered, petitioner's Motion for Reconsideration is hereby DENIED for lack of merit. SO ORDERED . DHAcET (SGD.) JUANITO C. CASTAEDA, JR. Associate Justice Roman G. del Rosario, P.J., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Amelia R. Cotangco-Manalastas and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. G.R. No. 145526, March 16, 2007, 518 SCRA 425,431. 2. Team Sual Corporation (formerly: Mirant Sual Corporation) v. Commissioner of Internal Revenue, and Commissioner of Internal Revenue v. Team Sual Corporation (formerly Mirant Sual Corporation) , CTA EB Case Nos. 649 & 651, Resolution dated March 21, 2012. See Philex Mining Corporation v. Commissioner of Internal Revenue , C.T.A. Case No. 8424, Resolution dated January 7, 2014; Commissioner of Internal Revenue v. CE Casecnan Water and Energy Company, Inc. , CTA EB Case No. 971, January 7, 2014; Coca-Cola Bottlers Philippines, Inc. v. Commissioner of Internal Revenue , C.T.A. Case No. 8218, December 6, 2013. 3. G.R. Nos. 172045-46, June 16, 2009, 589 SCRA 253. 4. G.R. Nos. 172045-46, June 16, 2009, 589 SCRA 253. 5. Exhibit "N". 6. G.R. Nos. 187485, 196113 & 197156, February 12, 2013. 7. See Commissioner of Internal Revenue v. Visayas Geothermal Power Company , CTA EB Case No. 282, November 20, 2007.