Atlas Consolidated Mining Development Corp. v. Court of Tax Appeals

THIRD DIVISION [CA-G.R. SP No. 46718. September 15, 2000.] ATLAS CONSOLIDATED MINING DEVELOPMENT CORPORATION , petitioner , vs . COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N REYES , JR., A. , J p : This is a petition for review of the decision, dated 30 October 1997 of respondent Court of Tax Appeals, which denied the claims for refund of input value added taxes (VAT) during the second, third, and fourth quarters of 1990 filed by petitioner Atlas Consolidated Mining and Development Corporation (ACMDC). The facts are as follows: Petitioner ACDMC is a corporation organized and existing under the laws of the Republic of the Philippines and engaged in the business of mining, production, and sale of mineral products. It is duly listed with the Bureau of Internal Revenue (BIR) as a VAT enterprise with Registration No. 32-A-00224. Petitioners applied with the BIR zero-rating of the following sales: a) gold to the then Central Bank of the Philippines (CBP); b) copper concentrates to the Philippine Associated smelting and Refining Corporation (PASRC); c) pyrite to the Philippine Phosphates, Inc. (PPI); and d) export sales. Petitioner ACMDC filed VAT returns with the BIR for the second, third, and fourth quarters of 1990 on 20 July 1990, 18 October 1990, and 20 January 1991, respectively. It filed claims for refund of input VATs corresponding to the said quarters of the issuance of tax credit certificates with the BIR as follows: Date Filed Period Covered Amount Claimed 21 August 1990 April to June 1990 P54,014,722.04 2 November 1990 July to September 1990 P75,304,774.77 19 February 1991 October to December 1990 P43,829,766.10 Pending action by the BIR on its claims, petitioner filed three separate petitions for review with respondent Court of Tax Appeals on 20 July 1992, 9 October 1992 and 14 January 1993. In the decision, dated 30 October 1997, respondent Court of Tax Appeals dismissed the petitions for review of petitioner mainly on the ground that the prescriptive periods for filing the same have expired. According to respondent Court of Tax Appeals: "It was held in the case of Nichimen Corporation, Philippine Branch vs. Commissioner of Internal Revenue, CTA Case No. 4431, February 13, 1995, that the two-year period provided for under Section 230 of the National Internal Revenue Code should be read in conjunction with Section 106 of the same Code when it comes to the refund of input taxes. Thus, the matter is deemed to involve a mere computation of the period of two years from the date of the close of each quarter to the time the cases at bar were filed. The records reveal that the petitioner filed applications for refund with the Commissioner of Internal Revenue on August 21, 1990, November 21, 1990 and February 19, 1991 respecting the second, third and fourth quarters of 1990. It should also be noted that the judicial actions were filed on July 20, 1992, October 9, 1992 and January 14, 1993 respectively, the subject claims being the input taxes paid for the second, third and fourth quarters of 1990. Consequently, applying the aforesaid provisions of the law in the cases at bar, it appears that when petitioner filed its petitions for review, more than two years had elapsed from the close of the said quarters. Clearly, the petitioner had already been barred by prescription from claiming the refund of input taxes in question." Petitioner ACMDC now raises the following assignments of error: A. The CTA erred in ruling that the instant judicial actions for input VAT refund are barred by prescription; B. The CTA erred in upholding the validity of VAT Ruling Nos. 008-92 and 59-92 where it qualifies the VAT zero-rated nature of the sales to PASAR and Philphos; C. The CTA erred in denying new trial on the ground of absence of an affidavit of merit." The instant petition is without merit. First . The Court of Tax Appeals erred in ruling that petitioner ACMDC belatedly filed its petitions for review. TcEaAS On the period of filing a claim for refund of input VATs or the issuance of a tax credit certificate, Section 106 (b) of the National Internal Revenue Code provides: "Any person, except those covered by paragraph (a) above, whose sales are zero-rated or are effectively zero-rated may, within two years after the close of the quarter when such sales were made, apply for the issuance of a tax credit certificate of refund of the input taxes attributable to such sales to the extent that such input tax has not been applied against output tax." Regarding the period for filing an action to recover taxes which have been paid, Section 230 of the National Internal Revenue Code in part states that "no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty regardless of any supervening cause that may rise after payment." It should be noted from the foregoing that while the period for filing a claim for refund of input VATs or the issuance of a tax credit certificate is reckoned from the close of the quarter involved, the period for filing an action to recover taxes which have been paid is reckoned from the date of payment. It is settled that in the case of input VATs, the date of payment is not deemed to be the close of the quarter involved, but rather the date of the filing of the VAT return, because it is only then that the amount of refund, if any, can be determined (Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, CTA Case No. 5296, 20 July 1998). Since petitioner ACMDC filed its petitions for review with the Court of Tax Appeals within two (2) years of filing the corresponding VAT returns, it is clear that the same have not prescribed. Second . However, although petitioner ACMDC timely filed its petitions for review with the Court of Tax Appeals, it has failed to substantiate its claims for refund of input VATs or the issuance of tax credit certificates. On zero-rating, Section 2 of the Revenue Regulation No. 2-88 provides: "Sales of raw materials to export-oriented BOI-registered enterprises whose export sales, under rules and regulations of the Board of Investments, exceed seventy percent (70%) of total annual production, shall be subject to zero-rate under the following conditions: (1) The seller shall file an application with the BIR, ATTN.: VAT Division, applying for zero-rating for each and every separate buyer, in accordance with Section 8 (d) of Revenue Regulation No. 5-87. The application should be accompanied with a favorable recommendation from the Board of Investments. (2) The raw materials sold are to be used exclusively by the buyer in the manufacture, processing or repacking of its own registered export product; (3) The words "Zero-rated Sales" shall be prominently indicated in the sales invoice." Regarding claims for refund, Section 4 of Revenue Regulation No. 2-88 states: "Refund of input taxes for zero-rated sales of goods under Section 2 of these regulations shall be allowed only upon presentation of documents of liquidation evidencing the actual utilization of the raw materials in the manufacture of goods at least 70% of which have been actually exported." VAT Ruling No. 008-92 reiterated the above requirements laid down in Revenue Regulation No. 2-88. Section 2 of Revenue Regulation No. 3-88 also prescribes the submission of the following to support a claim for refund: "(i) photocopy of approved application for zero rating if filing for the first time. (ii) sales invoice or receipt showing name of the person or entity to whom the sale of goods or services were delivered, date of delivery, amount of consideration, and description of goods or services delivered. (iii) Evidence of actual receipt of goods or services." The Secretary of Finance validly adopted Revenue Regulation Nos. 2-98 and 3-88 pursuant to Sec. 245 of the National Internal Revenue Code, which recognized his power to "promulgate all needful rules and regulations for the effective enforcement, of the provisions of this Code." Thus, it is incumbent, upon a taxpayer intending to file a claim for refund of input VATs or the issuance of a tax credit certificate with the BIR to substantiate the volume of the export sales of its buyers and their exclusive use of the raw materials for this purpose in accordance with Revenue Regulation No. 2-88 and to prove sales to such buyers as required by Revenue Regulation No. 3-88. Logically, the same evidence should be presented in support of an action to recover taxes which have been paid. DAETcC In the instant case, petitioner ACMDC has failed to present any evidence that the export sales of its buyers exceeded seventy percent (70%) of their annual production and they used the raw materials sold to them exclusively in the manufacture, processing, or repacking of their export products. Neither has it presented sales invoices or receipts showing sales of gold, copper concentrates, and pyrite to the CBP, PASRC, and PPI, respectively, and the dates and amounts of the same, nor any evidence of actual receipt by the said buyers of the mineral products. It merely presented receipts of purchases from suppliers on which input VATs were allegedly paid. Thus, the Court of Tax Appeals correctly denied the claims for refund of input VATs or the issuance of tax credit certificates of petitioner ACMDC. Significantly, in the resolution dated 7 June 2000, this Court directed the parties to file memoranda discussing, among others, the submission of proof for "its [petitioner's] sales of gold, copper concentrates, and pyrite to buyers." Nevertheless, the parties, including the petitioner, failed to address this issue, thereby necessitating the affirmance of the ruling of the Court of Tax Appeals on this point. Third. The Court of Tax Appeals properly denied the motion for new trial of petitioner ACMDC. Revenue Regulation Nos. 2-88 and 3-88 clearly laid down the requirements in support of an application with the BIR for a claim for refund of input VATs or the issuance of a tax credit certificate. Thus, evidence as to the volume of the export sales of its buyers and their exclusive use of the raw materials sold to them in the production of their export products is not newly discovered evidence which could not have been discovered and produced at the trial with reasonable diligence and which if presented would probably alter the result. The same can be said of proof of its sales to the said buyers. Therefore, apart from the technical defect of the motion for new trial because it lacked an affidavit of merit, there is no showing that would justify the grant of the motion for new trial of petitioner ACMDC. Furthermore, as mentioned above, petitioner did not discuss the presentation of evidence concerning its sales of raw materials to buyers despite being required to do so in the memorandum, dated 7 June 2000, in the event constraining us to uphold the conclusion of the Court of Tax Appeals on this issue. WHEREFORE, the instant petition is hereby DISMISSED. SO ORDERED. Abad Santos, Jr. and Brawner, JJ . , concur.