Benguet Corp. v. Commissioner of Internal Revenue

SECOND DIVISION [CA-G.R. SP No. 48314. July 8, 1999.] BENGUET CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS , respondents . D E C I S I O N ABESAMIS , J p : For our consideration is a petition for review of the decision of the Court of Tax Appeals (C.T.A.) dated February 14, 1996 entitled: "Benguet Corporation, petitioner vs. Commissioner of Internal Revenue, respondent " and the resolution dated May 27, 1998 in C.T .A . CASE NO. 5007. The facts of the case are as follows: On November 20, 1991, Benguet Corporation filed its Value Added Tax return for the third quarter of taxable year 1991 covering the period August 1, to October 30, 1991. The said return reflected the amount of P41,818,520.36 corresponding to the input tax payments made by Benguet during the third VAT taxable quarter of the year 1991. The same return indicated that after applying these input tax payments to the output tax in the sum of P793,222.98, there resulted an excess and refundable amount of P41,025,297.38. On February 20, 1992, Benguet Corporation filed its VAT return corresponding to the fourth VAT taxable quarter of the year 1991 and indicated the amount to P43,880.467.09 as input tax payments on its local purchases of materials and supplied and capital goods and after applying this amount against the output tax of P729,239.54 resulted in a creditable input tax of P43,151,227.15. Benguet Corporation, on two separate occasions, filed its claims for Tax Credit accompanied by an application form for Tax Credit (BIR Form No. 2552) on July 27, 1992 and September 30, 1992, respectively, but the Commissioner of Internal Revenue did not act on these two claims. During the hearings of the case, CIR partially granted the claim for refund of Benguet Corporation in the amount of P27,331,445.38 and as a consequence, a tax credit certificate was issued favor of petitioner corporation. The refundable amount granted in favor of Benguet Corporation was based on the results of the investigation made by the BIR examiners summarizing their findings as follows: AMOUNT APPLIED FOR TAX REFUND (Benguet Corporation) 3rd Quarter P41,025,297.38 P83,881,621.04 4th Quarter 42,856,323.66 ADD/DEDUCT ADJUSTMENTS a) Claims of input taxes without supporting document (163,170.11) b) Input tax adjustments per BCs computation Already taken up by examiner in adjustment (a) 38,160.17 c) Claims of input taxes on purchases of services From various contractors without the required VAT invoices representing cash advance and Materials and supplies (gasoline, etc.) issued to contractors. (9,741,234.52) d) Output tax on sale of gold to Central Bank (P312,603,337.20 x 1/11) (46,600,307.02) e) Unapplied/excess input taxes from purchases in 1st and 2nd quarters of 1991 directly identified with gold operations. 3,674,681.50 AMOUNT RECOMMENDED FOR TAX REFUND/CREDIT P31,089,751.06 =========== Accounted for as follows: To be refunded by: BIR P27,331,445.38 BOC 3,753,305.68 Total accounted for: P31,089,751.06 =========== After items a, c, and d, were disallowed by the Commissioner of Internal Revenue, on July 13, 1993, Benguet Corporation filed a petition for review before the Court of Tax Appeals. After the hearings, the public respondent CTA rendered its decision and upheld the disallowances made by the CIR on items a, c and d and denied Benguet's petition. Moreover, CTA did not grant Benguet a tax Credit of P3,758,305.68 notwithstanding that the amount had already been approved by the CIR. Not satisfied with the decision of the CTA, Benguet Corporation filed a motion for reconsideration and supplemental motion for reconsideration. The Court of Tax Appeals partially reconsidered its earlier decision and allowed the refund of item ( d ) in the amount of P46,600,307.02 and the amount of P3,758,305.68 which was already approved to be refunded by the Bureau of Customs. Still aggrieved by the resolution of Court of Tax Appeals, petitioner Benguet Corporation elevated the instant case via the instant petition for review only with respect to disallowed items ( a ) and ( c ) in the amount of P163,170.11 and P9,741,234.52, respectively. LexLib The pivotal issue before Us is, whether or not the Court of Tax Appeals gravely abuse its discretion amounting to lack or in excess of its jurisdiction in disallowing the refund input taxes amounting to P163,170.11 and P9,741,234.52 for being without value added tax invoices and ignoring the other available evidence supporting such refund. Petitioner Benguet Corporation contends that the fundamental principle in taxation is that the substance of the transaction will govern its form. It further argued that Benguet paid its contractors the full contract price and that a portion of the payment was made through netting old of cash advances is undisputed, and that the denial of its claim for input tax on a portion of the contract price simply because the formal requirements on substantiation were not complied with respect to the said portion would be upholding form in utter disregard of substance. Moreover, petitioner corporation stressed that it has more than oral proof to prove its input tax credits since the CIR does not deny the payment made by the said corporation the full contract price with respect to its contracts with its contractor. Sections 238 and 108 of the National Internal Revenue Code provide that: SECTION 238. Issuance of Receipts or Sales or Commercial Invoices . All persons, subject to an internal revenue tax shall for each sale or transfer of merchandise or for services rendered valued at P25 or more, issue receipts or sales or commercial invoices, prepared at least duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: Provided , That in the case of sales, receipts or transfers in the amount of P100 or more, or, regardless of amount, where the sale or transfer is made by persons subject to value added tax; . . . SECTION 108. Invoicing and Accounting Requirements for Vat-Registered persons . (a) A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to the information required under Section 238, the following information shall be indicated in the invoice or receipt. (1) The VAT registration number; (2) If the seller bills the tax as a separate item in the invoice; (A) The amount of gross selling price or gross receipts on which the value-added tax is based; (B) The amount of value-added tax determined by multiplying the amount of gross selling price or gross receipts by the rate of tax; and (C) The sum of (i) the gross selling price or gross receipts and (ii) the value-added tax which the purchaser pays or is obligated to pay to the vendor. (3) If the seller elects not to bill the tax as a separate item in the invoice or receipt the total amount charged against the buyer. By and large, the quantum of proof required in all administrative cases, as in the case at bench, is substantial evidence. Said quantum of evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion (Megascope General Services vs. National Labor Relations Commission 274 SCRA 147). The aforementioned Sections 238 and 108 of the National Revenue Code state clearly that the basic requirement of every transaction of VAT registered person shall be issued with corresponding invoice. The herein petitioner corporation has failed to present the required supporting VAT invoice to warrant tax refund. We agree with the Court of Tax Appeals in its resolution dated June 24, 1998 when it ruled that: "As regards second assignment of error, We find the disallowances of P163,170.11 and P9,741,234.52, representing input taxes without supporting documents and input taxes on purchases of services from various contractors without the required VAT invoices, in order. The records show that petitioner failed to present vital proof to support its claim. It did not bother to formally offer the VAT invoices as evidence to prove the veracity of the amount claimed for refund. Well-settled is the rule that claims for refund are construed strictly against the claimant, the same being in the nature of an exemption from taxation. (Insular Lumber Co. vs. Court of Tax Appeals, 104 SCRA 710 [1981]). (Resolution, p. 5 [p. 54, Rollo]) It is well-settled that the findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality (Naguiat vs. National Labor Relations Commission, 269 SCRA 564). Upon careful review of the questioned decision and resolution and as a matter of policy, We see no reason to set aside the conclusion leached by the Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority. In fine, neither of the questioned decision nor the resolution assailed by the petitioner may be struck down for having been issued with grave abuse of discretion. WHEREFORE, premises considered, instant petition is hereby DENIED DUE COURSE and DISMISSED for lack of merit and the decision dated February 14, 1996 as well as the resolution dated May 27, 1998 of the Court of Tax Appeals are hereby AFFIRMED in toto . SO ORDERED. Luna and Carpio Morales, JJ . , concur.