Atlas Consolidated Mining and Development Corp. v. Commissioner of Internal Revenue

FIFTH DIVISION [CA-G.R. SP No. 48569. November 28, 2000.] ATLAS CONSOLIDATED MINING and DEVELOPMENT CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N SANDOVAL GUTIERREZ , J p : Petition for review of the decision of the Court of Tax Appeals dated October 2, 1997 in CTA Case No. 5296, "Atlas Consolidated Mining and Development Corporation versus the Commissioner of Internal Revenue." Records show that petitioner Atlas Consolidated Mining and Development Corporation (Atlas for brevity) is a corporation engaged in the business of mining, milling and marketing of minerals, such as copper, gold and its by-products. Being a zero rated VAT (value-added tax) entity, Atlas applied for VAT zero-rating on its sales, including export sales duly approved by the Bureau of Internal Revenue (BIR). DcaECT During the third quarter of 1993, Atlas sold all its copper concentrates to Mitsubishi Materials Corporation in Japan and its gold productions to Centrotrade Minerals and Metals in Switzerland. Forthwith, Atlas filed with the BIR its monthly and quarterly VAT returns and paid the corresponding VAT dues. On October 6, 1995, as a zero-rated VAT entity, Atlas filed with the BIR an application for the issuance of tax credit or refund of VAT paid for the third quarter of 1993 in the amount of P7,076,520.27. However, the BIR failed to resolve Atlas' application. On October 20, 1995, to toll the running of the two year prescriptive period within which to file its application under Section 230 of the National Internal Revenue Code (NIRC), Atlas lodged a petition for review with the Court of Tax Appeals (CTA). Respondent BIR Commissioner (Liwayway Chato) failed to file her answer, hence, the CTA declared her in default and allowed Atlas to present its evidence ex parte . On October 2, 1997, the CTA rendered its decision, the dispositive portion of which reads: "WHEREFORE, premises considered, finding the petition unmeritorious for being filed beyond the two year reglementary period prescribed under Section 106(b) of the NIRC, the same is hereby DISMISSED. Accordingly, the claim for refund filed by the petitioner for input taxes paid during the third quarter of 1993 is denied. SO ORDERED." On October 2, 1998, Atlas filed a motion for reconsideration of the CTA decision. In its order, the CTA found merit in the motion and held that the two year prescriptive period within which to file an application for tax credit or refund of VAT paid "should not immediately be counted from the close of the quarter but from the date of filing of the VAT return" pursuant to Section 110(b) of the NIRC, as amended. But still the CTA dismissed Atlas' petition, this time on the ground that it failed to submit photocopies of export documents, invoices or receipts evidencing the sale of goods and names of persons to whom they were delivered. EaISTD Hence, this petition for review. Petitioner Atlas contends the sufficient evidence has been presented which justifies the grant of the VAT refund or credit. One of which is its audited financial statement which confirms the testimony of its accountant Maria Isabel Espeno that all its sales were export sales. Likewise, both testimonial and documentary evidence clearly identified the parties to whom petitioner sold its products. Nonetheless, petitioner is willing to present as additional evidence the required export documents. Respondent BIR failed to file its comment on the instant petition despite notice. The petition is impressed with merit. Section 2, paragraph c of the Revenue Regulations No. 3-88 of the BIR provides: " Claims for tax credits/refunds . Application for tax credit/refund of Value-Added Tax paid (BIR Form No. 2552) shall be filed with the Revenue District Office of the city or municipality where the principal place of business of the applicant is located or directly with the Commissioner, Attention: VAT Division. A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be submitted together with the application . The original copy of said invoice/receipt, however, shall be represented for cancellation prior to the issuance of the Tax Credit Certificate or refund. In addition, the following documents shall be attached whenever applicable: 1. Export Sales i) photocopy of export document showing the amount export, and the date and destination of the goods exported. With respect to foreign currency denominated sale, the photocopy of the invoice or receipt evidencing the sale of the goods, as well as the name of person to whom the goods were delivered. ii) statement from the Central Bank or any of its accredited agent banks that the proceeds of the sale in acceptable foreign currency has been inwardly remitted and accounted for in accordance with applicable banking regulations. CIDTcH 2. Zero-rated sale of services i) authenticated copy of the contract showing the person for whom the services were rendered, the amount of the consideration and description of the services and document evidencing actual payments ii) statement from the Central bank or any of its accredited agent bank that the consideration in acceptable foreign currency has been inwardly remitted and accounted for in accordance with applicable banking regulations. xxx xxx xxx" As aptly held by the CTA, the above Revenue Regulations No. 3-88, being enacted by an administrative body to interpret the law, has the force of law and is entitled to great respect. In the interest of justice and considering that technical rules should give way to substantial justice, We hold that petitioner should be given an opportunity to present in evidence the above requirements under Revenue Regulations No. 3-88. WHEREFORE, the petition is hereby GRANTED in part. The CTA is ordered to conduct further proceedings in CTA Case No. 5296 with dispatch to enable petitioner Atlas to present in evidence the necessary export documents required by Revenue Regulations No. 3-88. SO ORDERED. Alino-Hormachuelos and Asuncion, JJ., concur.