Philippine Bobbin Corp. v. Commissioner of Internal Revenue

SEVENTH DIVISION [CA-G.R. SP No. 48597. January 31, 2000.] PHILIPPINE BOBBIN CORPORATION , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE & COURT OF TAX APPEALS , respondents . D E C I S I O N AGNIR, JR. , J p : This appeal by way of a petition for review under Rule 43 of the Rules of Civil Procedure seeks the reversal of the Decision dated 05 March 1998 rendered by the Court of Tax Appeals in CTA Case No. 5050 entitled " Philippine Bobbin Corporation vs. The Commissioner of Internal Revenue " . Likewise assailed in this petition is the Resolution dated 23 July 1998, which denied petitioner's Motion for Reconsideration and/or New Trial for lack of merit. The facts of this case are succinctly but clearly summarized in the well-written ponencia of CTA Judge Ramon O. de Veyra, as follows: Petitioner Philippine Bobbin Corporation (PBC) is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines. It is registered with the Bureau of Internal Revenue (BIR) as a Value Added Tax (VAT) taxpayer pursuant to the requirement of Sec. 107 of the NIRC with VAT Registration No. 25-1-005982, and with the Export Processing Zone Authority (EPZA) as an export producer with Certificate of Registration No. 91-06. llcd As a zero-rated taxpayer, petitioner religiously filed its VAT returns indicating its creditable input VAT payments for local purchases of goods and services. For the period May 1991 to August 1993, the input VAT payments made by PBC amounted to Php 5,292,135.18 computed as follows: Exhibit Date Filed Period Covered Creditable Input VAT "C" October 21,1991 May-September 1991 P1,438,295.81 "D" January 20,1992 October-December 1991 1,180,232.95 "E" April 20,1992 January-March 1992 1,381,199.72 "F" July 20, 1992 April-June 1992 789,460.78 "G" October 20,1992 July-September 1992 153,419.52 "H" January 20, 1993 October-December 1992 211,022.50 "I" April 20,1993 January-March 1993 36,027.65 "J" July 20, 1993 April-June 1993 69,534.60 "K" August 25, 1993 July 1993 17,543.73 "L" September 24, 1993 August 1993 15,897.97 P5,292,135.18 ========= On 01 December 1993, petitioner filed with the BIR an application for refund/tax credit of input value added tax paid for the period covering 1 May 1991 to 31 August 1993 in the total amount of Php 5,292,135.18. Since the said application for tax credit/tax refund was not immediately acted upon by the BIR and the two-year prescriptive period under Section 230 of the Tax Code was about to expire, petitioner on 23 December 1993 filed with the Court of Tax Appeals (CTA) a petition seeking refund/tax credit of the above input VAT payments docketed as CTA Case No. 5050. On 06 March 1998, the Court of Tax Appeals rendered its questioned Decision, the dispositive portion of which reads: "WHEREFORE, in view of all the foregoing, the claim for refund or issuance of tax credit certificate in the amount of P 5,292,135.18 is hereby DENIED. SO ORDERED." On 26 March 1998, petitioner PBC filed a Motion for Reconsideration and/or New Trial which was denied by the public respondent CTA in its Resolution dated 23 July 1998. Hence, this petition for review premised on the following assignment of errors: "1. The Respondent CTA erred in finding that Petitioner failed to comply with the requirement of submitting photocopies of export documents showing the amount of export, and the date and destination of the goods exported, or with respect to foreign currency denominated sales, photocopies of invoices or receipts evidencing the sale of the goods, as well as the name of the person or entity to whom the gods were delivered. 2. The Respondent CTA erred in finding that Petitioner failed to show proof that it has not applied its VAT input taxes to any output tax liabilities for the succeeding period as ruled by the Honorable Court in the case of AMI Philippines vs. CIR, CTA Case No. 5304, dated January 20,1998. cdll 3. The Respondent CTA erred in denying the Petitioner's motion for reconsideration and/or new trial." The simple issue here is whether or not petitioner is entitled to a refund/tax credit. The appeal has no merit. Petitioner bases its claim for refund/tax credit on Section 106(c) of the Tax Code However, as correctly found by respondent CTA, the applicable provision is Section 106 (a) of the Tax Code which clearly mandates how an exporter may avail of refunds or tax credits of input tax, to wit: LexLib "Sec. 106. Refunds or tax credits of input tax . (a) Export Sales. An exporter who is a VAT-registered person may, within two years from the date of exportation, apply for the issuance of a tax credit certificate or refund of the input tax attributable to the good exported, to the extent that such input tax has not been applied to output tax and upon presentation of proof that the foreign exchange proceeds has been accounted for in accordance with the regulations of the Central Bank of the Philippines." In addition to the above provision, Revenue Regulations No. 5-87 as amended by Revenue Regulations No. 3-88 dated 7 April 1988, otherwise known as the "Value Added Tax Regulations", was promulgated to implement the provisions of Title IV of the Tax Code imposing the Value-added Tax on importation of goods and services. Thus, an application for refund/tax credit on input taxes paid shall be granted only upon compliance with the following requirements: llcd 1) The exporter must be VAT-registered; 2) An 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; 3) A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be submitted together with the application: 4) Photocopy of export document showing the amount of 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 the person to whom the goods were delivered; 5) Statement from the Central Bank or any or 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; 6.) That such input taxes paid has not been applied to output taxes; and 7) The value added tax paid must be attributable to the goods exported. In the assailed decisions, the CTA ruled that while petitioner complied with some of the above requirements, "it failed to comply with the equally significant requirement of submitting photocopies of export documents showing the amount of export and the date and destination of the goods exported, or with respect to foreign currency denominated sales, photocopies of invoices or receipts evidencing the sale of the goods, as well as the name of the person or entity to whom the goods were delivered...." In addition, said the CTA decision, "petitioner failed to show proof that it has not applied its VAT input taxes to any output tax liabilities for the succeeding period", pursuant to the ruling in AMI Philippines vs. CIR (CTA Case No. 5304 dated 20 January 1998 and CTA Cases No. 5187 and 5199 dated 02 October 1997). Petitioner however, contends, in effect, that it did not have to present photocopies of export documents to prove actual exportation of its products considering that the evidence it presented consisting of documents and testimonies of witnesses has already shown that it is indeed engaged in exporting 100% of its products entitling it to a zero rated status and therefore entitled to a claim for input VAT paid on its purchase of capital goods and services, and that since petitioner's VAT returns showed that its export-sales were subject to zero-rate VAT and petitioner was not assessed any deficiency VAT on these sales, there is a presumption that the sales made by petitioner were all made abroad. The contention is devoid of merit. As correctly stated by respondent CTA, citing authorities;". . . tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the exemption. The burden of proof is upon him who claims the exemption in his favor and he must be able to justify his claim by the clearest grant of organic or statute law and cannot be permitted to exist upon vague implications. Thus, when tax exemption is claimed, it must be shown indubitably to exist, for every prescription is against it and a well-founded doubt is fatal to the claim." p.7 of Decision, Rollo , p.33). Under Section 16 (c) of Revenue Regulations No. 3-88, one of the essential requisites in an application for refund/tax credit of input VAT is the presentation of the "photocopy of export document showing the amount of export, and the date and destination of the goods exported," or, 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." In other words, these documents are the only acceptable evidence to prove actual export sale. In the case at bench, petitioner failed to present these documents. It only presented "schedules of total sales" to prove actual export sale. Needless to say, these are not what Revenue Regulations No. 3-88 requires. Thus, petitioner failed to show that the value-added tax it had paid during the subject period refer or correspond to the funds for which exemption is sought. Hence, respondent CTA committed no error when it concluded that petitioner "failed to fully substantiate its claim for tax refund or issuance of tax credit certificate . . ." Petitioner also contends that while the VAT returns for the taxable quarters 30 September 1993, 31 December 1993, 31 March 1994, 30 June 1994, 30 September 1994, and 31 December 1994 were not presented in the instant case, these were actually presented in CTA Case No. 5338 in which petitioner is also a party and, therefore, respondent CTA should have taken judicial notice of said returns in order to determine if the input value-added taxes for which refund is claimed were applied for or deducted from output value-added taxes for the period covered in its claim or any succeeding period. LexLib The contention is likewise devoid of merit. The above VAT returns were submitted as evidence in a separate case, unrelated to the instant case. As pointed out by respondent CTA, it could not have considered these VAT returns in the course of its resolution of the instant case without any appropriate motion or manifestation to that effect by the petitioner who, in fact, did not bother to call the attention of respondent CTA to the existence of the VAT returns which were submitted as evidence in CTA Case No. 5398. In the case of Prieto vs. Arroyo (14 SCRA 549), the Supreme Court held: ". . . Secondly, if appellant had really wanted the court to take judicial notice of such records, he should have presented the proper request or manifestation to that effect.". . . Likewise, in Occidental Land Transportation Co., Inc. vs. CA (220 SCRA 167), the Supreme Court held: "As a general rule, courts are not authorized to take judicial notice, in the adjudication of cases pending before them, of the contents of the records of other cases, even when such cases have been tried or are pending in the same court, and notwithstanding the fact that both cases may have been heard or actually pending before the same judge." But even granting ex gratia argumenti that respondent CTA took judicial notice of the VAT returns in CTA Case No. 5398, petitioner's claim would still fail considering that as previously shown, it failed to substantiate the important requirements that an exportation actually took place. Finally, contrary to petitioner's submission, respondent CTA did not err when it denied petitioner's "Motion for Reconsideration and/or New Trial." Respondent CTA denied the motion for reconsideration on the ground that petitioner failed to comply with the requirements of Section 106 (a) of the Tax Code and Section 16(c) of Revenue Regulations No. 3-98 dated 07 April 1998, particularly on the requirements to prove actual sales and exportation of its products. On the other hand, the motion for new trial was denied because the VAT returns sought to be presented were not " newly-discovered evidence" because these were already in existence when the case was still undergoing trial. Petitioner made no move to submit them at that time and therefore respondent CTA cannot be faulted for denying petitioner's alternative prayer for new trial. LexLib WHEREFORE, there being no reversible error committed by respondent Court of Tax Appeals, the decision appealed from is AFFIRMED. SO ORDERED. Somera and Hormachuelos, JJ ., concur.