Itogon-Suyoc Mines, Inc. v. Commissioner of Internal Revenue

FIFTEENTH DIVISION [CA-G.R. SP No. 52710. May 31, 2001.] ITOGON-SUYOC MINES, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N ADEFUIN-DE LA CRUZ , B. , J p : This is a petition for review seeking to reverse and set aside the decision dated January 7, 1999 of the Court of Tax Appeals in C.T.A Case No. 5030 entitled: "Itogon-Suyoc Mines, Inc., petitioner versus Commissioner of Internal Revenue, respondent," where the petitioner is asking for a refund or issuance of tax credit certificate in the total amount of P5,465,204.94, representing excess input value-added tax for the period February 1, 1992 to January 31, 1993, as well as the Resolution dated April 21, 1999 of the same court denying the motion for reconsideration filed by the petitioner of the decision dated January 7, 1999, the dispositive portion of the assailed decision reads: "WHEREFORE, in view of the foregoing, the petition for review is hereby DENIED due to insufficiency of evidence. "SO ORDERED." (Decisions, p. 11; Rollo , p. 61) The antecedent facts, as narrated by the Court of Tax Appeals ("CTA" for brevity) are as follows: "Petitioner is a domestic corporation duly organized and existing under the laws of the Philippines. It is engaged in the mining business which includes, among others, the exploration, development, operation and production of mining products, and the subsequent sale thereof. It is a VAT registered taxpayer with its latest VAT Registration No. 350-000-162-935-V (Exh. A-1). On February 2, 1988, petitioner filed an Application for Zero Rate of its sales of mine products with the Bureau of Internal Revenue (Exh. B). "For the period February 1, 1992 to January 31, 1993, petitioner seasonably filed its quarterly VAT returns reflecting, among others, the zero rated sales of mine products, the VAT output tax, and the input taxes on domestic purchase of goods/services and on importations of goods, to wit: 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Particulars (Exh. E) (Exh. F) (Exh. G) (Exh. H) Zero-rated Sales P33,329,357.43 P47,034,840.43 P34,149,048.59 P30,550,200.16 ============= ============= ============ ============ VAT Output Tax P31,196.67 P18,929.97 P92,837.45 P109.33 Less: Input Tax 1. Carried from previous quarter P2,013,159.77 P1,255,219.50 P2,594,363.35 P1,412,075.34 2. Domestic purchases of goods/services P1,027,224.43 P1,191,583.10 P1,279,982.67 1,229,735.91 3. Importation of goods 256,700.00 166,490.72 209,361.00 289,367.00 Total P3,297,084.20 P2,613,293.32 P4,083,707.02 P2,931,178.25 Excess Input VAT credits P3,265,887.53 P2,594,363.35 P3,990,869.57 P2,931,068.92 Less: Refund/ TCC claimed 2,010,668.03 ___________ 2,578,794.23 Excess to be carried forward P1,255,219.50 P2,594,363.35 P1,412,075.34 P2,931,068.92 ============ ============ ============ ============ "Petitioner, believing that it is entitled to the refund of excess input VAT attributable to its zero-rated sales of mine products, pursuant to Section 106 of the 1992 Tax Code, filed on two separate occasions Applications for Tax Credit/Refund of Value-Added Tax Paid as follows: "Inclusive Dates of Date Input Tax Payments of Filing Exh. Amount November 1, 1991 to July 31, 1992 10-30-92 I P2,578,794.23 May 1, 1992 to January 31, 1993 05-26-93 O 2,886,410.71 Total P5,465,204.94 "Petitioner waited for more than sixty days for the respondent to act on such applications pursuant to Section 106 (e) of the Tax Code. Respondent did not act on these applications, hence, petitioner was compelled to file the instant petition for review on September 14, 1993 in order to preserve its right to judicially claim the refund of excessive input VAT payments. ADTCaI "Respondent, in his Answer raised the following and affirmative defenses: "5. Local sales of gold to Central bank are not considered 'export sales' for purposes of Section 100 (a) of the Tax Code, as amended, hence, subject to the 10% value added tax; "6. Revenue Memorandum Order No. 22-92, dated May 14, 1992 (a guidance to clarify implementation of Revenue Regulation No. 2-88 and sale of gold to Central Bank) categorically provides that sale of gold to the Central Bank by any person, including mining companies shall be considered local sales for VAT purposes effective January 1, 1988; "7. The opinion of the Secretary of Justice dated April 14, 1992 and the CB Circular No. 1301 dated August 7, 1991, which provides that all sales of gold to the Central Bank are considered constructive exports' have been set aside by the respondent as exhaustively discussed in its VAT Ruling No. 059-92 date April 28, 1992. "Hence, previous inconsistent rulings are considered superseded because the government is not estopped to collect unpaid taxes on account of errors/mistake of its agents/officials and there should be no vested right arising from an erroneous interpretation of the law (Hilado vs. Collector of Internal Revenue, 200 Phils. 288). "9. Claims for refund of taxes are construed against the claimant, the same being in the nature of an exemption form (sic) taxation. Hence in actions for refund, the burden of proof is upon the claimant to establish the right to refund; "10. Petitioner failed to show in its petition that it is entitled to the refund. Mere allegations of refundability does not ipso facto entitle petitioner to refund claimed, thus, petitioner's failure to sustain the burden is fatal to its action for refund; "11. It is incumbent upon the taxpayer to show that it has complied with the provisions of Section 104 and Section 230 of the Code. "To bolster its claim for refund, petitioner formally offered the following documentary evidence: "1. VAT registration certificates (Exhs. A and A-1): "2. Application for zero rate (Exh. B); "3. Central Bank Circular No. 1301, series of 1991 (Exh. C); "4. Opinion of Secretary of Justice dated April 14, 1992 composed of seven (7) pages (Exh. D). "5. Value-Added Tax Returns for the period February 1, 1992 to January 31, 1993 together with the attachments of summary lists of sales, importations, and purchases (Exhs. E to H-5, inclusive); "6. Applications for credit/refund of VAT paid (Exhs. I and J); "7. Certified xerox copies of the certificate of filing of Amended Articles of Incorporation issued by the Securities and Exchange Commission (Exhs. K and K-1); and "8. CB Circular No. 960, dated October 31, 1993 (Exh. M). "Respondent on the other hand, elected not to submit controverting evidence but instead submitted his case for decision (see Minutes of the Session, p. 195, CTA records). Both parties submitted their respective memoranda." (Decision, pp. 1-5; Rollo , pp. 51-55) On January 7, 1999, the assailed decision earlier adverted to was issued. ( Rollo , p. 51) Not satisfied with the aforesaid decision, the petitioner filed a motion for reconsideration on February 2, 1999 ( Ibid , p. 30). On April 21, 1999, the CTA issued a Resolution denying the motion for reconsideration filed by the petitioner. ( Ibid , p. 64) Hence, the present petition for review where petitioner raised the following: "ASSIGNMENT OF ERRORS "1. The Honorable Court of Tax Appeals committed serious error in declaring failure of petitioner to substantiate its claim notwithstanding the uncontested documentary evidence supporting the petition and stipulation made by the parties. "2. The Honorable Court of Tax Appeals erred in not considering in favor of the petitioner the fact that the records including the source documents governing the transaction in question were submitted to the respondent. "3. The Court of Tax Appeals erred in denying the motion for reconsideration despite clear and overwhelming evidence in support thereof. "4. The Court of Tax Appeals erred in not giving due course to the motion for reconsideration on ground of technicality." (Petition, p. 7; Rollo , pp. 7-8) As admitted by the petitioner, the case at bar deals mainly on two (2) issues namely: "I. WHETHER OR NOT UNDER THE FACTS PRESENTED AND PROVED, THE PETITIONER IS ENTITLED TO THE RELIEFS PRAYED FOR IN ITS PETITION." "II. WHETHER OR NOT THE COURT OF TAX APPEALS CORRECTLY DENIED PETITIONER'S MOTION FOR RECONSIDERATION." (Petition, p. 6; Rollo , p. 7) The petition is devoid or merit. Since the two issues are interrelated, both of which shall be discussed jointly. On the aforesaid issues, the petitioner argues that the CTA erroneously dismissed the petition on the wrong premise that the petitioner failed to adduce evidence to prove its claim; that despite the fact that all the documents, including the source documents supporting the claim for refund and/or tax credits, were submitted to the respondents, still the latter failed and refused to allow the refund because of its position that the transactions were not considered export, thus, not zero rates sales; and that the respondent does not deny the factual averments in the petition as regards the sales of the petitioner of its gold products to the Central Bank and abroad as well as the figures in the VAT returns duly filed with the respondent. We are persuaded. The CTA explicitly explained such issues in the following manner: ". . ., we now determine if petitioner was able to support with substantial evidence, its claim for refund. "Section 2 of Revenue Regulations No. 3-88 specifically enumerates the requirements for the issuance of tax credit certificate or tax refund of input taxes paid by a zero-rated taxpayer engaged in sale of goods or services, to quote: "Section 2. Section 16 of Revenue Regulations 5-87 is hereby amended to read as follows: "SECTION 16. Refunds of tax credits of input tax. "(a) Zero-rated sales of goods and services. . . . "(c) 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 the said invoice/receipt, however, shall be presented 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) Photo copy 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 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. "2. Zero-rated sale of services. . . "It is also important to note at this point that petitioner's zero-rated sales are not only composed of sales of gold to Central Bank but also (real) export sales to London, England. " After a thorough and careful examination of all the documentary evidence presented, this Court finds that petitioner failed to comply with the aforementioned requirements. It did not present in evidence the purchase invoices or receipts evidencing the value-added tax paid and the sales invoices which will show the amount of export, and the date and destination of the goods exported. Further, petitioner also failed to submit statements from the Central Bank or any of its accredited agent banks that the proceeds of the sale in acceptance foreign currency has been inwardly remitted and accounted for in accordance with applicable banking regulations . " What petitioner submitted in evidence were summary lists of sales, importations and purchases, which although certified to by the petitioner's Chief Accountant and Finance Assistant, would not suffice to establish the truthfulness and accuracy of the contents thereof unless the source documents were offered and actually verified by the court itself . The attestations of petitioner's own employees as to the correctness of the summary lists are at best self-serving, hence, of no consequence . " The failure of petitioner to submit in evidence the documents required under Section 2 of Revenue Regulations No . 3-88 prevented Us from confirming the veracity of the amount claimed by the petitioner as excess input VAT payments (Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, CTA Case No. 4601, 4632, 4655 and 4701, November 18, 1997). "In fact, We have already denied several claims for refund of input VAT for failure of petitioner to comply with the requirements under Revenue Regulations No. 3-88 (Dow Elanco B.V. Philippine Branch vs. Commissioner of Internal Revenue, CTA Case No. 5255, January 14, 1998; AMI Philippines, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 5304, January 20, 1998, Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5130, 5161 and 5190, February 5, 1998; and Benguet Corporation vs. Commissioner of Internal Revenue, CTA Case No. 5306, April 15, 1998), and it is for the same reason that We are denying the instant claim for refund." (Emphasis ours for emphasis) (Decision, pp. 8-11; Rollo , pp. 58-61) As to the allegations of the petitioner in its Motion for Reconsideration that the documentary and testimonial evidences it adduced have sufficiently established its claim for refund, the CTA such issue in this wise: " First, with respect to the completeness of its evidence, this Court evaluated the documents presented by petitioner and found that the summaries of transactions covering sales, importations and purchases referred to by the petitioner do not prove that such transactions exist. Section 2 of the Revenue Regulations No. 3-88 contains an enumeration of the documents required to be submitted in claiming for input VAT refund and records show that petitioner failed to submit the said documents to this Court. The summaries of transactions have little probative value unless the source documents are attached thereto . Although, respondent did not refute the allegation of petitioner that source documents were submitted by petitioner to his bureau, in support of its administrative claim for refund, the same has no bearing to the instant case. The proceedings before this Court and that of the Bureau of Internal Revenue are independent of one another. This principle finds support in the case of Acting Commissioner of Customs vs. Court of Tax Appeals, et al., CA-GR. SP No. 19840, dated July 30, 1993, where the Court of Appeals held: CTDAaE "'As regards the first issue, there appears no legal barrier that would prevent the Court of Tax Appeals from conducting a trial de novo when it deems it necessary in order to bring out the missing facts (C.F.) Sharp & Co., Inc. vs. Commissioner of Customs, 22 SCRA 760). More so in this case that the Bureau of Customs failed to submit a complete record of the checking services it undertook. In the absence of the records, the Court of Tax Appeals had no other way of threshing out the factual issues raised before it. Further, the Court of Tax Appeals is not bound by the technical rules of evidence.' (Purakan Plantation Co. vs. Domingo, 15 SCRA 151)" (Emphasis ours) Further, "the Court of Tax Appeals is a highly specialized body specifically created for the purpose of reviewing tax cases. Through its expertise, it is undeniably competent to determine the issue of whether or not the debt is deductible through the evidence presented before it." Because of this recognized expertise, the findings of the CTA will not ordinarily be reviewed absent a showing of gross error or abuse on its part. The findings of fact of the CTA are binding on this Court and in the absence of strong reasons for this Court to delve into facts only questions of law are open for determination." (Philippine Refining Company vs. Court of Appeals, 256 SCRA 667, 675-676) All told, "it bears stress that tax refunds are in the nature of tax exemptions. As such they are regarded as in derogation of sovereign authority an 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." (Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc., 309 SCRA 87, 108-109) WHEREFORE, premises considered, the present petition for review is hereby DENIED for lack of merit, and the assailed decision dated January 7, 1999 and the Resolution dated April 21, 1999 of the Court of Tax Appeals in CTA Case No. 5030 are hereby affirmed in toto. SO ORDERED. Reyes, Jr . , and Guevarra-Salonga, JJ . , concur.