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

FIRST DIVISION [CA-G.R. SP No. 59758. April 19, 2001.] ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION , petitioner , vs . COURT OF TAX APPEALS and COMMISSIONER OF INTERNAL REVENUE , respondents . D E C I S I O N LABITORIA , J p : Assailed in the instant petition are the Decision dated August 24, 1998 and Resolution dated June 21, 2000, respectively, both rendered by the Court of Tax Appeals in CTA Case No. 5322. In the questioned Decision of August 24, 1998, CTA dismissed the petitioner's claim for "tax credit or refund of input taxes due to its failure to show convincingly that the same has not been applied to any of its output tax liability as provided under Section 106(a) of the Tax Code." 1 Subsequently, the Motion for Reconsideration was denied. The petitioner raised the following grounds in support of its petition. I. THE COURT OF TAX APPEALS COMMITTED AN ERROR WHEN IT OVERLOOKED THE FACT THAT AS RESPONDENT FAILED TO RAISE THE DEFENSE OF PRESCRIPTION IN A MOTION TO DISMISS OR IN AN ANSWER, THUS, RESPONDENT IS DEEMED TO HAVE WAIVED SUCH DEFENSE. II. THE COURT OF TAX APPEALS ERRED WHEN IT HELD THAT PETITIONER DID NOT PRESENT ADEQUATE PROOF THAT IT HAD NOT APPLIED THE CLAIMED INPUT TAX TO ITS OTHER TAX LIABILITIES." Culled from the petition and the decision sought to be reviewed, the facts of the case show that petitioner is an exporter of copper concentrates and as such, is a zero-rated VAT person under Section 100 of the Tax Code. As found by the CTA, on January 20, 1994, petitioner filed its VAT return for the fourth quarter of 1993 with a total input tax of P863,556,963.74 and an excess VAT credits of P842,336,291.60. It applied for refund and/or issuance of a tax credit certificate of said amount with respondent Commissioner of Internal Revenue. When the 2-year prescriptive period provided in Section 230 of the Tax Code within which to appeal to the CTA was almost through, and the Commissioner has not acted on its claim, petitioner elevated the same to CTA. The Commissioner was declared in default thus, only the petitioner presented its evidence. On the sole issue of whether or not petitioner is entitled to its claim for refund, the CTA issued its assailed decision of August 24, 1998, 2 dismissing the petition for lack of merit. The petitioner alleged that because the respondent Commissioner was declared in default, the latter had waived its defense and consequently, the petitioner's allegation must be deemed admitted that it had clearly established its right to the refund of its input VAT. This, notwithstanding, the CTA was correct in assessing the evidence presented by the petitioner. And in doing so, it found that the petitioner was not able to prove the veracity of the amount being claimed. This Court concurs with the findings and conclusions of the CTA, following the settled doctrines of the Supreme Court that "as a matter of principle, the Supreme Court will not set aside the conclusion reached 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. 3 Thus, quoted with approval is the findings of the CTA, that: "The formal offer of evidence of the petitioner failed to include photo copy of its export documents, as required. There is no way, therefore, in determining the kind of goods and actual amount of export sales it allegedly made during the quarter involved. This finding is very crucial when we try to relate it with the requirement of the aforementioned regulations that the input tax being claimed for refund or tax credit must be shown to be entirely attributable to the zero-rated transaction, in this cases, export sales of goods. Without the export documents, the purchase invoice/receipts submitted by the petitioner as proof of its input taxes cannot be verified as being directly attributable to the goods so exported. AIDTHC Lastly, We cannot grant petitioner's claim for tax credit or refund of input taxes due to its failure to show convincingly that the same has not been applied to any of its output tax liability as provided under Section 106(a) of the Ta x Co de, supra . There is no evidence to show that the amount of herein claim for refund when applied for on January 25, 1996 has not been priorly or thereafter applied to its output tax liability." 4 Finally, assuming petitioner had adequately proved veracity of the claim, the filing of the claim had prescribed pursuant to the Tax Code which provides that: "SECTION 106. Refunds or tax credits of input tax . (a) Any VAT-registered person, whose sales are zero-rated of effectively zero-rated, may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 100 (a) (2) (A) (i), (ii) and (b) and Section 102 (b) (1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the regulations of the Bangko Sentral ng Pilipinas (BSP); Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transaction, it shall be allocated proportionately on the basis of the volume of sales. SECTION 230. Recovery of tax erroneously or illegally collected . No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be begun after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." 5 Records show that petitioner filed its VAT return on January 20, 1994 but its administrative claim was filed on January 25, 1996. Clearly, petitioner's cause of action has already prescribed. WHEREFORE, the petition is DISMISSED for lack of merit. The questioned Decision of the CTA dated August 24, 1998 and the Resolution dated June 21, 2000 are AFFIRMED in toto. SO ORDERED. Bello, Jr . and Gozo-Dadole, JJ . , concur. Footnotes 1. p. 12, Rollo . 2. pp. 9-13, Rollo . 3. Commissioner of Internal Revenue vs. CA, 271 SCRA 605. 4. pp. 11-12, Rollo . 5. Sec. 106 in relation to Sec. 230 Tax Code.