Central Azucarera Don Pedro v. Commissioner of Internal Revenue

SPECIAL FIFTH DIVISION [CA-G.R. SP No. 74325. June 10, 2004.] CENTRAL AZUCARERA DON PEDRO , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N LABITORIA ,, J p : This petition for review under Rule 45 of the 1997 Rules of Court seeks to annul and reverse the decision 1 of the Court of Tax Appeals which denied petitioner's claim for tax refund or issuance of a tax credit certificate in CTA Case No. 5821 entitled, "Central Azucarera Don Pedro vs. Commissioner of Internal Revenue", and its resolution 2 denying its petitioner's motion for reconsideration. The antecedents of the case: Petitioner Central Azucarera Don Pedro, a domestic corporation and existing under and by virtue of the laws of the Philippines, is engaged in the business of refining, preparing, importing, exporting, selling and generally dealing in sugar, sugar cane, molasses, syrups and glucose and all products or by-products thereof. Petitioner is duly registered with the Bureau of Internal Revenue as a value added tax (VAT) taxpayer and it duly filed its quarterly VAT returns for taxable year 1997 within the legally prescribed period. The returns, however, were amended as a result of petitioner's failure to recognize or claim its presumptive input tax for taxable year 1997. After applying the presumptive input tax, the amended quarterly VAT returns of petitioner reveal an overpayment of output VAT in the total amount of P9,369,175.79. On account of the discovery of the overpayment of output VAT, petitioner, on April 5, 1999, filed with the Bureau of Internal Revenue an administrative claim for refund of its overpaid value-added tax for taxable year 1997 in the amount of P9,369,175.79. For failure of the respondent Commissioner of Internal Revenue to act on petitioner's claim for refund, the latter filed a petition for review with the Court of Tax Appeals on April 20, 1999. The same was filed within the two-year prescriptive period provided under the Tax Code. On the other hand, respondent Commissioner filed his Answer on May 27, 1999. In the decision 3 promulgated August 05, 2002, the Court of Tax Appeals denied petitioner's petition for review, the decretal portion of which reads: "WHEREFORE, in view of all the foregoing, the instant petition for review is hereby DENIED due to insufficiency of evidence. SO ORDERED." 4 On August 23, 2002, petitioner filed its motion for reconsideration 5 which was denied for lack of merit by the Court of Tax Appeals in its resolution 6 promulgated on November 19, 2002. Hence, this petition for review. Petitioner raised the following grounds in support of its petition, to wit: "I. THE COURT OF TAX APPEALS ERRED WHEN IT RULED THAT PETITIONER'S VAT PAYMENTS FOR TAXABLE YEAR 1997 HAVE NOT BEEN DULY SUBSTANTIATED; II. THE COURT OF TAX APPEALS ERRED IN FINDING THAT PETITIONER'S 1997 QUARTERLY VAT RETURNS (EXHIBITS "C", "E", "G" and "I") ARE NOT SUFFICIENT TO PROVE THE MONTHLY VALUE ADDED TAX PAYMENTS FOR TAXABLE YEAR 1997; III. THE COURT OF TAX APPEALS ACTED WITH ABUSE OF AUTHORITY IN DENYING PETITIONER'S PETITION FOR REVIEW; and IV. THE COURT OF TAX APPEALS ERRED IN DISALLOWING PETITIONER'S DOMESTIC PURCHASE INPUT VAT AMOUNTING TO P5,268,597.58 DESPITE PROOF THAT THE PURCHASES WERE MADE FROM VAT-REGISTERED SUPPLIERS." 7 The petition lacks merit. Petitioner jointly discussed the first two (2) grounds and untended that the Input VAT carried over amounting to P636,554.49, the domestic purchase input VAT amounting to P8,291,476.65, the monthly VAT payments amounting to P31,096,150.30, and the withholding VAT input amounting to P253,916.20, which were disallowed as deductions from petitioner's output tax, were all substantiated by supporting documents, official receipts and invoices. In denying petitioner's claim for refund, the Court of Tax Appeals held that: "Petitioner's claim arose from the cash payments made in exchange for the unrecognized presumptive input tax. However, petitioner failed to fully substantiate the total payments appearing in its 1997 quarterly VAT returns, particularly the withholding (VAT input), monthly and advance payments of output VAT in the sums of P253,916.20, P31,096,150.30 and P50,520,850.22, respectively. In addition, petitioner failed to prove the amount P635,554.49, representing input tax carried-over from the previous quarter of the taxable year 1996. Petitioner's overpayments for the taxable year 1997 consisted of its monthly VAT payments, advance payments and quarterly payments for the said taxable year. It was, therefore, necessary for the petitioner to present proof of said payments. While petitioner submitted in evidence its quarterly payments, it, however, failed to present proof of the monthly VAT and advance payments for the year 1997. Thus, we are constrained to deny the refund sought." 8 Since the contention of petitioner involves an evaluation of its evidence, we agree with the factual findings of the Court of Tax Appeals, an expert in the adjudication of tax cases, that petitioner's evidence is insufficient. It has been consistently held that while the decisions of the Court of Tax Appeals are appealable to the Supreme Court, the former's findings of fact are entitled to the highest respect. 9 The same is reiterated in the case of Protectors Services, Inc. vs. Court of Appeals 10 where the Supreme Court held that, "in reviewing administrative decisions, the reviewing court cannot re-examine the factual basis and sufficiency of the evidence- the findings of fact must be respected, so long as they are supported by substantial evidence." The same holds true with regard to the claim of petitioner that the tax court erred in disallowing its domestic purchase input VAT amounting to P5,268,597.58 despite proof that the purchases were made from VAT registered suppliers. As correctly pointed out by the tax court, the amount of P5,268,597.58 should be disallowed for even if they were supported by invoices or official receipts, the same bore no pre-printed TIN-VAT/V thereon pursuant to the provisions of Section 108 (a) of the old Tax Code (now Sections 113(A) and 237 of the 1997 Tax Code) in relation to Section 4 108-1 of Revenue Regulations No. 7-95. 11 "SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. (A) Invoicing Requirements . A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to the information required under Section 237, the following information shall be indicated in the invoice or receipt: (1) A statement that the seller is a VAT-registered person, followed by his taxpayer's identification number (TIN); and (2) The total amount which the purchaser pays or in obligated to pay to the seller with the indication that such amount includes the value-added tax." xxx xxx xxx "SEC. 4.108-1. Invoicing Requirements . All VAT-registered persons shall, for every sale or lease of goods or properties services, issue duly registered receipts or sales of commercial invoices which must show: 1. The name, TIN and address of seller; 2. Date of transaction; 3. Quantity, unit cost and description of merchandise or nature of service; 4. The name, TIN, business style, if any, and address of the VAT-registered purchaser, customer or client; 5. The word "zero rated" imprinted on the invoice covering zero-rated sales ; and 6. The invoice value or consideration." 12 As gleaned from the above-quoted provisions, only VAT-registered persons can print their TIN, followed by the word "VAT" which shall be their VAT registration number, in their invoice or receipt. Following this, all purchases covered by VAT invoices shall be entitled to input taxes. Conversely, all purchases covered by invoices other than "VAT invoices" shall not be entitled to input taxes. In the case at bench, the official receipts and invoices submitted by petitioner in support of its VAT input taxes, as observed by the tax court, did not bear the preprinted TIN-VAT/V thereon. Consequently, the same cannot be allowed as petitioner's VAT input taxes. Hence, on the basis of all the foregoing, the Tax Court did not act with abuse of authority in denying petitioner's petition for review. WHEREFORE, premises considered, the petition for review is DENIED for lack of merit. SO ORDERED. Sabio, Jr., * and Mendoza, JJ ., concur. Footnotes * Vice J. Edgardo P. Cruz who is on leave. 1. p. 20, Rollo 2. p. 38, Rollo 3. supra . 4. p. 10, CTA Decision 5. p. 31, Rollo 6. supra 7. p. 5, Rollo 8. pp. 2829, Rollo 9. Commissioner of Internal Revenue vs. Arnoldus Carpentry Shop, Inc. (159 SCRA 199) 10. 330 SCRA 404. 11. pp. 89, Decision. 12. pp. 106 and 1172, The National Internal Revenue Code Annotated, Seventh Edition 2000 by Hector S. De Leon.