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

THIRTEENTH DIVISION [CA-GR SP No. 46717. May 1, 2000.] 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 : This is an appeal by way of a petition for review under Rule 43 of the Rules on Civil Procedure, questioning the consolidated decision of the Court of Tax Appeals, in CTA Cases Nos. 4601, 4632, 4655 and 4701, the decretal portion of which reads: "WHEREFORE, in view of the all the foregoing, petitioner's claim for issuance of tax credit certificate or refund is hereby DENIED due to insufficiency of evidence. No pronouncement as to costs. SO ORDERED." 1 Not satisfied with the decision of the Court of Tax Appeals, petitioner filed the instant petition assigning the following errors: "xxx xxx xxx A. The CTA erred in dismissing the petition a quo on petitioner's alleged failure to submit photocopies of VAT invoices under CTA Circular 1-95; B. The CTA erred in denying new trial on the ground of absence of an affidavit of merits; C. The CTA erred in upholding the validity of VAT Rulings No. 008-92 and 59-92 where it qualifies the VAT-zero-rated nature of the sale to PASAR and Philphos." 2 The undisputed facts of the case are: Petitioner is a corporation duly organized and existing under the laws of the Republic of the Philippines. It is engaged in the business of mining, production and sales of various mineral products such as gold, pyrite and copper concentrate. It is also registered with the Bureau of Internal Revenue (BIR for brevity) as a VAT entity. On April 20, 1989, July 20, 1989, October 20, 1989 and January 22, 1990, petitioner filed with the BIR its Value Added Tax Returns covering the first, second, third and fourth quarter of 1989. On July 28, 1989, March 5, 1990, April 24, 1990 and May 11, 1990, petitioner applied with the BIR for tax credit or refund of the value added tax paid contending that its sales of gold to Central Bank as well as its sales of copper concentrates to Philippine Associated Smelting and Refining Corporation (PASAR for brevity) and pyrite to Philippine Phosphate Fertilizer Corporation (Philphos for brevity) are transactions covered under zero-rated transactions defined under Section 100(a) of the National Internal Revenue Code. cdll Considering that the two-year prescriptive period under Section 230 of the Tax Code was to expire, petitioner filed with the Court of Appeals, four petitions for claim for refund of value added taxes paid during the first, second, third and fourth quarter of 1989 in the aggregate amount of P218,263,954.67. The petitions were docketed as CTA Case Nos. 4601, 4632, 4655 and 4701. Petitioner contends that the conditions set forth in VAT Rulings Nos. 008-92 and 59-92 are not applicable to its transactions because the Commissioner of BIR had previously approved without qualification or condition, petitioner's application for the zero-rating of its sales; that petitioner has every right to reply upon the continued validity of the approval; that the requirements under VAT Rulings 008-92 and 59-92 that the export sales of the export oriented firms must exceed 70% of their total annual production is devoid of basis; that zero-rating arises from the mere fact of sale to PASAR and Philphos, both being EPZA located; that the grant of zero-rating to sales to EPZA registered enterprises should not be premised on the eventual export of finished products on which raw materials were used by these EPZA registered enterprises; that VAT Rulings 008-92 and Revenue Regulation No. 2-38 go beyond that provided under Article 23, Title III Book I of Executive Order 226 and Article 77 Book VI of Executive Order 226; that administrative regulations adopted under a legislative authority should be in harmony with the provisions of the law. Respondent Commissioner of Internal Revenue insists that the sales made by petitioner to Central Bank, PASAR and Philphos cannot be classified as zero-rated under VAT Rulings 008-92 and 59-92; that the validity of these VAT Rulings have been upheld several times; that petitioner is not entitled to any refund. On November 18, 1997, after trial, the assailed decision was rendered. On December 9, 1997, petitioner filed a motion for reconsideration which was denied by Court of Tax Appeals on January 14, 1988. Thus, this instant petition. On February 4, 1998, petitioner moved for extension of time to file a petition for review involving a decision dated October 30, 1997 of the Court of Tax Appeals in CTA cases Nos. 4831, 4859 and 4944. On February 13, 1998, this Court through its Seventh Division granted petitioner's motion. On February 20, 1998, petitioner filed with the Court a petition for review questioning the November 18, 1997 decision of the Court of Tax Appeals in CTA Cases Nos. 4601, 4632, 4655 and 4701 and not the October 30, 1997 decision of the Court of Tax Appeals in CTA Cases Nos. 4831, 4859 and 4944 as stated in its motion for extension of time. LibLex We shall now discuss the merits of this petition. Technically, this petition must fail. Under Section 4 Rule 43 of the 1997 Rules of Civil Procedure, appeal to this Court for decision of an quasi-judicial agency shall be taken within 15 days from notice of the decision or of the denial of petitioner's motion for new trial or reconsideration. The provision reads: "SEC. 4. Period of appeal . The appeal shall be taken within fifteen (15) days from notice of the award, judgment, final order or resolution, or from the date of its last publication, if publication is required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the docket fee before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days. (n)." In this case, petitioner received a copy of the denial of its motion for reconsideration on January 20, 1998. Petitioner filed its petition for review only on February 19, 1998. Clearly, petitioner's appeal was filed out of time. It is true that petitioner filed a motion for extension of time to file a petitioner for review. However, in the said motion, petitioner was asking this Court to extend the period to file its petition for review of the October 30, 1997 decision of the Court of Tax Appeals in CTA Cases Nos. 4831, 4859 and 4944. Petitioner did not ask for extension of time to file its petition for review of the November 18, 1997 decision of the Court of Tax Appeals in CTA Cases Nos. 4601, 4632, 4655 and 4701. Thus, in so far as the November 18, 1997 decision of the Court of Tax Appeals is concerned, appeal thereto by petitioner was filed out time. The perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional and failure to perfect an appeal required by the rules has the effect of rendering judgment final and executory. 3 The timeliness of an appeal is jurisdictional caveat that not even this Court can trifle with. 4 Substantially, this petition must likewise fail. In resolving this instant petition, this Court need not dwell on the validity of the VAT Rulings 008-92 and 59-92. Indeed, even if We assume that these VAT Rulings are without legal basis and that the contention of petitioner that the sales to PASAR and Philphos are entitled to zero-rating without qualification, is true, still the Court of Tax Appeals correctly denied petitioner's claim for tax refund. Revenue Regulation No. 3-88 requires that a photocopy of the purchase invoices or receipts evidencing the value added tax paid shall be submitted with the Commissioner together with the application for tax refund. The regulation reads: "(c) claims for tax credit/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. . . ." (Emphasis supplied). 5 Admittedly, petitioner failed to produce these evidences inspite several extensions of time given in its favor to produce the evidence and inspite warning that no further extension of time to produce evidence shall be granted. The requirement provided under Regulation 3-88 is not a mere procedural, pro-forma requirement. The requirement is based on legal considerations. Absence of these VAT invoices, public respondent was prevented from confirming the veracity of the claims for refund by petitioner. The amounts claimed by petitioner as excess VAT payments cannot be verified by public respondent. The requirement affects the very substance of the validity of the claims of petitioner. Without these evidences, that fact that taxes have been paid in excess of that required by law was not established. Consequently, it cannot be ruled that petitioner is entitled to tax refund. Certainly, tax refund could not be allowed absence of evidence that taxes have been paid. The power of taxation is a high prerogative of sovereignty, the relinquishment is never presumed and any reduction or diminution thereof with respect to its mode or its rate, must be strictly construed, and the same must be coached in clear and unmistakable terms in order that it may be applied. Specifically stated, the general rule is that any claim for tax exemption from the tax statute should be strictly construed against the taxpayer. 6 Consequently, the collection of taxes should not be enjoined except upon a clear showing of a right to an exemption. 7 Unfortunately, petitioner failed to pass this test. Petitioner failed to prove that it had paid taxes in excess of that required by law. Under the circumstances, there appears to be no plausible reason to disturb the findings and conclusion of the Court of Tax Appeals. As a matter of principle, this Court will not set aside the conclusion reached by an agency such as 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. (Reyes vs. Commissioner of Internal Revenue, 24 SCRA 199), which is not present in the instance case. 8 Petitioner also contends that the decision should have been reconsidered by the Court of Tax Appeals when petitioner, in its motion for reconsideration, offered to submit the VAT invoices/receipts. Petitioner's contention is without merit. In a motion for reconsideration based on fraud, accident, mistake or excusable negligence, the circumstances must be such that ordinary prudence could not have guarded against them, and by reason of which, the party applying to set aside a judgment has probably been impaired in his rights. 9 In this case, petitioner explains that it failed to submit the VAT invoices during the period allowed by the Court of Tax Appeals and even during the several extensions allowed by the Court of Tax Appeals primarily because (1) the markings of the VAT documents numbering in thousands, could not be immediately finished; (2) petitioner was of the impression that it had submitted the documents; (3) that the receiving section of the Court of Tax Appeals did not reject petitioner's offer of evidence on the ground of failure to include such pre-marked photocopies. Petitioner in its motion for reconsideration averred: "xxx xxx xxx 2. The marking of the VAT documents, however, could not be immediately finished because of the numerous periods involved wherein petitioner has pending claims, the voluminous documents numbering easily in the thousands in all cases, and further compounded by the closure of petitioner's operations due to losses which resulted in its operating on a skeleton force which meant that only a few personnel could be utilized for the marking of the VAT documents." "xxx xxx xxx . . . Moreover, insofar as undersigned counsel was aware, the boxes containing the photocopies of the VAT invoices were submitted to this Honorable Court simultaneous with the filing of the formal offer of evidence. Hence, undersigned counsel was of the impression that it had duly complied with the provisions of CTA Circular Nos. 1-95 and 10-97, particularly with respect to the submission of the photocopies of the VAT invoices." "xxx xxx xxx 3. Undersigned counsel's impression that such compliance was made was further bolstered by the knowledge that in cases were parties resort to the procedure prescribed under CTA Circular No. 1-95 and 10-97, the receiving section of this Honorable Court always requires that the formal offer of evidence which includes the CPA's certification be accompanied by the pre-marked photocopies of the VAT documents and that it would even reject a formal offer of evidence which does not include such pre-marked photocopies. As it is, it was only upon receipt of the Decision dated November 18, 1997 that undersigned counsel was informed that there are no photocopies of the VAT documents with this Honorable Court." 10 The circumstances raised by petitioner are of such nature that can be guarded with the exercise of ordinary prudence and diligence. It is indisputable that petitioner was given by the Court of Tax Appeals not just one extension of time to file its evidence. Admittedly, petitioner was granted SEVERAL extensions for the sole purpose of submitting the evidence. With the allowance granted in its favor, the VAT documents, even if numbering in thousands, could be easily marked. If only petitioner had exercised ordinary diligence and patience in the performance of its responsibility, petitioner could have been submitted to documents on time. Likewise, no one could be blamed if petitioner had the impression that it had already submitted the documents to the Court of Tax Appeals. No one led petitioner to believe that it had already submitted the documents. prcd The fact that the receiving section did not reject petitioner's formal offer of evidence on the ground of non-submission of the VAT invoices could not have given petitioner the impression that the VAT documents have already been submitted. As it is, the receiving section of the Court of Tax Appeals has no authority to reject a formal offer of evidence. The Authority belongs to the Court of Tax Appeals. Further, it is not for the court or its receiving section to inform petitioner of the evidences that it should submit. It is for the petitioner to see to it that the documents necessary to prove its claim are actually filed. The non-filing of the VAT invoices could only be blamed to petitioner. Petitioner was not prevented by any circumstances which cannot be guarded against by ordinary diligence. Petitioner has only itself to blame why its rights was impaired. WHEREFORE, foregoing considered, the present petition for review is hereby DENIED. The appealed decision is hereby AFFIRMED. SO ORDERED. Abesamis and Asuncion, JJ ., concur. Footnotes 1. Decision, p. 15, November 18, 1997. 2. Rollo , p. 35. 3. Quiqui vs. Boncaros , 151 SCRA 417; Medina, Sr. vs. Court of Appeals , G.R. No. 76707, February 6, 1990, 181 SCRA 837. 4. Bank of America NT & SA vs. Gerochi, Jr ., GR No. 73210, February 10, 1994, 230 SCRA 9. 5. Rollo , p. 89. 6. Acting Commissioner of Customs vs. Manila Electric Co ., 69 SCRA 469; Commissioner of Internal Revenue vs. P.J. Kiener Co. Ltd ., 65 SCRA 142. 7. Northern Lines, Inc. vs. Court of Tax Appeals , No. L-41376-77, June 29, 1988, 163 SCRA 25. 8. Luzon Stevedoring Corporation vs. Court of Tax Appeals , No. L-30232, July 29, 1988, 163 SCRA 647. 9. Vallarta vs. Court of Appeals , No. L-36543, July 27, 1988, 163 SCRA 587. 10. Rollo , pp. 71-72.