Republic of the
SUPREME COURT
SECOND DIVISION
ATLAS CONSOLIDATED G.R.
No. 159490
MINING
AND DEVELOPMENT
CORPORATION, Present:
Petitioner,
QUISUMBING,
J., Chairperson,
CARPIO,
- versus - CARPIO MORALES,
TINGA,
and
VELASCO,
JR., JJ.
COMMISSIONER OF Promulgated:
INTERNAL REVENUE,
Respondent. February
18, 2008
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D E C I S I O N
VELASCO, JR., J.:
The Case
Before
us is a Petition for Review on Certiorari under Rule 45 assailing the May 16,
2003 Decision[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 46494, which affirmed the October 13, 1997
Decision[2]
of the Court of Tax Appeals (CTA) in CTA
Case No. 5205 entitled Atlas Consolidated
Mining and Development Corporation (Atlas) v. The Commissioner of Internal Revenue (CIR), involving petitioner Atlas’
application for issuance of tax credit
certificate or refund of value-added tax (VAT) payments in accordance
with Section 106(b) of the Tax Code on zero-rated VAT payers. Also assailed is
the August 11, 2003 Resolution[3]
of the CA denying Atlas’ motion for reconsideration.
The Facts
Atlas
is a corporation duly organized and existing under Philippine laws engaged in the
production of copper concentrates for export. It registered as a VAT entity and
was issued VAT Registration Certificate No. 32-0-004622 effective August 15,
1990.
For the
first quarter of 1993, Atlas’ export sales amounted to PhP 642,685,032.24. Its proceeds were
received in acceptable foreign currency and inwardly remitted in accordance
with Central Bank regulations. For the
same period, Atlas paid PhP 7,907,662.53 for input taxes, as follows:
Local PhP
7,117,222.53
Importation 790,440.00
Total PhP
7,907,662.53
Thereafter,
Atlas filed a VAT return for the first quarter of 1993 with the Bureau of
Internal Revenue (BIR) on April 20, 1993, and also filed an amended VAT return.
On
September 20, 1993, Atlas applied with the BIR for the issuance of a tax credit
certificate or refund under Section 106(b) of the Tax Code. The certificate
would represent the VAT it paid for the first quarter of 1993 in the amount of
PhP 7,907,662.53, which corresponded to the input taxes not applied against any
output VAT.
Atlas
then filed a petition for review with the CTA on February 22, 1995 to prevent
the running of the prescriptive period under Sec. 230 of the Tax Code.
The Ruling
of the Court of Tax Appeals
The petition
for review before the CTA was docketed as CTA Case No. 5205. On October 13, 1997, the CTA rendered a
Decision denying Atlas’ claim for tax credit or refund. The fallo reads:
WHEREFORE, in
the light of all the foregoing, [Atlas’] claim for issuance of tax credit
certificate or refund of value-added taxes for the first quarter of 1993 is
hereby DENIED for insufficiency of evidence.
No pronouncement as to costs.
SO ORDERED.[4]
We note
that respondent CIR filed his May 24, 1995 Answer asserting that Atlas has the
burden of proving erroneous or illegal payment of the tax being claimed for
refund, as claims for refund are strictly construed against the taxpayer. However, the CIR did not present any evidence
before the CTA nor file a memorandum, thus constraining the CTA to resolve the
case before it solely on the basis of the evidence presented by Atlas.
In
denying Atlas’ claim for tax credit or refund, the CTA held that Atlas failed
to present sufficient evidence to warrant the grant of tax credit or refund for
the alleged input taxes paid by Atlas.
Relying on Revenue Regulation No. (RR) 3-88 which was issued to implement
the then VAT law and list the documents to be submitted in actions for refunds
or tax credits of input taxes in export sales, it found that the documents
submitted by Atlas did not comply with said regulation. It pointed out that Atlas
failed to submit photocopies of export documents, invoices, or receipts evidencing
the sale of goods and others. Moreover, the Certification by Atlas’ bank,
Hongkong Shanghai Banking Corporation, did not indicate any conversion rate for
US dollars to pesos. Thus, the CTA could
not ascertain the veracity of the contents indicated in Atlas’ VAT return as
export sales and creditable or refundable input VAT.
Atlas
timely filed its Motion for Reconsideration of the above decision contending
that it relied on Sec. 106 of the Tax Code which merely required proof that the
foreign exchange proceeds has been accounted for in accordance with the
regulations of the Central Bank of the
Atlas’
motion for reconsideration was rejected by the CTA through its January 5, 1998 Resolution,
ruling that it is within its discretion to ascertain the veracity of the claims
for refund which must be strictly construed against Atlas. Moreover, it also rejected Atlas’ prayer for
a re-trial under Sec. 2 of Rule 37 of the Rules of Court, as Atlas failed to
submit the required affidavits of merits.
The Ruling
of the Court of Appeals
On
Atlas’ appeal, the CA denied and dismissed Atlas’ petition on the ground of insufficiency
of evidence to support Atlas’ action for tax credit or refund. Thus, through its May 16, 2003 Decision, the
CA sustained the CTA; and consequently denied Atlas’ motion for reconsideration.
The CA
ratiocinated that the CTA cannot be faulted in denying Atlas’ action for tax
credit or refund, and in denying Atlas’ prayer for a new trial. The CA concurred with the CTA in the finding
that Atlas’ failure to submit the required documents in accordance with RR 3-88
is fatal to Atlas’ action, for, without these documents, Atlas’ VAT export
sales indicated in its amended VAT return and the creditable or refundable
input VAT could not be ascertained. The
CA struck down Atlas’ contention that it has sufficiently established the
existence of its export sales through the testimony of its Accounting and
Finance Manager, as her testimony is not required under RR 3-88 and is
self-serving.
Also,
the CA rejected Atlas’ assertion that RR 3-88 is applicable only to
administrative claims and not to a judicial proceeding, since it is clear under
Sec. 245 (now Sec. 244 of the NIRC) that “[t]he Secretary of Finance, upon the
recommendation of the Commissioner, shall promulgate all needful rules and
regulations for the effective enforcement of the provisions of this Code.” Thus, according to the CA, RR 3-88 implementing
the VAT law is applicable to judicial proceedings as this Court held in Eslao
v. COA that “administrative policies enacted by administrative bodies to
interpret the law have the force of law and are entitled to great weight.”[5] The CA likewise agreed with the CTA in
denying a new trial for Atlas’ failure to attach the necessary affidavits of
merits required under the rules.
The Issues
Hence,
the instant petition of Atlas raising the following grounds for our
consideration:
A.
In rendering the assailed Decision and
Resolution, the Court of Appeals failed to decide this matter in accordance
with law or with the applicable decisions of the Supreme Court.
B.
In rendering the assailed Decision and
Resolution the Court of Appeals is guilty of grave abuse of discretion
amounting to a lack or excess of jurisdiction when it violated Atlas’ right to
due process and sanctioned a similar error from the Court of Tax Appeals’
(CTA), calling for the exercise of this Honorable Court’s power of supervision.[6]
The
foregoing issues can be simplified as follows: first, whether Atlas has
sufficiently proven entitlement to a tax credit or refund; and second,
whether Atlas should have been accorded a new trial.
The
Court’s Ruling
The
petition has no merit.
First
Issue: Atlas failed to show sufficient
proof
Consistent
with its position before the courts a quo, Atlas argues that the
requirements under RR 3-88 are only applicable in administrative claims for
refunds before the BIR and not for judicial claims, as in the instant
case. And that it is CTA Circular No. 1-95,
as amended by CTA Circular No. 10-97, which applies and which Atlas asserts it
has complied with. It contends that CTA
Circular No. 10-97, being the later law, is deemed to have qualified RR
3-88. Thus, it contends that what is
only required is a submission of a summary of the invoices and a certification
from an independent public accountant.
We are
not persuaded.
First, we reiterate the
prevailing rule that the findings of fact of the CA are generally conclusive
and binding and the Court need not pass upon the supporting evidence. For, it
is not this Court’s function to analyze or weigh evidence all over again.[7] Stated a bit differently, the CA’s findings
of fact affirming those of the trial court will not be disturbed by the Court.[8] This
is as it should be for the trial court, as trier of facts, is best equipped to make the assessment of issues
raised and evidence adduced before it. Therefore, its factual findings are
generally not disturbed on appeal unless it is perceived to have overlooked,
misunderstood, or misinterpreted certain facts or circumstances of weight,
which, if properly considered, would affect the result of the case and warrant
a reversal of the decision involved. In
the instant case, we find no cogent reason to depart from this general
principle.
Second, the Rules of Court, which is suppletory in quasi-judicial
proceedings, particularly Sec. 34[9]
of Rule 132, Revised Rules on Evidence, is clear that no evidence which has not
been formally offered shall be considered.
Thus, where the pertinent invoices or receipts purportedly evidencing
the VAT paid by Atlas were
not submitted, the courts a quo evidently could not determine the
veracity of the input VAT Atlas has paid.
Moreover, when Atlas
likewise failed to submit pertinent export documents to prove actual export
sales with due certification from accredited banks on the export proceeds in
foreign currency with the corresponding conversion rate into Philippine
currency, the courts a quo likewise could not determine the veracity of
the export sales as indicated in Atlas’ amended VAT return.
It must be noted that the most competent evidence must be
adduced and presented to prove the allegations in a complaint, petition, or
protest before a judicial court. And
where the best evidence cannot be submitted, secondary evidence may be presented.
In the instant case, the pertinent documents which are the best pieces of evidence
were not presented.
Third, the summary presented by Atlas does not replace the pertinent invoices, receipts, and
export sales documents as competent evidence to prove the fact of refundable or
creditable input VAT. Indeed, the summary
presented with the certification by an independent Certified Public Accountant
(CPA) and the testimony of Atlas’ Accounting
and Finance Manager are merely
corroborative of the actual input VAT it paid and the actual export sales. Otherwise, the pertinent invoices, receipts,
and export sales documents are the best and competent pieces of evidence
required to substantiate Atlas’
claim for tax credit or refund which is merely corroborated by the summary duly
certified by a CPA and the testimony of Atlas’ employee on the export sales. And when these pertinent
documents are not presented, these could not be corroborated as is true in the instant
case.
Fourth, Atlas’ mere
allegations of the figures in its amended VAT return for the first quarter of
1993 as well as in its petition before the CTA are not sufficient proof of the
amount of its refund entitlement. They do not even constitute evidence[10] adverse
to CIR against whom they are being presented.[11] While Atlas indeed submitted several
documents, still, the CTA could not ascertain from them the veracity of the
figures as the documents presented by Atlas were not sufficient to prove its
action for tax credit or refund. Atlas
has failed to meet the burden of proof required in order to establish the
factual basis of its claim for a tax credit
or refund. Neither can we ascertain the
veracity of Atlas’ alleged input VAT taxes which are refundable nor the alleged
actual export sales indicated in the amended VAT return.
Clearly,
it would not be proper to allow Atlas to simply prevail and compel a tax credit
or refund in the amount it claims without proving the amount of its claim.
After all, “[t]ax refunds are in the nature of tax exemptions,”[12] and are to be construed strictissimi
juris against the taxpayer.
Fifth, it is thus academic whether compliance with the
documentary requirements of RR 3-88 is necessary. Suffice it to say that a revenue regulation
is binding on the courts as long as the procedure fixed for its promulgation is
followed.[13] It
has not been disputed that RR 3-88 has been duly promulgated pursuant to the
rule-making power of the Secretary of Finance upon the recommendation of the CIR. As aptly held by the courts a quo, citing
Eslao,[14] these
RRs or administrative issuances have the force of law and are
entitled to great weight.
Sixth, it would not be amiss to point out that Atlas’ contention on the applicability of CTA Circular No. 10-97
is misplaced. For one, said circular
amended CTA Circular No. 1-95 only in 1997 whereas the proceedings of the
instant case were conducted prior to 1997.
In fact, Atlas’
Formal Offer of Evidence[15]
was filed before the CTA on September 2, 1996.
For another, even if said circular is retroactively applied for being
procedural, still, it does not afford Atlas relief as the documentary and testimonial pieces of evidence
adduced before the CTA are insufficient to prove the claim for refund or tax
credit.
Second Issue: No
denial of due process
Atlas asserts denial of due process when the courts a quo
denied its prayer to be given the opportunity to present the required documents,
asserting that the reliance by the courts a
quo on Sec. 2 of Rule 37 of the 1997 Revised Rules on Civil Procedure is
misplaced as said proviso applies only to a motion for new trial and not to a
motion for reconsideration.
We are not convinced.
Clearly, Atlas
attempted or showed willingness to submit the required documents only after the
CTA rendered its decision. Aside from
assailing the applicability of RR 3-88, Atlas argued in its motion for reconsideration before the CTA
that, on the alternative, the case be re-opened to allow it to present the
required documents as it followed in good faith the requirement under Sec. 106
of the 1977 Tax Code, and alleged that it has committed a mistake or excusable
negligence when the CTA ruled that RR 3-88 should be the one applied requiring Atlas
to submit the documents needed.
Obviously, Atlas’ reliance on Sec. 106 of the 1977 Tax Code is
unacceptable for such does not constitute excusable negligence. In short, Atlas is guilty of inexcusable negligence in the prosecution of
its case. The courts a quo relied
on the procedural deficiency of non-compliance with Sec. 2, Rule 37 of the
Rules of Court in denying a new trial.
In doing so, the courts a quo recognized Atlas’ motion for reconsideration also as a motion for new trial,
which was alternatively prayed for by Atlas.
Be that as it may, even if Atlas has complied with the affidavits-of-merits requirement, its
prayer for a new trial would still not prosper.
First, Atlas is guilty of inexcusable negligence in the prosecution of
its case. It is duty-bound to ensure
that all proofs required under the rules are duly presented. Atlas has indeed repeatedly asserted that in its action for the
instant judicial claim, the CTA is bound by its rules and suppletorily by the
Rules of Court. It certainly has not
exercised the diligence required of a litigant who has the burden of proof to
present all that is required. Second,
forgotten evidence, not presented during the trial nor formally offered, is not
newly found evidence that merits a new trial. Third, and most importantly, it goes against the orderly
administration of justice to allow a party to submit forgotten evidence which
it could have offered with the exercise of ordinary diligence, more so when a
decision has already been rendered.
In fine, we reiterate our consistent ruling that actions for tax
refund, as in the instant case, are in the nature of a claim for exemption
and the law is not only construed in strictissimi juris against the
taxpayer, but also the pieces of evidence presented entitling a taxpayer to an
exemption is strictissimi scrutinized and must be duly proven.
WHEREFORE, we DENY the petition for lack of merit,
and AFFIRM the CA’s May
16, 2003 Decision and August 11, 2003 Resolution in CA-G.R. SP No. 46494. Costs against petitioner.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA
CARPIO MORALES
Associate Justice Associate Justice
Associate Justice
I attest that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
Pursuant to Section 13,
Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, pp. 43-51. Penned by Presiding Justice Cancio C. Garcia (Chairperson, now a retired member of this Court) and concurred in by Associate Justices Eloy R. Bello, Jr. and Mariano C. Del Castillo.
[2]
[3]
[4]
[5] G.R.
No. 108310,
[6] Rollo, p. 17.
[7] Gabriel v. Mabanta, G.R. No. 142403, March 26, 2003, 399 SCRA 573, 579-580; citing Alipoon v. Court of Appeals, G.R. No. 127523, March 22, 1999, 305 SCRA 118.
[8] Acosta v. Enriquez, G.R. No. 140967, June 26, 2003, 405 SCRA 55, 59.
[9] SEC. 34. Offer of evidence.––The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified.
[10] Lagasca v. De Vera, 79 Phil. 376, 381 (1947).
[11] Sambrano v. Red Line Transportation Co., Inc., 68 Phil. 652, 655 (1939).
[12] Commissioner of Internal Revenue v. Solidbank Corp., G.R. No. 148191, November 25, 2003, 416 SCRA 436, 461; citations omitted.
[13]
[15] Rollo,
pp. 71-73, dated