Case Digest (G.R. No. 145526)
Facts:
The case involves Atlas Consolidated Mining and Development Corporation (petitioner) as the appellant and the Commissioner of Internal Revenue (respondent) as the appellee. The events leading to the case began on March 31, 1993, when the petitioner filed applications for a refund or tax credit of excess input taxes for the second, third, and fourth quarters of 1992. The amounts claimed were P24,031,673 for the second quarter, P16,597,709.17 for the third quarter, and P29,839,894.82 for the fourth quarter. The petitioner argued that these claims arose from zero-rated sales of gold to the Central Bank, copper concentrates to the Philippine Associated Smelting and Refining Corporation (PASAR), and pyrite to Philippine Phosphates, Inc. (Philphos), which should entitle them to refundable or creditable input taxes under Section 106(b) of the Tax Code of 1986.
Due to the respondent's inaction and the impending expiration of the two-year period for initiating a court action fo...
Case Digest (G.R. No. 145526)
Facts:
Petitioner's Business and Claims:
- Petitioner Atlas Consolidated Mining and Development Corporation is engaged in mining, production, and sale of mineral products.
- On March 31, 1993, petitioner filed applications for refund or tax credit of excess input taxes for the second, third, and fourth quarters of 1992. The amounts claimed were P24,031,673 (second quarter), P16,597,709.17 (third quarter), and P29,839,894.82 (fourth quarter).
- The claims were based on sales of gold to the Central Bank, copper concentrates to Philippine Associated Smelting and Refining Corporation (PASAR), and pyrite to Philippine Phosphates, Inc. (Philphos). Petitioner argued these were zero-rated transactions under Section 106(b) of the Tax Code of 1986, making the input taxes refundable or creditable.
Procedural History:
- Due to the respondent Commissioner of Internal Revenue's inaction and the impending expiration of the two-year period to file a court action, petitioner filed a petition for review with the Court of Tax Appeals (CTA).
- The CTA denied the claims, citing prescription and insufficiency of evidence.
- Petitioner appealed to the Court of Appeals (CA), which reversed the CTA's ruling on prescription but affirmed the denial of the claims for lack of sufficient evidence.
- Petitioner's motion for reconsideration was denied, prompting the filing of this appeal by certiorari.
Evidentiary Requirements:
- The CTA and CA found that petitioner failed to comply with the evidentiary requirements under Section 2(c) of Revenue Regulations 3-88 and CTA Circular 1-95, as amended by CTA Circular 10-97.
- These rules required submission of purchase invoices or receipts evidencing VAT paid, a summary of invoices/receipts, and a certification from an independent CPA.
- Petitioner did not submit the required invoices or receipts, arguing that (1) the requirements applied only to administrative claims, not judicial claims, and (2) the CPA certification and summary sufficed as principal evidence.
Issue:
- Whether petitioner complied with the evidentiary requirements for claiming a tax refund or credit.
- Whether the failure to submit invoices or receipts should bar the grant of the refund or tax credit.
- Whether the summary and CPA certification alone constitute sufficient evidence for the claim.
Ruling:
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that petitioner failed to meet the evidentiary requirements for a tax refund or credit. Specifically:
- Petitioner did not submit the required invoices or receipts, which are crucial for verifying the authenticity and veracity of the claims.
- The summary and CPA certification alone are insufficient to prove the claims, as they must be supported by the underlying documents (invoices/receipts).
- The judicial claim for refund is not independent of the administrative claim; thus, petitioner must satisfy the same evidentiary requirements in both proceedings.
Ratio:
Burden of Proof:
- Tax refunds or credits are in the nature of tax exemptions, and the burden of proof lies on the claimant to establish the factual and legal bases for the claim.
- Petitioner failed to prove that its sales qualified for zero-rating and that the claimed input taxes were attributable to these sales.
Evidentiary Requirements:
- Revenue Regulations 3-88 and CTA Circular 1-95 require the submission of invoices or receipts to substantiate claims for tax refunds or credits.
- The summary and CPA certification are not substitutes for the underlying documents but are supplementary to them.
- The CTA must verify the authenticity of the invoices/receipts to ensure compliance with VAT regulations.
Judicial Claim as an Appeal:
- A judicial claim for refund is an appeal from the denial of an administrative claim. Thus, the claimant must prove that the administrative claim should have been granted, including compliance with all documentary requirements.
- Petitioner's failure to submit the required documents in the administrative proceeding carried over to the judicial proceeding, rendering its claim unsubstantiated.
Technical Rules of Evidence:
- While the CTA is not strictly bound by technical rules of evidence, the submission of invoices/receipts is not a mere procedural technicality but a substantive requirement to verify the validity of the claims.
Conclusion:
The Supreme Court upheld the denial of petitioner's claims for tax refund or credit due to its failure to comply with the evidentiary requirements. The Court emphasized that tax refunds or credits are strictly construed against the claimant, and compliance with procedural and substantive requirements is mandatory.