February 2010 - Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions
[G.R. No. 167315 : February 10, 2010]
MIRANT SUAL CORPORATION (FORMERLY, SOUTHERN ENERGY PHILIPPINES, INC.), PETITIONER, VERSUS COMMISSIONER OE INTERNAL REVENUE, RESPONDENT
Quoted hereunder, for your information, is a resolution of this Court dated 10 February 2010:
G.R. No. 167315: MIRANT SUAL CORPORATION (formerly, Southern Energy Philippines, Inc.), petitioner, versus COMMISSIONER OE INTERNAL REVENUE, respondent.
This is a petition for review [1] of the 15 October 2004 Decision [2] and 23 February 2005 Resolution [3] of the Court of Appeals in CA-G.R. SP No. 67438, affirming the 18 My 2001 Decision [4] and 12 October 2001 Resolution [5] of the Court of Tax Appeals (CTA), and denying reconsideration.
Petitioner Mirant Sual Corporation (formerly, Southern Energy Philippines, Inc.) is a domestic corporation engaged in the business of power generation and subsequent sale thereof. It is a VAT-registered entity with Certificate of Registration bearing RDO Control No. 05-03219 and dated 22 January 1996.
For the period 1 April 1996 to 31 March 1998, petitioner timely filed its original Quarterly Value-Added Tax Returns reflecting a nil sale but with accumulated input VAT arising from its domestic purchases of goods and services. On 13 April 1998, petitioner simultaneously amended its VAT returns for the second calendar quarter of 1996 to the second calendar quarter of 1997, while the VAT returns for the third calendar quarter of 1997 to the first calendar quarter of 1998 were simultaneously amended on 25 June 1998. As of 31 March 1998, petitioner had accumulated input taxes in the sum of P316,356,744.95, out of which P286,592,786.25 pertains to domestic purchases of capital goods and services.
On 25 June 1998, petitioner filed with the Bureau of Internal Revenue, Revenue Region No. 5, Alaminos, Pangasinan, an application for tax credit or refund of the P286,592,786.25 unutilized VAT paid on capital goods and services.
On 1 July 1998, petitioner filed a petition for review with the CTA in order to toll the running of the two-year prescriptive period under Section 230 of the Tax Code, as amended.
Due to the voluminous documents to be presented, petitioner availed of the services of Ruben R. Rubio (Rubio), a partner in the accounting firm of SGV & Company, who was commissioned by the CTA to verify the accuracy of petitioner's summary of input taxes pursuant to CTA Circular No. 1-95, as amended by CTA Circular No. 10-97.
In a report dated 9 February 1999, Rubio described the audit procedures he performed and found that out of the total claimed input taxes of P286,592,786.25, a minimal amount of P872.73 was excepted because the corresponding official receipt bore only a stamped VAT number.
On the other hand, respondent presented as evidence the Memorandum Report of its Revenue Enforcement Officers, Zaldy I. Dy and BernadetteB. Mangaoang, recommending the complete denial of the claim for refund/credit despite their verification that input taxes in the amount of P75,333,540.54 pertain to capital goods.
The CTA found petitioner entitled to refund considering that (1) petitioner is a VAT-registered entity; (2) the input taxes pertained to capital goods; (3) the input taxes were not utilized by petitioner because it had no output tax liability during the subject period against which the said taxes could be applied; and (4) the claim for refund was seasonably filed.
However, the CTA disallowed input taxes in the total amount of P60,347,523.45. Therefore, deducting P60,347,523.45 from the total amount of input taxes claimed (P286,592,729.30), the amount refundable is P226,245,205.85.
The dispositive portion of the 18 July 2001 Decision of the CTA reads:
WHEREFORE, in view of the foregoing, petitioner's claim for refund is hereby PARTIALLY GRANTED. Respondent is ORDERED to REFUND or ISSUE A TAX CREDIT CERTIFICATE in the amount of P226,245,205.85 in favor of petitioner representing input taxes paid on capital goods for the period April 1,1996 to March 31,1998.
SO ORDERED.
Petitioner filed a Motion for Partial New Trial arguing that it committed mistake and excusable neglect in relying on the accuracy of the report of the independent CPA and the completeness of its supporting documents. Respondent, on the other hand, filed a Motion for Reconsideration of the CTA decision.
In its 12 October 2001 Resolution, the CTA denied both motions.
Petitioner filed a petition for review under Rule 43 with the Court of Appeals, seeking the partial reversal of the CTA decision.
In its 15 October 2004 Decision, the Court of Appeals disposed of the petition for review as follows:
WHEREFORE, the instant appeal is hereby DENIED and the Decision dated July 18, 2001 AFFIRMED.
SO ORDERED.
Petitioner filed a motion for reconsideration, which was denied by the Court of Appeals in its 23 February 2005 Resolution. Hence, this petition.
Basically, the issue in this case is whether the Court of Appeals committed reversible error in affirming the decision of the CTA which denied petitioner's motion for partial new trial grounded on mistake or excusable negligence.
The answer is in the negative. The Court of Appeals correctly affirmed the CTA decision denying the petitioner's plea for partial new trial.
Admittedly, petitioner failed to present certain pieces of evidence, relying totally on the report of the independent CPA. The pieces of evidence petitioner seeks to present are available during the trial but were not introduced since petitioner relied on the completeness and accuracy of the independent CPA report. Obviously, petitioner failed to exercise the diligence required of a litigant who has the burden of proof to present all that is required.1' Contrary to petitioner's view, its negligence is not excusable to warrant a partial new trial.
Petitioner's contention that the denial of the motion for partial new trial was not in accord with CTA Circular No. 1-95, as amended by CTA Circular No. 10-97, is untenable. CTA Circular No. 1-95 clearly requires that photocopies of the receipts or invoices must be pre-marked and submitted to the CTA to verify the correctness of the CPA certification.12
In Philippine Long Distance Telephone Company v. Commissioner of Internal Revenue, [13] Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue [14] and Commissioner of Internal Revenue v. Manila Mining Corporation, the Court explained that:
xxx The circular, in the interest of speedy administration of justice, was promulgated to avoid the time-consuming procedure of presenting, identifying and marking of documents before the Court. <B>It does not relieve respondent of its imperative task of pr em a r king photocopies of sales receipts and invoices and submitting the same to the court after the independent CPA shall have examined and compared them with the originals. Without presenting these pre-marked documents as evidence from which the summary and schedules were based, the court cannot verify the authenticity and veracity of the independent auditor's conclusions. (Emphasis supplied)
In another case involving Atlas Consolidated Mining and Development Corporation, [16] the Court held that the pertinent invoices and receipts are the best and competent evidence to establish a claim for tax credit or refund. The summary with the certification by an independent CPA is merely corroborative, and does not replace the invoices and receipts. Therefore, the non-presentation of such documents is fatal to petitioner's claim for tax refund.
Likewise, in another Atlas Consolidated Mining and Development Corporation [17] case, the Court pointed out that cases filed in the CTA are litigated de novo, such that a petitioner must substantiate its claim with sufficient evidence, thus:
In this case, it was necessary for petitioner to show the CTA not only that it was entitled under substantive law to the grant of its claims but also that it satisfied all the documentary and evidentiary requirements for an administrative claim for refund or tax credit. Second, cases filed in the CTA are litigated de novo. Thus, a petitioner should prove every minute aspect of its case by presenting, formally offering and submitting its evidence to the CTA. Since it is crucial for a petitioner in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place, part of the evidence to be submitted to the CTA must necessarily include whatever is required for the successful prosecution of an administrative claim.
At this juncture, the Court quotes the following conclusion in Commissioner of Internal Revenue v. A. Soriano Corporation:
We are left with no recourse but to conclude that this is a simple case of negligence on the part of the petitioner. For this act of negligence, the petitioner cannot be allowed to seek refuge in a liberal application of the Rules. For it should not be forgotten that the first and fundamental concern of the rules of procedure is to secure a just determination of every action. In the case at bench, a liberal application of the rules of procedure to suit the petitioner's purpose would clearly pave the way for injustice as it would be rewarding an act of negligence with undeserved tolerance.
WHEREFORE, the Court DENIES the petition and AFFIRMS the 15 October 2004 Decision and 23 February 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 67438.
SO ORDERED.
WITNESS the Honorable Antonio T. Carpio, Chairperson, Honorable Arturo D. Brion, Mariano C. Del Castillo, Roberto A. Abad and Jose P. Perez, Members, Second Division, this 10th day of February, 2010.
(Sgd.) MA. LUISA L. LAUREA
Clerk of Court
Endnotes:
[1] Under Rule 45 of the Rules of Court.
[2] Rollo, pp. 8-17. Penned by Associate Justice Monina Arevalo-Zenarosa, with Associate Justices Andres B. Reyes, Jr. and Rosmari D. Carandang, concurring.
[3] Id. at 18-20.
[4] Id. at 70-79. Penned by Presiding Judge Ernesto D. Acosta with Associate Judge Amancio Q. Saga concurring.
[5] Id. at 95-98. Signed by Presiding Judge Ernesto D. Acosta, Associate judges Juanito C. Castaneda, Jr. and Amancio Q. Saga.
[6] Sec. 230 of the National Internal Revenue Code (N1RC) of 1977 (now Sec. 229, NIRC of 1997) provides:
Sec. 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 excessive 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 proceedings shall begin after the expiration of two 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 a 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.
[7] CTA Circular No. 1-95 (as quoted in Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 146221, 25 September 2007, 534 SCRA 51) provides:
SUBJECT: CTA Rules governing the presentation of voluminous documents as evidence such as receipts, invoices and vouchers
In accordance with the announced policy of the court and in the interest of speedy administration of justice, the Court hereby promulgates the following rules governing the presentation, of voluminous documents and/or long accounts, such as receipts, invoices and vouchers, as evidence to establish certain facts, pursuant to Section 3(c), Rule 130 of the Rules of Court and the doctrine enunciated in Compania Maritima vs. Allied Free Workers Union (77 SCRA 24), as well as Section 8 of Republic Act No. 1125.
1. The party who desires to introduce as evidence such voluminous documents must present:
(a) Summary containing the total amount/s of the tax account or tax paid for the period involved and a chronological or numerical list of the numbers, dates and amounts covered by the invoices or receipts; and (b) a Certification of an independent Certified Public Accountant attesting to the correctness of the contents of the summary after making an examination and evaluation of the voluminous receipts and invoices. Such summary and certification must properly be identified by a competent witness from the accounting firm.
2. The method of individual presentation of each and every receipt or invoice or other documents for marking, identification and comparison with the originals thereof need not be done before the Court or the Commissioner anymore after the introduction of the summary and CPA certification.It is enough that the receipts, invoices and other documents covering the said accounts or payments must be pre-marked by the party concerned and submitted to the Court in order to be made accessible to the adverse party whenever he/she desires to check and verify the correctness of the summary and CPA certification. However, the originals of the said receipts, invoices or documents should be ready for verification and comparison in case doubt on the authenticity of the particular documents presented is raised during the hearing of the case.
[8] CTA Circular No. 10-97 (as footnoted in Commissioner of Internal Revenue v. Manila Mining Corporation, G.R. No. 152304, 31 August 2005, 468 SCRA 571, 591-592) provides:
1.The party who desires to introduce as evidence such voluminous documents must, after motion and approval by the Court, present: (a) a Summary containing, among others, a chronological listing of the numbers, dates and amounts covered by the invoices or receipts and the amount/s of tax paid; and (b) a Certification of an independent Certified Public Accountant attesting to the correctness of the contents of the summary after making an examination, evaluation and audit of the voluminous receipts and invoices. The name of the accountant or partner of the firm in charge must be stated in the motion so that he/she can be commissioned by the Court to conduct the audit and, thereafter, testify in Court relative to such summary and certification pursuant to Rule 32 of the Rules of Court.
2. The method of individual presentation of each and every receipt, invoice or account for marking, identification and comparison with the originals thereof need not be done before the Court or Clerk of Court anymore after the introduction of the summary and CPA certification. It is enough that the receipts, invoices, vouchers or other documents covering the said accounts or payment to be introduced in evidence must be pre-marked by the party concerned and submitted to the Court in order to be made accessible to the adverse party who desires to check and verify the correctness of the summary and CPA certification. Likewise the originals of the voluminous receipts, invoices or accounts must be ready for verification and comparison in case doubt on the authenticity thereof is raised during the hearing or resolution of the formal offer of evidence.
[9] Rollo, p. 79.
[10] Id. at 16-17.
[11] See Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 159490, 18 February 2008, 546 SCRA 150.
[12] Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 146221, 25 September 2007, 534 SCRA 51,56.
[13] G.R. No. 157264,31 January 2008, 543 SCRA 329, 339-340.
[14] Supra note 12 at 58.
[15] G.R. No. 153204, 31 August 2005, 468 SCRA 571, 592.
[16] Supra note 11 at 160.
[17] G.R. No. 145526, 16 March 2007, 518 SCRA 425, 431.
[18] G.R.No. 113703,31 January 1997, 267 SCRA313, 319.