THIRDDIVISION

ATLAS
CONSOLIDATED
G.R.Nos.141104&148763
MINING AND DEVELOPMENT

CORPORATION,
Present:
Petitioner,

YNARESSANTIAGO,J.

Chairperson,

AUSTRIAMARTINEZ,

CHICONAZARIO,and
versus
NACHURA,JJ.

COMMISSIONER
OF
Promulgated:

INTERNALREVENUE,
June8,2007
Respondent.
xx

DECISION

CHICONAZARIO,J.:

Before this Court are the consolidated cases involving the unsuccessful claims of herein
petitioner Atlas Consolidated Mining and Development Corporation (petitioner corporation) for the
refund/creditoftheinputValueAddedTax(VAT)onitspurchasesofcapitalgoodsandonitszero
ratedsalesinthetaxablequartersoftheyears1990and1992,thedenialofwhichbytheCourtofTax
Appeals(CTA),wasaffirmedbytheCourtofAppeals.

Petitionercorporationisengagedinthebusinessofmining,production,andsaleofvariousmineral
products,suchasgold,pyrite,andcopperconcentrates.ItisaVATregisteredtaxpayer.Itwasinitially
issuedVATRegistrationNo.32A6002224,dated1January1988,butithadtoregisteranewwith
theappropriaterevenuedistrictoffice(RDO)oftheBureauofInternalRevenue(BIR)whenitmoved
its principal place of business, and it was reissued VAT Registration No. 320004622, dated 15
[1]
August1990.

G.R.No.141104
[2]
PetitionercorporationfiledwiththeBIRitsVATReturnforthefirstquarterof1992. Itallegedthat
itlikewisefiledwiththeBIRthecorrespondingapplicationfortherefund/creditofitsinputVATon
[3]
itspurchasesofcapitalgoodsandonitszeroratedsalesintheamountofP26,030,460.00. When
its application for refund/credit remained unresolved by the BIR, petitioner corporation filed on 20
April1994itsPetitionforReviewwiththeCTA,docketedasCTACaseNo.5102.Assertingthatit
was a zerorated VAT person, it prayed that the CTA order herein respondent Commissioner of
InternalRevenue(respondentCommissioner)torefund/creditpetitionercorporationwiththeamount
of P26,030,460.00, representing the input VAT it had paid for the first quarter of 1992. The
respondent Commissioner opposed and sought the dismissal of the petition for review of petitioner
corporation for failure to state a cause of action. After due trial, the CTA promulgated its
[4]
Decision on24November1997withthefollowingdisposition
WHEREFORE,inviewoftheforegoing,theinstantclaimforrefundisherebyDENIED on
thegroundofprescription,insufficiencyofevidenceandfailuretocomplywithSection230oftheTax
Code,asamended.Accordingly,thepetitionatbarisherebyDISMISSEDforlackofmerit.

[5]
TheCTAdeniedthemotionforreconsiderationofpetitionercorporationinaResolution dated15
April1998.

WhenthecasewaselevatedtotheCourtofAppealsasCAG.R.SPNo.47607,theappellatecourt,in
[6]
its Decision, dated 6 July 1999, dismissed the appeal of petitioner corporation, finding no
reversible error in the CTA Decision, dated 24 November 1997.The subsequent motion for
reconsiderationofpetitionercorporationwasalsodeniedbytheCourtofAppealsinitsResolution,
[7]
dated14December1999.

Thus,petitionercorporationcomesbeforethisCourt,viaa Petition for Review on Certiorari under

Rule 45 of the Revised Rules of Court, assigning the following errors committed by the Court of
Appeals

THE COURT OF APPEALS ERRED IN AFFIRMING THE REQUIREMENT OF REVENUE

REGULATIONS NO. 288 THAT AT LEAST 70% OF THE SALES OF THE [BOARD OF
INVESTMENTS (BOI)]REGISTERED FIRM MUST CONSIST OF EXPORTS FOR ZERO
RATINGTOAPPLY.

II

THE COURT OF APPEALS ERRED IN AFFIRMING THAT PETITIONER FAILED TO SUBMIT

SUFFICIENT EVIDENCE SINCE FAILURE TO SUBMIT PHOTOCOPIES OF VAT INVOICES
ANDRECEIPTSISNOTAFATALDEFECT.

III

THE COURT OF APPEALS ERRED IN RULING THAT THE JUDICIAL CLAIM WAS FILED
BEYOND THE PRESCRIPTIVE PERIOD SINCE THE JUDICIAL CLAIM WAS FILED WITHIN
TWO(2)YEARSFROMTHEFILINGOFTHEVATRETURN.

IV

THE COURT OF APPEALS ERRED IN NOT ORDERING CTA TO ALLOW THE REOPENING
[8]
OFTHECASEFORPETITIONERTOPRESENTADDITIONALEVIDENCE.

G.R.No.148763

G.R.No.148763involvesalmostthesamesetoffactsasinG.R.No.141104presentedabove,except
thatitrelatestotheclaimsofpetitionercorporationforrefund/creditofinputVATonitspurchasesof
capitalgoodsandonitszeroratedsalesmadeinthelastthreetaxablequartersof1990.

Petitioner corporation filed with the BIR its VAT Returns for the second, third, and fourth
quartersof1990,on20July1990,18October1990,and20January1991,respectively.Itsubmitted
separateapplicationstotheBIRfortherefund/creditoftheinputVATpaidonitspurchasesofcapital
goodsandonitszeroratedsales,thedetailsofwhicharepresentedasfollows

DateofApplication

21August1990
21November1990
19February1991

PeriodCovered

nd
2 Quarter,1990
3rdQuarter,1990
4thQuarter,1990

AmountAppliedFor

P54,014,722.04
75,304,774.77
43,829,766.10

WhentheBIRfailedtoactonitsapplicationsforrefund/credit,petitionercorporationfiledwiththe
CTAthefollowingpetitionsforreview

DateFiled

20July1992
9October1992
14January1993

PeriodCovered

nd
2 Quarter,1990
3rdQuarter,1990
4thQuarter,1990

CTACaseNo.

4831
4859
4944

whichwereeventuallyconsolidated.TherespondentCommissionercontestedtheforegoingPetitions
andprayedforthedismissalthereof.TheCTAruledinfavorofrespondentCommissionerandinits

[9]
Decision, dated 30 October 1997, dismissed the Petitions mainly on the ground that the
[10]
prescriptiveperiodsforfilingthesamehadexpired.InaResolution,
dated15January1998,the
CTAdeniedthemotionforreconsiderationofpetitionercorporationsincethelatterpresentednonew
matter not already discussed in the courts prior Decision. In the same Resolution, the CTA also
deniedthealternativeprayerofpetitionercorporationforanewtrialsinceitdidnotfallunderanyof
thegroundscitedunderSection1,Rule37oftheRevisedRulesofCourt,anditwasnotsupportedby
affidavitsofmeritsrequiredbySection2ofthesameRule.

PetitionercorporationappealeditscasetotheCourtofAppeals,whereitwasdocketedasCAG.R.
[11]
SPNo.46718.On15September2000,theCourtofAppealsrendereditsDecision,
finding that
although petitioner corporation timely filed its Petitions for Review with the CTA, it still failed to
substantiateitsclaimsfortherefund/creditofitsinputVATforthelastthreequartersof1990.Inits
[12]
Resolution,
dated 27 June 2001, the appellate court denied the motion for reconsideration of
petitionercorporation,findingnocogentreasontoreverseitspreviousDecision.

Aggrieved, petitioner corporation filed with this Court another Petition for Review
onCertiorariunderRule45oftheRevisedRulesofCourt,docketedasG.R.No.148763,raisingthe
followingissues

A.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS

CLAIM IS BARRED UNDER REVENUE REGULATIONS NOS. 288 AND 388 I.E., FOR
FAILURE TO PTOVE [sic] THE 70% THRESHOLD FOR ZERORATING TO APPLY AND FOR
FAILURETOESTABLISHTHEFACTUALBASISFORTHEINSTANTCLAIM.

B.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THERE IS NO

BASISTOGRANTPETITIONERSMOTIONFORNEWTRIAL.

There being similarity of parties, subject matter, and issues, G.R. Nos. 141104 and 148763
wereconsolidatedpursuanttoaResolution,dated4September2006,issuedbythisCourt.Theruling
ofthisCourtinthesecaseshingesonhowitwillresolvethefollowingkeyissues:(1)prescriptionof
the claims of petitioner corporation for input VAT refund/credit (2) validity and applicability of
RevenueRegulationsNo.288imposinguponpetitionercorporation,asarequirementfortheVAT
zeroratingofitssales,theburdenofprovingthatthebuyercompanieswerenotjustBOIregistered
but also exporting 70% of their total annual production (3) sufficiency of evidence presented by

petitionercorporationtoestablishthatitisindeedentitledtoinputVATrefund/creditand(4)legal
groundforgrantingthemotionofpetitionercorporationforreopeningofitscasesorholdingofnew
trialbeforetheCTAsoitcouldbegiventheopportunitytopresenttherequiredevidence.

Prescription
Theprescriptiveperiodforfilinganapplicationfortaxrefund/creditofinputVATonzeroratedsales
made in 1990 and 1992 was governed by Section 106(b) and (c) of the Tax Code of 1977, as
amended,whichprovidedthat

SEC.106.Refundsortaxcreditsofinputtax.xxx.

(b)Zeroratedoreffectivelyzeroratedsales.Anyperson,exceptthosecoveredbyparagraph(a)
above,whosesalesarezeroratedmay,withintwoyearsafterthecloseofthequarterwhensuchsales
weremade,applyfortheissuanceofataxcreditcertificateorrefundoftheinputtaxesattributableto
suchsalestotheextentthatsuchinputtaxhasnotbeenappliedagainstoutputtax.

xxxx

(e) Period within which refund of input taxes may be made by the Commissioner. The
Commissionershallrefundinputtaxeswithin60daysfromthedatetheapplicationforrefundwasfiled
with him or his duly authorized representative. No refund of input taxes shall be allowed unless the
VATregisteredpersonfilesanapplicationforrefundwithintheperiodprescribedinparagraphs(a),(b)
and(c)asthecasemaybe.

By a plain reading of the foregoing provision, the twoyear prescriptive period for filing the
applicationforrefund/creditofinputVATonzeroratedsalesshallbedeterminedfromthecloseof
thequarterwhensuchsalesweremade.

Petitionercontends,however,thatthesaidtwoyearprescriptiveperiodshouldbecounted,notfrom
the close of the quarter when the zerorated sales were made, but from the date of filing of the
quarterly VAT return and payment of the tax due 20 days thereafter, in accordance with Section
110(b)oftheTaxCodeof1977,asamended,quotedasfollows

SEC.110.Returnandpaymentofvalueaddedtax.xxx.

(b)Timeforfilingofreturnandpaymentoftax.Thereturnshallbefiledandthetaxpaidwithin
20 days following the end of each quarter specifically prescribed for a VATregistered person under
regulationstobepromulgatedbytheSecretaryofFinance:Provided,however,Thatanypersonwhose
registrationiscancelledinaccordancewithparagraph(e)ofSection107shallfileareturnwithin20
daysfromthecancellationofsuchregistration.

Itisalreadywellsettledthatthetwoyearprescriptiveperiodforinstitutingasuitorproceedingfor
[13]
recoveryofcorporateincometaxerroneouslyorillegallypaidunderSection230
oftheTaxCode

of 1977, as amended, was to be counted from the filing of the final adjustment return. This Court
[14]
alreadysetoutinACCRAInvestmentsCorporationv.CourtofAppeals,
therationaleforsucha
rule,thus

Clearly, there is the need to file a return first before a claim for refund can prosper inasmuch as the
respondentCommissionerbyhisownrulesandregulationsmandatesthatthecorporatetaxpayeropting
toaskforarefundmustshowinitsfinaladjustmentreturntheincomeitreceivedfromallsourcesand
theamountofwithholdingtaxesremittedbyitswithholdingagentstotheBureauofInternalRevenue.
Thepetitionercorporationfileditsfinaladjustmentreturnforits1981taxableyearonApril15,1982.
In our Resolution dated April 10, 1989 in the case of Commissioner of Internal Revenue v. Asia
AustraliaExpress,Ltd.(G.R.No.85956),weruledthatthetwoyearprescriptiveperiodwithinwhich
toclaimarefundcommencestorun,attheearliest,onthedateofthefilingoftheadjustedfinaltax
return. Hence, the petitioner corporation had untilApril 15, 1984 within which to file its claim for
refund.

Considering that ACCRAIN filed its claim for refund as early as December 29, 1983 with the
respondentCommissionerwhofailedtotakeanyactionthereonandconsideringfurtherthatthenon
resolutionofitsclaimforrefundwiththesaidCommissionerpromptedACCRAINtoreiterateitsclaim
before the Court of Tax Appeals through a petition for review on April 13, 1984, the respondent
appellate court manifestly committed a reversible error in affirming the holding of the tax court
thatACCRAIN'sclaimforrefundwasbarredbyprescription.

It bears emphasis at this point that the rationale in computing the twoyear prescriptive period with
respecttothepetitionercorporation'sclaimforrefundfromthetimeitfileditsfinaladjustmentreturnis
thefactthatitwasonlythenthatACCRAINcouldascertainwhetheritmadeprofitsorincurredlosses
in its business operations. The "date of payment", therefore, in ACCRAIN's case was when its tax
liability,ifany,felldueuponitsfilingofitsfinaladjustmentreturnonApril15,1982.

[15]
Inanothercase,CommissionerofInternalRevenuev.TMXSales,Inc.,
this Court further
expoundedonthesamematter

AreexaminationoftheaforesaidminuteresolutionoftheCourtinthePacificProconcase is
warrantedunderthecircumstancestolaydownacategoricalpronouncementonthequestionastowhen
thetwoyearprescriptiveperiodincasesofquarterlycorporateincometaxcommencestorun.Afull
blowndecisioninthisregardisrenderedmoreimperativeinthelightofthereversalbytheCourtof
TaxAppealsintheinstantcaseofitspreviousrulinginthePacificProconcase.

Section292(nowSection230)oftheNationalInternalRevenueCodeshouldbeinterpretedin
relationtotheotherprovisionsoftheTaxCodeinordertogiveeffectthelegislativeintentandtoavoid
an application of the law which may lead to inconvenience and absurdity. In the case of People vs.
Rivera(59Phil.236[1933]),thisCourtstatedthatstatutesshouldreceiveasensibleconstruction,such
as will give effect to the legislative intention and so as to avoid an unjust or an absurd
conclusion. INTERPRETATIO TALIS IN AMBIGUIS SEMPER FRIENDA EST, UT EVITATUR
INCONVENIENS ET ABSURDUM. Where there is ambiguity, such interpretation as will avoid
inconvenience and absurdity is to be adopted. Furthermore, courts must give effect to the general
legislativeintentthatcanbediscoveredfromorisunraveledbythefourcornersofthestatute,andin
ordertodiscoversaidintent,thewholestatute,andnotonlyaparticularprovisionthereof,shouldbe
considered. (Manila Lodge No. 761, et al. vs. Court of Appeals, et al. 73 SCRA 162 [1976) Every
section, provision or clause of the statute must be expounded by reference to each other in order to
arriveattheeffectcontemplatedbythelegislature.Theintentionofthelegislatormustbeascertained

fromthewholetextofthelawandeverypartoftheactistobetakenintoview.(CharteredBankvs.
Imperial, 48 Phil. 931 [1921] Lopez vs. El Hoger Filipino, 47 Phil. 249, cited in Aboitiz Shipping
Corporationvs.CityofCebu,13SCRA449[1965]).

Thus,inresolvingtheinstantcase,itisnecessarythatweconsidernotonlySection292(now
Section 230) of the National Internal Revenue Code but also the other provisions of the Tax Code,
particularlySections 84, 85 (now both incorporated as Section 68), Section 86(nowSection70)and
Section 87 (now Section 69) on Quarterly Corporate Income Tax Payment and Section 321 (now
Section 232) on keeping of books of accounts. All these provisions of the Tax Code should be
harmonizedwitheachother.

xxxx

Therefore,thefilingofaquarterlyincometaxreturnsrequiredinSection85(nowSection68)
and implemented per BIR Form 1702Q and payment of quarterly income tax should only be
consideredmereinstallmentsoftheannualtaxdue.Thesequarterlytaxpaymentswhicharecomputed
based on the cumulative figures of gross receipts and deductions in order to arrive at a net taxable
income,shouldbetreatedasadvancesorportionsoftheannualincometaxdue,tobeadjustedatthe
endofthecalendarorfiscalyear.ThisisreinforcedbySection87(nowSection69)whichprovidesfor
the filing of adjustment returns and final payment of income tax. Consequently, the twoyear
prescriptive period provided in Section 292 (now Section 230) of the Tax Code should be computed
from the time of filing the Adjustment Return or Annual Income Tax Return and final payment of
incometax.

In the case of Collector of Internal Revenue vs. Antonio Prieto (2 SCRA 1007 [1961]), this
Court held that when a tax is paid in installments, the prescriptive period of two years provided in
Section306(Section292)oftheNationalInternalRevenueCodeshouldbecountedfromthedateof
thefinalpayment.ThisrulingisreiteratedinCommissionerofInternalRevenuevs.CarlosPalanca(18
SCRA496[1966]),whereinthisCourtstatedthatwherethetaxaccountwaspaidoninstallment,the
computation of the twoyear prescriptive period under Section 306 (Section 292) of the Tax Code,
shouldbefromthedateofthelastinstallment.

Intheinstantcase,TMXSales,Inc.filedasuitforarefundonMarch14,1984.Sincethetwo
yearprescriptiveperiodshouldbecountedfromthefilingoftheAdjustmentReturnonApril15,1982,
TMXSales,Inc.isnotyetbarredbyprescription.

Theverysamereasonssetforthintheaforecitedcasesconcerningthetwoyearprescriptiveperiod
forclaimsforrefundofillegallyorerroneouslycollectedincometaxmayalsoapplytothePetitions
atbarinvolvingthesameprescriptiveperiodforclaimsforrefund/creditofinputVATonzerorated
sales.

It is true that unlike corporate income tax, which is reported and paid on installment every
quarter, but is eventually subjected to a final adjustment at the end of the taxable year, VAT is
computedandpaidonapurelyquarterlybasiswithoutneedforafinaladjustmentattheendofthe
taxable year. However, it is also equally true that until and unless the VATregistered taxpayer
preparesandsubmitstotheBIRitsquarterlyVATreturn,thereisnowayofknowingwithcertainty
[16]
[17]
justhowmuchinputVAT
thetaxpayermayapplyagainstitsoutputVAT
how much output
VATitisduetopayforthequarterorhowmuchexcessinputVATitmaycarryovertothefollowing

quarter or how much of its input VAT it may claim as refund/credit. It should be recalled that not
onlymayaVATregisteredtaxpayerdirectlyapplyagainsthisoutputVATduetheinputVATithad
paid on its importation or local purchases of goods and services during the quarter the taxpayer is
also given the option to either (1) carry over any excess input VAT to the succeeding quarters for
applicationagainstitsfutureoutputVATliabilities,or(2)fileanapplicationforrefundorissuanceof
[18]
ataxcreditcertificatecoveringtheamountofsuchinputVAT.
Hence,evenintheabsenceofa
final adjustment return, the determination of any output VAT payable necessarily requires that the
VATregisteredtaxpayermakeadjustmentsinitsVATreturneveryquarter,takingintoconsideration
theinputVATwhicharecreditableforthepresentquarterorhadbeencarriedoverfromtheprevious
quarters.

Moreover,whenclaimingrefund/credit,theVATregisteredtaxpayermustbeabletoestablish
that it does have refundable or creditable input VAT, and the same has not been applied against its
output VAT liabilities information which are supposed to be reflected in the taxpayers VAT
returns.Thus,anapplicationforrefund/creditmustbeaccompaniedbycopiesofthetaxpayersVAT
return/sforthetaxablequarter/sconcerned.

Lastly, although the taxpayers refundable or creditable input VAT may not be considered as
illegallyorerroneouslycollected,itsrefund/creditisaprivilegeextendedtoqualifiedandregistered
taxpayers by the very VAT system adopted by the Legislature. Such input VAT, the same as any
illegallyorerroneouslycollectednationalinternalrevenuetax,consistsofmonetaryamountswhich
are currently in the hands of the government but must rightfully be returned to the
taxpayer. Therefore, whether claiming refund/credit of illegally or erroneously collected national
internal revenue tax, or input VAT, the taxpayer must be given equal opportunity for filing and
pursuingitsclaim.

Fortheforegoingreasons,itismorepracticalandreasonabletocountthetwoyearprescriptive
periodforfilingaclaimforrefund/creditofinputVATonzeroratedsalesfromthedateoffilingof
the return and payment of the tax due which, according to the law then existing, should be made
within20daysfromtheendofeachquarter.Havingestablishedthus,therelevantdatesintheinstant
casesaresummarizedandreproducedbelow

PeriodCovered

DateofFiling
(Returnw/BIR)

DateofFiling
(Applicationw/BIR)

DateofFiling
(Casew/CTA)

2ndQuarter,1990
3rdQuarter,1990
4thQuarter,1990
1stQuarter,1992

20July1990
18October1990
20January1991
20April1992

21August1990
21November1990
19February1991

20July1992
9October1992
14January1993
20April1994

Theabovetablereadilyshowsthattheadministrativeandjudicialclaimsofpetitionercorporationfor
refundofitsinputVATonitszeroratedsalesforthelastthreequartersof1990wereallfiledwithin
theprescriptiveperiod.

However,thesamecannotbesaidfortheclaimofpetitionercorporationforrefundofitsinput
VAT on its zerorated sales for the first quarter of 1992. Even though it may seem that petitioner
corporationfiledintimeitsjudicialclaimwiththeCTA,thereisnoshowingthatithadpreviously
filed an administrative claim with the BIR.Section 106(e) of the Tax Code of 1977, as amended,
explicitlyprovidedthatnorefundofinputVATshallbeallowedunlesstheVATregisteredtaxpayer
filed an application for refund with respondent Commissioner within the twoyear prescriptive
period.Theapplicationofpetitionercorporationforrefund/creditofitsinputVATforthefirstquarter
of 1992 was not only unsigned by its supposed authorized representative, Ma. Paz R. Semilla,
ManagerFinanceandTreasury,butitwasnotdated,stamped,andinitialedbytheBIRofficialwho
[19]
purportedlyreceivedthesame.TheCTA,initsDecision,
dated24November1997,inCTACase
No.5102,madethefollowingobservations

This Court, likewise, rejects any probative value of the Application for Tax
Credit/RefundofVATPaid(BIRFormNo.2552)[ExhibitB]formallyofferedinevidenceby
thepetitioneronaccountofthefactthatitdoesnotbeartheBIRstampshowingthedatewhen
such application was filed together with the signature or initial of the receiving officer of
respondentsBureau.Worsestill,itdoesnotshowthedateofapplicationandthesignatureofa
certainMa.PazR.Semillaindicatedintheformwhoappearstobepetitionersauthorizedfiler.

A review of the records reveal that the original of the aforecitedapplication was lost
during the time petitioner transferred its office (TSN, p. 6, Hearing of December 9,
1994).Attemptwasmadetoprovethatpetitionerexertedeffortstorecovertheoriginalcopy,
buttonoavail.Despitethis,however,Weobservethatpetitionercompletelyfailedtoestablish
the missing dates and signatures abovementioned. On this score, said application has no
probativevalueindemonstratingthefactofitsfilingwithintwoyearsafterthe[filingofthe
VAT return for the quarter] when petitioners sales of goods were made as prescribed under
Section106(b)oftheTaxCode.Webelievethusthatpetitionerfailedtofileanapplicationfor
refundindueformandwithinthelegalperiodsetbylawattheadministrativelevel.Hence,the
caseatbarhasfailedtosatisfytherequirementonthepriorfilingofanapplicationforrefund
with the respondent before the commencement of a judicial claim for refund, as prescribed
underSection230oftheTaxCode.Thisfactconstitutesanotheroneofthemanyreasonsfor
notgrantingpetitionersjudicialclaim.

As pointed out by the CTA, in serious doubt is not only the fact of whether petitioner corporation
timelyfileditsadministrativeclaimforrefundofitsinputVATforthefirstquarterof1992,butalso
whetherpetitionercorporationactuallyfiledsuchadministrativeclaiminthefirstplace.Forfailingto
provethatithadearlierfiledwiththeBIRanapplicationforrefund/creditofitsinputVATforthe
first quarter of 1992, within the period prescribed by law, then the case instituted by petitioner
corporationwiththeCTAfortherefund/creditoftheverysametaxcannotprosper.
RevenueRegulationsNo.288andthe70%exportrequirement

UnderSection100(a)oftheTaxCodeof1977,asamended,a10%VATwasimposedonthegross
sellingpriceorgrossvalueinmoneyofgoodssold,barteredorexchanged.Yet,thesameprovision
subjectedthefollowingsalesmadebyVATregisteredpersonsto0%VAT

(1)Exportsalesand

(2)Salestopersonsorentitieswhoseexemptionunderspeciallawsorinternationalagreements
towhichthePhilippinesisasignatoryeffectivelysubjectssuchsalestozerorate.

Export Sales means the sale and shipment or exportation of goods from thePhilippines to a
foreign country, irrespective of any shipping arrangement that may be agreed upon which may
influence or determine the transfer of ownership of the goods so exported, or foreign currency
denominated sales. Foreign currency denominated sales, means sales to nonresidents of goods
assembledormanufacturedinthePhilippines,fordeliverytoresidentsinthePhilippinesandpaidforin
convertibleforeigncurrencyremittedthroughthebankingsysteminthePhilippines.

Thesearetermedzeroratedsales.AzeroratedsaleisstillconsideredataxabletransactionforVAT
purposes,althoughtheVATrateappliedis0%.AsalebyaVATregisteredtaxpayerofgoodsand/or
servicestaxedat0%shallnotresultinanyoutputVAT,whiletheinputVATonitspurchasesofgoods
[20]
orservicesrelatedtosuchzeroratedsaleshallbeavailableastaxcreditorrefund.
PetitionercorporationquestionsthevalidityofRevenueRegulationsNo.288averringthatthesaid
regulationsimposedadditionalrequirements,notfoundinthelawitself,forthezeroratingofitssales
to Philippine Smelting and Refining Corporation (PASAR) and Philippine Phosphate, Inc.
(PHILPHOS), both of which are registered not only with the BOI, but also with the then Export
[21]
ProcessingZoneAuthority(EPZA).

ThecontentiousprovisionsofRevenueRegulationsNo.288read
SEC. 2. Zerorating. (a) Sales of raw materials to BOIregistered exporters. Sales of raw
materialstoexportorientedBOIregisteredenterpriseswhoseexportsales,underrulesandregulations
oftheBoardofInvestments,exceedseventypercent(70%)oftotalannualproduction,shallbesubject
tozerorateunderthefollowingconditions:

(1)ThesellershallfileanapplicationwiththeBIR,ATTN.:Division,applying
for zerorating for each and every separate buyer, in accordance with Section 8(d) of

RevenueRegulationsNo.587.Theapplicationshouldbeaccompaniedwithafavorable
recommendationfromtheBoardofInvestments.

(2) The raw materials sold are to be used exclusively by the buyer in the
manufacture,processingorrepackingofhisownregisteredexportproduct

(3) The words ZeroRated Sales shall be prominently indicated in the sales
invoice.Theexporter(buyer)cannolongerclaimfromtheBureauofInternalRevenue
oranyothergovernmentofficetaxcreditsontheirzeroratedpurchases

(b)Salesofrawmaterialstoforeignbuyer.Salesofrawmaterialstoanonresidentforeignbuyer
fordeliverytoaresidentlocalexportorientedBOIregisteredenterprisetobeusedinmanufacturing,
processingorrepackingofthesaidbuyersgoodsandpaidforinforeigncurrency,inwardlyremittedin
accordancewithCentralBankrulesandregulationsshallbesubjecttozerorate.

ItisthepositionoftherespondentCommissioner,affirmedbytheCTAandtheCourtofAppeals,that
Section2ofRevenueRegulationsNo.288shouldbeappliedinthecasesatbarandtobeentitledto
the zerorating of its sales to PASAR and PHILPHOS, petitioner corporation, as a VATregistered
seller,mustbeabletoprovenotonlythatPASARandPHILPHOSareBOIregisteredcorporations,
but also that more than 70% of the total annual production of these corporations are actually
exported. Revenue Regulations No. 288 merely echoed the requirement imposed by the BOI on
exportorientedcorporationsregisteredwithit.

WhilethisCourtisnotpreparedtostrikedownthevalidityofRevenueRegulationsNo.288,itfinds
thatitsapplicationmustbelimitedandplacedinthepropercontext.NotethatSection2ofRevenue
RegulationsNo.288referredonlytothezeroratedsalesofrawmaterialstoexportoriented BOI
registered enterprises whose export sales, under BOI rules and regulations, should exceed seventy
percent(70%)oftheirtotalannualproduction.

Section 2 of Revenue Regulations No. 288, should not have been applied to the zerorating of the
salesmadebypetitionercorporationtoPASARandPHILPHOS.Attheonset,itmustbeemphasized
thatPASARandPHILPHOS,inadditiontobeingregisteredwiththeBOI,werealsoregisteredwith
theEPZAandlocatedwithinanexportprocessingzone.Petitionercorporationdoesnotclaimthatits
sales to PASAR and PHILPHOS are zerorated on the basis that said sales were made to export
oriented BOIregistered corporations, but rather, on the basis that the sales were made to EPZA
registered enterprises operating within export processing zones. Although sales to exportoriented
BOIregisteredenterprisesandsalestoEPZAregisteredenterpriseslocatedwithinexportprocessing
zones were both deemed export sales, which, under Section 100(a) of the Tax Code of 1977, as
amended, shall be subject to 0% VAT distinction must be made between these two types of sales
becauseeachmayhavedifferentsubstantiationrequirements.

TheTaxCodeof1977,asamended,gavealimiteddefinitionofexportsales,towit:Thesale
andshipmentorexportationofgoodsfromthePhilippines to a foreign country, irrespective of any
shipping arrangement that may be agreed upon which may influence or determine the transfer of
ownershipofthegoodssoexported,orforeigncurrencydenominatedsales.ExecutiveOrderNo.226,
otherwise known as the Omnibus Investments Code of 1987 which, in the years concerned (i.e.,
1990 and 1992), governed enterprises registered with both the BOI and EPZA, provided a more
comprehensivedefinitionofexportsales,asquotedbelow:

ART.23.Export sales shall mean the Philippine port F.O.B. value, determined from invoices,
billsoflading,inwardlettersofcredit,landingcertificates,andothercommercialdocuments,ofexport
productsexporteddirectlybyaregisteredexportproducerorthenetsellingpriceofexportproductsold
by a registered export producer or to an export trader that subsequently exports the same: Provided,
That sales of export products to another producer or to an export trader shall only be deemed export
saleswhenactuallyexportedby the latter, as evidenced by landing certificates of similar commercial
documents: Provided, further, That without actual exportation the following shall be
consideredconstructively exported for purposes of this provision: (1) sales to bonded manufacturing
warehouses of exportoriented manufacturers (2) sales to export processing zones (3) sales to
registered export traders operating bonded trading warehouses supplying raw materials used in the
manufactureofexportproductsunderguidelinestobesetbytheBoardinconsultationwiththeBureau
ofInternalRevenueandtheBureauofCustoms(4)salestoforeignmilitarybases,diplomaticmissions
andotheragenciesand/orinstrumentalitiesgrantedtaximmunities,oflocallymanufactured,assembled
orrepackedproductswhetherpaidforinforeigncurrencyornot:Provided,further,Thatexportsalesof
registered export trader may include commission income and Provided, finally, That exportation of
goodsonconsignmentshallnotbedeemedexportsalesuntiltheexportproductsconsignedareinfact
soldbytheconsignee.

SalesoflocallymanufacturedorassembledgoodsforhouseholdandpersonalusetoFilipinos
abroad and other nonresidents of the Philippines as well as returning Overseas Filipinos under the
Internal Export Program of the government and paid for in convertible foreign currency inwardly
remittedthroughthePhilippinebankingsystemsshallalsobeconsideredexportsales.(Underscoring
ours.)

TheaforecitedprovisionoftheOmnibusInvestmentsCodeof1987recognizesasexportsalesthe
salesofexportproductstoanotherproducerortoanexporttrader,providedthattheexportproducts
are actually exported. For purposes of VAT zerorating, such producer or export trader must be
registeredwiththeBOIandisrequiredtoactuallyexportmorethan70%ofitsannualproduction.

Without actual exportation, Article 23 of the Omnibus Investments Code of 1987 also
considers constructive exportation as export sales. Among other types of constructive exportation
specifically identified by the said provision are sales to export processing zones. Sales to export
processingzonesaresubjectedtospecialtaxtreatment.Article77ofthesameCodeestablishesthe
tax treatment of goods or merchandise brought into the export processing zones. Of particular
relevance herein is paragraph 2, which provides that Merchandise purchased by a registered zone
enterprisefromthecustomsterritoryandsubsequentlybroughtintothezone,shallbeconsideredas

export sales and the exporter thereof shall be entitled to the benefits allowed by law for such
transaction.

Suchtaxtreatmentofgoodsbroughtintotheexportprocessingzonesareonlyconsistentwith
the Destination Principle and Cross Border Doctrine to which the Philippine VAT system
[22]
adheres.AccordingtotheDestinationPrinciple,
goodsandservicesaretaxedonlyinthecountry
where these are consumed. In connection with the said principle, the Cross Border
[23]
Doctrine
mandatesthatnoVATshallbeimposedtoformpartofthecostofthegoodsdestinedfor
consumptionoutsidetheterritorialborderofthetaxingauthority.Hence,actualexportofgoodsand
servicesfromthePhilippinestoaforeigncountrymustbefreeofVAT,whilethosedestinedforuseor
[24]
consumption within the Philippines shall be imposed with 10% VAT.
Export processing
[25]
zones
aretobemanagedasaseparatecustomsterritoryfromtherestofthePhilippinesand,thus,
fortaxpurposes,areeffectivelyconsideredasforeignterritory.Forthisreason,salesbypersonsfrom
the Philippine customs territory to those inside the export processing zones are already taxed as
exports.

Plainly, sales to enterprises operating within the export processing zones are export sales,
which, under the Tax Code of 1977, as amended, were subject to 0% VAT.It is on this ground that
petitionercorporationisclaimingrefund/creditoftheinputVATonitszeroratedsalestoPASARand
PHILPHOS.

The distinction made by this Court in the preceding paragraphs between the zerorated sales to
exportoriented BOIregistered enterprises and zerorated sales to EPZAregistered enterprises
operating within export processing zones is actually supported by subsequent development in tax
laws and regulations. In Revenue Regulations No. 795, the Consolidated VAT Regulations, as
[26]
amended,
theBIRdefinedwithmoreprecisionwhatarezeroratedexportsales

(1)ThesaleandactualshipmentofgoodsfromthePhilippinestoaforeigncountry,irrespective
ofanyshippingarrangementthatmaybeagreeduponwhichmayinfluenceordeterminethetransferof
ownershipofthegoodssoexportedpaidforinacceptableforeigncurrencyoritsequivalentingoodsor
services, and accounted for in accordance with the rules and regulations of
theBangkoSentralngPilipinas(BSP)

(2)The sale of raw materials or packaging materials to a nonresident buyer for delivery to a
residentlocalexportorientedenterprisetobeusedinmanufacturing,processing,packingorrepacking
inthePhilippinesofthesaidbuyersgoodsandpaidforinacceptableforeigncurrencyandaccounted
forinaccordancewiththerulesandregulationsoftheBangkoSentralngPilipinas(BSP)

(3) The sale of raw materials or packaging materials to an exportoriented enterprise whose
exportsalesexceedseventypercent(70%)oftotalannualproduction

Anyenterprisewhoseexportsalesexceed70%ofthetotalannualproductionofthepreceding
taxable year shall be considered an exportoriented enterprise upon accreditation as such under the
provisionsoftheExportDevelopmentAct(R.A.7844)anditsimplementingrulesandregulations

(4)SaleofgoldtotheBangkoSentralngPilipinas(BSP)and

(5) Those considered export sales under Articles 23 and 77 of Executive Order No. 226,
otherwiseknownastheOmnibusInvestmentsCodeof1987,andotherspeciallaws,e.g.RepublicAct
No.7227,otherwiseknownastheBasesConversionandDevelopmentActof1992.

[27]
TheTaxCodeof1997,asamended,
lateradoptedtheforegoingdefinitionofexportsales,which
aresubjectto0%VAT.

This Court then reiterates its conclusion that Section 2 of Revenue Regulations No. 288, which
appliedtozeroratedexportsalestoexportorientedBOIregisteredenterprises,shouldnotbeapplied
to the applications for refund/credit of input VAT filed by petitioner corporation since it based its
applications on the zerorating of export sales to enterprises registered with the EPZA and located
withinexportprocessingzones.

Sufficiencyofevidence

There can be no dispute that the taxpayerclaimant has the burden of proving the legal and
factualbasesofitsclaimfortaxcreditorrefund,butonceithassubmittedalltherequireddocuments,
[28]
itisthefunctionoftheBIRtoassessthesedocumentswithpurposefuldispatch.
Itthereforefalls
uponhereinpetitionercorporationtofirstestablishthatitssalesqualifyforVATzeroratingunderthe
existinglaws(legalbasis),andthentopresentsufficientevidencethatsaidsaleswereactuallymade
andresultedinrefundableorcreditableinputVATintheamountbeingclaimed(factualbasis).
It would initially appear that the applications for refund/credit filed by petitioner corporation
coveronlyinputVATonitspurportedlyzeroratedsalestoPASARandPHILPHOShowever,amore
thoroughperusalofitsapplications,VATreturns,pleadings,andotherrecordsofthesecaseswould
revealthatitisalsoclaimingrefund/creditofitsinputVATonpurchasesofcapitalgoodsandsalesof
goldtotheCentralBankofthePhilippines(CBP).

ThisCourtfindsthattheclaimsforrefund/creditofinputVATofpetitionercorporationhave
sufficientlegalbases.

Ashasbeenextensivelydiscussedherein,Section106(b)(2),inrelationtoSection100(a)(2)of
the Tax Code of 1977, as amended, allowed the refund/credit of input VAT on export sales to
enterprisesoperatingwithinexportprocessingzonesandregisteredwiththeEPZA,sincesuchexport
[29]
sales were deemed to be effectively zerorated sales.
The fact that PASAR and PHILPHOS, to
whompetitionercorporationsolditsproducts,wereoperatinginsideanexportprocessingzoneand
dulyregisteredwithEPZA,wasneverraisedasanissueherein.Moreover,thesamefactwasalready
judicially recognized in the case Atlas Consolidated Mining & Development Corporation v.
[30]
CommissionerofInternalRevenue.
Section106(c)ofthesameCodelikewisepermittedaVAT
registered taxpayer to apply for refund/credit of the input VAT paid on capital goods imported or
locally purchased to the extent that such input VAT has not been applied against its output
[31]
VAT. Meanwhile, the effective zerorating of sales of gold to the CBP from 1989 to 1991
was
already affirmed by this Court in Commissioner of Internal Revenue v. Benguet Corporation,
[32]
whereinitruledthat

At the time when the subject transactions were consummated, the prevailing BIR regulations
relied upon by respondent ordained that gold sales to the Central Bank were zerorated. The BIR
interpretedSec.100oftheNIRCinrelationtoSec.2ofE.O.No.581s.1980whichprescribedthat
goldsoldtotheCentralBankshallbeconsideredexportandthereforeshallbesubjecttotheexportand
premium duties. In coming out with this interpretation, the BIR also considered Sec. 169 of Central
Bank Circular No. 960 which states that all sales of gold to the Central Bank are considered
constructiveexports.xxx.

This Court now comes to the question of whether petitioner corporation has sufficiently
establishedthefactualbasesforitsapplicationsforrefund/creditofinputVAT.Itisinthisregardthat
petitionercorporationhasfailed,bothintheadministrativeandjudiciallevel.

Applications for refund/credit of input VAT with the BIR must comply with the appropriate
revenueregulations.AsthisCourthasalreadyruled,RevenueRegulationsNo.288isnotrelevantto
theapplicationsforrefund/creditofinputVATfiledbypetitionercorporationnonetheless,thesaid
applicationsmusthavebeeninaccordancewithRevenueRegulationsNo.388,amendingSection16
ofRevenueRegulationsNo.587,whichprovidedasfollows

SECTION16.Refundsortaxcreditsofinputtax.

xxxx

(c)Claimsfortaxcredits/refunds.ApplicationforTaxCredit/RefundofValueAddedTaxPaid
(BIRFormNo.2552)shallbefiledwiththeRevenueDistrictOfficeofthecityormunicipalitywhere

theprincipalplaceofbusinessoftheapplicantislocatedordirectlywiththeCommissioner,Attention:
VATDivision.

A photocopy of the purchase invoice or receipt evidencing the value added tax paid shall be
submittedtogetherwiththeapplication.Theoriginalcopyofthesaidinvoice/receipt,however,shallbe
presentedforcancellationpriortotheissuanceoftheTaxCreditCertificateorrefund.Inaddition,the
followingdocumentsshallbeattachedwheneverapplicable:

xxxx

3.Effectivelyzeroratedsaleofgoodsandservices.

i)photocopyofapprovedapplicationforzerorateiffilingforthefirsttime.

ii) sales invoice or receipt showing name of the person or entity to whom the sale of
goodsorservicesweredelivered,dateofdelivery,amountofconsideration,anddescriptionof
goodsorservicesdelivered.

iii)evidenceofactualreceiptofgoodsorservices.

4.Purchaseofcapitalgoods.

i) original copy of invoice or receipt showing the date of purchase, purchase price,
amountofvalueaddedtaxpaidanddescriptionofthecapitalequipmentlocallypurchased.

ii)withrespecttocapitalequipmentimported,thephotocopyofimportentrydocument
forinternalrevenuetaxpurposesandtheconfirmationreceiptissuedbytheBureauofCustoms
forthepaymentofthevalueaddedtax.

5.Inapplicablecases,

where the applicants zerorated transactions are regulated by certain government agencies, a
statementtherefromshowingtheamountanddescriptionofsaleofgoodsandservices,nameof
personsorentities(exceptincaseofexports)towhomthegoodsorservicesweresold,anddate
oftransactionshallalsobesubmitted.

In all cases, the amount of refund or tax credit that may be granted shall be limited to the
amount of the valueadded tax (VAT) paid directly and entirely attributable to the zerorated
transactionduringtheperiodcoveredbytheapplicationforcreditorrefund.

Wheretheapplicantisengagedinzeroratedandothertaxableandexemptsalesofgoodsand
services, and the VAT paid (inputs) on purchases of goods and services cannot be directly
attributed to any of the aforementioned transactions, the following formula shall be used to
determinethecreditableorrefundableinputtaxforzeroratedsale:

AmountofZeroratedSale
TotalSales

TotalAmountofInputTaxes

=AmountCreditable/Refundable

In case the application for refund/credit of input VAT was denied or remained unactedupon by the
BIR,andbeforethelapseofthetwoyearprescriptiveperiod,thetaxpayerapplicantmayalreadyfile
aPetitionforReviewbeforetheCTA.Ifthetaxpayersclaimissupportedbyvoluminousdocuments,
such as receipts, invoices, vouchers or long accounts, their presentation before the CTA shall be
governedbyCTACircularNo.195,asamended,reproducedinfullbelow

Intheinterestofspeedyadministrationofjustice,theCourtherebypromulgatesthefollowing
rules governing the presentation of voluminous documents and/or long accounts, such as receipts,
invoicesandvouchers,asevidencetoestablishcertainfactspursuanttoSection3(c),Rule130ofthe
RulesofCourtandthedoctrineenunciatedinCompaniaMaritimavs.AlliedFreeWorkersUnion(77
SCRA24),aswellasSection8ofRepublicActNo.1125:

1.Thepartywhodesirestointroduceasevidencesuchvoluminousdocumentsmust,aftermotionand
approvalbytheCourt,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
independentCertifiedPublicAccountantattestingtothecorrectnessofthecontentsofthesummary
after making an examination, evaluation and audit of the voluminous receipts and invoices. The
nameoftheaccountantorpartnerofthefirminchargemustbestatedinthemotionsothathe/she
canbecommissionedbytheCourttoconducttheauditand,thereafter,testifyinCourtrelativeto
suchsummaryandcertificationpursuanttoRule32oftheRulesofCourt.

2. Themethodofindividualpresentationofeachandeveryreceipt,invoiceoraccountformarking,
identificationandcomparisonwiththeoriginalsthereofneednotbedonebeforetheCourtorClerk
ofCourtanymoreaftertheintroductionofthesummaryandCPAcertification.Itisenoughthatthe
receipts, invoices, vouchers or other documents covering the said accounts or payments to be
introducedinevidence must be premarked by the party concerned and submittedtotheCourtin
ordertobemadeaccessibletotheadversepartywhodesirestocheckandverifythecorrectnessof
thesummaryandCPAcertification.Likewise,theoriginalsofthevoluminousreceipts,invoicesor
accountsmustbereadyforverificationandcomparisonincasedoubtontheauthenticitythereofis
raisedduringthehearingorresolutionoftheformalofferofevidence.

[33]
[34]
SinceCTACasesNo.4831,4859,4944,
and5102,
werestillpendingbeforetheCTAwhen
the said Circular was issued, then petitioner corporation must have complied therewith during the
courseofthetrialofthesaidcases.

[35]
InCommissionerofInternalRevenuev.ManilaMiningCorporation,
thisCourtdeniedthe
claimofthereinrespondent,ManilaMiningCorporation,forrefundoftheinputVATonitssupposed
zeroratedsalesofgoldtotheCBPbecauseitwasunabletosubstantiateitsclaim.Inthesamecase,
thisCourtemphasizedtheimportanceofcomplyingwiththesubstantiationrequirementsforclaiming
refund/creditofinputVATonzeroratedsales,towit

Forajudicialclaimforrefundtoprosper,however,respondentmustnotonlyprovethatitisa
VATregisteredentityandthatitfileditsclaimswithintheprescriptiveperiod.Itmustsubstantiatethe
inputVATpaidbypurchaseinvoicesorofficialreceipts.

Thisrespondentfailedtodo.

Revenue Regulations No. 388 amending Revenue Regulations No. 587 provides the
requirementsinclaimingtaxcredits/refunds.

xxxx

UnderSection8ofRA1125,theCTAisdescribedasacourtofrecord.Ascasesfiledbeforeit
arelitigated de novo, party litigants should prove every minute aspect of their cases. No evidentiary
valuecanbegiventhepurchaseinvoicesorreceiptssubmittedtotheBIRastherulesondocumentary
evidencerequirethatthesedocumentsmustbeformallyofferedbeforetheCTA.

ThisCourtthusnoteswithapprovalthefollowingfindingsoftheCTA:

xxx[S]aleofgoldtotheCentralBankshouldnotbesubjecttothe10%VAT
outputtaxbutthisdoesnotipsofactmeanthat[theseller]isentitledtotheamountof
refundsoughtasitisrequiredbylawtopresentevidenceshowingtheinputtaxesitpaid
duringtheyearinquestion.Whatisbeingclaimedintheinstantpetitionistherefundof
the input taxes paid by the herein petitioner on its purchase of goods and
services.Hence,itisnecessaryforthePetitionertoshowproofthatithadindeedpaid
the input taxes during the year 1991.In the case at bar, Petitioner failed to discharge
thisduty. It did not adduce in evidence the sales invoice, receipts or other documents
showingtheinputvalueaddedtaxonthepurchaseofgoodsandservices.

xxx

Section 8 of Republic Act 1125 (An Act Creating the Court of Tax Appeals) provides
categoricallythattheCourtofTaxAppealsshallbeacourtofrecordandassuchitisrequiredto
conduct a formal trial (trial de novo) where the parties must present their evidence accordingly if
theydesiretheCourttotakesuchevidenceintoconsideration.(Emphasisanditalicssupplied)

Asalesorcommercialinvoiceisawrittenaccountofgoodssoldorservicesrenderedindicating
thepriceschargedtherefororalistbywhatevernameitisknownwhichisusedintheordinarycourse
ofbusinessevidencingsaleandtransferoragreementtosellortransfergoodsandservices.

A receipt on the other hand is a written acknowledgment of the fact of payment in money or
othersettlementbetweensellerandbuyerofgoods,debtororcreditor,orpersonrenderingservicesand
clientorcustomer.

Thesesalesinvoicesorreceiptsissuedbythesupplierarenecessarytosubstantiatetheactual
amountorquantityofgoodssoldandtheirsellingprice,andtakencollectivelyarethebestmeansto
[36]
provetheinputVATpayments.

Although the foregoing decision focused only on the proof required for the applicant for
refund/credit to establish the input VAT payments it had made on its purchases from suppliers,
Revenue Regulations No. 388 also required it to present evidence proving actual zerorated
VAT sales to qualified buyers, such as (1) photocopy of the approved application for zerorate if
filingforthefirsttime(2)salesinvoiceorreceiptshowingthenameofthepersonorentitytowhom
thegoodsorservicesweredelivered,dateofdelivery,amountofconsideration,anddescriptionof
goodsorservicesdeliveredand(3)theevidenceofactualreceiptofgoodsorservices.

AlsoworthnotinginthesamedecisionistheweightgivenbythisCourttothecertificationby
theindependentcertifiedpublicaccountant(CPA),thus

Respondent contends, however, that the certification of the independent CPA attesting to the
correctness of the contents of the summary of suppliers invoices or receipts which were examined,
evaluated and audited by said CPA in accordance with CTA Circular No. 195 as amended by CTA
CircularNo.1097shouldsubstantiateitsclaims.

Thereisnothing,however,inCTACircularNo.195,asamendedbyCTACircularNo.1097,
which either expressly or impliedly suggests that summaries and schedules of input VAT payments,
evenifcertifiedbyanindependentCPA,sufficeasevidenceofinputVATpayments.

xxxx

The circular, in the interest of speedy administration of justice, was promulgated to avoid the
timeconsuming procedure of presenting, identifying and marking of documents before the Court. It
does not relieve respondent of its imperative task of premarking photocopies of sales receipts and
invoices and submitting the same to the court after the independent CPA shall have examined and
comparedthemwiththeoriginals.Without presenting these premarked documents as evidence from
whichthesummaryandscheduleswerebased,thecourtcannotverifytheauthenticityandveracityof
theindependentauditorsconclusions.

Thereis,moreover,aneedtosubjecttheseinvoicesorreceiptstoexaminationbytheCTAin
ordertoconfirmwhethertheyareVATinvoices.UnderSection21ofRevenueRegulation,No.587,all
purchasescoveredbyinvoicesotherthanaVATinvoiceshallnotbeentitledtoarefundofinputVAT.

xxxx

WhiletheCTAisnotgovernedstrictlybytechnicalrulesofevidence,asrulesofprocedureare
not ends in themselves but are primarily intended as tools in the administration of justice, the
presentationofthepurchasereceiptsand/orinvoicesisnotmereproceduraltechnicalitywhichmaybe
disregardedconsideringthatitistheonlymeansbywhichtheCTAmayascertainandverifythetruth
oftherespondentsclaims.

The records further show that respondent miserably failed to substantiate its claims for input
VAT refund for the first semester of 1991. Except for the summary and schedules of input VAT
paymentspreparedbyrespondentitself,nootherevidencewasadducedinsupportofitsclaim.

AsforrespondentsclaimforinputVATrefundforthesecondsemesterof1991,itemployedthe
services of Joaquin Cunanan & Co. on account of which it (Joaquin Cunanan & Co.) executed a
certificationthat:

We have examined the information shown below concerning the input tax payments
made by the Makati Office of Manila Mining Corporation for the period from July 1
toDecember31,1991. Our examination included inspection of the pertinent suppliers
invoices and official receipts and such other auditing procedures as we considered
necessaryinthecircumstances.xxx

Asthecertificationmerelystatedthatitusedauditingproceduresconsiderednecessaryandnotauditing
procedureswhichareinaccordancewithgenerallyacceptedauditingprinciplesandstandards,andthat
the examination was made on input tax payments by the Manila Mining Corporation, without
specifyingthatthesaidinputtaxpaymentsareattributabletothesalesofgoldtotheCentralBank,this
CourtcannotrelythereonandregarditassufficientproofoftherespondentsinputVATpaymentsfor
[37]
thesecondsemester.


AsforthePetitioninG.R.No.141104,involvingtheinputVATofpetitionercorporationonitszero
ratedsalesinthefirstquarterof1992,thisCourtalreadyfoundthatthepetitionercorporationfailed
to comply with Section 106(b) of the Tax Code of 1977, as amended, imposing the twoyear
prescriptiveperiodforthefilingoftheapplicationforrefund/creditthereof.Thisbarsthegrantofthe
application for refund/credit, whether administratively or judicially, by express mandate of Section
106(e)ofthesameCode.

Grantingarguendothattheapplicationofpetitionercorporationfortherefund/creditoftheinputVAT
onitszeroratedsalesinthefirstquarterof1992wasactuallyandtimelyfiled,petitionercorporation
stillfailedtopresenttogetherwithitsapplicationtherequiredsupportingdocuments,whetherbefore
theBIRortheCTA.AstheCourtofAppealsruled

Inactionsinvolvingclaimsforrefundoftaxesassessedandcollected,theburdenofproofrests
onthetaxpayer.AsclearlydiscussedintheCTAsdecision,petitionerfailedtosubstantiateitsclaimfor
taxrefunds.Thus:

We note, however, that in the cases at bar, petitioner has relied totally on
Revenue Regulations No. 288 in determining compliance with the documentary
requirements for a successful refund or issuance of tax credit. Unmentioned is the
applicable and specific amendment later introduced by Revenue Regulations No. 388
datedApril7,1988(issuedbarelyaftertwomonthsfromthepromulgationofRevenue
Regulations No. 288 on February 15, 1988), which amended Section 16 of Revenue
RegulationsNo.587onrefundsortaxcreditsofinputtax.xxx.

xxxx

Athoroughexaminationoftheevidencesubmittedby the petitioner before this

courtreveals outright the failure to satisfy documentary requirements laid down under
theabovecitedregulations.Specifically,petitionerwasnotabletopresentthefollowing
documents,towit:

a)salesinvoicesorreceipts

b)purchaseinvoicesorreceipts

c)evidenceofactualreceiptofgoods

d)BOIstatementshowingtheamountanddescriptionofsaleofgoods,etc.

e)original or attested copies of invoice or receipt on capital equipment locally

purchasedand

f) photocopy of import entry document and confirmation receipt on imported

capitalequipment.

Thereistheneedtoexaminethesalesinvoicesorreceiptsinorder to ascertain
the actual amount or quantity of goods sold and their selling price.Without them, this
Court cannot verify the correctness of petitioners claim inasmuch as the regulations
requirethattheinputtaxesbeingsoughtforrefundshouldbelimitedtotheportionthat

is directly and entirely attributable to the particular zerorated transaction.In this

instance,thebestevidenceofsuchtransactionarethesaidsalesinvoicesorreceipts.

Also, even if sales invoices are produced, there is the further need to submit
evidence that such goods were actually received by the buyer, in this case, by
CBP,Philp[h]osandPASAR.

xxxx

Lastly,thisCourtcannotdeterminewhethertherewereactuallocalandimported
purchaseofcapitalgoodsaswellasdomesticpurchaseofnoncapitalgoodswithoutthe
requiredpurchaseinvoiceorreceipt,asthecasemaybe,andconfirmationreceipts.

There is, thus, the imperative need to submit before this Court the original or
attestedphotocopiesofpetitionersinvoicesorreceipts,confirmationreceiptsandimport
entry documents in order that a full ascertainment of the claimed amount may be
achieved.

Petitioner should have taken the foresight to introduce in evidence all of the
missing documents abovementioned. Cases filed before this Court are litigated de
novo.Thismeansthatpartylitigantsshouldendeavortoproveatthefirstinstanceevery
minute aspect of their cases strictly in accordance with the Rules of Court, most
especiallyondocumentaryevidence.(pp.3742,Rollo)

Taxrefundsareinthenatureoftaxexemptions.Itisregardedasinderogationofthesovereign
authority, and should be construed in strictissimi juris against the person or entity claiming the
exemption. The taxpayer who claims for exemption must justify his claim by the clearest grant of
organicorstatutelawandshouldnotbepermittedtostandonvagueimplications(AsiaticPetroleum
Co.v.Llanes,49Phil.466NorthernPhil.TobaccoCorp.v.Mun.ofAgoo,LaUnion,31SCRA304
Reaganv.Commissioner,30SCRA968AsturiasSugarCentral,Inc.v.CommissionerofCustoms,29
SCRA617DavaoLightandPowerCo.,Inc.v.CommissionerofCustoms,44SCRA122).

There is no cogent reason to fault the CTAs conclusion that the SGVscertificate is self
destructive,asitfindscomfortintheverySGVsstand,asfollows:

Itisourunderstandingthattheaboveprocedurearesufficientforthepurposeof
theCompany.Wemakenopresentationregardingthesufficiencyoftheseproceduresfor
suchpurpose.Wedidnotcomparethetotaloftheinputtaxclaimedeachquarteragainst
thepertinentVATreturnsandbooksofaccounts.Theaboveproceduresdonotconstitute
anauditmadeinaccordancewithgenerallyacceptedauditingstandards.Accordingly,we
donotexpressanopiniononthecompanysclaimforinputVATrefundorcredit.Hadwe
performedadditionalprocedures,orhadwemadeanauditinaccordancewithgenerally
accepted auditing standards, other matters might have come to our attention that we
wouldhaveaccordinglyreportedon.

The SGVs disclaimer of opinion carries much weight as it is petitioners independent

auditor.Indeed,SGVexpressedthatitdidnotcomparethetotaloftheinputtaxclaimedeachquarter
[38]
againsttheVATreturnsandbooksofaccounts.

MovingontothePetitioninG.R.No.148763,concerningtheinputVATofpetitionercorporationon
itszeroratedsalesinthesecond,third,andfourthquartersof1990,theappellatecourtlikewisefound
that petitioner corporation failed to sufficiently establish its claims. Already disregarding the
declarationsmadebytheCourtofAppealsonitserroneousapplicationofRevenueRegulationsNo.

288,quotedhereunderistherestofthefindingsoftheappellatecourtafterevaluatingtheevidence
submittedinaccordancewiththerequirementsunderRevenueRegulationsNo.388

TheSecretaryofFinancevalidlyadoptedRevenueRegulations[No.]xxx398pursuanttoSec.
245oftheNationalInternalRevenueCode,whichrecognizedhispowertopromulgateallneedfulrules
andregulationsfortheeffectiveenforcementoftheprovisionsofthisCode.Thus,itisincumbentupon
ataxpayerintendingtofileaclaimforrefundofinputVATsortheissuanceofataxcreditcertificate
with the BIR x x x to prove sales to such buyers as required by Revenue Regulations No. 3
98.Logically, the same evidence should be presented in support of an action to recover taxes which
havebeenpaid.

xxx Neither has [herein petitioner corporation] presented sales invoices or receipts showing
sales of gold, copper concentrates, and pyrite to the CBP, [PASAR], and [PHILPHOS], respectively,
and the dates and amounts of the same, nor any evidence of actual receipt by the said buyers of the
mineralproducts.ItmerelypresentedreceiptsofpurchasesfromsuppliersonwhichinputVATs were
allegedlypaid.Thus,theCourtofTaxAppealscorrectlydeniedtheclaimsforrefundofinputVATsor
theissuanceoftaxcreditcertificatesofpetitioner[corporation].Significantly,intheresolution,dated7
June2000,thisCourtdirectedthepartiestofilememorandadiscussing,amongothers,thesubmission
ofproofforits[petitioners]salesofgold,copperconcentrates,andpyritetobuyers.Nevertheless, the
parties,includingthepetitioner,failedtoaddressthisissue,therebynecessitatingtheaffirmanceofthe
[39]
rulingoftheCourtofTaxAppealsonthispoint.

ThisCourtis,therefore,boundbytheforegoingfacts,asfoundbytheappellatecourt,forwell
settledisthegeneralrulethatthejurisdictionofthisCourtincasesbroughtbeforeitfromtheCourt
of Appeals, by way of a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court,islimitedtoreviewingorrevisingerrorsoflawfindingsoffactofthelatterareconclusive.
[40]
ThisCourtisnotatrieroffacts.Itisnotitsfunctiontoreview,examineandevaluateorweigh
[41]
theprobativevalueoftheevidencepresented.

Thedistinctionbetweenaquestionoflawandaquestionoffactisclearcut.Ithasbeenheld
that"[t]hereisaquestionoflawinagivencasewhenthedoubtordifferencearisesastowhatthelaw
isonacertainstateoffactsthereisaquestionoffactwhenthedoubtordifferencearisesastothe
[42]
truthorfalsehoodofallegedfacts."

Whether petitioner corporation actually made zerorated sales whether it paid input VAT on
these sales in the amount it had declared in its returns whether all the input VAT subject of its
applications for refund/credit can be attributed to its zerorated sales and whether it had not
previously applied the input VAT against its output VAT liabilities, are all questions of fact which
could only be answered after reviewing, examining, evaluating, or weighing the probative value of
the evidence it presented, and which this Court does not have the jurisdiction to do in the present
PetitionsforReviewonCertiorariunderRule45oftherevisedRulesofCourt.


Grantingthatthereareexceptionstothegeneralrule,whenthisCourtlookedintoquestionsof
[43]
factunderparticularcircumstances,
noneoftheseexistintheinstantcases.TheCourtofAppeals,
inbothcases,foundadearthofevidencetosupporttheclaimsforrefund/creditoftheinputVATof
petitioner corporation, and the records bear out this finding. Petitioner corporation itself cannot
disputeitsnoncompliancewiththerequirementssetforthinRevenueRegulationsNo.388andCTA
CircularNo.195,asamended.Itconcentrateditsargumentsonitsassertionthatthesubstantiation
requirements under Revenue Regulations No. 288 should not have applied to it, while being
conspicuouslysilentontheevidentiaryrequirementsmandatedbyotherrelevantregulations.

Reopeningofcases/holdingofnewtrialbeforetheCTA

ThisCourtnowfacesthefinalissueofwhethertheprayerofpetitionercorporationforthere
openingofitscasesorholdingofnewtrialbeforetheCTAforthereceptionofadditionalevidence,
maybegranted.PetitionercorporationpraysthattheCourtexerciseitsdiscretiononthematterinits
favor, consistent with the policy that rules of procedure be liberally construed in pursuance of
substantivejustice.

ThisCourt,however,cannotgranttheprayerofpetitionercorporation.

An aggrieved party may file a motion for new trial or reconsideration of a judgment already
renderedinaccordancewithSection1,Rule37oftherevisedRulesofCourt,whichprovides

SECTION1.Groundsofandperiodforfilingmotionfornewtrialorreconsideration. Within
theperiodfortakinganappeal,theaggrievedpartymaymovethetrialcourttosetasidethejudgment
or final order and grant a new trial for one or more of the following causes materially affecting the
substantialrightsofsaidparty:

(a)Fraud, accident, mistake or excusable negligence which ordinary prudence could not have
guardedagainstandbyreasonofwhichsuchaggrievedpartyhasprobablybeenimpairedinhisrights
or

(b)Newlydiscoveredevidence,whichhecouldnot,withreasonablediligence,havediscovered
andproducedatthetrial,andwhichifpresentedwouldprobablyaltertheresult.

Within the same period, the aggrieved party may also move fore reconsideration upon the
groundsthatthedamagesawardedareexcessive,thattheevidenceisinsufficienttojustifythedecision
orfinalorder,orthatthedecisionorfinalorderiscontrarytolaw.

InG.R.No.148763,petitionercorporationattemptstojustifyitsmotionforthereopeningof
itscasesand/orholdingofnewtrialbeforetheCTAbycontendingthatthe[f]ailureofitscounselto

adducethenecessaryevidenceshouldbeconstruedasexcusablenegligenceormistakewhichshould
constitutebasisforsuchreopeningoftrialasforanewtrial,ascounselwasofthebeliefthatsuch
evidence was rendered unnecessary by the presentation of unrebutted evidence indicating that
respondent[Commissioner]hasacknowledgedthesaleof[sic]PASARand[PHILPHOS]tobezero
[44]
rated.
TheCTAdeniedsuchmotiononthegroundthatitwasnotaccompaniedbyanaffidavitof
meritasrequiredbySection2,Rule37oftherevisedRulesofCourt.TheCourtofAppealsaffirmed
the denial of the motion, but apart from this technical defect, it also found that there was no
justificationtograntthesame.

Onthematterofthedenialofthemotionofthepetitionercorporationforthereopeningofits
casesand/orholdingofnewtrialbasedonthetechnicalitythatsaidmotionwasunaccompaniedbyan
affidavit of merit, this Court rules in favor of the petitioner corporation. The facts which should
otherwise be set forth in a separate affidavit of merit may, with equal effect, be alleged and
incorporatedinthemotionitselfandthiswillbedeemedasubstantialcompliancewiththeformal
requirements of the law, provided, of course, that the movant, or other individual with personal
knowledgeofthefacts,takeoathastothetruththereof,ineffectconvertingtheentiremotionfornew
[45]
trial into an affidavit.
The motion of petitioner corporation was prepared and verified by its
counsel,andsincethegroundforthemotionwaspremisedonsaidcounselsexcusablenegligenceor
mistake,thentheobviousconclusionisthathehadpersonalknowledgeofthefactsrelatingtosuch
negligence or mistake. Hence, it can be said that the motion of petitioner corporation for the re
opening of its cases and/or holding of new trial was in substantial compliance with the formal
requirementsoftherevisedRulesofCourt.

Evenso,thisCourtfindsnosufficientgroundforgrantingthemotionofpetitionercorporation
forthereopeningofitscasesand/orholdingofnewtrial.

[46]
InG.R.No.141104,petitionercorporationinvokestheResolution,
dated20July1998,by
the CTA in another case, CTA Case No. 5296, involving the claim of petitioner corporation for
refund/creditofinputVATforthethirdquarterof1993.ThesaidResolutionallowedthereopening
of CTA Case No. 5296, earlier dismissed by the CTA, to give the petitioner corporation the
opportunitytopresentthemissingexportdocuments.

The rule that the grant or denial of motions for new trial rests on the discretion of the trial
[47]
court,
may likewise be extended to the CTA. When the denial of the motion rests upon the

discretionofalowercourt,thisCourtwillnotinterferewithitsexercise,unlessthereisproofofgrave
[48]
abusethereof.

ThattheCTAgrantedthemotionforreopeningofonecaseforthepresentationofadditional
evidenceand,yet,denyasimilarmotioninanothercasefiledbythesameparty,doesnotnecessarily
demonstrate grave abuse of discretion or arbitrariness on the part of the CTA. Although the cases
involveidenticalparties,thecausesofactionandtheevidencetosupportthesamecanverywellbe
different. As can be gleaned from the Resolution, dated 20 July 1998, in CTA Case No. 5296,
petitionercorporationwasclaimingrefund/creditoftheinputVATonitszeroratedsales,consisting
ofactualexportsales,toMitsubishiMetalCorporationinTokyo,Japan.TheCTAtookintoaccount
the presentation by petitioner corporation of inward remittances of its export sales for the quarter
involved,itsSupplyContractwithMitsubishiMetalCorporation,its1993AnnualReportshowingits
salestothesaidforeigncorporation,anditsapplicationforrefund.Incontrast,thepresentPetitions
involve the claims of petitioner corporation for refund/credit of the input VAT on its purchases of
capitalgoodsandonitseffectivelyzeroratedsalestoCBPandEPZAregisteredenterprisesPASAR
and PHILPHOS for the second, third, and fourth quarters of 1990 and first quarter of 1992. There
being a difference as to the bases of the claims of petitioner corporation for refund/credit of input
VATinCTACaseNo.5926andinthePetitionsatbar,then,thereareresultingvariancesastothe
evidencerequiredtosupportthem.

Moreover,theverysameResolution,dated20July1998,inCTACaseNo.5296,invokedby
petitioner corporation, emphasizes that the decision of the CTA to allow petitioner corporation to
presentevidenceisapplicableprohacviceorinthisoccasiononlyasitisthefindingof[theCTA]
thatpetitioner[corporation]hasestablishedafewoftheaforementionedmaterialpointsregardingthe
possible existence of the export documents together with the prior and succeeding returns for the
quarters involved, x xx [Emphasis supplied.] Therefore, the CTA, in the present cases, cannot be
bound by its ruling in CTA Case No. 5296, when these cases do not involve the exact same
circumstancesthatcompelledittograntthemotionofpetitionercorporationforreopeningofCTA
CaseNo.5296.

Finally,assumingforthesakeofargumentthatthenonpresentationoftherequireddocumentswas
due to the fault of the counsel of petitioner corporation, this Court finds that it does not constitute
excusablenegligenceormistakewhichwouldwarrantthereopeningofthecasesand/orholdingof
newtrial.
UnderSection1,Rule37oftheRevisedRulesofCourt,thenegligencemustbeexcusableand
generallyimputabletothepartybecauseifitisimputabletothecounsel,itisbindingontheclient.To

follow a contrary rule and allow a party to disown his counsels conduct would render proceedings
indefinite,tentative,andsubjecttoreopeningbythemeresubterfugeofreplacingthecounsel.What
theaggrievedlitigantshoulddoisseekadministrativesanctionsagainsttheerringcounselandnotask
[49]
forthereversalofthecourtsruling.

[50]
AselucidatedbythisCourtinanothercase,
thegeneralruleisthattheclientisboundby
theactionofhiscounselintheconductofhiscaseandhecannotthereforecomplainthattheresultof
thelitigationmighthavebeenotherwisehadhiscounselproceededdifferently.Ithasbeenheldtime
andagainthatblundersandmistakesmadeintheconductoftheproceedingsinthetrialcourtasa
resultoftheignorance,inexperienceorincompetenceofcounseldonotqualifyasagroundfornew
trial.Ifsuchweretobeadmittedasvalidreasonsforreopeningcases,therewouldneverbeanendto
litigationsolongasanewcounselcouldbeemployedtoallegeandshowthatthepriorcounselhad
notbeensufficientlydiligent,experiencedorlearned.

Moreover, negligence, to be excusable, must be one which ordinary diligence and prudence
[51]
couldnothaveguardedagainst.
RevenueRegulationsNo.388,whichwasissuedon15February
1988,hadbeenineffectmorethantwoyearspriortothefilingbypetitionercorporationofitsearliest
applicationforrefund/creditofinputVATinvolvedhereinon21August1990.CTACircularNo.195
was issued only on 25 January 1995, after petitioner corporation had filed its Petitions before the
CTA, but still during the pendency of the cases of petitioner corporation before the tax court. The
counselofpetitionercorporationdoesnotallegeignoranceoftheforegoingadministrativeregulation
andtaxcourtcircular,onlythathenolongerdeemeditnecessarytopresentthedocumentsrequired
thereinbecauseofthepresentationofallegedunrebuttedevidenceofthezeroratedsalesofpetitioner
corporation.Itwasajudgmentcallmadebythecounselastowhichevidencetopresentinsupportof
hisclientscause,laterprovedtobeunwise,butnotnecessarilynegligent.

Neitheristhereanymeritinthecontentionofpetitionercorporationthatthenonpresentation
oftherequireddocumentaryevidencewasduetotheexcusablemistakeofitscounsel,agroundunder
Section1,Rule37oftherevisedRulesofCourtforthegrantofanewtrial.Mistake,asitisreferred
[52]
tointhesaidrule,mustbeamistakeoffact,notoflaw,whichrelatestothecase.
Inthepresent
case, the supposed mistake made by the counsel of petitioner corporation is one of law, for it was
groundedonhisinterpretationandevaluationthatRevenueRegulationsNo.388andCTACircular
No.195,asamended,didnotapplytohisclientscasesandthattherewasnoneedtocomplywiththe
documentary requirements set forth therein. And although the counsel of petitioner corporation

advocatedanerroneouslegalposition,theeffectsthereof,whichdidnotamounttoadeprivationof
hisclientsrighttobeheard,mustbindpetitionercorporation.Thequestionisnotwhetherpetitioner
corporation succeeded in establishing its interests, but whether it had the opportunity to present its
[53]
side.

Besides, litigation is a not a trial and error proceeding. A party who moves for a new trial on the
groundofmistakemustshowthatordinaryprudencecouldnothaveguardedagainstit.Anewtrialis
[54]
not a refuge for the obstinate.
Ordinary prudence in these cases would have dictated the
presentationofallavailableevidencethatwouldhavesupportedtheclaimsforrefund/creditofinput
VAT of petitioner corporation. Without sound legal basis, counsel for petitioner corporation
concludedthatRevenueRegulationsNo.388,andlateron,CTACircularNo.195,asamended,did
notapplytoitsclientsclaims.Theobstinacyofpetitionercorporationanditscounselisdemonstrated
intheirfailure,nay,refusal,tocomplywiththeappropriateadministrativeregulationsandtaxcourt
circularinpursuingtheclaimsforrefund/credit,nowsubjectofG.R.Nos.141104and148763,even
though these were separately instituted in a span of more than two years. It is also evident in the
failureofpetitionercorporationtoaddresstheissueandtopresentadditionalevidencedespitebeing
giventheopportunitytodosobytheCourtofAppeals.Aspointedoutbytheappellatecourt,inits
Decision,dated15September2000,inCAG.R.SPNo.46718

x x x Significantly, in the resolution, dated 7 June 2000, this Court directed the parties to file
memorandadiscussing,amongothers,thesubmissionofproofforits[petitioners]salesofgold,copper
concentrates,andpyritetobuyers.Nevertheless,theparties,includingthepetitioner,failedtoaddress
thisissue,therebynecessitatingtheaffirmanceoftherulingoftheCourtofTaxAppealsonthispoint.
[55]

Summary

Hence,althoughthisCourtagreedwiththepetitionercorporationthatthetwoyearprescriptive
periodforthefilingofclaimsforrefund/creditofinputVATmustbecountedfromthedateoffiling
ofthequarterlyVATreturn,andthatsalestoEPZAregisteredenterprisesoperatingwithineconomic
processingzoneswereeffectivelyzeroratedandwerenotcoveredbyRevenueRegulationsNo.288,
it still denies the claims of petitioner corporation for refund of its input VAT on its purchases of
capitalgoodsandeffectivelyzeroratedsalesduringthesecond,third,andfourthquartersof1990and
the first quarter of 1992, for not being established and substantiated by appropriate and sufficient
evidence. Petitioner corporation is also not entitled to the reopening of its cases and/or holding of
new trial since the nonpresentation of the required documentary evidence before the BIR and the

CTAbyitscounseldoesnotconstituteexcusablenegligenceormistakeascontemplatedinSection1,
Rule37oftherevisedRulesofCourt.

WHEREFORE, premises considered, the instant Petitions for Review are hereby DENIED,
andtheDecisions,dated6July1999and15September2000,oftheCourtofAppealsinCAG.R.SP
Nos.47607and46718,respectively,areherebyAFFIRMED.Costsagainstpetitioner.

MINITAV.CHICONAZARIO
AssociateJustice

WECONCUR:

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson

MA.ALICIAAUSTRIAMARTINEZANTONIOEDUARDOB.NACHURA
AssociateJusticeAssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethecasewas
assignedtothewriteroftheopinionoftheCourtsDivision.

CONSUELOYNARESSANTIAGO
AssociateJustice
Chairperson,ThirdDivision

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,it
isherebycertifiedthattheconclusionsintheaboveDecisionwerereachedinconsultationbeforethe
casewasassignedtothewriteroftheopinionoftheCourtsDivision.

LEONARDOA.QUISUMBING
ActingChiefJustice
[1]
SeeAtlasConsolidatedMiningandDevelopmentCorporationv.CommissionerofInternalRevenue,376Phil.495,508(1999).
[2]
Records(G.R.No.141104),p.4.
[3]
Id.at5.
[4]
PennedbyPresidingJudgeErnestoD.AcostawithAssociateJudgesRamonO.DeVeyraandAmancioQ.Saga,concurringrollo(G.R.
No.141104),pp.6786.
[5]
PennedbyPresidingJudgeErnestoD.AcostawithAssociateJudgesRamonO.deVeyraandAmancioQ.Saga,concurringid.at8892.
[6]
Penned by Associate Justice Artemon D. Luna with Associate Justices Conchita Carpio Morales (now an Associate Justice of the
SupremeCourt)andBernardoP.Abesamis,concurringid.at3242.
[7]
PennedbyAssociateJusticeBernardoP.AbesamiswithAssociateJusticesConchitaCarpioMorales (now an Associate Justice of the
SupremeCourt)andBernardoLl.Salas,concurringid.at4445.
[8]
Rollo(G.R.No.141104),pp.1423.
[9]
Penned by Presiding Judge Ernesto D. Acosta with Associate Judges Ramon O. de Veyra and Amancio Q. Saga,
concurringCArollo(G.R.No.148763),pp.4966.
[10]
Id.at67.
[11]
Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Quirino D. AbadSantos, Jr. and Romeo A. Brawner,
concurringrollo(G.R.No.148763),pp.3746.
[12]
PennedbyAssociateJusticeAndresB.Reyes,Jr.withAssociateJusticesBuenaventuraJ.GuerreroandRomeoA.Brawner,concurring
id.at48.
[13]
SEC.230.Recoveryoftaxerroneouslyorillegallycollected.Nosuitorproceedingshallbemaintainedinanycourtfortherecoveryof
anynationalinternalrevenuetaxhereafterallegedtohavebeenerroneouslyorillegallyassessedorcollected,orofanypenalty
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
maintainedwhetherornotsuchtax,penalty,orsumhasbeenpaidunderprotestorduress.
In any case, no such suit or proceeding shall be begun after the expiration of two years from the date of payment of the tax or penalty
regardlessofanysuperveningcausethatmayariseafterpaymentProvided,however,ThattheCommissionermay,evenwithouta
writtenclaim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment
appearsclearlytohavebeenerroneouslypaid.
Forfeiture of refund. A refund check or warrant issued in accordance with the pertinent provisions of this Code which shall remain
unclaimedoruncashedwithinfive(5)yearsfromthedatethesaidwarrantorcheckwasmailedordeliveredshallbeforfeitedin
favorofthegovernmentandtheamountthereofshallreverttotheGeneralFund.
[14]
G.R.No.96322,20December1991,204SCRA957,963964.
[15]
G.R.No.83736,15January1992,205SCRA184,187192.
[16]
InputVATmeansthevalueaddedtaxpaidbyaVATregisteredpersoninthecourseofhistradeorbusinessonimportationofgoodsor
localpurchasesofgoodsorservicesfromaVATregisteredperson.(Section104,TaxCodeof1977,asamended)
[17]
OutputVATreferstoVATdueonthesaleoftaxablegoodsorservicesbyanypersonregisteredorrequiredtoregisterunderSection107
oftheTaxCodeof1977,asamended(Section104,TaxCodeof1977,asamended)
[18]
SeeSection104oftheTaxCodeof1977,asamended,onTaxCredits.
[19]
Supranote4at8384.

[20]
Section8(a),RevenueRegulationsNo.587SeealsoSections106(a)and(b)oftheTaxCodeof1977,asamended.
[21]
NowthePhilippineExportProcessingZoneAuthority,underRepublicActNo.7916.
[22]
CommissionerofInternalRevenuev.SeagateTechnology(Philippines),G.R.No.153866,11February2005,451SCRA133,144.
[23]
VICTORA.DEOFERIO,JR.ANDVICTORINOC.MAMALATEO,THEVALUEADDEDTAXINTHEPHILIPPINES,p.422(2000
Ed.).
[24]
Now12%,undertheTaxCodeof1997,asamendedbyRepublicActNo.9337.
[25]
RepublicActNo.7916,asamended,establishedwhatarecalledspecialeconomiczones(ECOZONES),referringtoareaswithhighly
developedorwhichhavethepotentialtobedevelopedintoagroindustrial,tourist/recreational,commercial,banking,investment,
andfinancialcenters.AnECOZONEmaycontainanyofthefollowing:industrialestates(Ies),exportprocessingzones(EPZs),free
tradezones,andtourist/recreationalcenters.(Section4)
[26]
Section4.100.2.
[27]
Section 106(A)(2)(a). Republic Act No. 9337 amending the Tax Code of 1997 added a sixth paragraph, listing The sale of goods,
supplies,equipmentandfueltopersonsengagedininternationalshippingorinternationalairtransportoperations,alsoasexport
sales.
[28]
PhilexMiningCorp.v.CommissionerofInternalRevenue,356Phil.189,201202(1998).
[29]
UndertheTaxCodeof1977,asamended,salestoenterpriseslocatedwithinexportprocessingzonesandregisteredwithEPZAwere
consideredexportsalesbyvirtueoftheOmnibusInvestmentsCode,aspeciallaw.Thus,theyweresubjectedto0%VATrateunder
Section100(a)(2)oftheTaxCodeof1977,asamended,andrefund/creditofinputVATthereonwasallowedunderSection106(b)
(2)ofthesameCodeoneffectivelyzeroratedsales.SalestoEPZAenterpriseswerenotyetdirectlyrecognizedbytheTaxCodeof
1977,asamended,asexportsales,theinputVATonwhichmayberefunded/creditedunderaseparateprovision,Section106(b)
(1).However,undertheTaxCodeof1997,asamended,salestoenterpriseswithinexportprocessingzonesarealreadyexplicitly
recognized as zerorated export sales in Section 106(A)(2)(a), the input VAT on which may be refunded/credited under Section
112(A),whichnowgovernstherefund/creditofinputVATonallzeroratedandeffectivelyzeroratedsales.TheTaxCodeof1997,
asamended,alreadyeliminatedtheseparateparagraphontherefund/creditofinputVATonexportsales.
[30]
Supranote1.
[31]
Petitionercorporationappliedforrefund/creditofitsinputVATonitssalesofgoldtotheCentralBankofthePhilippines(CBP)inthe
second,third,andfourthquartersof1990,subjectofthePetitioninG.R.No.148763.
[32]
G.R.Nos.134587and134588,8July2005,463SCRA28,47.
[33]
TheDecisionintheseconsolidatedcaseswaspromulgatedonlyon30October1997.
[34]
TheDecisioninthiscasewaspromulgatedonlyon24November1997.
[35]
G.R.No.153204,31August2005,468SCRA571.
[36]
Id.at587590.
[37]
Id.at590594.
[38]
Supranote6at3641.
[39]
Supranote11at4345.
[40]
Sps.Rosariov.CourtofAppeals,369Phil.729,738(1999).
[41]
Bautistav.PuyatVinylProducts,Inc.,416Phil.305,309(2001).
[42]
CommissionerofInternalRevenuev.CourtofAppeals,358Phil.562,575(1998).
[43]
Thefollowinghavebeenidentifiedasexceptionalcircumstances:(1)whenthefindingsaregroundedentirelyonspeculation,surmises,
or conjectures (2) when the interference made is manifestly mistaken, absurd, or impossible (3) when there is grave abuse of
discretion(4)whenthejudgmentisbasedonamisapprehensionoffacts(5)whenthefindingsoffactareconflicting(6)whenin
makingitsfindings,theCourtofAppealswentbeyondtheissuesofthecase,oritsfindingsarecontrarytotheadmissionsofboth
theappellantandtheappellee(7)whenthefindingsarecontrarytothoseofthetrialcourt(8)whenthefindingsareconclusions
withoutcitationofspecificevidenceonwhichtheyarebased(9)whenthefactssetforthinthepetitionaswellasinthepetitioners
mainandreplybriefsarenotdisputedbytherespondentand(10)whenthefindingsoffactarepremisedonthesupposedabsence
ofevidenceandcontradictedbytheevidenceonrecord.[Sps.Sta.Mariav.CourtofAppeals,349Phil.275,282283(1998)].
[44]
Rollo(G.R.No.148763),p.26.
[45]
CircleFinancialCorporationv.CourtofAppeals,G.R.No.77315,22April1991,196SCRA166,171.

[46]
SignedbyPresidingJudgeErnestoD.AcostaandAssociateJudgesAmancioQ.SagaandRamonO.deVeyra,rollo,148160(G.R.No.
141104).
[47]
Baringv.Cabahug,127Phil.84,86(1967).
[48]
Galvezv.CourtofAppeals,149Phil.377,384385(1971)NorthernLuzonTransportation,Co.,Inc.v.Sambrano,66Phil.60,6263
(1938).
[49]Quev.CourtofAppeals,G.R.No.150739,18August2005
,467SCRA358,369.
[50]River v.CourtofAppeals,
a
452Phil.1014,10241025(2003).
[5 1 ] InsularLifeSavingsandTrustCompanyv.
G.R.No.152530,12August2004

Runes,Jr.,
,436SCRA317,324325.
[52]
Supranote46.
[53]
Baringv.Cabahug,supranote47.
[54]
VikingIndustrialCorporationv.CourtofAppeals,G.R.No.143794,13July2004,434SCRA223,231.
[55]
Supranote11at4445.