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G.R. Nos. 141104 & 148763 June failure to comply with Section 230 G.R. No.

ply with Section 230 G.R. No. 148763 involves almost the same
8, 2007 of the Tax Code, as amended. set of facts as in G.R. No. 141104
Accordingly, the petition at bar is presented above, except that it relates to
hereby DISMISSED for lack of the claims of petitioner corporation for
merit. refund/credit of input VAT on its purchases
of capital goods and on its zero-rated sales
CORPORATION, petitioner,
made in the last three taxable quarters of
vs. The CTA denied the motion for
COMMISSIONER OF INTERNAL reconsideration of petitioner corporation in
REVENUE, respondent. a Resolution5 dated 15 April 1998.
Petitioner corporation filed with the BIR its
VAT Returns for the second, third, and
DECISION When the case was elevated to the Court of
fourth quarters of 1990, on 20 July 1990, 18
Appeals as CA-G.R. SP No. 47607, the
October 1990, and 20 January 1991,
appellate court, in its Decision,6 dated 6
CHICO-NAZARIO, J.: respectively. It submitted separate
July 1999, dismissed the appeal of
applications to the BIR for the refund/credit
petitioner corporation, finding no reversible
of the input VAT paid on its purchases of
Before this Court are the consolidated error in the CTA Decision, dated 24
capital goods and on its zero-rated sales,
cases involving the unsuccessful claims of November 1997. The subsequent motion
the details of which are presented as
herein petitioner Atlas Consolidated Mining for reconsideration of petitioner corporation
and Development Corporation (petitioner was also denied by the Court of Appeals in
corporation) for the refund/credit of the its Resolution,7 dated 14 December 1999.
input Value Added Tax (VAT) on its Date of Period Amount Applied
purchases of capital goods and on its zero- Application Covered For
Thus, petitioner corporation comes before
rated sales in the taxable quarters of the
this Court, via a Petition for Review
years 1990 and 1992, the denial of which 21 August 2nd Quarter, P 54,014,722.04
on Certiorari under Rule 45 of the Revised
by the Court of Tax Appeals (CTA), was 1990 1990
Rules of Court, assigning the following
affirmed by the Court of Appeals.
errors committed by the Court of Appeals –
21 3rd Quarter, 75,304,774.77
November 1990
Petitioner corporation is engaged in the
I 1990
business of mining, production, and sale of
various mineral products, such as gold,
pyrite, and copper concentrates. It is a THE COURT OF APPEALS 19 February 4th Quarter, 43,829,766.10
VAT-registered taxpayer. It was initially ERRED IN AFFIRMING THE 1991 1990
issued VAT Registration No. 32-A-6- REQUIREMENT OF REVENUE follows –
002224, dated 1 January 1988, but it had to REGULATIONS NO. 2-88 THAT
register anew with the appropriate revenue AT LEAST 70% OF THE SALES
district office (RDO) of the Bureau of OF THE [BOARD OF When the BIR failed to act on its
Internal Revenue (BIR) when it moved its INVESTMENTS (BOI)]- applications for refund/credit, petitioner
principal place of business, and it was re- REGISTERED FIRM MUST corporation filed with the CTA the following
issued VAT Registration No. 32-0-004622, CONSIST OF EXPORTS FOR
dated 15 August 1990.1 ZERO-RATING TO APPLY.
Date Period Covered CTA Case No.
G.R. No. 141104 II Filed

20 July 2nd Quarter, 4831

Petitioner corporation filed with the BIR its THE COURT OF APPEALS 1992 1990
VAT Return for the first quarter of 1992.2 It ERRED IN AFFIRMING THAT
alleged that it likewise filed with the BIR the PETITIONER FAILED TO
9 3rd Quarter, 4859
corresponding application for the SUBMIT SUFFICIENT
October 1990
refund/credit of its input VAT on its EVIDENCE SINCE FAILURE TO
purchases of capital goods and on its zero- SUBMIT PHOTOCOPIES OF
rated sales in the amount VAT INVOICES AND RECEIPTS
of P26,030,460.00.3 When its application for IS NOT A FATAL DEFECT. 14 4th Quarter, 4944
refund/credit remained unresolved by the January 1990
BIR, petitioner corporation filed on 20 April 1993
1994 its Petition for Review with the CTA, petitions for review –
docketed as CTA Case No. 5102. Asserting
that it was a "zero-rated VAT person," it THE COURT OF APPEALS
prayed that the CTA order herein ERRED IN RULING THAT THE which were eventually consolidated. The
respondent Commissioner of Internal JUDICIAL CLAIM WAS FILED respondent Commissioner contested the
Revenue (respondent Commissioner) to BEYOND THE PRESCRIPTIVE foregoing Petitions and prayed for the
refund/credit petitioner corporation with the PERIOD SINCE THE JUDICIAL dismissal thereof. The CTA ruled in favor of
amount of P26,030,460.00, representing CLAIM WAS FILED WITHIN respondent Commissioner and in its
the input VAT it had paid for the first quarter TWO (2) YEARS FROM THE Decision,9 dated 30 October 1997,
of 1992. The respondent Commissioner FILING OF THE VAT RETURN. dismissed the Petitions mainly on the
opposed and sought the dismissal of the ground that the prescriptive periods for filing
petition for review of petitioner corporation the same had expired. In a
for failure to state a cause of action. After IV Resolution,10 dated 15 January 1998, the
due trial, the CTA promulgated its CTA denied the motion for reconsideration
Decision4 on 24 November 1997 with the THE COURT OF APPEALS of petitioner corporation since the latter
following disposition – ERRED IN NOT ORDERING presented no new matter not already
CTA TO ALLOW THE RE- discussed in the court's prior Decision. In
OPENING OF THE CASE FOR the same Resolution, the CTA also denied
WHEREFORE, in view of the the alternative prayer of petitioner
foregoing, the instant claim for PETITIONER TO PRESENT
ADDITIONAL EVIDENCE.8 corporation for a new trial since it did not
refund is hereby DENIED on the fall under any of the grounds cited under
ground of prescription, Section 1, Rule 37 of the Revised Rules of
insufficiency of evidence and G.R. No. 148763
Court, and it was not supported by affidavits opportunity to present the required regulations to be promulgated by
of merits required by Section 2 of the same evidence. the Secretary of
Rule. Finance: Provided, however, That
any person whose registration is
cancelled in accordance with
Petitioner corporation appealed its case to
paragraph (e) of Section 107
the Court of Appeals, where it was
The prescriptive period for filing an shall file a return within 20 days
docketed as CA-G.R. SP No. 46718. On 15
application for tax refund/credit of input VAT from the cancellation of such
September 2000, the Court of Appeals
on zero-rated sales made in 1990 and 1992 registration.
rendered its Decision,11 finding that
was governed by Section 106(b) and (c) of
although petitioner corporation timely filed
the Tax Code of 1977, as amended, which
its Petitions for Review with the CTA, it still It is already well-settled that the two-year
provided that –
failed to substantiate its claims for the prescriptive period for instituting a suit or
refund/credit of its input VAT for the last proceeding for recovery of corporate
three quarters of 1990. In its SEC. 106. Refunds or tax credits income tax erroneously or illegally paid
Resolution,12 dated 27 June 2001, the of input tax. – x x x. under Section 23013 of the Tax Code of
appellate court denied the motion for 1977, as amended, was to be counted from
reconsideration of petitioner corporation, the filing of the final adjustment return. This
finding no cogent reason to reverse its (b) Zero-rated or effectively zero- Court already set out in ACCRA
previous Decision. rated sales. – Any person, except Investments Corporation v. Court of
those covered by paragraph (a) 14
Appeals, the rationale for such a rule, thus
above, whose sales are zero- –
Aggrieved, petitioner corporation filed with rated may, within two years after
this Court another Petition for Review the close of the quarter when
on Certiorari under Rule 45 of the Revised such sales were made, apply for Clearly, there is the need to file a
Rules of Court, docketed as G.R. No. the issuance of a tax credit return first before a claim for
148763, raising the following issues – certificate or refund of the input refund can prosper inasmuch as
taxes attributable to such sales to the respondent Commissioner by
the extent that such input tax has his own rules and regulations
not been applied against output mandates that the corporate
tax. taxpayer opting to ask for a
WHETHER OR NOT THE refund must show in its final
COURT OF APPEALS ERRED adjustment return the income it
xxxx received from all sources and the
PETITIONER'S CLAIM IS amount of withholding taxes
BARRED UNDER REVENUE (e) Period within which refund of remitted by its withholding agents
REGULATIONS NOS. 2-88 AND input taxes may be made by the to the Bureau of Internal
3-88 I.E., FOR FAILURE TO Commissioner. – The Revenue. The petitioner
PTOVE [sic] THE 70% Commissioner shall refund input corporation filed its final
THRESHOLD FOR ZERO- taxes within 60 days from the adjustment return for its 1981
RATING TO APPLY AND FOR date the application for refund taxable year on April 15, 1982. In
FAILURE TO ESTABLISH THE was filed with him or his duly our Resolution dated April 10,
FACTUAL BASIS FOR THE authorized representative. No 1989 in the case
INSTANT CLAIM. refund of input taxes shall be of Commissioner of Internal
allowed unless the VAT- Revenue v. Asia Australia
registered person files an Express, Ltd. (G.R. No. 85956),
B. we ruled that the two-year
application for refund within the
period prescribed in paragraphs prescriptive period within which to
WHETHER OR NOT THE (a), (b) and (c) as the case may claim a refund commences to
COURT OF APPEALS ERRED be. run, at the earliest, on the date of
IN FINDING THAT THERE IS NO the filing of the adjusted final tax
BASIS TO GRANT return. Hence, the petitioner
By a plain reading of the foregoing corporation had until April 15,
provision, the two-year prescriptive period 1984 within which to file its claim
for filing the application for refund/credit of for refund.
input VAT on zero-rated sales shall be
There being similarity of parties, subject determined from the close of the quarter
matter, and issues, G.R. Nos. 141104 and when such sales were made. Considering that ACCRAIN filed
148763 were consolidated pursuant to a its claim for refund as early as
Resolution, dated 4 September 2006, December 29, 1983 with the
Petitioner contends, however, that the said respondent Commissioner who
issued by this Court. The ruling of this Court
two-year prescriptive period should be failed to take any action thereon
in these cases hinges on how it will resolve
counted, not from the close of the quarter and considering further that the
the following key issues: (1) prescription of
when the zero-rated sales were made, but non-resolution of its claim for
the claims of petitioner corporation for input
from the date of filing of the quarterly VAT refund with the said
VAT refund/credit; (2) validity and
return and payment of the tax due 20 days Commissioner prompted
applicability of Revenue Regulations No. 2-
thereafter, in accordance with Section ACCRAIN to reiterate its claim
88 imposing upon petitioner corporation, as
110(b) of the Tax Code of 1977, as before the Court of Tax Appeals
a requirement for the VAT zero-rating of its
amended, quoted as follows – through a petition for review on
sales, the burden of proving that the buyer
companies were not just BOI-registered but April 13, 1984, the respondent
also exporting 70% of their total annual SEC. 110. Return and payment appellate court manifestly
production; (3) sufficiency of evidence of value-added tax. – x x x. committed a reversible error in
presented by petitioner corporation to affirming the holding of the tax
establish that it is indeed entitled to input court that ACCRAIN's claim for
(b) Time for filing of return and refund was barred by
VAT refund/credit; and (4) legal ground for
granting the motion of petitioner corporation payment of tax. – The return shall prescription.
for re-opening of its cases or holding of new be filed and the tax paid within 20
days following the end of each
trial before the CTA so it could be given the It bears emphasis at this point
quarter specifically prescribed for
a VAT-registered person under that the rationale in computing
the two-year prescriptive period legislature. The intention of the where the tax account was paid
with respect to the petitioner legislator must be ascertained on installment, the computation of
corporation's claim for refund from the whole text of the law and the two-year prescriptive period
from the time it filed its final every part of the act is to be under Section 306 (Section 292)
adjustment return is the fact that taken into view. (Chartered Bank of the Tax Code, should be from
it was only then that ACCRAIN vs. Imperial, 48 Phil. 931 the date of the last installment.
could ascertain whether it made [1921]; Lopez vs. El Hoger
profits or incurred losses in its Filipino, 47 Phil. 249, cited
In the instant case, TMX Sales,
business operations. The "date of in Aboitiz Shipping Corporation
Inc. filed a suit for a refund on
payment", therefore, in vs. City of Cebu, 13 SCRA 449
March 14, 1984. Since the two-
ACCRAIN's case was when its [1965]).
year prescriptive period should
tax liability, if any, fell due upon
be counted from the filing of the
its filing of its final adjustment
Thus, in resolving the instant Adjustment Return on April
return on April 15, 1982.
case, it is necessary that we 15,1982, TMX Sales, Inc. is not
consider not only Section 292 yet barred by prescription.
In another case, Commissioner of Internal (now Section 230) of the National
Revenue v. TMX Sales, Inc.,15 this Court Internal Revenue Code but also
The very same reasons set forth in the
further expounded on the same matter – the other provisions of the Tax
afore-cited cases concerning the two-year
Code, particularly Sections 84, 85
prescriptive period for claims for refund of
(now both incorporated as
A re-examination of the aforesaid illegally or erroneously collected income tax
Section 68), Section 86 (now
minute resolution of the Court in may also apply to the Petitions at bar
Section 70) and Section 87 (now
the Pacific Procon case is involving the same prescriptive period for
Section 69) on Quarterly
warranted under the claims for refund/credit of input VAT on
Corporate Income Tax Payment
circumstances to lay down a zero-rated sales.
and Section 321 (now Section
categorical pronouncement on
232) on keeping of books of
the question as to when the two-
accounts. All these provisions of It is true that unlike corporate income tax,
year prescriptive period in cases
the Tax Code should be which is reported and paid on installment
of quarterly corporate income tax
harmonized with each other. every quarter, but is eventually subjected to
commences to run. A full-blown
a final adjustment at the end of the taxable
decision in this regard is
year, VAT is computed and paid on a purely
rendered more imperative in the xxxx
quarterly basis without need for a final
light of the reversal by the Court
adjustment at the end of the taxable year.
of Tax Appeals in the instant
Therefore, the filing of a quarterly However, it is also equally true that until
case of its previous ruling in
income tax returns required in and unless the VAT-registered taxpayer
the Pacific Procon case.
Section 85 (now Section 68) and prepares and submits to the BIR its
implemented per BIR Form 1702- quarterly VAT return, there is no way of
Section 292 (now Section 230) of Q and payment of quarterly knowing with certainty just how much input
the National Internal Revenue income tax should only be VAT16 the taxpayer may apply against its
Code should be interpreted in considered mere installments of output VAT;17 how much output VAT it is
relation to the other provisions of the annual tax due. These due to pay for the quarter or how much
the Tax Code in order to give quarterly tax payments which are excess input VAT it may carry-over to the
effect the legislative intent and to computed based on the following quarter; or how much of its input
avoid an application of the law cumulative figures of gross VAT it may claim as refund/credit. It should
which may lead to inconvenience receipts and deductions in order be recalled that not only may a VAT-
and absurdity. In the case to arrive at a net taxable income, registered taxpayer directly apply against
of People vs. Rivera (59 Phil. 236 should be treated as advances or his output VAT due the input VAT it had
[1933]), this Court stated that portions of the annual income tax paid on its importation or local purchases of
statutes should receive a due, to be adjusted at the end of goods and services during the quarter; the
sensible construction, such as the calendar or fiscal year. This is taxpayer is also given the option to either
will give effect to the legislative reinforced by Section 87 (now (1) carry over any excess input VAT to the
intention and so as to avoid an Section 69) which provides for succeeding quarters for application against
unjust or an absurd the filing of adjustment returns its future output VAT liabilities, or (2) file an
conclusion. INTERPRETATIO and final payment of income tax. application for refund or issuance of a tax
TALIS IN AMBIGUIS SEMPER Consequently, the two-year credit certificate covering the amount of
FRIENDA EST, UT EVITATUR prescriptive period provided in such input VAT.18 Hence, even in the
INCONVENIENS ET Section 292 (now Section 230) of absence of a final adjustment return, the
ABSURDUM. Where there is the Tax Code should be determination of any output VAT payable
ambiguity, such interpretation as computed from the time of filing necessarily requires that the VAT-
will avoid inconvenience and the Adjustment Return or Annual registered taxpayer make adjustments in its
absurdity is to be adopted. Income Tax Return and final VAT return every quarter, taking into
Furthermore, courts must give payment of income tax. consideration the input VAT which are
effect to the general legislative creditable for the present quarter or had
intent that can be discovered been carried over from the previous
In the case of Collector of Internal
from or is unraveled by the four quarters.
Revenue vs. Antonio Prieto (2
corners of the statute, and in
SCRA 1007 [1961]), this Court
order to discover said intent, the
held that when a tax is paid in Moreover, when claiming refund/credit, the
whole statute, and not only a
installments, the prescriptive VAT-registered taxpayer must be able to
particular provision thereof,
period of two years provided in establish that it does have refundable or
should be considered. (Manila
Section 306 (Section 292) of the creditable input VAT, and the same has not
Lodge No. 761, et al. vs. Court of
National Internal Revenue Code been applied against its output VAT
Appeals, et al. 73 SCRA 162
should be counted from the date liabilities – information which are supposed
[1976) Every section, provision or
of the final payment. This ruling is to be reflected in the taxpayer's VAT
clause of the statute must be
reiterated in Commissioner of returns. Thus, an application for
expounded by reference to each
Internal Revenue vs. Carlos refund/credit must be accompanied by
other in order to arrive at the
Palanca (18 SCRA 496 [1966]), copies of the taxpayer's VAT return/s for the
effect contemplated by the
wherein this Court stated that taxable quarter/s concerned.
Lastly, although the taxpayer's refundable This Court, likewise, rejects any Under Section 100(a) of the Tax Code of
or creditable input VAT may not be probative value of the Application 1977, as amended, a 10% VAT was
considered as illegally or erroneously for Tax Credit/Refund of VAT imposed on the gross selling price or gross
collected, its refund/credit is a privilege Paid (BIR Form No. 2552) value in money of goods sold, bartered or
extended to qualified and registered [Exhibit "B'] formally offered in exchanged. Yet, the same provision
taxpayers by the very VAT system adopted evidence by the petitioner on subjected the following sales made by VAT-
by the Legislature. Such input VAT, the account of the fact that it does registered persons to 0% VAT –
same as any illegally or erroneously not bear the BIR stamp showing
collected national internal revenue tax, the date when such application
(1) Export sales; and
consists of monetary amounts which are was filed together with the
currently in the hands of the government signature or initial of the receiving
but must rightfully be returned to the officer of respondent's Bureau. (2) Sales to persons or entities
taxpayer. Therefore, whether claiming Worse still, it does not show the whose exemption under special
refund/credit of illegally or erroneously date of application and the laws or international agreements
collected national internal revenue tax, or signature of a certain Ma. Paz R. to which the Philippines is a
input VAT, the taxpayer must be given Semilla indicated in the form who signatory effectively subjects
equal opportunity for filing and pursuing its appears to be petitioner's such sales to zero-rate.
claim. authorized filer.
"Export Sales" means the sale
For the foregoing reasons, it is more A review of the records reveal and shipment or exportation of
practical and reasonable to count the two- that the original of the aforecited goods from the Philippines to a
year prescriptive period for filing a claim for application was lost during the foreign country, irrespective of
refund/credit of input VAT on zero-rated time petitioner transferred its any shipping arrangement that
sales from the date of filing of the return office (TSN, p. 6, Hearing of may be agreed upon which may
and payment of the tax due which, December 9, 1994). Attempt was influence or determine the
according to the law then existing, should made to prove that petitioner transfer of ownership of the
be made within 20 days from the end of exerted efforts to recover the goods so exported, or foreign
each quarter. Having established thus, the original copy, but to no avail. currency denominated sales.
relevant dates in the instant cases are Despite this, however, We "Foreign currency denominated
summarized and reproduced below – observe that petitioner completely sales", means sales to
failed to establish the missing nonresidents of goods assembled
dates and signatures or manufactured in the
Period Covered Date of Filing (Return Dateabovementioned. On this score,
of Filing (Application w/ Date of Filing (Case Philippines,
w/ for delivery to
w/ BIR) said application has no probativeCTA)
BIR) residents in the Philippines and
value in demonstrating the fact of paid for in convertible foreign
2nd Quarter, 1990 20 July 1990 its August
21 filing within
1990two years after the20 July 1992 currency remitted through the
[filing of the VAT return for the banking system in the
3rd Quarter, 1990 18 October 1990 quarter]
21 when 1990
November petitioner's sales of9 October 1992 Philippines.
goods were made as prescribed
under Section 106(b) of the Tax
4th Quarter, 1990 20 January 1991 19 February 1991 14 JanuaryThese
1993 are termed zero-rated sales. A zero-
Code. We believe thus that
petitioner failed to file an rated sale is still considered a taxable
1st Quarter, 1992 20 April 1992 -- transaction for VAT purposes, although the
application for refund in due form20 April 1994
and within the legal period set by VAT rate applied is 0%. A sale by a VAT-
law at the administrative level. registered taxpayer of goods and/or
The above table readily shows that the services taxed at 0% shall not result in any
Hence, the case at bar has failed
administrative and judicial claims of to satisfy the requirement on the output VAT, while the input VAT on its
petitioner corporation for refund of its input prior filing of an application for purchases of goods or services related to
VAT on its zero-rated sales for the last such zero-rated sale shall be available as
refund with the respondent before
three quarters of 1990 were all filed within the commencement of a judicial tax credit or refund.20
the prescriptive period. claim for refund, as prescribed
under Section 230 of the Tax Petitioner corporation questions the validity
However, the same cannot be said for the Code. This fact constitutes of Revenue Regulations No. 2-88 averring
claim of petitioner corporation for refund of another one of the many reasons that the said regulations imposed additional
its input VAT on its zero-rated sales for the for not granting petitioner's requirements, not found in the law itself, for
first quarter of 1992. Even though it may judicial claim. the zero-rating of its sales to Philippine
seem that petitioner corporation filed in time Smelting and Refining Corporation
its judicial claim with the CTA, there is no (PASAR) and Philippine Phosphate, Inc.
As pointed out by the CTA, in serious doubt
showing that it had previously filed an is not only the fact of whether petitioner (PHILPHOS), both of which are registered
administrative claim with the BIR. Section corporation timely filed its administrative not only with the BOI, but also with the then
106(e) of the Tax Code of 1977, as Export Processing Zone Authority (EPZA).21
claim for refund of its input VAT for the first
amended, explicitly provided that no refund quarter of 1992, but also whether petitioner
of input VAT shall be allowed unless the corporation actually filed such The contentious provisions of Revenue
VAT-registered taxpayer filed an application administrative claim in the first place. For Regulations No. 2-88 read –
for refund with respondent Commissioner failing to prove that it had earlier filed with
within the two-year prescriptive period. The the BIR an application for refund/credit of its
application of petitioner corporation for input VAT for the first quarter of 1992, SEC. 2. Zero-rating. – (a) Sales
refund/credit of its input VAT for the first within the period prescribed by law, then of raw materials to BOI-registered
quarter of 1992 was not only unsigned by the case instituted by petitioner corporation exporters. – Sales of raw
its supposed authorized representative, Ma. with the CTA for the refund/credit of the materials to export-oriented BOI-
Paz R. Semilla, Manager-Finance and very same tax cannot prosper. registered enterprises whose
Treasury, but it was not dated, stamped, export sales, under rules and
and initialed by the BIR official who regulations of the Board of
purportedly received the same. The CTA, in Revenue Regulations No. 2-88 and the Investments, exceed seventy
its Decision,19 dated 24 November 1997, in 70% export requirement percent (70%) of total annual
CTA Case No. 5102, made the following production, shall be subject to
observations –
zero-rate under the following While this Court is not prepared to strike Provided, further, That without
conditions: down the validity of Revenue Regulations actual exportation the following
No. 2-88, it finds that its application must be shall be considered constructively
limited and placed in the proper context. exported for purposes of this
"(1) The seller shall file
Note that Section 2 of Revenue Regulations provision: (1) sales to bonded
an application with the
No. 2-88 referred only to the zero-rated manufacturing warehouses of
BIR, ATTN.: Division,
sales of raw materials to export-oriented export-oriented manufacturers;
applying for zero-rating
BOI-registered enterprises whose export (2) sales to export processing
for each and every
sales, under BOI rules and regulations, zones; (3) sales to registered
separate buyer, in
should exceed seventy percent (70%) of export traders operating bonded
accordance with
their total annual production. trading warehouses supplying
Section 8(d) of
raw materials used in the
Revenue Regulations
manufacture of export products
No. 5-87. The Section 2 of Revenue Regulations No. 2-
under guidelines to be set by the
application should be 88, should not have been applied to the
Board in consultation with the
accompanied with a zero-rating of the sales made by petitioner
Bureau of Internal Revenue and
favorable corporation to PASAR and PHILPHOS. At
the Bureau of Customs; (4) sales
recommendation from the onset, it must be emphasized that
to foreign military bases,
the Board of PASAR and PHILPHOS, in addition to
diplomatic missions and other
Investments." being registered with the BOI, were also
agencies and/or instrumentalities
registered with the EPZA and located within
granted tax immunities, of locally
an export-processing zone. Petitioner
"(2) The raw materials manufactured, assembled or
corporation does not claim that its sales to
sold are to be used repacked products whether paid
PASAR and PHILPHOS are zero-rated on
exclusively by the for in foreign currency or not:
the basis that said sales were made to
buyer in the Provided, further, That export
export-oriented BOI-registered
manufacture, sales of registered export trader
corporations, but rather, on the basis that
processing or may include commission income;
the sales were made to EPZA-registered
repacking of his own and Provided, finally, That
enterprises operating within export
registered export exportation of goods on
processing zones. Although sales to export-
product; consignment shall not be deemed
oriented BOI-registered enterprises and
export sales until the export
sales to EPZA-registered enterprises
products consigned are in fact
"(3) The words "Zero- located within export processing zones
sold by the consignee.
Rated Sales" shall be were both deemed export sales, which,
prominently indicated under Section 100(a) of the Tax Code of
in the sales invoice. 1977, as amended, shall be subject to 0% Sales of locally manufactured or
The exporter (buyer) VAT distinction must be made between assembled goods for household
can no longer claim these two types of sales because each may and personal use to Filipinos
from the Bureau of have different substantiation requirements. abroad and other non-residents
Internal Revenue or of the Philippines as well as
any other government returning Overseas Filipinos
The Tax Code of 1977, as amended, gave
office tax credits on under the Internal Export
a limited definition of export sales, to wit:
their zero-rated Program of the government and
"The sale and shipment or exportation of
purchases; paid for in convertible foreign
goods from the Philippines to a foreign
currency inwardly remitted
country, irrespective of any shipping
through the Philippine banking
(b) Sales of raw materials to arrangement that may be agreed upon
systems shall also be considered
foreign buyer. – Sales of raw which may influence or determine the
export sales. (Underscoring
materials to a nonresident foreign transfer of ownership of the goods so
buyer for delivery to a resident exported, or foreign currency denominated
local export-oriented BOI- sales." Executive Order No. 226, otherwise
registered enterprise to be used known as the Omnibus Investments Code The afore-cited provision of the Omnibus
in manufacturing, processing or of 1987 - which, in the years concerned Investments Code of 1987 recognizes as
repacking of the said buyer's (i.e., 1990 and 1992), governed enterprises export sales the sales of export products to
goods and paid for in foreign registered with both the BOI and EPZA, another producer or to an export trader,
currency, inwardly remitted in provided a more comprehensive definition provided that the export products are
accordance with Central Bank of export sales, as quoted below: actually exported. For purposes of VAT
rules and regulations shall be zero-rating, such producer or export trader
subject to zero-rate. must be registered with the BOI and is
"ART. 23. "Export sales" shall
required to actually export more than 70%
mean the Philippine port F.O.B.
of its annual production.
It is the position of the respondent value, determined from invoices,
Commissioner, affirmed by the CTA and the bills of lading, inward letters of
Court of Appeals, that Section 2 of credit, landing certificates, and Without actual exportation, Article 23 of the
Revenue Regulations No. 2-88 should be other commercial documents, of Omnibus Investments Code of 1987 also
applied in the cases at bar; and to be export products exported directly considers constructive exportation as
entitled to the zero-rating of its sales to by a registered export producer export sales. Among other types of
PASAR and PHILPHOS, petitioner or the net selling price of export constructive exportation specifically
corporation, as a VAT-registered seller, product sold by a registered identified by the said provision are sales to
must be able to prove not only that PASAR export producer or to an export export processing zones. Sales to export
and PHILPHOS are BOI-registered trader that subsequently exports processing zones are subjected to special
corporations, but also that more than 70% the same: Provided, That sales of tax treatment. Article 77 of the same Code
of the total annual production of these export products to another establishes the tax treatment of goods or
corporations are actually exported. producer or to an export trader merchandise brought into the export
Revenue Regulations No. 2-88 merely shall only be deemed export processing zones. Of particular relevance
echoed the requirement imposed by the sales when actually exported by herein is paragraph 2, which provides that
BOI on export-oriented corporations the latter, as evidenced by "Merchandise purchased by a registered
registered with it. landing certificates of similar zone enterprise from the customs territory
commercial documents: and subsequently brought into the zone,
shall be considered as export sales and the manufacturing, processing, It would initially appear that the applications
exporter thereof shall be entitled to the packing or repacking in the for refund/credit filed by petitioner
benefits allowed by law for such Philippines of the said buyer's corporation cover only input VAT on its
transaction." goods and paid for in acceptable purportedly zero-rated sales to PASAR and
foreign currency and accounted PHILPHOS; however, a more thorough
for in accordance with the rules perusal of its applications, VAT returns,
Such tax treatment of goods brought into
and regulations of the Bangko pleadings, and other records of these cases
the export processing zones are only
Sentral ng Pilipinas (BSP); would reveal that it is also claiming
consistent with the Destination Principle
refund/credit of its input VAT on purchases
and Cross Border Doctrine to which the
of capital goods and sales of gold to the
Philippine VAT system adheres. According (3) The sale of raw materials or
Central Bank of the Philippines (CBP).
to the Destination Principle,22 goods and packaging materials to an export-
services are taxed only in the country oriented enterprise whose export
where these are consumed. In connection sales exceed seventy percent This Court finds that the claims for
with the said principle, the Cross Border (70%) of total annual production; refund/credit of input VAT of petitioner
Doctrine23 mandates that no VAT shall be corporation have sufficient legal bases.
imposed to form part of the cost of the
Any enterprise whose export
goods destined for consumption outside the
sales exceed 70% of the total As has been extensively discussed herein,
territorial border of the taxing authority.
annual production of the Section 106(b)(2), in relation to Section
Hence, actual export of goods and services
preceding taxable year shall be 100(a)(2) of the Tax Code of 1977, as
from the Philippines to a foreign country
considered an export-oriented amended, allowed the refund/credit of input
must be free of VAT, while those destined
enterprise upon accreditation as VAT on export sales to enterprises
for use or consumption within the
such under the provisions of the operating within export processing zones
Philippines shall be imposed with 10%
Export Development Act (R.A. and registered with the EPZA, since such
VAT.24 Export processing zones25 are to be
7844) and its implementing rules export sales were deemed to be effectively
managed as a separate customs territory
and regulations; zero-rated sales.29 The fact that PASAR
from the rest of the Philippines and, thus,
and PHILPHOS, to whom petitioner
for tax purposes, are effectively considered
corporation sold its products, were
as foreign territory. For this reason, sales (4) Sale of gold to the Bangko
operating inside an export processing zone
by persons from the Philippine customs Sentral ng Pilipinas (BSP); and
and duly registered with EPZA, was never
territory to those inside the export
raised as an issue herein. Moreover, the
processing zones are already taxed as
(5) Those considered export same fact was already judicially recognized
sales under Articles 23 and 77 of in the case Atlas Consolidated Mining &
Executive Order No. 226, Development Corporation v. Commissioner
Plainly, sales to enterprises operating within otherwise known as the Omnibus of Internal Revenue.30 Section 106(c) of the
the export processing zones are export Investments Code of 1987, and same Code likewise permitted a VAT-
sales, which, under the Tax Code of 1977, other special laws, e.g. Republic registered taxpayer to apply for
as amended, were subject to 0% VAT. It is Act No. 7227, otherwise known refund/credit of the input VAT paid on
on this ground that petitioner corporation is as the Bases Conversion and capital goods imported or locally purchased
claiming refund/credit of the input VAT on Development Act of 1992. to the extent that such input VAT has not
its zero-rated sales to PASAR and been applied against its output VAT.
PHILPHOS. Meanwhile, the effective zero-rating of
The Tax Code of 1997, as amended,27 later sales of gold to the CBP from 1989 to
adopted the foregoing definition of export
199131 was already affirmed by this Court
The distinction made by this Court in the sales, which are subject to 0% VAT. in Commissioner of Internal Revenue v.
preceding paragraphs between the zero-
Benguet Corporation,32 wherein it ruled that
rated sales to export-oriented BOI-
This Court then reiterates its conclusion –
registered enterprises and zero-rated sales
to EPZA-registered enterprises operating that Section 2 of Revenue Regulations No.
within export processing zones is actually 2-88, which applied to zero-rated export At the time when the subject
sales to export-oriented BOI-registered
supported by subsequent development in transactions were consummated,
tax laws and regulations. In Revenue enterprises, should not be applied to the the prevailing BIR regulations
Regulations No. 7-95, the Consolidated applications for refund/credit of input VAT relied upon by respondent
filed by petitioner corporation since it based
VAT Regulations, as amended,26 the BIR ordained that gold sales to the
defined with more precision what are zero- its applications on the zero-rating of export Central Bank were zero-rated.
rated export sales – sales to enterprises registered with the The BIR interpreted Sec. 100 of
EPZA and located within export processing
the NIRC in relation to Sec. 2 of
zones. E.O. No. 581 s. 1980 which
(1) The sale and actual shipment
prescribed that gold sold to the
of goods from the Philippines to a
Sufficiency of evidence Central Bank shall be considered
foreign country, irrespective of
export and therefore shall be
any shipping arrangement that
subject to the export and
may be agreed upon which may There can be no dispute that the taxpayer- premium duties. In coming out
influence or determine the claimant has the burden of proving the legal with this interpretation, the BIR
transfer of ownership of the and factual bases of its claim for tax credit also considered Sec. 169 of
goods so exported paid for in or refund, but once it has submitted all the Central Bank Circular No. 960
acceptable foreign currency or its required documents, it is the function of the which states that all sales of gold
equivalent in goods or services, BIR to assess these documents with to the Central Bank are
and accounted for in accordance purposeful dispatch.28 It therefore falls upon considered constructive exports.
with the rules and regulations of herein petitioner corporation to first x x x.
the Bangko Sentral ng establish that its sales qualify for VAT zero-
Pilipinas (BSP); rating under the existing laws (legal basis),
and then to present sufficient evidence that This Court now comes to the question of
said sales were actually made and resulted whether petitioner corporation has
(2) The sale of raw materials or
in refundable or creditable input VAT in the sufficiently established the factual bases for
packaging materials to a non-
amount being claimed (factual basis). its applications for refund/credit of input
resident buyer for delivery to a
VAT. It is in this regard that petitioner
resident local export-oriented
corporation has failed, both in the
enterprise to be used in
administrative and judicial level.
Applications for refund/credit of input VAT description of the period covered by the
with the BIR must comply with the goods or application for credit or refund.
appropriate revenue regulations. As this services
Court has already ruled, Revenue delivered.
Where the applicant is engaged
Regulations No. 2-88 is not relevant to the
in zero-rated and other taxable
applications for refund/credit of input VAT
"iii) evidence and exempt sales of goods and
filed by petitioner corporation; nonetheless,
of actual services, and the VAT paid
the said applications must have been in
receipt of (inputs) on purchases of goods
accordance with Revenue Regulations No.
goods or and services cannot be directly
3-88, amending Section 16 of Revenue
services. attributed to any of the
Regulations No. 5-87, which provided as
aforementioned transactions, the
follows –
following formula shall be used to
"4. Purchase of capital
determine the creditable or
SECTION 16. Refunds or tax refundable input tax for zero-
credits of input tax. – rated sale:
"i) original
copy of
xxxx Amount of Zero-rated Sale
invoice or
Total Sales
(c) Claims for tax showing the
credits/refunds. – Application for date of X
Tax Credit/Refund of Value- purchase, Total Amount of Input Taxes
Added Tax Paid (BIR Form No. purchase =
2552) shall be filed with the price, Amount Creditable/Refundable
Revenue District Office of the city amount of
or municipality where the value-added
In case the application for refund/credit of
principal place of business of the tax paid and
input VAT was denied or remained unacted
applicant is located or directly description of
upon by the BIR, and before the lapse of
with the Commissioner, Attention: the capital
the two-year prescriptive period, the
VAT Division. equipment
taxpayer-applicant may already file a
Petition for Review before the CTA. If the
A photocopy of the purchase taxpayer's claim is supported by
invoice or receipt evidencing the voluminous documents, such as receipts,
value added tax paid shall be "ii) with invoices, vouchers or long accounts, their
submitted together with the respect to presentation before the CTA shall be
application. The original copy of capital governed by CTA Circular No. 1-95, as
the said invoice/receipt, however, equipment amended, reproduced in full below –
shall be presented for imported, the
cancellation prior to the issuance photo copy
In the interest of speedy
of the Tax Credit Certificate or of import
administration of justice, the
refund. In addition, the following entry
Court hereby promulgates the
documents shall be attached document for
following rules governing the
whenever applicable: internal
presentation of voluminous
revenue tax
documents and/or long accounts,
xxxx such as receipts, invoices and
and the
vouchers, as evidence to
establish certain facts pursuant to
"3. Effectively zero- receipt
Section 3(c), Rule 130 of the
rated sale of goods and issued by the
Rules of Court and the doctrine
services. Bureau of
enunciated in Compania Maritima
Customs for
vs. Allied Free Workers Union (77
the payment
"i) photo SCRA 24), as well as Section 8
of the value-
copy of of Republic Act No. 1125:
added tax.
1. The party who desires to
for zero-rate "5. In applicable cases,
introduce as evidence such
if filing for the
voluminous documents must,
first time.
where the applicant's zero-rated after motion and approval by the
transactions are regulated by Court, present:
"ii) sales certain government agencies, a
invoice or statement therefrom showing the
(a) a Summary
receipt amount and description of sale of
containing, among
showing goods and services, name of
others, a chronological
name of the persons or entities (except in
listing of the numbers,
person or case of exports) to whom the
dates and amounts
entity to goods or services were sold, and
covered by the invoices
whom the date of transaction shall also be
or receipts and the
sale of goods submitted.
amount/s of tax paid;
or services
and (b) a Certification
In all cases, the amount of refund of an independent
or tax credit that may be granted Certified Public
date of
shall be limited to the amount of Accountant attesting to
the value-added tax (VAT) paid the correctness of the
amount of
directly and entirely attributable to contents of the
the zero-rated transaction during summary after making
, and
an examination, purchase invoices or official as such it is required to
evaluation and audit of receipts. conduct a formal trial (trial de
the voluminous novo) where the parties must
receipts and invoices. present their evidence
This respondent failed to do.
The name of the accordingly if they desire the
accountant or partner Court to take such evidence into
of the firm in charge Revenue Regulations No. 3-88 consideration. (Emphasis and
must be stated in the amending Revenue Regulations italics supplied)
motion so that he/she No. 5-87 provides the
can be commissioned requirements in claiming tax
A "sales or commercial invoice" is
by the Court to conduct credits/refunds.
a written account of goods sold or
the audit and,
services rendered indicating the
thereafter, testify in
xxxx prices charged therefor or a list
Court relative to such
by whatever name it is known
summary and
which is used in the ordinary
certification pursuant to Under Section 8 of RA1125, the course of business evidencing
Rule 32 of the Rules of CTA is described as a court of
sale and transfer or agreement to
Court. record. As cases filed before it sell or transfer goods and
are litigated de novo, party services.
litigants should prove every
2. The method of individual
presentation of each and every minute aspect of their cases. No
evidentiary value can be given A "receipt" on the other hand is a
receipt, invoice or account for
the purchase invoices or receipts written acknowledgment of the
marking, identification and
submitted to the BIR as the rules fact of payment in money or other
comparison with the originals
on documentary evidence require settlement between seller and
thereof need not be done before
that these documents must be buyer of goods, debtor or
the Court or Clerk of Court
formally offered before the CTA. creditor, or person rendering
anymore after the introduction of
services and client or customer.
the summary and CPA
certification. It is enough that the This Court thus notes with
receipts, invoices, vouchers or approval the following findings of These sales invoices or receipts
other documents covering the the CTA: issued by the supplier are
said accounts or payments to be necessary to substantiate the
introduced in evidence must be actual amount or quantity of
pre-marked by the party x x x [S]ale of gold to goods sold and their selling price,
concerned and submitted to the the Central Bank and taken collectively are the
Court in order to be made should not be subject best means to prove the input
accessible to the adverse party to the 10% VAT-output VAT payments.36
who desires to check and verify tax but this does
the correctness of the summary not ipso fact mean that
[the seller] is entitled to Although the foregoing decision focused
and CPA certification. Likewise,
the originals of the voluminous the amount of refund only on the proof required for the applicant
receipts, invoices or accounts sought as it is required for refund/credit to establish the input VAT
by law to present payments it had made on
must be ready for verification and
comparison in case doubt on the evidence showing the its purchases from suppliers, Revenue
authenticity thereof is raised input taxes it paid Regulations No. 3-88 also required it to
during the year in present evidence proving actual zero-rated
during the hearing or resolution of
the formal offer of evidence. question. What is being VAT sales to qualified buyers, such as (1)
claimed in the instant photocopy of the approved application for
petition is the refund of zero-rate if filing for the first time; (2) sales
Since CTA Cases No. 4831, 4859, the input taxes paid by invoice or receipt showing the name of the
4944,33 and 5102,34 were still pending the herein petitioner on person or entity to whom the goods or
before the CTA when the said Circular was its purchase of goods services were delivered, date of delivery,
issued, then petitioner corporation must and services. Hence, it amount of consideration, and description of
have complied therewith during the course is necessary for the goods or services delivered; and (3) the
of the trial of the said cases. Petitioner to show evidence of actual receipt of goods or
proof that it had indeed services.
In Commissioner of Internal Revenue v. paid the input taxes
Manila Mining Corporation,35 this Court during the year 1991.
Also worth noting in the same decision is
In the case at bar,
denied the claim of therein respondent, the weight given by this Court to the
Manila Mining Corporation, for refund of the Petitioner failed to
certification by the independent certified
discharge this duty. It
input VAT on its supposed zero-rated sales public accountant (CPA), thus –
did not adduce in
of gold to the CBP because it was unable to
substantiate its claim. In the same case, evidence the sales
this Court emphasized the importance of invoice, receipts or Respondent contends, however,
other documents that the certification of the
complying with the substantiation
requirements for claiming refund/credit of showing the input value independent CPA attesting to the
input VAT on zero-rated sales, to wit – added tax on the correctness of the contents of the
purchase of goods and summary of suppliers' invoices or
services. receipts which were examined,
For a judicial claim for refund to evaluated and audited by said
prosper, however, respondent CPA in accordance with CTA
must not only prove that it is a Circular No. 1-95 as amended by
VAT registered entity and that it CTA Circular No. 10-97 should
filed its claims within the Section 8 of Republic Act 1125 substantiate its claims.
prescriptive period. It (An Act Creating the Court of Tax
must substantiate the input VAT Appeals) provides categorically
paid by There is nothing, however, in
that the Court of Tax Appeals
CTA Circular No. 1-95, as
shall be a court of record and
amended by CTA Circular No. semester of 1991, it employed "We note, however,
10-97, which either expressly or the services of Joaquin Cunanan that in the cases at bar,
impliedly suggests that & Co. on account of which it petitioner has relied
summaries and schedules of (Joaquin Cunanan & Co.) totally on Revenue
input VAT payments, even if executed a certification that: Regulations No. 2-88 in
certified by an independent CPA, determining
suffice as evidence of input VAT compliance with the
We have examined the
payments. documentary
information shown
requirements for a
below concerning the
successful refund or
xxxx input tax payments
issuance of tax credit.
made by the Makati
Unmentioned is the
Office of Manila Mining
The circular, in the interest of applicable and specific
Corporation for the
speedy administration of justice, amendment later
period from July 1 to
was promulgated to avoid the introduced by Revenue
December 31, 1991.
time-consuming procedure of Regulations No. 3-88
Our examination
presenting, identifying and dated April 7, 1988
included inspection of
marking of documents before the (issued barely after two
the pertinent suppliers'
Court. It does not relieve months from the
invoices and official
respondent of its imperative task promulgation of
receipts and such other
of pre-marking photocopies of Revenue Regulations
auditing procedures as
sales receipts and invoices No. 2-88 on February
we considered
and submitting the same to the 15, 1988), which
necessary in the
court after the independent CPA amended Section 16 of
circumstances. x x x
shall have examined and Revenue Regulations
compared them with the originals. No. 5-87 on refunds or
Without presenting these pre- As the certification merely stated tax credits of input tax.
marked documents as evidence – that it used "auditing procedures x x x.
from which the summary and considered necessary" and not
schedules were based, the court auditing procedures which are in
cannot verify the authenticity and accordance with generally
veracity of the independent accepted auditing principles and
auditor's conclusions. standards, and that the "A thorough
examination was made on "input examination of the
tax payments by the Manila evidence submitted by
There is, moreover, a need to
Mining Corporation," without the petitioner before
subject these invoices or receipts
specifying that the said input tax this court reveals
to examination by the CTA in
payments are attributable to the outright the failure to
order to confirm whether they are
sales of gold to the Central Bank, satisfy documentary
VAT invoices. Under Section 21
this Court cannot rely thereon requirements laid down
of Revenue Regulation, No. 5-87,
and regard it as sufficient proof of under the above-cited
all purchases covered by invoices
the respondent's input VAT regulations.
other than a VAT invoice shall not
payments for the second Specifically, petitioner
be entitled to a refund of input
semester.37 was not able to present
the following
documents, to wit:
As for the Petition in G.R. No. 141104,
involving the input VAT of petitioner
corporation on its zero-rated sales in the "a) sales
While the CTA is not governed first quarter of 1992, this Court already invoices or
strictly by technical rules of found that the petitioner corporation failed receipts;
evidence, as rules of procedure to comply with Section 106(b) of the Tax
are not ends in themselves but Code of 1977, as amended, imposing the
"b) purchase
are primarily intended as tools in two-year prescriptive period for the filing of
invoices or
the administration of justice, the the application for refund/credit thereof.
presentation of the purchase This bars the grant of the application for
receipts and/or invoices is not refund/credit, whether administratively or
mere procedural technicality judicially, by express mandate of Section "c) evidence
which may be disregarded 106(e) of the same Code. of actual
considering that it is the only receipt of
means by which the CTA may goods;
Granting arguendo that the application of
ascertain and verify the truth of
petitioner corporation for the refund/credit of
the respondent's claims.
the input VAT on its zero-rated sales in the "d) BOI
first quarter of 1992 was actually and timely statement
The records further show that filed, petitioner corporation still failed to showing the
respondent miserably failed to present together with its application the amount and
substantiate its claims for input required supporting documents, whether description of
VAT refund for the first semester before the BIR or the CTA. As the Court of sale of
of 1991. Except for the summary Appeals ruled – goods, etc.
and schedules of input VAT
payments prepared by
In actions involving claims for "e) original or
respondent itself, no other
refund of taxes assessed and attested
evidence was adduced in support
collected, the burden of proof copies of
of its claim.
rests on the taxpayer. As clearly invoice or
discussed in the CTA's decision, receipt on
As for respondent's claim for petitioner failed to substantiate its capital
input VAT refund for the second claim for tax refunds. Thus: equipment
locally entry documents in with generally accepted
purchased; order that a full auditing standards.
and ascertainment of the Accordingly, we do not
claimed amount may express an opinion on
be achieved. the company's claim for
"f) photocopy
input VAT refund or
of import
credit. Had we
entry "Petitioner should
performed additional
document have taken the
procedures, or had we
and foresight to introduce in
made an audit in
confirmation evidence all of the
accordance with
receipt on missing
generally accepted
imported documentsabovementi
auditing standards,
capital oned. Cases filed
other matters might
equipment. before this Court are
have come to our
litigated de novo. This
attention that we would
means that party
"There is the need to have accordingly
litigants should
examine the sales reported on."
endeavor to prove at
invoices or receipts in
the first instance every
order to ascertain the
minute aspect of their The SGV's "disclaimer of opinion"
actual amount or
cases strictly in carries much weight as it is
quantity of goods sold
accordance with the petitioner's independent auditor.
and their selling price.
Rules of Court, most Indeed, SGV expressed that it
Without them, this
especially on "did not compare the total of the
Court cannot verify the
documentary input tax claimed each quarter
correctness of
evidence." (pp. 37-42, against the VAT returns and
petitioner's claim
Rollo) books of accounts."38
inasmuch as the
regulations require that
the input taxes being Tax refunds are in the nature of Moving on to the Petition in G.R. No.
sought for refund tax exemptions. It is regarded as 148763, concerning the input VAT of
should be limited to the in derogation of the sovereign petitioner corporation on its zero-rated
portion that is directly authority, and should be sales in the second, third, and fourth
and entirely attributable construed in strictissimi quarters of 1990, the appellate court
to the particular zero- juris against the person or entity likewise found that petitioner corporation
rated transaction. In claiming the exemption. The failed to sufficiently establish its claims.
this instance, the best taxpayer who claims for Already disregarding the declarations made
evidence of such exemption must justify his claim by the Court of Appeals on its erroneous
transaction are the said by the clearest grant of organic or application of Revenue Regulations No. 2-
sales invoices or statute law and should not be 88, quoted hereunder is the rest of the
receipts. permitted to stand on vague findings of the appellate court after
implications (Asiatic Petroleum evaluating the evidence submitted in
Co. v. Llanes, 49 Phil. 466; accordance with the requirements under
"Also, even if sales
Northern Phil. Tobacco Corp. v. Revenue Regulations No. 3-88 –
invoices are produced,
Mun. of Agoo, La Union, 31
there is the further
SCRA 304; Reagan v.
need to submit The Secretary of Finance validly
Commissioner, 30 SCRA 968;
evidence that such adopted Revenue Regulations
Asturias Sugar Central, Inc. v.
goods were actually [No.] x x x 3-98 pursuant to Sec.
Commissioner of Customs, 29
received by the buyer, 245 of the National Internal
SCRA 617; Davao Light and
in this case, by CBP, Revenue Code, which recognized
Power Co., Inc. v. Commissioner
Philp[h]os and PASAR. his power to "promulgate all
of Customs, 44 SCRA 122).
needful rules and regulations for
the effective enforcement of the
There is no cogent reason to fault provisions of this Code." Thus, it
the CTA's conclusion that the is incumbent upon a taxpayer
"Lastly, this Court SGV's certificate is "self- intending to file a claim for refund
cannot determine destructive", as it finds comfort in of input VATs or the issuance of
whether there were the very SGV's stand, as follows: a tax credit certificate with the
actual local and BIR x x x to prove sales to such
imported purchase of buyers as required by Revenue
"It is our understanding
capital goods as well Regulations No. 3-98. Logically,
that the above
as domestic purchase the same evidence should be
procedure are sufficient
of non-capital goods presented in support of an action
for the purpose of the
without the required to recover taxes which have been
Company. We make no
purchase invoice or paid.
presentation regarding
receipt, as the case
the sufficiency of these
may be, and
procedures for such x x x Neither has [herein
confirmation receipts.
purpose. We did not petitioner corporation] presented
compare the total of sales invoices or receipts
"There is, thus, the the input tax claimed showing sales of gold, copper
imperative need to each quarter against concentrates, and pyrite to the
submit before this the pertinent VAT CBP, [PASAR], and [PHILPHOS],
Court the original or returns and books of respectively, and the dates and
attested photocopies of accounts. The above amounts of the same, nor any
petitioner's invoices or procedures do not evidence of actual receipt by the
receipts, confirmation constitute an audit said buyers of the mineral
receipts and import made in accordance products. It merely presented
receipts of purchases from Circular No. 1-95, as amended. It "[f]ailure of its counsel to adduce the
suppliers on which input VATs concentrated its arguments on its assertion necessary evidence should be construed as
were allegedly paid. Thus, the that the substantiation requirements under excusable negligence or mistake which
Court of Tax Appeals correctly Revenue Regulations No. 2-88 should not should constitute basis for such re-opening
denied the claims for refund of have applied to it, while being of trial as for a new trial, as counsel was of
input VATs or the issuance of tax conspicuously silent on the evidentiary the belief that such evidence was rendered
credit certificates of petitioner requirements mandated by other relevant unnecessary by the presentation of
[corporation]. Significantly, in the regulations. unrebutted evidence indicating that
resolution, dated 7 June 2000, respondent [Commissioner] has
this Court directed the parties to acknowledged the sale of [sic] PASAR and
Re-opening of cases/holding of new trial
file memoranda discussing, [PHILPHOS] to be zero-rated." 44 The CTA
before the CTA
among others, the submission of denied such motion on the ground that it
proof for "its [petitioner's] sales of was not accompanied by an affidavit of
gold, copper concentrates, and This Court now faces the final issue of merit as required by Section 2, Rule 37 of
pyrite to buyers." Nevertheless, whether the prayer of petitioner corporation the revised Rules of Court. The Court of
the parties, including the for the re-opening of its cases or holding of Appeals affirmed the denial of the motion,
petitioner, failed to address this new trial before the CTA for the reception of but apart from this technical defect, it also
issue, thereby necessitating the additional evidence, may be granted. found that there was no justification to grant
affirmance of the ruling of the Petitioner corporation prays that the Court the same.
Court of Tax Appeals on this exercise its discretion on the matter in its
point.39 favor, consistent with the policy that rules of
On the matter of the denial of the motion of
procedure be liberally construed in
the petitioner corporation for the re-opening
pursuance of substantive justice.
This Court is, therefore, bound by the of its cases and/or holding of new trial
foregoing facts, as found by the appellate based on the technicality that said motion
court, for well-settled is the general rule that This Court, however, cannot grant the was unaccompanied by an affidavit of merit,
the jurisdiction of this Court in cases prayer of petitioner corporation. this Court rules in favor of the petitioner
brought before it from the Court of Appeals, corporation. The facts which should
by way of a Petition for Review otherwise be set forth in a separate affidavit
on Certiorari under Rule 45 of the Revised An aggrieved party may file a motion for of merit may, with equal effect, be alleged
Rules of Court, is limited to reviewing or new trial or reconsideration of a judgment and incorporated in the motion itself; and
revising errors of law; findings of fact of the already rendered in accordance with this will be deemed a substantial
latter are conclusive.40 This Court is not a Section 1, Rule 37 of the revised Rules of compliance with the formal requirements of
trier of facts. It is not its function to review, Court, which provides – the law, provided, of course, that the
examine and evaluate or weigh the movant, or other individual with personal
probative value of the evidence SECTION 1. Grounds of and knowledge of the facts, take oath as to the
presented.41 period for filing motion for new truth thereof, in effect converting the entire
trial or reconsideration. – Within motion for new trial into an affidavit.45 The
the period for taking an appeal, motion of petitioner corporation was
The distinction between a question of law
the aggrieved party may move prepared and verified by its counsel, and
and a question of fact is clear-cut. It has
the trial court to set aside the since the ground for the motion was
been held that "[t]here is a question of law
judgment or final order and grant premised on said counsel's excusable
in a given case when the doubt or
a new trial for one or more of the negligence or mistake, then the obvious
difference arises as to what the law is on a
following causes materially conclusion is that he had personal
certain state of facts; there is a question of
affecting the substantial rights of knowledge of the facts relating to such
fact when the doubt or difference arises as
said party: negligence or mistake. Hence, it can be
to the truth or falsehood of alleged facts."42
said that the motion of petitioner
corporation for the re-opening of its cases
Whether petitioner corporation actually (a) Fraud, accident, mistake or and/or holding of new trial was in
made zero-rated sales; whether it paid input excusable negligence which substantial compliance with the formal
ordinary prudence could not have requirements of the revised Rules of Court.
VAT on these sales in the amount it had
declared in its returns; whether all the input guarded against and by reason of
VAT subject of its applications for which such aggrieved party has
probably been impaired in his Even so, this Court finds no sufficient
refund/credit can be attributed to its zero-
rights; or ground for granting the motion of petitioner
rated sales; and whether it had not
corporation for the re-opening of its cases
previously applied the input VAT against its
and/or holding of new trial.
output VAT liabilities, are all questions of (b) Newly discovered evidence,
fact which could only be answered after which he could not, with
reviewing, examining, evaluating, or reasonable diligence, have In G.R. No. 141104, petitioner corporation
weighing the probative value of the discovered and produced at the invokes the Resolution,46 dated 20 July
evidence it presented, and which this Court trial, and which if presented 1998, by the CTA in another case, CTA
does not have the jurisdiction to do in the would probably alter the result. Case No. 5296, involving the claim of
present Petitions for Review petitioner corporation for refund/credit of
on Certiorari under Rule 45 of the revised input VAT for the third quarter of 1993. The
Rules of Court. Within the same period, the said Resolution allowed the re-opening of
aggrieved party may also move CTA Case No. 5296, earlier dismissed by
fore reconsideration upon the the CTA, to give the petitioner corporation
Granting that there are exceptions to the grounds that the damages the opportunity to present the missing
general rule, when this Court looked into awarded are excessive, that the export documents.
questions of fact under particular evidence is insufficient to justify
circumstances,43 none of these exist in the the decision or final order, or that
instant cases. The Court of Appeals, in both the decision or final order is The rule that the grant or denial of motions
cases, found a dearth of evidence to contrary to law. for new trial rests on the discretion of the
support the claims for refund/credit of the trial court,47 may likewise be extended to
input VAT of petitioner corporation, and the the CTA. When the denial of the motion
records bear out this finding. Petitioner In G.R. No. 148763, petitioner corporation rests upon the discretion of a lower court,
corporation itself cannot dispute its non- attempts to justify its motion for the re- this Court will not interfere with its exercise,
compliance with the requirements set forth opening of its cases and/or holding of new unless there is proof of grave abuse
in Revenue Regulations No. 3-88 and CTA trial before the CTA by contending that the thereof.48
That the CTA granted the motion for re- proceedings indefinite, tentative, and client's right to be heard, must bind
opening of one case for the presentation of subject to re-opening by the mere petitioner corporation. The question is not
additional evidence and, yet, deny a similar subterfuge of replacing the counsel. What whether petitioner corporation succeeded in
motion in another case filed by the same the aggrieved litigant should do is seek establishing its interests, but whether it had
party, does not necessarily demonstrate administrative sanctions against the erring the opportunity to present its side.53
grave abuse of discretion or arbitrariness counsel and not ask for the reversal of the
on the part of the CTA. Although the cases court's ruling.49
Besides, litigation is a not a "trial and error"
involve identical parties, the causes of
proceeding. A party who moves for a new
action and the evidence to support the
As elucidated by this Court in another trial on the ground of mistake must show
same can very well be different. As can be
case,50 the general rule is that the client is that ordinary prudence could not have
gleaned from the Resolution, dated 20 July
bound by the action of his counsel in the guarded against it. A new trial is not a
1998, in CTA Case No. 5296, petitioner
conduct of his case and he cannot therefore refuge for the obstinate.54Ordinary
corporation was claiming refund/credit of
complain that the result of the litigation prudence in these cases would have
the input VAT on its zero-rated sales,
might have been otherwise had his counsel dictated the presentation of all available
consisting of actual export sales, to
proceeded differently. It has been held time evidence that would have supported the
Mitsubishi Metal Corporation in Tokyo,
and again that blunders and mistakes made claims for refund/credit of input VAT of
Japan. The CTA took into account the
in the conduct of the proceedings in the trial petitioner corporation. Without sound legal
presentation by petitioner corporation of
court as a result of the ignorance, basis, counsel for petitioner corporation
inward remittances of its export sales for
inexperience or incompetence of counsel concluded that Revenue Regulations No. 3-
the quarter involved, its Supply Contract
do not qualify as a ground for new trial. If 88, and later on, CTA Circular No. 1-95, as
with Mitsubishi Metal Corporation, its 1993
such were to be admitted as valid reasons amended, did not apply to its client's claims.
Annual Report showing its sales to the said
for re-opening cases, there would never be The obstinacy of petitioner corporation and
foreign corporation, and its application for
an end to litigation so long as a new its counsel is demonstrated in their failure,
refund. In contrast, the present Petitions
counsel could be employed to allege and nay, refusal, to comply with the appropriate
involve the claims of petitioner corporation
show that the prior counsel had not been administrative regulations and tax court
for refund/credit of the input VAT on
sufficiently diligent, experienced or learned. circular in pursuing the claims for
its purchases of capital goods and on
refund/credit, now subject of G.R. Nos.
its effectively zero-rated sales to CBP and
141104 and 148763, even though these
EPZA-registered enterprises PASAR and Moreover, negligence, to be "excusable,"
were separately instituted in a span of more
PHILPHOS for the second, third, and fourth must be one which ordinary diligence and
than two years. It is also evident in the
quarters of 1990 and first quarter of 1992. prudence could not have guarded
failure of petitioner corporation to address
There being a difference as to the bases of against.51 Revenue Regulations No. 3-88,
the issue and to present additional
the claims of petitioner corporation for which was issued on 15 February 1988,
evidence despite being given the
refund/credit of input VAT in CTA Case No. had been in effect more than two years
opportunity to do so by the Court of
5926 and in the Petitions at bar, then, there prior to the filing by petitioner corporation of
Appeals. As pointed out by the appellate
are resulting variances as to the evidence its earliest application for refund/credit of
court, in its Decision, dated 15 September
required to support them. input VAT involved herein on 21 August
2000, in CA-G.R. SP No. 46718 –
1990. CTA Circular No. 1-95 was issued
only on 25 January 1995, after petitioner
Moreover, the very same Resolution, dated
corporation had filed its Petitions before the x x x Significantly, in the
20 July 1998, in CTA Case No. 5296,
CTA, but still during the pendency of the resolution, dated 7 June 2000,
invoked by petitioner corporation,
cases of petitioner corporation before the this Court directed the parties to
emphasizes that the decision of the CTA to
tax court. The counsel of petitioner file memoranda discussing,
allow petitioner corporation to present
corporation does not allege ignorance of among others, the submission of
evidence "is applicable pro hac vice or in
the foregoing administrative regulation and proof for "its [petitioner's] sales of
this occasion only as it is the finding of [the
tax court circular, only that he no longer gold, copper concentrates, and
CTA] that petitioner [corporation] has
deemed it necessary to present the pyrite to buyers." Nevertheless,
established a few of the
documents required therein because of the the parties, including the
aforementioned material points regarding
presentation of alleged unrebutted evidence petitioner, failed to address this
the possible existence of the export
of the zero-rated sales of petitioner issue, thereby necessitating the
documents together with the prior and
corporation. It was a judgment call made by affirmance of the ruling of the
succeeding returns for the quarters
the counsel as to which evidence to present Court of Tax Appeals on this
involved, x x x" [Emphasis supplied.]
in support of his client's cause, later proved point.55
Therefore, the CTA, in the present cases,
to be unwise, but not necessarily negligent.
cannot be bound by its ruling in CTA Case
No. 5296, when these cases do not involve Summary
the exact same circumstances that Neither is there any merit in the contention
compelled it to grant the motion of petitioner of petitioner corporation that the non-
Hence, although this Court agreed with the
corporation for re-opening of CTA Case No. presentation of the required documentary
5296. petitioner corporation that the two-year
evidence was due to the excusable mistake
prescriptive period for the filing of claims for
of its counsel, a ground under Section 1,
refund/credit of input VAT must be counted
Rule 37 of the revised Rules of Court for
Finally, assuming for the sake of argument from the date of filing of the quarterly VAT
the grant of a new trial. "Mistake," as it is
that the non-presentation of the required return, and that sales to EPZA-registered
referred to in the said rule, must be a
documents was due to the fault of the enterprises operating within economic
mistake of fact, not of law, which relates to
counsel of petitioner corporation, this Court processing zones were effectively zero-
the case.52 In the present case, the
finds that it does not constitute excusable rated and were not covered by Revenue
supposed mistake made by the counsel of
negligence or mistake which would warrant Regulations No. 2-88, it still denies the
petitioner corporation is one of law, for it
the re-opening of the cases and/or holding claims of petitioner corporation for refund of
was grounded on his interpretation and
of new trial. its input VAT on its purchases of capital
evaluation that Revenue Regulations No. 3-
goods and effectively zero-rated sales
88 and CTA Circular No. 1-95, as
during the second, third, and fourth quarters
Under Section 1, Rule 37 of the Revised amended, did not apply to his client's cases
of 1990 and the first quarter of 1992, for not
Rules of Court, the "negligence" must be and that there was no need to comply with
being established and substantiated by
excusable and generally imputable to the the documentary requirements set forth
appropriate and sufficient evidence.
party because if it is imputable to the therein. And although the counsel of
Petitioner corporation is also not entitled to
counsel, it is binding on the client. To follow petitioner corporation advocated an
the re-opening of its cases and/or holding of
a contrary rule and allow a party to disown erroneous legal position, the effects thereof,
new trial since the non-presentation of the
his counsel's conduct would render which did not amount to a deprivation of his
required documentary evidence before the
BIR and the CTA by its counsel does not
constitute excusable negligence or mistake
as contemplated in Section 1, Rule 37 of
the revised Rules of Court.

WHEREFORE, premises considered, the

instant Petitions for Review are
hereby DENIED, and the Decisions, dated
6 July 1999 and 15 September 2000, of the
Court of Appeals in CA-G.R. SP Nos.
47607 and 46718, respectively, are
hereby AFFIRMED. Costs against

Ynares-Santiago, Chairperson, Austria-

Martinez, Nachura, JJ., concur.