G.R. No. 175142, July 22, 2013 - BONIFACIO WATER CORPORATION (FORMERLY BONIFACIO VIVENDI WATER CORPORATION), Petitioner, v. THE COMMISSIONER OF INTERNAL REVENUE, Respondent.
G.R. No. 175142, July 22, 2013
BONIFACIO WATER CORPORATION (FORMERLY BONIFACIO VIVENDI WATER CORPORATION), Petitioner, v. THE COMMISSIONER OF INTERNAL REVENUE, Respondent.
D E C I S I O N
Quarter Input VAT Paid on
Purchase of Capital Goods
Total Amount 1999 4th Quarter P11,607,748.20 P11,607,748.20 2000 1st Quarter P18,281,682.96 2nd Quarter 14,884,531.96 3rd Quarter 21,705,122.19 4th Quarter (836,270.66) 54,035,066.45 Grand Total P65,642,814.65
WHEREFORE, in the light of the foregoing, the Petition for Review is PARTIALLY GRANTED. The respondent is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of the petitioner in the reduced amount of P40,875,208.64, representing unutilized input VAT on capital goods for the period from the 4th quarter of 1999 to the 4th quarter of 2000, computed as follows:cralavvonlinelawlibrarySO ORDERED.4
Amount Claimed P 65,642,814.65 Less: Disallowance per Court’s Evaluation 24,767,606.01 Refundable Amount P 40,875,208.64
In sum, the refundable amount to be granted to petitioner should be increased to P45,446,280.55, computed as follows:cralavvonlinelawlibrary
Refundable Amount per Decision P 40,875,208.64 Add: Additional Input VAT a.) Construction in Progress P 1,439,629.72 b.) Input VAT found not to have been recorded twice 3,131,442.19 4,571,071.91 Total Refundable Amount P 45,446,280.55
IN VIEW OF ALL THE FOREGOING, respondent’s Motion for Reconsideration is DENIED for lack of merit, while petitioner’s Motion for Partial Reconsideration is PARTIALLY GRANTED.
Accordingly, respondent is ORDERED to REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the increased amount of P45,446,280.55 as computed above.
WHEREFORE, premises considered, the assailed Decision and Resolution of the Second Division [are] hereby AFFIRMED in toto, and the Petition for Review is hereby DISMISSED for lack of merit.
GROUNDS FOR THE PETITION
PETITIONER RESPECTFULLY MOVES THAT THE ASSAILED DECISION DATED 26 JUNE 2006, AND THE RESOLUTION DATED 19 OCTOBER 2006, ISSUED BY THE CTA EN BANC, BE SET ASIDE, BASED ON ANY OR ALL OF THE FOLLOWING GROUNDS:cralavvonlinelawlibrary
THE CTA EN BANC ERRED WHEN IT SANCTIONED THE PARTIAL DENIAL OF PETITIONER’S CLAIM FOR REFUND ON THE GROUND THAT PETITIONER’S INVOICES ARE NOT COMPLIANT WITH ADMINISTRATIVE REGULATIONS.
THE CTA EN BANC ERRED WHEN IT SANCTIONED THE PARTIAL DENIAL OF PETITIONER’S CLAIM FOR REFUND BY ITS FAILURE TO APPLY THE DEFINITION OF CAPITAL GOODS CONTAINED IN EXISTING JURISPRUDENCE TO CERTAIN PURCHASES OF PETITIONER.
THE CTA EN BANC FAILED TO APPLY THE RULES REGARDING JUDICIAL ADMISSIONS IN THE PROCEEDINGS BELOW.
IN CIVIL CASES, SUCH AS CLAIMS FOR REFUND, STRICT COMPLIANCE WITH TECHNICAL RULES OF EVIDENCE IS NOT REQUIRED. MOREOVER, A MERE PREPONDERANCE OF EVIDENCE WILL SUFFICE TO JUSTIFY THE GRANT OF A CLAIM. THE CTA EN BANC SANCTIONED THE USE OF A HIGHER STANDARD OF EVIDENCE IN A NON-CRIMINAL PROCEEDING.10
Petitioner, in support of its first ground, argues that it has presented substantial evidence that unequivocally proved petitioner’s input VAT on purchases of capital goods from the 4th quarter of 1999 to the 4th quarter of 2000 as well as the fact that petitioner and Bonifacio GDE Corporation are one and the same entity.
We do not agree.
The change of name to Bonifacio GDE Corporation being unauthorized and without approval from the Securities and Exchange Commission, petitioner cannot now seek for a refund of input taxes which are supported by receipts under that name. This is pursuant to Sections 4.104-5 and 4.108-1 of Revenue Regulations No. 7-95 in relation to Sections 113 and 237 of the Tax Code, reproduced below for easy reference.
x x x x
The requisite that the receipt be issued showing the name, business style, if any, and address of the purchaser, customer or client is precise so that when the books of accounts are subjected to a tax audit examination, all entries therein could be shown as adequately supported and proven as legitimate business transactions. The absence of official receipts issued in the taxpayer’s name is tantamount to non-compliance with the substantiation requirements provided by law.
Petitioner cannot raise the argument that, “non-compliance with the invoicing requirements under the 1997 NIRC, as amended, does not automatically result in the denial of a claim for refund or tax credit when the same is supported by substantial evidence” and that, “In civil cases, such as claims for refund, strict compliance with technical rules of evidence is not required. Moreover, a mere preponderance of evidence will suffice to justify the grant of a claim,” in addition to its first ground in the instant petition. Taxpayers claiming for a refund or tax credit certificate must comply with the strict and mandatory invoicing and accounting requirements provided under the 1997 NIRC, as amended, and its implementing rules and regulations. Rules and regulations with regard to procedures are implemented not to be ignored or to be taken for granted, but are strictly adhered to for they are developed from the law itself. 13
Petitioner alleges that the disallowed input taxes are paid on services related to the construction of petitioner’s Waste Water Treatment Plant and Water Sewerage Distribution Networks, summarized as follows:cralavvonlinelawlibrary
Expense Exhibit Payee Professional services, project management and design, advisory works for operations and management, and contract preparation/ supervision. O-27 Symonds Travers Morgan Lease for Water Treatment Plant, Waste Water Treatment Plant and Elevated Reservoir from April 1999 to August 2000 O-29 Fort Bonifacio Development Corporation Professional services for project management and design for August 2000 O-33 Symonds Travers Morgan Rental on BDCA lot from 1 September 2000 to 31 November 2001 for the Water Treatment Plant, Waste Water Treatment Plant and Elevated Reservoir O-35 Fort Bonifacio Development Corporation Insurance for turned-over waste water treatment facilities O-36 -do- Professional services O-37 Symonds Travers Morgan O-39 Fort Bonifacio Development Corporation Contracted services and secondment O-41 Sade Compagnie Generale de Travaux Contracted services for additional service connection O-42 -do-
x x x x
Thus, it can be seen that the aforesaid expenses were correspondingly charged to “Pre-Operating Expense,” “Accrued Expense,” “Direct Overhead,” “Prepaid Insurance,” and “Construction in Progress.”
Records reveal that petitioner’s Property, Plant & Equipment account is composed of the following specific account titles, to wit:cralavvonlinelawlibrary
_______________________________________________________________________________________________ 2000 1999 _______________________________________________________________________________________________ Plant, machinery and equipment P 625,868,017.00 P - Sewerage and water pipelines 563,252,132.00 - Reservoir, tanks and pumping station 186,127,317.00 - Leasehold improvements 162,561,913.00 - Electronic and instrumentation 153,544,879.00 - Building 64,865,059.00 - Wells 20,248,580.00 - Office furnitures, fixtures & equipment 6,658,699.00 335,209.00 Transportation equipment 3,004,053.00 - _______________________________________________________________________________________________ P 1,786,130,649.00 P 335,209.00 Less: Accumulated Depreciation 868,012.00 - _______________________________________________________________________________________________ P 1,785,262,637.00 P 335,209.00 Construction in Progress 73,185,765.00 832,065,352.00 _______________________________________________________________________________________________ P 1,858,448,402.00 P 832,400,561.00 _______________________________________________________________________________________________
Only the above real accounts are to be considered as capital goods since “capital goods” is defined as:cralavvonlinelawlibrary“Capital goods or properties” refer to goods or properties with estimated useful life greater than one year and which are treated as depreciable assets under Section 29(f), used directly or indirectly in the production or sale of taxable goods or services.Had petitioner intended the aforementioned itemized expenses to be part of Property, Plant & Equipment, then it should have recorded the same to the foregoing specific accounts. Except for the account “Construction in Progress,” the other expense items do not fall within the definition of capital goods pursuant to Section 4.106-1(b) of Revenue Regulations No. 7-95.16
1 Penned by Associate Justice Caesar A. Casanova, with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, and Erlinda P. Uy, concurring; rollo, pp. 59-68.cralawlibrary
2Rollo, pp. 69-73.cralawlibrary
3Id. at 173-183.cralawlibrary
4 Id. at 182-183. (Emphasis in the original)
5 Id. at 218-230.cralawlibrary
6 Id. at 229-230. (Emphasis in the original)
7Id. at 59-68.cralawlibrary
8Id. at 67. (Emphasis in the original)
9Id. at 69-73.cralawlibrary
10Id. at 22-23.cralawlibrary
11Spouses Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February 23, 2011, 644 SCRA 1, 8-9.cralawlibrary
12 Among the recognized exceptions are the following, to wit:cralavvonlinelawlibrary(a) When the findings are grounded entirely on speculation, surmises, or conjectures;chanroblesvirtualawlibrary
(b) When the inference made is manifestly mistaken, absurd, or impossible;chanroblesvirtualawlibrary
(c) When there is grave abuse of discretion;chanroblesvirtualawlibrary
(d) When the judgment is based on a misapprehension of facts;chanroblesvirtualawlibrary
(e) When the findings of facts are conflicting;chanroblesvirtualawlibrary
(f) When in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee;chanroblesvirtualawlibrary
(g) When the CA’s findings are contrary to those by the trial court;chanroblesvirtualawlibrary
(h) When the findings are conclusions without citation of specific evidence on which they are based;chanroblesvirtualawlibrary
(i) When the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent;chanroblesvirtualawlibrary
(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.
13Rollo, pp. 62-64. (Emphasis supplied)
14Western Mindanao Power Corporation v. Commissioner of Internal Revenue, G.R. No. 181136, June 13, 2012.cralawlibrary
15Rollo, pp. 218-230.cralawlibrary
16 Id. at 221-224. (Citations omitted)
17Commissioner of Internal Revenue v. Asian Transmission Corporation, G.R. No. 179617, January 19, 2011, 640 SCRA 189, 200.cralawlibrary
18 G.R. No. 157064, August 7, 2006, 498 SCRA 126; 529 Phil. 785 (2006).cralawlibrary
19 Id. at 135-136; at 795.