ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QIJEZON CITY ATLAS CONSOLIDATED MINING and DEVELOPMENT CORPORATION, Petitione r, - versus - C.T.A. CASE NO. COMMISSIONER OF INTERNAL REVENUE, Respondent. I I X- - - - - -- - -X I. I I '.x. To this Court comes petitioner Atl as Conso lidate d Mining and Development Corporation wit h the prayer that respondent Commissioner of Internal Re venue be ordered to refund or iss ue a tax credit certificate to herein petitioner for the sum of P40,078, 267 . 81, representing input value- added tax <VAT> allegedly paid during the first quart er <January to Ma rch> of 1 990 as shown in i ts application for ax cre dit/refund filed on Jul y 24, 1 990 <p . 262, BIR Records>. The facts of the case as manifested by the parties in the Joint Stipulation of Facts submitted to this Court on January 8, 19 93 are as follows <pp. 40-55, CTA Recorda>:

-- -- - DE C I S I 0 N - C.T.A. Case No. 4794 -2- Petitioner is a corporation duly organized and existing under the laws of the Philippines. It is engaged in the business of mining, production, and sale of various min ral products, consisting principally of co pper concentrates and gold. It is registered with the Bureau of Internal Revenue <B IR> as a VAT e nt er prise. Pursuant to Sect on 100( >< 2 > of the Tax Code , a s am nd ed, p t i ti oner applied f or zero - rating of the fol l owing s 1 e: Gold . o the Central Bank of the P h i pp i n ee <C B> ( 2) co centrates to t e Phi lippine a � d Sm 1 i ng end Refinin g ation <PAS AR> ., Pyr'te concentrates to Phili ppine Ph ph t~ Fertilizer � Corporation <Ph lphoe) The SIR' s approval o s lee to CB and PASAR wa s dated Apri l 2 1, 1988 <Ann e x " A"> ' while zero - rating of sales to Philphos was approved effective '' June 1, 1988 <A nnex "8">. PASAR and Philphos are regis ered wi t h the . - ~ Bo ard of Investme nt s <BOI> and Export Processing Zone Author it y <EPZA> as export- oriented enterprises located in an EPZA zone . ''

- DECI S I 0 N- C.T . A. Case No. 4794 -3- In the VAT return filed by petitioner wit h the BIR on April 20, 1988 covering the period January to Mar c h 1990, pet i tioner declared its sales to CB, PAS AR and Philphos as zero-r at e d sales and there fore not s ubj ect to the lO Y. o utput VAT <Annex "C-1">. Petitioner applied wit h respondent on J uly 24, 1990 for tax credit /r efund of inpu t VAT paid on i ts purchases of goods and services for the first quarter of 990 in the total amount of ~40,078,267.81 <Ann x "D ">. No act on h ad as yet been t k en by res p o nden t on the afore mentioned applicatio n at the time the instant petition or r ~ vie w wa s fil e d on April 20, 1992, t h avow purpo"�e of whic h � �s �bo � beat t he two-yea od w thi n ,. I whi c h a judicial olB m e hould b il Su aequen tly , an amended applic i on for x credi t/r efund ~as filed on Septe mb er 22 , 1992 reducing the amI oun't � claimed to P35,5 22 ,056.58 <Ann x "E"; p . 265, BIR Rec o r da). On or about Se pt ember 22 , 1992, respondent ap p r oved t he issuance of tax credit cert,tfia::ate to pe titioner but only in th amount of P 2;5~8,122.32 while disallowing P33 ,003,934.2G. Tbe.� detailed computation is shown b elow <Annex "F" ~ p. 295 , BIR Recorda>: .,

- DE C I S I 0 H- C.T.A. Case No. 4794 -4- h aunt. Claiaed P35,522, 05&. 58 Less-Dis llowancea 2,814, 318. 83 P32,7fJI ,737 .75 tal No O.R./Invoic a/Proper 3!!,189, 615. 43 Oocu~~enh Pl, 384, 172.48 Jl 2,518, 122.32 ibl Invoice w/o VAT Registration No. 474,606. 87 (c) Invoice w/ Sold to 'Cash' :U,499. 04 ld! Invoice t/o authori ty to prin I l VAT No. stoap /typwritt n handwritten printed in 198 � 1909 441 , 195.54 <fl Others 71,088.09 lgl Erroneous eo�putolion �5, 362.58 Allowable Input T9~ Other Deductions! !hi Output tax due on ftiacellan ou taxable 8 1B p 972, 535. 67 Iii Output tax du on sale of gold to Centr 1 Bank 1179, 314,048.17 � 1/11 ) 16,301, 277.11 t j) Input tax at tributable to sal a to PASAR <No val id BOI certification as required by RKO 22 -92 ) 12,404,150.65 (kl Inpu~ t J a\tributab t tc sal~e to Philphos !Mo BOI c~rti� e lion l 501,652.00 W Pena ~y for iaou nc of invo�ces without authority to u loose leaf a leu invo .c~~ !Q,OOO.Q�1 Allo1nble Input T~x Reeotsend for issuance o! Tax Credit Certificat~ The � :foregoing disallowa nces' and l other II �� d e duc tions which e:f:fectively denied a substantial portion o:f the claim :for input VAT re:fund/tax credit are assailed by pe titioner :for various reasons.

- DEC I S I 0 N- C.T.A. Case No. 4794 -5- A s upp e me ntal r ep or t of investigati on was '�' s u b mitte d by t h e BI R ex a mi n er s o n Oc t ober 15 , 1992 recomme ndi n g th in c r e a se in a ll owable ~ i~ put tax credit f ro m P 2 , 5 1 8 , 1 22.32 to ~ 12;10 1 , 5 69. 11 or an i n cr e ment of P 9~ 5 8 3 ,44 6. 79 due to p eti tioner's sub mission of BOI oer ' fie i n on t h e s ales to PAS AR wh ich b r oug ht d o wn t he dedu c t i on o� Pl 2 , 40 4~ 150. 65 t o 2 , 5 1 S , 1 22.32 (pp . 3 44 - 367 , BIR Records). Th e iss u a ais ed and a~ @@d upon by the parties i n h r espe ctivo ple dings are as �a llows: a . t h e va l id' t y o� VAT ~uling No. 008 - 92 in connection wi th - J. i. the a p pli c ability o � lOY. VAT on sales o� c 6 ppe:t--corlcentrates to PASAR and pyrite to Philphos: l �;; > lo I. ii. t he applica'U !on ci!f-. lOY. VAt on sales o� gold to ' CB; f!�:' t l I b. the validity o� VAT Ruling No. 59 - 92 which applies retroactivel�y s 'V'AT Ruling 008 - 92 dated January 23 ; 199'2 ;' ' - c. the applicability o� Revenue Regulations No. 2-88 in that i~ requires the purchaser to export more than ' �70Y. o� its

- DEC I S I 0 N- C.T.A. Case No. 4794 -6- total annual production for the supplier's sales s uch as petitioner 's to be lOOY. zero - rated; d. th v id ty o:f he d ea llowance of input ta~e n h moun o:f P2,814,318.83 on h g und t h p titioner has not OO!Tlp.\. e-d w th Sect on 108 <e> of the NIRC; e. th v l i y ef B R fi@ ~ tl~tions that auto ma ia ly di s 1 ~ VAT refund for failu t- eq ir -d documents although he purohaae can be substantiated by other documents; f. the propriety of deducting the "output tax on miscellaneo us taxable sales" from the current input tax ihste:ad o-f" against petitioner's presumptive ~nput ~:ax <PIT> whiol, per Blq find tnge nr sufficient to cover the amount assessed; , g. the mandatory nature of Sect~on ~ ~~6(e) of the NIRC pr escr ibing a specif~c period of sixty ( 60) days within which , to 1 process and grant applications fo~ ~nput VAT refund and the corresponding right given to claimants t o apply VAT credits to other taY l abilit ies as allowed under n 1 , / I

- DEC I S I 0 H- C.T.A. Case Ho. 4794 -7- Section 104<b > of the NIRC law as well as i nterest for the delay in the grant of petitioner' s clai ms for VAT refund/credit. ;,� I is axiom c th th Cou~t : can only adjudicate and rende its opinion on matters as to wh ich there is a liv e or justiciable contro ve r sy brought befo e i � It cannot r~ nd e r such o pinions on the basie o hypo h t cal d'sputes or disputes which a e not yet ripe for adjudication. The task of he a u is to djudicate on actual disp u tes and not to render advisory Qpini ons . To the mind of th Court, t h e threshold issue involved in th s case is whether under t he peculiar set of facts ob aining in the case at bar, petitioner is ent led to cla m any value-added tax credit/refund. If the answer is in the negative, there would be no need to dwel ve in o the other / issues agreed pon by h e p ie, as :there would no longer be any liv controversy to spea~ of and any ruling this Court may lay down on sa~d issues would partake of he natu e of � a mere advisory opini on.

- DEC I S I 0 N - C.T.A. Case No. 4794 -8 - The records of the case show ~ h at a lthough the parties stipulated t hat petitioner is a VAT reg istered en erp i per i s Registration No. 32-A -6-00222 4,., the VAT Regi s tration Certificate of petitioner as appearing in the records is 32-0 -004622 and not 32 - A- 6 - 002224 <p. 250, BIR Records) . f Sect'on 107<d > of th NIRC states that "ea c h VAT - re~�s � r d p~r son h � l be assigned only one egis ra t io n number ." We ar e therefore at a l oss as to whe petit ioner got its allege d VAT Regi stration No . 32 - A- 6-002224 whi c h i t used in the VAT return and ap p lica tion for t x credit/refund that it :fi l ed, In addit ' on, the Court likaw se notes that the supp r.;: cl ctiv'ty d Reg1.atration q ) r ;l't;. R@ t'lt rrt idn 1Certif icate s u bmitted> we Au \.1St 1 � 19 o, wherders' 't .he input VAT refund i s e eks a v l"f!l th p i d f x'-6 m January I to Mar ch 1990. Si n ce liability fo~ VAT �� commences only on the first day of the month following the regis tration of th e e nt er pri se ESe>ction., 2a,. Revenue Regulations No. 5-87 >, the reckoning i p,oint for petitioner's entitlement to any � refun~At~x credit should likewis e be c ounted from . the ~t sa me date, .. ....~ ~ i.e., September 1, 1990.

- DEC I S I 0 N- C.T.A. Case No. 4794 -9- BIR Rulings cannot, as a rule, be given retroactive effect <Commi ssi oner of � Internal Revenue vs. Burroughs Limited 142 SCRA 324> The Court can only ascertain the truth respecti ng a matter of fact by means of evidence presented before it. The VAT Registration Certif c ate submitt d by pet'tioner plainly shows that 't b cam f ct'v on Augu t 15, 1990. It t h erefore foll ~~s that pr i r to said date, pet:lt on ~gist er ed nte pri e unde r the VAT syste m. An "ot bGing th en a VAT -r egistered person, pet t oner :i. not ent itle to a ny tax credit/refund of 'n put VA T paid for the period from Jan uary to Ma c h 1990 , pu r ant to Section 16 <a> of Revenue R -g u a � o n s No. �- 87 , a amen ded tly Revenue Regulations No, - 88 dated A r i l 7 , ~ 1988, which states s fell ws: "Sec. tax c'redits o:� tax. aa�l ea of e v cea. ~ VA T~ er on !!!.�!.Y. b e . i ven �( !t , t ax cer if ca _g_ Q.!:. ref und of value - tax es aid cor e a p o nd-ing. 1 "to. i the zero - rated sa ea of goods or ervicea, to t h e e xtent that s u c h t x s h v ~ot ,~ b ee n applied against output axes, upon showing o� proof of oompli nee witD , the � condi i ons stat d in Section 8 of these Regulations." <Underscor'ng supplied) 1 1 /) ' J

- DECI S I 0 H - C.T.A. Case No. 4794 - 10 - Rule is sett l ed that laws granting exemptions from t x ar c n tru~d tr'c is im' juris against the taxpayer and i be al l y e onstrued of the taxing power < Ni ts ub .i. . h:i Mot a Corp. vs � � �ciR, 181 SCRA 2 14>. Having det e mined that p e titioner is not entitle 0 h tax r fun cl me d by it, the Court de e m�l i tli y t w .l ~ h eco ot her issues raised on eed upon y the p rties. The resolut-'on - :f h e ia ues are ti C longer germane to the adj udicati on o� p titi an 'a i ghte under the specific circums ances obtain i ng in the case at bar. There s no 1 ng r any live or justiciable controversy whic h the Cour e called upon to adjudicate . Any op ' nio n We re nd~r. on '. such other is s u e s wo uld b me e dic�t �um) ' a�nd, worse , would pa r take of h nat.ure of " a �mere a'dvisor y opinion, The Cou _t s not p p red to emba~k upon such a enuo v n ur , esp e lly c onside ring the serious imp i c ion that an a dverse T uling may ha ve on the admin:stration of the VAT e~stiem. Lastly, tax a ar~ wh - t w pa f for t e civilized socie_ty. Without tax es the government ��� would be paralyzed :for lack of th~ motive po'lll er to actuate and operate it, It is the li:febl o dd o:f the ...

- DE C I 5 I 0 N- C.T.A. Case No. 4794 - 11 - government and so should be collected without unne cessary h indra n ce. <Commissioner of Internal Revenue � v. Wyeth S uaco Laboratories, Inc., G.R. 76281 , 30 Sept. 9 1> WHEREFORE, i n view of the fore going, the Court reso l ves to DENY the petition for lac k of. merit. 50 ORDERED. GRUBA Judge WE CONCUR: / j li � Concurs &Dissents i: in ~separate opin i on ER -sTO D. ACOSTA decision was . . es;ding J~e v~ J~~~ RAMON O. P� �. - � A Assoc�a ~ Jud I I~ lI CE ON I hereby certify that thi reached after du e consultat ion among the members of the Court of Tax App @a l s i n ccordance with Section 13 Art 'cle VIII of the Constitu ion. ~ I n~ Q I ;nl\ ;;-:, ~ ~ n�~.i/111, ERNEStO D. ACOSTA Pres iding -Judge Court of Tex Appeals