COMMISSIONER OF INTERNAL REVENUE v. CORAL BAY NICKEL CORPORATION

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY EN BANC CO MMISSIONER OF CTA EB No. 1418 (CTA Case No. 8641) INTERNAL REVENUE, Petitioner, -versus- CORAL BAY NICKEL CORPORATION, Respondent. X- - - - - - - - - - - - - - - X CTA EB No. 1512 (CTA Case No. 8641) CORAL BAY NICKEL CORPORATION, Present: Petitioner, DEL ROSARIO, PJ; CASTANEDA, JR., -versus- UY, FABON-VICTORINO, COMMISSIONER OF MINDARO-GRULLA, INTERNAL REVENUE, RINGPIS-LIBAN, and MANAHAN, JJ. Respondent. Promulgated: DEC 12 2~ . ~ .� ~~~. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x RESOLUTION Fabon - Victorino, J.: On May 17, 2018, the Court rendered a Decision, / disposing the case in the following fashion:

RESOLUTION CTA EB Nos. 1418 and 1512 WHEREFORE, the Petition for Review dated February 10, 2016 filed by the Commissioner of Internal Revenue, and the Petition for Review dated September 23, 2016 filed by Coral Bay Nickel Corporation, are both DENIED, for lack of merit. SO ORDERED. 1 Both Coral Bay Nickel Corporation (CBNC) and the Commissioner of Internal Revenue (CIR) now move for reconsideration of the above decision in their respective motions both dated June 6, 2018. CBNC's Motion for Partial Reconsideration: CBNC claims that it clearly stated in its Petition for Review an assignment of error2 with the corresponding discussion3 pertaining to its entitlement for refund of input tax for CY 2011 in compliance with the rule on assignment of errors under Section 8, Rule 51 of the Rules of Court. CBNC believes that the word "TIN-V" appearing in the VAT official receipts4 (VAT O.Rs) issued by Cendaur Engineering (CE) is not fatal to its claim for refund for: 1) neither the Tax Code nor any revenue regulation (RR) consider the word "TIN-V" as defective or flawed for the purpose of substantiating input taxes, citing jurisprudence5 as authority; 2) the information stated in such VAT O.Rs was approved by the Bureau of Internal Revenue (BIR); and 3) the word "TIN-V" simply means "Taxpayer's Identification Number- VAT." Equally compliant with the substantiation requirements are the VAT O.Rs issued by Century Properties (CP)6 containing notations "collected on behalf of CEN Holdings, Inc. (CHI)," says CBNC. Allegedly, the receipts themselves reveal that they were issued by CP and not CHI, hence, the seller of service from which input taxes were incurred was 1 Rollo, p. 135. I 2 Assignment of Error/Issue, CBNC's petition for review, p. 6. 3 Paragraphs 28 and 29, CBNC's petition for review, p. 8. 4 Exhibits P-116.672 to 677 and P-116.1279. . 5 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007. 6 Exhibits 0-116.522 to 525 and P-116-818 to 819.

RESOLUTION CTA EB Nos. 1418 and 1512 CP itself. With the foregoing, CBNC believes that the Court must grant the refund of the additional amount of P1,448,072.01. Despite directive, the CIR failed to file his comment/opposition to CBNC's Motion for Partial Reconsideration. 7 CIR's Motion for Reconsideration: The CIR contends that pursuant to Section 112 of the NIRC, as amended, he had 120-days to decide CBNC's administrative claim, reckoned from the date of submission of complete supporting documents. CBNC had 30 days from the lapse of the said 120-day period to institute its appeal before the CTA, lest its right to appeal would be lost. Given that CBNC failed to submit documents to substantiate its claim for refund, his 120-day period to act on the administrative claim did not run rendering its filing of Petition for Review with the Court in Division premature, thereby leaving the Court without any option but to dismiss the case outright. Further, CBNC is not the proper party to claim the subject refund. Citing case-law8 on the matter, he opines that goods/services destined for consumption inside an economic zone (ECOZONE) are zero-rated, for which reason, suppliers may not shift the VAT burden to entities located therein. Since CBNC is located inside the Rio Tuba Export Processing Zone, it is not legally feasible for its suppliers to pass on the VAT charged on its purchases of goods/services. In the event that the supplier of goods/services erroneously shifted VAT to CBNC, it is the former and not the latter which has the legal right to claim the erroneously shifted VAT. Even granting that CBNC is the proper party to institute the present claim, it is still not entitled to the refund sought as it failed to present certifications from the Board of Investments, Department of Finance, and Philippine / 7 Records verification report dated September 21, 2018, rollo, unpaged. 8 Coral Bay Nickel Corporation vs. Commissioner of Internal Revenue, G.R. No. 190506, June 13, 2016.

RESOLUTION CTA EB Nos. 1418 and 1512 Economic Zone Authority to the effect that it has no pending administrative claim for refund before the said government entities. CBNC also failed to present sufficient proof showing that the input taxes it incurred are attributable to its zero- rated sales. The CIR considers the evidence adduced by CBNC deficient for the grant of the subject claim for refund justifying the denial of the entire claim. By way of Comment/Opposition, 9 CBNC posits that the CIR was not able to furnish it with a copy of his Motion for Reconsideration at least three (3) days from date of hearing, in violation of Section 4, Rule 15 of the Rules of Court, rendering such motion a mere scrap of paper. Further, allowing the CIR to determine the completeness of the supporting documents for purposes of counting the 120-day period for him to act on his level is practically allowing him to prevent the taxpayer-claimant from seeking timely recourse to the Court. Moreover, its evidence show that its purchases of goods/services were consumed outside the Rio Tuba Export Processing Zone, hence, input taxes could be legally shifted to it. It is plain that both motions for reconsideration filed by CBNC and the CIR merely mimic the arguments they advanced in their previous pleadings, all of which have been squarely addressed and passed upon by the Court in the impugned Decision of May 17, 2018. No reason nor rhyme had been raised to justify a reversal or even a modification of the Court's ruling. To discuss them anew is certainly useless, if not futile. In any event, even assuming ex gratia argumenti that the parties' respective Motions are impressed with merit, their resort to the Court En Bane is legally and procedurally flawed, justifying denial of their respective actions. The matters properly cognizable by the Court En Bane are expressly laid down in Section 18 of Republic Act (R.A.) No. 1125, as amended, which reads: SEC. 18. Appeal to the Court of Tax Appeals En Bane. - No / civil proceeding involving matter arising under the National 9 Rollo, pp. 181-196.

RESOLUTION CTA EB Nos. 1418 and 1512 Internal Revenue Code, the Tariff and Customs Code or the Local Government Code shall be maintained, except as herein provided, until and unless an appeal has been previously filed with the CTA and disposed of in accordance with the provisions of this Act. A party adversely affected by a resolution of a Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the CTA en bane. (emphasis supplied) In implementing the above provision, Section 1, Rule 8 of the Revised Rules of the Court of Tax Appeals (RRCTA) 10 stringently requires a party dissatisfied with the Decision of the Court in Division to first institute a timely motion for reconsideration or new trial thereto before invocation of the Court En Bane's jurisdiction may be permitted. 11 In Asia Trust Development Bank, Inc. vs. Commissioner of Internal Revenue/ 2 no less than the Supreme Court explained that when the Court in Division renders an Amended Decision, it is technically a decision distinct from the original one. Ergo, prior filing by the aggrieved party of a motion for reconsideration/new trial of the Amended Decision is again compulsory, lest the Amended Decision shall become final and executory, to wit: Thus, in order for the CTA En Bane to take cognizance of an appeal via a petition for review, a timely motion for reconsideration or new trial must first be filed with the CTA Division that issued the assailed decision or resolution. Failure to do so is a ground for the dismissal of the appeal as the word "must" indicates that the filing of a prior motion is mandatory, and not merely directory. The same is true in the case of an amended decision. Section 3, Rule 14 of the same rules defines an amended decision as '[a]ny action modifying or reversing a decision of the Court en bane or in Division.' As explained in CE Luzon Geothermal Power Company, Inc. v. Commissioner of Internal Revenue, an amended decision is a different 10 SECTION 1. Review of cases in the Court en bane. - In cases falling under the I exclusive appellate jurisdiction of the Court en bane, the petition for review of a decision or resolution of the Court in Division must be preceded by the filing of a timely motion for reconsideration or new trial with the Division. 11 See Commissioner of Customs vs. Marina Sales, Inc., G.R. No. 183868, November 22, 2010. 12 G.R. No. 201530, April19, 2017.

RESOLUTION CTA EB Nos. 1418 and 1512 decision, and thus, is a� proper subject of a motion for reconsideration. 13 In this case, the Court in Division rendered its Original Decision dated August 25, 2015, 14 granting in part CBNC's refund to the extent of P23,298,024.45, thus: WHEREFORE, in view thereof, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, let a tax refund be issued in favor of petitioner Coral Bay Nickel Corporation in the reduced amount of P23,298,024.45, representing unutilized input taxes attributable to zero-rated sale of goods for the for quarters of year 2011. SO ORDERED. Both CBNC15 and the CIR16 moved to reconsider the above Decision. In the Resolution dated January 4, 2016, 17 the Court in Division allowed CBNC to present additional evidence in support of its plea. Thereafter, the Court in Division promulgated an Amended Decision dated August 23, 2016, 18 increasing CBNC's refundable amount to P23,298,946.12, thus: WHEREFORE, in view thereof, (CBNC)'s Motion for Reconsideration and Supplemental Motion are PARTIALLY GRANTED. Accordingly, the dispositive portion of the Decision dated August 25, 2015 is AMENDED, as follows: "WHEREFORE, in view thereof, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, let a tax refund be issued in favor of petitioner Coral Bay Nickel Corporation in the reduced amount of P23,298,946.12, representing unutilized input taxes attributable to zero-rated sale of goods for the for quarters of year 2011." SO ORDERED. 13 Underscoring supplied, citations omitted. 14 Docket (CTA Case No. 8641), pp. 689-709. I 15 CBNC's Motion for Reconsideration dated September 10, 2015, ibid. at pp. 717- 729; and its Supplemental Motion for Reconsideration dated October 9, 2015, id. at pp. 774-780. 16 The CIR's Motion for Partial Reconsideration dated September 10, 2015, id. at pp. 750-756. 17 Id. at pp. 806-818. 18 Id. at pp. 930-939.

RESOLUTION CTA EB Nos. 1418 and 1512 Consistent with the rules and jurisprudence, the proper legal recourse for both CBNC and the CIR is to seek reconsideration of the Amended Decision dated August 23, 2016, which they failed to do for reasons only known to them. This procedural lapse allowed the Amended Decision of August 23, 2016 to attain immutability, hence, may no longer be disturbed. In other words, CBNC and the CIR are now precluded from seeking affirmative relief with the Court En Bane relative to the present consolidated cases. WHEREFORE, the Motion for Partial Reconsideration and the Motion for Reconsideration, both dated June 6, 2018 respectively filed by Coral Bay Nickel Corporation and the Commissioner of Internal Revenue are DENIED. SO ORDERED. ' . FABON-VICTORINO We Concur: (I reiterate my Concurring nd Dissenting Opinion.) ROMAN G. DEL ROSARIO Presiding Justice ~~c.~;. ER~P.UY JOANITO c. CASTANEDA, jR. Associate Justice Associate Justice w.~ ....&~- ~ N, M"'-�~.C~ MA. BELEN M. RINGPIS-LIBAN Associate Justice CIELITO N. MINDARO-GRULLA Associate Justice ~~. ~~ CATHERINE T. MANAHAN Associate Justice