CTA affirms P57.9-M tax refund for Philex

THE COURT of Tax Appeals (CTA) affirmed its Second Division’s ruling to award a P57.9million tax refund to Philex Mining Corp., the country's largest gold and copper producer.

Voting unanimously in full court, the tax court dismissed the petition for review filed by the Bureau of Internal Revenue (BIR) assailing the CTA Second Division’s earlier ruling to award P57,910,100.80 to Philex Mining due to lack of merit.

“Wherefore, the instant petition for review is here denied for lack of merit. Accordingly, the decision promulgated on May 20, 2016 and the resolution promulgated on July 7, 2016 both rendered by the Court of Division is hereby affirmed,” read the June 1 decision penned by Associate Justice Lovell R. Bautista.

To recall, Philex Mining filed a claim for a refund for tax credits for the second and third quarter of 2012 amounting to P43.96 million and P42.12 million, respectively, with the Department of Finance’s One-Stop Shop InterAgency Tax Credit and Duty Drawback Center (DoF-OSS) on Dec. 17, 2013.

Citing inaction from the BIR, Philex raised the issue to the tax court. The court in division, on May 20, 2016, partially granted refund to Philex.

“The Court declared that only the input [value added tax (VAT)] of P57,910,100.80 can be attributed to zero-rated sales,” the decision then read.

The BIR then filed a motion for reconsideration, but it was denied by the CTA Second Division.

The BIR elevated the case with the CTA en banc, arguing the court “erred in not considering respondent’s failure to present evidence showing that it submitted with the DoF-OSS complete documents in support of its claim for refund.”

The CTA en banc said it found “no merit in petitioner’s contentions.”

“The term ‘relevant supporting documents’ refers to those documents necessary to support the legal basis in disputing a tax assessment or in proving the claim for refund, as determined by the taxpayer and not by the BIR, who can only inform the taxpayer to submit additional documents but cannot demand what type of supporting documents to be submitted.”

The CTA en banc also noted that the Court in Division only partially granted Philex’s tax refund claim.

“The Court En Banc finds no reason to reverse the findings of the Court in Division, which merely considered the evidence presented by respondent in arriving at its decision. In fact, due to the rule that refunds are construed strictly against the taxpayer, the Court in Division did not award respondent the full refund it prayed for and only granted a portion thereof which is supported by evidence,” it added.

Presiding Justice Roman G. del Rosario also submitted a 5-page concurring opinion, noting that, “If the petitioner (BIR) truly believed that respondent submitted insufficient documents in support of its administrative claim for refund, then petitioner should have notified of necessary documents needed to ascertain the validity of its refund claim.”

“Considering that the present petition is a result of petitioner’s inaction on respondent’s refund claim, respondent may submit as it did, any document or evidence it deems necessary to support its judicial claim,” Mr. Del Rosario added.