GR 153204; (August, 2005) (Digest)
G.R. No. 153204 . August 31, 2005.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. MANILA MINING CORPORATION, Respondent.
FACTS
Manila Mining Corporation, a VAT-registered mining company, sold gold to the Central Bank in 1991. Believing such sales were zero-rated export sales based on a prior BIR letter, it filed applications for refund or tax credit for input VAT paid in 1991, totaling ₱13,856,824.64. The Commissioner of Internal Revenue failed to act on the applications, prompting Manila Mining to file petitions before the Court of Tax Appeals (CTA).
During the CTA proceedings, Manila Mining filed Requests for Admission regarding the submission and amounts of its supporting documents. The CIR’s Replies to these requests were initially unverified. The CTA deemed the matters in the requests impliedly admitted under the Rules of Court due to the lack of a sworn denial. The CTA later granted the refund, a decision reversed by the Court of Appeals, which held that Manila Mining failed to substantiate its claim with proper evidence.
ISSUE
Whether Manila Mining Corporation sufficiently proved its entitlement to a refund or tax credit for input VAT on its zero-rated sales of gold to the Central Bank.
RULING
The Supreme Court denied the petition and affirmed the Court of Appeals, ruling that Manila Mining failed to discharge its burden of proof. The legal logic is anchored on the fundamental principle that tax refunds are in the nature of tax exemptions and are construed strictly against the claimant. The claimant must prove not just the legal basis for zero-rating but also the factual basis for the refund amount through competent evidence.
The Court found that Manila Mining’s reliance on the implied admissions from the CIR’s unverified replies was misplaced. Judicial admissions under the Rules of Court must pertain to facts that are solely within the knowledge of the adverse party. The existence and authenticity of the claimant’s own invoices and receipts, which are crucial to substantiate the input VAT paid, are not matters peculiarly within the CIR’s knowledge. Therefore, the CTA erred in treating these as impliedly admitted. Consequently, Manila Mining was obligated to formally offer the required receipts and invoices as evidence, which it did not do. Without this crucial documentary proof, its claim for refund remained unsubstantiated and could not be granted.