G.R. No. 159490 ; February 18, 2008
Atlas Consolidated Mining and Development Corporation, petitioner, vs. Commissioner of Internal Revenue, respondent.

FACTS

Atlas Consolidated Mining and Development Corporation, a VAT-registered entity engaged in producing copper concentrates for export, filed an application for a tax credit certificate or refund of input VAT paid for the first quarter of 1993, amounting to PhP 7,907,662.53. Its claim was based on its zero-rated export sales, the proceeds of which were inwardly remitted in acceptable foreign currency. After the Bureau of Internal Revenue did not act on its administrative claim, Atlas filed a petition for review with the Court of Tax Appeals to prevent the prescriptive period from lapsing.
The CTA denied Atlas’s claim, ruling it failed to present sufficient evidence. Specifically, the CTA found that Atlas did not comply with the documentary requirements under Revenue Regulation No. 3-88, such as failing to submit photocopies of export documents, invoices, and receipts, and presenting a bank certification without a currency conversion rate. The CTA held these omissions prevented it from ascertaining the veracity of the export sales and the creditable input VAT claimed. The Court of Appeals affirmed the CTA’s decision.

ISSUE

Whether the Court of Tax Appeals and the Court of Appeals erred in denying Atlas’s claim for tax credit or refund of input VAT on the ground of insufficiency of evidence and for non-compliance with Revenue Regulation No. 3-88.

RULING

The Supreme Court denied the petition and affirmed the assailed rulings. The Court emphasized that a claim for tax refund or credit is in the nature of a tax exemption and is construed strictly against the taxpayer, who bears the burden of proof. This burden includes proving not only the factual basis of the claim but also strict compliance with the conditions prescribed by law and its implementing regulations.
The Court upheld the applicability of Revenue Regulation No. 3-88 to judicial claims, as the regulation was issued pursuant to the Secretary of Finance’s authority to promulgate rules for the effective enforcement of the Tax Code and has the force of law. Atlas’s failure to submit the specific documents required by the regulation—such as export documents, commercial invoices, and proof of inward remittance—was fatal to its claim. The general testimony of its Accounting and Finance Manager and the incomplete bank certification could not substitute for this mandatory documentary evidence. Furthermore, the Court found no merit in Atlas’s plea for a new trial to submit forgotten evidence, as it failed to exercise the ordinary diligence required of a litigant. Consequently, Atlas did not discharge its burden of proof, warranting the denial of its claim.