G.R. No. 230016 , November 23, 2020
Commissioner of Internal Revenue, Petitioner, vs. Philex Mining Corporation, Respondent.

FACTS

Philex Mining Corporation (Philex Mining), a VAT-registered domestic corporation engaged in mining and exportation of mineral products, filed claims for refund of unutilized input VAT attributable to its zero-rated sales for the second and third quarters of taxable year 2010. It filed amended quarterly VAT returns reflecting excess input tax and subsequently filed administrative claims for refund with the Department of Finance’s One-Stop Shop Center (DOF-OSS) in June 2012, attaching supporting documents via Claimant Information Sheets. After the claims were not acted upon, Philex Mining filed separate petitions for review before the Court of Tax Appeals (CTA) Division in October 2012. The CTA Division consolidated the cases and, after trial and evaluation of an Independent Certified Public Accountant’s report, partially granted the petitions, ordering a refund of ₱51,734,898.99. The CTA Division rejected the Commissioner of Internal Revenue’s (CIR) motion for reconsideration, which argued that the judicial claim was premature, that Philex Mining failed to submit a required checklist of documents, and that it did not comply with accounting requirements such as keeping subsidiary sales/purchase journals and filing monthly VAT declarations. The CTA En Banc affirmed the Division’s decision. The CIR elevated the case to the Supreme Court, contending that tax declarations and subsidiary journals form part of the mandatory requirements for a tax refund.

ISSUE

Whether Philex Mining’s compliance with the requirements of keeping subsidiary journals and filing monthly VAT declarations is a condition precedent for the grant of its claim for refund or tax credit of unutilized input VAT attributable to zero-rated sales.

RULING

The Supreme Court denied the petition and affirmed the decisions of the CTA. The Court held that while the tax law mandates the keeping of subsidiary journals and the filing of monthly VAT declarations, these are not enumerated as substantiation requirements that a taxpayer must comply with to be entitled to a refund or tax credit under Section 112(A) of the National Internal Revenue Code (NIRC). The Court applied the plain-meaning rule (verba legis), stating that when the words of a statute are clear, they must be given their literal meaning without interpretation. Section 112(A) of the NIRC and the relevant Revenue Regulations (RR No. 16-2005) specify that creditable input taxes must be substantiated by a VAT invoice or official receipt issued in accordance with the law. The subsidiary journals and monthly VAT declarations, though required for other purposes under Sections 113 and 114 of the NIRC and related regulations, are not included in the list of documents a taxpayer must present to prove a claim for refund. The Court emphasized that it cannot impose additional conditions or limitations not provided by the law. Therefore, Philex Mining’s failure to present these specific accounting records did not disqualify it from the refund, as it had sufficiently substantiated its claim with the required VAT invoices and other evidence. The refund of ₱51,734,898.99 was upheld.