In filing a value-added tax (VAT) refund claim, the law provides two stages — the first is at the administrative level and the second is at the judicial or court level. Only when the administrative claim is denied or not acted upon by the Bureau of Internal Revenue (BIR) within the prescribed period can the taxpayer file an appeal with the Court of Tax Appeals (CTA).
At the court level, certain rules have to be observed by taxpayers in proving their claim for refund, such as the manner of presenting or offering their evidence. Evidence may be presented before the courts in three forms:
• Object evidence — those addressed to the senses of the court (i.e., those that may be shown, inspected or observed by the court);
• Documentary evidence — those consisting of writing or any material containing letters, words, numbers, figures, symbols or other modes of written expression offered as proof of their contents (or simply put, those that prove the contents of a document); and
• Testimonial evidence — a statement given by a witness in open court.
The focus of our topic today is a document offered as evidence. A document may be offered as object evidence or documentary evidence depending on the purpose for which it is presented in court. It is object evidence if the purpose of its presentation is to prove its existence. In contrast, it is documentary evidence if the purpose is to prove the contents of the document.
In either instance, a document presented as evidence requires identification by a witness. Otherwise, it will not be admitted as evidence, similar to what happened in CTA Case No. 8876, Oct. 10, 2017, involving a claim for refund or issuance of a tax credit certificate (TCC) for unutilized input VAT attributable to zero-rated sales.
In its decision, the CTA stated that a taxpayer needed to prove that it is a VAT-registered taxpayer, among others, to be entitled to the VAT TCC or refund. Under the law and prevailing jurisprudence, it is an essential requisite that VAT registration must be established for a taxpayer to be entitled to a refund or TCC.
During the proceeding, the taxpayer offered in evidence its BIR Certificate of Registration (COR) as a VAT-registered taxpayer. However, the CTA issued a Resolution denying its admission in evidence for the following reasons: (1) The taxpayer failed to have its COR identified by its witnesses; (2) It was never testified to by any of its witnesses; (3) It did not appear in the Minutes of the Hearing when witnesses were presented; and (4) It was not listed as among the documents identified by the witnesses during their presentation.
Despite available legal remedies under the circumstances, the taxpayer failed to correct its errors leading to the finality of the Resolution. In an attempt to secure a reversal of the Resolution, the taxpayer filed a motion for reconsideration to the CTA’s Resolution asking that the COR be admitted as part of its evidence without need of identification by a competent witness. The CTA denied the taxpayer’s motion for reconsideration and pointed out, again, that the COR was denied admission as it was not identified during trial.
Thereafter, the taxpayer filed a Memorandum to which it attached a “Re-issued Certified True Copy of its BIR COR.” However, upon examination by the court, no such document was attached to the Memorandum.
Insisting on the admissibility of the COR, the taxpayer then filed a Motion for Leave to Submit and to Admit Re-issued Certified True Copy of COR. It argued the admissibility of the COR on the pretext that the certified true copy is a faithful reproduction of the original document. As a public record, the original copy cannot be removed from the office of its custodian and is covered by the rule on irremovability of public records.
Again, the CTA denied the admissibility of the COR for neither having been identified by a competent witness nor for having been mentioned in any of the judicial affidavits of the taxpayer’s witnesses.
Likewise, the evidence was not found in the minutes of the proceedings when the taxpayer’s witnesses were presented. Even a later submission of an alleged certified true copy of the COR did not cure the taxpayer’s error since the document was not a certified true copy but a mere color-printed scanned copy, as observed by the CTA.
The CTA emphasized that only documents duly identified by a competent witness and formally offered in evidence will be admitted for the Court’s consideration and evaluation.
Jurisprudence has established the importance of formal offer of evidence. As triers of facts, judges are mandated to rest their findings of facts and their judgment only and strictly upon the evidence offered by the parties at the trial. A formal offer of evidence conveys to the judge the purpose/s for which an evidence is being presented and allows the court to pass judgment on its admissibility should the adverse party object to the evidence after examining it. Finally, it facilitates review as the appellate court will not be required to review documents not previously scrutinized by the trial court (G.R. No. 195876, Dec. 5, 2016).
The rule, however, admits of an exception. In the interest of substantial justice, the Supreme Court has, on occasion, allowed the admission of evidence not formally offered, provided that two essential conditions must concur: (1) The evidence must have been duly identified by testimony duly recorded; and (2) It must have been incorporated in the records of the case.
Being an exception to the rule, strict compliance with the requisites must be observed. In the absence of those qualifying conditions in this case, the presentation of evidence to prove that the taxpayer is a VAT-registered entity cannot be disregarded. Jurisprudence is really more than just a piece of paper.
The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.
Rachael U. Yap is a senior consultant at the tax services department of Isla Lipana & Co., the Philippine member firm of the PwC network.