FIRST DIVISION

G.R. No. 185666, February 04, 2015NIPPON EXPRESS (PHILIPPINES) CORP., Petitioner, v. COMMISSIONER OF
INTERNAL REVENUE, Respondents.
DECISION
PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside the 20 August 2008 Decision1 and
the 16 December 2008 Resolution2 of the Court of Tax Appeals (CTA) En Banc in C.T.A. E.B. No. 335 which affirmed in
toto the Decision and Resolution dated 15 June 20073 and 13 November 2007,4respectively, of the First Division of the CTA
(CTA in Division)5 in C.T.A. Case No. 6464, denying due course petitioner’s claim for the issuance of a Tax Credit Certificate
(TCC) in the amount of P24,826,667.61 allegedly representing accumulated excess or unutilized input taxes attributable to
its zero-rated sales for the calendar year 2000, and therefore dismissing the petition for failure to comply with the
substantiation requirements.

The Facts

As aptly found by the CTA in Division, the factual antecedents of the case are undisputed:

Petitioner is a corporation duly organized and existing under the laws of the Republic of the Philippines, registered with the
Securities and Exchange Commission (SEC) under Certificate of Registration No. ASO95-005669, and with principal office
at U-2701 Yuchengco Tower, RCBC Plaza, 6819 Ayala Ave., Salcedo Village, Makati City.

Likewise, petitioner is registered with the Large Taxpayers District Office of the Bureau of Internal Revenue in Makati City
as, among others, a Value-Added Tax (VAT) taxpayer rendering freight forwarding services.

Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue vested with power to decide,
approve, and grant refunds or tax credits of overpaid internal revenue taxes as provided by law and holds office and may
be served with summons, orders, pleadings, and other processes at BIR Revenue Region 8, 5/F Atrium Bldg., Makati Ave.,
Makati City.

The precedent facts, as culled from the records are as follows:

For the calendar year 2000, petitioner’s gross receipts were primarily derived from rendering its services to Philippine
Economic Zone Authority (PEZA)-registered clients. Likewise, it incurred total sales of P1,063,357,608.74, which as shown
in petitioner’s Amended Quarterly VAT Return, is made up of the following:

GRAND TOTAL: P1,063,357,608.74

Also, for the same year, petitioner paid input taxes amounting to P31,846,253.57 and apportioning this amount with its total
sales above in accordance with Section 112 of the 1997 Tax Code, as amended; the amount of total sales attributable to
zero-rated sales would be P24,826,667.61.

Under the premise that it is entitled to a refund of the amount of P24,826,667.61, petitioner filed four separate applications
for tax credit/refund with the One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of
Finance (OSSAC-DOF) on September 24, 2001.

Receiving no resolution from OSSAC-DOF, petitioner filed the instant petition for review on April 24, 2002 pursuant to
Section 112 in relation to Section 229 of the 1997 Tax Code, as amended. 6

Docketed as C.T.A. Case No. 6464, trial ensued having both parties submitted various documentary and testimonial
evidence during the proceedings, as well as rebuttal and sur-rebuttal evidence, in order to establish their respective claim.

The Ruling of the CTA in Division

In a Decision dated 15 June 2007,7 the CTA in Division denied due course and accordingly dismissed petitioner’s claim for
the issuance of a TCC on the ground of its failure to comply with the substantiation requirements. It explained that the sales
invoices, transfer slips, and credit memos presented in support thereof did not comply with the substantiation requirements
provided for under Sections 106, 108, and 1138 of the National Internal Revenue Code (NIRC) of 1997, as amended,
considering that petitioner’s sales are sales of services which should only be supported by official receipts. Consequently,
without the VAT official receipts evidencing its zero-rated revenues, the input VAT payment alleged to be directly attributable
thereto cannot be refunded or a TCC cannot be issued in its favor in accordance with Revenue Memorandum Circular
(RMC) No. 42-2003. Having rendered such ruling, the CTA in Division decided not to pass upon other incidental issues
raised before it for being moot.

On 13 November 2007, the CTA in Division denied both petitioner’s Motion for Reconsideration and Supplemental Motion
for Reconsideration for lack of merit.9chanroblesvirtuallawlibrary

Aggrieved, petitioner appealed to the CTA En Banc by filing a Petition for Review under Section 18 of Republic Act (R.A.)
No. 1125, as amended by R.A. No. 9282,10 on 21 December 2007, docketed as C.T.A. E.B. No. 335.
The Ruling of the CTA En Banc

The CTA En Banc affirmed in toto both the aforesaid Decision and Resolution rendered by the CTA in Division in CTA Case
No. 6464, pronouncing that although Sections 113 and 237 of the NIRC of 1997, as amended, and Section 4.108-1 of
Revenue Regulations (RR) No. 7-95 use the words “invoice” and “receipt” without distinction, nevertheless, the NIRC of
1997, as amended, provides separate provisions, which must be read in relation thereto: Section 106 for VAT on sale of
goods or properties, and Section 108 for VAT on sale of services and use or lease of properties.11 Clearly therefore, the
CTA En Banc agreed with the court a quo’s findings that the evidence submitted by petitioner, i.e. sales invoices, transfer
slips, credit memos, cargo manifests, and credit notes, as well as formal report of the independent certified public accountant
(ICPA), to prove its zero-rated sales, were insufficient so as to entitle it to the issuance of a TCC since the aforesaid legal
provisions do not provide for any other document that can be used as an alternative to, or in lieu of an invoice and official
receipts.12 Ultimately, it ruled that petitioner’s sales, being sales of services, shall properly be supported by VAT official
receipts only, which unfortunately were not presented and submitted as evidence by petitioner during trial.

Upon denial of petitioner’s Motion for Reconsideration thereof, it filed the instant Petition for Review on Certiorari before this
Court seeking the reversal of the aforementioned Decision and the 16 December 2008 Resolution13 rendered in C.T.A. E.B.
No. 335, based on the following grounds:
That nowhere in the NIRC of 1997, as amended, and its regulations does it state that only official receipts support the sale
of services or that only sales invoices support the sale of goods;
That the NIRC of 1997, as amended, its implementing regulations, and well-established jurisprudence allow other
documentary evidence to prove the zero-rated sales;
That amendment in the law that requires the issuance of sales invoice for every sale of goods and the issuance of official
receipt for every sale of services cannot be given retroactive effect;
That the majority of the CTA En Banc committed grave abuse of discretion amounting to lack or want of jurisdiction when
they made an erroneous interpretation and application of the applicable law and regulations;
That denial of petitioner’s just and valid claim constitutes unjust enrichment at the expense of the taxpayer and should not
be sustained;
That even assuming for the sake of argument that the majority of the CTA En Banc is correct, petitioner should at least be
allowed to introduce its existing official receipts in the interest of justice and equity; and
That petitioner has fully complied with all requirements for its claim for refund or TCC considering
that:chanRoblesvirtualLawlibrary
Petitioner filed both administrative and judicial claims for refund/TCC within the two (2) year prescriptive period;
Petitioner’s input taxes amounting to P31,846,253.87 were incurred for the period from January 1, 2000 to December 31,
2000 of which P24,826,667.61 remained unutilized and unapplied against its output tax;
Petitioner’s input taxes subject of the present case were not applied against any of its output tax liability;
Petitioner’s input taxes subject of the present case are directly attributable to zero-rated sales;
Petitioner’s zero-rated sales are supported by documentary evidence in accordance with the NIRC of 1997, as amended,
and its implementing regulations; and
The input taxes being claimed are supported by VAT invoices or official receipts in accordance with Section 4.108-5 of RR
No. 7-95 in relation to Sections 110 and 237 of the NIRC of 1997, as amended.14

The Issue

The sole issue for this Court’s consideration is whether or not petitioner is entitled to a TCC in the amount of P24,826,667.61
allegedly representing its excess and unutilized input VAT for the taxable year 2000, in accordance with the provisions of
the NIRC of 1997, as amended, other pertinent laws, and applicable jurisprudential proclamations.
Our Ruling

At the outset, in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be
raised.15 The Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by
the contending parties during the trial of the case considering that the findings of facts of the (CTA) are conclusive and
binding on the Court16 – and they carry even more weight when the (CTA En Banc) affirms the factual findings of the trial
court.17 However, this Court had recognized several exceptions to this rule,18 including instances when the appellate court
manifestly overlooked relevant facts not disputed by the parties, which, if properly considered, would probably justify a
different conclusion.

In Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of
Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue (San Roque case),19 this Court has
finally settled the issue on proper observance of the prescriptive periods in claiming for refund of creditable input tax due or
paid attributable to any zero-rated or effectively zero-rates sales. In view of the foregoing jurisprudential pronouncements,
there appears to be an imperious need for this Court to review the factual findings of the CTA in order to attain a complete
determination of the issue presented.

Records reveal that the CTA in Division in C.T.A. Case No. 6464 merely focused on the compliance with the substantiation
requirements, which particularly ruled that the evidence submitted by petitioner to prove its zero-rated sales were insufficient
so as to entitle it to the issuance of a TCC. The same findings were adopted and affirmed in toto by the CTA En Banc in
the assailed 20 August 2008 Decision.20chanroblesvirtuallawlibrary

While it is true that the substantiation requirements in establishing a refund claim is a valid issue, the Court finds it imperative
to first and foremost determine whether or not the CTA properly acquired jurisdiction over petitioner’s claim covering taxable
year 2000, taking into consideration the timeliness of the filing of its judicial claim pursuant to Section 112 of the NIRC of
1997, as amended, and consistent with the pronouncements made in the San Roque case. Clearly, the claim of petitioner
for the TCC can proceed only upon compliance with the aforesaid jurisdictional requirement.

Relevant to the foregoing, Section 7 of R.A. No. 1125, 21 which was thereafter amended by R.A. No. 9282,22 clearly defined
the appellate jurisdiction of the CTA, to wit:chanRoblesvirtualLawlibrary
Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as
herein provided.
(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal
revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National
Internal Revenue Code or other law or part of law administered by the Bureau of Internal Revenue;chanrobleslaw

x x x.23 (Emphasis supplied)

Moreover, Section 11 of the same law prescribes how the said appeal should be taken. It
reads:chanRoblesvirtualLawlibrary
Section 11. Who may appeal; effect of appeal. – Any person, association or corporation adversely affected by a decision or
ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of Assessment
Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such decision or ruling.24 x x x
(Emphasis and underscoring supplied)

The timeliness in the administrative and judicial claims can be found in Section 112 of the NIRC of 1997, as amended, which
reads:chanRoblesvirtualLawlibrary
SEC. 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. – Any VAT-registered person, whose sales are zero-rated or effectively zero-
rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of
a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to
the extent that such input tax has not been applied against output tax: x x x.

x x x x

(D)25Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall
grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the
date of submission of complete documents in support of the application filed in accordance with Subsections (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act
on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of
the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the
unacted claim with the Court of Tax Appeals.

x x x x. (Emphasis and underscoring supplied)

As mentioned earlier, the proper interpretation of the afore-quoted provision was finally settled in the San Roque case26 by
this Court sitting En Banc. The relevant portions of the discussion pertinent to the focal issue in the present case are quoted
hereunder as follows:chanRoblesvirtualLawlibrary
To repeat, a claim for tax refund or credit, like a claim for tax refund exemption, is construed strictly against the
taxpayer. One of the conditions for a judicial claim of refund or credit under the VAT System is compliance with the 120+30
day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim
to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of
BIR Ruling No. DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again
reinstated the 120+30 day periods as mandatory and jurisdictional. 27 (Emphasis supplied)

The same disposition was declared in Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue, and
Mindanao I Geothermal Partnership v. Commissioner of Internal Revenue,28 which, for emphasis, further provided a
Summary of Rules on Prescriptive Periods Involving VAT as a guide for all parties concerned, to
wit:chanRoblesvirtualLawlibrary
We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input
VAT as provided in Section 112 of the 1997 Tax Code, as follows:chanRoblesvirtualLawlibrary

(1) An administrative claim must be filed with the CIR within two years after the close of the taxable quarter when the zero-
rated or effectively zero-rated sales were made.

(2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within
which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-
year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-
day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by
inaction.

(3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR’s decision denying the administrative
claim or from the expiration of the 120-day period without any action from the CIR.

(4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up
to its reversal by this Court in Aichi on October 6, 2010, as an exception to the mandatory and jurisdictional 120+30 day
periods.29 (Emphasis supplied)

Certainly, it is evident from the foregoing jurisprudential pronouncements that a taxpayer-claimant only had a limited period
of thirty (30) days from the expiration of the one hundred twenty (120)-day period of inaction of the Commissioner of Internal
Revenue (CIR) to file its judicial claim with the CTA, with the exception of claims made during the effectivity of Bureau of
Internal Revenue (BIR) Ruling No. DA-489-03 (from 10 December 2003 to 5 October 2010).30 Failure to do so, the judicial
claim shall prescribe or be considered as filed out of time.

Applying the foregoing discussion to the present case, although it appears that petitioner has indeed complied with the
required two-year period within which to file a refund/tax credit claim with the BIR (OSSAC-DOF in this case) by filing all its
administrative claims on 24 September 2001 (within the period from the close of the taxable quarters for the year 2000,
when the sales were made), this Court finds that petitioner’s corresponding judicial claim was filed beyond the 30-day period,
detailed hereunder as follows:chanRoblesvirtualLawlibrary
Taxable year 2000 (close Filing date of the Last day of the 120-day Last day of the 30-day Filing date of the Petition
of taxable quarters) administrative claim period under Section period to judicially appeal for Review
(within the 2-year period) 112(D) from the date of said inaction
submission of complete
documents in support of its
application
1st Quarter
(31 March 2000)
2nd Quarter
(30 June 2000)
24 September 2001 22 September 2001 21 February 2002 24 April 2002
3rd Quarter
(30 September 2000)
4th Quarter
(31 December 2000)

Section 112(D) of the NIRC of 1997 categorically states that in case of failure on the part of the respondent to act on the
application within the 120-day period prescribed by law, petitioner only has 30 days after the expiration of the 120-day period
to appeal the unacted claim with the CTA. Since petitioner’s judicial claim for the aforementioned quarters for taxable year
2000 was filed before the CTA only on 24 April 2002,32which was way beyond the mandatory 120+30 days to seek judicial
recourse, such non-compliance with the mandatory period of 30 days is fatal to its refund claim on the ground of
prescription. Consequently, the CTA had no jurisdiction over the instant claim of petitioner as the petition was belatedly
filed.

It must be emphasized that jurisdiction over the subject matter or nature of an action is fundamental for a court to act on a
given controversy,33 and is conferred only by law and not by the consent or waiver upon a court which, otherwise, would
have no jurisdiction over the subject matter or nature of an action. Lack of jurisdiction of the court over an action or the
subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties. 34 If
the court has no jurisdiction over the nature of an action, its only jurisdiction is to dismiss the case. The court could not
decide the case on the merits.35chanroblesvirtuallawlibrary

The CTA, even if vested with special jurisdiction, is, as courts of general jurisdiction can only take cognizance of such
matters as are clearly within its statutory authority. 36 Relative thereto, when it appears from the pleadings or the evidence
on record that the court has no jurisdiction over the subject matter, the court shall dismiss the
claim.37chanroblesvirtuallawlibrary

Finally for academic discussion, as regards the substantiation requirements, it is worthy to mention that in Kepco Philippines
Corporation v. Commissioner of Internal Revenue,38 the High Court ruled that under the law, a VAT invoice is necessary for
every sale, barter or exchange of goods or properties while a VATofficial receipt properly pertains to every lease of goods
or properties, and every sale, barter or exchange of services. In other words, the VAT invoice is the seller’s best proof of
the sale of the goods or services to the buyer while the VAT receipt is the buyer’s best evidence of the payment of goods
or services received from the seller. Thus, the High Court concluded that VAT invoice and VAT receipt should not be
confused as referring to one and the same thing. Certainly, neither does the law intend the two to be used interchangeably.

All told, the CTA has no jurisdiction over petitioner’s judicial appeal considering that its Petition for Review was filed beyond
the mandatory 30-day period pursuant to Section 112(D)39 of the NIRC of 1997, as amended, and consistent with the ruling
in the San Roque case. Consequently, petitioner’s instant claim for refund must be denied.

WHEREFORE, the claim for refund is by prescription BARRED. Accordingly, the petition for review filed before the Court
of Tax Appeals docketed as CTA Case No. 6464 is DISMISSED for lack of jurisdiction and the issue on substantiation
requirements rendered MOOT and ACADEMIC. This petition is, for such reason, DISMISSED.

G.R. No. 188260 November 13, 2013

LUZON HYDRO CORPORATION, Petitioner,
vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
DECISION
BERSAMIN, J.:

This case involves a claim for refund or tax credit to cover petitioner Luzon Hydro Corporation's unutilized Input Value-
Added Tax (VAT) worth 1 2,920,665 .16 corresponding to the four quarters of taxable year 2001.
The Case
The petitioner brought this action in the Court of Tax Appeals (CTA) after the Commissioner of Internal Revenue
(respondent) did not act on the claim (CTA Case No. 6669). The CTA 2nd Division denied the claim on May 2, 2008 on the
ground that the petitioner did not prove that it had zero-rated sales for the four quarters of 2001.1The CT A En Banc denied
the petitioner's motion for reconsideration, and affirmed the decision of the CTA 2nd Division through its decision dated May
5, 2009.2 Hence, the petitioner appeals the decision of the CTA En Banc.
Antecedents
The petitioner, a corporation duly organized under the laws of the Philippines, has been registered with the Bureau of
Internal Revenue (BIR) as a VAT taxpayer under Taxpayer Identification No. 004-266-526. It was formed as a consortium
of several corporations, namely: Northern Mini Hydro Corporation, Aboitiz Equity Ventures, Inc., Ever Electrical
Manufacturing, Inc. and Pacific Hydro Limited.
Pursuant to the Power Purchase Agreement entered into with the National Power Corporation (NPC), the electricity
produced by the petitioner from its operation of the Bakun Hydroelectric Power Plant was to be sold exclusively to
NPC.3 Relative to its sale to NPC, the petitioner was granted by the BIR a certificate for Zero Rate for VAT purposes in the
periods from January 1, 2000 to December 31, 2000; February 1, 2000 to December 31, 2000 (Certificate No. Z-162-2000);
and from January 2, 2001 to December 31, 2001 (Certificate No. 2001-269).4
The petitioner alleged herein that it had incurred input VAT in the amount of ₱9,795,427.89 on its domestic purchases of
goods and services used in its generation and sales of electricity to NPC in the four quarters of 2001; 5 and that it had
declared the input VAT of ₱9,795,427.89 in its amended VAT returns for the four quarters on 2001, as follows: 6
Exhibit Date Filed Period Covered Input VAT (P)

F May 25, 2001 1st quarter – 2001 1,903,443.96

I July 23, 2001 2nd quarter – 2001 2,166,051.96

L July 23, 2002 3rd quarter –2001 1,598,482.39

O July 24, 2002 4th quarter – 2001 4,127,449.58

Total 9,795,427.89
On November 26, 2001, the petitioner filed a written claim for refund or tax credit relative to its unutilized input VAT for the
period from October 1999 to October 2001 aggregating ₱14,557,004.38. 7 Subsequently, on July 24, 2002, it amended the
claim for refund or tax credit to cover the period from October 1999 to May 2002 for ₱20,609,047.56. 8
The BIR, through Revenue Examiner Felicidad Mangabat of Revenue District Office No. 2 in Vigan City, concluded an
investigation, and made a recommendation in its report dated August 19, 2002 favorable to the petitioner’s claim for the
period from January 1, 2001 to December 31, 2001.9
Respondent Commissioner of Internal Revenue (Commissioner) did not ultimately act on the petitioner’s claim despite the
favorable recommendation. Hence, on April 14, 2003, the petitioner filed its petition for review in the CTA, praying for the
refund or tax credit certificate (TCC) corresponding to the unutilized input VAT paid for the four quarters of 2001 totalling
₱9,795,427.88.10
Answering on May 29, 2003,11 the Commissioner denied the claim, and raised the following special and affirmative
defenses, to wit:
xxxx
7. The petitioner has failed to demonstrate that the taxes sought to be refunded were erroneously or illegally collected;
8. In an action for tax refund, the burden is upon the taxpayer to prove that he is entitled thereto, and failure to sustain the
same is fatal to the action for tax refund;
9. It is incumbent upon petitioner to show compliance with the provisions of Section 112 and Section 229, both of the
National Internal Revenue Code, as amended;
10. Claims for refund are construed strictly against the claimant for the same partakes the nature of exemption from taxation
(Commissioner of Internal Revenue vs. Ledesma, G.R. No. L-13509, January 30, 1970, 31 SCRA 95) and as such they are
looked upon [with] disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 121);
11. Taxes paid and collected are presumed to have been made in accordance with the law and regulations, hence, not
refundable.12
xxxx
On October 30, 2003, the parties submitted a Joint Stipulation of Facts and Issues, 13 which the CTA in Division approved
on November 10, 2003. The issues to be resolved were consequently the following:
1. Whether or not the input value added tax being claimed by petitioner is supported by sufficient documentary evidence;
2. Whether petitioner has excess and unutilized input VAT from its purchases of domestic goods and services, including
capital goods in the amount of ₱9,795,427.88;
3. Whether or not the input VAT being claimed by petitioner is attributable to its zero-rated sale of electricity to the NPC;
4.Whether or not the operation of the Bakun Hydroelectric Power Plant is directly connected and attributable to the
generation and sale of electricity to NPC, the sole business of petitioner; and 5. Whether or not the claim filed by the
petitioner was filed within the reglementary period provided by law. 14
While the case was pending hearing, the Commissioner, through the Assistant Commissioner for Assessment Services,
informed the petitioner by the letter dated March 3, 2005 that its claim had been granted in the amount of ₱6,874,762.72,
net of disallowances of ₱2,920,665.16. Accompanying the letter was the TCC for ₱6,874,762.72 (TCC No. 00002618).15
On May 3, 2005, the petitioner filed a Motion for Leave of Court to Amend Petition for Review in consideration of the partial
grant of the claim through TCC No. 00002618. The CTA in Division granted the motion on May 11, 2005, and admitted the
Amended Petition for Review, whereby the petitioner sought the refund or tax credit in the reduced amount of
₱2,920,665.16. The CTA in Division also directed the respondent to file a supplemental answer within ten days from notice. 16
When no supplemental answer was filed within the period thus allowed, the CTA in Division treated the answer filed on May
16, 2003 as the Commissioner’s answer to the Amended Petition for Review. 17
Thereafter, the petitioner presented testimonial and documentary evidence to support its claim. On the other hand, the
Commissioner submitted the case for decision based on the pleadings. 18 On May 2, 2007, the case was submitted for
decision without the memorandum of the Commissioner.19
Ruling of the CTA in Division
The CTA in Division promulgated its decision in favor of the respondent denying the petition for review, viz:
In petitioner’s VAT returns for the four quarters of 2001, no amount of zero-rated sales was declared. Likewise, petitioner
did not submit any VAT official receipt of payments for services rendered to NPC. The only proof submitted by petitioner is
a letter from Regional Director Rene Q. Aguas, Revenue Region No. 1, stating that the financial statements and annual
income tax return constitute sufficient secondary proof of effectively zero-rated and that based on their examination and
evaluation of the financial statements and annual income tax return of petitioner for taxable year 2000, it had annual gross
receipts of Ph₱187,992,524.00. This Court cannot give credence to the said letter as it refers to taxable year 2000, while
the instant case refers to taxable year 2001.
Without zero-rated sales for the four quarters of 2001, the input VAT payments of Ph₱9,795,427.88 (including the present
claim of Ph₱2,920,665.16) allegedly attributable thereto cannot be refunded. It is clear under Section 112 (A) of the NIRC
of 1997 that the refund/tax credit of unutilized input VAT is premised on the existence of zero-rated or effectively zero-rated
sales.
xxxx
For petitioner’s non-compliance with the first requisite of proving that it had effectively zero-rated sales for the four quarters
of 2001, the claimed unutilized input VAT payments of Ph₱2,920,665.16 cannot be granted.
WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit.
SO ORDERED.20
On May 21, 2008, the petitioner moved to reconsider the decision of the CTA in Division. 21 However, the CTA in Division
denied the petitioner’s motion for reconsideration on September 5, 2008. 22
Decision of the CTA En Banc
On October 17, 2008, the petitioner filed a petition for review in the CTA En Banc (CTA E.B No. 420), posing the main issue
whether or not the CTA in Division erred in denying its claim for refund or tax credit upon a finding that it had not established
its having effectively zero-rated sales for the four quarters of 2001.
On May 5, 2009, the CTA En Banc promulgated the assailed decision affirming the Division, and denying the claim for
refund or tax credit, stating:
The other argument of petitioner that even if the tax credit certificate will not be used as evidence, it was able to prove that
it has zero-rated sale as shown in its financial statements and income tax returns quoting the letter opinion of Regional
Director Rene Q. Aguas that the statements and the return are considered sufficient to establish that it generated zero-rated
sale of electricity is bereft of merit. As found by the Court a quo, the letter opinion refers to taxable year 2000, while the
instant case covers taxable year 2001; hence, cannot be given credence. Even assuming for the sake of argument that the
financial statements, the return and the letter opinion relates to 2001, the same could not be taken plainly as it is because
there is still a need to produce the supporting documents proving the existence of such zero-rated sales, which is wanting
in this case. Considering that there are no zero-rated sales to speak of for taxable year 2001, petitioner is, therefore, not
entitled to a refund of Ph₱2,920,665.16 input tax allegedly attributable thereto since it is basic requirement under Section
112 (A) of the NIRC that there should exists a zero-rated sales in order to be entitled to a refund of unutilized input tax.
It is settled that tax refunds, like tax exemptions, are construed strictly against the taxpayer and that the claimant has the
burden of proof to establish the factual basis of its claim for tax credit or refund. Failure in this regard, petitioner’s claim must
therefore, fail.
WHEREFORE, the instant Petition for Review is hereby DENIED for lack of merit.
SO ORDERED.23
On June 10, 2009, the CTA En Banc also denied the petitioner’s motion for reconsideration.24
Issue
Aggrieved, the petitioner has appealed, urging as the lone issue: –
WHETHER THE CTA EN BANC COMMITTED A REVERSIBLE ERROR IN AFFIRMING THE DECISION OF THE CTA.
In its August 3, 2009 petition for review,25 the petitioner has argued as follows:
(1) Its sale of electricity to NPC was automatically zero-rated pursuant to Republic Act No. 9136 (EPIRA Law); hence, it
need not prove that it had zero-rated sales in the period from January 1, 2001 to December 31, 2001 by the presentation of
VAT official receipts that would contain all the necessary information required under Section 113 of the National Internal
Revenue Code of 1997, as implemented by Section 4.108-1 of Revenue Regulations No. 7-95. Evidence of sale of electricity
to NPC other than official receipts could prove zero-rated sales.
(2) The TCC, once issued, constituted an administrative opinion that deserved consideration and respect by the CTA En
Banc.
(3) The CTA En Banc was devoid of any authority to determine the existence of the petitioner’s zero-rated sales, inasmuch
as that would constitute an encroachment on the powers granted to an administrative agency having expertise on the matter.
(4) The CTA En Banc manifestly overlooked evidence not disputed by the parties and which, if properly considered, would
justify a different conclusion.26
The petitioner has prayed for the reversal of the decision of the CTA En Banc, and for the remand of the case to the CTA
for the reception of its VAT official receipts as newly discovered evidence. It has supported the latter relief prayed for by
representing that the VAT official receipts had been misplaced by Edwin Tapay, its former Finance and Accounting Manager,
but had been found only after the CTA En Banc has already affirmed the decision of the CTA in Division. In the alternative,
it has asked that the Commissioner allow the claim for refund or tax credit of ₱2,920,665.16.
In the comment submitted on December 3, 2009,27 the Commissioner has insisted that the petitioner’s claim cannot be
granted because it did not incur any zero-rated sale; that its failure to comply with the invoicing requirements on the
documents supporting the sale of services to NPC resulted in the disallowance of its claim for the input tax; and the claim
should also be denied for not being substantiated by appropriate and sufficient evidence.
In its reply filed on February 4, 2010,28 the petitioner reiterated its contention that it had established its claim for refund or
tax credit; and that it should be allowed to present the official receipts in a new trial.
Ruling of the Court
The petition is without merit.
Section 112 of the National Internal Revenue Code 1997 provides:
SEC. 112. Refunds or Tax Credits of Input Tax.—
(A) Zero-rated or Effectively Zero-rated Sales--Any VAT-registered person, whose sales are zero-rated or effectively zero-
rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of
a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to
the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated
sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange
proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng
Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also
in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be
directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume
of sales.
xxxx
A claim for refund or tax credit for unutilized input VAT may be allowed only if the following requisites concur, namely: (a)
the taxpayer is VAT-registered; (b) the taxpayer is engaged in zero-rated or effectively zero-rated sales; (c) the input taxes
are due or paid; (d) the input taxes are not transitional input taxes; (e) the input taxes have not been applied against output
taxes during and in the succeeding quarters; (f) the input taxes claimed are attributable to zero-rated or effectively zero-
rated sales; (g) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable
foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas; (h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales,
and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately
allocated on the basis of sales volume; and (i) the claim is filed within two years after the close of the taxable quarter when
such sales were made.29
The petitioner did not competently establish its claim for refund or tax credit.1avvphi1 We agree with the CTA En Banc that
the petitioner did not produce evidence showing that it had zero-rated sales for the four quarters of taxable year 2001. As
the CTA En Banc precisely found, the petitioner did not reflect any zero-rated sales from its power generation in its four
quarterly VAT returns, which indicated that it had not made any sale of electricity. Had there been zero-rated sales, it would
have reported them in the returns. Indeed, it carried the burden not only that it was entitled under the substantive law to the
allowance of its claim for refund or tax credit but also that it met all the requirements for evidentiary substantiation of its
claim before the administrative official concerned, or in the de novo litigation before the CTA in Division.30
Although the petitioner has correctly contended here that the sale of electricity by a power generation company like it should
be subject to zero-rated VAT under Republic Act No. 9136,31 its assertion that it need not prove its having actually made
zero-rated sales of electricity by presenting the VAT official receipts and VAT returns cannot be upheld. It ought to be
reminded that it could not be permitted to substitute such vital and material documents with secondary evidence like financial
statements.
We further find to be lacking in substance and bereft of merit the petitioner’s insistence that the CTA En Banc should not
have disregarded the letter opinion by BIR Regional Director Rene Q. Aguas to the effect that its financial statements and
its return were sufficient to establish that it had generated zero-rated sale of electricity. To recall, the CTA En Banc rejected
the insistence because, firstly, the letter opinion referred to taxable year 2000 but this case related to taxable year 2001,
and, secondly, even assuming for the sake of argument that the financial statements, the return and the letter opinion had
related to taxable year 2001, they still could not be taken at face value for the purpose of approving the claim for refund or
tax credit due to the need to produce the supporting documents proving the existence of the zero-rated sales, which did not
happen here. In that respect, the CTA En Banc properly disregarded the letter opinion as irrelevant to the present claim of
the petitioner.
We further see no reason to grant the prayer of the petitioner for the remand of this case to enable it to present before the
CTA newly discovered evidence consisting in VAT official receipts.
Ordinarily, the concept of newly discovered evidence is applicable to litigations in which a litigant seeks a new trial or the
re-opening of the case in the trial court. Seldom is the concept appropriate when the litigation is already on appeal,
particularly in this Court. The absence of a specific rule on newly discovered evidence at this late stage of the proceedings
is not without reason. The propriety of remanding the case for the purpose of enabling the CTA to receive newly discovered
evidence would undo the decision already on appeal and require the examination of the pieces of newly discovered
evidence, an act that the Court could not do by virtue of its not being a trier of facts. Verily, the Court has emphasized in
Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue 32 that a judicial claim for tax
refund or tax credit brought to the CTA is by no means an original action but an appeal by way of a petition for review of the
taxpayer’s unsuccessful administrative claim; hence, the taxpayer has to convince the CTA that the quasi-judicial agency a
quo should not have denied the claim, and to do so the taxpayer should prove every minute aspect of its case by presenting,
formally offering and submitting its evidence to the CTA, including whatever was required for the successful prosecution of
the administrative claim as the means of demonstrating to the CTA that its administrative claim should have been granted
in the first place.
Nonetheless, on the proposition that we may relax the stringent rules of procedure for the sake of rendering justice, we still
hold that the concept of newly discovered evidence may not apply herein. In order that newly discovered evidence may be
a ground for allowing a new trial, it must be fairly shown that: (a) the evidence is discovered after the trial; (b) such evidence
could not have been discovered and produced at the trial even with the exercise of reasonable diligence; (c) such evidence
is material, not merely cumulative, corroborative, or impeaching; and (d) such evidence is of such weight that it would
probably change the judgment if admitted.33
The first two requisites are not attendant. To start with, the proposed evidence was plainly not newly discovered considering
the petitioner s admission that its former Finance and Accounting Manager had misplaced the VAT official receipts. If that
was true, the misplaced receipts were forgotten evidence. And, secondly, the receipts, had they truly existed, could have
been sooner discovered and easily produced at the trial with the exercise of reasonable diligence. But the petitioner made
no convincing demonstration that it had exercised reasonable diligence. The Court cannot accept its tender of such receipts
and return now, for, indeed, the non-production of documents as vital and material as such receipts and return were to the
success of its claim for refund or tax credit was improbable, as it goes against the sound business practice of safekeeping
relevant documents precisely to ensure their future use to support an eventual substantial claim for refund or tax credit.
WHEREFORE, the Court DENIES the petition for review on certiorari for its lack of merit; AFFIRMS the decision dated May
5, 2009 of the Court of Tax Appeals En Bane; and ORDERS the petitioner to pay the costs of suit.
SO ORDERED.

G.R. No. 181858 : November 24, 2010

KEPCO PHILIPPINES CORPORATION, Petitioner, v. Commissioner of Internal Revenue, Respondent.
DECISION
MENDOZA, J.:

This is a petition for review on certiorari cralaw1 under Rule 45 of the Rules of Court seeking reversal of the February 20,
2008 Decisioncralaw2 of the Court of Tax Appeals En Banc (CTA) in C.T.A. EB No. 299, which ruled that 'in order for
petitioner to be entitled to its claim for refund/issuance of tax credit certificate representing unutilized input VAT attributable
to its zero-rated sales for taxable year 2002, it must comply with the substantiation requirements under the appropriate
Revenue Regulations.'

Petitioner KEPCO Philippines Corporation (Kepco) is a VAT-registered independent power producer engaged in the
business of generating electricity. It exclusively sells electricity to National Power Corporation (NPC), an entity exempt from
taxes under Section 13 of Republic Act No. 6395 (RA No. 6395).cralaw3

Records show that on December 4, 2001, Kepco filed an application for zero-rated sales with the Revenue District Office
(RDO) No. 54 of the Bureau of Internal Revenue (BIR). Kepco's application was approved under VAT Ruling 64-01.
Accordingly, for taxable year 2002, it filed four Quarterly VAT Returns declaring zero-rated sales in the aggregate amount
of P3,285,308,055.85 itemized as follows:

Exhibit
Quarter Involved

Zero-Rated Sales

1st Quarter

P651,672,672.47

2nd Quarter

725,104,468.99

3rd Quarter

952,053,527.29

4th Quarter

956,477,387.10

________________

Total

P3,285,308,055.85cralaw4

In the course of doing business with NPC, Kepco claimed expenses reportedly sustained in connection with the production
and sale of electricity with NPC. Based on Kepco's calculation, it paid input VAT amounting to P11,710,868.86 attributing
the same to its zero-rated sales of electricity with NPC. The table shows the purchases and corresponding input VAT it paid.
Exhibit

Quarter Involved

Purchases

Input VAT

1st Quarter

P6,063,184.90

P606,318.49

2nd Quarter

18,410,193.20

1,841,019.32

3rd Quarter

16,811,819.21

1,681,181.93

4th Quarter

75,823,491.20

P117,108,688.51

7,582,349.12

P11,710,868.86cralaw5

Thus, on April 20, 2004, Kepco filed before the Commissioner of Internal Revenue (CIR) a claim for tax refund covering
unutilized input VAT payments attributable to its zero-rated sales transactions for taxable year 2002.cralaw6 Two days later,
on April 22, 2004, it filed a petition for review before the CTA. The case was docketed as C.T.A. Case No. 6965.cralaw7

In its Answer,cralaw8 respondent CIR averred that claims for refund were strictly construed against the taxpayer as it was
similar to a tax exemption. It asserted that the burden to show that the taxes were erroneous or illegal lay upon the taxpayer.
Thus, failure on the part of Kepco to prove the same was fatal to its cause of action because it was its duty to prove the
legal basis of the amount being claimed as a tax refund.

During the hearing, Kepco presented court-commissioned Independent Certified Public Accountant, Victor O. Machacon,
who audited their bulky documentary evidence consisting of official receipts, invoices and vouchers, to prove its claim for
refund of unutilized input VAT.cralaw9

On February 26, 2007, the CTA Second Division ruled that out of the total declared zero-rated sales of P3,285,308,055.85,
Kepco was only able to properly substantiate P1,451,788,865.52 as its zero-rated sales. After factoring, only 44.19% of the
validly supported input VAT payments being claimed could be considered.cralaw10 The CTA Division used the following
computation in determining Kepco's total allowable input VAT:

Substantiated zero-rated sales to NPC

P1,451,788,865.52

Divided by the total declared zero-rated sales

' 3,285,308,055.85

Rate of substantiated zero-rated sales

44.19% cralaw11

Total Input VAT Claimed

P11,710,868.86

Less:Disallowance
(a) Per verification of the independent CPA

P125,556.40

(b) Per Court's verification

5,045,357.80

5,170,914.20

Validly Supported Input VAT

P6,539,954.66

Multiply by Rate of Substantiated Zero-Rated Sales

44.19%

Total Allowed Input VAT

P 2,890,005.96 cralaw12
The CTA Second Division likewise disallowed the P5,170,914.20 of Kepco's claimed input VAT due to its failure to comply
with the substantiation requirement. Specifically, the CTA Second Division wrote:chanrobles virtual law library

[i]nput VAT on purchases supported by invoices or official receipts stamped with TIN-VAT shall be disallowed because
these purchases are not supported by 'VAT Invoices' under the contemplation of the aforequoted invoicing requirement. To
be considered a 'VAT Invoice,' the TIN-VAT must be printed, and not merely stamped. Consequently, purchases supported
by invoices or official receipts, wherein the TIN-VAT are not printed thereon, shall not give rise to any input VAT. Likewise,
input VAT on purchases supported by invoices or official receipts which are not NON-VAT are disallowed because these
invoices or official receipts are not considered as 'VAT Invoices.' Hence, the claims for input VAT on purchases referred to
in item (e) are properly disallowed.cralaw13

Accordingly, the CTA Second Division partially granted Kepco's claim for refund of unutilized input VAT for taxable year
2002. The dispositive portion of the decisioncralaw14 of the CTA Second Division reads:chanrobles virtual law library

WHEREFORE, petitioner's claim for refund is hereby PARTIALLY GRANTED. Accordingly, respondent is ORDERED to
REFUND petitioner the reduced amount of TWO MILLION EIGHT HUNDRED NINETY THOUSAND FIVE PESOS AND
96/100 (P2,890,005.96) representing unutilized input value-added tax for taxable year 2002.

SO ORDERED.cralaw15

Kepco moved for partial reconsideration, but the CTA Second Division denied it in its June 28, 2007 Resolution.cralaw16

On appeal to the CTA En Banc,cralaw17 Kepco argued that the CTA Second Division erred in not considering
P8,691,873.81 in addition to P2,890,005.96 as refundable tax credit for Kepco's zero-rated sales to NPC for taxable year
2002.

On February 20, 2008, the CTA En Banc dismissed the petitioncralaw18 and ruled that 'in order for Kepco to be entitled to
its claim for refund/issuance of tax credit certificate representing unutilized input VAT attributable to its zero-rated sales for
taxable year 2002, it must comply with the substantiation requirements under the appropriate Revenue Regulations, i.e.
Revenue Regulations 7-95.'cralaw19 Thus, it concluded that 'the Court in Division was correct in disallowing a portion of
Kepco's claim for refund on the ground that input taxes on Kepco's purchase of goods and services were not supported by
invoices and receipts printed with 'TIN-VAT.'cralaw20

CTA Presiding Justice Ernesto Acosta concurred with the majority in finding that Kepco's claim could not be allowed for lack
of proper substantiation but expressed his dissent on the denial of certain claims,cralaw21 to wit:chanrobles virtual law
library

[I] dissent with regard to the denial of the amount P4,720,725.63 for nothing in the law allows the automatic invalidation of
official receipts/invoices which were not imprinted with 'TIN-VAT;' and further reduction of petitioner's claim representing
input VAT on purchase of goods not supported by invoices in the amount of P64,509.50 and input VAT on purchase of
services not supported by official receipts in the amount of P256,689.98, because the law makes use of invoices and official
receipts interchangeably. Both can validly substantiate petitioner's claim.cralaw22

Hence, this petition alleging the following errors:chanrobles virtual law library

ASSIGNMENT OF ERRORS

I.

THE COURT OF TAX APPEALS EN BANC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS
OF JURISDICTION WHEN IT HELD THAT NON-COMPLIANCE WITH THE INVOICING REQUIREMENT SHALL RESULT
IN THE AUTOMATIC DENIAL OF THE CLAIM.

II.

THE COURT OF TAX APPEALS EN BANC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF EXCESS
OF JURISDICTION WHEN IT DISALLOWED PETITIONER'S CLAIM ON THE GROUND THAT 'TIN-VAT' IS NOT
IMPRINTED ON THE INVOICES AND OFFICIAL RECEIPTS.

III.
THE COURT OF TAX APPEALS EN BANC GRAVELY ABUSED ITS DISCRETION WHEN IT MADE A DISTINCTION
BETWEEN INVOICES AND OFFICIAL RECEIPTS AS SUPPORTING DOCUMENTS TO CLAIM FOR AN INPUT VAT
REFUND . cralaw23

At the outset, the Court has noticed that although this petition is denominated as Petition for Review on Certiorari under
Rule 45 of the Rules of Court, Kepco, in its assignment of errors, impugns against the CTA En Banc grave abuse of
discretion amounting to lack or excess of jurisdiction, which are grounds in a petition for certiorari under Rule 65 of the Rules
of Court. Time and again, the Court has emphasized that there is a whale of difference between a Rule 45 petition (Petition
for Review on Certiorari) and a Rule 65 petition (Petition for Certiorari.) A Rule 65 petition is an original action that dwells
on jurisdictional errors of whether a lower court acted without or in excess of its jurisdiction or with grave abuse of
discretion.cralaw24 A Rule 45 petition, on the other hand, is a mode of appeal which centers on the review on the merits of
a judgment, final order or award rendered by a lower court involving purely questions of law.cralaw25 Thus, imputing
jurisdictional errors against the CTA is not proper in this Rule 45 petition. Kepco failed to follow the correct procedure. On
this point alone, the Court can deny the subject petition outright.

At any rate, even if the Court would disregard this procedural flaw, the petition would still fail.

Kepco argues that the 1997 National Internal Revenue Code (NIRC) does not require the imprinting of the word zero-rated
on invoices and/or official receipts covering zero-rated sales.cralaw26 It claims that Section 113 in relation to Section 237
of the 1997 NIRC 'does not mention the requirement of imprinting the words 'zero-rated' to purchases covering zero-rated
transactions.'cralaw27 Only Section 4.108-1 of Revenue Regulation No. 7-95 (RR No. 7-95) 'required the imprinting of the
word 'zero-rated' on the VAT invoice or receipt.'cralaw28 'Thus, Section 4.108-1 of RR No. 7-95 cannot be considered as a
valid legislation considering the long settled rule that administrative rules and regulations cannot expand the letter and spirit
of the law they seek to enforce.'cralaw29

The Court does not agree.

The issue of whether the word 'zero-rated' should be imprinted on invoices and/or official receipts as part of the invoicing
requirement has been settled in the case of Panasonic Communications Imaging Corporation of the Philippines vs.
Commissioner of Internal Revenuecralaw30 and restated in the later case of J.R.A. Philippines, Inc. v.
Commissioner.cralaw31 In the first case, Panasonic Communications Imaging Corporation (Panasonic), a VAT-registered
entity, was engaged in the production and exportation of plain paper copiers and their parts and accessories. From April
1998 to March 31, 1999, Panasonic generated export sales amounting to US$12,819,475.15 and US$11,859,489.78
totaling US$24,678,964.93. Thus, it paid input VAT of P9,368,482.40 that it attributed to its zero-rated sales. It filed
applications for refund or tax credit on what it had paid. The CTA denied its application. Panasonic's export sales were
subject to 0% VAT under Section 106(A)(2)(a)(1) of the 1997 NIRC but it did not qualify for zero-rating because the word
'zero-rated' was not printed on Panasonic's export invoices. This omission, according to the CTA, violated the invoicing
requirements of Section 4.108-1 of RR No. 7-95. Panasonic argued, however, that 'in requiring the printing on its sales
invoices of the word 'zero-rated,' the Secretary of Finance unduly expanded, amended, and modified by a mere regulation
(Section 4.108-1 of RR No. 7-95) the letter and spirit of Sections 113 and 237 of the 1997 NIRC, prior to their amendment
by R.A. 9337.'cralaw32 Panasonic stressed that Sections 113 and 237 did not necessitate the imprinting of the word 'zero-
rated' for its zero-rated sales receipts or invoices. The BIR integrated this requirement only after the enactment of R.A. No.
9337 on November 1, 2005, a law that was still inexistent at the time of the transactions. Denying Panasonic's claim for
refund, the Court stated:

Section 4.108-1 of RR 7-95 proceeds from the rule-making authority granted to the Secretary of Finance under Section 245
of the 1977 NIRC (Presidential Decree 1158) for the efficient enforcement of the tax code and of course its amendments.
The requirement is reasonable and is in accord with the efficient collection of VAT from the covered sales of goods and
services. As aptly explained by the CTA's First Division, the appearance of the word 'zero-rated' on the face of invoices
covering zero-rated sales prevents buyers from falsely claiming input VAT from their purchases when no VAT was actually
paid. If, absent such word, a successful claim for input VAT is made, the government would be refunding money it did not
collect.

Further, the printing of the word 'zero-rated' on the invoice helps segregate sales that are subject to 10% (now 12%) VAT
from those sales that are zero-rated. Unable to submit the proper invoices, petitioner Panasonic has been unable to
substantiate its claim for refund.cralaw33

Following said ruling, Section 4.108-1 of RR 7-95cralaw34 neither expanded nor supplanted the tax code but merely
supplemented what the tax code already defined and discussed. In fact, the necessity of indicating 'zero-rated' into VAT
invoices/receipts became more apparent when the provisions of this revenue regulation was later integrated into RA No.
9337,cralaw35 the amendatory law of the 1997 NIRC. Section 113, in relation to Section 237 of the 1997 NIRC, as amended
by RA No. 9337, now reads:chanrobles virtual law library

SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. -

(A) Invoicing Requirements. - A VAT-registered person shall issue:chanrobles virtual law library

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

(B) Information Contained in the VAT Invoice or VAT Official Receipt. - The following information shall be indicated in the
VAT invoice or VAT official receipt:chanrobles virtual law library

(1) A statement that the seller is a VAT-registered person, followed by his taxpayer's identification number
(TIN);chanroblesvirtualawlibrary

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount
includes the value-added tax: Provided, That:chanrobles virtual law library
(a) The amount of the tax shall be shown as a separate item in the invoice or receipt;chanroblesvirtualawlibrary

(b) If the sale is exempt from value-added tax, the term "VAT-exempt sale" shall be written or printed prominently on the
invoice or receipt;chanroblesvirtualawlibrary

(c) If the sale is subject to zero percent (0%) value-added tax, the term "zero-rated sale" shall be written or printed
prominently on the invoice or receipt;chanroblesvirtualawlibrary

(d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or
VAT-exempt, the invoice or receipt shall clearly indicate the breakdown of the sale price between its taxable, exempt and
zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice
or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated
components of the sale.

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and

(4) In the case of sales in the amount of one thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-
registered person, the name, business style, if any, address and taxpayer identification number (TIN) of the purchaser,
customer or client.

(C) Accounting Requirements. - Notwithstanding the provisions of Section 233, all persons subject to the value-added tax
under Sections 106 and 108 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal
and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain
such information as may be required by the Secretary of Finance.

xxxx

SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for
each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly
registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity,
unit cost and description of merchandise or nature of service: Provided, however, That where the receipt is issued to cover
payment made as rentals, commissions, compensation or fees, receipts or invoices shall be issued which shall show the
name, business style, if any, and address of the purchaser, customer or client.

The original of each receipt or invoice shall be issued to the purchaser, customer or client at the time the transaction is
effected, who, if engaged in business or in the exercise of profession, shall keep and preserve the same in his place of
business for a period of three (3) years from the close of the taxable year in which such invoice or receipt was issued, while
the duplicate shall be kept and preserved by the issuer, also in his place of business, for a like period.

The Commissioner may, in meritorious cases, exempt any person subject to an internal revenue tax from compliance with
the provisions of this Section. [Emphases supplied]

Evidently, as it failed to indicate in its VAT invoices and receipts that the transactions were zero-rated, Kepco failed to
comply with the correct substantiation requirement for zero-rated transactions.

Kepco then argues that non-compliance of invoicing requirements should not result in the denial of the taxpayer's refund
claim. Citing Atlas Consolidated Mining & Development Corporation vs. Commissioner of Internal Revenue,cralaw36 it
claims that a party who fails to issue VAT official receipts/invoices for its sales should only be imposed penalties as provided
under Section 264 of the 1997 NIRC.cralaw37

The Court has read the Atlas decision, and has not come across any categorical ruling that refund should be allowed for
those who had not complied with the substantiation requirements. It merely recited 'Section 263' which provided for penalties
in case of 'Failure or refusal to Issue Receipts or Sales or Commercial Invoices, Violations related to the Printing of such
Receipts or Invoices and Other Violations.' It does not categorically say that the claimant should be refunded. At any rate,
Section 264 (formerly Section 263)cralaw38 of the 1997 NIRC was not intended to excuse the compliance of the substantive
invoicing requirement needed to justify a claim for refund on input VAT payments.

Furthermore, Kepco insists that Section 4.108.1 of Revenue Regulation 07-95 does not require the word 'TIN-VAT' to be
imprinted on a VAT-registered person's supporting invoices and official receiptscralaw39 and so there is no reason for the
denial of its P4,720,725.63 claim of input tax.cralaw40

In this regard, Internal Revenue Regulation 7-95 (Consolidated Value-Added Tax Regulations) is clear. Section 4.108-1
thereof reads:chanrobles virtual law library

Only VAT registered persons are required to print their TIN followed by the word 'VAT' in their invoice or receipts and this
shall be considered as a 'VAT' Invoice. All purchases covered by invoices other than 'VAT Invoice' shall not give rise to any
input tax.

Contrary to Kepco's allegation, the regulation specifically requires the VAT registered person to imprint TIN-VAT on its
invoices or receipts. Thus, the Court agrees with the CTA when it wrote: '[T]o be considered a 'VAT invoice,' the TIN-VAT
must be printed, and not merely stamped. Consequently, purchases supported by invoices or official receipts, wherein the
TIN-VAT is not printed thereon, shall not give rise to any input VAT. Likewise, input VAT on purchases supported by invoices
or official receipts which are NON-VAT are disallowed because these invoices or official receipts are not considered as 'VAT
Invoices.''cralaw41

Kepco further argues that under Section 113(A) of the 1997 NIRC, invoices and official receipts are used interchangeably
for purposes of substantiating input VAT.cralaw42 Hence, it claims that the CTA should have accepted its substantiation of
input VAT on (1) P64,509.50 on purchases of goods with official receipts and (2) P256,689.98 on purchases of services
with invoices.cralaw43

The Court is not persuaded.

Under the law, a VAT invoice is necessary for every sale, barter or exchange of goods or properties while a VAT official
receipt properly pertains to every lease of goods or properties, and for every sale, barter or exchange of services.cralaw44
In Commissioner of Internal Revenue v. Manila Mining Corporation,cralaw45 the Court distinguished an invoice from a
receipt, thus:

A 'sales or commercial invoice' is a written account of goods sold or services rendered indicating the prices charged therefor
or a list by whatever name it is known which is used in the ordinary course of business evidencing sale and transfer or
agreement to sell or transfer goods and services.

A 'receipt' on the other hand is a written acknowledgment of the fact of payment in money or other settlement between seller
and buyer of goods, debtor or creditor, or person rendering services and client or customer.

In other words, the VAT invoice is the seller's best proof of the sale of the goods or services to the buyer while the VAT
receipt is the buyer's best evidence of the payment of goods or services received from the seller. Even though VAT invoices
and receipts are normally issued by the supplier/seller alone, the said invoices and receipts, taken collectively, are
necessary to substantiate the actual amount or quantity of goods sold and their selling price (proof of transaction), and the
best means to prove the input VAT payments (proof of payment).cralaw46 Hence, VAT invoice and VAT receipt should not
be confused as referring to one and the same thing. Certainly, neither does the law intend the two to be used alternatively.

Although it is true that the CTA is not strictly governed by technical rules of evidence,cralaw47 the invoicing and
substantiation requirements must, nevertheless, be followed because it is the only way to determine the veracity of Kepco's
claims. Verily, the CTA En Banc correctly disallowed the input VAT that did not meet the required standard of substantiation.

The CTA is devoted exclusively to the resolution of tax-related issues and has unmistakably acquired an expertise on the
subject matter. In the absence of abuse or reckless exercise of authority,cralaw48 the CTA En Banc's decision should be
upheld.

The Court has always decreed that tax refunds are in the nature of tax exemptions which represent a loss of revenue to the
government. These exemptions, therefore, must not rest on vague, uncertain or indefinite inference, but should be granted
only by a clear and unequivocal provision of law on the basis of language too plain to be mistaken. Such exemptions must
be strictly construed against the taxpayer, as taxes are the lifeblood of the government.cralaw49

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 197663, March 14, 2018

TEAM ENERGY CORPORATION (FORMERLY: MIRANT PAGBILAO CORPORATION AND SOUTHERN ENERGY
QUEZON, INC.), Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

G.R. No. 197770, March 14, 2018

REPUBLIC OF THE PHILIPPINES REP. BY THE BUREAU OF INTERNAL REVENUE, Petitioner, v.TEAM ENERGY
CORPORATION, Respondent.
DECISION
LEONEN, J.:

For a judicial claim for Value Added Tax (VAT) refund to prosper, the claim must not only be filed within the mandatory
120+30-day periods. The taxpayer must also prove the factual basis of its claim and comply with the 1997 National Internal
Revenue Code (NIRC) invoicing requirements and other appropriate revenue regulations. Input VAT payments on local
purchases of goods or services must be substantiated with VAT invoices or official receipts, respectively.
The Petitions for Review in G.R. Nos. 197663 and 197770 seek to reverse and set aside the April 8, 2011 Decision 1 and
July 7, 2011 Resolution2 of the Court of Tax Appeals En Banc in CTA EB No. 603. The assailed Decision affirmed with
modification the October 5, 2009 Decision3 and February 23, 2010 Resolution4 of the Court of Tax Appeals in Division,
granting Team Energy Corporation (Team Energy) a tax refund/credit in the reduced amount of P11,161,392.67,
representing unutilized input VAT attributable to zero-rated sales for the taxable year 2003. The assailed Resolution denied
the respective motions for reconsideration filed by Team Energy and the Commissioner of Internal Revenue
(Commissioner).
Team Energy is a VAT-registered entity with Certificate of Registration No. 96-600-002498. It is engaged in power
generation and electricity sale to National Power Corporation (NPC) under a Build, Operate, and Transfer scheme. 5
On November 13, 2002, Team Energy filed with the Bureau of Internal Revenue (BIR) "an Application for Effective Zero-
Rate of its supply of electricity to the NPC, which was subsequently approved." 6
For the year 2003, Team Energy filed its Original and Amended Quarterly VAT Returns on the following dates and with the
following details:
Quarter Original Return Amended Return Zero-rated Sales Input VAT

1st April 25, 2003 July 25, 2003 P3,170,914,604.24 P15,085,320.31

2nd July 25, 2003 October 27, 2003 3,034,739,252.93 15,898,643.56

3rd October 27, 2003 - 2,983,478,607.66 21,151,308.57

4th January 24, 2004 July 26, 20047 3,019,672,908.84 31,330,081.06

Total P12,208,805,373.678 P83,465,353.509

On December 17, 2004, Team Energy filed with the Revenue District Office No. 60 in Lucena City a claim for refund of
unutilized input VAT in the amount of P83,465,353.50, for the first to fourth quarters of taxable year 2003. 10
On April 22, 2005, Team Energy appealed before the Court of Tax Appeals its 2003 first quarter VAT claim of PI
5,085,320.31. The appeal was docketed as CTA Case No. 7229.11
Opposing the appeal, the Commissioner averred that the amount claimed by Team Energy was not properly documented
and that NPC's exemption from taxes did not extend to its electricity supplier such as Team Energy. 12
On July 22, 2005, Team Energy appealed its VAT refund claims for the second to fourth quarters of 2003 in the amount of
P68,380,033.19, docketed as CTA Case No. 7298.13
As special and affirmative defenses, the Commissioner alleged that it was imperative upon Team Energy to prove its
compliance with the registration requirements of a VAT taxpayer; the invoicing and accounting requirements for VAT-
registered persons; and the checklist of requirements for a VAT refund under Revenue Memorandum Order No. 53-98.
Furthermore, the Commissioner contended that Team Energy must prove that the claims were filed within the prescriptive
periods and that the input taxes being claimed had not been applied against any output tax liability or were not carried over
in the succeeding quarters.14
On October 12, 2005, the two (2) cases were consolidated.15
The Court of Tax Appeals First Division partially granted Team Energy's petition. 16 It held that NPC's exemption from direct
and indirect taxes had long been resolved by this Court.17 Consequently, NPC's electricity purchases from independent
power producers, such as Team Energy, were subject to 0% VAT pursuant to Section 108(B)(3) of the 1997 NIRC. 18
The Court of Tax Appeals First Division further ruled that P20,986,302.67 out of the reported zero-rated sales of
P12,208,805,373.67 must be excluded for Team Energy's failure to submit the corresponding official receipts, leaving a
balance of P12,187,819,071.00 as substantiated zero-rated sales.19 Consequently, only 99.83%20 of the validly supported
input VAT payments being claimed could be considered.
The Court of Tax Appeals First Division likewise disallowed P12,642,304.32 of Team Energy's claimed input VAT for its
failure to meet the substantiation requirements under Sections 110(A) and 113(A) of the 1997 NIRC and Sections 4.104-1,
4.104-5, and 4.108-1 of Revenue Regulations No. 7-95 or the Consolidated Value Added Tax Regulations.21 Team Energy's
reported output VAT liability of P776.36 in its Quarterly VAT Return for the third quarter of 2003 was further deducted from
the substantiated input VAT.22 The Court of Tax Appeals used the following computation in determining Team Energy's total
allowable input VAT:
Substantiated Input VAT P70,823,049.18

Less: Output VAT 776.36

Excess: Input VAT 70,822,272.82

Multiply by rate of substantiated zero-rated sales 99.83%

Excess input VAT attributable to substantiated zero-rated sales P70,700,533.0123

Finally, on the issue of prescription, the Court of Tax Appeals First Division held that "[t]he reckoning of the two-year
prescriptive period for the filing of a claim for input VAT refund starts from the date of filing of the corresponding quarterly
VAT return."24 It explained that this Court's ruling in Commissioner of Internal Revenue v. Mirant Pagbilao Corporation,25 to
the effect that "the two-year prescriptive period for the filing of a claim for input VAT refund starts from the close of the
taxable quarter when the relevant sales were made," 26 must be applied to cases filed after the promulgation of Mirant.
Accordingly, Team Energy's administrative claim filed on December 17, 2004, and judicial claims filed on April 22, 2005 and
July 22, 2005 were well within the two (2)-year prescriptive period.27
The dispositive portion of the October 5, 2009 Decision provided:
WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby PARTIALLY GRANTED. [The
Commissioner of Internal Revenue] is hereby ORDEREDto REFUND or ISSUE a tax credit certificate to [Team Energy] in
the amount of P70,700,533.01.
SO ORDERED.28 (Emphasis in the original)
Upon the denial of her Motion for Reconsideration, the Commissioner filed on March 31, 2010 a Petition for Review with
the Court of Tax Appeals En Banc.29 She argued that the Court of Tax Appeals First Division erred in allowing the tax
refund/credit as Team Energy's administrative and judicial claims for the first and second quarters were filed beyond the
two (2)-year period prescribed in Section 112(A) of the 1997 NIRC. 30 Additionally, she averred that Team Energy's judicial
claims for the second, third, and fourth quarters of 2003 were filed beyond the 30-day period to appeal under Section 112
of the 1997 NIRC.31 Team Energy filed its Comment/Opposition to the Petition.32
On April 8, 2011, the Court of Tax Appeals En Banc promulgated its Decision, partially granting Team Energy's petition. It
held that Team Energy's judicial claim for refund for the second, third, and fourth quarters of 2003 was filed only on July 22,
2005 or beyond the 30-day period prescribed under Section 112(D)33 of the 1997 NIRC. Consequently, the claim for these
quarters must be denied for lack of jurisdiction. Furthermore, the Court of Tax Appeals En Banc found Team Energy entitled
to a refund in the reduced amount of P11,161,392.67, representing unutilized input VAT attributable to its zero-rated sales
for the first quarter of 2003.
The dispositive portion of the Court of Tax Appeals En Banc April 8, 2011 Decision read:
WHEREFORE, on the basis of the foregoing considerations, the Petition for Review ... is PARTIALLY GRANTED. The
assailed Decision and Resolution of the First Division dated October 5, 2009 and February 23, 2010, respectively, are
hereby MODIFIED. Accordingly, [the Commissioner] is ORDERED to refund in favor of [Team Energy] the reduced amount
of Eleven Million One Hundred Sixty[-]One Thousand Three Hundred Ninety[-]Two [Pesos] and Sixty[-]Seven Centavos
(P11,161,392.67) representing unutilized input value-added tax (VAT) paid on its domestic purchases of goods and services
and importation of goods attributable to its zero-rated sales for the first quarter of taxable year 2003.
SO ORDERED.34 (Emphasis in the original)
The separate partial motions for reconsideration of Team Energy and the Commissioner were denied in the Court of Tax
Appeals En Banc July 7, 2011 Resolution.35
Team Energy and the Commissioner filed their separate Petitions for Review before this Court, docketed as G.R. Nos.
19766336 and 197770,37 respectively.
After the parties have filed their respective comments to the petitions and replies to these comments, this Court directed
them to submit their respective memoranda in its July 1, 2013 Resolution. 38
Team Energy filed its Consolidated Memorandum 39 while the Commissioner filed a Manifestation, 40stating that she was
adopting her Comment dated February 21, 201241 as her Memorandum.
The issues for this Court's resolution are as follows:
First, whether or not the Court of Tax Appeals erred in disallowing Team Energy Corporation's claim for tax refund of its
unutilized input VAT for the second to fourth quarters of 2003 on the ground of lack of jurisdiction;
Second, whether or not the Court of Tax Appeals erred in failing to recognize the interchangeability of VAT invoices and
VAT official receipts to comply with the substantiation requirements for refunds of excess or unutilized input tax under
Sections 110 and 113 of the 1997 National Internal Revenue Code, resulting in the disallowance of P258,874.55; and
Finally, whether or not Team Energy Corporation's failure to submit the Registration and Certificate of Compliance issued
by the Energy Regulatory Commission (ERC) disqualifies it from claiming a tax refund/credit.
I
The prescriptive periods regarding judicial claims for refunds or tax credits of input VAT are explicitly set forth in Section
112(D)42 of the 1997 NIRC:
Section 112. Refunds or Tax Credits of Input Tax. —
….
(D) Period within which Refund or Tax Credit, of Input Taxes shall be Made. — In proper cases, the Commissioner shall
grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the
date of submission of complete documents in support of the application filed in accordance with Subsections (A) and (B)
hereof.
In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act
on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of
the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the
unacted claim with the Court of Tax Appeals. (Emphasis supplied)
The text of the law is clear that resort to an appeal with the Court of Tax Appeals should be made within 30 days either from
receipt of the decision denying the claim or the expiration of the 120-day period given to the Commissioner to decide the
claim.
It was in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.43 where this Court first pronounced that
observance of the 120+30-day periods in Section 112(D)44 is crucial in filing an appeal with the Court of Tax Appeals. This
was further emphasized in Commissioner of Internal Revenue v. San Roque Power Corporation 45 where this Court
categorically held that compliance with the 120+30-day periods under Section 112 of the 1997 NIRC is mandatory and
jurisdictional. Exempted from this are VAT refund cases that are prematurely filed before the Court of Tax Appeals or before
the lapse of the 120-day period between December 10, 2003, when the BIR issued Ruling No. DA-489-03, and October 6,
2010, when this Court promulgated Aichi.46
Section 112(D)47 is consistent with Section 11 of Republic Act No. 1125, as amended by Section 9 of Republic Act No. 9282
(2004), which provides a 30-day period of appeal either from receipt of the adverse decision of the Commissioner or from
the lapse of the period fixed by law for action:
Section 11. Who May Appeal; Mode of Appeal; Effect of Appeal. -Any party adversely affected by a decision, ruling or
inaction of the Commissioner of Internal Revenue, . . . may file an appeal with the CTA within thirty (30) days after the
receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section
7(a)(2)48 herein.
Appeal shall be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the
1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of
inaction as herein provided, from the expiration of the period fixed by law to act thereon. (Emphasis supplied)
In this case, Team Energy's judicial claim was filed beyond the 30-day period required in Section 112(D). The administrative
claim for refund was filed on December 17, 2004. 49 Thus, BIR had 120 days to act on the claim, or until April 16, 2005.
Team Energy, in turn, had until May 16, 2005 to file a petition with the Court of Tax Appeals but filed its appeal only on July
22, 2005, or 67 days late. Thus, the Court of Tax Appeals En Banc correctly denied its claim for refund due to prescription.
Team Energy argues, however, that the application of the Aichi doctrine to its claim would violate the rule on non-retroactivity
of judicial decisions.50 Team Energy adds that when it filed its claims for refund with the BIR and the Court of Tax Appeals,
both the administrative and judicial claims for refund must be filed within the two (2)-year prescriptive period.51 Moreover,
Revenue Regulations No. 7-95 did not require a specific number of days after the 60-day, now 120-day, period given to the
Commissioner to decide on the claim within which to appeal to the Court of Tax Appeals. 52 Team Energy contends that to
deny its claim of P70,700,533.01 duly proven before the Court of Tax Appeals First Division "would result to unjust
enrichment on the part of the government."53
This Court is not persuaded.
When Team Energy filed its refund claim in 2004, the 1997 NIRC was already in effect, which clearly provided for: (a) 120
days for the Commissioner to act on a taxpayer's claim; and (b) 30 days for the taxpayer to appeal either from the
Commissioner's decision or from the expiration of the 120-day period, in case of the Commissioner's inaction.
"Rules and regulations [including Revenue Regulations No. 7-95] or parts [of them] which are contrary to or inconsistent
with [the NIRC] are . . . amended or modified accordingly."54
This Court, in construing the law, merely declares what a particular provision has always meant. It does not create new
legal obligations. This Court does not have the power to legislate. Interpretations of law made by courts necessarily always
have a "retroactive" effect.55
In Aichi, where the issue on prematurity of a judicial claim was first raised and passed upon, this Court applied outright its
interpretation of the 1997 NIRC's language on the mandatory character of the 120+30-day periods. Consequently, it ordered
the dismissal of Aichi's appeal due to premature filing of its claim for refund/credit of input VAT. The administrative and
judicial claims in Aichi were filed on September 30, 2004, even prior to the filing of Team Energy's claims.
San Roque dealt with judicial claims which were either prematurely filed or had already prescribed. That case, specifically
in G.R. No. 197156, Philex Mining Corporation v. Commissioner of Internal Revenue, involved the filing of a judicial claim
beyond the 30-day period to appeal as in this case. Then and there, this Court rejected Philex Mining Corporation's (Philex)
judicial claim because of late filing:
Unlike San Roque and Taganito, Philex's case is not one of premature filing but of late filing. Philex did not file any petition
with the CTA within the 120-day period. Philex did not also file any petition with the CTA within 30 days after the expiration
of the 120-day period. Philex filed its judicial claim long after the expiration of the 120-day period, in fact 426 days after the
lapse of the 120-day period. In any event, whether governed by jurisprudence before, during, or after the Atlas case, Philex's
judicial claim will have to be rejected because of late filing. Whether the two-year prescriptive period is counted from the
date of payment of the output VAT following the Atlas doctrine, or from the close of the taxable quarter when the sales
attributable to the input VAT were made following the Mirant and Aichi doctrines, Philex's judicial claim was indisputably
filed late.
The Atlas doctrine cannot save Philex from the late filing of its judicial claim. The inaction of the Commissioner on Philex's
claim during the 120-day period is, by express provision of law, "deemed a denial" of Philex's claim. Philex had 30 days
from the expiration of the 120-day period to file its judicial claim with the CTA. Philex's failure to do so rendered the "deemed
a denial" decision of the Commissioner final and inappealable. The right to appeal to the CTA from a decision or "deemed
a denial" decision of the Commissioner is merely a statutory privilege, not a constitutional right. The exercise of such
statutory privilege requires strict compliance with the conditions attached by the statute for its exercise. Philex failed to
comply with the statutory conditions and must thus bear the consequences.56 (Emphasis supplied, citation omitted)
Philex filed its judicial claim on October 17, 2007, before Aichi was promulgated.
The proper application of the mandatory and jurisdictional nature of the 120+30-day periods, whether prospective or
retroactive, was, in fact, at the heart of this Court en banc's debates in San Roque.
Some justices were of the view that the mandatory and jurisdictional nature of the 120+30-day periods must be applied
prospectively, or at the earliest upon the effectivity of Revenue Regulations No. 16-2005,57 or upon the finality of Aichi.58 Still
others59 argued for retroactive application to all undecided VAT refund cases regardless of the period when the claim for
refund was made.
The majority held that the 120+30-day mandatory periods were already in the 1997 NIRC when the taxpayers filed their
judicial claims. The law is clear, plain, and unequivocal and must be applied exactly as worded. However, the majority
considered as an exception, for equitable reasons, BIR Ruling No. DA-489-03, which expressly stated that taxpayers need
not wait for the lapse of the 120-day period before seeking judicial relief. Thus, judicial claims filed from December 10, 2003,
when BIR Ruling No. DA-489-03 was issued, to October 6, 2010, when the Aichi doctrine was adopted, were excepted from
the strict application of the 120+30-day mandatory and jurisdictional periods.
San Roque Power Corporation (San Roque) filed a motion for reconsideration and supplemental motion for reconsideration
in G.R. No. 187485, arguing for the prospective application of the 120+30-day mandatory and jurisdictional periods. This
Court denied San Roque with finality on October 8, 2013.60
In Commissioner of Internal Revenue v. Mindanao II Geothermal Partnership,61 Mindanao II Geothermal Partnership
(Mindanao II) filed its administrative and judicial claims on October 6, 2005 and July 21, 2006, respectively, prior to the
promulgation of Aichi and San Roque. While its administrative claim was found to have been timely filed, this Court
nevertheless denied its refund claim because the judicial claim was filed late or only 138 days after the lapse of the 120+30-
day periods. This Court held that the 30-day period to appeal was mandatory and jurisdictional, applying the ruling in San
Roque. It further emphasized that late filing was absolutely prohibited.
Since then, the 120+30-day periods have been applied to pending cases,62 resulting in denial of taxpayers' claims due to
late filing. This Court finds no reason to except this case.
Further, the Commissioner's inaction on Team Energy's claim during the 120-day period is "deemed a denial," pursuant to
Section 7(a)(2)63 of Republic Act No. 1125, as amended by Section 7 of Republic Act No. 9282. Team Energy had 30 days
from the expiration of the 120-day period to file its judicial claim with the Court of Tax Appeals. Its failure to do so rendered
the Commissioner's "deemed a denial" decision as final and inappealable.
Team Energy's contention that denial of its duly proven refund claim would constitute unjust enrichment on the part of the
government is misplaced.
"Excess input tax is not an excessively, erroneously, or illegally collected tax." 64 A claim for refund of this tax is in the nature
of a tax exemption, which is based on Sections 110(B) and 112(A) of 1997 NIRC, allowing VAT-registered persons to
recover the excess input taxes they have paid in relation to their zero-rated sales. "The term 'excess' input VAT simply
means that the input VAT available as [refund] credit exceeds the output VAT, not that the input VAT is excessively collected
because it is more than what is legally due."65 Accordingly, claims for tax refund/credit of excess input tax are governed not
by Section 229 but only by Section 112 of the NIRC.
A claim for input VAT refund or credit is construed strictly against the taxpayer. 66 Accordingly, there must be strict
compliance with the prescriptive periods and substantive requirements set by law before a claim for tax refund or credit may
prosper.67 The mere fact that Team Energy has proved its excess input VAT does not entitle it as a matter of right to a tax
refund or credit. The 120+30-day periods in Section 112 is not a mere procedural technicality that can be set aside if the
claim is otherwise meritorious. It is a mandatory and jurisdictional condition imposed by law. Team Energy's failure to comply
with the prescriptive periods is, thus, fatal to its claim.
II
On the disallowance of some of its input VAT claims, Team Energy submits that "at the time when the unutilized input VAT
[was] incurred in 2003, the applicable NIRC provisions did not create a distinction between an official receipt and an invoice
in substantiating a claim for refund."68 Section 113 of the 1997 NIRC, prior to its amendment by Republic Act No. 9337 in
2005, provides:
Section 113. Invoicing and Accounting Requirements for VAT-Registered Persons. —
(A) Invoicing Requirements. - A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to
the information required under Section 237, the following information shall be indicated in the invoice or receipt:

(1) A statement that the seller is a VAT-registered person, followed by his taxpayer's identification number (TIN);
and

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such
amount includes the value-added tax.
Team Energy posits that Section 113, prior to its amendment by Republic Act No. 9337, must be applied to its input VAT
incurred in 2003, and that the disallowed amount of P258,874.55 supported by VAT invoice or official receipts should be
allowed.
Team Energy's contention is untenable.
Claimants of tax refunds have the burden to prove their entitlement to the claim under substantive law and the factual basis
of their claim.69 Moreover, in claims for VAT refund/credit, applicants must satisfy the substantiation and invoicing
requirements under the NIRC and other implementing rules and regulations. 70
Under Section 110(A)(1) of the 1997 NIRC, creditable input tax must be evidenced by a VAT invoice or official receipt, which
must in turn reflect the information required in Sections 113 and 237 of the Code, viz:
Section 113. Invoicing and Accounting Requirements for VAT-Registered Persons. —
(A) Invoicing Requirements. — A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to the
information required under Section 237, the following information shall be indicated in the invoice or receipt:
(1) A statement that the seller is a VAT-registered person, followed by his taxpayer's identification number (TIN); and
(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount
includes the value- added tax.
....
Section 237. Issuance of Receipts or Sales or Commercial Invoices. — All persons subject to an internal revenue tax shall,
for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly
registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity,
unit cost and description of merchandise or nature of service: Provided, however, That in the case of sales, receipts or
transfers in the amount of One hundred pesos (P100.00) or more, or regardless of amount, where the sale or transfer is
made by a person liable to value-added tax to another person also liable to value-added tax; or where the receipt is issued
to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall
show the name, business style, if any, and address of the purchaser, customer or client: Provided, further, That where the
purchaser is a VAT-registered person, in addition to the information herein required, the invoice or receipt shall further show
the Taxpayer Identification Number (TIN) of the purchaser. (Emphasis supplied)
Section 4.108-1 of Revenue Regulations No. 7-95 summarizes the information that must be contained in a VAT invoice and
a VAT official receipt:
Section 4.108-1. Invoicing Requirements — All VAT-registered persons shall, for every sale or lease of goods or properties
or services, issue duly registered receipts or sales or commercial invoices which must show:
the name, TIN and address of seller;
date of transaction;
quantity, unit cost and description of merchandise or nature of service;
the name, TIN, business style, if any, and address of the VAT- registered purchaser, customer or client;
the word "zero rated" imprinted on the invoice covering zero- rated sales; and
the invoice value or consideration.
In the case of sale of real property subject to VAT and where the zonal or market value is higher than the actual
consideration, the VAT shall be separately indicated in the invoice or receipt.
Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or receipts and this
shall be considered as a "VAT Invoice". All purchases covered by invoices other than "VAT Invoice" shall not give rise to
any input tax.
If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable
and exempt operations. A "VAT Invoice" shall be issued only for sales of goods, properties or services subject to VAT
imposed in Sections 100 and 102 [now Sections 106 and 108] of the Code.
The invoice or receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be
retained by the seller as part of his accounting records. (Emphasis supplied)
In this case, the Court of Tax Appeals disallowed Team Energy's input VAT of P258,874.55, which consisted of:
Input taxes of P78,134.65 claimed on local purchase of goods supported by documents other than VAT invoices; 71 and
Input taxes of P180,739.90 claimed on local purchase of services supported by documents other than VAT official receipts. 72
Team Energy submits that the disallowances "essentially result from the non-recognition [by] the [Court of Tax Appeals] En
Banc of the interchangeability of VAT invoices and VAT [official receipts] in a claim for refund of excess or unutilized input
tax."73
In AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue,74 this Court was confronted with
the same issue on the substantiation of the taxpayer-applicant's zero-rated sales of services. In that case, AT&T
Communications Services Philippines, Inc. (AT&T) applied for tax refund and/or tax credit of its excess/unutilized input VAT
from zero-rated sales of services for calendar year 2002. The Court of Tax Appeals First Division, as affirmed by the En
Banc, denied AT&T's claim "for lack of substantiation" on the ground that:
[Considering that the subject revenues pertain to gross receipts from services rendered by petitioner, valid VAT official
receipts and not mere sales invoices should have been submitted in support thereof. Without proper VAT official receipts,
the foreign currency payments received by petitioner from services rendered for the four (4) quarters of taxable year 2002
in the sum of US$1,102,315.48 with the peso equivalent of P56,898,744.05 cannot qualify for zero-rating for VAT
purposes.75 (Emphasis in the original)
Reversing the Court of Tax Appeals, this Court held that since Section 113 did not distinguish between a sales invoice and
an official receipt, the sales invoices presented by AT&T would suffice provided that the requirements under Sections 113
and 237 of the Tax Code were met. It further explained:
Sales invoices are recognized commercial documents to facilitate trade or credit transactions. They are proofs that a
business transaction has been concluded, hence, should not be considered bereft of probative value. Only the
preponderance of evidence threshold as applied in ordinary civil cases is needed to substantiate a claim for tax refund
proper.76 (Citations omitted)
However, in a subsequent claim for tax refund or credit of input VAT filed by AT&T for the calendar year 2003, the same
issue on the interchangeability of invoice and official receipt was raised. This time in AT&T Communications Services Phils.,
Inc. v. Commissioner of Internal Revenue,77 this Court held that there was a clear delineation between official receipts and
invoices and that these two (2) documents could not be used interchangeably. According to this Court, Section 113 on
invoicing requirements must be read in conjunction with Sections 106 and 108, which specifically delineates sales invoices
for sales of goods and official receipts for sales of services.
Although it appears under [Section 113 of the 1997 NIRC] that there is no clear distinction on the evidentiary value of an
invoice or official receipt, it is worthy to note that the said provision is a general provision which covers all sales of a VAT[-
]registered person, whether sale of goods or services. It does not necessarily follow that the legislature intended to use the
same interchangeably. The Court therefore cannot conclude that the general provision of Section 113 of the NIRC of 1997,
as amended, intended that the invoice and official receipt can be used for either sale of goods or services, because there
are specific provisions of the Tax Code which clearly delineates the difference between the two transactions.
In this instance, Section 108 of the NIRC of 1997, as amended, provides:
SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. —
....
(C) Determination of the Tax — The tax shall be computed by multiplying the total amount indicated in the official receipt by
one-eleventh (1/11).
Comparatively, Section 106 of the same Code covers sale of goods, thus:
SEC. 106. Value-added Tax on Sale of Goods or Properties. —
....
(D) Determination of the Tax. — The tax shall be computed by multiplying the total amount indicated in the invoice by one-
eleventh (1/11).
Apparently, the construction of the statute shows that the legislature intended to distinguish the use of an invoice from an
official receipt. It is more logical therefore to conclude that subsections of a statute under the same heading should be
construed as having relevance to its heading. The legislature separately categorized VAT on sale of goods from VAT on
sale of services, not only by its treatment with regard to tax but also with respect to substantiation requirements. Having
been grouped under Section 108, its subparagraphs, (A) to (C), and Section 106, its subparagraphs (A) to (D), have
significant relations with each other.
Legislative intent must be ascertained from a consideration of the statute as a whole and not of an isolated part or a particular
provision alone. This is a cardinal rule in statutory construction. For taken in the abstract, a word or phrase might easily
convey a meaning quite different from the one actually intended and evident when the word or phrase is considered with
those with which it is associated. Thus, an apparently general provision may have a limited application if viewed together
with the other provisions.78 (Emphasis supplied, citation omitted)
This Court reiterates that to claim a refund of unutilized or excess input VAT, purchase of goods or properties must be
supported by VAT invoices, while purchase of services must be supported by VAT official receipts.
For context, VAT is a tax imposed on each sale of goods or services in the course of trade or business, or importation of
goods "as they pass along the production and distribution chain." 79 It is an indirect tax, which "may be shifted or passed on
to the buyer, transferee or lessee of the goods, properties or services." 80 The output tax81 due from VAT-registered sellers
becomes the input tax82 paid by VAT-registered purchasers on local purchase of goods or services, which the latter in turn
may credit against their output tax liabilities. On the other hand, for a non-VAT purchaser, the VAT shifted forms part of the
cost of goods, properties, and services purchased, which may be deductible as an expense for income tax purposes.83
Panasonic Communications Imaging Corp. v. Commissioner of Internal Revenue 84 explained the concept of VAT and its
collection through the tax credit method:
The VAT is a tax on consumption, an indirect tax that the provider of goods or services may pass on to his customers. Under
the VAT method of taxation, which is invoice-based, an entity can subtract from the VAT charged on its sales or outputs the
VAT it paid on its purchases, inputs and imports. For example, when a seller charges VAT on its sale, it issues an invoice
to the buyer, indicating the amount of VAT he charged. For his part, if the buyer is also a seller subjected to the payment of
VAT on his sales, he can use the invoice issued to him by his supplier to get a reduction of his own VAT liability. The
difference in tax shown on invoices passed and invoices received is the tax paid to the government. In case the tax on
invoices received exceeds that on invoices passed, a tax refund may be claimed.
Under the 1997 NIRC, if at the end of a taxable quarter the seller charges output taxes equal to the input taxes that his
suppliers passed on to him, no payment is required of him. It is when his output taxes exceed his input taxes that he has to
pay the excess to the BIR. If the input taxes exceed the output taxes, however, the excess payment shall be earned over
to the succeeding quarter or quarters. Should the input taxes result from zero-rated or effectively zero-rated transactions or
from the acquisition of capital goods, any excess over the output taxes shall instead be refunded to the taxpayer. 85(Citations
omitted)
Our VAT system is invoice-based, i.e. taxation relies on sales invoices or official receipts. A VAT-registered entity is liable
to VAT, or the output tax at the rate of 0% or 10% (now 12%) on the gross selling price86 of goods or gross receipts87 realized
from the sale of services. Sections 106(D) and 108(C) of the Tax Code expressly provide that VAT is computed at 1/11 of
the total amount indicated in the invoice for sale of goods or official receipt for sale of services.88 This tax shall also be
recognized as input tax credit to the purchaser of the goods or services.
Under Section 11089 of the 1997 NIRC, the input tax on purchase of goods or properties, or services is creditable:
(a) To the purchaser upon consummation of sale and on importation of goods or properties;
(b) To the importer upon payment of the VAT prior to the release of the goods from the custody of the Bureau of Customs;
and
[(c)] [T]o the purchaser [of services], lessee [of property] or licensee upon payment of the compensation, rental, royalty or
fee.
A VAT-registered person may opt, however, to apply for tax refund or credit certificate of VAT paid corresponding to the
zero-rated sales of goods, properties, or services to the extent that this input tax has not been applied against the output
tax.
Strict compliance with substantiation and invoicing requirements is necessary considering VAT's nature and VAT system's
tax credit method, where tax payments are based on output and input taxes and where the seller's output tax becomes the
buyer's input tax that is available as tax credit or refund in the same transaction. It ensures the proper collection of taxes at
all stages of distribution, facilitates computation of tax credits, and provides accurate audit trail or evidence for BIR
monitoring purposes.
The Court of Tax Appeals further pointed out that the noninterchangeability between VAT official receipts and VAT invoices
avoids having the government refund a tax that was not even paid.
It should be noted that the seller will only become liable to pay the output VAT upon receipt of payment from the purchaser.
If we are to use sales invoice in the sale of services, an absurd situation will arise when the purchaser of the service can
claim tax credit representing input VAT even before there is payment of the output VAT by the seller on the sale pertaining
to the same transaction. As a matter of fact[,] if the seller is not paid on the transaction, the seller of service would legally
not have to pay output tax while the purchaser may legally claim input tax credit thereon. The government ends up refunding
a tax which has not been paid at all. Hence, to avoid this, VAT official receipt for the sale of services is an absolute
requirement.90
In conjunction with this rule, Revenue Memorandum Circular No. 42-0391 expressly provides that an "invoice is the
supporting document for the claim of input tax on purchase of goods whereas official receipt is the supporting document for
the claim of input tax on purchase of services." It further states that a taxpayer's failure to comply with the invoicing
requirements will result to the disallowance of the claim for input tax. Pertinent portions of this circular provide:
A-13: Failure by the supplier to comply with the invoicing requirements on the documents supporting the sale of goods and
services will result to the disallowance of the claim for input tax by the purchaser-claimant.
If the claim for refund/[tax credit certificate] is based on the existence of zero-rated sales by the taxpayer but it fails to comply
with the invoicing requirements in the issuance of sales invoices (e.g. failure to indicate the TIN), its claim for tax credit/refund
of VAT on its purchases shall be denied considering that the invoice it is issuing to its customers does not depict its being
a VAT-registered taxpayer whose sales are classified as zero-rated sales. Nonetheless, this treatment is without prejudice
to the right of the taxpayer to charge the input taxes to the appropriate expense account or asset account subject to
depreciation, whichever is applicable. Moreover, the case shall be referred by the processing office to the concerned BIR
office for verification of other tax liabilities of the taxpayer.
Pursuant to Sections 106(D) and 108(C) in relation to Section 110 of the 1997 NIRC, the output or input tax on the sale or
purchase of goods is determined by the total amount indicated in the VAT invoice, while the output or input tax on the sale
or purchase of services is determined by the total amount indicated in the VAT official receipt.
Thus, the Court of Tax Appeals properly disallowed the input VAT of P258,874.55 for Team Energy's failure to comply with
the invoicing requirements.
III
The Commissioner submits that the Court of Tax Appeals En Banc erred in granting Team Energy a tax refund/credit of
P11,161,392.67, representing unutilized input VAT attributable to zero-rated sales of electricity to NPC.92 She maintains
that Team Energy is not entitled to any tax refund or credit because it cannot qualify for VAT zero-rating under Republic Act
No. 913693 or the Electrical Power Industry Reform Act (EPIRA) Law for failure to submit its ERC Registration and Certificate
of Compliance.94 She avers that to operate a generation facility, Team Energy must have a duly issued ERC Certificate of
Compliance, without which an entity cannot be considered a power generation company and its sales of generated power
will not qualify for VAT zero-rating.95
The Court of Tax Appeals rejected this argument on the ground that the issue was raised for the first time in a motion for
partial reconsideration, viz:
[The Commissioner] raised the issue of [Team Energy's] failure to submit the Registration and Certificate of Compliance
(COC) issued by ERC for the first time in the instant Motion for Partial Reconsideration. The said issue was neither raised
in the Court a quo nor in the Petition for Review with the Court En Banc. The rule is well settled that no question will be
considered by the appellate court which has not been raised in the court below. When a party deliberately adopts a certain
theory, and the case is tried and decided upon the theory in the court below, he will not be permitted to change his theory
on appeal, because to permit him to do so would be unfair to the adverse party. Thus, a judgment that goes beyond the
issues and purports to adjudicate something on which the court did not hear the parties, is not only irregular but also
extrajudicial and invalid. In the case of Rizal Commercial Banking Corporation vs. Commissioner of Internal Revenue,96 the
Supreme Court said:
The rule is well-settled that points of law, theories, issues and arguments not adequately brought to the attention of the
lower court need not be considered by the reviewing court as they cannot be raised for the first time on appeal, much more
in a motion for reconsideration as in this case, because this would be offensive to the basic rules of fair play, justice and
due process. This last ditch effort to shift to a new theory and raise a new matter in the hope of a favorable result is a
pernicious practice that has consistently been rejected.
Also, both parties stipulated and recognized in the Joint Stipulation of Facts and Issues that [Team Energy] is principally
engaged in the business of power generation. Moreover, [the Commissioner] acknowledged [Team Energy's] sale of
electricity to the NPC as zero-rated evidence[d] by the approved Application for VAT zero-rating.97
The Commissioner now asserts that her counsel's mistake in belatedly raising the issue should not prejudice the State, as
it is not bound by the errors of its officers or agents.98 She adds that despite the Stipulation of Facts, the Court of Tax
Appeals should have determined Team Energy's compliance with Republic Act No. 9136 or the EPIRA Law because the
burden lies on the taxpayer to prove its entitlement to a refund.99
The Commissioner's argument is misplaced.
Team Energy's claim for unutilized or excess input VAT was anchored not on the EPIRA Law but on Section 108(B)(3)100 of
the 1997 NIRC, in relation to Section 13 of Republic Act No. 6395 101 or the NPC's charter,102 before its repeal by Republic
Act No. 9337. One of the issues presented before the Court of Tax Appeals First Division was "[w]hether or not the power
generation services rendered by [Team Energy] to NPC are subject to zero percent (0%) VAT pursuant to Section
108(B)(3)."103Otherwise stated, the Court of Tax Appeals First Division was confronted with the legal issue of whether NPC's
tax exemption privilege includes the indirect tax of VAT to entitle Team Energy to 0% VAT rate. The Court of Tax Appeals
aptly resolved the issue in the affirmative, consistent with this Court's pronouncements 104 that NPC is exempt from all taxes,
both direct and indirect, and services rendered by any VAT-registered person or entity to NPC are effectively subject to 0%
rate.
Indeed, the requirements of the EPIRA law would apply to claims for refund filed under the EPIRA. In such case, the
taxpayer must prove that it has been duly authorized by the ERC to operate a generation facility and that it derives its sales
from power generation. This was the thrust of this Court's ruling in Commissioner of Internal Revenue v. Toledo Power
Company (TPC).105
In Toledo, the Court of Tax Appeals granted Toledo Power Company's (TPC) claim for refund of unutilized input VAT
attributable to sales of electricity to NPC, but denied refund of input VAT related to sales of electricity to other entities106 for
failure of TPC to prove that it was a generation company under the EPIRA. This Court held that TPC's failure to submit its
ERC Certificate of Compliance renders its sales of generated power not qualified for VAT zero-rating. This Court, in affirming
the Court of Tax Appeals, held:
Section 6 of the EPIRA provides that the sale of generated power by generation companies shall be zero-rated. Section 4
(x) of the same law states that a generation company "refers to any person or entity authorized by the ERC to operate
facilities used in the generation of electricity." Corollarily, to be entitled to a refund or credit of unutilized input VAT
attributable to the sale of electricity under the EPIRA, a taxpayer must establish: (1) that it is a generation company, and (2)
that it derived sales from power generation.
....
In this case, when the EPIRA took effect in 2001, TPC was an existing generation facility. And at the time the sales of
electricity to CEBECO, ACMDC, and AFC were made in 2002, TPC was not yet a generation company under EPIRA.
Although it filed an application for a COC on June 20, 2002, it did not automatically become a generation company. It was
only on June 23, 2005, when the ERC issued a COC in favor of TPC, that it became a generation company under EPIRA.
Consequently, TPC's sales of electricity to CEBECO, ACMDC, and AFC cannot qualify for VAT zero-rating under the
EPIRA.107 (Emphasis supplied)
Here, considering that Team Energy's refund claim is premised on Section 108(B)(3) of the 1997 NIRC, in relation to NPC's
charter, the requirements under the EPIRA are inapplicable. To qualify its electricity sale to NPC as zero-rated, Team Energy
needs only to show that it is a VAT-registered entity and that it has complied with the invoicing requirements under Section
108(B)(3) of the 1997 NIRC, in conjunction with Section 4.108-1 of Revenue Regulations No. 7-95.108
Finally, the Commissioner is bound by her admission in the Joint Stipulation of Facts and Issues, 109concerning the prior
approval of Team Energy's 2002 Application for Effective Zero-Rate of its supply of electricity to the NPC.110 Thus, she is
estopped from asserting that Team Energy's transactions cannot be effectively considered zero-rated.
In sum, the Court of Tax Appeals En Banc found proper the refund of P11,161,392.67, representing unutilized input VAT
attributable to Team Energy's zero-rated sales for the first quarter of 2003.111This Court accords the highest respect to the
factual findings of the Court of Tax Appeals112considering its developed expertise on the subject, unless there is showing
of abuse in the exercise of its authority.113 This Court finds no reason to overturn the factual findings of the Court of Tax
Appeals on the amounts allowed for refund.
WHEREFORE, the Petitions are DENIED. The April 8, 2011 Decision and July 7, 2011 Resolution of the Court of Tax
Appeals En Banc in CTA EB No. 603 are AFFIRMED.
SO ORDERED.