REPUBLIC OF THE PHILIPPINES

Court of Tax Appeals

QUEZON CITY

Special Third Division

MINDANAO II GEOTHERMAL CTA CASE NOS. 7899, 7942,
PARTNERSHIP, &7960
Petitioner,
Members:
BAUTISTA, Chairperson
-versus-
FABON-VICTORINO, and
RINGPIS-LIBAN, II.

COMMISSIONER OF INTERNAL Promulgated:

REVENUE,
Respondent.

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RESOLUTION

BAUTISTA, J:

For resolution are the following:

1. Respondent's Motion for Partial Reconsideration (Re:

Decision dated July 25, 2017) ("Respondent's MPR") filed on August
22, 2017; with petitioner's Opposition (to Respondent's Motion for
Partial Reconsideration) filed by registered mail on October 13, 2017;
and

2. Petitioner's Motion for Partial Reconsideration

("Petitioner's MPR) filed on August 22, 2017; sans respondent's
comment despite notice, as evidenced by Records Verification Report
dated October 24, 2017.

On July 25, 2017, the Court promulgated an Amended

Decision1 ("Assailed Decision"), the dispositive portion of which
states: 2

1 Records, Vol. 3, CTA Case Nos. 7899, 7942 & 7960, pp. 1486-1507.
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CT A CASE NO. 7899, 7942 & 7960
Page 2of8

WHEREFORE, premise considered, the Petitions for

Review are hereby GRANTED but in a modified amount.
Respondent is hereby ORDERED TO REFUND OR TO
ISSUE A TAX CREDIT CERTIFICATE in the amount of
ONE MILLION SEVEN HUNDRED SEVENTY ONE
THOUSAND FOUR HUNDRED SEVENTY NINE AND
78/100 PESOS (Php1,771,479.78), representing its creditable
input value-added taxes paid and attributed to its effectively
zero-rated sales for the first and second quarters of CY 2007.

SO ORDERED.

Respondent's MPR

In its MPR, respondent claims that he was not given the

opportunity to act on petitioner's claim, thus no inaction nor decision
can be appealed to the Court. Respondent avers that administrative
authority must be given opportunity to decide the matter, to act and
correct the errors in the administrative forum. Respondent asserts
that the party with an administrative remedy must not merely initiate
the prescribed administrative procedure to obtain relief, but also
pursue it to its appropriate conclusion before seeking judicial
intervention.

Respondent also assails the Court's finding that petitioner is

entitled to refund of alleged unutilized input VAT, considering that
petitioner is not the proper party to seek the refund, citing the cases
Contex Corporation vs. Commissioner of Internal Revenue3 ("Contex case")
and Coral Bay Nickel Corporation vs. Commissioner of Internal Revenue4
("Coral Bay case"), respondent claims that it is petitioner's suppliers
who are the proper parties to claim the tax credit and accordingly
refund the petitioner of the VAT erroneously passed on to the latter.

On the other hand, petitioner points out that respondent cannot

raise new matters not raised in his Answer or in his Petition for
Review on Certiorari filed before the Supreme Court. Petitioner states
that pursuant to Section 1, Rule 9 of the Rules of Court, defenses and
objections not raised in the Answer are deemed waived. Moreover,

z Id., pp. 1507-1507.

3 G.R. No. 151135, July 2, 2004.
4 G.R. No. 190506, June 13,2016.
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CT A CASE NO. 7899, 7942 & 7960
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petitioner asserts that the Decision dated November 11, 2013 of the
Court En Bane has already become final and executory; that in an
Entry of Judgment, the First Division of the Supreme Court certified
that its Resolution dated June 29, 2015, which resolved that the Court
En Bane did not commit any reversible error in its Decision and
Resolution as to warrant the exercise of the Supreme Court's
discretionary appellate jurisdiction, became final and executory on
February 18, 2016.

Petitioner counter-argues that the Contex and Coral Bay cases

which were cited by respondent are not applicable in the present
case. In the Contex case, Contex is registered with the Subic Bay
Metropolitan Authority ("SBMA"), it is also registered with the
Bureau of Internal Revenue ("BIR") as a non-VAT taxpayer, as a
Subic Bay Freeport Enterprise, as such, it is exempt from all local and
national internal revenue taxes. Petitioner is a power generation
company which is not an SBMA-registered enterprise, it is not
exempt from all local and national taxes, it is a VAT-registered entity,
and as a VAT-registered entity, it paid the input VAT on its domestic
purchases of goods and services directly attributable to zero-rated
sales. In the Coral Bay case, the Supreme Court held that Coral Bay is a
domestic corporation which is registered with the Philippine
Economic Zone Authority ("PEZA"), as such, the purchases of goods
and services by the petitioner that were destined for consumption
within the ecozone should be free of VAT, hence, no input VAT
should then be paid on such purchases, rendering the petitioner not
entitled to claim a tax refund or credit. In the instant case, petitioner
is not PEZA-registered, it is a VAT-registered entity and it incurred
input VAT from its domestic purchases of goods and services.

Lastly, citing San Roque Power Corporation vs. Commissioner of

Internal Revenue5, citing State Land Investment Corporation vs.
Commissioner of Internal Revenue6, petitioner maintains that
technicalities and legalisms should not be misused by the
government to keep money not belonging to it thereby enriching
itself at the expense of its law-abiding citizens, when there is no
doubt that a taxpayer is entitled to a refund; that the State must lead
by its own example of honor, dignity and uprightness. Petitioner also

5 G.R. No. 180345, November 25, 2009, 605 SCRA 536.

6 G.R. No. 171956, January 18,2008,542 SCRA 114.
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CT A CASE NO. 7899, 7942 & 7960
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cites BPI-Family Savings Bank, Inc. vs. Court of Appeals, et. al.,7 and
states that the State should not invoke technicalities to keep money
not belonging to it.

Petitioner's MPR

In its MPR, petitioner assails the Court's decision denying its

claim for refund or the Issuance of TCC amounting to
Php2,479,138.93 allegedly for failure to comply with the
substantiation requirements. Petitioner cites the case of Kepco
Philippines Corporation vs. Commissioner of Internal Revenue8 wherein
the Supreme Court recognized that 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). Petitioner points out that it offered in evidence both the
individual invoices issued by petitioner's customers where the
amount of the tax is shown as a separate item and the official receipts
also issued by its said customers evidencing actual payment of the
said invoices by petitioner which included the tax due.

Petitioner avers that the doctrine of strictissimi juris should be

relaxed when it is clear that a claim for tax refund or TCC has clear
legal basis and is sufficiently supported by evidence. Lastly,
petitioner maintains that the State should not invoke technicalities to
keep money not belonging to it; that no one, not even the State
should enrich oneself at the expense of anther; that technicalities and
legalisms, however exalted, should not be used by the government to
enrich itself at the expense of its law-abiding citizens.

The Court resolves.

Anent respondent's MPR, the Court notes that the issues raised
therein, i.e. that he was not given even a single day to perform his
duties and that petitioner is not the proper party to file for the tax
refund or TCC, were raised for the first time in the instant MPR. The
rule is well-settled that points of law, theories, issues and arguments

7 G.R. No. 122480, April12, 2000, 330 SCRA 507.

8 G.R. No. 181858, November 24, 2010, 636 SCRA 166.
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CT A CASE NO. 7899, 7942 & 7960
Page 5 o£8

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 appeal9, 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.1° 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. 11

Anent petitioner's MPR, petitioner claims that it substantially

complied with the substantiation requirements such that the official
receipts presented and offered in evidence are duly supported by
sales invoices, billing invoice numbers, statement of accounts.
Petitioner maintains that it offered in evidence both the individual
invoices issued by its customers where the actual amount of the tax is
shown as a separate item, as well as the official receipts issued by its
customers evidencing actual payment of the said invoices by
petitioner which included the tax due; that these, taken collectively,
are necessary to substantiate the actual amount or quantity of goods
sold and their selling price and the best means to prove the input
VAT payments.

The Court is not convinced.

The Court has consistently held that to have a valid claim for
refund, petitioner must comply with the invoicing requirements
provided under Section 11 12 of Republic Act No. 9337, amending Section

9Rizal Commercial Banking Corporation vs. CIR, G.R. No. 168498, April 24, 2007, citing Multi-Realty
Development Corporation v. Makati Tuscany Condominium Corporation, G.R. No. 146726, June 16,
2006, 491 SCRA 9, 23.
10 Rizal Commercial Banking Corporation vs. CIR, G.R. No. 168498, April 24, 2007, citing Sta. Rosa
Realhj Development Corporation v. Amante, G.R. No. 112526, March 16, 2005, 453 SCRA 432, 478.
11 Rizal Commercial Banking Corporation vs. Commissioner of Internal Revenue, G.R. No. 168498, April

24,2007.
12 Section 11, RA No. 9337 reads as follows:
SEC. 11 Section 113 of the same code, as amended, is hereby further amended to read as
follows:
SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. -
(A) Invoicing Requirements.- A VAT-registered person shall issue:
(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:
(1) A statement that the seller is a VAT-registered person, followed by his taxpayer's
identification number (TIN);
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CT A CASE NO. 7899, 7942 & 7960
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113 of the 1997 National Internal Revenue Code ("1997 NIRC"). Said
section provides that a VAT-registered person shall issue a VAT
invoice for every sale, barter or exchange of goods or properties
and/ or VAT official receipt shall be issued for every lease of goods or
properties, and for every sale, barter or exchange of services.

There is no merit in petitioner's claim that the Supreme Court

has recognized in the Kepco case that invoices and receipts, taken
collectively, are necessary to substantiate the actual amount or
quantity of goods sold and their selling prices and the best means to
prove the input VAT payments. The Supreme Court ruled in the
Kepco case that VAT invoice and VAT receipt should not be confused
as referring to one and the same thing and that the law did not intend
the two to be used alternatively, thus, we quote:

In other words, the VAT invoice is the sellers best proof

of the sale of the goods or services to the buyer while the VAT
receipt is the buyers 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). Hence,
VAT invoice and VAT receipt should not be confused as

(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:
(a) The amount of the tax shall be shown as a separate item in the invoice or
receipt;
(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;
(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;
(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 (Pl,OOO) 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.
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CT A CASE NO. 7899, 7942 & 7960
Page 7 o£8

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, the invmc1ng and
substantiation requirements must, nevertheless, be followed
because it is the only way to determine the veracity of Kepcos
claims. Verily, the CTA En Bane correctly disallowed the input
VAT that did not meet the required standard of
substantiation. 13

Applying the foregoing provision and the Kepco case in the case
at bar, it is clear that the invoicing requirements for VAT-registered
entities that are engaged in sale, barter or exchange of goods or
properties and those that are engaged in the sale of services differ.
For the former entities, a VAT invoice will suffice, while for the latter
entities, a VAT official receipt is the required proof. The Supreme
Court emphasized that these two cannot be used alternatively.

The Court has pored over all the pieces of evidence offered by
petitioner and found that: (1) the VAT was not separately indicated in
the official receipts; and (2) it is not supported by an official receipt. It
is clear therefore that petitioner failed to comply with the
substantiation requirements for its claim for refund/TCC, thus,
petitioner's MPR must necessarily fail. It is worthy to stress that the
Court of Tax Appeals is a court of record, and that cases filed before
it are litigated de novo, thus, the claimant should prove every minute
aspect of its case.14

WHEREFORE, premises considered, respondent's Motion for

Partial Reconsideration and petitioner's Motion for Partial
Reconsideration are hereby DENIED for lack of merit. Accordingly,
the Amended Decision dated July 25, 2017 is AFFIRMED and
UPHELD.

13Underscoring ours.
14Commissioner of Internal Revenue v. Philippine National Bank, G.R. No. 180290, September 29, 2014,
736 SCRA 609.
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CT A CASE NO. 7899, 7942 & 7960
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SO ORDERED.

LOVELLiAUTISTA
Associate Justice

WE CONCUR:

%tt. ~ .;1 '- .

A . FABON-VICTORINO MA. BELEN M. RINGPIS-LIBAN
A(sociate Justice Associate Justice