DOLE Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

CUI-DAVID, J.:

Before this Court is a Petition for Review filed on August 20, 2020, by petitioner Dole Philippines, Inc., praying that the Court renders judgment ordering respondent Commissioner of Internal Revenue to refund petitioner the aggregate amount of P1 ,381,096,733.07, representing its eJ<cess and unutilized input value-added ta){ (VAT) attributable to its VAT zero-rated sales for the period April 1, 2018 to March 31, 2019.1

THE PARTIES

Petitioner Dole Philippines, Inc. is a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal address at Cannery Site, Cannery, Polomolok, South Cotabato.2 Its head office and branches throughout the Philippines are registered with the Bureau of Internal Revenue (BIR). 3 v ' Special Member per Memorandum dated June 21, 2024. 1 Statement of the Case, Pre-Trial Order, Docket - Vol. II, p. 718. 2 Par. 1, Joint Stipulation ofFacts and Issues (.JSFI), Docket - Vol. II, p. 675. 3 Exhibits "P-3", "P-3-1 ", "P-3-2", "P-3-3", "P-3-4", "P-3-5", "P-3-6", "P-3-7", "P-3-8", "P-3-9", "P-3-1 0", "P-3- 11", "P-3-1 2", "P-3-13", "P-3-1 4", "P-3- 15", "P-3-16", "P-3-1 7", "P-3-1 8", "P-3-1 9", "P-3-20", "P-3-21", "P-3- 22", "P-3-22", "P-3-23", "P-3-24", "P-3-25", "P-3-26", "P-3-27", "P-3-28", "P-3-29", and "P-3-30", Docket- Vol. III, pp. 1325 to 136 1.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Respondent Commissioner of Internal Revenue (CIR) is empowered to perform the duties of his office, including acting upon protest cases and approval of claims for refund or tax credit as provided by law and implementing regulations. 4

FACTUAL ANTECEDENTS

On December 16, 2019, petitioner filed before the BIR- VAT Credit Audit Division (VCAD) an administrative claim for VAT refund in the total amount of P1,381,096,733.07, allegedly representing unutilized input taxes directly attributable and allocable to its VAT zero-rated sales as declared in its VAT returns, for the taxable period from April 1, 2018 to March 31, 2019.5 The Tax Verification Notice No. TVN 201800116184, dated December 16, 2019, was issued to petitioner, authorizing Revenue Officers (RO) Leo-Gibbs C. Tapiru, Dexter C. Bustillos, Ruth E. Jimenez, Jerome C. Manuncia, Estela G. Buenviaje, Ma. Cleofe T. Tasarra, Jonathan G. Simon, Michele Alonzo-Bucayu, Mary Ann B. Estaci9, and Marjorie C. Dioso of the VCAD to verify petitioner's supporting documents and/ or pertinent records relative to its claim for VAT refund, covering the above-stated taxable period. 6 On July 16, 2020, petitioner received the decision of Commissioner Caesar R. Dulay (via the VAT Refund Notice dated February 20, 2020), 7 denying its claim for a tax refund. 8

PROCEEDINGS BEFORE THIS COURT

Aggrieved, the present Petition of Review was filed on August 20, 2020.9 Within the extended time granted by the Court, 10 respondent posted his Answer on November 3, 2020.11 N/ 4 Par. 2, JSFJ, Docket- Vol. II, p. 675. 5 Par. 3, JSFI, Docket- Vol. II, pp. 675 to 676; Exhibit "P-47", Docket- Vol. III, pp. 1481 to 1492; and Exhibit "P- 46", Docket- Vol. III, p. 1480.

6 Par. 4, JSFI, Docket- Vol. II, p. 676. 7 Exhibit "54", Docket- Vol. III, pp. 1523 to 1525; and Exhibit "R-5", BIR Records, pp. 1354 to 1356. 8 Par. 5, JSFI, Docket - Vol. II, p. 676. 9 Docket- Vol. I, pp. 6 to 53.

10 Respondent's Motion for Extension of Time to File Answer dated October 2, 2020, Docket- Vol. I, pp. 248 to 251; and Resolution dated October 8, 2020, Docket- Vol. I, p. 254.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

On December 4, 2020, respondent transmitted the BIR Records for this case, which consisted of two (2) folders numbered consecutively as pages 1 to 1363. 12 The Pre-Trial Conference was initially set for April 8, 2021,13 but was eventually reset to and held on February 8, 2022.1 4 Prior thereto, petitioner's Pre-Trial Briefwas filed on May 17, 2021; 15 while respondent's Pre-Trial Brief was submitted on May 20, 2021.16 On March 9, 2022, the parties submitted their Joint Stipulation of Facts and Issues, 17 which was admitted and approved by the Court in the Resolution dated March 17, 2022, 18 thereby deeming the termination of the Pre-Trial. The Pre-Trial Order dated April 1, 2022 was then issued. 19 ' The trial then ensued, with both parties presenting and offering their respective testimonial and documentary evidence.

Petitioner offered the testimonies of the following individuals, namely: (1) Mr. Artjohn C. Guerra, Tax Manager of Dole Asia Company Ltd.; 2o and (2) Atty. Adan T. Delamide, 21 the Court -commissioned Independent Certified Public Accountant (ICPA).22 The Amended and Final Report of the ICPA was posted on June 30, 2022.23 Petitioner filed its Formal Offer of Evidence on October 25, 2022,24 to which respondent filed his Comment (On Petitioner's Formal Offer of Evidence) on November 3, 2022.25 ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In the Resolution dated January 25, 2023,26 the Court partly admitted petitioner's offered exhibits. Consequently, on February 17, 2023, petitioner filed a Motion for Partial Reconsideration to the Resolution dated January 25, 2023,27 praying that this Court admit the denied exhibits.

Thereafter, respondent filed his Comment/Opposition on March 14, 2023.28 For his part, respondent offered the testimonies of ROs Leo-Gibbs C. Tapiru29 and Junelle Aira C. Salamanca.3o Respondent filed his Formal Offer of Evidence on

February

13, 2023, 31 to which petitioner filed its Comment/ Opposition (To the Respondent's Formal Offer of Evidence) on February 21 , 2023.32 In the Resolution dated April 18, 2023, 33 the Court partially granted petitioner's Motion for Partial Reconsideration and admitted Exhibit "P-6." However, the Court still denied the admission of certain , exhibits because they were not found in the records. In the same Resolution, the Court admitted all respondent's offered exhibits.

On May 22, 2023, petitioner filed its Memorandum; 34 while on May 24, 2023, 35 respondent submitted a Manifestation stating that he would adopt his Answer as his Memorandum.

On May 26, 2023, the present case was considered submitted for decision. 36

THE ISSUE

As stipulated by the parties, the sole issue for this Court's resolution is as follows:

26 Docket- Vol. IV, pp. 1538 to 1557. 27 Docket- Vol. IV, pp. 1567 to 1592. 28 Docket- Vol. IV, pp. 1621 to I 622. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"WHETHER PETITIONER IS ENTITLED TO THE CLAIM FOR

REFUND OF THE EXCESS AND UNUTILIZED INPUT

VALUE ADDED TAX (VAT) ALLOCABLE/ATTRIBUTABLE

TO ITS VAT ZERO RATED SALES FOR THE PERIOD FROM APRIL 1, 2018 TO MARCH 31 , 2019 IN THE AMOUNT OF ONE BILLION, THREE HUNDRED EIGHTY-ONE MILLION, NINETY-SIX THOUSAND, SEVEN HUNDRED THIRTY-

THREE

PESOS

AND

SEVEN

CENTAVOS

(P1 ,381 ,096, 733.07)."37 Petitioner's arguments:

Petitioner argues that its claim for a tax refund should be granted because all the necessary elements are present. As such, its present judicial claim for a tax refund in the amount ofP1,381 ,096,733.07 should be granted. Respondent's counter-arguments:

Respondent contends that the Court has no jurisdiction over the case and that the denial of petitioner's claim for refund in the amount of P1 ,381 ,096,733.07 is proper as it failed to comply with the mandatory requirements for claiming a tax refund or credit.

THE COURT'S RULING

The present Petition for Review is partly meritorious. The Court has jurisdiction over the present case.

' Respondent alleges that petitioner admitted receiving the VAT Refund Notice denying its claim for a tax refund on July 16, 2020. Citing Section 112 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 10963, the Tax Reform for Acceleration and Inclusion (TRAIN) Law, 38 respondent claims that petitioner had thirty (30) days, or until August 15, 2020, to elevate the 37 Par. B, JSFI, Docket - Vol. II, p. 676. v 38 AN ACT AMENDING SECTIONS 5, 6, 24, 25, 27, 3 I, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 11 0, 11 2, 11 4, I 16, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35, 62, AND 89; ALL UNDER REPUBLIC ACT 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

Dole Philippines, Inc. v. Commissioner of Internal Revenue denial of its claim to this Court. Respondent maintains that petitioner filed the instant Petition for Review on August 20, 2020, which is five (5) days beyond the period prescribed under Section 112 (C); thus, this Court has no jurisdiction over the subject matter of the present case. 39 The Court disagrees with respondent. Section 112 of the NIRC of 1997, as amended by the TRAIN Law,4o provides, in part, as follows: "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 refu:pd of creditable input tax due or paid attributable to such sales

XXX

XXX

XXX

XXX

(C) Period within which Refund of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided} That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided} however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code." [Emphasis supplied] v 39 Answer, Docket - Vol. I, pp. 266 to 267. 40 AN ACT AMENDING SECTIONS 5, 6, 24, 25, 27, 31, 32, 33, 34, 51 , 52, 56, 57, 58, 74, 79, 84, 86, 90, 91 , 97, 99, 1 0~ 101 , 10~ 107, 1 0~ 10~ II ~ 11 2, II ~ 11 6, 127, 128, 1 2~ 145, 148, 1 4~ 151 , 155, 171, 174, 175, 1 7~ 178, 1 7~ 180, 18 1, 182, 183, 186, 188, 1 8~ 190, 191, 192, 193, 194, 195, 196, 1 9~2 3 2 , 23~237 , 24~2 5 4 , 26~ 269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35, 62, AND 89; ALL UNDER REPUBLIC ACT 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Based on the foregoing, a VAT-registered . taxpayer claiming a tax refund or credit of excess and unutilized input VAT may file an administrative claim within two (2) years from the close of the taxable quarter when the sales were made; and a judicial claim within 30 days from receipt of respondent's decision denying the claim. The present claim covers the taxable period from April 1, 2018 to March 31, 2019. Counting two (2) years from the close of the taxable quarters, petitioner had until the following dates to file its administrative claim: Close ofthe

Last Day to File

Period Covered

Taxable Quarter

Administrative Claim

1st Quarter June 30, 2018 June 30, 2020 (April 1 to June 30, 20 18) 2nd Quarter September 30, 2018 September 30, 2020 (July 1 to September 30, 2018) ' 3rct Quarter December 31, 2018 December 31, 2020 (October 1 to December 31, 2018) 4th Quarter March 31, 2019 March 31, 2021 (January 1 to March 31 , 2019) Hence, petitioner's administrative claim for refund was timely filed on December 16, 2019.41 Correspondingly, from filing petitioner's administrative claim for refund on December 16, 2019, respondent had ninety (90) days, or until March 15, 2020, to decide on the claim.

While respondent's VAT Refund Notice denying petitioner's claim was allegedly issued on February 20, 2020, within the 90-day period, it was received by petitioner only on July 16, 2020.42 As such, petitioner had thirty (30) days from July 16, 2020, or until August 15, 2020,43 to app((al before this Court.

However, due to the imposition of Modified Enhanced Community Quarantine (MECQ) in Metro Manila, the Supreme Court issued Administrative Circular No. 43A-2020, suspending the reglementary periods for the filing of petitions, appeals, and other court submissions from August 4 to 18, 2020, and ordering their resumption on August 19, 2020.44 4 1 Exhibits "P-46" and "P-47'', Docket- Vol. III, pp. 1480 to 1492. 42 Exhibit "54", Docket- Vol. III, pp. 1523 to 1525; and Exhibit "R-5", BIR Records, pp. 1354 to 1356. 43 August 15, 2020 (30'h day) fell on Saturday. 44 Supreme Court Administrative Circular No. 43A-2020 dated August 3, 2020. v Dole Philippines, Inc. v. Commissioner of Internal Revenue Since August 19, 2020 was declared a special non-working holiday (Quezon City Day) in Quezon City where this Court sits, the filing of the present Petition for Review on the following working day, August 20, 2020,45 was well within the adjusted reglementary period.

The Court notes that the filing of the Petition for Review on August 20, 2020 was beyond the 90(previously 120)+30- day period. Records reveal that as of March 15, 2020, the end of ninety (90) days, petitioner had not received a decision on the refund claim, nor had it filed a petition for review within thirty (30) days from March 15, 2020. While respondent did not question the filing of the Petition for Review after the 90+30-day period, the Court finds it necessary to discuss, for the guidance of the bench and bar, that the Petition for Review was, nevertheless, timely filed. Section 112 (C) of the NIRC of 1997, as amended, governs the filing of a judicial claim for refund or tax credit of input VAT.

Before the enactment of TRAIN Law, Section 112 (C) reads: "SEC. 112. Refunds or Tax Credits of Input Tax.-

XXX

(C) 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 Subsection (A). 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] ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In construing the afore quoted provision, the Supreme Court opined, in Taihei Alltech Construction (Phil.), Inc. v. Commissioner of Internal Revenue (Taihei}, 46 that th~ taxpayer can file an appeal in one of two (2) ways: ( 1) file the judicial claim within 30 days after the Commissioner denies the claim within the 120-day period, OR (2) file the judicial claim within 30 days from the expiration of the 120-day period if the Commissioner does not act within the 120 days. In Taihei, taxpayers were reminded that when the 120 days lapse and there is inaction on the part of the CIR, they must no longer wait for it to come up with a decision thereafter. The CIR's inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within thirty (30) days from the lapse of the 120- day waiting period.47 In the case of Silicon Philippines, Inc. v. Commissioner of Internal Revenue (Silicon) cited in the Taihei case, the Supreme Court emphasized that a judicial claim for refund shall be filed within thirty (30) days after the receipt of the CIR's decision/ruling OR after the expiration of the 120-day period, "whichever is sooner." 48 The judicial claim shall be filed within a period of 30 days after the receipt of respondent's decision or ruling or after the expiration of the 120-day period, whichever is sooner.

Aside from a specific exception to the mandatory and jurisdictional nature of the periods provided by the law, any claim filed in a period less than or beyond the 120+30 days provided by the NIRC is outside the jurisdiction of the CTA. [Emphasis supplied] The Supreme Court said in Taihei that the post facto denial of the administrative claim is irrelevant, as the CIR's inaction for 120 days is already considered a "deemed denial" of the administrative claim for refund. Without a timely appeal, the "deemed denial" becomes final and unappealable. 49 v 46 G.R. No. 258791 , December 7, 2022. 47 Taihei Alltech Construction (Phil.), Inc. v. Commissioner of Internal Revenue, id. , citing Rohm Apollo Semiconductor ?hils. v. Commissioner of Internal Revenue in Taihei Alltech Construction (Phil.). Inc. v. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 48 !d. , citing Silicon Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182737, March 2, 20 16. 49 !d.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

With the enactment of the TRAIN Law, Section 112(C) of the NIRC was amended to read as follows: "SEC. 112. Refunds or Tax Credits of Input Tax.-

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and· other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial.

In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within ninety (90) days period shall be punishable under Section 269 of this Code." [Emphasis supplied] As provided in Section 112 (C) above, the period for the CIR to act on the administrative claim for refund was reduced from 120 days to 90 days, and specific phrases relative to the "inaction of the CIR" have been deleted. As currently worded, Section 112(C) does not anymore give the taxpayer the right to appeal the "inaction of the CIR" within thirty (30) days following the lapse of the 120(now 90)- day period. Given the deletion or removal of the phrases "or the failure on the part of the Commissioner to act on the application within the period prescribed above' and "or after the expiration ofthe one hundred twenty day-period," the 30- day period to appeal to the CTA, pursuant to the TRAIN law, can be made under only one circumstance, that is, from receipt by the taxpayer of the CIR's decision denying the refund claim - whether the receipt was before or after the lapse of the 90-day waiting period.

Indeed, the principle behind the Silicon case, as cited in Taihei, that "any claim filed in a period less than or beyond the 120+30 days provided by the NIRC is outside the jurisdiction of the CTA" - no longer applies to cases ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue governed by the TRAIN Law, considering the deletion of the phrases relative to the CIR's inaction on the claim after 120 (now 90) days.

Moreover, Section 4.112-1 (d) of Revenue Regulations (RR) No. 16-2005, 5o as amended by RR No. 26-2018,51 explicitly provides that the taxpayer affected may appeal the decision to the CTA within thirty (30) days from receipt of the decision denying the claim to wit:

"SEC. 4.112-1. Claims for Refund/Credit of Input Tax. -xxx

XXX

XXX

XXX

(d) Period within which refund/ credit of input taxes shall be made

XXX

XXX

XXX

The 90-day period to process and decide shall ,start from the filing of the claim up to the release of the payment of the VAT refund: Provided, That, the claim/ application is considered to have been filed only upon submission of the official receipts or invoices and other documents in support of the application as prescribed under pertinent revenue Issuances.

In case of full or partial denial of the claim for tax refund, the taxpayer affected, may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals (CTA): Provided, that failure on the part of any official, agent or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of the Tax Code, as amended. Provided, further, That, in the event that the 90-day period has lapsed without having the refund released to the taxpayer-claimant, the VAT refund claim may still continue to be processed administratively. Provided however, That the BIR of~icial, agent or employee who was found to have deliberately caused the delay in the processing of the VAT refund claim may be subjected to penalties imposed under said section. x x x " [Emphasis supplied] v 50 SUBJECT: Consolidated Value-Added Tax Regulations of2005. 51 SUBJECT: Amends Certain Provisions of RR No. 13-2018 to Implement the 90-Day Processing ofC1aim for VAT Refund under Section 112 (C) of the Tax Code of 1997, as Amended by Republic Act (R.A.) No. 10963, Otherwise Known as the Tax Reform for Acceleration and Inclusion or TRAIN.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

){------------------------------------------------------------------------------------------){ Under the cited provision, if the 90-day period lapses without the refund being released to the claimant, the BIR may continue to process the refund claim. Furthermore, the BIR official, agent, or employee found to have deliberately caused the delay in processing the VAT refund claim may be subjected to penalties.

Clearly, Section 112 of the NIRC of 1997, as amended, and Section 4.112-1(d) or RR No. 16-2005, as amended, contemplate the possibility that the BIR may act and issue a decision on the refund claim after the lapse of the 90-day period. In such cases, the taxpayer may file an appeal with this Court within thirty (30) days from receipt of the decision or ruling.

Nonetheless, notwithstanding the amendment, a taxpayer may still elevate the CIR's inaction should he desire to do so, pursuant to Section 7(a)(2), in relation to Section 11 of RA No. 112552, as amended by RA No. 928253, which provides that the CTA has jurisdiction not only over CIR's decisions but also his inactions on refund claims where the law provides a "specific period of action." Notably, Section 86 of the TRAIN Law, 54 the repealing clause, which includes a comprehensive list of repealed laws, does not mention RA No. 1125 nor RA No. 9282. It has been consistently held that "on the presumption that whenever the legislature enacts a provision it has in mind the previous statutes relating to the same subject matter, it is held that in the absence of any express repeal or amendment therein, the new provision was enacted in accord with the legislative policy embodied in those prior statutes, and they all should be construed together. 55 Applying the foregoing, in enacting the TRAIN Law, the legislature is presumed to have in mind the 'pertinent provisions of RA No. 9282 concerning the CTA's jurisdiction

OFT AX APPEALS

~ 53 AN ACT EXPANDING THE JURISDICTION OF THE COURT OF TAX APPEALS (CTA), ELEVATING ITS RANK TO THE LEVEL OF A COLLEGIATE COURT WITH SPECIAL JURISDICTION AND ENLARGING ITS MEMBERSHIP, AMENDING FOR THE PURPOSE CERTAIN SECTIONS OR REPUBLIC ACT NO. 11 25, AS AMENDED, OTHERWISE KNOWN AS THE LAW CREATING THE COURT OF TAX APPEALS, AND FOR OTHER PURPOSES.

54 SECTION 86. Repealing Clause. - The following laws or provisions of laws are hereby repealed, and the persons and/or transactions affected herein are made subject to the VAT provision of Title IV of the NIRC, as amended: ... Tax Reform for Acceleration and Inclusion (TRAIN), Republic Act No. I 0963, December 19, 2017.

Dole Philippines, Inc. v. Commissioner of Internal Revenue to review by appeal the inaction of the CIR in cases involving disputed assessments, refunds, or other matters arising under the NIRC. Thus, in the absence of its express repeal, the TRAIN Law is deemed enacted in accordance. with the legislative policy embodied in those prior laws, including RA No. 9282.

Section 7(a)(1) and (2) and Section 11 of RA No. 112556 , as amended by RA No. 928257 , which have not been repealed by the TRAIN Law, are quoted as follows: SEC. 7. Jurisdiction.- The CTA shall exercise:

(a) 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 in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue;

(2)

Inaction by the Commissioner of Internal

Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed ·a denial;

XXX

XXX

XXX

SEC. 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 actiqn as referred to in Section 7(a)(2) 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 . 56 Supra at note 52.

57 Supra at note 53.

. t/

Dole Philippines, Inc. v. Commissioner of Internal Revenue

A Division of the CTA shall hear the appeal: xxx [Emphasis supplied] Indeed, despite the amendments introduced by the TRAIN Law, the CTA retains its appellate jurisdiction to review the inaction of the CIR. Regarding the decision of the CIR, it is not required that it be received before the lapse of the "specific period of action," which is ninety (90) days. Therefore, a judicial claim filed within thirty (30) days from receipt of a decision rendered or received beyond the 90-day period is valid.

In summary, under the present text of Section 112 (C) of the NIRC of 1997, as amended by the TRAIN Law, and Sections 7(a)(2) and 11 of RA No. 1125, as amended by RA No. 9282, a taxpayer adversely affected by a decision, ruling or inaction of the CIR may file an appeal as follows: ( 1) In case of full or partial denial of the tax refund claim within the 90-day period for the CIR to act, the affected taxpayer may appeal to this Court within 30 days from receipt of the decision denying the claim;

(2) In case the 90-day period lapses without the taxpayer receiving a decision fully or partially denying the claim, the taxpayer may treat the inaction as a denial under Section 7 (a)(2) of RA No. 1125, as amended by RA No. 9282, and may appeal to this Court within 30 days from the lapse of the 90-day period; and (3) In case the taxpayer chooses to wait for the CIR's decision and receives a full or partial denial of the claim after the 90-day period has lapsed, the taxpayer may still file an appeal with this Court within 30 days from receipt of the decision, pursuant to the current wording of Section 112(C) of the NIRC of 1997, as amended. As previously discussed, petitioner received the VAT Refund Notice allegedly issued within the 90-day period on July 16, 2020. Counting thirty (30) days from that date, petitione~ had until August 15, 2020, to file a petition for review before this Court. However, the filing of petitions was suspended from August 4 to 18, 2020, and resumed on August 19, 2020, in accordance with Supreme Court Administrative Circular No. 43A-2020, dated August 3, 2020. Moreover, August 19, 2020 was a special non-working holiday. Hence, the filing of the instant Petition for Review on August 20, 2020, which coincided with the resumption of the filing of petitions, appeals, and other court submissions before this Court, was timely. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Having settled that the Petition for Review was timely filed, the Court likewise rules that it has the requisite jurisdiction to take cognizance of this case under Section 3(a)(l), Rule 4 of RRCTA.ss Requisites for the grant of a refund or issuance of tax credit certificate of unutilized or excess input VAT attributable to zero- rated sales.

Section 112(A) and (C) ofthe NIRC of 1997, as amended, 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 refu:p.d 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 of 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. Provided, finally, That for a person making sales that are zero-rated under Section 1 08(B) (6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. (B) ...

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety

(90) days from the date of submission of the official receipts tyt/ 58 Section 3. Cases Within the Jurisdiction of the Court in Divisions. - The Court in Divisions shall exercise:

(a) Exclusive original or appellate jurisdiction to review by appeal the following: ( I) Decisions of the Commissioner of Internal Revenue in cases involving xxx refunds of internal revenue taxes, XXX.

CTA Case No. 103 15 Dole Philippines, Inc. v. Commissioner of Internal Revenue or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim fo ~ tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within ninety

(90) days period shall be punishable under Section 269 of this Code.

As culled from jurisprudence, particularly Commissioner of Internal Revenue v. Toledo Power Co., 59 the requisites to successfully obtain a credit/refund ofunutilized or excess input VAT under Section 112 of the NIRC of 1997, as amended, are as follows:

As to the timeliness of the filing of the administrative and judicial claims:

1. the claim is filed with the BIR within two (2) years 'after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made;6o

2. in case of full or partial denial of the refund claim rendered within a period of ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application, the judicial claim shall be filed with this Court within thirty

(30) days from receipt of the decision. 5 1 With reference to the taxpayer's registration with the BIR:

3. the taxpayer is a VAT-registered person;62 In relation to the taxpayer's output VAT:

4. the taxpayer is engaged in zero-rated or effectively zero- rated sales;63 59 G.R. Nos. 1951 75 & 199645, 10 August 2015, 766 SCRA 20-33. v 60 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 201 0.

6 1 Refer to Energy Development Corporation v. Commissioner of Internal Revenue, G.R. No. 203367, March 17, 2021; Commissioner of Internal Revenue v. CE Casecnan Water and Energy Company, Inc., G.R. No. 212727, February I, 2023; and Commissioner of Internal Revenue v. Vestas Services Philippines, Inc., G.R. No. 255085, March 29, 2023.

62 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, supra; San Roque Power Corporation v. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, supra.

63 !d.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

5. for zero-rated sales under Section 106(A)(2)(a)(l), (2) and (b) , and Section 108(B)(l) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;64 As regards the taxpayer's input VAT being refunded: ·

6. the input taxes are not transitional;6s

7. the input taxes are due or paid;66

8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, 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;67 and

9. the input taxes have not been applied against output taxes during and in the succeeding quarters.68 In addition, in claims for VAT refund/credit, applicants must satisfy the substantiation and invoicing requirements under the NIRC and other implementing rules and regulations 69 to determine the veracity of the taxpayer's claims.7° Moreover, compliance with all the VAT ,invoicing requirements provided by tax laws and regulations is mandatory. 7 1 Furthermore, it must be emphasized that in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case. 72 Thus, petitioner must comply with the foregoing requisites and invoicing requirements. The absence of any of the said requisites is a valid ground to deny the refund claim. 64 !d.

65 !d.

66 Jd.

hi 67 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, supra; and San Roque Power Corporation

v. Commissioner of Internal Revenue, supra. 68 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, supra; San Roque Power Corporation v. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, supra.

' 69 Team Energy Corporation v. Commissioner of Internal Revenue, et seq., G.R. Nos. 197663 and 197770, March 14, 2018.

70 Nippon Express (Philippines) Corporation v. Commissioner of Internal Revenue, G.R. No. 191495, July 23, 20 18. 71 Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 183531 , March 25, 20 15.

72 Edison (Bataan) Cogeneration Corporation v. Commissioner of Internal Revenue, etseq., G.R. Nos. 201 665 and 20 1668, August 30, 20 17; Commissioner of Internal Revenue v. Philippine National Bank, G. R. No. 180290, September 29, 20 14; Commissioner of Internal Revenue v. United Salvage and Towage (Phils.), Inc., G.R. No. 19751 5, July 2, 20 14; Dizon v. Court ofTax Appeals, et al. , G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue v. Manila Mining Corporation, G.R. No. 153204, August 31 ,.2005.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

First and second requisites:

The administrative and judicial claims were timely filed.

The first and second requisites have already been exhaustively discussed above. To reiterate, the Court finds that petitioner timely filed its administrative and judicial claims for a refund.

Third requisite: Petitioner is a VAT-registered entity.

The Certificate of Registration (BIR Form No. 2303) may be used to determine whether petitioner is VAT -registered. Anent the third requisite, it is undisputed that petitioner is a VAT-registered person/entity with Tax Identification No. (TIN) 000-428-573-000, as evidenced by BIR Certificates of Registration for its Head Office and branches. 73 Thus, there is no question that petitioner showed compliance with the said requisite.

Fourth and fifth requisites:

Petitioner has zero-rated or effectively zero-rated sales but only in the amount of P36,499,857,975.17.

The fourth and fifth requisites require that the taxpayer be engaged in zero-rated or effectively zero-rated sales, and for zero-rated sales under Sections 106(A)(2)(a)(1) and (3), and 1 08(B)( 1) and (2) of the NIRC of 1997, as amended, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with Bangko Sentral ng Pilipinas (BSP) rules and regulations. In its Amended Quarterly VAT Returns for the period covering April 1, 20 18 to March 31, 20 19, petitioner reported total sales ofP39,600,679,515.70 which include vatable sales amounting to P2,539,658,198.47, zero-rated sales amounting 3-3" "P-3-4" "P-3-5'' "P-3-6" "P-3-7" "P-3-8" "P-3-9" "P-3-10" "P-3- ~ ' ' ' ' ' ' ' ' II ", "P-3-12", "P-3-13", "P-3-14", "P-3-15", "P-3-16", "P-3-1 7", "P-3-18", "P-3-19", "P-3-20", "P-3-21 ", "P-3- 22", "P-3-22", "P-3-23", "P-3-24", "P-3-25", "P-3-26", "P-3-27", "P-3-28", "P-3-29", and "P-3-30", Docket- Vol. III, pp. 1325 to 1361.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Period

to P36,533,275,020.59 and exempt sales amounting to P527,746,296.64, as shown below:

Covered

Vatable Sales

Zero Rated Sales

Exempt Sales

Total

1st

Quarter74

p 428,259,954.73 p 8 ,660,656,265.05 p 110,066,861.07 p 9 ,198,983,080.85 2nd '

Quarter75

554,060,017.74 7 ,284,692 ,457.69 117 ,686,494.03 7 ,956,438,969.46 3rd

Quarter76

968,167,282.26 10,202,383,488.80 154, 117,379.02 11 ,324 ,668,150.08 4th

Quarter77

589 ,170,943.74 10,385,542,809.05 145,875,562.52 11 ,120,589,315.31

Total

P2,539,658, 198.47 P36,533,275,020.59 P527,746,296.64 P39,600,679,515. 70 Petitioner claims that it entered into a Sales Agreement78 with Dole Asia Holdings (DAH) Pte. Ltd., a non-r~sident foreign corporation (NRFC) established under the laws of Singapore and holding principal office thereat and the consideration for which was paid for and inwardly remitted in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP.79 In addition, petitioner avers that its other clients for the period April 1, 2018 to March 31, 2019, include export- oriented entities that are either registered with the, Board of Investments (BOI) , Subic Bay Metropolitan Authority (SBMA), and Clark Development Corporation (CDC). Bo From the foregoing, petitioner has two (2) sources of zero-rated sales, i.e., (1) sales to NRFC doing business outside the Philippines; and, (2) sales to entities registered with Philippine Economic Zone Authority (PEZA), BOI, CDC, SBMA and other government entities, under Section 106(A)(2)(a)(l) and (5) of the NIRC of 1997, as amended. Based on the ICPA Report, petitioner's zero-rated sales can be classified as follows:

74 Exhibit "P-1 0", Docket - Vol. III, pp. 1420 to 142 1. 75 Exhibit "P-1 3", Docket - Vol. III, pp. 1426 to 1427. 76 Exhibit "P-17", Docket - Vol. Ill, pp. 1434 to 1435. 77 Exhibit "P-20", Docket - Vol. III, pp. 1440 to 1441. 78 Exhibit "P-5", Docket - Vol. III, pp. 1393 to 1399. 79 Par. 6.7, Petition for Review, Docket- Vol. I, pp. 17 to 18. 80 Par. 6. 18, Petition for Review, Docket- Vol. I, p. 22. \1 I.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Registration

Annexes

Amount

Customer Name

Type to ICPA

(in USD)

Report

Sales to NRFC (Direct Export Sales)

1. Dole

Asia

Annexes

AA,AE, $ ,

Holdings

(DAH)

NRFC

AG, AI, AC, 686,411,805.64 p Pte. Ltd.

AD,AH,AJ

2. Dole Thailand

NRFC

Annex AA

528,199.96

3. Itochu

Metals

NRFC

Annex AA

3,167,049.24

Corporation

Amount

(in Pesos)

36,310,334,491 .67 27,845,700.35 165,453,606.60

Total Direct Export Sales

$690,107,054.84 P36,503,633, 798.62 II.

Sales registered with BOI, SBMA, and CDC (Considered Export Sales)

1. Century

Pacific

Agricultural

BOI

Annex AB

P ·

21,252,520.02 Ventures, Inc.

2. General

Tuna

BOI

Annex AB

4,461,530.88

Corporation

3. Philbest Canning

BOI

Annex AB

1,253,062.00

Corporation

4. Fresh Consumer

BOI

Trade

and

(DTI-Export

Annex AF

2,558,520.00

Development

Logistics, Inc.

Act)

5. Gem

Foods

International,

SBMA

Annex AF

$ 5,702.50 296,620.57 Inc.

6 . Milbrae Exports,

CDC

Annex AF

(181 ,030.00) Inc.

Total Considered Export Sales

$ 5,702.50 p 29,641,223.47

TOTAL ZERO-RATED SALES

$686,417,508.14 P36 ,533,275,022.0981 As the table above shows, petitioner's sales to NRFCs include its sales to Dole Thailand and ltochu Metals Corporation, in addition to DAH Pte. Ltd. The relevant provision in determining whether petitioner's sales to the foregoing customers are subject to VAT at zero percent (0°/o) is Section 106(A)(2)(a)(l) and (5) of the NIRC of 1997, as amended, which reads: "SEC. 106. Value-Added Tax on Sale of Goods or Properties. -

(A)

Rate and Base of Tax. - xxx

(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales.- The term 'export sales' means: ~ 81 The Court notes an unexplained discrepancy of Pl .50 between the !CPA Report and the declared zero-rated sales on the VAT return.

I

I

I

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

XXX

XXX

XXX

(5) Those considered export sales under Executive Order No.

226, otherwise known as the "Omnibus Investments Code of 1987', and other special laws." Relative thereto, Section 4.106-5 of RR No. 16-2005,82 as further amended by RR No. 13-2018,83 provides: "SEC.

4.106-5. Zero-Rated Sales of Goods or Properties. - xxx The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales.- 'Export Sales' shall mean: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of , any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid for in acceptable foreign currency or its equivalent in goods and services, and accounted for in accordance with the rules and regulation of the Bangko Sentral ng Pilipinas (BSP);

XXX

XXX

XXX

( 4) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. 'Considered export sales under Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of e4port products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products 82 Supra at note 50.

ty/ 83 Regulations Implementing the VAT Provisions under the RA No. I 0963, Further Amending RR No. 16-2005, as Amended, March 15, 2018.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

X------------------------------------------------------------------------------------------X· to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents;

Provided, further, That without actual exportation the following shall be considered constructively exported for purposes of these provisions: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones; (3) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); (4) sales to diplomatic missions and other agencies and/ or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not.

For purposes of zero-rating, the export sales of registered export traders shall include commission income. The exportation of goods on consignment shall not be deemed export sales until the export products consigned are in fact sold by the consignee: and Provided, finally, that sales of goods, properties or services made by a VAT- registered supplier to a

BOI-registered

manufacturer j producer whose products are 100% exported are considered export sales. A certification to this effect must be issued by the Board of Investment (BOI) which shall be good for one year unless subsequently re- issued by the BOI."

Moreover, petitioner must comply with the invoicing requirements under Section 113(A) and (B) of the NIRC of 1997, as amended, which provides that a VAT taxpayer shall, for every sale, barter or exchange of goods or properties, issue a VAT invoice or official receipt (OR) which must contain the following information:

"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.

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(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);

(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 component 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 (P1,000.00) or more where the sale or transfers 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." [Emphasis supplied] The above provision is implemented by Section 4.113-1 of RR No. 16-2005, as amended, which reads: SEC. 4.113-1.

Invoicing Requirements. - (A) A VAT-registered person shall issue:-

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

Dole Philippines, Inc. v. Commissioner of Internal Revenue

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

Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice" or "VAT official receipt". All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipts shall not give rise to any input tax. VAT invoice/official 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.

(B) Information contained in VAT invoice or VAT official receipt. - The following information shall be indicated in VAT invoice or VAT official receipt:

(1) A statement that the seller is a VAT-registered person, followed by his TIN;

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That:

(a) The amount of tax shall be shown as a separate item in the invoice or receipt;

(b) If the sale is exempt from VAT, 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%) VAT, 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 break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale.

(3) In the case of sales in the amount of one thousand peso (Pl,OOO.OO) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, v

Dole Philippines, Inc. v. Commissioner of Internal Revenue shall be indicated in addition to the information required in

(1) and (2) of this Section." In addition to the above requirements, the sales invoices (Sis) and ORs must be duly registered with the BIR as prescribed under Section 237, in relation to Section 238, of the NIRC of 1997, as amended, which provides: "SEC. 237. Issuance of Receipts or Sales or Commercial Invoices.- "(A) Issuance. - All persons subject to an internal revenue tax shall, at the point of each sale and transfer of merchandise or for services rendered valued at One hundred pesos (PlOO) or more, issue duly registered receipts or sale or commercial invoices, 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: 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."

"SEC. 238.

Printing of Receipts or Sales or

Commercial Invoices. - All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style,

Taxpayer

Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner." Thus, only the sales of goods or services supported by the Sis or ORs, having the required information, shall qualify for VAT zero-rating.

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

I. Export sales of goods to

NRFCs

Based on the foregoing, for petitioner's export sales of goods to qualify as zero-rated under Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended, the following essential elements must be present:

1. The sale was made by a VAT-registered person;

2. There was a sale and actual shipment of goods from the Philippines to a foreign country; and,

3. The sale was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP.

Corollary thereto, any VAT -registered person claiming for VAT zero-rating on its export sale of goods must present at least three (3) types of documents, as follows:

1. sales invoice as proof of sale of goods;

2. bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and,

3. bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services. Consequently, only the export sales supported by the said documents shall qualify for VAT zero-rating .under Section 1 06(A)(2)(a)( 1) of the NIRC of 1997, as amended. As discussed earlier, petitioner has proved that it is a VAT-registered person as regards the first essential element. Anent the second essential element, petitioner adduced before this Court its Sis and export documents, such as Bill of Lading (BL) or Waybills, Single Administrative Documents (SADs), and Export Declarations (EDs).B4 ~ 84 Exhibits "P-63-A-01-01" to "P-63-D-34".

f)

Dole Philippines, Inc. v. Commissioner of Internal Revenue

For the third essential element, petitioner presented the Certificates of Inward Remittance, 85 Account Statements, 86

and Reconciliation of Export Sales and Foreign Currency

Remittances 87 to support that the sales were paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the BSP, as examined by the ICPA.

The ICPA noted the following observations88 in relation to petitioner's sales to NRFC, which the Court finds to be in order, to wit:

Sales Amount

Observations per Schedules

Reference

(in PHP)

Zero-rated sales arising from the export of goods duly supported by original zero-rated sales invoices dated within April 2018 and March 2019 and export documents but without valid proof of remittance p 439,686.28

AnnexAC

g) Zero-rated sales arising from the export of i) j) goods duly supported by original zero-rated sales invoices dated within April 2018 and March 2019 with valid proof of remittances but without export documents89 1,613,499.11

Annex AD

Zero-rated sales arising from the export of goods not duly supported by zero-rated sales invoices but with valid proof of remittances and BOC certification of the exportation (139,532.59)

AnnexAH

Zero-rated sales arising from the export of ' goods not duly supported by zero-rated sales invoices but with proof of remittance and BOC certification of exportation 370,529.51

AnnexAJ

---- --- _P2,284, 182.31 However, upon further examination of the submitted supporting documents, the Court finds the following sales to DAH Pte. Ltd. amounting to P1,491,641.14 are not valid for zero-rating based on the reasons stated below: 85 Exhibits "P-86-C" to "P-86-D".

86 Exhibits "P-86-A" to "P-86-B".

87 Exhibits "P-85-A" to "P-85-E".

88 Exhibit "P-215", Docket - Vol. JII, p. II 08. ~ 89 The !CPA noted in his report that the P I ,613,499.11 zero-rated sale was supported by a bill of lading (Exhibit "P- 63-B-06-494"). However, examination shows that the said bill of lading was unreadable. Thus, the Court shall disallow the same.

• i

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Invoice Number

BL/Airway

Proof of Inward Remittance

Amount

Reason for

Bill

disallowance

Exhibit

Invoice

Exhibit

Exhibit

Month

Page

No.

No.

No.

No.

No.

P-63-B-

87772

P-85-C &

July 2018

21 p 612,825.41 Not supported 05-529

P-86-A

by BL

P-63-B-

90505

P-85-C &

April 2019

5 126,874.73 Not supported 13-764

P-86-A

by BL, and the

Invoice

was

P-63-B-

P-85-B &

December

09-511 102089

P-86-B

2018 4 355,608.56 not found on the records

P-63-B-

BL does 08-327 to 101846

P-63-B-08-

P-85-B &

November

20 396,332.45 pertain

P-63-B-

588

P-86-B

2018

Invoice

08-328 ' 10 1846 P1,491,641.14 In fine, only the amount ofP36,499,857,975.17 satisfied the essential elements to qualify as VAT zero-rated sales under Section 106 (A)(2 )(a)( 1) of the NIRC of 1997, as amended, to wit:

Total Zero-Rated Sales to NRFC

Dole Asia Holdings (DAH) Pte. Ltd.

P36,310,334,491.67

Dole Thailand

27,845,700.35 not to No.

Itochu Metals Corporation

165,453,606.60 p 36,503,633,798.62

Less: Disallowances

Per ICPA

Per Court's further verification

Total Valid Zero-Rated Sales to NRFC

II. Sales to BOI, SBMA, and CDC-registered entities 2,284,182.31 1,491 ,641.14 3,775,823.45 p 36,499,857,975.17 Petitioner claims that it also derived its zero-rated sales to entities registered with the BOI, Department of Trade and Industry (DTI), SBMA, and CDC in the aggregate amount of P29,641 ,223.47, broken down as follows:

Registration

Annexes

Amount

Customer Name to ICPA

(in Pesos)

Type

Report

Century Pacific

BOI

AB

P21 ,252,520.02 Agricultural Ventures, Inc.

General Tuna Corporation

BOI

AB

4,461,530.88

Philbest Canning

BOI

AB

Corporation

1,253,062.00

Fresh Consumer Trade

' and Logistics, Inc.

DTI

AF

2,558,520.00 ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Gem Foods International,

SBMA

AF

Inc.

296,620.57 Milbrae Exports, Inc.

CDC

AF

(181.,030.001

Total

P29,641,223.47 Under Section 1 06(A)(2)(a)(5) of the NIRC of 1997, as amended and as implemented by Section 4.106-5 of RR No. 16-2005, 9o as amended by RR No.

13-2018, 9 1 for a ''considered export sale" to qualify as zero-rated, the following essential elements must be present:

1.

The sale was made by a VAT-registere,d person; and, 2.

There was a sale of goods or services to an entity entitled to incentives under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987 (OIC), and other special laws.

As for the first essential element, it is already settled that petitioner is a VAT-registered person. As for the second essential element, any VAT-registered person claiming VAT zero-rated ((considered export sales" must present, among others, the following documents: 1.

The sales invoice as proof of sale of goods; and, 2.

The proof of entitlement to zero-rating under the ore or other special laws.

Moreover, in Commissioner of Internal Revenue v. Filminera Resources Corporation (Filminera case), 92 the Supreme Court ruled that sales made to a BOI-registered buyer are export sales subject to the zero percent rate if the following conditions are met:

1. The buyer is a

BOI-registered

manufacturer /producer;

2. The buyer's products are 100°/o exported; and, 3 . The BOI certifies that the buyer exported 100°/o of its products. For this purpose, the BOI Certification is vital 90 Supra at note 50.

9 1 Supra at note 83.

92 G.R. No. 236325, September 16, 2020. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Kern nnn nnn nnn nnn nnn nn nnn nnn nnn ne nnn nnn nnn nnn ne nnn nen nn nnn nnn ne enn n nner ne cence! X for the seller-taxpayer to avail of zero-rating benefits. The certification is evidence that the buyer exported its entire product and shall serve as authority for the seller to claim a refund or tax credit.

Thus, in compliance with the second essential element, petitioner presented the following: (1) Sales Invoices and Return Sales Invoices;93 and (2) Certificates of BOI and SBMA registration.

Upon examination of petitioner’s sales invoices, the Court finds that the total amount of P27,263,733.47 must be disallowed for petitioner’s failure to comply with the invoicing requirements (1.e., failure to indicate the purchaser’s TIN in the invoices issued by petitioner), to wit:

Type in Pesos

“P-63-E-1” to “P-63-E- 13”, “P-63-E-:19” to “P- 63-E-21”, “P-63-E-23” to “P.63-E-25”, “P-63-E-28” to “P-63-E-33”, “P-63-E- 35” to “P-63-E-52”, “P- 63-E-54” to “P-63-E-71”, “P_63-E-75” to “P-63-E- 89”, “P-63-E-94” to “P- 63-E-105”, “P-63-E-108” to “P-63-E-113”, “P-63-E- 117” to “P-63-E-121”, “P-

63-E-123” to “P-63-E-

132”, “P-63-E-137” to “P- 63-E-153”, “P-63-E-157” to “P-63-E-165”, “P-63-E- 171”, “P-63-E-173” to “P- 63-E-209”, “P-63-E-211” to “P-63-E-213”, “P-63-E- 219” to “P-63-E-226”, “P-

63-E-228” to “P-63-E-

235”, “P-63-E-239” to “P- 63-E-243”, “P-63-E-245” to “P-63-E-255”, “P-63-E- 257” to “P-63-E-259”, “P-

63-E-261” to “P-63-E-

265” “P.63-E-14”, “P-63-E- 15”, “P-63-E-26”, “P-63-

Century Pacific

Agricultural

Ventures, Inc.

P22) 252,520 295

Corporation

33 Exhibits “P-63-E-1” to “P-63-E-269”, and “P-63-F-01-01” to “P-63-F-01-17”. % Exhibits “P-99” to “P-103”, USB.

95 Annex AB, USB. ’

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Customer Name

Philbest Canning

Corporation

Gem Foods

International, Inc.

Total

Sales

to

HOI-registered

entities

Registration

Type

BOI

SBMA

Amount

(in Pesos)

1,253,062.0097 296,620.5798 P27 ,263, 733.47

Exhibits

E-27", "P-63-E-34", "P- 63-E-39", "P-63-E-40", "P-63-E-7 3", "P-63-E- 7 4", "P-63-E-90" to "P- 63-E-93", "P-63-E-106", "P-63-E-107", "P-63-E- 114" to "P-63-E-116", "P- 63-E-122", "P-63-E-133" to "P-63-E-136", "P-63-E- 154", "P-63-E-156", "P-

63-E-166"

to "P-63-E- 170", "P-63-E-210", "P- 63-E-227" ~ "P-63-E-244", "P-63-E-256", "P-63-E- 260" "P-63-E-155", "P-63-E- 172", "P-63-E-236" to "P- 63-E-238", "P-63-E-266",

"P-63-E-267"

Exhibits "P-63-E-16", "P-

63-E-17"

"P-63-E-18"

' .

' "P-63-E-22", "P-63-E- 53", "P-63-E-72", "P-63- E-214" to "P-63-E-218", "P-63-E-268", "P-63-E- 269" Again, at the risk of being repetitive, petitioner must ensure that its sales of goods or services are duly supported by Sis or ORs that are compliant with the invoicing requirements under Section 113(A) and (B) of the NIRC of 1997, as amended, to qualify for VAT zero-rating. Thus, it is deemed proper to outrightly disallow as valid zero-rated sales the amount of P27,263,733.47 due to petitioner 1S failure to comply with the invoicing requirements. On the other hand, while petitioner's sales to Fresh

Consumer

Trade

and Logistics, Inc.

amounting to P2,558,520.0099 were duly supported with Sis dated within the period of claim, they cannot qualify as valid zero-rated sales as petitioner fell short in proving that its products were v 97 !d.

98 Annex AF, USB.

99 The amount oft>2,558,520.00 pertains to sales to Fresh Consumer Trade and Logistics, Inc.; !CPA's observation letter (h) amounting to P2,674, II 0.57 excluding observation regarding sales to SBMA and CDC ,registered entities amounting to Pll5,590.57.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

100°/o exported, based on the

DTI

Certificate

of Accreditation. loa To reiterate, as ruled in the Filminera case, for a sale to a BOI-registered entity to be accorded VAT zero- rating, petitioner must be able to show that its buyer's products are 1 00°/o exported.

Moreover, it may be noted that petitioner failed to offer a certification issued by CDC to prove entitlement to VAT zero-rating of sales to its supplier Milbrae Exports, Inc. Thus, petitioner's sales thereto cannot qualify for VAT zero-rating. In fine, petitioner's ((considered export sales" cannot qualify for VAT zero-rating.

To recapitulate, out of petitioner's zero-rated sales for the period covering April 1, 20 18 to March 31, 20 19 amounting to P36,533,275,022.09, only the amount of !>36,499,857,975.17 qualify for

VAT

zero-rating, as determined below:

Sales to BOI/

·Total

Particulars

Sales to NRFC

SBMA/CDC-

registered

Entities

Reported Zero-

P36,503,633, 798.62 1"29,641,223.47 P36 ,533,275,022.09 rated Sales 101

Less: Exceptions

Noted

Exceptions noted by

the ICPA (Annexes

(2,284, 182.31) (2,284, 182.31) AC, AD, AH, and AJ) Zero-rated sales not .

supported by BLs (1,491,641.14) (1,491,641.14)

and Sales Invoices

Failure to comply with the invoicing requirements and to prove entitlement of (29,641,223.47) (29,641,223.47)

the BOI/CDC-

registered entities to VAT zero-rating

Total Valid Zero-

P36,499,857,975.17 P36,499,857,975.17

Rated Sales

- ------- ----- v 100 Exhibit "P-I 03".

101 With Pl.50 difference between the total zero-rated sales reported per return and per schedule. ,

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Sixth requisite: The input taxes claimed by petitioner are not transitional.

The claimed input taxes do not appear to be transitional, as understood under Section 111 (A) of the NIRC of 1997, as amended, to wit:

"SEC. 111. Transitional/ Presumptive Input Tax Credits. (A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to rules and regulations presctibed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax."

As held by the Supreme Court in Fort Bonifacio

Development Corporation

v.

Commissioner of Internal

Revenue, 1o2 the transitional input tax credit benefits newly VAT-registered persons, whether or not they previously paid taxes on the acquisitions of their beginning inventory of goods, materials, and supplies. During the transition from non-VAT to VAT status, the transitional input tax credit alleviates the impact of VAT on the taxpayer. Since there is no showing that the claimed input taxes are transitional input VAT, petitioner has complied with the sixth requisite for the grant of an input VAT refund. Seventh requisite: Not all input taxes claimed are due or paid.

Anent the seventh requisite, petitioner must provide supporting documents to prove that the input taxes claimed for refund for the period covering April 1, 20 17 to March 31, 2018 were actually due or paid under Section 110(A) of the NIRC of 1997, as amended, which provides: 102 G.R. Nos. 158885 & 170680, April2, 2009. ll

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"SEC. 110. Tax Credits.- (A) Creditable input Tax. -

(1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereOf on the following transactions shall be creditable against the output tax:

(a) Purchase or importation of goods: 1.

For sale; or 11.

For conversion into or intended to form part of a finished product for sale including packaging materials; or 111.

For use as supplies in the course of business or iv.

For use as materials supplied in the sale of serv1ce; or v.

For use in trade or business for which deduction for depreciation or amortization is allowed under this Code.

(b) Purchase of services on which a value-added tax has actually been paid.

(2) The input tax on domestic purchase or importation of goods or properties by a VAT-registered person shall be creditable:

(a) To the purchaser upon consummation of sale and on importation of goods or properties; and '

(b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs.

Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds

One

Million

pesos (P1,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, finally, That in the case of purchase of services, lease or use of t/

Dole Philippines, Inc. v. Commissioner of Internal Revenue properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee." The above provisions are implemented by Sections 4.110-1 to 4.110-3 ofRR No. 16-2005,103 as amended,.which provide as follows:

"SECTION 4.110-1. Credits for Input Tax. - 'Input tax' means the VAT due on or paid by a VAT -registered person on importation of goods or local purchases of goods, properties, or services, including lease or use of properties, in the course of his trade or business. It shall also include the transitional input tax and the presumptive input tax determined in accordance with Sec. 111 of the Tax Code. It includes input taxes which can be directly attributed to transactions subject to the VAT plus a ratable portion of any input tax which cannot be directly attributed to either the taxable or exempt activity. Any input tax on the following transactions evidenced by a VAT invoice or official receipt issued by a VAT-registered person in accordance with Sees. 113 and 237 of the Tax Code shall be creditable against the output tax:

(a) Purchase or importation of goods: ( 1) For sale; or

(2) For conversion into or intended to form part of a finished product for sale including packaging materials; or

(3) For use as supplies in the course of business; or

(4) For use as materials supplied in the sale of services; or

(5) For use in trade or business for which deduction for depreciation or amortization is allowed under the Tax Code,

(b) Purchase of real properties for which a VAT has actually been paid;

(c) Purchase of services in which a VAT has actually been paid. v 103 Supra at note 50.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(d) Transactions "deemed sale" under Sec. 106 (B) of the Tax Code;

(e) Transitional input tax allowed under Sec. 4.111

(a) of these Regulations;

(f) Presumptive input tax allowed under Sec. 4.11"1

(b) of these Regulations;

(g) Transitional input tax credits allowed under the transitory and other provisions of these Regulations. SEC. 4.110-2. Persons Who Can Avail ofthe Input Tax Credit. - The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT- registered person shall be creditable:

(a) To the importer upon payment of VAT prior to the release of goods from customs custody;

(b) To the purchaser of the domestic goods or properties upon consummation of the sale; or

(c) To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty or fee.

SEC. 4.110-3. Claim for Input Tax on Depreciable Goods. - Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (P1,000,000.00), regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner:

(a) If the estimated useful life of the capital 'good is five (5) years or more - The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided by 60 and the quotient will be the amount to be claimed monthly.

(b) If the estimated useful life of a capital good is less than five (5) years - The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. v

Dole Philippines, Inc. v. Commissioner of Internal Revenue x--------------------------------------------------------------------------------------J---x Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed one million pesos (Pl,OOO,OOO.OO), the total input taxes will be allowable as credit against output tax in the month of acquisition.

Capital goods or properties refers to goods or properties with estimated useful life greater than one (1) year and which are treated as depreciable assets under Sec. 34(Fl of the Tax Code, used directly or indirectly in the production or sale of taxable goods or services. The aggregate acquisition cost of depreciable assets in any calendar month refers to the total price, excluding the VAT, agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired on installment for an acquisition cost of more than P1,000,000.00, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed P1,000,000.00.

Construction in progress (CIP) is the cost of construction work which is not yet completed. CIP is not depreciated until the asset is placed in service. Normally, upon completion, a CIP item is reclassified and tlie reclassified asset is capitalized and depreciated. CIP is considered, for purposes of claiming input tax, as a purchase of service, the value of which shall be determined based on the progress billings. Until such time the construction has been completed, it will not qualify as capital goods as herein defined, in which case, input tax credit on such transaction can be recognized in the month the payment was made: Provided, that an official receipt of payment has been issued based on the progress billings. In case of contract for the sale of service where only the labor will be supplied by the contractor and the materials will be purchased by the contractee from other suppliers, input tax credit on the labor contracted shall still be recognized on the month the payment was made based on a progress billings while input tax on the purchase of materials shall be recognized at the time the materials were purchased.

(a) The amortization of the input VAT shall only be allowed until December 31, 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, That in the case of purchase of services, lease or use of properties, the input tax shall be ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee.

XXX

XXX

XXX

Once the input tax has already been claimed while the construction is still in progress, no additional input tax can be claimed upon completion of the asset when it has been reclassified as a depreciable capital asset and depreciated."

Relative thereto, Section 4.110-8 of RR No. 16-2005104 provides for the substantiation requirements of input tax credits, as follows:

"SEC. 4.110-8. Substantiation of Input Tax Credits.-

(a) Input taxes for the importation of goods or the domestic purchase of goods, properties or services is made in the course of trade or business, whether such input taxes shall be credited against zero-rated sale, non-zero- rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau:

(1) For the importation of goods - import entry or other equivalent document showing actual payment of VAT on the imported goods.

(2) For the domestic purchase of goods and properties - invoice showing the information required under Sees. 113 and 237 of the Tax Code.

(3) For the purchase of real property- .. .

(4) For the purchase of services - official receipt showing the information required under Sees. 113 and 23.7 of the Tax Code.

A cash register machine tape issued to a registered buyer shall constitute valid proof of substantiation of tax credit only if it shows the information required under Sees. 113 and 237 of the Tax Code." [Emphasis supplied} Verily, to prove entitlement to credits for input taxes due and paid, petitioner must not only present the supporting documents prescribed under Section 4.110-8 of RR No. 16- 2005, but also, these documents must comply with the invoicing requirements under Sections 113(A) and (B), 237 ' M S"P'O ot OOie 50.

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue and 238 of the NIRC of 1997, as amended, as implemented by Section 4.113-1(A) and (B) of RR No. 16-2005.

Based on petitioner’s Amended Quarterly VAT Returns! for the period covering April 1, 2018 to March 31, 2019, petitioner reported current input tax amounting to P1,685,855,716.90, 1°6© out of which the amount of P1,381,096,733.07197 is the subject of the present claim, as shown below:

|| ast gtr2019 | anager2019 | sragtr20i9 | 4th gtr 2019

Input Tax Due on

Capital Goods

exceeding P1M quarter P_14,425,367.03 | P_12,054,628.58 P 9,914,113.08 P 7,906,800.60 P 44,300,909.29

Purchase of

Capital Goods

Exceeding

P1M

14,425,367.03 12,054,628.58 9,914,113.08 7,906,800.60 44,300,909.29 exceeding P1M 2,370,738.45 2,140,515.48 2,007 ,312.51 1,819,027.94

Input Tax Due on

Current Purchases

of Goods other than Capital Goods 81,418, 138.62 145,798,573.68

Input Tex Paid on: Ree Pee

106,796,280.00 61,619,675.00 102,321,190.00 82,592,665.00 f] purchases of

Importation of

services 166,334,109.49 129,701,730.68 172,452,962.52 128,997,136.18 597 485,938.87 goods other

Services

Rendered by

Non-Residents ead 220,045.67 uty/ | 133.10 al 502,126.87 21 eae 712.08 cereal 455,017.72 than capital pasdemiaric 350,435.16 209, ers 538.78 299, eee 279.39 233 F sxscirh alg 513.26 1 ) 4 aaaene Ren 270,766.59 goods

Creditable

Withholding VAT

(reflected as

Others in VAT

4,010.39 17,368.22 2,585.48 552.46 24,516.55 Deferred from

Less: Deferred

for the succeeding period 35,963,314.91

Amortized

input tax on 8,337,594.38 206,960,536.98 213,045,590.10 647,222 ,839.38 353,329,810.00 Input tax on domestic 105 Exhibits “P-10”, “P-13”, “P-17”, and “P-20”, Docket — Vol. III, pp. 1420 to 1421, 1426 to 1427, 1434 to 1435, and 1440 to 1441.

106 Exhibit “P-215”, Docket — Vol. III, p. 1114.

'07 With discrepancy of P0.01 against the total amount per VAT Returns.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Total input tax ' during the period 372,143,322.62 357,107,996.16 508,246,714.36 448,357,683.76 1,685,855,716.90 Less: Output tax 51,391,194.57 66,487,202.13 116,180,073.87 70,700,513.25 304,758,983.82 Excess input tax P320, 752,128.05 P290,620, 794.03 P392,066,640.49 P377,657,170.51 P1,381,096, 733.08 Based on the foregoing, petitioner's input VAT consists of the following:

a) Domestic Purchase of Goods Other than

Capital Goods

p 64 7,222,839.38 b) Domestic Purchase of Services 597,485,938.87 Total Input VAT from Domestic Purchases of

Goods and Services

p 1 ,244, 708,778.25 c) Importation of Goods Other than Capital

Goods

353,329,810.00 d) Services rendered by Non-residents 79,455,017.72 e) Amortized input tax on capital goods for FY 2019 8,337,594.38 f)

Others

,24,516.55

Total Current Input VAT

P1,685,855,716.90 To support its input VAT arising from importations and domestic purchases of goods and services, petitioner submitted its importation documents [i.e., SAD, Statement of

Settlement of Taxes

and

Duties

(SSDT)],

Supplier's

Certification,

Computation

for the

Transfer

Pricing

Adjustments, Debit and Credit Memos,1os and VAT Sis and ORs l09 issued by its various suppliers, which the ICPA examined.

Based on the !CPA's review of petitioner's supporting documents, out of petitioner's total input VAT amounting to P1,685,855,716.90, only the total amount of P1,611,787,038.32 was duly substantiated and supported by documents in accordance with the invoicing requirements. The result of the !CPA's reviewuo is shown below: 108 Exhibits "P-78-A" to "P-79".

109 Exhibits "P-60-A-0 1-1" to "P-60-D-13-56"; "P-61-A-03-1 " to "P-61-B-955". 11 0 Exhibit "P-215", Docket- Vol. III, pp. 11 28 to 1129. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Per Claim 111

Per ICPA

a. Local purchases of goods and services p 1,244,708,778.25 P1, 171,255,240.68112

b. Importation 353,329,810.00 352,719,233.23113

c. Services rendered by Non- residents 79,455,017.72 79,455,016.32114

d. Amortized input tax on capital goods for FY 20 19 8,337,594.38 8,337,594.39115

e. Others 24,516.55 19,953.70116

Total Input Tax

P1,685,855, 716.90 P P1,611,787,038.32

Domestic

purchase goods and services

Importation

Pl,S98,038,588.25117 of and Comparison made by the ICPA of the input VAT on domestic purchases of goods and services and importation based on supporting documents submitted for his review by petitioner in the total amount of P 1,602, 783,734.13 against the input VAT reported in the schedule (Summary List of Purchases118 and Summary List of Importations119) and VAT returns amounting to P1,598,037,598.96 resulted in a difference amounting to P4,746, 135.17, the pertinent portion of the ICPA report is reproduced below:

Observations

Domestic

Importation

Total

Input taxes supported by p 1' 171,255,240.68 p 352,719,233.23 p 1,523,974,473.91 proper documents Input taxes not duly 78,036,059.22 773,201.00 78,809,260.22 supported by proper documents Total input taxes P1,249,291,299.90 P353,492,434.23 P1,602,783,734.13 examined Input taxes per schedule 1,598,037,598.96

Difference

p 4,746,135.17 ~ 11 1 Exhibits "P-10", "P-13", "P-17", and "P-20", Docket- Vol. Ill, pp. 1420 to 1421 , 1426 to 1427, 1434 to 1435, and 1440 to 1441.

112 Annexes AK, CR, AL, CS, AM, CT, CZ, BF, BR, FA, FB, FC, FF, GA, FG, FH, FI, BT, FO, FP, GC, GB, FS, BU, BY, GE, GK, GF, BZ, GG, GJ, GH, CA, GL, GS, GN, GO, CB, GP, CH, CI, HG, CM, and HK of Exhibit "P- 215", Docket-Vol. III, pp. 1116to 1118. ·

Dole Philippines, Inc. v. Commissioner of Internal Revenue

It is to be noted that there is a difference of P989.29 between the total input

VAT

declared pet return (P1,598,038,588.25) and the total input VAT used by the ICPA in its report, as shown in the table above (P1,598,037,598.96). Thus, the difference should only be P4,745,145.88.

The ICPA accounted for the difference ofP4,746, 135.17, as follows:

Reference

Domestic

Importation

Total

Annex CB and Annex

p 2,571,483.73 p 2,571,483.73

GP

Annex BY and Annex

1,997,520.81 1,997,520.81

GE

Annex FH

6,685.7 1 6,685.71

Annex GC

6,086.61 6,086.61

Annex GF

380.74 380.74

Annex FP

245.85 ' 245.85

Annex FF

107.48 107.48

Annex CB

p 21,144.00 21,144.00

Annex CO

71,316.23 71,316.23

Annex CP

71,164.00 71,164.00

Total

P4,582,510.93 P163,624.23 P4, 746,135.16120 The ICPA explained that the difference pertains to input taxes duly supported by valid invoices and receipts but not included in the schedule. Thus, there is an understatement of input taxes in the schedule vis-a-vis the actual supporting documents. 121 Upon careful examination of the supporting documents, the Court finds that the difference of P4,746, 135.17 arose from the following: ( 1) the spot rate used by petitioner in recording its transactions was different from the exchange rate used by the ICPA in his review; and, (2) only a portion of the total input VAT per supporting document was claimed. However, the Court cannot go beyond the subject claim. Analogous to an assessment case, the power to assess is bestowed to respondent; thus, the Court is constrained to limit its findings based on the disputed claim only. 122 Consequently, the Court will not consider the !CPA's 120 With 0.0 I difference due to rounding off. tyT( 121 Par. 120 of Exhibit "P-215", Docket - Vol. III, p. II 16. 122 Commissioner of Internal Revenue v. Transnational Plans, Inc., CT A EB Nos. 133 7 and 1339 (CT A Case No. 8291), March 27, 2017.

Dole Philippines, Inc. v. Commissioner of Internal Revenue conclusion that there was an understatement of input VAT in the adjusted amount of P4,745, 145.88123. The Court will then proceed to determine whether petitioner complied with the requisites for a valid refund claim of its alleged excess or unutilized input VAT. Based on the ICPA report, out of the total input VAT on domestic purchases of goods and services of Pl,244,708,778.25, We find the following disallowances amounting to P78,036,059.22 proper; thus, shall be sustained:

Observations

1) Input VAT on domestic purchases of goods and services not duly supported by original TIN VAT Invoice I TIN VAT ORs dated April 2018 to March 2019.

2) IVAT

on goods and services supported by invoice/official receipt without the word "TIN VAT"; Possible overclaiming of IVAT 3) IVAT on goods and services supported by invoice/official receipt without the word "TIN VAT"; Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Incomplete or incorrect address of buyer indicated on the invoice/official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice I official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice I official receipt; No business style of buyer indicated on the invoice I official receipt

4) IV AT

on goods and services supported by invoice/official receipt without the word "TIN VAT"; Incomplete or incorrect address of buyer indicated on the invoice/ official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice I official receipt; Possible underclaiming of IVAT; Possible underclaiming of IVAT; Possible underclaiming of IV AT;

5) IVAT on goods and services supported by invoice/official receipt without the word "TIN VAT"; Invoice/Official Receipt with statement "Document not valid for claiming input taxes"; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the _y_ear;

6) Input VAT on domestic purchases of goods and services that are properly supported by invoicesjORs dated April20 18 to March 2019, but the Company's name was incomplete/incorrect

Amount

I Reference

P 38,567,154.35 I Annex AO

Annex CU

1,902.41 I Annex CV 2 ,893.90 I Annex CW 1,355.65 I Annex CX 1,285.71 I Annex CY 15,096.47 I Annex AR

Annex CZ

123 Accounted difference off'4,746,135.17 less typographical error in input VAT per VAT returns used by the !CPA t/ in his report.

~\

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

7) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's name and address are wrong. 8) Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; 9) Incomplete or incorrect name of buyer indicated on the invoice I official receipt; Incomplete or incorrect address of buyer indicated on the invoice j official receipt; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the vear;

10) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019 but the Company's name and TIN.

11) Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice I official receipt; Possible overclaiming of IVAT; 12) Incomplete or incorrect name of buyer indicated on the invoice I official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year;

13) Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice I official receipt;

Possible underclaiming of IVAT; No business style of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt;

No

business style of buyer indicated on the invoice I official receipt;

14) Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Invoice/ official receipt with alteration on buyer's name and without countersign of vendor 15) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's name, TIN, address, and business style are incorrect/incomplete.

16) Incomplete or incorrect name of buyer indicated on the invoice/ official receipt; Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; IVAT on

Amount

I Reference

62,813.161 Annex AS ·

Annex DE

42,900.15 I Annex DF 12,257.40 I Annex DG 5,857.12 1 Annex AT

Annex DL

4,658.4 7 I Annex DM 2,245.10 I Annex DN 927.75 I Annex DO 2,177.19 I Annex DP 204,007.32 I Annex AU

Annex DH

2,616.87 I Annex DI ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

)(------------------------------------------------------------------------------------------)(

Observations

goods and services supported by invoice f official receipt dated outside the taxable quarter but within the year;

17) Incomplete or incorrect name of buyer indicated on the invoice f official receipt; Incomplete or incorrect address of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice f official receipt; No business style of buyer indicated on the invoice/official receipt; No business style of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year 18) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's name, address, and business style are incorrect/incomplete.

19) Incomplete or incorrect name of buyer indicated on the invoice f official receipt; IVAT on goods and services supported by invoice/ official receipt with no date or incomplete date; Incomplete or incorrect address of buyer indicated on the invoice I official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice j official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice f official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice/official receipt;

20) Incomplete or incorrect name of buyer indicated on the invoice/official receipt;

IVAT on goods and services supported by invoice/official receipt with no date or incomplete date;

Incomplete or

incorrect address of buyer indicated on the invoice f official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice f official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice I official receipt; IVAT on goods and services supported by certified true copy of invoice/ official receipt 21) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs but with no invoice date or incomplete invoice date, and the Company's name, TIN, address, and business style are incorrect/incomplete. 22) Incomplete or incorrect name of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/official receipt with no date or incomplete date; Incomplete or incorrect address of buyer indicated on the invoice f official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice f official receipt;

Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; Incomplete or incorrect

Amount

Reference

33,963.43 I Annex DK 94,721.42 I Annex AW

Annex DJ

1,937.14 I Annex DA 2,599.29 I Annex DB 143,110,.30 I Annex AX

Annex DC

7,611.95 I Annex DD ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

TIN of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt ) 23) Input VAT on domestic purchases of goods and 413.04 services supported by TIN VAT Invoice/TIN VAT ORs but with no invoice date or incomplete invoice date, and the Company's name and business style are incorrect/incomplete.

24) Input VAT on domestic purchases of goods and 276,343.62 services supported by VAT invoices/TIN VAT ORs but with no or incomplete invoice date. 25) Input VAT on domestic purchases of goods and 1,237.51 services supported b y VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date, and the Company's address and business style are incorrect/incomplete.

26) Input VAT on domestic purchases of goods and 308,530.70 services supported by VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date, and the Company's address, TIN, and business style are incorrect/incomplete. 27) Input VAT on domestic purchases of goods and 168'.03 services supported by VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date, Company's TIN and business style are incorrect/incomplete, and VAT amount is not indicated/ not separately shownjnot properly shown in the designated line item.

28) Input VAT on domestic purchases of goods and 105,267.88 services supported by VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date, and the Company's TIN and business style are incorrect/incomplete.

29) Input VAT on domestic purchases of goods and 319.78 services supported by VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date, and VAT amount is not indicated/ not separately shown/not properly shown in the designated line item.

30) Input VAT on domestic purchases of goods and 268.39 services supported by VAT invoices/TIN VAT ORs but with no invoice date or incomplete invoice date and the

Company's

business style is

I

incorrect/incomplete.

31) Input VAT on domestic purchases of goods and 15,513,943.41 services claimed during the period April 2018 to March 2019, but the TIN VAT Invoices/TIN VAT ORs were not dated within the refund period. 32) Input VAT on domestic purchases of goods and 702,035.85 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's address is incorrect/incomplete 33) Input VAT on domestic purchases of goods and 324,121.36 services supported by TIN VAT Invoice/TIN VAT

Reference

AnnexAY

AnnexAZ

. Annex DQ

Annex BA

Annex BB

Annex BC

Annex BD

Annex DR

Annex BE

Annex BF

Annex BG

Annex DS

Annex BH

Annex DT

Annex BI

Annex DU v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

ORs dated April 2018 to March 2019, but the Company's address and TIN.

34) Incomplete or incorrect address of buyer indicated on the invoice/ official receipt; Incomplete or incorrect

TIN

of buyer indicated on the invoice/ official receipt; Invoice j official receipt with alteration on buyer's name and with countersign of the vendor;

Invoice/ official receipt with alteration on the date and with countersign of the vendor; Invoice/official receipt with alteration on the date and with countersign of the vendor; Invoice j official receipt with alteration on the date and with countersign of the vendor; No business style of buyer indicated on the invoice j official receipt 35) Incomplete or incorrect address of buyer indicated on the invoice j official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice I official receipt;

Propriety of for ex rates used (i.e., possible overclaiming);

36) Incomplete or incorrect address of buyer indicated on the invoice j official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice I official receipt; Possible underclaiming of IVAT;

37) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice I official receipt; Possible underclaiming of IVAT; No business style of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt;

No

business style of buyer indicated on the invoice/ official receipt;

38) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's address, TIN, and business style are incorrect/incomplete, and VAT amount is not indicated/not separately shownjnot properly shown in the designated line item.

39) Incomplete or incorrect address of buyer indicated on the invoice/ official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice/official receipt;

VAT

amount not indicated/not separately shown/not properly shown on the designated line item;

40) Input VAT on domestic purchases of goods and services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's address, TIN, and business style are incorrect I incomplete.

Amount

Reference

7,097.53 I Annex DV 12,844.80 I Annex DW 1,126.91 I Annex DX 16,830.79 I Annex DY

Annex BJ

34,666.72 I Annex DZ 73.39 I Annex EA 459,600.40 I Annex BK

Annex EB

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

41) Incomplete or incorrect address of buyer indicated on the invoice/ official receipt;

Incomplete or

incorrect

TIN

of buyer indicated on the invoice/official receipt;

IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 42) Incomplete or incorrect address of buyer indicated on the invoice/ official receipt; Incomplete or incorrect

TIN

of buyer indicated on the invoice/official receipt;

IVAT on goods and services supported by certified true copy of invoice/official receipt;

IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year;

IV AT

on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; VAT on goods and services supported by in voice/ official receipt dated outside the taxable quarter but within the year; 43) Incomplete or incorrect address of buyer indicated on the invoice 1 official receipt; Incomplete or incorrect

TIN

of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year; IVAT on goods and services supported by invoice I official receipt dated outside the taxable quarter but within the year; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year;

44) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Invoice I official receipt with alteration on buyer's name and with countersign of vendor 45) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Invoice I official receipt with alteration on buyer's name and without countersign ofvendor 46) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Invoice/ official receipt with alteration on the date and with countersign of the vendor.

4 7) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Possible

overclaiming of IVAT;

VAT

amount not indicated/not separately shown/not properly shown on the designated line item;

48) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Possible

underclaiming of IVAT; Invoice/Official Receipt with statement "Document not valid for claiming input taxes";

49) Incomplete or incorrect address of buyer indicated on the invoice I official receipt;

Possible

Amount

I Reference

1,449.66 I Annex EC 503.57 I Annex ED 42,862.00 I Annex EE 44,132.02 I Annex EF 28,027.27 I Annex EG 49,866.55 I Annex EH 3,183.08 I Annex EI 258.48 I Annex EJ 1,138.23·1 Annex EK v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

underclaiming of IV AT; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 50) Incomplete or incorrect address of buyer indicated 5,357.14 on the invoice/official receipt; VAT amount not ' indicated/ not separately shown/not properly shown on the designated line item; IVAT on goods and services supported by a certified true copy of the invoice I official receipt; No business style of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt; 51) Incomplete or incorrect address of buyer indicated 151.64.

on the invoice I official receipt;

Invoice I Official

Receipt with statement "Document not valid for claiming input taxes"; No business style of buyer indicated on the invoice/ official receipt; 52) Incomplete or incorrect address of buyer indicated 32,919.19 on the invoice/official receipt; IVAT on goods and services supported by a certified true copy of the invoice I official receipt 53) Incomplete or incorrect address of buyer indicated 554.40 on the invoice/official receipt; IVAT on goods and services supported by a certified true copy of the invoice/ official receipt; No business style of buyer ' indicated on the invoice I official receipt; 54) Input VAT on domestic purchases of goods and 41,924.41 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the

Company's

address and business style are incorrect I incomplete.

55) Input VAT on domestic purchases of goods and 2,713,854.43 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's TIN is incorrect/incomplete. 56) Incomplete or incorrect TIN of buyer indicated on 114,378.38 the invoice I official receipt; Invoice I official receipt with alteration on buyer's name and with countersign of vendor 57) Incomplete or incorrect TIN of buyer indicated on 10,195.89 the invoice/ official receipt; Invoice/ official receipt with alteration on buyer's name and without countersign of vendor 58) Input VAT on domestic purchases of goods and 18,608.80 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the ' Company's TIN is incorrect/incomplete and with alteration in invoice/OR date and/or amount that is not countersigned.

59) Incomplete or incorrect TIN of buyer indicated on 22,311.85 the invoice I official receipt; Possible overclaiming of IV AT; No business style of buyer indicated on the invoice I official receipt;

60) Incomplete or incorrect TIN of buyer indicated on the invoice j official receipt;

VAT amount not 15,551.67"

Reference

Annex EL

Annex EM

Annex EN

Annex EO

Annex BL

Annex EP

Annex BM

Annex EQ

Annex ER

AnnexES

Annex BN

Annex ET

Annex EU

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

indicated I not separately shown/not properly shown on the designated line item 61) Input VAT on domestic purchases of goods and 150,372.03 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the ,

Company's

TIN

and business style are incorrect/incomplete, and VAT amount is not indicated/ not separately shown/not properly shown in the designated line item.

62) Incomplete or incorrect TIN of buyer indicated on 19,676.57 the invoice j official receipt;

IV AT on goods and services supported by a certified true copy of the invoice I official receipt 63) Input VAT on domestic purchases of goods and 1,789,318.18 services supported b y TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the

Company's

TIN

and business style are incorrect/incomplete.

64) Input VAT on domestic purchases of goods and 1,711.34 services supported by TIN VAT InvoicejTIN VAT ORs that were not dated within respective quarter of the period of refund and the Company's TIN and business style is incorrect/incomplete. 65) Incomplete or incorrect TIN of buyer indicated on 22,945.71 the invoice j official receipt; Invoice j official receipt with alteration on the date and with countersign of

I

the vendor; No business style of buyer indicated on the invoice I official receipt;

66) Invoice/ official receipt with alteration on buyer's 25,950.54 name and with countersign of vendor;

Invoice/ official receipt with alteration on the date and without countersign of vendor 67) Invoice/official receipt with alteration on buyer's 11,414.38 name and with countersign of vendor;

Invoice j official receipt with alteration on the date and without countersign ofvendor; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year;

68) Invoice/official receipt with alteration on buyer's 358.34 name and with countersign of the vendor; Invoice j official receipt with alteration on the date and without countersign of the vendor; Possible underclaiming of IV AT;

69) Invoice/official receipt with alteration on buyer's 1.07 name and with countersign of vendor; Propriety of forex rates used (i.e., possible overclaiming)

I

70) Invoice/official receipt with alteration on buyer's 659.61 name and with countersign of the vendor; Possible overclaiming of IV AT 71) Invoice/ official receipt with alteration on buyer's 20,313.05 name and with countersign ofvendor; No business style of buyer indicated on the invoice/ official receipt; IVAT on goods and services supported by invoice j official receipt dated outside the taxable quarter but within the year;

Reference

Annex EV

Annex EW

Annex BP

· Annex EX

Annex BQ

Annex EY

Annex EZ

Annex FD

Annex FW

Annex FE

Annex GA

Annex FG

Annex FJ

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

72) Invoice/official receipt with alteration on buyer's 3,295.57 name and with countersign of vendor; No business style of buyer indicated on the invoice/ official receipt 73) Input VAT on domestic purchases of goods and 488,458.10 services supported by invoicesjORs dated April 2018 March 2019 with alteration the ' to m Company's name and not countersigned by the vendor.

74) Input VAT on domestic purchases of goods and 4,285.71 services that are supported by invoicesjORs dated April 2018 to March 2019 with alteration in the Company's name and not countersigned by the vendor; No business style of buyer indicated on the invoice I official receipt;

IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year; 75) Invoice/official receipt with alteration on buyer's 19,700.78 name and without countersign of vendor;

Invoice/ official receipt with alteration on the date and without countersign of vendor 76) Invoice/ official receipt with alteration on buyer's 23,682.26 name and without countersign of vendor;

Invoice/ official receipt with alteration on the date and without countersign ofvendor; IVAT on goods and services supported by invoice j official receipt dated outside the taxable quarter but within the ' year;

77) Invoice/official receipt with alteration on buyer's 2,793.05 name and without countersign of vendor; VAT computation indicated on the in voice/ official receipt is erroneous 78) Input VAT on domestic purchases of goods and 21 ,631.50 services duly supported by original TIN VAT invoices/ORs but with alteration in invoice/OR date and/ or amount and countersigned. 79) Invoice I official receipt with alteration on the date 531.01 ' and with countersign of the vendor; Propriety of forex rates used (i.e. , possible overclaiming) ; IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year;

80) Invoice/official receipt with alteration on the date 9,629.84 and with countersign of the vendor; VAT amount not indicated/not separately shown/not properly shown on the designated line item 81) Invoice/ official receipt with alteration on the date 6,982.73 and with countersign of the vendor; VAT amount ' not indicated/not separately shown/not properly shown on the designated line item; IVAT on goods and services supported by invoice I official receipt dated outside the taxable quarter but within the year;

82) Invoice I official receipt with alteration on the date 3,022.20 and with countersign of the vendor; VAT computation indicated on the invoice I official receipt is erroneous

Reference

Annex FY

Annex BS

Annex FK

Annex FZ

Annex FL

Annex FM '

Annex FN

Annex BT

Annex FO

Annex GB

Annex FX

Annex FQ

Annex FR

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

83) Invoice/ official receipt with alteration on the date and with countersign of the vendor; No business 31,742.08 style of buyer indicated on the invoice j official receipt 84) Input VAT on domestic purchases of goods and 1,861,459.12 services duly supported by original TIN VAT .

invoicesjORs but with alteration in invoice/OR date and/ or amount and not countersigned. 85) Input VAT on domestic purchases of goods and 40,603.89 services duly supported by original TIN VAT invoicesjORs but with alteration in invoice/OR date andjor amount and not countersigned VAT amount is not indicated/not separately shown/not properly shown in the designated line item. 86) Input VAT on domestic purchases of goods and 664.29 · services duly supported by original TIN VAT invoicesjORs but with alteration in invoice/OR date andjor amount and not countersigned.; IVAT on goods and services supported by a certified true copy of the invoice I official receipt 87) Input VAT on domestic purchases of goods and 62,130.24 services duly supported by original TIN VAT in voices j 0 Rs that were not dated within a respective quarter of the period of refund and with alteration in invoice/OR date andjor amount and not countersigned.

88) Input

VAT

on domestic foreign -currency- 535,243 . 94 denominated purchases of goods and services duly supported by original TIN VAT Invoice/TIN VAT ORs, but erroneously computed due to incorrect foreign exchange rate used (overclaimed). 89) Propriety of for ex rates used (i.e., possible 140.80 over claiming);

IVAT

on goods and services supported by a certified true copy of the invoice I official receipt 90) Propriety of for ex rates used (i.e. , possible 54.82" overclaiming);

IVAT

on goods and services supported by a certified true copy of the invoice I official receipt; IV AT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 91) Propriety of for ex rates used (i.e., possible 99,299.02 overclaiming); No business style of buyer indicated on the invoice/official receipt; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 92) Input VAT on domestic purchases of goods and 535,743, 11 services duly supported by original TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but input VAT erroneously computed ( overclaimed).

93) Possible over claiming of IVAT; Incomplete or 4,195.88 incorrect

TIN

of buyer indicated on the invoice I official receipt

Reference

Annex FT

Annex BV

Annex FU

Annex BW

Annex FV

Annex GD

Annex BX

Annex BZ

Annex GG

Annex GJ

Annex GH

Annex GI

Annex CA

Annex GL

Annex GR

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

94) Possible over claiming of IVAT; Invoice/ official 51.43 receipt with alteration on the date and with countersign of the vendor.

95) Possible overclaiming of IVAT; VAT computation 1,220.09 indicated on the invoice/ official receipt

IS

erroneous; IVAT on goods and services supported ' by invoice I official receipt dated outside the taxable quarter but within the year;

96) Possible overclaiming of IV AT; Invoice/ Official 11,863.50 Receipt with statement "Document not valid for claiming input taxes"; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 97) Possible overclaiming of IVAT; IVAT on goods and 129.60 services supported by a certified true copy of the in voice I official receipt 98) Possible overclaiming of IVAT; IVAT on goods and 2,643.64 services supported by certified true copy of invoice/official receipt; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year: 99) Possible underclaiming of IVAT; Incomplete or 93.83 incorrect address of buyer indicated on the invoice/ official receipt; Incomplete or incorrect TIN of buyer indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt; No business style of buyer ' indicated on the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt; Incomplete or incorrect name of buyer indicated on the invoice/ official receipt 100)

Possible

underclaiming of IVAT;

VAT

535.71 computation indicated on the in voice/ official receipt is erroneous; IVAT on goods and services supported by invoice/official receipt dated outside the taxable quarter but within the year; 101) Input VAT on domestic purchases of goods and 4 ,099,764.95 services duly supported by original TIN VAT Invoice /TIN VAT official receipts dated April 20 18 to March 2019, but VAT amount

IS

not indicated/ not separately shownjnot properly shown in the designated line item.

102) VAT amount not indicated I not separately 143,536.41 shownjnot properly shown on the designated line item; IVAT on goods and services supported by a certified true copy of the invoice/ official receipt 103) Input VAT on domestic purchases of goods and 153, 160'.13 services duly supported by original TIN VAT Invoice/TIN VAT official receipts, but VAT amount

IS

not indicated/ not separately shown/not properly shown m designated line item and business style is not indicated 104) VAT amount not indicated/ not separately 4,741.29 shown/not properly shown on the designated line item; IVAT on goods and services supported by invoice I official receipt dated outside the taxable

Reference

Annex GS

Annex GT

Annex GM

Annex GN

Annex GO

Annex GU

Annex GQ

Annex CC

Annex GV

Annex GW

Annex CD

Annex GX

Annex GY

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

quarter but within the year; Invoice/official receipt with alteration on the date and with countersign of the vendor. ;

105) Input VAT on domestic purchases of goods and 3,677,668.82 services duly supported by original TIN VAT Invoice /TIN VAT official receipts dated April 2018 ' to March 2019, but VAT computation is incorrect. 106)

VAT

computation indicated on the 25,886.52 invoice/ official receipt is erroneous;

Invoice/ official receipt with alteration on the date and without countersign of vendor 107)

VAT

computation indicated on the 25,131.29 invoice I official receipt is erroneous; Possible overclaiming of IV AT 108)

VAT

computation indicated on the 3,420 .00 invoice/official receipt is erroneous; !VAT on goods and services supported by a certified true copy of the invoice I official receipt 109) Input tax on domestic purchases of goods and 355,742.15 services supported with invoicesjORs dated within April 2018 to March 2019 but classified as VAT- exempt purchase 110) Input tax on domestic purchases of goods and 594,344.76 services supported with invoicesjORs dated within April 2018 to March 2019 but with the statement "Document not valid for claiming input taxes." 111)

Invoice/ Official

Receipt

with statement 1,372.93 "Document not valid for claiming input taxes"; IV AT on goods and services supported by a certified true copy of the invoice/ official receipt 112) IVAT on goods and services supported by a 33,822.00 certified true copy of the invoice/ official receipt; No business style of buyer indicated on the invoice I official receipt 113) IVAT on goods and services supported by a 31,114.29 certified true copy of the invoice/ official receipt; No business style of buyer indicated on the invoice/ official receipt;

IVAT on goods and services supported by invoice/ official receipt dated outside the taxable quarter but within the year; 114) Input VAT on domestic purchases of goods and 2,945,593.80 services supported by TIN VAT Invoice/TIN VAT ORs dated April 2018 to March 2019, but the Company's business style is not indicated

Total

P78,036,059.22

Reference

Annex CE

Annex GZ

Annex HC

Annex HA

Annex HB

Annex CF

Annex HD

Annex CG

Annex HE

Annex HF

Annex HH

Annex HI

Annex CJ

Annex HJ

Likewise, the input VAT on the importation . of goods amounting to P773,20 1.00 should be disallowed for petitioner's failure to properly account and substantiate the same, summarized as follows: v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Observations

Amount

Reference

1) Input VAT on importation of goods not duly P1,564,675.00 AnnexAP supported by SSDT and SAD claimed under the period of refund.

2) Input VAT on importation of goods not duly -791,474.00 Annex CN supported by SSDT and SAD claimed and commercial invoice under the period of refund.

Total

P773,201.00.00 Moreover, the Court finds that the input VAT amounting to P45, 116,209.84 without supporting exhibits and with supporting exhibits but were denied admission by the Court, 1 2 4 should likewise be disallowed, to wit:

1. Input VAT from domestic purchase of goods and services supported by denied exhibits

Annex

Exhibit

Supplier

Input VAT

CR

"P-60-A-02-

DAVAO DEL NORTE ELECTRIC

8639"

COOPERATIVE

p 7,988.22

CR

"P-60-A-04-

KING SOLOMON & ALLIED

5231"

SERVICES

13,423.99

CR

"P-60-A-04-

KING SOLOMON & ALLIED

5251"

SERVICES

48,868.63

Sub-total

p 70,280.84

2. Input VAT from importation without supporting documents

Annex Exhibit

Particulars

Input VAT

WITHDRAWAL FROM PEZA FOR

AN

-

CONSUMPTION / SALE OF

SCRAP MATERIALS

p 45,045,929.00

Sub-total

p 45,045,929.00

Total

p 45,116,209.84 ~ - In sum, out of petitioner's total input VAT from importation and domestic purchase of goods and services amounting to P1,598,038,588.25, the total amount of P123,925,470.06 shall be disallowed for petitioner's failure to meet the substantiation and invoicing requirements . under the existing law and regulations, determined as follows: • Exceptions noted by the !CPA On domestic purchase of goods and services On importation • Exceptions noted by the Court On domestic purchase of goods and services On importation Total excep_tions noted 124 Supra at notes 26 to 33.

p 78,036,059.22 773,201.00 70,280.84 45,045,929.00 p 123,925,470.06 tl

Dole Philippines, Inc. v. Commissioner of Internal Revenue rrr rr rrr rn rn rrr tn nnn nn nnn nnn nn rn nn nnn nnn ee nnn nm x Services rendered by Non- residents - P79,455,017. 72125 The ICPA found that petitioner’s input VAT arising from payments for services rendered by non-residents amounting to P79,455,017.7212 was duly supported by BIR Form No. 1600 with corresponding proofs of payment, broken down as follows:

ca) ee Covered Reference!27 (2018 | P_4,088,943.66 5,301,333.96 6,032,380.98 5,876,049.24 5,921,702.55 6,041,349.09 6,301,560.89 | December | January 9, 2019136 171900028403311] 12,159,215.59 (2019 171900029050221 6,977,772.46 6,654,850.58 April 10, 2019139 17 1900029923396 8,270,089.27 79,455,017.72 P (1.40)240 Upon examination of the supporting documents, the Court agrees with the ICPA findings; thus, the total input VAT amount of P79,455,017.72 duly supported by documents may be validly claimed for refund.

125 Ttem d, Par. 115 of Exhibit “P-215”, Docket — Vol. III, p. 1114. 126 Exhibit “P-90”, USB.

127 Exhibits “P-33” to “P-44”, Docket — Vol. Il, pp. 1466 to 1477. 128 Exhibit “P-21”, Docket — Vol. II, pp. 1442 to 1443.

129 Exhibit “P-22”, Docket — Vol. II, pp. 1444 to 1445.

130 Exhibit “P-23”, Docket ~ Vol. II, pp. 1446 to 1447.

131 Exhibit “P-24”, Docket — Vol. I], pp. 1448 to 1449.

132 Exhibit “P-25”, Docket — Vol. II, pp. 1450 to 1451.

133 Exhibit “P-26”, Docket — Vol. II, pp. 1452 to 1453.

134 Exhibit “P-27”, Docket — Vol. II, pp. 1454 to 1455.

135 Exhibit “P-28”, Docket — Vol. II, pp. 1456 to 1457.

136 Exhibit “P-29", Docket — Vol. I], pp. 1458 to 1459.

137 Exhibit “P-30”, Docket — Vol. II, pp. 1460 to 1461.

138 Exhibit “P-31”, Docket — Vol. II, pp. 1462 to 1463.

189 Exhibit “P-32”, Docket — Vol. II, pp. 1464 to 1465.

40 Due to rounding off.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Amortized input VAT on capital goods exceeding Pl,OOO,OOO.OO for FY 2019 - P8,337,594.38.141 In support of its claim, petitioner submitted a schedule of amortization of deferred input VAT142 on its purchases of capital goods exceeding Pl,OOO,OOO, which the ICPA evaluated.

The ICPA noted that the amortized input VAT could be traced in petitioner's VAT returns, as summarized in his report. l43 According to the ICPA, there are two (2) sources of petitioner's deferred input VAT:

(1) from petitioner's purchases of capital goods generated from its purchases from TY 2013 and 2014, where the supporting documents are no longer available; and, (2) from purchases of cars and computers as evidenced by BIR decisionsl44 on petitioner's previous input VAT refund claims.

However, as noted by the ICPA, no supporting documents were presented to substantiate its purchase of capital goods exceeding Pl,OOO,OOO.OO and corroborate its amortization schedule.l45 Thus, the Court has no way to verify the existence of the said purchases of capital goods and the veracity of the computation of the said amortized input VAT. Consequently, the Court finds the disallowance · of the amortized portion of the deferred input VAT amounting to 1>8,337 ,594.38 in order.

Input VAT on sales to government- P24,516.55146 The BIR alleged that petitioner failed to provide proof for the final withholding VAT in the amount ofP4,562.85. 141 Item e, Par. 115 of Exhibit "P-215", Docket - Vol. Ill, p. 111 4. 142 Exhibit "P- 165", USB.

143 Exhibit "P-215", Docket- Vol. III, p. I 087. 144 Exhibit "P-1 66" to "P-1 69", USB. 145 Table 2-C, page II , Exhibit "P-1 65", USB. 146 Item f, Par. 115 of Exhibit "P-215", Docket - Vol. III, p. 1114. tv!

Dole Philippines, Inc. v. Commissioner of Internal Revenue

The ICPA noted that the input VAT reported under the line item "Others"147 in the VAT returns pertain to petitioner's sales to the government amounting to P24,516.55. The ICPA's verification disclosed that only the total amount of P19,953.70 was duly supported by Certificate of Final Tax Withheld at Source (BIR Form No. 2306)148 and that petitioner failed to provide supporting documents on the remaining balance of P4,562.85. According to respondent, said amount should be disallowed.

Moreover, petitioner is amenable to the above disallowance for P4,562.85 made by the BIR.l49 Thus, for compliance with the seventh requisite, out of the total declared input taxes of P1,685,855,716.9·o, the amount of P132,267,627.29 shall be disallowed.

Consequently, petitioner's valid input taxes amounted to P1,553,588,089.61.

Declared input taxes P1,685,855,716.90

1. Exceptions/ disallowances noted bu the !CPA a . Input VAT on domestic purchases not properly ' supported with documents P78,036,059.22

b. Input VAT on importations not duly supported with proper documentation 773,201.00

c. Unsupported input VAT on sales to the Government 4,562.85 78,813,823.07

2. Disallowances found by the

Court

a. Unsupported input VAT on domestic purchases of goods and services 70,280.84

b. Unsupported input VAT on importation 45,045,929.00

c. Unsupported amortized input VAT on purchase of capital goods exceeding 1M 8,337,594.38 53,453,804.22

Disallowances

132,267,627.29 Valid input taxes Pl ,553,588,089.61 ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue x------------------------------------------------------------------------------------------x. Eighth requisite: A portion of the input taxes claimed by petitioner is attributable to zero-rated or effectively zero-rated sales.

To reiterate, the eighth requisite is that the input VAT claimed is attributable to zero-rated or effectively zero-rated sales. However, 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.

As discussed earlier, petitioner declared in its Amended Quarterly VAT returns for the period covering April 1, 2018 to March 31 , 2019 a total sales of P39,600,679,515.70 consisting ofVATable sales amounting to P2,539,658, 198.4 7, zero-rated sales amounting to P36,533,275,020.59, and exempt sales amounting to P527,746,296.64. It is to be noted, however, that the

VATable

sales amounting to P2,539,658,198.47 include the Sales to the Government amounting to P490,331.0Q.15o Since petitioner's input VAT for the FY 2019 in the total amount of P1,685,855,716.90, as declared in its quarterly VAT returns, cannot be identified to specific sales, this Court shall proportionately allocate the said input VAT on the basis of the volume of petitioner's sales, thus:

Total Zero-Rated Sales per VAT Returns

p 36,533,275,020.59 Divided by the Reported Total Sales per Quarterly VAT p 39,600,679,515.70

Returns

Multiplied by Total Declared Input VAT

P1,685,855,716.90 Declared input VAT allocated to total zero-rated sales p 1,5'55,272,06,3.60

Total VA Table Sales per VAT Returns

P2,539, 167,867.47151 Divided by the Reported Total Sales per Quarterly VAT p 39,600,679,515.70

Returns

Multiplied by Total Declared Input VAT

P1,685,855,716.90 Declared input VAT allocated to VA Table sales p '108,095,889.21 v 150 Exhibit "P-215", Docket - Vol. III, pp. 1113 to 111 4; This amount was subjected to 5% withholding VAT in the amount ofP24,51 6.55.

151 P2,539,658, 198.47 - P490,33 1.00.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

VATable Sales to Government

p 490,331.00 Divided by the Reported Total Sales per Quarterly VAT p 39,600,679,515.70

Returns

Multiplied by Total Declared Input VAT

P1,685,855,716.90 Declared input VAT allocated to VATable sales to the p 20,874.07

Government

Total Exempt Sales per VAT Returns

p 527,746,296.64 Divided by the Reported Total Sales per Quarterly VAT p 39,600,679,515.70

Returns

Multiplied by Total Declared Input VAT

P1 ,685,855,716.90 Declared input VAT allocated to Exempt sales p 22,466,890.02 Thus, regarding petitioner's compliance with the eighth requisite, only the amount of Pl ,555,272,063.60 represents its input VAT attributable to the total declared zero-rated for the subject period of the claim.

Ninth requisite: Petitioner's input taxes have not been applied against output taxes during and in the succeeding quarters.

Regarding the ninth requisite, petitioner reported output taxes from its taxable sales for the 1st to 4th quarter of FY 2019 in the aggregate amount of P304,758,983.82, to wit: FY ending March 2019

Output VAT

Exhibit (Line lSB) 1st Quarter p 51 ,39 1, 194.57

"P-1 0" 152

2nd Quarter 66,487,202.13

"P-13"153

3rd Quarter 116,180,073.87

"P-17"154

4th Quarter 70,700,513.25

"P-20"155

Total

p 304,758,983.82 In the recent case of Chevron Holdings, Inc. (Formerly Caltex Asia Limited) v. Commissioner of Internal Revenue,156 the Supreme Court held that the input tax attributable to zero-rated sales may, at the option of the VAT -registered taxpayer, be: (1) charged against output tax from regular 12o/o VAT-able sales, and any unutilized or "excess" input tax may be claimed for refund or the issuance of tax credit certificate; 152 Docket - Vol. III, pp. 1420 to 142 1. 153 Docket - Vol. III, pp. 1426 to 1427. 154 Docket - Vol. III, pp. 1434 to 1435. Jss Docket- Vol. III, pp. 1440 to 1441. 1s6 G.R. No. 215159. July 5, 2022.

' ~ Dole Philippines, Inc. v. Commissioner of Internal Revenue or (2) claimed for refund or tax credit in its entirety, and such option is vested with the taxpayer-claimant, to wit: "Thus, the input tax attributable to zero-rated sales may, at the option of the VAT-registered taxpayer, be:

(1) charged against output tax from regular 12% VAT-able sales, and any unutilized or "excess" input tax may be claimed for refund of the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety. It must be stressed that the remedies of charging the input tax against the output tax and applying for a refund or tax credit are alternative and cumulative. Furthermore, the option is vested with the taxpayer-claimant." [Emphasis supplied] Applying the foregoing, records show that petitioner chose the first option, i.e., it computed its claim for refund in the aggregate amount of P1,381,096,733.07 by offsetting its output VAT from the regular VATable sales against its available input VAT for the 1 st to 4 th quarters of FY ending March 2019, as shown hereafter:l57

Output VAT Due (A)

p 304,758,983.82

Input Tax on Net Current

Purchases

P1,677,493,605.96

Add: Input Tax Deferred on

Capital Goods Exceeding P1M

from Previous Quarter 44,300,909.29

Add: Withholding VAT on

Payments to GOCCs

24,516.55

Less: Input Tax on Purchases of

Capital Goods Exceeding P1M

deferred for the succeeding period 35,963,314.91

Input VAT per Return (B)

1 ,685,855, 716.89

Excess and Unutilized Input

VAT (A-B)

P1,381,096,733.07 It is clear from the foregoing that petitioner opted to claim a refund of its unutilized or "excess" input tax, which is the amount after charging the input tax allocated to zero- rated sales against its output tax liabilities. Following the same computation, since petitioner's declared input VAT allocated to sales subject to the 12°/o VAT in the amount of P108,095,889.21, as earlier determined, is not enough to cover its output VAT liability amounting to P304,758,983.82, the output VAT still due amounting to 157 Exhibit "P-215", Docket - Vol. III, p. 1482. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

P196,604,254.89 shall then be charged against its valid input VAT attributable to total reported zero-rated sales of Pl ,555,272,063.60 leaving an excess input VAT attributable to total zero-rated sales of Pl ,358,667 ,808. 71, as herein computed:

Output VAT attributable to VATable Sales Less: Output VAT to government sales Adjusted output VAT Less: Declared input VAT attributable to VATable sales Out_eut VAT still due Output VAT still due Less: Declared Input VAT attributable to Zero- rated Sales Excess input VAT attributable to declared zero-rated sales p 304,758,983.82 (58,839.72) p 304,700,144.10 ' (108,095,889.21) p 196,604,254.89 p 196,604,254.89 1,555,272,063.60 p 1,358,667 ,808. 71 However, as discussed earlier, not all petitioner's input VAT is valid. Thus, this Court determines whether the valid input VAT of petitioner is sufficient to cover its excess input VAT attributable to declared zero-rated sales, viz.: Excess input VAT attributable to declared zero-rated sales (A) Valid input taxes (B) Valid Available Input VAT attributable to Zero-rated Sales (A or B, whichever is lower} p 1,358,667,808.71 1,553,588,089.61 p 1,358,667,808.71 In relation to its zero-rated sales, petitioner was able to properly substantiate only the total amount of P36,499,857,975.17 out of its total declared zero-rated sales of P36,533,275,022.09. Consequently, only the input VAT of Pl ,357,425,033.02 is attributable to the said valid zero-rated sales of P36,499,857,975.17, as computed below:

Valid Zero-rated Sales

Total Zero-rated Sales

Ratio of Valid Zero-rated Sales to Total

Zero-Rated Sales

Valid Input VAT attributable to Valid Zero- rated Sales

Total Net Refundable Amount

p 36,499,857,975.17 36,533,275,022.09 99.91% 1,358,667,808.71 p 1,357,425,033.02 Further, although petitioner carried over the claimed amount of P1 ,381,096,733.07 in its succeeding ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue quarters/period, the same remained unutilized until it was deducted as "VAT Refund/TCC claimed"158 in its Quarterly VAT Return for the 2nd quarter ofFY ending September 2019, albeit, only in the amount of P1,358,809,685.73, since the discrepancy of which amounting to P22,287,047.35 159 pertains to input VAT allocable to exempt sales which was already deducted and does not anymore form part of petitioner's allowable input tax to be carried over, as disclosed in its VAT Returns for the 1st to 4th quarters of FY ending March 2019. Accordingly, the subject claim no longer formed part of the excess input VAT of P418, 175, 190.04160' as of the end of the 2nd quarter of FY ending September 2019, to be carried over to the succeeding quarters. Such being the case, the excess valid input VAT of P1,357,425,033.02 was not utilized or applied against any output tax liability during the 3rd quarter of FY 2019 and in the succeeding quarters.l61 In fine, petitioner was able to satisfy the ninth requisite and has sufficiently proven its entitlement to the refund or issuance of TCC for P1,357,425,033.02, representing its excess and unutilized input VAT attributable to its zero-rated sales for the 1st to 4th quarters of FY ending March 20 19. Final note An applicant for a tax refund or credit must prove entitlement to the claim and comply with all the documentary and evidentiary requirements, such as VAT invoicing requirements, provided by tax laws and regulations. 162 Well- settled is the rule that tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit.163 v- 158 Exhibit "P-45", Line 23D, Docket- Vol. III, p. 1479. 159

FY

ending Input Tax allocable

Exhibit (Line 23C)

March 2018 to Exempt Sales

I st Quarter p 4,256,352. 18 "P-10", Docket- Vol. III, pp. 1420 to 1421 2nd Quarter 5,204,779.36 "P-13", Docket - Vol. III, pp. 1426 to 1427 3rd Quarter 6,905,227.70 "P-17" Docket- Vol. III, pp. 1434 to 1435 4th Quarter 5,920,688.11 "P-20", Docket- Vol. III, pp. 1420 to 1421

Total

P22,287,047.35

Dole Philippines, Inc. v. Commissioner of Internal Revenue

However, once the requirements laid down by the NIRC have been met, a claimant should be considered suc€essful in discharging its burden of proving its right to a refund. Thereafter, the burden of going forward with the evidence, as distinct from the general burden of proof, shifts to the opposing party, the respondent. It is then the turn of the latter to disprove the claim by presenting contrary evidence. 164

WHEREFORE, in light of the foregoing, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED to refund or issue a tax credit certificate in favor of petitioner in the amount of P1,357,425,033.02, representing petitioner's excess and unutilized input VAT attributable to its zero-rated sales for the first to fourth quarters of FY ending March 20 19.

WE CONCUR:

JEANMA

k~JA~t LA~~fVl.''cui~A VID

Associate Justice

0

Presiding Justice

\ ..

Dole Philippines, Inc. v. Commissioner of Internal Revenue

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ' s Special 2nd ~sian Acting Chrurperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Special 2nd Division Acting Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. 0

Presiding Justice

w