DOLE Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

BACORRO-VILLENA, L:

Before the Court is a Petition for Review 1 filed by petitioner Dole Philippines, Inc. (petitioner/DPI) pursuant to Section 3(a),2 Rule 8 in relation to Section 3(a)(r),3 Rule 4 of the Revised Rules of the Court oft Filed on 07 April 2022, Division Docket, Volume I, pp. 6-336, with attached exhibits. SEC. 3. Who may appeal; period to file petition.-

(a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or rul ing of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review within the two-year period prescribed by law from payment or collection of the taxes.

SEC. 3. Cases within the jurisdiction of the Court in Division. - The Court in Division shall exercise:

(a) Exclusive original over or appellate jurisdiction to review by appeal the following: 1

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Tax Appeals (RRCTA), seeking to appeal respondent Commissioner of

Internal

Revenue's

(respondent's/CIR's) total denial of its administrative claim for refund in the amount of P934,65I,9o6.8s. The amount claimed represents excess and unutilized input Value-Added Tax (VAT) on purchases of goods and services attributable to zero-rated sales for the period from 01 April 2019 to 31 March 2020, or the fiscal year (FY) ended 31 March 2020.

PARTIES TO THE CASE

Petitioner is a domestic corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with principal address at Cannery Site, Polomolok, 9504 South Cotabato, Sarangani Economic Development Zone (SEDZ).4 It is also a VAT registered entity with Taxpayer Identification Number (TIN) ooo-428- 573-ooo, as evidenced by the Bureau of Internal Revenue (BIR)-issued Certificate of Registration (CO R).5 Respondent, on the other hand, is the duly appointed Commissioner oflnternal Revenue (respondent/CIR), vested by law to enforce and implement the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended, as well as the related statutes and their implementing rules and regulations. He or she holds office at the BIR National Office Building, BIR Road (now Senator Miriam P. Defensor-Santiago Avenue), Diliman, Quezon City. 6

FACTS OF THE CASE

For the FY ended 31 March 2018, petitioner filed Amended . Quarterly VAT Returns (BIR Forms No. 255o-Q)J There, it declared at 4 6

(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!nternal Revenue[.]

See Petitioner's Securities and Exchange Commission (SEC)-issued Certificate of Filing of Amended Articles of Incorporation (AOI) dated 09 January 2015 and Amended AOI, Exhibits "P- I" and "P-2", respectively, Division Docket, Volume II, pp. 739 and 741-755, respectively. See Petitioner's Bureau of Internal Revenue (BIR)-issued Certificate of Registration (COR) dated 30 September2022 for its Head Office, Exhibit"P-3", id., pp. 756-758. Paragraph A, Joint Stipulation of Facts & Issues (JSFI), id., Volume I, p. 430. Exhibits "P-9" (I" Quarter), "P-12" (2"' Quarter), "P-14" (3'' Quarter) and "P-16" (4'" Quarter), id., Volume II, pp. 874-875,880-881,884-885 and 888-889, respectively.

Dole Philippines, Inc. v. Commissioner of Internal Revenue total sales amount of P39A87,739,145·01, which included zero-rated sales/receipts in the aggregate amount ofP36,o71,523,649·66. For the same period, petitioner claimed to have accumulated excess input tax in the total amount ofP1,276,291-422-42 from its current domestic purchases of goods and services and amortized input VAT on purchases of capital goods from previous quarters, out of which the amount of P934,651,906.85 is the subject of the present petition. On 29 June 2021, petitioner filed a letter-application for refund or tax credit dated 15 June 20218, together with the corresponding

Application

for

Tax

Credit/Refund

(BIR

Form

No.

1914)9 (administrative claim), with the BIR's VAT Credit Audit Division (VCAD). Petitioner sought the refund of excess and unutilized input VAT attributable to zero-rated sales for FY ended 31 March 2020 in the total amount ofP934,651,9o6.85.

Respondent, on the other hand, issued a Tax Verification Notice (TVN) with TVN No. 201800143163 dated 29 June 2021 10 authorizing Revenue Officers (ROs) Marvin K. Villarama (Villarama), Rochelle May P. Leonor, Marjorie C. Dioso, Michele J. Alonzo-Bucayu, Kristine M. Albano, Mary Ann B. Estacio, Faye Armie S. Arroyo, Aubrey M. Pepita-Collado, Kevin L. Fernandez, Fei Ann MarieS. Nazar And Denise R. Dayanan, all from the BIR'S VCAD, to verify the supporting documents to petitioner's claim for VAT refund. 11 On o8 March 2022, petitioner received a Letter dated 15 November 2021u (Denial Letter) from the BIR, issued by then CIR, Caesar R. Dulay (Commissioner Dulay). In the Denial Letter, Commissioner Dulay denied petitioner's claim for refund on the ground that the total deductions applied to the claim exceeded the total amount being claimed, detailed as follows:t 9 10

II

12 Exhibit "P-43", Division Docket, Volume II, pp. 930-946. Exhibit "P-42", id., p. 929.

Exhibit "P-46", id., p. 954.

Q&A No. II, Judicial Affidavit of Revenue Officer (RO) Marvin K. Villarama dated 27 June 2022, Exhibit "R-7", id., Volume I, p. 377.

Exhibit "P-45", id., Volume II, pp. 951-953, with annex; Exhibit "R-5", B!R Records (Exhibit "R- 6"), pp. 958-960, with annex.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Local

Importations

Total

Amount of Claim

P8oo,86s,s76.42 1'133·786,330·43 l'g34,6s•,go6.8s Deductions from Claim Input tax on sale to the Philippine Economic Zone (48·572,777-65) (48.572>777·65) Authority (PEZA) zone - Disallowed input tax on local purchases (513, 724.3oo.o8) - (513, 724o3oo.o8) Disallowed input tax on Big Ticket purchases (1,236,442.65) - (1,236.442.65) Disallowed input tax on importations - (1,832,634·00) (!,832,634-00) Disallowed input tax as per BJR Integrated Tax (4,183,056·75) (4,18},056·75) System (BIR-ITS) verification - Creditable Withholding VAT on sales to ( 71,33!.80) ( 71,33!.80)

Government

- Disallowed ripened input tax from prior period (7,566,649·'6) (25,219,731.17) (32,786,380.33) purchases Deferred input tax on capital goods which (2,70g,867.63) (2,709,867.63) exceeded the 1'1 million threshold - Output tax on undeclared VA Table sales not (s.so8,I3L35) (s.so8,I3L3sl reported in the schedule of sales - Output tax on undeclared VA Table sales per

Summary Alphalist of Withholding Agents of

- ( 7I,56I,842.91) (7I,56I,842.91)

Income Payments Subjected to Withholding Tax

(SAWT)

Output tax on deemed sale transaction subject to - (871,)20.00) (871,)20.00)

VAT

Input tax allocable to zero-rated sales with (217,312,142.6!)

(36,302,464-45) (253,614,607.06) insufficient documentation and exempt sales Compromise penalty (25,ooo.oo) - (25,ooo.oo) Tqtal Deductions from Claim (!'Boo ,gog, 6g9.68) (1'135, 787 ,gg2. 53) (l'gJ6,6g7,692,21)

Excess Deductions Against the Claim for Refund

(1'44,123.26) (P2,oot,662.to) (1'2,045·785·36)

PROCEEDINGS BEFORE THE COURT

Aggrieved, on 07 April 2022, petitioner filed the present Petition for Review.'3 The same was raffled to the Second Division and docketed as CTA Case No. 10830.'4 On 11 April2o22, the Second Division issued Summons'S ordering respondent to file an Answer within thirty (3o) days frqm service. Respondent received the said Summons on 20 April 2022.'6t

IJ

14 13 16 Supra at note I.

The Second Division is composed of Associate Justice Juanita C. Castafi.eda, Jr. (Ret.), as Chairperson, Associate Justice Jean Marie A. Bacorro-Villena and Associate Justice Lanee S. Cui- David, as Members.

Division Docket, Volume I, p. 337.

I d.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

After the Second Division granted an extension of time to respondent'7, the Answer'8 was filed on 10 June 2022. There, respondent cited the following special and affirmative defenses: (1) the instant refund claim should be denied for petitioner's failure to substantiate it at the administrative level; (2) it is incumbent upon petitioner to prove that it is entitled to the refund sought because a refund claim is not ipso facto granted upon the filing thereof; (3) tax refunds are subject to administrative routinary investigation; and (4) tax refunds are strictly construed against the taxpayer and in favor of the government. On 16 June 2022, the Second Division issued a Notice of Pre-Trial Conference'9 and set the case for pre-trial on 19 September 2022 (later rescheduled to 22 September 202220). Accordingly, on 28 June 2022, respondent filed his or her Pre-Trial Brief", while petitioner filed its Pre-Trial Brief' 2 on o6 September 2022. Meanwhile, on 28 June 2022, respondent transmitted to the Second Division the present case's BIR Records, consisting of 963 pages in one (1) folder.

23 The Second

Division noted the same in the Minute Resolution dated 07 September 2022. 2 4 At the scheduled Pre-Trial Conference on 22 September 2022, the Second Division granted the parties a 3o-day period, or until24 October 2022, to file their Joint Stipulation of Facts and Issues (JSFI).25 Within the deadline set, on 24 October 2022, the parties filed their JSFJ.26 On 21 October 2022, petitioner filed a "Motion to Commission (An Independent Certified Public Accountant [ICPA])"27 (Motion to Commission), requesting the appointment of Myra Celeste 0. Dabalos (Dabalos), as the ICPA.t 17 18 19 20 21 22 23 25 26 27 See Order dated 24 May 2022, id., p. 344.

I d .• pp. 345-356.

ld., pp. 358-359.

See Notice of Hearing dated 31 August 2022, id., p. 391. Id., pp. 382-385.

!d., pp. 392-4 I 6.

See Compliance dated 27 January 2022, id., pp. 388-389. id., p. 418.

SeeM inutes of the Hearing and Order, both dated 22 September 2022, id., pp. 4 I 9 and 420-42 I, respectively. Id., pp. 430-453.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In the Resolution dated 27 October 2022/8 the Second Division approved the parties' JSFI, declared the pre-trial terminated, and set both the possible commissioning of petitioner's ICPA and the initial presentation of petitioner's evidence on 09 February 2023. Thereafter, on os December 2022, the Second Division issued a Pre-Trial Order, 29 again confirming its approval of the JSFI and formally declaring the pre- trial proceedings terminated.

In the trial that ensued subsequently, petitioner presented the following witnesses who all testified via their respective judicial affidavits, namely: (1) Rhodora U. Cagampan (Cagampan), Tax Director of Dole Asia Company Ltd. (DACL); and (2) ICPA Dabalos. During the 09 February 2023 hearing, the Second Division granted petitioner's Motion to Commission, ICPA Dabalos took her oath in open court, and petitioner presented the testimony of its witness, Cagampan.30 On the witness stand, Cagampan, DACL's Tax Director, declared that: (1) she has been assisting petitioner in its tax-related matters since 17 March 2014; (2) as Tax Director, her functions include, among others, general supervision of the tax compliance of Dole entities in the Philippines; (3) petitioner is a VAT registered entity; (4) petitioner is engaged in zero-rated sale of goods; (s) the input taxes subject of the instant petition are duly paid; (6) the input taxes subject of the instant petition are not transitional input tax; (7) the input taxes claimed are attributable to zero-rated sale of goods; (8) the refund claim was filed within two (2) years from the close of the taxable quarters when such sales were made; and (9) petitioner is entitled to the refund of excess and unutilized input VAT for FY ended 31 March 2020 in the total amount ofP934,6SI,9o6.8s.J' On cross-examination, Cagampan confirmed that petitiOner submitted the same set of documents to the BIR in support of tl!e administrative claim and to this Court during judicial proceedingsY t 30 31 32 !d., p. 455.

!d., pp. 457-466.

See Minutes of the Hearing and Order, both dated 09 February 2023, id., pp. 496 and 498-499. See Judicial Affidavit ofRhodora U. Cagampan dated 07 April2022, Exhibit "P-49", id., pp. 71· 335, with attached exhibits.

TSN dated 09 February 2023, p. 7.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Petitioner did not conduct any redirect examination.33 After the Second Division twice granted extensions of time34, petitioner filed Dabalos' Interim !CPA Report3s on 26 May 2023. Petitioner subsequently filed Dabalos' Amended ICPA Report on 27 June 2023, which consisted of one (1) binder36 and one (1) USB37 containing the supporting documents. Subsequently, on 30 June 2023, petitioner filed a "Motion to Admit Amended ICPA Report"38 (Motion to Admit).

Meanwhile, on 22 May 2023, petitioner filed a "Motion to Require the BIR-VCAD to Transmit Documents"39 (Motion to Require). Respondent failed to file a comment thereto despite due notice. 40 Subsequently, in view of the reorganization of the three (3) Divisions of the Court effective 29 May 2023,4 1 the present case was transferred to the First DivisionY On 27 June 2023, respondent filed his or her Compliance dated 26 June 2023,43 transmittin the present case's BIR Records, consisting of twelve (12) folders.44 33 " 35 36 38 39 40 41

4J

H

I d.

See Resolutions dated 29 March 2023 and 20 April 2023, Division Docket, Volume I, pp. 506 and 512, respectively.

Exhibit "P-52'', id., pp. 534-584.

Exhibit "P-I47", id., pp. 59I-666.

Exhibit "P-147-B".

Division Docket, Volume I, pp. 67I-673.

I d., pp. 513-531, with annexes.

See Records Verification dated 03 July 2023, id., p. 695. See Notice dated 29 May 2023, id., p. 585. The First Division is composed of Presiding Justice Roman G. Del Rosario (Ret.), as Chairperson, and Associate Justice Jean Marie A. Bacorro-Villena and Associate Justice Lanee S. Cui-David, as Members.

Division Docket, Volume I, pp. 667-669.

Folder 2

Pages 1-283

Folder A

Pages I -829

Folder B

Pages I -882

Folder C

Pages I -759

Folder D

Pages 1-500

Folder E

Pages I -780

Folder F

Pages I -570

Folder G

Pages 1-953

Folder H

Pages I -909

Folder I

Pages I -970

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In Resolution dated 12 July 2023,45 the First Division noted respondent's Compliance, granted petitioner's Motion to Admit, admitted the Amended ICPA Report,46 and submitted petitioner's Motion to Require for resolution.

Thereafter, in the Resolution dated 04 August 2023,47 the First Division (I) granted petitioner's Motion to Require, (2) ordered respondent to transmit the documents enumerated in the said Motion to Require within ten (w) days from notice, and (3) directed respondent to file the necessary manifestation if the subject documents already form part of the BIR Records submitted to the First Division on 27 June 2023.

In compliance with the Court's directive, respondent filed his or her Manifestation48 on 16 August 2023. The First Division subsequently noted the filing in open court.49 On 17 August 2023, petitioner presented the testimony of its last witness, ICPA Dabalos.so She testified on the following: (I) performance of her duties and responsibilities as an ICPA (2) confirmation that she verified and examined petitioner's voluminous documents, including various receipts, invoices, and other accounting records, submitted in support of the instant refund claim; (3) the findings and conclusions in her Amended ICPA Report, particularly that -

(a) petitioner's VAT refund claim amounting to P934,651,906.8s, included input VAT allocable to exempt sales in the amount ofP18,397,862.75, (b) petitioner did not utilize in subsequent periods the remaining input VAT amounting to i'g16,254,044·10, net of input VAT allocable to exempt sales, (c) petitioner's zero-rated sales arising from export sales are supported by VAT-registered invoices marked as zero-rated and corroborated by bills of lading (BLs), airway bills (A WBs), and export . declarations, except for items specifically identified under Exhibitt 45 47 48 49 50 Division Docket, Volume I, pp. 700-701.

Exhibit "P-147", supra at note 36.

ld., pp. 703-704.

Id., pp. 705-707.

See Minutes of the Hearing and Order, both dated 17 August 2023, id., Volume II, pp. 709-709-B and 710-711.

I d.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"P-n6-A",sr (d) petitioner received payment for these export sales in foreign currency and accounted for the proceeds in accordance with Bangko Sentral ng Pilipinas (BSP) rules and regulations, (e) as regards petitioner's zero-rated sales arising from sale of services to nonresidents, she verified that (i) petitioner's customers are not engaged in trade or business in the Philippines and (ii) petitioner received payments through credits to its Foreign Currency Deposit Unit (FCDU) Savings Account with Rizal Commercial Banking Corporation (RCBC), and (f) based on the results of her review, the allowable amount for refund is only P738,2o6,835·13Y Respondent did not conduct any cross-examination. 53 On 29 August 2023, after completing the presentation of its testimonial evidence, petitioner filed its Formal Offer of Evidence54 (FOE) consisting of Exhibits "P-1" to "P-151-!", inclusive of sub-markings. On 30 August 2023, respondent filed his or her Comment55 thereto. While petitioner's FOE remained pending resolution, petitioner filed a "Motion to Submit Supplemental ICPA Report and to Recall the ICPA to Testify"S6 (Motion to Submit) on 31 October 2023, seeking the setting of a hearing for the continuation of! CPA Dabalos' testimony on official receipts (ORs) and invoices and the grant of a 30-day period within which to submit a Supplemental ICPA Report. Respondent failed to file a comment thereto despite due notice.57 Subsequently, in a Minute Resolution dated 25 January 2024,58 the First Division granted petitioner's Motion to Submit, directed !CPA Dabalos to submit her Supplemental ICPA Report within 30 day~ from notice, and set the hearing for her testimony on 03 April2024.t 51 53 54 55 56 57 58 Results of Review for Input Tax Allocable to Zero-Rated Sales Insufficient Documentation and Exempt Sales.

See Judicial Affidavit of Myra Celeste 0. Dabalos dated 29 June 2023, Exhibit "P-151 ", id., Volume I, pp. 677-693.

TSN dated 17 August 2023, p. 6.

Division Docket, Volume II, pp. 713-737.

!d., pp. 989-991.

!d., pp. 996-1009, with annex.

See Records Verification dated 18 December2023, id., p. 1019. !d., p. 1038.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Thereafter, In the Resolution dated 01 December 2023s9 (First FOE Resolution), the First Division admitted petitioner's exhibits, except the following: (1) Exhibit "P-6",60 for failure to submit the duly marked exhibit; (2) Exhibits "P-no-2SSA", "P-no-43SA", "P-no-753A", "P

A" "P

A" "P

, "'" "P

A" "P

A"

-110-1099 , -110-1140 , -U0-132)" , -110-1495 , -ll0-1502 , "P

SA" "P

SA" "P

s A" "P

6A" "P

6 - A"

-no-151 , -110-157 , -no- 15 5 , -110-159 , -110-1 OJ.l"\.

t "P 6 , "'" "P

6 A"

"P

6 SA"

t "P

6 A"

0

-110-1 Oy' '

-110-1 IS

'

-110-I I

0

-110-I I9

' "P-no-16z3A", "P-no-I627A", "P-no-166zA", "P-no-IS36A", "P-no-ISS7A", "P-no-I4S22B", "P-u6-I749B" to "P-u6-I753B", "P-I4o" and "P-I43-391",61 for not being found in the records of the case; and (3) Exhibits "P-no-49A", "P-no-S96A" to "P-no-S99A", "P-uo-1S6oA", "P-uo-1915A" and "P-uo-I95oA",62 for being totally blurred or unreadable (collectively, . "First Set of Denied Exhibits"). In the same Resolution, the Firstt 59 60 61 ld., pp. 1015-1018.

BlR Authority to Print/Permit to Use Computerized Accounting System issued by the Large Taxpayer District Office with Permit No. L TDO-CAS-0 111-122-00058. Exhibit No.

Description

"P-110-288A", "P-110-438A", "P-110- Part of the batch of documents described as 753A", "P-110-1099A", "P-110-1140A", "P- "Suppliers' Invoices, Official Receipts, and 110-1323A", "P-110-1495A", "P-110- Other Supporting Documents in relation to 1502A", "P-II0-1518A", "P-110-1578A", "P- Exhibit "P-110" for Dolefil Division."

110- 1585A", "P-110-1596A", "P-110- 1601A" to "P-110-1603A", "P-110-1615A", "P-110-1618A" to "P-110-1619A", "P-110- 1623A", "P-110-1627A", "P-110-1662A", "P-

110-1836A" and "P-110-1887A"

"P-110-148228"

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents in relation to Exhibit "P-1 10" for Stanfilco Division."

"P-116-17498" to "P-116-17538"

Part of the batch of documents described as ·'Petitioner's Invoices, Bills of Lading, Airway 8ill[s], Export Declaration[ s ], Debit Notes,

Credit

Notes.

and

Other

Supporting

Documents in relation to Exhibit "P-116" for Stanfilco Division."

"P-140"

Part of the batch of documents described as "Certified True Copies of the Account Statement for Petitioner's US Dollar Saving[s] Account with J.P. Morgan."

"P-143-391"

Part of the batch of documents described as "Certifications Issued by Petitioner's Suppliers who issued Certifications as to corrections made in their respective invoices and official receipts."

Exhibit No.

Description

"P-110-49A", "P-110-896A" to "P-110- Part of the batch of documents described as 899A", "P-II0-!860A", "P-II0-1915A" and "Suppliers' Invoices, Official Receipts, and

"P-11 0-1950A"

Other Supporting Documents in relation to Exhibit "P-110" for Dolefil Division."

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Division set the initial presentation of respondent's evidence on 18 January 2024.

On 27 December 2023, petitioner filed a "Motion for Partial Reconsideration to the (First FOE Resolution] with Motion for Remarking"63 (First MPR). Respondent filed his or her "Comment and Opposition"64 thereto on 24 January 2024- On 29

February

2024, petitioner filed !CPA

Dabalos'

Supplemental !CPA Report,6s along with a USB66 containing scanned copies of the supporting documents.

In the Resolution dated 03 April2o24,67 the First Division partially granted petitioner's First MPR. It admitted several of the First Set of Denied Exhibits but still denied admission of the following: (1) Exhibits "P

A"

"P 8

B"

"P 6

B"

"P 6

B"

d -110-1099 , -no-14 22 , -11 -1749 to -11 -1753 an "P-140",68 for not being found in the records of the case; and (2) Exhibits "P

A" "P

8 6A"

"P 8

A" "P

A"

d "P -110-49 , -uo- 9 to -no- 99 , -no-1950 an -no- 1232A",69 for being totally blurred or unreadable. In the same Resolution, the First Division reset the initial presentation of respondent's evidence to 30 May 2024. The First Division later rescheduled this initial presentation to 30 July 2024. 70 During the 03 April2o24 hearing, !CPA Dabalos testified anew on her Supplemental ICPA Report after petitioner recalled her as a witness?' Petitioner offered her testimony to address the remaining disallowance of P148,734,852.57 relating to input taxes on local purchases, as reflected in her Amended !CPA Report, and to establish that the exhibits identified in her Supplemental ICPA Report were _ submitted to the Court through a USB and faithful reproductions ofthet 63 64 65 66 67 68 69 70 71 Division Docket, Volume II, pp. 1020-1025. ld., pp. 1033-1036.

Exhibit "P-152", id., pp. I 043-1081.

Exhibit "P-152-B".

Division Docket, Volume II, pp. 1103-1108. Supra at note 61.

Supra at note 62; Exhibit "P-11 0-1232A" also forms part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents in relation to Exhibit "P- liO" for Dolefil Division."

See Notice of Resetting dated 09 May 2024, Division Docket, Volume II, p. I I26. See Order dated 03 April 2024, id., pp. Ill 0-1111.

Dole Philippines, Inc. v. Commissioner of Internal Revenue original documents that she examined and relied upon in preparing her Supplemental ICPA Report.72 Respondent did not conduct any cross-examination.73 On 05 April 2024, petitioner filed a Supplemental F0£74 consisting of Exhibits "P-152" to "P-160-1", inclusive of sub-markings. Respondent filed his or her Comment75 thereto on o8 April 2024. In the Resolution dated 17 July 202476 (Second FOE Resolution), the First Division admitted petitioner's exhibits, except the following:

(1) Exhibits "P-153-887B", "P-11o-49A", "P-11o-896A" to "P-11o-899A", "P

A"

"P

SA"

"P , b." "P

A"

"P -110-1099 , -110-119 , -110-132y, , -110-1947 to -11o- 1948A", "P-110-195oA", "P-110-15778B" and "P-110-1578sB",77 for being unreadable; (2) Exhibits "P-11o-1945A" to "P-11o-1946A" and "P-11o- 22238B" to "P-no-22245B",78 for failure to present originals for comparison; and (3) Exhibits "P-153-824B", "P-153-826-B", "P-153-829-B", _ "P-153-909B", "P-11o-1o5IA", "P-11o-129IA", "P-110-1397A", "P-110-1427A", t 73 74 75 76 77 78 See Supplemental Judicial Affidavit of Myra Celeste 0. Dabalos dated 27 March 2024, Exhibit "P- 60", id., pp. I 086-1098.

TSN dated 03 April 2024, p. II.

Division Docket, Volume II, pp. 1113-1118. ld., pp. 1120-1122.

ld., pp. 1130-1133.

Exhibit No.

"P-!53-8878" "P-ll0-49A", "P-110-896A" to "P-110- 899A", "P-110-1099A", "P-110-1198A", "P- II 0-1323A", "P-II0-1947A" to "P-11 0-

1948A" and "P-II0-1950A"

"P-110-157788" and "P-110-157858"

Exhibit No.

"P-II0-1945A" to "P-110-1946A"

"P-11 0-222388" to "P-11 0-222458"

Descrintion

Part of the batch of documents described as "Supporting Documents of the Supplemental !CPA Reoort."

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents in relation to Exhibit "P-110" for Dolefil Division."

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents In relation to Exhibit "P-110" for Stanfilco Division."

Description

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents In relation to Exhibit "P-110" for Dolefil Division."

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents in relation to Exhibit "P-110" for Stanfilco Division."

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"P

• A" "P

A" "P

A" "P

A" "P

A"

-110-ISO"t"'- , -110-1534 , -110-1552 , -110-1554 , -110-1557 , "P

6 A" "P

6 A"

"P

66A" "P

A"

"P -110-15 2 , -110-15 5 to -110-15 , -110-1572 , -110-

8 A" "P

8 A" "P

8

B" "P

D"

"P

D" "P

15 9 , -110-1 77 , -110-14 22 , -110-90 to -110-91 , -143- 495", "P-143-498" and "P-143-503",79 for not being found in the records of the case (collectively, "Second Set of Denied Exhibits"). In the same Resolution, the First Division reiterated the setting of the initial presentation of respondent's evidence on 30 July 2024. At the 30 July 2024 hearing, respondent presented his or her witnesses, ROs Villarama and Jelly Anne T. Mateo (Mateo).80 On the witness stand, RO Villarama declared that he holds the position ofRO II and was then assigned to the BIR's VCAD. He testified that his duties include the verification of VAT refund claims of direct exporters and the preparation of evaluation reports, including narrative memorandum reports on the results of verifications conducted. He further stated that he processed and evaluated petitioner's claim for refund of excess and unutilized input VAT covering the FY ended 31 March 2020 in the aggregate amount ofP934,65I,906.8s. He testified that the BlR issued TVN No. 201800143163 dated 29 June 20218' to him and assigned ROs Dioso, Albano, Arroyo, Fernandez, Dayanan, Leonor, Alonzo-Bucayu, Estacio, Pepito-Collado, and Nazar, all from VCAD, to conduct the verification and audit. He added that BIR duly served this TVN, together with Revised Checklist of Mandatory Requirements on t 79 80 81 Exhibit No,

Description

"P-I 53-8248", "P-\53-826-8'', ·'P-!53-829- Part of the batch of documents described as 8", "P-153-9098", "P-143-495", "P-143-498" "Supporting Documents of the Supplemental

and "P-143-503"

!CPA Reoort."

"P-110-1051A", "P-110-1291A", "P-110- Part of the batch of documents described as 1397A", "P-110-1427A", "P-110-1504A", "P- "Suppliers' Invoices, Official Receipts, and 110-1534A", "P-!10-1552A", "P-110- Other Supporting Documents In relation to 1554A", "P-11 0-1557 A", "P-11 0-1562A", "P- Exhibit "P-11 0" for Dolefil Division."

II0-1565A" to "P-110-1566A", "P-110- 1572A", "P-110-1589A" and "P-II0-1877A"

"P-11 0-148228"

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents In relation to Exhibit "P-110" for Stanfilco Division."

"P-11 0-90D" to "P-11 0-91 D"

Part of the batch of documents described as "Suppliers' Invoices, Official Receipts, and Other Supporting Documents In relation to

Exhibit "P-110" for Philippine Marketing

Fresh !PMF) Division."

See Minutes of the Hearing and Order, both dated 30 July 2024, Division Docket, Volume II, pp. 1134-1136 and 1137-1139, respectively.

Exhibit "R-1 ", 81R Records (Exhibit "R-6"), p. 562.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Claims for VAT Refund, 82 on petitioner. He further testified that on 28 October 2021, his team recommended denial of petitioner's refund claim through a Memorandum83 for lack of factual and legal basis, particularly because deductions on both sales and purchases exceeded the amount sought to be refunded. Finally, he declared that his office forwarded the case to the BIR's Tax Audit Review Division (TARD) on os November 2021 for final review to pursuant to Section II(II)(D) 84 of Revenue Administrative Order (RAO) No. 6-17,85 providing that the findings of the VCAD examiners is automatically subject to review by the TARD.86 Petitioner did not conduct any cross-examination. 87 Respondent then presented his or her last witness, RO Mateo, who testified that she holds the position afRO III and was then assigned to BIR's TARD. She stated that her duties include the review and evaluation of tax credit or refund cases forwarded by the BIR's VCAD and Regional Offices. She further testified that she reviewed and evaluated petitioner's claim for refund of alleged excess and unutilized input VAT covering period from 01 April 2019 to 31 March 2020 in the aggregate amount off'934,65I,9o6.8s pursuant to Section m(A) 88 of the t 8' 83 84 85 86 87 88 Exhibit "R-2", id., p. 560.

Exhibit "R-3", id., pp. 936-945.

II, AMENDMENTS:

II. Assessment Service D. Tax Audit Review Division (Emphasis in the original text and supplied) Amendment of Revenue Administrative Order (RAO) No. 2-2014 dated August 7, 2014 Relative to the Organization and Functions of the Operations Group, Including the Services, Divisions and Sections under It.

See Judicial Affidavit of Revenue Officer Marvin K. Villarama dated 27 June 2022, Exhibit "R-7'', Division Docket, Volume I, pp. 375-38 I.

TSN dated 30 July 2024, p. 5.

SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-Rated or Effectively Zero-Rated Sales.- Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(I), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the 8angko Sentral ng Pilipinas (8SP): 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 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non- zero-rated sales.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

NIRC of 1997, as amended. She declared that her team conducted the review based on documents petitioner submitted and the Revised Checklist of Mandatory Requirements and that her ·team upheld VCAD's recommendation through a Memorandum dated 18 November 2021.89 As stated in this Memorandum, petitioner's refund claim warranted denial because deductions exceeded amount sought to be refunded. She further testified that BIR T ARD noted additional findings, namely, that petitioner wrote off inventories worth ·P7,261,ooo.oo without supporting documents to explain the write-off, which BIR treated as a deemed sale under Section w6(B)(1)90 of the NIRC of1997, as amended, resulting in the deduction of the corresponding output VAT amounting to P871>32o.oo from the claim, and that petitioner should be imposed a compromise penalty of P25,ooo.oo for failure to supply correct and accurate sales information in its Quarterly VAT Returns pursuant to Revenue Memorandum Order (RMO) No. 7-15,91 in relation to Section 25592 of the NIRC of 1997, as amended. She finally testified that respondent thereafter issued a Denial Letter93 informing petitioner of the denial of its refund claim.94 Petitioner likewise did not conduct any cross-examination.95 On 30 July 2024, respondent filed his or her FOE9~ consisting of Exhibits "R-1" to "R-8-1", inclusive of sub-markings. Petitioner filed its Comment97 thereto on 05 August 2024.

On 12 August 2024, petitioner filed a "[MPR] to the [Second FOE . Resolution)"98 (Second MPR). Respondent filed his or her Comment99t 89 90 91 92 93 99 95 96 97 98 99 Exhibit "R-4", BIR Records (Exhibit "R-6"), pp. 953-956. SEC. 106. Value-Added Tax on Sale of Goods or Properties.- (B) Transactions Deemed Sale.- The following transactions shall be deem ell sale: (I) Transfer, use or consumption not in the course of business of goods or properties originally intended for sale or for use in the course of business[.] The Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code.

SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax, Withhold and Remit Tax and Refund Excess Taxes Withheld on Compensation. Exhibit "R-5", supra at note 12.

See Judicial Affidavit of Revenue Officer Jelly Anne T. Mateo dated 27 June"2022, Exhibit "R-8", Division Docket, Volume I, pp. 364-370.

TSN dated 30 July 2024, p. I 0.

Division Docket, Volume II, pp. 1141-1144. !d., pp. 1147-1148.

!d., pp. 1151-1157.

!d., pp. 1163-1165.

Dole Philippines, Inc. v. Commissioner of Internal Revenue thereto on 29 August 2024. The First Division later admitted respondent's exhibits in its Resolution dated 23 September 2024-100 In the Resolution dated 15 November 2024,

101 the First Division

partially granted petitioner's Second MPR. It admitted several of the Second Set of Denied Exhibits but still denied admission of the following: (1) Exhibits "P-no-1945A" to "P-no-1946A" and "P-no-22238B" to "P-no-22245B",102 for failure to present the originals for comparison;

(z) Exhibits "P-no-wsrA" and "P-no-9oD" to "P-no-91D",103 for not being found in the records of the case; and (3) Exhibits "P-no-49A", "P-no- 8 6A" t "P 8

A"

"P

A"

"P

SA"

"P ~ .i" 9 0 -IIO- 99 ,

-II0-1099

, -ll0-ll9 , -II0-132y' , "P-no-1947A" to "P-no-1948A", "P-no-1950A", "P-uo-15778B" and "P-no- 15785B"/o4 for being unreadable. In the same Resolution, the First Division granted the parties a period of 30 days within which to file their respective memoranda.

In compliance with the Court's directive, on 17 December 2024, petitioner filed its Memorandum/as while respondent filed a

Manifestation

106 on 19 December 2024 stating that he or she adopts arguments raised in his or her Answer107 as his or her Memorandum. In a Minute Resolution dated 20 January 2025, the First Division considered the instant case submitted for decision. 108

ISSUE

As can be gleaned from the parties' JSFI, 109 the sole issue for this Court's resolution is-t 100 101

I 02

103 104 105 106 107 108 109 !d., pp. I 169-1170.

Id.,pp. 1175-1181.

Supra at note 78.

Supra at note 79.

Supra at note 77.

Division Docket, Volume II, pp. I 182-1245. Id., pp. 1248-1250.

Supra at note I 8.

Division Docket, Volume II, p. 1254.

See supra at note 26.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

WHETHER PETITIONER DOLE PHILIPPINES, INC. IS ENTITLED TO A REFUND OF ITS ALLEGED EXCESS AND UNUTILIZED INPUT

VALUE-ADDED TAX

(VAT)

DIRECTLY ATTRIBUTABLE AND

ALLOCABLE TO ITS VALUE-ADDED TAX (VAT) ZERO-RATED

SALES FOR THE PERIOD FROM 01 APRIL 2019 TO 31 MARCH 2020 IN THE AMOUNT OF '1'934,6S1,9o6.85.

ARGUMENTS

In the instant Petition for Review,"a petitioner argues that its claim for refund of excess and unutilized input VAT amounting to P934,651,906.8s should be granted because it has established the presence of all required legal and factual elements. Conversely, in his or her Answer, 111 respondent contends that the present claim warrants denial because petitioner failed to substantiate its refund claim at the administrative level. Respondent further argues that petitioner bears burden of proving entitlement to refund, as a claim for refund does not arise ipso facto upon filing. Respondent likewise asserts that tax refunds remain subject to routine administrative investigation and that tax refund laws are strictly construed against the taxpayer and in favor of the government.

RULING OF THE COURT

After a careful and thorough evaluation of the parties' respective evidence and the applicable laws, rules and regulations, the Court finds the instant petition unmeritorious.

Petitioner anchors its claim on Sections no(B), 112 n2(A) and (C) of the NIRC of 1997, as amended by Republic Act (RA) No. 10963 or Tax Reform for Acceleration and Inclusion (TRAIN), which are quoted hereunder: t

IIC

Ill

112 Supra at note 1.

Supra at note 18.

As amended by Republic Act No. 9361, "AN ACT AMENDING SECTION I 10(8) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES".

Dole Philippines, Inc. v. Commissioner of Internal Revenue

SEC. no. Tax Credits. - (B) Excess Output or Input Tax. - If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: Provided, however, That any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112.

SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-Rated or Effectively Zero-Rated Sales. -Any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section w6(A)(2)(a)(1), (2) and (b) and Section w8(B)(1) and (z), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section w8(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. (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 (9o) 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 (3o) days from the receipt of the . decision denying the claim, appeal the decision with the Court of Tax t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

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 (9o)-day period shall be punishable under Section 269 of this Code."3 In Commissioner of Internal Revenue v. Deutsche Knowledge Services Pte. Ltd. 114 (Deutsche Knowledge Services), the Supreme Court laid down the requisites for the entitlement to tax refund or credit of excess input VAT attributable to zero-rated sales, to wit: Under Section 4.nz-r(a) of Revenue Regulations No. (RR) r6-os, otherwise known as the Consolidated VAT Regulations of zoos, in relation to Section nz of the Tax Code, a claimant's entitlement to a tax refund or credit of excess input VAT attributable to zero-rated sales hinges upon the following requisites: "(r) the taxpayer must be VAT-registered; (2) the taxpayer must be engaged in sales which are zero-rated or effectively zero-rated; (3) the claim must be filed within two years after the close of the taxable quarter when such sales were made; and (4) the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax."

Applying the foregoing principle, the Court will proceed to determine whether petitioner complied with the aforementioned requisites. For an orderly discussion, We shall start with the third (3'd) requisite, followed by the first (1'') and second (znd) requisites, then the fourth (4'h) requisite.

THIRD (3R0 ) REQUISITE:

THE CLAIM MUST BE FILED WITHIN

TWO (2) YEARS AFTER THE CLOSE OF

THE TAXABLE QUARTER WHEN SUCH

SALES ARE MADE.

In accordance with Section nz(A) and ( C) 115 of the NIRC of 1997, _ as amended by TRAIN, the administrative claim for refund ofunutilizedt 113 114 115 Emphasis supplied and italics in the original text. G.R. No. 234445, 15 July 2020; Citations omitted. Supra at p. 18.

Dole Philippines, Inc. v. Commissioner of Internal Revenue input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales are made.

Petitioner's present claim covers the 1st to 4th quarters of the FY ended 31 March 2020. Counting two (2) years from the close of the subject taxable quarters, petitioner had until the following dates to file its administrative claim, to wit:

Close of the

Last Day to File

Period Covered

Taxable Quarter

Administrative Claim

1" quarter 30 june 2019 30 june 2021 (01 April to 30 june 2019) 2"d quarter

30 September 2019

30 September 2021

(01 July to 30 September 2019)

3'd quarter

31 December 2019

31 December 2021

(01 October to 31 December 2019)

4'" quarter

31 March 2020

31 March 2022

( 01 January to 31 March 2020)

Hence, petitioner's administrative claim for refund covering the aforesaid quarters filed on 29 June 2021116 was timely made within the two (2)-year prescriptive period.

As to the timeliness of petitioner's judicial claim, respondent had ninety (9o) days, or until 27 September 2021, within which to act on petitioner's administrative claim. However, considering that during the said period, enhanced community quarantine (ECQ) and modified enhanced community quarantine (MECQ) were imposed due to corona virus disease 2019 (COVID-19) pandemic,117 thereby further extendingt 116 117 Exhibits "P-43'' and "P-42", supra at notes 8 and 9, respectively.

Imposed

Number

Dates

Quarantine

of days COVID-19-re\ated Issuances

Restriction

06 August 2021 to

ECQ

15 IATF-EID Resolution No. 130-A,

20 August 2021

July 2021

21 August 2021 to

MECQ

II

IATF-EID

Resolution

No.

134, 3\ Au oust 2021

August 2021

0 I September 2021 to

MECQ

7 IATF-EID Resolution No. 135-A,

07 September 2021

August 2021

Total

33 29 19 26

Dole Philippines, Inc. v. Commissioner of Internal Revenue the 90-day period to act, and taking into account the additional3o days after the lifting thereof per Revenue Regulations (RR) No. 27-20,"8 the 9o-day to act now fell on 29 November 2021. Considering that respondent issued the Denial Letter"9 on 15 November 2021, respondent acted well within the extended 9o-day period. Notably, petitioner received respondent's Denial Letter on o8 March 2022. Counting thirty (3o) days therefrom, petitioner had until 07 April 2022, within which to file a judicial claim before this Court. Thus, the instant Petition for Review'20 was also seasonably filed on 07 April 2022. Such being the case, the Court finds that petitioner satisfied the above-stated 3rd requisite.

FIRST (I5T) REQUISITE:

PETITIONER MUST BE VALUE-ADDED

TAX (VAT)-REGISTERED.

Undeniably, petitioner is a VAT -registered taxpayer with TIN ooo-428-573-ooo, as shown in its

BIR

COR

Number OCN

127RCzozzooooooo302.121 Thus, petitioner complied with the 1st requisite.

SECOND (2N°) REQUISITE:

PETITIONER MUST BE ENGAGED IN

SALES WHICH ARE ZERO-RATED OR

EFFECTIVELY ZERO-RATED.

The z"d requisite requires that the taxpayer-claimant be engaged in zero-rated or effectively zero-rated sales. In its Amended Quarterly VAT Returns'22 for the FY ended _ 31 March zozo (i.e., 01 Aprilz019 to 31 March zozo), petitioner reportedt 118 119 120 121 122 Regulations Suspending the Filing and Ninety (90)-Day Processing of Value-Added Tax (VAT) Refund Claims Anchored Under Section 112 of the Tax Code of 1997, as Amended, in Relation to Section 4(tt) of Republic Act (R.A.) No. 11494, Otherwise Known as the "Bayanihan to Recover as One Act".

Exhibit "P-45"/Exhibit "R-5", supra at note 12. Supra at note I.

Exhibit "P-3", supra at note 5.

Exhibits "P-9" (1" Quarter), "P-12" (2"d Quarter), "P-14" (3'd Quarter) and "P-16" ( 4'h Quarter), supra at note 7.

Dole Philippines, Inc. v. Commissioner of Internal Revenue total sales/receipts of f'39A87,739,145-01, which included zero-rated sales/receipts off'36,o7I,523,649·66, as shown below: FY ended

Vatable

Zero-Rated

Exempt

Total

31 March :z.o:z.o

Sales/Receipts

Sales/Receipts

Sales/Receipts

1st Quarter

(01 April 2019

!' 436,041,168.21 1'8-497.940,989.66 1'123,232, 79!.94 1'9, 057,214,949.81

to 30 June 2019)

znd Quarter

(01 July 2019

647-441,279-41 8,638,231,500.95 100,062,997·03 9.385.735.777-39 to 30 Sept. 2019) 3rd Quarter

(01 October 2019

1,039,831,660.62 9.587,191,611.94 196,619,345-48 w,823,642,618.o4 to 31 Dec. 2019) 4th Quarter (01 January zozo 723,681,85+71 9-348,159.547·ll 149·304-397·95 10,221,145,799·77 to 31 Mar. zozo)

Total

1'2,846·995·962·95 1')6,071,523,649·66 P569,2,9,532.4o l'J9o487,739·145·01 Respondent's verification of the documents submitted by petitioner at the administrative level disclosed the following findings: 123 II. SALES AND OTHER INCOME • The basis for the claim of tax refund were anchored with the provisions of Section w6(A)(2)(a)(1)(5) and Section w8(B)(2) of the NIRC of 1997, as amended. The same were also verified as properly recorded and accounted for in the books of accounts and correctly reflected in the company's audited financial statements. Also, the term "Zero-Rated Sale" was indicated on the sales invoices and official receipts issued by the claimant for export sale of goods and services, respectively.

• However, verification of documents disclosed that certain zero- rated sales of goods and services were found not to be supported with sales invoices, official receipts, bill of ladings, proof of inward remittances and delivery receipts. Of the l"36,071,523,649·66 zero- rated sales of goods and services, PI4,319,506,8g6.7o lack sufficient documentation for zero-rating.

• Verification of its export sale of goods and services disclosed that . only certain export sales were paid in acceptable foreign currency, t 123 Part II, Memorandum dated 28 October 2021, Exhibit "R-3", supra at note 83, p. 943; Underscoring in the original text and emphasis supplied.

A.

EXHIBIT

REFERENCE"'

Dole Philippines, Inc. v. Commissioner of Internal Revenue generally accounted for and inwardly remitted in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). • Moreover, detailed verification of inward remittances disclosed that there were unaccounted remittances from Dole Asia Holdings Pte. Ltd. Amounting to P442,13o,zos.n, please refer on pages 574· Hence, input tax amounting to Pzs3.614,6o7.o6 was allocated together with VAT exempt sales, and deducted from the herein claim.

From the foregoing, out of the I'36,o71,523,649·66 total zero-rated sales reported by petitioner for FY ended 31 March 2020, respondent found that the amount of I'14.3I9,so6,896.7o lacked sufficient documentation to support VAT zero-rating. Respondent likewise determined that petitioner failed to declare or underdeclared zero-rated sales amounting to I'442,130,2os.n, representing unaccounted foreign currency inward remittances from Dole Asia Holdings Pte. Ltd. (DAHPL).124 We now proceed to determine whether respondent's findings are correct.

The Court-commissioned !CPA examined petitioner's supporting documents relating to disallowed zero-rated sales amounting to I'I4,319,so6,896.7o and reported the following findings:

PARTICULARS

AMOUNT

OF SALES

DIRECT EXPORT SALES OF GOODS

"P-n6-A-1"

"P-n6-A-2"

124 125 VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH P382,736,624-67

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE Sl DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 42.404,289·74

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); See Summary of Zero-Rated Sales with Insufficient Documentations, BIR Records (Exhibit "R-6"),

p. 574. USB (Exhibit "P-147-B").

EXHIBIT

REFERENCE"'

"P-u6-A-3"

"P-n6-A-4"

"P-n6-A-5"

"P-u6-A-6"

"P-n6-A-i'

"P-n6-A-8"

"P-n6-A-9 "

"P-n6-A-1o "

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT

OF SALES

B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE;

c PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 961,039,069·57

ARE SUPPORTED BY:

E.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); F.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI; G.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 551,361,694-60

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI; c

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 19,335-738.28

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE;

c PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 342.316,356.61

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 3,804,754-17

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 149-791,075·38

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE Sl DATE;

c

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 4,168,347A0

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 468,883·57

ARE SUPPORTED BY:

A, SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI);

EXHIBIT

REFERENCE"'

"P-u6-A-u"

"P-116-A-12 "

"P-n6-A-13"

"P-u6-A-14"

"P-u6-A-15"

"P-n6-A-16"

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT

OF SALES

B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 2,158,6ss.3o

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE Sl DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH J,935,170,818.29

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 25,174,94L15

ARE SUPPORTED BY:

A

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 5.443,009·46

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED SHIPPING LINE CERTIFICATION SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE; c.

PROOF OF INWARD REMITTANCE

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 1,286, 738.16

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI AND DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 62,670,083-48

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

EXHIBIT

·· REFERENCE"'

"P-n6-A-17"

"P-n6-A-18"

"P-n6-A-19"

"P-u6-A-2o''

"P-n6-A-21 "

"P-n6-A-:z:z "

"P-n6-A-23"

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT

OF SALES

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 1,124,a78.6s

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 3,896,031,o8o.83

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED Sl DATED ON OR AFTER THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 54,169,459·96

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 18,079,529.96

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED Sl DATED ON OR AFTER THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 21,297,962.50

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE Sl DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 4,188,109.14

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE Sl DATE BUT WITH DIFFERENCE ON THE QUANTITY COMPARED TO THE VAT ZERO-RATED SI; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 4,237,166.56

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE Sl DATE;

c.

PROOF OF INWARD REMITTANCE

EXHIBIT

REFERENCE"'

"P-u6-A-24"

"P-u6-A-zs"

"P-u6-A-26"

"P-u6-A-27"

"P-n6-A-28"

"P-116-A-29"

"P-n6-A-3o'' "P-n6-A-31 , "P-n6-A-32 , "P-n6-A-33 ,

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT

OF SALES

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 327,997-49

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SJ DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 2,321,66+93

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE Sl DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ;6,964,6)2.96

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SJ BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED SJ DATED EARLIER THAN THE SJ DATE; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 4.579,093·13

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED Sl BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED Sl DATED EARLIER THAN THE Sl DATE; c.

PROOF OF INWARD REMITTANCE

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS DATED 1,151.07 WITHIN THE COVERED PERIOD WITHOUT SIR-REGISTERED VAT ZERO-RATED SALES INVOICES, BILLS OF LADING, DEBIT/CREDIT MEMO, PROOF OF INWARD REMITTANCE AND EXPORT DECLARATION.

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ll,I42,935·94

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 15,584,1}0.50

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PROOF OF INWARD REMITTANCE;

c.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 10,453·472·55

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

UNREADABLE COPY OF BILLS OF LADING (BL);

c.

PROOF OF INWARD REMITTANCE

TRANSFER PRICING ADJUSTMENTS SUPPORTED BY SIR-REGISTERED DEBIT/CREDIT 3.596,5n,672.92

MEMO

VAT ZERO-RATED SALES OF GOODS TO SBMA-REGJSTERED ENTERPRISES CUSTOMERS 3SS,8J1.20 ENJOYING VAT ZERO-RATING INCENTIVE ON THEIR PURCHASES DATED OUTSIDE THE

COVERED PERIOD SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

COPY OF CERTIFICATE OF VAT ZERO RATING FROM 801 .

EXHIBIT

REFERENCE"'

"P-n6-A-34"

"P-n6-A-35"

"P-n6-A-36"

"P-n6-A-37''

"P-u6-A-38"

"P-n6-A-39"

"P-u6-A-4o , "P-n6-A-41 ,

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT

OF SALES

WITHOUT DELIVERY RECEIPTS

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHERE 958.301.36 THE AMOUNT BEING CLAIMED IS HIGHER THAN THE AMOUNT PER DOCUMENT

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

BILLS OF LADING (BL) WHEREIN DETAILS SUCH AS BL REFERENCE NUMBER AND QUANTITY CANNOT BE ASCERTAINED;

c.

PROOF OF INWARD REMITTANCE

TRANSFER PRICING ADJUSTMENTS WITHOUT SUPPORTING DOCUMENT (I.E., BIR- 6,99+17

REGISTERED DEBIT /CREDIT MEMO)

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS 8,86!.87 SUPPORTED BY SIR-REGISTERED DEBIT/CREDIT MEMO CERTIFIED AS TRUE COPY BY THE

PETITIONER

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 1,9)6,869.30

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY AND SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE IN WET INK WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE;

D.

SHIPPING LINE CERTIFICATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 9.403,025·53

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI AND DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE

D.

SHIPPING LINE CERTIFICATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 978,10o.66

ARE SUPPORTED BY:

A.

BJR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY AND SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE IN WET INK WHICH MATCHES THE BL REFERENCE NUMBER INDICATED PER VAT ZERO-RATED 51 DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENCE ON THE QUANTITY COMPARED TOTE VAT ZERO-RATED Sl;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH l,llJ,s77.69

ARE SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED S! BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 86,842..13

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER BUT WITH DIFFERENT QUANTITY INDICATED PER VAT ZERO-RATED Sl DATED EARLIER THAN THE SI DATE;

c.

PROOF OF INWARD REMITTANCE

D.

EXPORT DECLARATION

B.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

EXHIBIT

PARTICULARS

AMOUNT

REFERENCE"'

OF SALES

"P-u6-A-42"

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH

ARE SUPPORTED BY:

7,720,41043 A. BIR-REGJSTERED VAT ZERO-RATED SALES INVOICES (51); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) SUPPORTED BY CERTIFICATION FROM THE SHIPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SJ;

c. PROOF OF INWARD REMITTANCE

"P-u6-A-43 "

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH 19,176,847-42

ARE SUPPORTED BY:

A. BIR-REGJSTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY CERTIFICATION FROM THE SHJPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SJ DATED ON OR AFTER THE SJ DATE;

c. PROOF OF INWARD REMITTANCE

"P-n6-A-44"

VAT ZERO-RATED SALE OF GOODS TO NON~ RESIDENT FOREIGN CORPORATIONS WHICH l,J8I,27J·59

ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (51); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY CERTIFICATION FROM THE SHIPPPJNG LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED 51 DATED ON OR AFTER THE 51 DATE; c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

"P~n6-A-45" VAT ZERO-RATED SALES OF GOODS TO NON~RESIDENT FOREIGN CORPORATIONS 2,112,)13.03

WHICH ARE SUPPORTED BY:

A.

BJR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY CERTIFICATION FROM THE SHJPPPJNG LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SJ DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI; c.

PROOF OF INWARD REMITTANCE

"P-n6-A-46"

VAT ZERO-RATED SALES OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS 728,294-43

WHICH ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHJPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE BL REFERENCE NUMBER AND QUANTITY INDICATED PER VAT ZERO-RATED SI DATED EARLIER THAN THE SJ DATE;

c.

PROOF OF INWARD REMITTANCE

Subtotal

l'l4,2J2,JJ2, 781.73

INDIRECT EXPORT SALES OF GOODS AND SERVICES

"P-n6~A-47"

VAT ZERO-RATED SALES OF GOODS TO DOMESTIC CORPORATIONS WHICH ARE !'628,134·84

SUPPORTED BY:

A.

BJR-REGISTERED VAT ZERO-RATED SALES INVOICES (51); B.

DELIVERY RECEIPTS;

c.

VAT ZERO-RATING CERTIFICATES WHICH I VIEWED IN THE BIR ORIGINAL ADMIN

CLAIM DOCKET

"P-n6-A-48"

VAT ZERO-RATED SALES OF GOODS TO DOMESTIC CORPORATIONS WHICH ARE 7,189,336.so

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

VAT ZERO-RATING CERTIFICATES WHICH I VIEWED IN THE BIR ORIGINAL ADMIN

CLAIM DOCKET

"P-n6-A-49 "

VAT ZERO-RATED SALES OF GOODS TO DOMESTIC CORPORATIONS WHICH ARE 473,707,00

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

DELIVERY RECEIPTS;

- c.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

EXHIBIT

PARTICULARS

AMOUNT

REFERENCE"'

OF SALES

c.

VAT ZERO-RATING CERTIFICATES

"P-u6-A-so"

VAT ZERO-RATED SALES OF GOODS TO DOMESTIC CORPORATIONS WHICH ARE 6,043,893·06

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

VAT ZERO-RATING CERTIFICATES

"P-n6-A-s1"

VAT ZERO-RATED SALES OF SERVICES TO A DOMESTIC CORPORATION WHICH ARE 8o8,842.7o

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED OFFICIAL RECEIPTS (OR); B.

BOI CERTIFICATION

Subtotal

Pl5,143·9'4·10

SERVICES RENDERED TO NON-RESIDENT FOREIGN CORPORATIONS

"P-n6-A-s1"

VAT ZERO-RATED SALE OF SERVICES TO NON-RESIDENT FOREIGN CORPORATIONS r6,748,8o6.59

WHICH ARE SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED OFFICIAL RECEIPTS (OR); B.

PHOTOCOPIES OF CERTIFICATE OF NON-REGISTRATION OF CORPORATION/ PARTNERSHIP ISSUED BY SEC DULY CERTIFIED BY AMELITA A. ESCOBER, VAT CREDIT AUDIT DIVISION CHIEF;

c.

PROOF OF INWARD REMITTANCE

"P-n6-A-52 "

VAT ZERO-RATED SALE OF SERVICES TO NON-RESIDENT FOREIGN CORPORATIONS

WHICH ARE SUPPORTED BY:

s8,876,o63·93 A.

SALES INVOICE BUT WITH NO ZERO-RATED STAMP

B.

PRINTED BILL OF LADING

c.

VAT ZERO-RATED OFFICIAL RECEIPT OR COLLECTION RECEIPT

D.

PROOF OF INWARD REMITTANCE

Subtotal

P65,624,87o.52 "P-u6-A-52" and "P- No supporting documents presented 6,405.J30·37 n6-A-s4 "

Total

''4·3'9>506,896·72

a. Disallowed Unsupported Zero-Rated Sales The Court sustains respondent's disallowance of petitioner's claimed zero-rated sales amounting to I'6,405,330.37 because petitioner failed to present any supporting documents for these transactions.

b. Disallowed Direct Export Sales of Goods With respect to the disallowed direct export sales of goods amounting to I'14,232,332, 781.73, Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended, provides as follows:

SEC. 106. Value-Added Tax on Sale of Goods or Properties.- (A) Rate and Base of Tax. - ... t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(2) The following sales by VAT-registered persons shall be subject to zero percent (o%) rate:

(a) Export Sales.- The term 'export sales' means:

(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)[.] Based on the foregoing, for an export sale to qualifY as VAT zero- rated, the following conditions must be complied with: 1.

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

2.

The sale was made by a VAT-registered person; 3· The sale was paid for in acceptable foreign currency or its equivalent in goods and services, accounted for in accordance with the rules and regulations of the BSP. Corollary to the l 1 requisite, Section 113 of the NlRC of 1997, as amended, requires a VAT -registered taxpayer, such as petitioner, to issue a VAT sales invoice (SI) for every sale, barter, or exchange of goods or properties, which must contain the following information: SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons.- (A) Invoicing Requirements.- A VAT-registered person shall lSSUe:

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

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

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:

(r) A statement that the seller is a VAT-registered person, followed by his Taxpayer's Identification Number (TIN);

(z) 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) Ifthe 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 (o%) 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 break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale.

(3) The date oftransaction, 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 (Pr,ooo) or more where the sale or transfer is made to a VAT- registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client.u6 Implementing the foregoing provision, Section 4.113-1 of RR No. 16-2005' 27 provides as follows: t 126 127 Emphasis supplied and italics in the original text. Consolidated Value-Added Tax Regulations of2005.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

SEC. 4·113-J. Invoicing Requirements. - (A) 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. 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 Receipt 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 (o%) 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 t

Dole Philippines, Inc. v, Commissioner of Internal Revenue 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 (1"1,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, shall be indicated in addition to the information required in (1) and (2) of this Section. In addition to the foregoing requirements, the SI must be duly registered with the BIR, as prescribed under Section 237, in relation to Section 238, of the NIRC of1997, as amended, to wit: SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. -All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty-five pesos (P2s.oo) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service.

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."8 Applying the foregoing provisions, a VAT -registered person, such as petitioner, who claims VAT zero-rated qirect export sales must present at least three (3) types of documents:t 128 Italics in the original text and underscoring supplied.

EXHIBIT

REFERENCE

"P-u6-A-15 ,

"P-u6-A-16"

"P-n6-A-17 , Dole Philippines, Inc. v. Commissioner of Internal Revenue 1.

the SI as proof of sale of goods;

2. the bill of lading (BL) or airway bill (AWB) as proof of actual shipment of goods from the Philippines to a foreign country; and 3· the bank credit advice, certificate of bank remittance, or any other document proving payment of goods in acceptable foreign currency or its equivalent in goods and services, duly accounted for in accordance with BSP rules and regulations. Consequently, only the direct export sales supported by these documents shall qualify for VAT zero-rating under Section 106(A)(2)(a)(1)129 of the NIRC o£1997, as amended.

Upon a review of the !CPA report, out of the 1"14,232,332,781.73 direct export sales disallowed by respondent, the amount of P10,448,88o,n2.56 13° is properly substantiated and qualifies for VAT zero- rating under Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended. Only the remaining amount of 1"3,783>452,669.17 should be denied VAT zero-rating, as detailed below:

PARTICULARS

AMOUNT OF

SALES

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE P1,286, 738.16

SUPPORTED BY:

A.

BIR-REG!STERED VAT ZERO-RATED SALES INVOICES (Si); B.

ORIGINAL COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI AND DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED Sl;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 62,67o,o83-48

SUPPORTED BY:

A.

BIR- REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION

FROM

THE

SHIPPPING

LINE

SIGNED

BY

THE

SHIPPING

LINE'S

AUTHORIZED

REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE Sl DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 1,124,o78.6s

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION

FROM

THE

SHIPPPING

LINE

SIGNED

BY

THE

SHIPPING

LINE'S

AUTHORIZED

129 Supra at pp. 30-31.

130 Sum total of Exhibits "P-116-A-1" to "P-116-A-14", "P-116-A-18" to "P-116-A-21 ", "P-116-A- 23", "P-116-A-24", "P-116-A-33", "P-116-A-42" to "P-116-A-44", and "P-116-A-46".

EXHIBIT

REFERENCE

"P-u6-A-2z"

"P-u6-A-zs"

"P-u6-A-z6"

"P-n6-A-z7''

"P-n6-A-z8"

"P-u6-A-z9"

"P-n6-A-3o''

"P-u6-A-31"

"P-u6-A-3z"

"P-n6-A-34"

Dole Philippines, Inc. v. Commissioner of Internal Revenue

PARTICULARS

AMOUNT OF

SALES

REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED Sl DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED Sl; c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 4,188,109.14

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENCE ON THE QUANTITY COMPARED TO THE VAT ZERO-RATED SI; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 2,)2!,664-93

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED Sl;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 56,964,652.96

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION

FROM

THE

SHIPPPING

LINE

SIGNED

BY

THE

SHIPPING

LINE'S

AUTHORIZED

REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 4.579,093·13

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY DULY NOTARIZED CERTIFICATION

FROM

THE

SHIPPPING

LINE

SIGNED

BY

THE

SHIPPING

LINE'S

AUTHORIZED

REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED SI DATED EARLIER THAN THE Sl DATE; c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS DATED 1,151.07 WITHIN THE COVERED PERIOD WITHOUT SIR-REGISTERED VAT ZERO-RATED SALES INVOICES, BILLS OF LADING, DEBIT/CREDIT MEMO, PROOF OF INWARD REMITTANCE AND EXPORT DECLARATION.

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE ll,l42,935·94

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 15,584,~30·50

SUPPORTED BY:

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PROOF OF INWARD REMITTANCE;

c.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 10,453>472·55

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

UNREADABLE COPY OF BILLS OF LADING (BL);

c.

PROOF OF INWARD REMITTANCE

TRANSFER PRICING ADJUSTMENTS SUPPORTED BY SIR-REGISTERED DEBIT/CREDIT MEMO 3,596,5n,672.92 VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHERE THE 958,JOI.J6 AMOUNT BEING CLAIMED IS HIGHER THAN THE AMOUNT PER DOCUMENT SUPPORTED BY: -

EXHIBIT

REFERENCE

"P-n6-A-35 "

"P-u6-A-36"

"P-n6-A-37''

"P-n6-A-38"

"P-n6-A-39 "

"P-n6-A-4o "

"P-u6-A-41 "

"P-n6-A-45 "

Dole Philippines, Inc. v. Commissioner of Internal Revenue

AMOUNT OF

PARTICULARS

SALES

A.

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

BILLS OF LADING (BL) WHEREIN DETAILS SUCH AS BL REFERENCE NUMBER AND QUANTITY CANNOT BE ASCERTAINED;

c.

PROOF OF INWARD REMITTANCE

TRANSFER PRICING ADJUSTMENTS WITHOUT SUPPORTING DOCUMENT (I.E., SIR-REGISTERED 6,994·17

DEBIT /CREDIT MEMO)

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS SUPPORTED 8,86!.87 BY BIR-REGISTERED DEBIT/CREDIT MEMO CERTIFIED AS TRUE COPY BY THE PETITIONER VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 1,956,869·30

SUPPORTED BY:

A

BIR- REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY AND SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE IN WET INK WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE;

D.

SHIPPING LINE CERTIFICATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 9o40J,025·53

SUPPORTED BY:

A

SIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

CERTIFIED TRUE COPY OF BILLS OF LADING (BL) WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED Sl AND DATED ON OR AFTER THE SI DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE;

D.

SHIPPING LINE CERTIFICATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 978,wo.66

SUPPORTED BY:

A

BIR- REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY AND SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE IN WET INK WHICH MATCHES THE BL REFERENCE NUMBER INDICATED PER VAT ZERO-RATED Sl DATED ON OR AFTER THE Sl DATE BUT WITH DIFFERENCE ON THE QUANTITY COMPARED TOTE VAT ZERO-RATED SI;

c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE l,nJ.sn69

SUPPORTED BY:

A.

BIR- REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) CERTIFIED AS TRUE COPY SUPPORTED BY DULY NOTARIZED CERTIFICATION FROM THE SHIPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED Sl BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO THE VAT ZERO-RATED SI DATED EARLIER THAN THE SI DATE; c.

PROOF OF INWARD REMITTANCE

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 86,842.13

SUPPORTED BY:

A.

BIR-REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) WHICH MATCHES THE BL REFERENCE NUMBER BUT WITH DIFFERENT QUANTITY INDICATED PER VAT ZERO-RATED Sl DATED EARLIER THAN THE Sl DATE;

c.

PROOF OF INWARD REMITTANCE;

D.

EXPORT DECLARATION

VAT ZERO-RATED SALE OF GOODS TO NON-RESIDENT FOREIGN CORPORATIONS WHICH ARE 2,112,J1J.03

SUPPORTED BY:

A

BIR- REGISTERED VAT ZERO-RATED SALES INVOICES (SI); B.

PRINTED COPY OF BILLS OF LADING (BL) SUPPORTED BY CERTIFICATION FROM THE SHIPPPING LINE SIGNED BY THE SHIPPING LINE'S AUTHORIZED REPRESENTATIVE WHICH MATCHES THE QUANTITY INDICATED PER VAT ZERO-RATED SI DATED ON OR AFTER THE .

EXHIBIT

REFERENCE

c.

Total

Dole Philippines, Inc. v. Commissioner of Internal Revenue

AMOUNT OF

PARTICULARS

SALES

Sl DATE BUT WITH DIFFERENT OR MISSING BL REFERENCE NUMBER COMPARED TO BL NUMBER INDICATED PER VAT ZERO-RATED SI;

PROOF OF INWARD REMITTANCE

f'3,783,452,669.17

c. Disallowed Indirect Export Sales of Goods and Services As regards the disallowed indirect export sales amounting to PI5,I43,914.10, records show that these transactions involve packaging materials sold to the following entities registered with the Board of Investments (BOI) and Subic Bay Metropolitan Authority (SBMA), as well as shipping services rendered to a BOI-registered entity:

Exhibit Reference

Customer

Sales of packaging materials to BOI-registered entities "P-n6-47'' and "P-116-48"

CENTURY PACIFIC AGRICULTURAL

VENTURES, INC.

"P-116-48"

PHIL. BEST CANNING CORPORATION "P-u6-49" and "P-u6-5o"

GENERAL TUNA CORPORATION

"P-n6-49" and "P-n6-so"

WELL-DELIGHT NETWORK CORP

Subtotal

Sales of packaging materials to an SBMA-registered entity "P-n6-so" GEM FOODS INTERNATIONAL INC.

Subtotal

Sales of services to a BOI-registered 1oo% exporter

"P-n6-51"

DIAMOND STARAGRO PRODUCTS, INC.

1.

Disallowed Indirect Export Sales of Goods to HOI-registered Entities

Subtotal i

Total

Amount of

Sales

1'5,442,768.96 2.374.702.38 3.477.435·88 396,897-74 Pn,69I,8o4.96 1'2,643,266-44 1'2,643,266.44 --------- -- 1'8o8,842-7o --· P8o8,842.70 1'15,143·9'4·10 l As to petitioner's claimed zero-rated sales of packaging materials to BOI-registered entities, Section w6(A)(2)(a)(3) of the NIRC of 1997, as amended, provides as follows:

SEc.w6. Value-Added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax. - ... t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(2) The following sales by VAT-registered persons shall be subject to zero percent (o%) rate:

(a) Export Sales. -The term 'export sales' means:

(3) Sale of raw materials or packaging materials to export- oriented enterprise whose export sales exceed seventy percent (7o%) of total annual production[.]'3' Based on the foregoing, a sale of goods to an export-oriented enterprise whose export sales exceed seventy percent (7o%) of total annual production qualifies as a zero-rated sale only if following essential elements are present:

1.

the sale was made by a VAT-registered person;

2. the buyer must be considered as an export-oriented enterprise; and, 3· the goods sold must be used as raw materials or packaging materials for the goods exported by the export-oriented enterprise.

As for the 1'1 essential element, it is settled that petitioner is a VAT -registered person as previously discussed. In relation to the 2nd essential element, Section 4.106-s(a)(3) ofRR No. 16-2005'32 provides that "[a]ny enterprise whose export sales exceed 70% of the total annual production of the preceding taxable year shall be considered an export-oriented enterprise." Petitioner presented the respective BOI Certifications attesting that the above-mentioned customers are BOT-registered and maintain the following percentages of export sales relative to total sales: t 131

\J2

Emphasis supplied and italics in the original text. Supra at note 127.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Exhibit

Percentage of

Period When Export

Reference

Export-Oriented Enterprise

Export Sales to

Sales Were Made

Total Sales

"P-138-8", p. z 80.89°/o • 01 january 2018 to

CENTURY PACIFIC AGRICULTURAL

31 December 2018

"P-138-8", p. 5 VENTURES, INC.

m January 2019 to 88.J7%

31 December 2019

"P-138-w", p. 9 wo%

01 January 2018 to

31 December 2018

GENERAL TUNA CORPORATION

"P-138-w", p. 13 woo/o

01 January 2019 to

• 31 December 2019

"P-138-n", p. 2 95·70% 01 january 2018 to PHIL. BEST CANNING

31 December 2018

"P-138-n", p. 5

CORPORATION

m January 2019 to 95·12%

31 December 2019

"P-138-12", p. 2

WELL-DELIGHT NETWORK

woo/o

01 January 2018 to

CORPORATION

• 31 December zm8 Based on the information reflected in the BOI Certifications, export sales of the aforementioned entities exceeded 70% of their total production in 2018 and 2019, which are the taxable years preceding the FY ended 31 March 2020, the period covered by the instant refund claim. These entities therefore qualify as export-oriented enterprises, thereby satisfying the 2nd essential element. However, petitioner failed to present any BOI Certification for its customer, "Well-Delight Network Corp.", covering its export sales for the year 2019. Consequently, petitioner's claimed zero-rated sales to Well-Delight Network for the year 2020 amounting to P24,167.oo'33 shall be disallowed.

Lastly, with respect to the 3rd essential element, a VAT -registered person claiming VAT zero-rated sales of goods to an export-oriented enterprise whose export sales exceed 70% of total annual production must present the following requirements:

\33

1. the SI as proof of sale of goods; and,

2. proof that the goods sold are used as raw materials or packaging materials for the good.s ultimately exp.orted by the export-oriented enterprise. t Exhibit "P-116-1367A", USB (Exhibit "P-147-B").

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In the instant case, petitioner presented the related Sis, 134 which the Court found to be compliant with the invoicing requirements. Moreover, descriptions of the goods sold as indicated in the Sis show that the transactions involve packaging materials, thereby satisfying the 2nd requirement under the 3'd essential element. In sum, out of the claimed amount of'Pn,691,8o4.96 representing sales of packaging materials to BOI-registered entities, only Pn,667,637·76 (.Pn,691,8o4.96 less P24,167.oo) qualifies for VAT zero- rating under Section w6(A)(z)(a)(3)135 of the NIRC of1997, as amended. 1.

Disallowed Indirect Export Sales of Goods to an SBMA-registered Entity

With respect to the disallowed indirect export sales .of goods to an

SBMA-registered

entity amounting to Pz,643,z66-44,

Section

w6(A)(z)(a)(s)(c) of the NIRC ofi997, as amended, states: 134 135 136 SEC. ro6. Value-Added Tax on Sale of Goods or Properties.-. (A) Rate and Base of Tax. - ...

(2) The following sales by VAT-registered persons shall be subject to zero percent (o%) rate:

(a) Export Sales. -The term 1export sales' means:

(s) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code ohg87, and other special laws.

(c) Sales to persons or entities whose exemption under special laws or international agreements to which the P~ines is a signatory effectively subjects such sales to zero rate.'36 Q · Exhibits "P-116-1282A" to "P-116-1449A", id. Supra at pp. 38-39.

Emphasis supplied and italics in the original text.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In connection therewith, the special law applicable to this case is RA 7227,137 as amended by RA 9400/38 otherwise known as the Bases Conversion and Development Act of 1992. Relevant portions of this law are quoted below for ready reference:

SEC. 12. Subic Special Economic Zone. - ...

(b) The Subic Special Economic Zone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. However, exportation or removal of goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine territory shall be subject to customs duties and taxes under the Tariff and Customs Code of the Philippines, as amended, the National Internal Revenue Code of 1997, as amended, and other relevant tax laws of the Philippines.

(c) The provision of existing laws, rules and regulations to the contrary notwithstanding, no national and local taxes shall be imposed within the Subic Special Economic Zone. In lieu of said taxes, a five percent (s%) tax on gross income earned shall be paid by all business enterprises within the Subic Special Economic Zone and shall be remitted as follows: three percent (3%) of the National Government, and two percent (z%) to the Subic Bay Metropolitan Authority (SBMA) for distribution to the local government units affected by the declaration of and contiguous to the zone[.]'39 Since the ecozone is viewed as a foreign territory by legal fiction, sales of goods and services made by a VAT-registered person in the Philippine customs territory to an entity registered and operating within the ecozone are considered exports to a foreign country subject to o% VAT. In the case of Commissioner of Internal Revenue v. Toshiba InformatiQn Equipment (Phils.), Inc./40 the Supreme Court elucidated thusly-t 137 138 139 1<0 AN ACT ACCELERATING THE CONVERSION OF MILITARY RESERVATIONS INTO OTHER PRODUCTIVE USES, CREATING THE BASES CONVERSION AND DEVELOPMENT AUTHORITY FOR THE PURPOSE. PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES. AN ACT AMENDING REPUBLIC ACT NO. 7227, AS AMENDED, OTHERWISE KNOWN AS THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992, AND FOR OTHER PURPOSES. Emphasis supplied and italics in the original text. G.R. No. 150154,09 August 2005; Citations omitted and emphasis supplied.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

This

Court

agrees, however, that

PEZA-registered

enterprises, which would necessarily be located within ECOZONES, are VAT-exempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the five percent (s%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of all taxes; but, rather, because of Section 8 of the same statute which establishes the fiction that ECOZONES are foreign territory.

... An ECOZONE or a Special Economic Zone has been described as - ... [S]elected areas with highly developed or which have the potential to be developed into agro- industrial, industrial, tourist, recreational, commercial, banking, investment and financial centers whose metes and bounds are fixed or delimited by Presidential Proclamations. An ECOZONE may contain any or all of the following: industrial estates (!Es), export processing zones (EPZs), free trade zones and tourist/recreational centers.

The national territory of the Philippines outside of the proclaimed borders of the ECOZONE shall be referred to as the Customs Territory.

Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territory; thus, creating the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs Territory shall be considered as an importation into the Customs Territory. Given the preceding discussion, what would be the VAT implication of sales made by a supplier from the Customs Territory to an ECOZONE enterprise?

The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority. Hence, actual export of goods and services from the Philippines to a foreign . country must be free of VAT; while, those destined for use or t

Dole Philippines, Inc. v. Commissioner of Internal Revenue consumption within the Philippines shall be imposed with ten percent (w%)'4' VAT.'4' Evidently, sales of goods and services by a VAT -registered taxpayer, such as petitioner, to entities located in ecozones qualify as export sales subject too% VAT rate pursuant to Section w6(A)(2)(a)(s) and (c)'43 of the NIRC of1997, as amended. Here, petitioner presented the Certificate of Registration and Tax Exemption (CRTE) dated 09 October 2018144 issued by the SBMA proving that "Gem Foods International Inc." (GFII), is duly registered as a Subic Bay Freeport Enterprise with Permit to Operate at Suite 26, West Gate Offices, Central Business District, Subic Bay Freeport Zone (SBFZ).

Thus, petitioner's sales to GFII for the subject period covered by the refund claim, amounting to 'P2,643,266.44, and duly supported by Sls145 compliant with the invoicing requirements, qualify for VAT zero- rating under Section w6(A)(2)(a)(s) and (c)146 of the NIRC of 1997, as amended.

ii.

Disallowed Indirect

Export Sales of

Services

to a

HOI-registered

wo%

Exporter

With respect to petitioner's claimed sales of services to a SOl- registered wo% exporter amounting to P8o8,842.70, Section 4.106- s(a)(s) of RR No. 16-2005147 provides that "sales of goods, properties or services made by a VAT-registered supplier to a SOl-registered manufacturer/producer whose products are wo% exported are . considered export sales. A certification to this effect must be issued byt 141 142 143 144 145 146 147 Now at !2% VAT rate.

Emphasis supplied.

Supra at p. 41.

Exhibit "P-138-9", USB (Exhibit "P-147-B"). Exhibits "P-116-1370A" to "P-116-1372A", "P-116-1376A", "P-116-1379A", "P-116-1380A", P- 116-1384A" to ··P-116-1387A", "P-116-1393A", "P-116-1396A", "P-116-1411A" to "P-116- 1449A", id.

Supra at p. 41.

Supra at note 127.

Dole Philippines, Inc. v. Commissioner of Internal Revenue the [BOI] which shall be good for one year unless subsequently re-issued by the BOI."

In Commissioner of Internal Revenue v. Filminera Resources Corporation'48 (Filminera), the Supreme Court ruled that sales made to a BOI-registered buyer are export sales subject to the o% rate if the following conditions are met:

1.

the buyer is a BOI-registered manufacturer/producer;

2. the buyer's products are woo/a exported; and 3· the BOI certified that the buyer exported wiflo of its products. For this purpose, the BOI Certification is vital for the seller-taxpayer to avail of the benefits of zero- rating. The certification is evidence that the buyer exported its entire products and shall serve as authority for the seller to claim for refund or tax credit. In this case, petitioner submitted a BOI Certification confirming that "Diamond Star Agro Products, Inc." is registered with the BOI and exported woo/a of its products in the years :w18, 201~ and 202o.'49 Accordingly, petitioner's sales of services to the said entity for the subject period of claim, amounting to P8o8,842.70 and duly supported by VAT ORs compliant with invoicing requirements, qualifY for VAT zero-rating.

;.

Disallowed Zero-Rated Sales of Services to NRFCs

With regard to respondent's disallowance of petitioner's claimed zero-rated sales of services to nonresident foreign corporations (NRFCs) amounting to P6s,6z4,87o.sz, Section w8(B)(z) of the NIRC of 1997, as amended, provides as follows:

148 149 SEC. 108. Vqlue-added Tax on Sale ofServices and Use or Lease of Properties. t · G.R. No. 236325, 16 September 2020.

Exhibit "P-138-1 ", USB (Exhibit "P-147-B").

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(B) Transactions Subject to Zero Percent ( o%) Rate. - The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (o%) rate:

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

(2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)[.]'so Based on the foregoing, in order for a sale or supply of services to qualify as zero-rated under Section wS(B)(z) of the NIRC of 1997, as amended, the following essential elements must be present: 150 151 15.C 153

1. The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a non-resident person not engaged in business who is outside the Philippines when the services are performed;'5'

2. The services fall under any of the categories under Section w8 (B)(z),'5 2 or simply, the services rendered should be other thi:J.n "processing, manufacturing or repacking goods" ;'53 t Emphasis supplied and italics in the original text. Site/ Philippines Corporation (Formerly Clientlogic Phils., Inc.) v. Commissioner of Internal Revenue, G.R. No. 201326, 08 February 2017; Accenture, Inc. v. Commissioner of Internal Revenue, G.R. No. 190102, II July 2012; Commissioner of Internal Revenue v. Burmeister und Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205,22 January 2007. Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), G.R. No. 152609,29 June 2005.

Commissioner of Internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, inc., supra at note !51.

• I

I

Dole Philippines, Inc. v. Commissioner of Internal Revenue

3· The service must be performed in the Philippines by a VAT -registered person;1s4 and, 4· The payment was accounted for in accordance with the rules and regulations of the BSP. 1ss Anent the 1st essential element, this Court has consistently ruled in a number of cases156 that to be considered as an NRFC doing business outside the Philippines, such must be proven by presenting, for each corporation involved, at the very least, both the Securities and Exchange Commission (SEC)-issued "Certification of Non-Registration of Company" and the proof of incorporation or registration in a foreign country (i.e., "Certificate/ Articles of Incorporation/ Association"), and that there is no other indication which would disqualify said entity in being classified as an NRFC.

In Commissioner of Internal Revenue v. Deutsche Knowledge Services Pte. Ltd., !57 the Supreme Court affirmed the necessity of presenting the said documents in this wise: 154 155 156 157 For purposes of zero-rating under Section w8(B)(2) of the Tax Code, the claimant must establish the two components of a client's NRFC status, viz.: (1) that their client was established under the laws of a country not the Philippines or, simply, is not a domestic corporation; and (2) that it is not engaged in trade or business in the Philippines. To be sure, there must be sufficient proof of both of these components: showing not only that the clients are foreign ~orations, but also are not doing business in the Philippines. 0 I d.; Commissioner of Internal Revenue v. American Express International, Inc. (Philippine Branch), supra at note 152.

!d.

NCR Cebu Development Center, Inc. v. Commissioner of Internal Revenue, CTA Case No. 9255, 04 April 20 I 9; Deutsche Knowledge Services Pte. Ltd. v. Commissioner of Internal Revenue. CT A Case No. 9079, 09 January 20 18; Deutsche Knowledge Services Pte. Ltd. v. Commissioner of Internal Revenue, CTA Case No. 8065, 20 September 20 17; Deutsche Knowledge Services Pte. Ltd.

v. Commissioner of Internal Revenue, CTA Case Nos. 8623, 8656, 8661 and 8685, 04 August 20 17; Emerson Electric (Asia) Limited-ROHQ v. Commissioner of internal Revenue, CTA Case No. 8657, 21 December 20 16; Procter & Gamble Asia, Pte. Ltd. v. Commissioner of Internal Revenue, CTA Case No. 7820, 22 June 20 16; Deutsche Knowledge Services Pte. Ltd. v. Commissioner of Internal Revenue, CTA Case No. 7808, 16 December 2014 affirmed in toto by the CTA En Bane on 16 August 2016 in CTA EB No. 1290.

G.R. No. 234445, 15 July 2020; Citations omitted, italics in the original text and emphasis supplied.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Such proof must be especially required from ROHQs such as OKS. That the law expressly authorizes ROHQs to render services to local and foreign affiliates alike only stresses the ROHQ's burden to distinguish among their clients' nationalities and actual places of business operations and establish that they are seeking refund or credit of input VAT only to the extent of their sales of services to foreign clients doing business outside the Philippines. To recall, the CTA found that the SEC Certification of Non- Registration of Company and Authenticated Articles of Association and/or Certificates of Registration/Good Standing/Incorporation sufficiently established the NRFC status of n of DKS's affiliates clients. The Court upholds these findings.

The Court accords the CTA's factual findings with utmost respect, if not finality, because the Court recognizes that it has necessarily developed an expertise on tax matters. Significantly, both the CTA Division and CTA En Bane gave credence to the aforementioned documents as sufficient proof of NRFC status. The Court shall not disturb its findings without any showing of grave abuse of discretion considering that the members of the tax court are in the best position to analyze the documents presented by the parties. In any case, after a judicious review of the records, the Court still do not find any reason to deviate from the court a quo's findings. To the Court's mind, the SEC Certifications of Non-Registration show that these affiliates are foreign corporations. On the other hand, the articles of association/ certificates of incorporation stating that their affiliates are registered to operate in their respective home countries, outside the Philippines are prima facie evidence that their clients are not engaged in trade or business in the Philippines.

Petitioner's claimed zero-rated P6s,624,87o.s2 in zero-rated sales of services to NRFCs doing business outside the Philippines, which were disallowed by respondent, pertain to the following entities, for which petitioner submitted the following documents:

SEC Certification of

Proof of

Amount of

Incorporation/

Name of Client

Sales1s8

Non-Registration of

Registration in a

Company

Foreign Country

DOLE JAPAN, INC.

fl3,o63,106.6z

None

None

15' Exhibits "P-116-A-51" and "P-116-A-52", USB (Exhibit "P-14 7-B").

OR

Exhibit

Date

No.

"P-n6- '7 16s88"

September

2019 "P-u6-

22 January

166oB" 2020

and "P-

u6- 16618" "P-n6-

07 February

16628" 2020 "P-u6- og March !6638" 2020 Dole Philippines, Inc. v. Commissioner of Internal Revenue DOLE LANKA (PRIVATE) LTD.

55.812,957·31

None

"P-138-y''

FARMIND CORPORATION

6,248,o8o.77 "P-138-4", p. 1 "P-138-4", pp. 2-30 ROYAL CO., LTD 500,725.82

"P-138-5"

None

Total

P65,624,s7o.52 Based on the foregoing, only Farmind Corporation qualifies as an NRFC doing business outside Philippines, as petitioner duly supported this status with both an SEC Certificate of Non-Registration of Company and proof of incorporation or registration in a foreign country. Accordingly, petitioner satisfied the 1st essential element only with respect to its sales to Farmind Corporation amounting to P6,248,o8o.77. With respect to petitioner's compliance with the 2nd, 3'd and 4th essential elements for sales amounting to P6,248,o8o.77, petitioner submitted various billing invoices and Ors,'59 as well as a Certification of foreign currency remittances from RCBC.160 Billing invoices show that services petitioner rendered to Farmind Corporation in the Philippines relate to shipping services, which do not fall within category of "processing, manufacturing or repacking goods" as required under the 2nd and 3'd essential elements. However, petitioner failed to satisfy the 4th essential element because none of the amounts reflected in the ORs correspond to the amounts included in the claimed total sales to Farmind Corporation amounting to P6,248,o8o.77 per sales schedule, as illustrated below.

SALES TO FARMIND CORPORATION

Proof of Remittance

Invoice

Per Schedule (Exhibit "P-116-A-51")

Antount

Total

Sales

Conversion

Sales

Exhibit

Amount of

Sales

(USD)

Date

Nos.

Amount

(USD)

Rate

(PHP)

Disallowance

No.

(USD)

"P-139"

'3 SJO,J45.24 2239· 2243· 2244· $JO,JJ2.')2 $26,084.16 52.27 PI,J6J,497-JO (p. 2 of

September

2248, 2249· :0.252, 71 2019 2253· 2257· 2258, 2261, 2268

"P-139"

16 January

25>484.86 2554· 2555· 2561, 25,2og.6o 2o,got.6o so.So 1,061,847·56 (p. 4 of 2020 2562, 2565, zs66, 7) zs68 "P-139 ..

o6 February 27,095·62 2599· 2600, :!607, 26,840.62 20>591.70 so.Bo t,o46,o78.gs (p. 4 of 2020 2608, :o.6Jl, :!.61:!, 7) 2616, 2558

"P-139"

o6 March 25,730,20 268J, 2688, 2689.

25,730.20 22,404.86 50.72 1,136,424·38 (p. 5 of 2020 2694· 2700, 2701, 7) :!710 159 Exhibits "P-1!6-!658B", "P-116-16603" to "P-116-1663B", "P-116-1666B" to "P-1!6-1668B", id.

160 Exhibit "P-139", id.

(PHP)

P222,739.43 1,061,847·56 1,046,o78.95 1,136.424·38 .

0

Exhibit

No.

"P-u6- t6668'' "P-n6- t6678" "P-116- !6688"

OR

Date

Dole Philippines, Inc. v. Commissioner of Internal Revenue

SALES TO FARMIND CORPORATION

Proof of Remittance

Invoice

Per Schedule (Exhibit "P-n6-A-st")

Amount

Total

Exhibit

(USD)

Sales

Conversion

Sales

Date

Nos.

Amount

Amount of

Sales

No.

(USD)

(USD)

Rate

(PHP)

Disallowance

(PHP)

21 February

"P-139"

17 February

6,106.68 so.So 310,22.).45 310,225-45 2020 (p. 4 of 2020 7l

21 February

"P-139"

17 February

48,n2.94 z6:u, 2628, 2629, 45,236-44 22,t8g.24

SD-Tl

1,125,482.63 1,12),482.63 2020 (p. 4 of 2020 26JJ, 2634- 26)7, 7) 26J8, 2642, 2641, z645, 2646, 2655

27 February

"P-139"

26 February

J0,2J2-49 2577· 2578. 2)72, 30·449·35 z6,szz.66 50-72 t,J4S,.Z-Rq6 1,34j,282.36 2020 (p. 4 of 2020 2652, 2653, 266o, 7l 2668, 2669. 267), 2679, z68o, 2566

Total

$187,001.35 St8J,798.73 $144,800.90 P7,J88,838.64 P6,248,o8o.77 Consequently, petitioner's sales to Farmind Corporation likewise fail to qualify for VAT zero-rating.

To summarize the foregoing discussion, out of the I'14,319,so6,896.72 m claimed zero-rated sales that respondent disallowed, petitioner sufficiently established that I'14,o6o,sn,s32.58 constitutes valid zero-rated sales. Only the remaining amount of I'3,8ss.so7,o37·o6 fails to qualify for VAT zero-rating, as shown below:

Properly

Disallowances

Particulars

BIR

Substantiated

Upheld by the

Disallowances

Per the Court's

Verification

Court

Direct Export Sales of Goods

1'14,232.332. 781.73 l'w,448,88o,u2.56 1'3. 783.452,669.17

Indirect Export Sales of Goods

15,143.914-10 15,119.747·10 24,167.00

and Services

Services Rendered to NRFCs

65,6z4,87o.52 - 65,624,87o.52

Without Supporting Documents

6,405·330-37 - 6,405.330-37

Total

1'14, 3'9· 506 ,8g6. 72 1'14,o6o>5H>532·58 I'J,8ss.so7,o37·o6 Accordingly, out of the claimed zero-rated sales amounting to I'36,071,523,649·66 for FY ended 31 March 2020, only I'32,216,m6,612.6o constitutes petitioner's valid zero-rated sales, computed as follows:

Zero-Rated Sales/Receipts

1"36,071,523,649·66

Less: Disallowances

3.855.507,037·06

Valid Zero-Rated Sales/Receipts

P32,216,016,612.6o

Dole Philippines, Inc. v. Commissioner of Internal Revenue

As regards the alleged unaccounted remittances from DAHPL amounting to I'442,I3o,zos.n, !CPA Dabalos noted that these figures resulted from a comparison between amounts billed per invoice and amounts remitted, as reflected in related credit memos appearing in the schedules petitioner submitted.161 In instances where amounts remitted exceeded amounts billed, the BIR treated the difference as undeclared zero-rated sales.

162 In view of petitioner's failure to explain the unaccounted remittances amounting to I'442,13o,zos.n, the Court upholds respondent's treatment of this amount as petitioner's undeclared zero- rated sales.

FOURTH (4TH) REQUISITE:

THE CREDITABLE INPUT TAX DUE OR

PAID MUST BE ATTRIBUTABLE TO

SUCH

SALES,

EXCEPT

THE

TRANSITIONAL INPUT TAX, TO THE

EXTENT THAT SUCH INPUT TAX HAS

NOT BEEN APPLIED AGAINST THE

OUTPUT TAX.

To satisfY the 4th requisite, the following conditions must concur:

a. 151 condition: the input taxes are due or paid;

b. 2nd condition: the input taxes claimed are attributable to zero-rated or effectively zero-rated sales and 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;

c. 3'd condition: the input taxes are not transitional input taxes; and, t 161 See Amended !CPA Report, Exhibit "P-147", supra at note 36, p. 610. 162 ld.

Dole Philippines, Inc. v. Commissioner of Internal Revenue d. 4th condition: the input taxes have not been applied against output taxes during and in the succeeding quarters.

The input VAT being claimed does not appear to be transitional input VAT.

Petitioner complied with the ]'d condition as the claimed input VAT does not appear to be transitional input VAT, as understood under Section m(A) of the NIRC of 1997, as amended, to wit: SEC.m. Transitional/Presumptive Input VAT Credits.- (A) Transitional Input VAT 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 the rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, be allowed input VAT 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. Transitional input VAT credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input VAT credit serves to alleviate the impact of the VAT on the taxpayer. 163 Since there is no showing that the claimed input VAT is transitional input VAT, petitioner has complied with the ]'d condition.

Petitioner did not duly substantiate a/} input VAT amounts claimed for refUnd. t lri3 Fort Bonifacio Development Corporation v. Commissioner of Internal Revenue, et al., G.R. Nos. 158885 and 170680, 02 April 2008.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Based on the declarations in its Amended Quarterly VAT Returns/64 petitioner computed its excess input VAT claim amounting to ~'934,651,906.8s as follows:165 FY ended 1st Quarter znd Quarter 3rd Quarter 4'h Quarter

31 March 2020

( 01 April 2019

( ol]uly 2019

( 01 October 2019

(or January 2020

Total

to 30 june 2019) to 30 Sept. 2019) to 31 Dec. 2019)

to 31 March 2020)

Domestic purchases of goods r8o5446, 703.83 r686,237,933.14 Pl,l8S,IOS,720.75 r1,392,053,172.64 ~4,068,843.530.36 other than capital goods Importation of goods other 340,275.416.67 309,598,533·33 527,167,014·33 345.}64,906.oo I,S22AOS,870.JJ than capital goods Domestic purchase of services 940,621,776.83 t,zzJ,6g8,6w.s8 1,291,849·519.81 970,577446.89 4426,747.354-11 Services rendered by non- 146423,570.88 149,69s,n6.go 192,597.964-95 105,871,784.02 594,588436.75 residents

Net Current Purchases

r2,232,7674 68.21 1'2,369,230,193·95 r),Ig6,720,219.84 1'2,813,867,309. 55 'Pto,6tz, s8s,t91·55

Current Available Input Tax-

1'267,932,096.19 r284,307,623.27 r 383,6o64 26.38 ~'337,664,077-15 'Pl,273.510,222.99

(12% of Current Purchases)

Add: Input tax deferred on 6,087,772.66 4·728,037-36 4·142,996.6g 3· 760-450.86 18,719,257·57'66 capital go?ds from previous quarter Add: Other tax 36,soo.99 11,422.64 10,677-54 12,730.63 71,331.80 credits/payments Less: Input tax on purchases

4. 728,037·38 4,142,996.69 3·760,450.86 3.377.905.03 16,009,389·96'67 of capital goods deferred for the succeeding period

Less: Output VAT

52,324,940.19 n692,953.53 124,779.799·27 86,841,822.57 341,639.515·55

Excess and Unutilized

P2171003>392.27 P2o7,211,133·05 P259,219,85o.48 P251,217,S3L04 1'9J4,651,906.87'68

Input VAT

As shown in the table above, petitioner's input VAT claim arose from the following transactions:

FY ended 31 March 2020

Current

Amount of

Purchases

Input VAT (12%)

Domestic purchases Goods other than capital goods l' 4,068,843·530·36 f'488,261,223.64

Services

4.426, 74 7-354·11 531,209,682.49 f'1,019,4 70,906.14 Importation of goods other than capital goods 1,522,405,870·33 182,688,704-44 Services rendered by nonresidents 594·588,436·75 71,350,612-41

Current Available Input Tax

l'l,273. 510,222.99 164 165 166 167 168 Exhibits "P-9" (I" Quarter), "P-I 2" (2"' Quarter), "P-I 4" (3'' Quarter) and "P-I 6" (4'" Quarter), supra at note 7.

Exhibit "P-43", supra at note 8, p. 942.

Should be amount, as corrected from 1'6,087.772.66 per Letter-Application for Refund or Tax Credit dated 15 June 2021 (Exhibit "P-43"). Should be amount, as corrected from 1'3,377,905.03 per Letter-Application for Refund or Tax Credit dated 15 June 2021 (Exhibit "P-43"). With minimal difference ofi'0.02.

t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Add: Other tax credits/payments 7'·33!.80 Add: Amortized input VAT on previous period's 2,709,867.63'69 capital goods purchases exceeding 1"1 million

Total

.1"10 ,612' 585,191.55 f"I,276,29I,422-42 Out of the aforesaid total input VAT of P1,276,291,422-42 (or P1,276,291,422,40), respondent recognized only P67I,174,631.52 as petitioner's valid or allowable input VAT and disallowed the remaining amount of:P6os,n6,790.88, as detailed below:'70

Input VAT Disallowances

Local Purchases

Importations

Total

Disallowed input tax per vouching

No Single Administrative Document

1'- 'P1,714,902.00 Pt,7t4,9oz.oo

(SAD)/Statement of Settlement of Duties and

Taxes (SSDT)

No proof of payment 1,236,442.65 - 1,236,442.65 TIN not indicated 3,102, 764-03 - 3,102,764-03 Address not indicated 6oo.oo - 6oo.oo VAT OR not attached r6,7o8,775·10 - r6,7o8,775·10 1 VAT SI not attached '·377.539·21 - '·377·539·21

Overclaim

509,355·68 - 509.355·68 Out of period supporting documents/no date 3.558,330-45 - 3,558,330-45 VAT not separately indicated 436,730.61 - 436,730.61 Supporting document not in the name of 920,229-39 - 920,229-39 taxpayer-claimant Not within Authority to Print (ATP) validity 791,637·24 - 791,637·24

Non-VAT OR/Invoice

132,933-60 - 132,933-60 ATP not indicated 291,569·99 - 291,569-99

VAT Exempt OR/SI

51,077.10 - 51,077.10 No business style/Incorrect business style 36,043.798·37 - 36,043,798-37 Unclear copy 1·553.997-47 - 1,553.997-47 Document not proper for claiming input VAT 52,445,242-41 - 52.445,242-41 Zero-rated sales per supporting document zo,goo.sz - 20,900.52 Photocopy/not original document 3.921,532.20 - 3,921,532.20 TIN is different from taxpayer-claimant's 385,020.22 - 385,020.22 Alterations without countersignature/ 42,287,733·64 r6,356.oo 42,304,089.64 Incomplete supplier certification Supporting document does not indicate 5,306.6o - 5,3o6.6o name of buyer No supporting document 349·'79,226.25 101,376.oo 349,280,602.25 169 "Total Input Tax Deferred on Capital Goods from Previous Quarter" of1'18,719,257.57 less "Total Input Tax on Purchases of Capital Goods Deferred for the Succeeding Period" of1'16,009,389.96 (with minimal difference of 1'0.02).

170 See Working Papers- Sales and Dollar Remittances, BIR Records (Exhibit "R-6"), p. 932; Annex "A", Denial Letter dated 15 November 2021, Exhibit "P-45"/Exhibit "R-5", supra at note 12,

p. 953.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Input VAT Disallowances

Local Purchases

Importations

Total

Per BIR-ITS

4,183,056·75 - 4,183,056·75

Subtotal

1'519, 143· 799·48 Pl., 832,634. oo 1'520, 976,433·48 Input tax on sale to PEZA zone 48·572,777·65 48·572,777-65

Creditable Withholding VAT on Sales to

71.331.80 71,331.80

Government

Disallowed ripened input tax on prior period 2,70g,867.63 2,7og,867.63 purchases of capital goods exceeding P1 million Deferred input tax on capital goods exceeding 7.566,649·16 25,219-731.17 32,786,380.33 the 1'1 million threshold

Total

~'578,064,425-72 1'27,052,J65,17 1'6o5,n6,7go.8g The foregoing findings resulted from respondent's verification of petitioner's sources of input VAT against both original and soft copies of VAT invoices and ORs, in accordance with the invoicing requirements under Section 113, 171 in relation to Section no, 172 of the NIRC of1997, as amended.

173 Before determining whether petitiOner complied with the substantiation and invoicing requirements with respect to its claimed total input VAT amounting to P1,276,291-422-42 (i.e., the gross amount prior to deduction of P341,639,515.55 in output VAT), the Court shall first address whether petitioner is legally entitled to assert such a claim. As found by respondent, petitioner is registered with the Philippine Economic Zone Authority (PEZA) under Registration Certificate No. 02-067 dated 25 November 2002 for four (4) economic zones, namely: (1) SEDZ; (2) Sarangani Resources Corporation Allah

Valley

Economic

Development Zone

(SRC-AVEDZ);

(3)

SRC

Calumpang Economic Development Zone (SRC-CEDZ); and (4) SRC Upper Klinan Economic Development Zone (SRC-UKEDZ). 174 As stated earlier, an ecozone is a foreign territory by legal fiction. As an ecozone enterprise, petitioner's local purchases of goods, properties, and services are subject to o% VAT pursuant to the Cross- Border Doctrine and Destination Principle under the Philippine VAT t 171 17:!

173 174 Supra at pp. 31-32.

SEC. 110. Tax Credits.

Part III. Purchases and Input VAT, Memorandum dated 28 October 2021, Exhibit "R-3", supra at note 83, p. 942.

Part I. Company Background, Memorandum dated 28 October 2021, Exhibit "R-3", supra at note 83,p.944.

Dole Philippines, Inc. v. Commissioner of Internal Revenue system. The Cross-Border Doctrine mandates "that no VAT shall be imposed to form part of the cost of goods destined for consumption outside the territorial border of the taxing authority," while the Destination Principle requires that "goods and services are taxed only in the country where these are consumed".17s Consequently, no input VAT may be passed on to petitioner for its local purchases destined for consumption within the PEZA ecozone. Accordingly, since petitioner cannot be charged input VAT on its local purchases of goods, properties, and services, petitioner cannot claim any input VAT for refund arising from such transactions.

However, in the recent case of Coral Bay Nickel Corporation v. Commissioner of Internal Revenue176 (2025 Coral Bay), the Supreme Court clarified the territorial scope of tax incentives granted to PEZA- registered entities, particularly with respect to claims for input VAT refunds. The Supreme Court held that VAT exemption and zero-rating privileges apply only to goods and services consumed or rendered within the geographical boundaries of the ecozone. Accordingly, a PEZA- registered entity may still seek a refund of input VAT on goods and services consumed or rendered outside the ecozone, provided that such purchases are attributable to its zero-rated sales. In this case, petitioner failed to establish that its local purchases of goods and services corresponding to claimed input VAT amounting to l'I,Ol9>470,go6.14 were consumed or rendered outside the ecozone. Out of the claimed input VAT of I'1,019A70,9o6.14, respondent disallowed I'48,572,77.65, which allegedly represents big-ticket purchases delivered within the PEZA zone.'77 Records show that input VAT amounting to I'48,572,777·65 pertains to fuel purchases made by petitioner's Dolefil Division and Stanfilco Division from World Fuel Services (Singapore) Pte.'78 Petitioner asserts that these fuel purchases were delivered to sites . located outside the ecozone. For the Dolefil Division's fuel purchases, t 175 Commissioner of Internal Revenue v. Fi/minera Resources Corporation, supra at note 148; Citations omitted.

' 76 G.R. Nos. 251333-34, 05 March 2025.

' 77 Par. 15. Amended !CPA Report, Exhibit "P-147", supra at note 36. pp. 602-603.

Dole Philippines, Inc. v. Commissioner of Internal Revenue petitioner claims delivery occurred at the Central Fuel Station located in Barangay Cannery Site, Polomolok, South Cotabato. For the Stanfilco Division's fuel purchases, petitioner claims delivery occurred at Panabo Wharf & Container Yard in Panabo City, Davao del Norte.'79 As to petitioner's Stanfilco Division's fuel purchases, petitioner submitted a PEZA Certification dated n May 2023'80 confirming that the Wharf and Container Yard (owned by Pacific International Terminal Services, Inc.) leased by petitioner is neither registered with PEZA nor part of the SRC-CEDZ. For the Dolefil Division's fuel purchases, on the other hand, petitioner submitted a site map identifying the location where delivery occurred.'8' In addition, for fuel purchases of both the Dolefil Division and Stanfilco Division, petitioner submitted the corresponding invoices, collection receipts, paid checks, purchase orders, and remittance statements.'8• The Court finds the documents petitioner submitted insufficient, for reasons discussed below.

As regards petitioner's Stanfilco Division's fuel purchases, the Court observed that the related invoices stated "Delivered to: PANABO WHARF & CONTAINER YARD 8105 PANABO CITY, DAVAO DEL NORTE", followed by the corresponding Delivery Note (DN) numbers. However, petitioner did not present in evidence these DNs. As a result, the Court cannot ascertain the actual place of delivery of Stanfilco Division's fuel purchases.

Similarly, for petitioner's Dolefil's Division's fuel purchases, the Court noted that the invoices were addressed to petitioner's principal address, "CANNERY SITE, POLOMOLOK, SOUTH COT ABA TO, 9504", and the purchase orders indicated the final destination of fuel as "DOLE PHILIPPINES, INC., POLOMOLOK, SOUTH COTABATO, 9504 PHILIPPINES." Accordingly, petitioner likewise failed to prove th~t Dolefil Division's fuel purchases were delivered outside the ecozone. t 179 180 181 182 Par. 15, Amended !CPA Report, Exhibit "P-147", supra at note 36, pp. 602-603. Exhibit "P-141 ", USB (Exhibit "P-14 7-B"). Exhibit "P-142", id.

Exhibits "P-109-IA" to "P-109-12A", "P-109-IB" to "P-109-648", id.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

More importantly, petitiOner failed to present evidence demonstrating actual consumption of the subject purchases outside the ecozone and failed to establish a link or nexus between these purchases and petitioner's zero-rated export sales.

In fine, petitioner's claimed input VAT amounting to PI,OI9A7o,go6.14 shall be denied for petitioner's failure to prove that the related domestic purchases of goods and services were consumed or rendered outside the ecozone.

Moreover, the Court must disallow portions of petitioner's input VAT claim amounting to P2, 709,867.63 and P71,331.8o, representing amortized input VAT on capital goods purchases exceeding P1 million and other tax credits/payments, respectively, because petitioner failed to provide supporting documents therefor.

Accordingly, only the input VAT pertaining to petitioner's importation of goods other than capital goods and services rendered by nonresidents in the total amount ofP254,039,316.8s, may be the subject of petitioner's claim for refund, broken down as follows:

Particulars

Input VAT Claim

Importation of goods other than capital goods t'182,688,7o4-44 Services rendered by nonresidents 71,350,612-41

Total

P254,039>J16.85 Section 4-11o-8(a)(1) of RR No. 16-2005 183 provides for the substantiation requirement of input tax credits from importation of goods, as follows:

183 SEC. 4.no-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 s% Final . Withholding VAT, must be substantiated and supported by thet Supra at note 127.

Dole Philippines, Inc. v. Commissioner of Internal Revenue 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.'84 As earlier noted, out of the input VAT claim on importation of goods amounting to '1'182,688,704-44, respondent denied the total amount off>27,052.365·17 for the following reasons:

Reason for Disallowance

Amount oflnput VAT Claim

No SAD/SSDT

1"1,714,902.00 Alterations without 16,356.oo countersignatures/Incomplete supplier certification No supporting document 101,376.oo 1"1, 832,634-oo'85 Deferred input tax on capital goods 25,219,73!.17'86 which exceeded 1"1 million threshold

Total Disallowances

P27,052>365.17 On the disallowance of P1,832,634·oo, pet1t10ner submitted, among others, the related Bureau of Customs (BOC) Statements of Settlement of Duties and Taxes (SSDTs) and Single Administrative Documents (SADs).'87 A scrutiny of these documents shows that petitiOner properly supported its input VAT claims amounting to P1,714,902.oo and Pw1,376.oo, or a total off>I,816,278.oo, through the corresponding SAD.s and SSDTs, as summarized by !CPA Dabalos in Exhibit "P-112-A-1".'88 t 184

I 85

186 187 188 Emphasis supplied.

Part Ill. Purchases and Input VAT, Memorandum dated 28 October 2021, Exhibit "R-3", supra at note 83, p. 941.

Part of the P32,786,380.33 disallowance, with description erroneously interchanged by respondent with that of the !'2,709,867.63 disallowance in Annex "A" of the VAT Refund Notice, Exhibit "P- 45"/Exhibit "R-5", supra at note 12, p. 953; Working Papers- Input Tax, BIR Records (Exhibit "R- 6"), p. 929 (with details on pp. 579-582). Exhibits "P-112-1" to "P-112-6", USB (Exhibit "P-147-B"). !d.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

However, the Court sustains the disallowance of the P16,J56.oo input VAT claim for petitioner's failure to provide supporting SAD and SSDT.

On the disallowance of f>25,219,73Ll7, respondent determined that certain fixed assets were recorded under petitioner's Construction In Progress (CIP) account but did not qualify as CIP for tax purposes. Consequently, respondent subjected these purchases to deferral of the related input VAT. 189 In computing the disallowed input VAT, respondent amortized the input VAT on these purchases over a period of sixty ( 6o) months and allowed only the amortized portion allocable to the period from 01 April 2019 to 31 March 2020, or the FY ended 31 March 2020, as claimable input VAT. Respondent disallowed the amortized portion allocable to periods after FY ended 31 March 2020 amounting to f>32,786a8o.33, of which P25,219,73I.I7 pertains to petitioner's importations, as shown below: 19°

Total

Input VAT

Input VAT

Subject to

Purchases

Claimed

Amortization

Local Purchases

Pnn8.4s8.3r f'8,774,215,00 f'7,s66,649·16

Importations

236,so4,641.67 28,380,557,00 25,219,731.17

Total

!'309,623,099-98 1"37 ,154, 772.00 1"32, 786,380-33 Section 4.uo-3 of RR No. 16-zoos/91 as amended by RR No. 04-2007, 19 2 defines and differentiates capital goods or properties (CGP) from CIP, as follows:

189 190 191 192 Capital goods or properties refers to goods or properties with estimated useful life greater than one (r) year and which are treated as depreciable assets under Sec. 34(F) 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 t Working Papers- Input Tax. BIR Records (Exhibit "R-6"), p. 929. See Working Papers- Input Tax. BIR Records (Exhibit "R-6"), p. 929 (with details shown on pp. 579-583; Exhibit "P-114", USB (Exhibit "P-147-B"). Supra at note !27.

Amending Certain Provisions of Revenue Regulations No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of2005.

Dole Philippines, Inc. v. Commissioner of Internal Revenue 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,ooo,ooo.oo, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed PI,ooo,ooo.oo.

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 the 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.

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.'9' The distinction between CGP and CIP is important since, under Section 4.110-3 of RR No. 16-2005,'94 as amended by RR No. 04-2007,'95 the input VAT on the purchase of CIP "can be recognized in the month the payment was made: Provided, that an [OR] of payment has been issued based on the progress billings."

the 193 ]94 195 In contrast, CGP is presumed ready for use or already in use by . taxpayer because it already constitutes a depreciable asset. Its t Italics in the original text and emphasis supplied. Supra at note 127.

Supra at note 192.

Dole Philippines, Inc. v. Commissioner of Internal Revenue acquisition cost and the corresponding input VAT therefore become subject to amortization over the course of its useful life. From the time of acquisition, useful life begins to run and asset value correspondingly depreciates.

CIP, on the other hand, represents the cost of construction work that remains incomplete. It is not yet subjected to depreciation, and neither its acquisition cost nor the corresponding input VAT becomes subject to amortization. Depreciation and amortization apply only after completion of construction, at which point asset is reclassified as CGP. Nevertheless, when materials and labor components are supplied by different suppliers, the same provision further states that: [l]nput tax credit on the labor contracted shall still be recognized on the month the payment was made based on a progress billing while input tax on the purchase of materials shall be recognized at the time the materials were purchased.'96 Thus, Section 4.110-3 of RR No. 16-2005, 197 as amended by RR No.

04-2007/98 allows a taxpayer to recognize and claim the entire amount of input VAT incurred and paid at the time of purchase, provided the following circumstances are present:

a. The asset has yet to be placed in service; and

b. The labor to place the asset in service will be supplied by a contractor/supplier different from that supplying the asset/materials.

Here, petitioner failed to present documentary evidence showing that purchases corresponding to the disallowed input VAT of P25,219,731.17 qualify as CIP, as contemplated under Section 4.110-3 of RR No. 16-2005, as amended by RR )'lo. 04-2007. Thus, respondent's disallowance of P25,219, 731.17 stands. t 196 [97 [98 See Revenue Regulations No. 04-2007, supra at note 193; Emphasis supplied. Supra at note 127.

Supra at note !92.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

With respect to petitioner's claimed input VAT on services rendered by non-residents, Sections 4.11o-8(a) and (c) and 4.114-2 (b) of RR No. 16-zoos, as amended, provide:

SEC. 4.no-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 s% 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:

(d) Input tax from payments made to non-residents (such as for services, rentals and royalties) shall be supported by a copy of the Monthly Remittance Return of Value-Added Tax Withheld (BIR Form 16oo) filed by the resident payor in behalf of the non- resident evidencing remittance of VAT due which was withheld by the payor.

SEC. 4-H4·2. Withholding of VAT on Government Money Payments and Payments to Non-Residents.- (b) The government or any of its political subdivisions, instrumentalities or agencies, including GOCCs, as well as private corporations, individuals, estates and trusts, whether large or non-large taxpayers, shall withhold ten percent (w%) VAT with respect to the following payments:

(1) Lease or use of properties or property rights owned by non- residents;

(3) Other serv1ces rendered m the Philippines by non- residents.

In remitting VAT withheld, the withholding agent shall use BIR Form No. 16oo Remittance Return of VAT and Other Percentage Taxes Withheld.t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

VAT withheld and paid for the non-resident recipient (remitted using BIR Form No.16oo), which VAT is passed on to the resident withholding agent by the non-resident recipient of the income, may be claimed as input tax by said VAT-registered withholding agent upon filing his own VAT Return, subject to the rule on allocation of input tax among taxable sales, zero-rated sales and exempt sales. The duly filed BIR Form No. 16oo is the proof or documentary substantiation for the claimed input tax or input VAT.'99 As can be gleaned from the afore-quoted provisions, withholding VAT (WVAT) may be claimed as input tax credit in the month the taxpayer withholds and remits such WV AT to the BIR, provided that the taxpayer supports the claim with BIR Form No. 16oo. In this case, petitioner submitted the corresponding BIR Forms No. 16oo reflecting WV AT in the total amount off'71,417A44-SI, detailed as follows:

Exhibit

Month

Income Payment

WVAT

Exhibit

Date of Payment

Reference 200

Covered

Reference01

"P-17"

Apr-19

1'40,554,827.83 1'4,866,579-34

"P-zg"

07 May 2019

"P-18"

May-19

51·775·491.6° 6,213,058·99 "P-3o" 10 june 2019

"P-19"

jun-19 54,650,201.70 6,558,024-20

"P-31"

o8 july 2019

"P-zo"

jul-19 53·537,649·48 6-424,517·94

"P-32"

og August 2019

"P-21"

Aug-19

47,868,618.39 5.744,234-21

"P-JJ"

10 September 2019

"P-zz"

Sep-19

48,288,843.71 5.794.661.25

"P-34"

10 October 2019

"P-23"

Oct-19

83,6oo,o21.63 10,032,002.60

"P-35"

n November 2019

"P-24"

Nov-19

46-421,840.18 5.570,620.82

"P-36"

10 December 2019

"P-zs"

Dec-19

62,576,096-42 7.5°9,131.57

"P-37"

og January zozo

"P-z6"

jan-20 46,842,505.56 5,6z1,10o.67

"P-38"

10 February 2020

"P-z7'' Feb-2o 38,368,130-37 4,604,175-64

"P-Jg"

og March 2020 "P-28

Mar-20

20,661,143-99 2.479.337·28 "P-4o"

15 April 2020

Ps9S·•4So37o.S6 P71,417,444·5' However, the WVAT amounting to P2o479o337·28 should be disallowed because it falls outside period of claim. Accordingly, petitioner properly substantiated its claimed WV AT only to th~ extent ofP68,938,107.23 out of the reported amount ofP71,3S0,612-41. t 199 200 :!01 Italics in the original text, emphasis and underscoring supplied. Division Docket, Volume II, pp. 890-913.

1d' pp. 914-926.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Summarizing the above findings on petitioner's compliance with the 1st condition, the Court finds that petitioner's claimed total allowable input VAT for FY ended 31 March 2020 amounting to l"1,276,291.422-42 should be reduced by disallowances totaling l"I,049,900,697·92, as detailed below:

Allowable Input

Disallowances

Valid

VAT Per VAT

Per this Court's lnputVAT

Return

Verification

Domestic Purchases

Goods other than capital 1'488,261,223.64 goods

Services

531,209,682-49

Subtotal

PJ,01914701906.14 PI, oi9,47o, 906.14 J'.

Importation of goods other 1'182,688,704-44 l'16,356.oo 1'157.452,617.27 than capital goods 25,219,731.17 Services rendered by 71,350,612-41 2.412,505.18 68,938,107.23 nonresidents

Subtotal

rz54,o39a,6.s5 P27,648,592·35 Pzz6,J9D,724.50 Amortized input VAT on 2,709,867.63 2,709,867.63 - previous period's capital goods purchases exceeding Pr million Other tax credits/payments 71,331.80 71,331.80 -

Total

Pr,276,zgr,422.42 PI,049,900,6g7.92 Pzz6,Jg0,724·50 Consequently, only the remammg amount of l"226,390,724.so constitutes petitioner's valid input VAT for FY ended 31 March 2020. Since there are zero-rated or effectively zero-rated sales, taxable sales and exempt sales, the valid input

VAT

of f'zz6.J90,724.50 shall be proportionately allocated on the basis of sales volume.

The 2nd condition requires that claimed input taxes be attributable to zero-rated or effectively zero-rated sales. When a taxpayer has both zero-rated or effectively zero-rated sales and taxable or exempt sales, and input taxes cannot be directly and entirely attributed to any specific category of sales, ipput taxes must be allocated proportionately based on volume of sales. t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

As stated earlier, during the four (4) quarters of FY ended 31 March 2020, petitioner's reported total sales/receipts consisted of VATable sales/receipts, zero-rated sales/receipts and VAT-exempt sales/receipts. Considering that petitioner's input VAT cannot be directly identified with specific sales transactions, this Court shall allocate the valid input VAT of i>226,390, 724.50 proportionately on the basis of the volume of its sales, as follows:

Amount

Valid Input VAT

Allocation Factor

Type of Sales/Receipts

Per VAT Return

[C]

Allocation

[A]

[D]

(A+ B)

(EX C)

VA Table Sales/Receipts

1'2,846·995.962.95 7.12999068% 1'16,141,637·56

Zero-rated Sales/Receipts

J6,513,65J,854·77'"' 91.44446U2o/o 207,021,778.04

VAT-exempt Sales/Receipts

569,219,532-40 1.42554820% J,227,308.90

Total

1'39>929,869.350.12

[B]

100% 1'226,390 '724· 50 Thus, for purposes of petitioner's compliance with 2nd condition, only i>2o7,02I,778.o4 constitutes valid input VAT attributable to petitioner's total reported zero-rated sales or receipts. Petitioner has no excess input VAT available for refund.

Having determined that petitiOner had valid input VAT attributable to its zero-rated sales, the Court shall now determine whether petitioner applied this input VAT against its output VAT liability during and in succeeding quarters, in relation to the 4'h condition of the 4th requisite for the successful prosecution of an input VAT refund claim.

In the case of Chevron Holdings, Inc. (Formerly Caltex Asia Limited) v. Commissioner of Internal Revenue203 (Chevron), the Supreme Court made a definitive declaration that a VAT-registered taxpayer has two (2) options with respect to its input VAT attributable to zero-rated sales, it may: (1) charge the same against output VAT from VA Table sales, and claim for refund or issuance of a TCC any unutilized or "excess" input VAT; or (2) claim the same for refund or issuance of a TCC in its entirety, viz: t 202 Adjusted to include undeclared zero-rated sales of1'442,130,205.11. 1°3 G.R. No. 215159,05 July 2022; Citation omitted, emphasis and underscoring supplied.

[E]

Dole Philippines, Inc. v. Commissioner of Internal Revenue

[T]he 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 or 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. It goes without saying that the CTA, and even the Court, may not, on its own, deduct the input tax attributable to zero-rated sales from the output tax derived from the regular twelve percent (12%) VAT-able sales first and use the resultant amount as the basis in computing the allowable amount for refund. The courts cannot condition the refund of input taxes allocable to zero-rated sales on the existence of "excess" creditable input taxes. which includes the input taxes carried over from the previous periods, from the output taxes. These procedures find no basis in law and jurisprudence.

Clearly from the foregoing, a VAT-registered taxpayer has the discretion to decide whether to charge its input VAT attributable to zero-rated sales against output VAT. In this respect, the Court cannot impose its own methods for calculating the refund, such as compelling the crediting of input VAT against output VAT as a condition precedent to the refund or issuance of a TCC. This is especially true when the taxpayer-claimant opts to claim the input VAT attributable to zero- rated sales for a refund or issuance of a TCC in its entirety. Furthermore, regardless of which option the taxpayer-claimant chooses, the Supreme Court's ruling in Chevron clariftes that since the taxpayer-claimant is requesting a refund of unutilized or unused input VAT from zero-rated sales (as opposed to the "excess" creditable input VAT from the output VAT), this amount is inherently immediately refundable, given that there is no related output VAT to offset it against. Therefore, the CTA's proper preliminary step in determining the refundable excess and unutilized input VAT attributable to valid zero- rated sales should be computing the ratable portion of the taxpayer- claimant's input VAT allocable to zero-rated sales, assuming the input VAT cannot be directly attributed to zero-rated activities. t

Dole Philippines, Inc. v. Commissioner of Internal Revenue

It is only when the taxpayer-claimant chooses the first option, i.e., to charge the input VAT attributable to zero-rated sales against output VAT from VA Table sales and claim for refund or issuance of a TCC any unutilized or "excess" input VAT that the Court may require the offsetting of such ratable portion of the taxpayer-claimant's input VAT attributable to zero-rated sales against "Output VAT Still Due" as a condition precedent to the refund or issuance of a TCC. In this case, petitioner credited its output VAT off>341,639,515.55 against its claimed total input VAT or "Declared Input VAT" of P1,276,291.422.40 and applied for refund the alleged remaining "Excess Input VAT" of P934,651,906.8s. Clearly, petitioner has chosen the first option.

Now, after deducting the PI6,141,637·56 valid input VAT attributable to taxable sales subject to 12% VAT, as determined earlier, from its output VAT liability amounting to P341,639.515·55 on such sales, petitioner still has a net output VAT payable of P325.497,877.99· as computed below:

Output VAT

'~'341,639.515·55 Less: Input VAT attributable to 12% VA Table Sales/Receipts 16,141,637·56

Net Output VAT Payable

f>325,497,877-99 Since the valid input VAT attributable to 12% VATable sales remains insufficient to fully offset petitioner's output VAT liability, the P2o7,021, 778.04 valid input VAT attributable to its total reported zero- rated sales shall be utilized against the remaining output VAT liability ofP325.497,877.99· However, the said amount of input VAT attributable to total reported zero-rated sales falls short of the net output VAT payable of P325.497,877.99· Consequently, petitioner still incurs a net output VAT due amounting to Pn8,476,o99·94, as computed below:

Net Output VAT Payable

'1'325>497.877-99 Less: Input VAT attributable to zero-rated sales 207,021,778.04

Net Output VAT Still Due

Pn8,476,ogg.g5

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Consequently, petitioner failed to satisfy the 4th condition, i.e., that claimed input taxes were not applied against output taxes during the period of claim. Petitioner failed to establish that it possessed sufficient input taxes to offset output tax liabilities for the period covered. This failure warrants the denial of the entire claim for refund. In light of the foregoing disquisitions, petitiOner failed to demonstrate full compliance with the requisites to successfully obtain a refund of input VAT.

Accordingly, the Court finds no necessity to the resolve issue of whether respondent correctly imposed additional output VAT in the total amount of 1'77,941,294·26. 204

WHEREFORE, premises considered, the instant Petition for Review filed on 07 April 2022 by petitioner Dole Philippines, Inc. Is hereby DENIED for lack of merit.

I CONCUR:

204 ~ LANEE S. CUI-DAVID

Associate Justice

See Annex "A", Denial Letter dated 15 November 2021, Exhibit "P-45"/Exhibit "R-5", supra at note 12, p. 953.

Output tax on undeclared VA Table sales not reported in the 1'5,508, 131.35 schedule of sales Output tax on undeclared VA Table sales per SA WT 71,561,842.91 Output tax on deemed sale transaction subject to VAT 871,320.00

Total

1'77 ,941,294.26

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.

iate Justice Special 1st 1v1sion Acting Chairperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Special 1st 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.

a...~...., "'- MA. BELEN M. RINGPIS-LIBAN

Presiding Justice