Amertron Incorporated vs. Commissioner of Internal Revenue

DECISION

BACORRO-VILLENA, L:

At bar is a Petition for Review filed by petitioner Amertron Incorporated (petitioner/Amertron). The petition seeks the refund of alleged unutilized input Value-Added Tax (VAT) for taxable year (TY) 2016 amounting to PI8,ss7A98.Is.

PARTIES OF THE CASE

Petitioner is a duly registered domestic corporation operating .

and existing by virtue of the laws of the Republic of the Philippines. ~ Filed on 27 July 20 18, Division Docket, pp. I 0-20.

Amertron Incorporated v. CIR has its principal office at 2430 Maloma St., Clark Field, CSEZ, Angeles City, Pampanga. On the other hand, respondent Commissioner of Internal Revenue (respondent/CIR) of the Bureau of Internal Revenue (BIR) is clothed with the authority to administer tax laws including the grant of tax refunds.

FACTS OF THE CASE

Petitioner is a VAT-registered entity with Tax Identification Number (TIN) ooo-418-589-ooo as shown in its Certificate of Registration.

2 It alleges that it accumulated an aggregate input VAT amounting to P19,222,854.8o for TY 2016, P18,557>498.15 of which is fully substantiated by documents and remain unutilized. On 28 March 2018, petitioner filed an administrative claim3 for the refund of the foregoing amount with the SIR's VAT Credit Audit Division (VCAD). However, through a letter dated 20 June 20184 (which petitioner received on 29 June 2018), the said claim for refund was denied.

Hence, the present petition.

On 15 August 2018, this Court, through the Second Division, issued its Summons5 to respondent who filed his Answer6 to the petition on 25 September 2018. Thereafter, petitioner and respondent filed their Pre-Trial Briefs on 28 November 20187 and 04 December 20188, respectively.

In the Pre-Trial Conference that followed on 31 January 2019, the Court ordered the parties to submit their Joint Stipulation of Facts and , Issues (JSFI) within fifteen (15) days from such order.9 On 14 Februay 4 6 7 9 Exhibit "P-5", USB.

Exhibit "P-12", id.

Exhibit "P-13", id.

Division Docket, p. 62.

!d., pp. 70-74.

!d., pp. 88-93.

!d., pp. 94-97.

See Order dated 31 January 2019, id., p. I 04.

Amertron Incorporated v. CIR

2019, the parties filed their JSFI.

10 Accordingly, the Court issued a Pre- Trial Order on o6 March 2019.

11 During the trial, petitioner presented the testimony of its sole witness, Ronerick C. Tugas (Tugas), the Court-appointed Independent Certified Public Accountant (ICPA), who testified through his judicial affidavit.

12 On the witness stand, Tugas testified on his official findings as regards petitioner's claim. He also identified and authenticated the ICPA Report'3 and the documents contained in the Universal Serial Bus (USB) drive14 submitted to this Court. These documents consisted mostly of sales invoices of allegedly zero-rated and VAT -exempt transactions covering TY 2016, as well as, various receipts for purchases of services and goods for TY 2016. Thereafter, Tugas declared that petitioner was only able to substantiate an unutilized input VAT in the amount ofP1,6SS,245·55· With no other witnesses to present, the Court, in an Order dated 16 September 2019'5, gave petitioner five (s) days within which to file its Formal Offer of Evidence (FOE). Likewise, respondent was given five (s) days from his receipt of petitioner's FOE to file his comment/opposition thereto.

Given

respondent's further manifestation that it had no evidence to offer, the Court gave the parties thirty {3o) days to file their respective memoranda. Later or on 23 September 2019, petitioner filed its FOE'6 while respondent filed his Comment'7 on 30 September 2019. In a Resolution dated 04 December 2019'8, a bulk of petitioner's exhibits was denied admission due to corruption of its files in the USB • drive that it submitted. On 02 January 2020, petitioner then filed for y 10

II

12 13 14 15 16 17 18 !d., pp. I ll-ll5.

!d., pp. 142-145.

Exhibit "P-3501", id., pp. 275-291.

Exhibit "P-2", id., pp. !69-274, with annexes. Exhibit "P-2-B".

Division Docket, p. 404.

Id., pp. 408-419.

ld., pp. 420-435.

ld., pp. 438-440.

Amertron Incorporated v. CIR

“Motion for Partial Reconsideration? (MPR) [of Resolution dated December 4, 2019] and Motion to Set a Commissioner’s Hearing for Submission of a Replacement Universal Serial Bus (USB) Flash Drive”.

On 22 June 20207, petitioner was allowed to submit a replacement for its USB drive and a commissioner’s hearing was set for the comparison of its exhibits. In a Resolution dated 28 September 2020”, the Court resolved to admit all of petitioner’s exhibits except the following: (1) Exhibits “P-51”, “P-63”, “P-85”, “P-107” to “P-109”, “P- 149”, “P-151”, “P-255””, “P-296”, “P-317”, “P-362", “P-364” to “P-365”, “P- 395, “P-405”, “P-413”, “P428”, “P-463”, “P-479”, “P-489” to “P-490”, “P- 502” to “P-505”, “P-522”, “p-559”, “p-575", “P-624”, “P-634", “P-674” to “P-675", “P-7o1", “P-734", “P-743” to “P-745”, “P-772”, “P-810”, “P-832", “P-847” to “P-848”, “P-860”, “P-941” to “P-942”, “P-949", “P-953”, “P- 974, “P-990”, “p-994”, “p-1010", “P-1015”, “P-1041”, “P-1082”, “P-118”, “P- 1127”, “P-1156”, “P-1159” to “P-1160”, “P-1179”, “P-1231", “P-1233", “P-1248”, “P-1293° to “P-1294", “P-1337", “P-1355", “P-1388”, “P-1416", “P-1418”, “P- 1455, “P-1459” to “P-1460"%, “P-2419”, “P-2440”, “P-2453", “P-2585” to “P-2586", “P-2593”, “P-2617" to “P-2618”, “P-2628", “P-2648”, “P-2658", “P-2676", “P-2705”, “P-2725”, “P-2770” to “P-2779", “P-2793”, “P-2824", “P-2848", “P-2858”, “P-2877", “P-2884", “P-2925”, “P-2938”, “P-2964”, “P- . 2978”, “P-3000”, “P-3023", “P-3043” to “P-3044”, “P-3071”, “P-3074", 7 "9 Id., pp. 441-445.

0 See Resolution dated 22 June 2020, id., pp. 472-473. . Id., pp. 483-487.

Exhibit Description

“P-51”, “P-63”, P-85”, “P-107” to “P-109”, | Sales invoices supporting Petitioner’s zero rated “P-149", “P-151” and “P-255” sales for the year 2016.

23

Exhibit Description

“P-296”, “P-317”, P-362”, “P-364” to “P- | Sales invoices supporting Petitioner’s VAT 365”, “P-395”, “P-405”, “P-413”, “P-428”, | exempt sales for the year 2016. “P-463”, ‘“P-479”, “P-489” to “P-490”, “P- 502” to “P-505”, “P-522”, “P-559", “P- 575”, “P-624”, “P-634”, “P-674” to “P- 675”, “P-701”, “P-734”, “P-743” to “P- 745”, “P-772”, “P-810”, “P-832”, “P-847” to “P-848”, “P-860”, “P-941” to “P-942”, “P-949”, “P-953”, “P-974”, “P-990", “P- 994”, “P-1010”, “P-1015”", P-1041”, “P- 1082”, “P-1118”, “P-1127”, “P-1156", “P- 1159” to “P-1160", “P-1179", “P-1231”, “P-1233”, “P-1248", “P-1293” to “P- 1294”, “P-1337”, “P-1355”, “P-1388”, “P- 1416”, “P-1418”, “P-1455” and “P-1459”

to “P-1460”

Amertron Incorporated v. CIR

11 up

" "P

" "P

6" "P

11 up " "P

6" "P

3110 ,

-3133 , -3151 , -321 , -3222 , -3234 to -323 , - 3251", "P-3321", "P-3343", "P-3397", "P-3403" and "P-2547'"4 for not being found in the records nor among the scanned copies in the USB flash drive submitted; and, (2) Exhibits "P-937", "P-2573" to "P-2575", "P- 2687'' to "P-2688", "P-2930" to "P-2931", "P-3027", "P-3089" to "P-3091" and "P-3383'"5 for being unreadable or not properly scanned. In the interim, per Records Verification26 on 01 December 2020, petitioner failed to file its memorandum, while respondent filed his Memorandum27 on 09 January 2020.

Following petitioner's failure to file its memorandum within the prescribed period, the Court submitted the present petition for decision through a Resolution dated 04 January 2021. 28

ARGUMENTS

Petitioner anchors its claim for refund on Section uo(B), in , relation to Section n2(A) and (C) of the National Internal Revenuy 24 25 26 27 28

Exhibit

Description

"P-2419", "P-2440", "P-2453", "P-2585" Various sales invoices, official receipts, delivery to "P-2586", "P-2593", "P-2617" to "P- receipts, and collection receipts supporting 2618", "P-2628", "P-2648", "P-2658", "P- Petitioner's local purchases of goods and services 2676", "P-2705", "P-2725", "P-2770" to for2016. "P-2779", "P-2793", "P-2824", "P-2848", "P-2858", "P-2877", "P-2884", "P-2925", "P-2938", "P-2964", "P-2978", "P-3000", "P-3023", "P-3043" to "P-3044", "P- 3071 ", "P-3074", "P-311 0", "P-3133", "P- 3151", "P-3216", "P-3222", "P-3234" to "P-3236", "P-3251 ", "P-3321 ", "P-3343", "P-3397", "P-3403" and "P-2547"

Exhibit

Description

"P-937"

Sales invoice supporting Petitioner's VAT exempt sales for the year 2016.

"P-2573" to "P-2575", "P-2687" to "P- Various sales invoices, official receipts, delivery 2688", "P-2930" to "P-2931", "P-3027'', receipts, and collection receipts supporting

"P-3089" to "P-3091" and "P-3383"

Petitioner's local purchases of goods and services Division Docket, p. 488.

ld., pp. 449-457.

ld., p. 490.

for 2016.

Amertron Incorporated v. CIR

Code (NIRC) of 1997, as amended by Republic Act (RA) No. 1096329, otherwise known as Tax Reform for Acceleration and Inclusion (TRAIN) Law. The pertinent provisions read as follows: 29 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, That the input tax inclusive of input VAT carried over from the previous quarter that may be credited in every quarter shall not exceed seventy percent (7o%) of the output VAT. 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 (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated , proportionately on the basis of the volume of sales: Provided, finally/ AN ACT AMENDING SECTIONS 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86, 90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, !55, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197,232,236,237, 249, 254, 264, 269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, !50-A, 150-B, 237-A, 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35, 62, AND 89; ALL UNDER REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES.

Amertron Incorporated v. CIR

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 (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (9o )-day period shall be punishable under Section 269 of this Code.

Petitioner claims that it incurred unutilized input VAT from its purchases of goods and services from local suppliers as shown in its Quarterly VAT Returns for TY 2016. It further contends that it had zero-rated sales in TY 2016 pertaining to its sales of goods to customers abroad. Moreover, that the input VAT it incurred was not claimed against any output VAT during the same TY or succeeding quarters. On the other hand, respondent argues that petitioner failed to prove that it had zero-rated sales. He pointed out that petitioner did not comply with the proper invoicing requirements when no corresponding zero-rated sale invoices were submitted to prove its export sales to Singapore. Likewise, it contends that petitioner's invoices were not covered by an Authority to Print (ATP) from the BIR.

Respondent also documentary exhibits.

questioned

I

the veracity of petitioner's

Amertron Incorporated v. CIR

ISSUE

WHETHER

PETITIONER

AMERTRON

INCORPORATED

IS

ENTITLED TO ITS CLAIM FOR INPUT VALUE-ADDED TAX (VAT)

REFUND IN THE AMOUNT OF EIGHTEEN MILLION FIVE

HUNDRED FIFIY-SEVEN THOUSAND FOUR HUNDRED NINETY-

EIGHT AND FIFTEEN CENTAVOS (PI8,557,498.15) REPRESENTING

UNUTILIZED/EXCESS INPUT VAT CREDITS FOR THE FOUR (4)

QUARTERS OF THE TAXABLE CALENDAR YEAR (CY) 2016.

RULING OF THE COURT

Before the Court proceeds to discuss the merits of the petition, it IS best to first tackle the timeliness of its filing or if this Court's jurisdiction has been timely invoked.

TIMELINESS OF THE PETITION

In accordance with the above-cited Section u2(A) and ( C)3° of the NIRC of 1997, as amended, the administrative claim for refund of excess 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 were made.

Petitioner's instant administrative claim covers the four (4) quarters of TY 2016. Thus, petitioner's last day for the filing of its administrative claim and the actual filing of administrative claim for the said periods fell on the following dates:

Period Covered

Last Day to File

Administrative Claim

January to March 2016

31 March 2018

(151 Quarter)

April to June 2016

(2"d Quarter)

30 June 2018

July to September 2016

30 September 2018

(3'd Quarter)

October to December 2016

31 December 2018

(4th Quarter) Supra at pp. 6-7.

30 31 Exhibit "P-12'", supra at note 3.

Actual Date of Filing of

Administrative Claim

28 March 20183'

.

~ '

I

I

Amertron Incorporated v. CIR

From the foregoing, it is clear that petitioner's administrative claim for the four (4) quarters of TY 2016 was filed within the prescriptive period.

As to the timeliness of petitioner's judicial claim, respondent had ninety (go} days or until 26 June 2018, to decide on petitioner's administrative claim. Considering that respondent issued a letter dated 20 June 201832 denying the said administrative claim (which petitioner received on 29 June 2018}, petitioner had 30 days therefrom or until 29 July 2018, within which to file a judicial claim before this Court. Thus, the instant Petition for Review was also timely filed on 27 July 2018. This Court shall now proceed to resolve whether petitioner is entitled to the refund being claimed.

PETITIONER

FAILED

TO

PROVE

ITS

ENTITLEMENT TO A TAX REFUND OR

CREDIT OF THE CLAIMED AMOUNT.

In Luzon Hydro Corporation v. Commissioner of Internal Revenue33 (Luzon}, the Supreme Court laid down the requisites that must concur in order to allow a claim for refund or tax credit for unutilized input VAT, to wit:

32 33 A claim for refund or tax credit for unutilized input VAT may be allowed only if the following requisites concur, namely: (a) the taxpayer is VAT -registered; (b) the taxpayer is engaged in zero-rated or effectively zero-rated sales; (c) the input taxes are due or paid; (d) the input taxes are not transitional input taxes; (e) the input taxes have not been applied against output taxes during and in the succeeding quarters; (f) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; (g) for zero-rated sales under Section w6(A)(2)(1) and (2); w6(B); and w8(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas; (h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any ?I Exhibit "P-13", supra at note 4.

G.R. No. 188260, 13 November2013; Citation omitted.

Amertron Incorporated v. CIR these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (i) the claim is filed within two years after the close of the taxable quarter when such sales were made. Upon a careful review of the records and petitioner's voluminous documents, the Court finds that petitioner was unable to prove that it had engaged in zero-rated or effectively zero-rated sales for reasons set forth below.

At the onset, it is undisputed that petitioner is a VAT-registered entity and that its claim for refund was timely filed. With that said, the Court will focus on the existence of zero-rated sales that would have entitled petitioner to the refund or credit of its unutilized input VAT. For a tax refund or credit ofunutilized input VAT to be allowed, Luzon requires that the taxpayer has zero-rated or effectively zero- rated sales. In the case of export sales, Sections w6(A)(2)(a)(1), (2) and , (b)34, and w8(B)(1) and (2)35 of the NIRC36 of1997, as amended, providj/ 34 35 Sec. 106. Value-Added Tax on Sale of Goods or Properties.- (A) Rate and Base of Tax. -There shall be levied, assessed and collected on every sale, barter or exchange of goods or properties, a value-added tax equivalent to twelve percent (12%) of the gross selling price or gross value in money of the goods or properties sold, bartered or exchanged, such tax to be paid by the seller or transferor.

(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

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

(2) Sale of raw materials or packaging materials to a nonresident buyer for delivery to a resident local export-oriented enterprise to be used in manufacturing, processing, packing or repacking in the Philippines of the said buyer's goods and paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

(b) Foreign Currency Denominated Sale. - The phrase 'foreign currency denominated sale' means sale to a nonresident of goods, except those mentioned in Sections I 49 and I 50, assembled or manufactured in the Philippines for delivery to a resident in the Philippines, paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP).

Sec. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties.-

Amertron Incorporated v. CIR that they must be paid in acceptable foreign currency and such proceeds must be duly accounted for in accordance with the Bangko Sentral ng Pilipinas (BSP) rules and regulations. As indicated in petitioner's final amended Quarterly VAT Returns for the CY 2016, it declared exempt and zero-rated sales in the amounts of f'2,184,141,876.42 and f'I,988,893,167.12, respectively, and detailed as follows:

Zero-Rated

Exhibit

Period

Exempt Sales

Sales

"P-8"

January to March 2016

P-

PI,014.465,087.02

(I'' Quarter)

"P "

-9

April to June 2016

763.792,892.70 332,5I6,024.66 (2nd Quarter)

"P-to"

July to September 20I6

699.335.385.65 32I,633,096·44 (3'd Quarter)

"P-u"

October to December 2oi6 72I,OI3,598.07 320,278,959-00 (4th Quarter)

Total

P2,I84,14I,II76.42 PI,988,893,I67.I2 However, as the ICPA noted37, petitioner erroneously reported the f'716,os7,754·72 exempt sales as zero-rated sales for the 1st quarter of CY 2016. Accordingly, the revised breakdown of petitioner's sales for CY 2016 is as follows:

36 37

Period

Exempt Sales

Zero-Rated Sales

January to March 2oi6 P7I6,057.754-72 1'298,407,332-30

(I" Quarter)

April to June 20I6

(2nd Quarter) 763,792,892-70 332,5I6,024.66 // (B) Transactions Subject to Zero Percent (0%) Rate. -The following services perfonned in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (I) 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 non-resident person not engaged in business who is outside the Philippines when the services are perfonned, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentra/ ng Pilipinas (BSP); Prior to the changes brought about by TRAIN. Exhibit "P-2", !CPA Report, Division Docket, p. 175. ~

Amertron Incorporated v. CIR

July to September 2016

699.335.3Bs.6s 321,633,096·44 (3'd Quarter)

October to December 2016

721,013,s9B.o7 320,278,959-00 (41hQuarter)

Total

P2,900,t99•631.14 Pl,272,835>412.40 Based on petitioner's Schedule of Zero-Rated Sales38, its total zero-rated sales for CY 2016 can be attributed to the actual export sale of goods under Section w6(A)(2)(a)(1) of the NIRC of 1997, as amended. The said section further states: SEC. 106. Value-Added Tax on Sale of Goods or Properties.- (A) Rate and Base ofTax. - ...

(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, in order for an export sale of goods to qualify as zero-rated under Section w6(A)(2)(a)(1) of the NIRC ofl997, as amended, the following requirements must be met: 38

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

2. There was a sale and actual shipment of goods from the Philippines to a foreign country; and, 3· The sale was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP.)

Exhibit "P·2", Annex 1, id., pp. 183-188.

Amertron Incorporated v. CIR

As for the first requirement, it has already been settled that petitioner is a VAT-registered person. As regards the second requirement, Sections 113(A)(1), (8)(1) and (2)(c) of the NIRC of 1997, as amended, and Sections 4·113-1(A)(1), (8)(1) and (2)(c) of Revenue Regulations (RR) No. 16-200539, provide respectively:

39 SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.- (A) Invoicing Requirements.- A VAT-registered person shall issue:

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and (B) Information Contained in the VAT Invoice or VAT Official Receipt. -The following information shall be indicated in the VAT invoice or VAT official receipt:

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

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

(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;

SEC. 4.113-1. Invoicing Requirements. - (A) A VAT-registered person shall issue:- (1) A VAT invoice for every sale, barter or exchange of goods or properties; and (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of service1 Consolidated Value-Added Tax Regulations of2005.

Amertron Incorporated v. CIR

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:

(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[.] 40 The foregoing provisions mandate that any VAT-registered person claiming for VAT zero-rating in relation to export sales of goods must present the following documents, to wit:

1. Sales invoice as proof of sale of goods; and,

2. Bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country. In addition to the above requirements, the sales invoices supporting the export sales must be duly registered with the BIR and must contain all the required information, pursuant to Sections 237 and 238 of the NIRC of 1997, as amended, viz/ 40 Emphasis supplied.

Amertron Incorporated v. CIR

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.

Thus, only export sales supported by the aforementioned documents shall qualify for

VAT

zero-rating under Section w6(A)(2)(a)(1) of the NIRC of1997, as amended. As per the I CPA's verification41 of petitioner's Schedule of Zero- Rated Sales4Z, CTBC Bank Daily Transaction Listing43, BOO Export Advances44, Airway Bill/Bill of Lading45, and sales invoices46, only PI71,120,0JS-98 (out of P1,272,835>412.40) comprise the valid zero-rated sales and are properly supported with VAT zero-rated sales invoices, bills of lading or airway bills and export declarations, to wi~~ 41 42 43 44 45 46 Exhibit "P-2", Table II, JCPA Report, Division Docket, p. 176. Exhibit "P-2", supra at note 38.

Exhibit "P-1537", USB.

Exhibits "P-151 0" to "P-1536", id.

Exhibits "P-3422" to "P-3499", id.

Exhibits "P-14" to "P-265", id.

Amertron Incorporated v. CIR

Description

Exhibit

I.

Sales with discrepancy in

"P-14" to "P-48"

remittance amount 2.

Sales without proof of inward

"P-49" to "P-185"

remittance 3· Zero-rated sales without

"P-186" to "P-247"

airway bill/ bill of lading 4· Zero-rated sales without "P-248" to "P-249 ..

original invoice 5· Zero-rated sale with "P-250 ..

discrepancy remittance 6.

Valid zero rated sales "P-2so" to "P-270 ..

Amount

~"738,233.291.22 261, 710.496.so 201,178.943·59 19,345.052·75 1,8oo.s9 171,120,035·98 Upon further scrutiny of the !CPA Report with other submitted documentary evidence, the Court finds that the details of the amount ofP171,120,o35·98 (that the !CPA identified in his report) do not match the details in the sales invoices marked and submitted by petitioner as evidence, to wit:

Per /CPA Report47

Per petitioner's evidence ..

Exhibit

SINo.

Date

Amount in

Exhibit

SINo.

Date

Amount in

No.

P-2<;o

P-29

P-2'<>

P-2'i< P-2'i4 P-2'i'i P-2'i6 P-2'i7 P-2<;8 P-2<;0 P-26o

P-261

P-262

P-261

P-264

P-26'

P-266

P-267

P-268

P-26o

P-270

Total

47 48 49

USD

No.

6n1'i 2<;-)an-16 764,24Q.17 P-2'io

6161Q

6n6o 2•;-)an-16 440,111-1Q

P-2'>1

61641 614<6

18-Aor-16

20'i,628.""' P-2'i2 6164'i 614'i'i 2'i·Aor-16 78,814-01 P-2'i1 61647 614'i0

02-Mav-16

41,216.8o P-2'i4 61621 61400 oq-May-16 16o,8o6.71

P-2')')••

- 61'i1d o6-lun-16 170,667.10 P-2'i6 61616 61'i16 n-)un-16 8,o6o.o8 P-2'i7 61612 61'i18 1<;-)un-16 126,044·68 P-2<;8 61611 61<;21 27-)un-16 8,1';2.17 P-2'>o 61617 61'i42 n-)ul-16 20,671-61 P-26o 61619 61'i'i< >'i-)ul-16 'i6'i,682.74

P-261

616<7 61'i'i8

01-Aug-16

12,126.68

P-262

61618 61<;61 o8-Aug-16 16,071.88

P-261

61610 61'i68

22-Aug-16

21,8')1.20

P-264

61620 61'i70 20-Au!!-16 10,140-40 P-26o;

61400 61'i72

O'i·Seo-16

<<,80l.'i7

P-266

l'iO'i'i 61<;78 1o-Seo-16 'i0,184.1'i

P-267

1')011 61'i8<

26-Sep-16

Q4,01Q.OO

P-268

3574'> 616oo 17-0ct-16 202,'i46-41 P-26o <"740

6161Q

07-Nov-16

68,0'i6.<2

P-270

<'i706 1.416,4Q0.<1 Exhibit "P-2", Annex 1-5, !CPA Report, Division Docket, p. 198. USB marked on 27 July 2020.

USD

12-Dec-16

'>11.400.68 1q-Dec-16 1Q0,2J2.20 1,-Dec-16 2,424-'iQ 1'i·Dec-16 84.10

10-Nov-16

')4-62 - -

14-Nov-16

9·56

07-Nov-16

oo.8o

21-Nov-16

11Q.O')

14-Nov-16

26.31

07-Nov-16

68,os6.32

28-Nov-16

2<1,12<-47

14-Nov-16

10Q,8'i7-88

28-Nov-16

6'i,782.30

21-Nov-16

321,256·43 oo-Mav-16 16o,8o6.73 16-)un-16 22,810.11

11-May-16

201.80

26-May-16

2,237-38

24-Mav-16

11,187-35 w-Mar-16 4<2.17 1,1Q4,21Q-77 ' In the Resolution dated 28 September 2020, the Court denied the admission of P-255 for not being found in the records/no scanned copy found in the USB submitted.

Amertron Incorporated v. CIR

A thorough scrutiny of the pieces of evidence offered by petitioner also shows that the documents identified by the ICPA to support validly substantiated zero-rated sales are marked differently in the records, as follows:

Per /CPA Report'"

Per petitioner's evidence51

Exhibit

SINo.

Date

Amount in

Exhibit

Sl No.

Date

Amount in

No.

USD

No.

USD

P-20o 6111';

20-]an-16 764,24Q·17

P-161

6111';

20-]an-16 764,249·37

P-251

61360

25-Jan-16

440,111·19 P-16o 61360 20-]an-16 440,333·39

P-252

61436

18-Apr-16

295,628.35

P-179

61436

18-Apr-16

295,628.35

P-253

61455

25-Apr-16

78,834·93

P-181

61455

25-Apr-16

78,81±2.1_ P-2<;4 614<;Q

02-May-16

41,216.89

P-172

614'iQ

02-May-16

41,216.8Q P-20<;

614QO

oq-May-16 16o,8o6.71

P-260

614Q0

oq-May-16 16o,8o6.73

P-256

61514 o6-]un-16 179,667.JO

P-189

61514 o6-]un-16 179,667-30

P-257

61516 13-]un-16 8,o6o.98

P-187

61516 13-]un-16 8,o6o.98

P-258

61518

15-Jun-16

326,044·68

P-186

61518

15-Jun-16

326,04_4.68 P-2<;Q 61<;21 27-]un-16 8,1<;2.17

P-188

61<;21 27-]un-16 8,152.37

P-260

61542 11-]ul-16 20,671.61

P-193

61';42 11-]ul-16 20,673.61

P-261

61553 25-]ul-16 565,682.74

P-203

61553 25-]ul-16 565,682.74

P-262

61558

01-Aug-16

12,126.68

P-214

61558

01-Aug-16

12,126.68

P-263

6~1 o8-Aug-16 36,07J.88

P-210

61561 o8-Aug~16 36,o73-88

P-264

61<;68

22-Aug-16

21,8<;1.2Q

P-211

61<;68

22-Aug-16

21,8'jl.2Q

P-265

61)70 2q-Aug-16 1Q,14Q-40

P-208

61';70 2q-Aug-16 1Q,149·40

P-266

61572 os-Sep-16 33,891.)7

P-215

61)72

05-Sep-16

33,891·57

P-267

61578

19-Sep-16

59.384·35

P-218

61578

19-Sep-16

59.384·35

P-268

6'583

26-Sep-16

94,039·09

P-216

61583

26-Sep-16

94,0}2-"2_ P-26q 616oo 17-0ct-16 202,<;46·41

P-221

616oo 17-0ct-16 202,<;46·41

P-270

61619

07-Nov-16

68,o06.12 P-26o

6161Q

07-Nov-16

68,os6.32

Total

3>436,490·33 3>436,490·33 The Court further observed significant differences in the names and addresses of petitioner's customers appearing in its zero-rated sales invoices vis-a-vis the air waybill documents based on petitioner's Schedule of Zero-Rated Sales5\ to wit:

Per Sales Invoice

Per Air Waybill

Exhibit

Exhibit

Air

No.

Sl No.

Name

Address

No.

Waybill

Name

Address

No.

P-161

61335

Avago

Locked Bag

P-3428

6UB2m7 63 #211, Pejabat

Alexandra

P-16o 61360

Technologies

Serahan

International

P-3424

6UB2oo5

Avago

Terrace No.

P-179

P-181

50 " 52 61436 Sales Pte,

Bayan Lepas

n9oo Bayan Ltd.

Lepas, 61455 Penanl!

Exhibit "P-2", supra at note 47.

Supra at note 49.

Exhibit "P-2", supra at note 43.

P-3456

6UB7372

Technologies

03-07 Trading Ltd.

Harbour

Link

P-3457

6UB8215

Warehouse

/ ~

Amertron Incorporated v. CIR

Malaysia

P-172

61459

P-265

61490

P-189

61514

P-187

61<;16

P-186

61')18

P-188

61521

P-193

61542

P-203

61553

P-214

61'i<;8

P-210

61561

P-zn

61568 P-2o8 61570 P-21<;

61'i72

P-218

61<;78

P-216

61583

P-223

616oo P-26o 61619

P-3459

P-3474

P-3451

P-3464

P-14'i2

P-1461

P-3466

P-3465

P-3467

P-3478

P-3488

P-3485

P-3472

P-3494

P-1486

P-3495

P-3497

Singapore

6UB8292

Avago

u5o Depot

Technologies

Road

Mfg. Pte Ltd.

Harbour link

Warehouse

Singapore

6Xjoo62

63

6X}1512

Alexandra

6X}1876

Avago

Terrace No.

6X}1o;11 03-07

6X}2910

Technologies

Harbour

6X}4872

Trading Ltd.

Link

6X}2928

Warehouse

6X}5228

Singapore

6Xj6269

Avago

u5o Depot

Technologies

Road

Singapore

6X}528o

Avago

63

6X}6737

Technologies

Alexandra

6X}2977

Trading Ltd.

Terrace No.

6Xj882o;

03-07

6X}6789

Harbour

6Xj88o6

Link

7CE2oo3

Warehouse

Singapore

The sales invoices issued by petitioner do not also indicate the related air waybill or the details of the items exported. Indubitably, petitioner failed to establish the linkage between the air waybill documents and its zero-rated sales invoices. In other words, the Court cannot ascertain whether petitioner's sales (as evidenced by zero-rated sales invoices) were actually shipped to the intended foreign customers. As a result, petitioner failed to prove compliance with second invoicing requirement. With the foregoing and following petitioner's failure to properly support his claim with the necessary pieces of evidence, the Court is constrained to deny its claim for tax refund. The oft-repeated rule is that actions for tax refund or credit are construed strictly against the taxpayer. In Coca-Cola Bottlers Philippines, Inc. v. Commissioner of Internal Revenue53, the Supreme f Court held:

/" 53 G.R. No. 222428, 19 February 2018, c1tmg Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue, 569 Phil. 483 (2008); Commissioner of Amertron Incorporated v. CIR On a final note, the Court reiterates its consistent ruling that actions for tax refund or credit, as in the instant case, are in the nature of a claim for exemption and the law is not only construed in strictissimi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption is strictissimi scrutinized and must be duly proven. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit. Since taxes are the lifeblood of the government, tax laws must be faithfully and strictly implemented as they are not intended to be liberally construed ...

WHEREFORE, the foregoing premises considered, the Petition for Review filed by petitioner Amertron Incorporated on 27 July 2018 is hereby DENIED for lack of merit.

WE CONCUR:

,.......

~·t; <Z.~-..t, l f{JANITO C. CASTANEDA, ft(

Associate Justice

kruut!Mt/Jf LANEE S. CUI-DAVID

Associate Justice

LENA

Internal Revenue v. San Roque Power Corporation; 703 Phil. 300 (2013), and Commissioner of internal Revenue v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., 746 Phil. 139 (2014).

Amertron Incorporated v. CIR

ATTESTATION

I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division.

>L~·trc. ~~/ 2-,.

f(JANITO C. CASTANEDA, JR.

Associate Justice

2nd Division Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division 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.

Presiding Justice