JULY 23, 2018, G.R. No.

191495 review, before the CTA who has exclusive and appellate
jurisdiction. 14 The period to appeal is thirty (30) days counted from
NIPPON EXPRESS (PHILIPPINES) CORPORATION v CIR the receipt of the decision or inaction by the CIR.

MARTIRES, J.:
FACTS:
Nippon Express is a domestic corporation registered with the Large
Taxpayer District Office (LTDO)  of the Bureau of Internal
Revenue (BIR), as a Value Added Tax (VAT)  taxpayer.
On 30 March 2005, Nippon Express filed with the LTDO an
application for tax credit of its excess/unused input taxes attributable
to zero-rated sales for the taxable year 2004 in the total amount of
P27,828,748.95. By reason of the inaction by the BIR, Nippon
Express filed a Petition for Review before the CTA on 31 March
2006.
In its Answer, respondent Commissioner of Internal
Revenue (CIR)  alleged that Nippon Express' excess input VAT paid
for its domestic purchases of goods and services attributable to zero-
rated sales for the four quarters of taxable year 2004 was not fully
substantiated by proper documents.
In this case, Nippon Express timely filed its administrative claim
on 30 March 2005, or within the two-year prescriptive period.
Counted from such date of submission of the claim with supporting
documents, the CIR had 120 days, or until 28 July 2005, the last day
of the 120-day period, to decide the claim. As the records reveal, the
CIR did not act on the application of Nippon Express. Thus, in
accordance with law and the cited jurisprudence, the claimant,
Nippon Express, had thirty days from such inaction "deemed a
denial," or until 27 August 2005, the last day of the 30- day period,
within which to appeal to the CTA.
However, Nippon Express filed its petition for review with the CTA
only on 31 March 2006, or two hundred forty-six (246) days from the
inaction by the CIR. In other words, the petition of Nippon Express
was belatedly filed with the CTA and, following the doctrine above,
the court ought to have dismissed it for lack of jurisdiction.
When a VAT-taxpayer claims to have zero-rated sales of services, it
must substantiate the same through valid VAT official receipts, not
any other document.

After trial, the CTA Division denied the petitioner’s claim for failure to The burden of a claimant who seeks a refund of his excess or
submit the required VAT official receipts as proof of zero-rated sales.  unutilized creditable input VAT pursuant to Section 112 of the NIRC
is two-fold: 
In its appeal before the CTA En Banc, Nippon Express alleged that it
had fully complied with the invoicing requirements when it submitted
sales invoices to support its claim of zero-rated sales. Nippon argued (1) prove payment of input VAT to suppliers; and 
that there is nothing in the tax laws and regulations that requires the
sale of goods or properties to be supported only by sales invoices, or (2) prove zero-rated sales to purchasers.
the sale of services by official receipts only.
Additionally, the taxpayer-claimant has to show that the VAT
The CTA En Banc affirmed the CTA Division’s decision. payment made, called input VAT, is attributable to his zero-rated
sales.
ISSUE:

Whether or not the sales invoices and documents other than official Under the law on VAT, as contained in Title IV of the NIRC, there are
receipts are proper in substantiating zero-rated sales of services in three known taxable transactions, namely: 
connection with a claim for refund under Section 112 of the NIRC.
(1) sale of goods or properties (Section 106); 
RULING: NO.
(2) importation (Section 107); and 
Jurisdictional issue
(3) sale of services and lease of properties (Section 108).
A VAT-registered taxpayer who has excess and unutilized creditable
input VAT attributable to zero-rated sales may file an application for
Both sale transactions in Section 106 and 108 are qualified by the
cash refund or issuance of TCC (administrative claim) before the CIR
phrase 'in the course of trade or business,' whereas importation in
who has primary jurisdiction to decide such application. 13 The period
Section 107 is not.
within which to file the administrative claim is two (2) years reckoned
from the close of the taxable quarter when the pertinent zero-rated
sales were made. At this juncture, it is imperative to point out that the law had set apart
the sale of goods or properties, as contained in Section 106, from the
sale of services in Section 108.
From the submission of complete documents to support the
administrative claim, the CIR is given a 120-day period to decide. In
case of whole or partial denial of or inaction on the administrative In establishing the fact that taxable transactions like sale of goods or
claim, the taxpayer may bring his judicial claim, through a petition for properties or sale of services were made, the law provided for
invoicing and accounting requirements.
1
SEC. 108. Value-added Tax on Sale of Services and Use or Lease
of Properties.-
(c) Determination of the Tax -The tax shall be computed by
multiplying the total amount indicated in the official receipt by one-
eleventh.
Comparatively, Section 106 of the same Code covers sale of goods,
thus:
SEC. 106. Value-added Tax on Sale of Goods or Properties.-
(D) Determination of the Tax. - The tax shall be computed by
multiplying the total amount indicated in the invoice by one-eleventh
(1/11).
 A "sales or commercial invoice" is a written account of
goods sold or services rendered indicating the prices
charged therefor or a list by whatever name it is known
which is used in the ordinary course of business evidencing
sale and transfer or agreement to sell or transfer goods
and services.
 A "receipt" on the other hand is a written acknowledgment
of the fact of payment in money or other settlement
between seller and buyer of goods, debtor or creditor, or
person rendering services and client or customer. 
Irrefutably, when a VAT-taxpayer claims to have zero-rated sales of
services, it must substantiate the same through valid VAT official
receipts, not any other document, not even a sales invoice which
properly pertains to a sale of goods or properties.
In this case, the documentary proofs presented by Nippon Express to
substantiate its zero-rated sales of services consisted of sales
invoices and other secondary evidence like transfer slips, credit
memos, cargo manifests, and credit notes.34 It is very clear that these
are inadequate to support the petitioner's sales of services.
Consequently, the CT A, albeit without jurisdiction, correctly ruled
that Nippon Express is not entitled to its claim.
G.R. No. 188260               November 13, 2013
LUZON HYDRO CORPORATION v CIR
BERSAMIN, J.:
FACTS:
The petitioner, a corporation duly organized under the laws of the
Philippines, has been registered with the BIR as a VAT taxpayer. It
was formed as a consortium of several corporations.
Pursuant to the Power Purchase Agreement entered into with the
National Power Corporation (NPC), the electricity produced by the
petitioner from its operation of the Bakun Hydroelectric Power Plant
was to be sold exclusively to NPC. 3 Relative to its sale to NPC, the
2
petitioner was granted by the BIR a certificate for Zero Rate for VAT
purposes in the periods from January 1, 2000 to December 31, 2000;
February 1, 2000 to December 31, 2000 (Certificate No. Z-162-
2000); and from January 2, 2001 to December 31, 2001 (Certificate
No. 2001-269).
The petitioner alleged herein that it had incurred input VAT in the
amount of P9,795,427.89 on its domestic purchases of goods and
services used in its generation and sales of electricity to NPC in the
four quarters of 2001.
The BIR made a recommendation favorable to the petitioner’s claim.
Respondent Commissioner of Internal Revenue did not ultimately act
on the petitioner’s claim despite the favorable recommendation.
Hence, on April 14, 2003, the petitioner filed its petition for review in
the CTA, praying for the refund or tax credit certificate (TCC)
corresponding to the unutilized input VAT paid for the four quarters of
2001 totalling P9,795,427.88.10
While the case was pending hearing, the Commissioner informed the
petitioner by the letter dated March 3, 2005 that its claim had been
granted in the amount of P6,874,762.72, net of disallowances of
P2,920,665.16.
On May 3, 2005, the petitioner filed a Motion for Leave of Court to
Amend Petition for Review in consideration of the partial grant of the
claim. The CTA in Division granted the motion on May 11, 2005, and
admitted the Amended Petition for Review, whereby the petitioner
sought the refund or tax credit in the reduced amount of
P2,920,665.16.
However, no supplemental answer by the commissioner was filed.
The CTA in Division promulgated its decision in favor of the
respondent denying the petition for review.
The CTA En Banc promulgated the assailed decision affirming the
Division.
ISSUE:
Whether or not the input value-added tax being claimed by petitioner
is supported by sufficient documentary evidence.
RULING: No.
A claim for refund or tax credit for unutilized input VAT may be
allowed only if the following requisites concur, namely:
(1) the taxpayer is VAT-registered;
(2) the taxpayer is engaged in zero-rated or effectively zero-
rated sales;
(3) the input taxes are due or paid;
(4) the input taxes are not transitional input taxes;
(5) the input taxes have not been applied against output taxes
during and in the succeeding quarters;
(6) the input taxes claimed are attributable to zero-rated or
effectively zero-rated sales;
(7) for zero-rated sales under Section 106(A)(2)(1) and (2);
106(B); and 108(B)(1) and (2), the acceptable foreign
currency exchange proceeds have been duly accounted for
 in accordance with the rules and regulations of the Bangko
Sentral ng Pilipinas;
(8) where there are both zero-rated or effectively zero-rated
sales and taxable or exempt sales, and the input taxes
cannot be directly and entirely attributable to any of these
sales, the input taxes shall be proportionately allocated on
the basis of sales volume; and
(9) the claim is filed within two years after the close of the
taxable quarter when such sales were made.29

The petitioner did not competently establish its claim for refund or tax
credit.

The petitioner did not produce evidence showing that it had zero-
rated sales for the four quarters of taxable year 2001. As the CTA En
Banc precisely found, the petitioner did not reflect any zero-rated
sales from its power generation in its four quarterly VAT returns,
which indicated that it had not made any sale of electricity. Had there
been zero-rated sales, it would have reported them in the returns.

Indeed, it carried the burden not only that it was entitled under the
substantive law to the allowance of its claim for refund or tax credit
but also that it met all the requirements for evidentiary substantiation
of its claim.

Although the petitioner has correctly contended here that the sale of
electricity by a power generation company like it should be subject to
zero-rated VAT under Republic Act No. 9136, 31 its assertion that it
need not prove its having actually made zero-rated sales of electricity
by presenting the VAT official receipts and VAT returns cannot be
upheld. It ought to be reminded that it could not be permitted to
substitute such vital and material documents with secondary
evidence like financial statements.