San Carlos Solar Energy, Inc. v. Commissioner of Internal Revenue

THIRD DIVISION [C.T.A. CASE NO. 9576. February 3, 2021.] SAN CARLOS SOLAR ENERGY, INC. , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION MODESTO-SAN PEDRO , J p : The Case This is a Petition for Review, 1 filed on 12 April 2017, by petitioner San Carlos Solar Energy, Inc. against respondent Commissioner of Internal Revenue ("CIR"), praying that the Decision of respondent, dated 17 February 2017, on petitioner's claim for refund of its unapplied input value added tax ("VAT") paid on purchases of taxable goods and services, allegedly directly attributable to its zero-rated sales for the period January to December 2015, be partially reversed and modified and seeking for an additional VAT refund in the amount of P40,624,825.97. 2 HTcADC The Parties Petitioner is a corporation duly organized and existing under the laws of the Philippines and is a registered VAT taxpayer with Tax Identification Number 008-514-713-000. Its principal office is located at the Emerald Arcade, F.C. Ledesma St., San Carlos City, Negros Occidental. 3 Meanwhile, respondent is the head of the Bureau of Internal Revenue ("BIR") vested with the power and authority to grant a refund of or to issue a tax credit certificate for unutilized input value-added tax (VAT) attributable to zero-rated sales. 4 The Facts On 3 November 2016, petitioner filed with BIR RDO No. 76 its Application for Tax Credits/Refunds (BIR Form No. 1914), with attached supporting documents, requesting for refund of its alleged unapplied and unutilized input VAT directly to its zero-rated sales for the period 1 January 2015 to 31 December 2015 in the amount of P92,282,341.28. 5 Subsequently, on 14 March 2017, petitioner received from BIR a letter dated 17 February 2017, partially granting petitioner's VAT refund claim in the amount of P29,644,104.17 (hereinafter referred to as the "BIR Decision"). 6 Petitioner requested for a computation of the granted refund claim as stated in the BIR Decision through its letter to the BIR, dated 28 March 2017, and received by BIR on 31 March 2017. 7 On 6 April 2017, petitioner received the BIR's letter dated, 5 April 2017, providing a detailed computation of the recommended VAT refund claim of P29,644,104.17. 8 BIR computed the recommended VAT refund claim of P29,644,104.17 as follows: 9 TOTAL Amount of Claim 92,282,341.28 Adjustments and Disallowances per Audit Disallowed input taxes Non-compliance with the invoicing requirements Sec. 113 of the NIRC of 1997, as amended (363,200.57) Total Adjustments and Disallowances per Audit (363,200.57) Amount Recommended per Audit Assessment Division, RR 12 91,919,140.71 Adjustments and Disallowances per TARD Review Excess and unaccounted/unverified prior year's input tax (331,859.81) Disallowed input taxes due to violation of invoicing requirements Sec. 113 of the NIRC of 1997, as amended (1,787,894.99) Disallowed input taxes per ITS verification pursuant to RMC 42-2003 Q14/A14 (3,524.00) Additional output VAT on the Sale of Capital Goods to ISLASOL Output VAT on other income (24,416.69) Output VAT on other income (51,701.16) Final Withholding VAT on income payment to foreign affiliates pursuant to Sec. 4.112.2 of Revenue Regulations (RR) 16-2005 (18,798,522.96) Additional disallowed input taxes due to violation of invoicing requirements Sec. 113 of the NIRC of 1997, as amended (652,290.06) Net IT attributable to taxable sales pursuant to Section 4.110-4 of RR 16-20[0]15, as amended, in relation to Section 112 (A) of the 1997 NIRC, as amended (40,624,825.97) Total Adjustments and Disallowances per TARD Review (62,275,035.64) Recommended for VAT refund per TARD Review 29,644,105.07 ============ Petitioner then filed the instant Petition for Review on 12 April 2017, 10 praying that the disallowance with respect to P40,624,825.97, which was found by BIR to be attributable to taxable sales, be reversed and modified. On 4 May 2017, the Court issued Summons requiring respondent to file its Answer within fifteen (15) days from receipt thereof, 11 which respondent Office of the Solicitor General ("OSG") received on 9 May 2017 12 and respondent BIR on 10 May 2017. 13 On 24 May 2017, respondent filed a Motion for Extension of Time to File Answer praying for an additional period of thirty (30) days from 25 May 2017, or until 24 June 2017, to file its Answer, 14 which the Court granted in its Order dated 25 May 2017. 15 On 23 August 2017, the Court issued a Resolution 16 noting the Judicial Records Division's Records Verification, dated 4 August 2017, 17 stating that respondent failed to file its answer within the extended period of 24 June 2017 and thus directed petitioner to file the appropriate action relative to respondent's failure to file its answer. On 24 August 2017, respondent filed its Motion to Admit Attached Answer with attached Answer. 18 In its Answer, respondent interposed the following defenses: (i) that the denial of petitioner's refund claim is proper due to the absence of zero-rated or effectively zero-rated sales during the period of claim which is a mandatory element in a VAT refund claim; (ii) that an administrative claim for refund must be accompanied by complete supporting and relevant documents filed in accordance with the Tax Code and other rules and regulations before it can be acted upon by respondent and, subsequently by this Court; and (iii) that claims for refund are construed strictly against the claimant thus, it is charged with the burden of proving that it satisfied all statutory and administrative requirements to be entitled to the refund. 19 Subsequently, on 29 August 2017, petitioner filed a Motion to Declare Respondent Commissioner of Internal Revenue in Default. 20 On 8 September 2017, the Court issued a Resolution 21 granting respondent's Motion to Admit Attached Answer, admitting the attached Answer and denying petitioner's Motion to Declare Respondent Commissioner of Internal Revenue in Default. In the same Resolution, the Court set the Pre-Trial on 12 October 2017. 22 On 12 January 2018, respondent filed its Pre-Trial Brief, 23 while petitioner submitted its Pre-Trial Brief on 6 March 2018. 24 Following the filing of both parties' Pre-Trial Briefs, and after several resettings, the Pre-Trial Conference was held on 10 May 2018. 25 Both petitioner and respondent agreed to submit their Joint Stipulation of Facts and Issues ("JSFI") on or before 25 May 2018. 26 aScITE On 25 May 2018, respondent transmitted the BIR records and filed the corresponding Compliance, 27 which the Court took note in its Order dated 29 May 2018 28 and Minute Resolution dated 2 July 2018. 29 Similarly, on 25 May 2018, the parties filed a Joint Motion for Extension of Time to File Joint Stipulation of Facts and Issues 30 and prayed for an additional period of fifteen (15) days or until 9 June 2018 to file their JSFI, which the Court granted in its Order dated 29 May 2018. 31 Said Joint Stipulation of Facts and Issues, dated 9 June 2018, 32 was filed on 13 June 2018. 33 In the Court's Resolution dated 29 June 2018, it approved the parties' JSFI filed on 13 June 2018, terminated the Pre-Trial, and directed that a Pre-Trial Order be issued. 34 Subsequently, the Court issued the Pre-Trial Order on 20 August 2018. 35 On 14 August 2018, Katherine O. Constantino submitted the ICPA Report dated 13 August 2018. 36 The Court took note of the ICPA Report in its Minute Resolution dated 3 September 2018. 37 Petitioner presented the following witnesses: (i) Melanie M. Naranja (Finance Manager of AC Energy Development, Inc.); 38 and (ii) Katherine O. Constantino (Court-Commissioned ICPA). 39 In the meantime, on 21 September 2018, the Court issued an Order transferring the instant case to the CTA Third Division pursuant to CTA Admin. Circular No. 02-2018 Reorganizing the Three Divisions of the Court. 40 After the presentation of petitioner's witnesses, petitioner filed its Formal Offer of Evidence on 20 December 2018 within the extended period granted by the Court. 41 Respondent did not file a Comment to petitioner's Formal Offer of Evidence. 42 Petitioner's exhibits, except for Exhibits "P-1060 to P-1064", "P-1112 to P-1114", "P-1131 to P-1147", "P-1177 to P-1178", "P-1192", and "P-1256 to P-1257", were all admitted in a Resolution dated 26 September 2019. 43 On 10 October 2019, respondent presented its lone witness Revenue Officer Orlan S. Rabelista. 44 With the termination of presentation of respondent's witness, respondent was directed to file its Formal Offer of Evidence until 25 October 2019 and for petitioner to file its Comment thereto within fifteen (15) days from receipt. 45 On 11 October 2019, respondent filed its Formal Offer of Evidence. 46 Petitioner did not file a comment to respondent's Formal Offer of Evidence. 47 In a Resolution dated 26 November 2019, respondent's exhibits were admitted except for Exhibit "R-3," for failure to present the original document for comparison. 48 The parties were likewise granted a period of thirty (30) days from receipt within which to file their respective memoranda. 49 On 6 January 2020, the Court received 50 respondent's Memorandum dated 23 December 2019 filed through registered mail on 23 December 2019. 51 Meanwhile, petitioner filed its Memorandum on 3 February 2020 52 within the extended period granted by the Court. 53 Thereafter, the instant case was submitted for decision on 7 February 2020. 54 The Issues 55 The issues for this Court's resolution are: A. Whether petitioner is entitled to a refund of its excess and unutilized input VAT directly attributable to its zero-rated sales for the period January to December 2015 in the amount of P40,624,825.97; and B. Whether respondent erred in applying the rule on apportionment resulting in the disallowance of the amount of P40,624,825.97 from petitioner's claim for VAT refund by allocating said amount to petitioner. Arguments of the Parties Petitioner's Arguments 56 Petitioner argues that respondent is barred from claiming that the Court is confined to a more limited issue of whether the denial was proper given the evidence submitted at the administrative level and that petitioner cannot submit documents it did not submit at the administrative level because respondent failed to raise these issues in its Answer during Pre-Trial and while presenting its witness. Petitioner adds that this Court is not limited by evidence presented at the administrative level. On the substantive issue, petitioner maintains that respondent's disallowance of P40,624,825.97, on the ground that such amount is attributable to taxable sales, is improper and erroneous for having no legal or factual basis. Petitioner claims that it sufficiently established, through testimonial evidence and as supported by the ICPA Report, that the input VAT of P40,624,825.97 is directly and entirely attributable to its zero-rated sales for which respondent failed to present a contrary evidence. Respondent's Arguments 57 Meanwhile, respondent claims that, first , the petition must be dismissed for failure of petitioner to substantiate its administrative claim for refund. Respondent asserts that since the BIR rendered a decision denying petitioner's administrative claim for refund for failure to substantiate, this Court cannot consider documents that were not submitted at the administrative level. Respondent adds that findings of this Court should be confined to a more limited issue of whether the denial of the administrative refund claim is proper given the evidence submitted at the administrative level. Second , according to respondent, petitioner is not entitled to input VAT refund claim of P92,282,341.28 due to the absence of zero-rated sales or effectively zero-rated sales which is a mandatory element in refund claims. Furthermore, audit disclosed several adjustments and disallowances to the refund claim, such as unaccounted/unverified prior year's input tax, violation of invoicing requirements, discrepancies per matching of data, and input VAT attributable to taxable sales, resulting to the reduced recommended refund claim after review of P29,644,104.17. Respondent concludes that considering that claims for refund are construed strictly against the claimant, the claimant has the burden of proof to establish the factual basis of its claim. The Ruling of the Court After due consideration, we deny the instant Petition for Review for lack of merit. The CTA may not limit itself to issues stipulated by the parties. Petitioner claims that respondent is barred from raising new issues that were not raised in respondent's Answer, stipulated during Pre-Trial, nor while presenting its witness. We disagree. Section 1, Rule 14 of the RRCTA provides that this Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve the orderly disposition of the case. 58 Section 1, Rule 14 of the RRCTA pertinently provides: "RULE 14 JUDGMENT, ITS ENTRY AND EXECUTION SECTION 1. Rendition of judgment. The Court shall decide the cases brought before it in accordance with Section 15, paragraph (1), Article VIII of the 1987 Constitution. The conclusions of the Court shall be reached in consultation by the Members on the merits of the case before its assignment to a Member for the writing of the decision. The presiding justice or chairman of the Division shall include the case in an agenda for a meeting of the Court En Banc or in Division, as the case may be, for its deliberation. If a majority of the justices of the Court En Banc or in Division agree on the draft decision, the ponente shall finalize the decision for the signature of the concurring justices and its immediate promulgation. Any justice of the Court En Banc or in Division may submit a separate written concurring or dissenting opinion within twenty days from the date of the voting on the case. The concurring and dissenting opinions, together with the majority opinion, shall be jointly promulgated and attached to the rollo . In deciding the case, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. " 59 The Supreme Court, in Commissioner of Internal Revenue v. Lancaster Philippines, Inc. , 60 affirmed the authority of this Court to rule on issues not raised by the parties in this wise: "On whether the CTA can resolve an issue which was not raised by the parties, we rule in the affirmative . Under Section 1, Rule 14 of A.M. No. 05-11-07-CTA, or the Revised Rules of the Court of Tax Appeals, the CTA is not bound by the issues specifically raised by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The text of the provision reads: SECTION 1. Rendition of judgment. x x x In deciding the case, the Court may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case. The above section is clearly worded. On the basis thereof, the CTA Division was, therefore, well within its authority to consider in its decision the question on the scope of authority of the revenue officers who were named in the LOA even though the parties had not raised the same in their pleadings or memoranda . The CTA En Banc was likewise correct in sustaining the CTA Division's view concerning such matter." 61 Here, respondent raised in its Memorandum the issues of whether this Court must limit its findings on the propriety of the denial of the administrative claim given the evidence submitted at the administrative level and whether this Court can accept evidence not submitted at the administrative level. We rule on these issues pursuant to the authority of this Court to rule on issues necessary for the orderly disposition of the case. Cases filed before this Court are litigated de novo . Respondent cites Pilipinas Total Gas, Inc. v. Commissioner of Internal Revenue 62 (hereinafter referred to as the "Total Case" ) in claiming that the petition must fail for failure of petitioner to substantiate its claim for refund at the administrative level. 63 According to respondent, there can be no first instance trial following the Total Case . Consequently, respondent claims that the findings of this Court should be limited to determining whether the BIR's denial of the administrative refund claim is proper given the evidence submitted at the administrative level. The Court finds no merit in respondent's contention. In the Total Case , the Supreme Court distinguished administrative cases appealed due to inaction and due to failure of the taxpayer to submit complete supporting documents as follows: "A distinction must, thus, be made between administrative cases appealed due to inaction and those dismissed at the administrative level due to the failure of the taxpayer to submit supporting documents. If an administrative claim was dismissed by the CIR due to the taxpayer's failure to submit complete documents despite notice/request, then the judicial claim before the CTA would be dismissible, not for lack of jurisdiction, but for the taxpayer's failure to substantiate the claim at the administrative level . When a judicial claim for refund or tax credit in the CTA is an appeal of an unsuccessful administrative claim, the taxpayer has to convince the CTA that the CIR had no reason to deny its claim. It, thus, becomes imperative for the taxpayer to show the CTA that not only is he entitled under substantive law to his claim for refund or tax credit, but also that he satisfied all the documentary and evidentiary requirements for an administrative claim . It is, thus, crucial for a taxpayer in a judicial claim for refund or tax credit to show that its administrative claim should have been granted in the first place. Consequently, a taxpayer cannot cure its failure to submit a document requested by the BIR at the administrative level by filing the said document before the CTA . In the present case, however, Total Gas filed its judicial claim due to the inaction of the BIR . Considering that the administrative claim was never acted upon; there was no decision for the CTA to review on appeal per se. Consequently, the CTA may give credence to all evidence presented by Total Gas, including those that may not have been submitted to the CIR as the case is being essentially decided in the first instance. The Total Gas must prove every minute aspect of its case by presenting and formally offering its evidence to the CTA, which must necessarily include whatever is required for the successful prosecution of an administrative claim." 64 aDSIHc In the instant case, the BIR Decision 65 did not deny petitioner's administrative claim for failure of petitioner to submit complete supporting documents at the administrative level. Instead, the BIR Decision reads: "This refers to your claim for Value Added Tax (VAT) refund in the amount of Php92,282,341.28 representing unutilized input VAT for the period covered January 01, 2015 to December 31, 2015 pursuant to Section 112(A) of the 1997 NIRC, as amended. Please be informed that after consideration of the factual basis of the said claim and the law applicable thereto, this Office found the same to be meritorious, thus, we recommend for tax refund the amount of Php29,644,104.17, net of disallowances. . ." 66 A perusal of BIR's letter dated 5 April 2017, 67 which contained a detailed computation of the recommended VAT refund claim of P29,644,104.17 as stated in the BIR Decision, reveals that the denial was due to, among others, unaccounted/unverified prior year's input tax, violation of invoicing requirements, discrepancies per matching of data, and input VAT attributable to taxable sales. Notably, in Philippine Airlines, Inc. v. Commissioner of Internal Revenue , 68 the Supreme Court ruled that the CTA is not limited by evidence presented at the administrative level and that the taxpayer-claimant may present additional evidence before this Court. The Court ruled in this wise: "This Court rules that the Court of Tax Appeals is not limited by the evidence presented in the administrative claim in the Bureau of Internal Revenue. The claimant may present new and additional evidence to the Court of Tax Appeals to support its case for tax refund . Section 4 of the National Internal Revenue Code states that the Commissioner has the power to decide on tax refunds, but his or her decision is subject to the exclusive appellate jurisdiction of the Court of Tax Appeals: Section 4. Power of the Commissioner to Interpret Tax Laws and to Decide Tax Cases. The power to interpret the provisions of this Code and other tax laws shall be under the exclusive and original jurisdiction of the Commissioner, subject to review by the Secretary of Finance. The power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under this Code or other laws or portions thereof administered by the Bureau of Internal Revenue is vested in the commissioner, subject to the exclusive appellate jurisdiction of the Court of Tax Appeals. Republic Act No. 9282, amending Republic Act No. 1125, is the governing law on the jurisdiction of the Court of Tax Appeals. Section 7 provides that the Court of Tax Appeals has exclusive appellate jurisdiction over tax refund claims in case the Commissioner fails to act on them: Section 7. Jurisdiction. The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue; (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; (3) Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction[.] (Emphasis supplied) This means that while the Commissioner has the right to hear a refund claim first, if he or she fails to act on it, it will be treated as a denial of the refund, and the Court of Tax Appeals is the only entity that may review this ruling." The power of the Court of Tax Appeals to exercise its appellate jurisdiction does not preclude it from considering evidence that was not presented in the administrative claim in the Bureau of Internal Revenue . Republic Act No. 1125 states that the Court of Tax Appeals is a court of record: Section 8. Court of record; seal; proceedings. The Court of Tax Appeals shall be a court of record and shall have a seal which shall be judicially noticed. It shall prescribe the form of its writs and other processes. It shall have the power to promulgate rules and regulations for the conduct of the business of the Court, and as may be needful for the uniformity of decisions within its jurisdiction as conferred by law, but such proceedings shall not be governed strictly by technical rules of evidence. As such, parties are expected to litigate and prove every aspect of their case anew and formally offer all their evidence . No value is given to documentary evidence submitted in the Bureau of Internal Revenue unless it is formally offered in the Court of Tax Appeals . Thus, the review of the Court of Tax Appeals is not limited to whether or not the Commissioner committed gross abuse of discretion, fraud, or error of law, as contended by the Commissioner. As evidence is considered and evaluated again, the scope of the Court of Tax Appeals' review covers factual findings ." 69 Similarly, in the more recent case of Commissioner of Internal Revenue v. Univation Motor Philippines, Inc. , 70 the Supreme Court ruled: "The law creating the CTA specifically provides that proceedings before it shall not be governed strictly by the technical rules of evidence . The paramount consideration remains the ascertainment of truth . Thus, the CTA is not limited by the evidence presented in the administrative claim in the Bureau of Internal Revenue . The claimant may present new and additional evidence to the CTA to support its case for tax refund. Cases filed in the CTA are litigated de novo as such, respondent "should prove every minute aspect of its case by presenting, formally offering and submitting x x x to the Court of Tax Appeals all evidence x x x required for the successful prosecution of its administrative claim." Consequently, the CTA may give credence to all evidence presented by respondent , including those that may not have been submitted to the CIR as the case is being essentially decided in the first instance ." 71 In view of the foregoing, respondent's contention that the appellate jurisdiction of the CTA is limited as to whether the findings of the BIR are consistent with law 72 has no merit. To stress, the inquiry of this Court is not limited to determining whether the findings of the BIR are consistent with law considering the supporting documents submitted at the administrative level. Rather, jurisprudence has settled that this Court may consider and evaluate anew evidence submitted before it and make its own factual determination of the case. Petitioner failed to establish that its sales qualify for VAT zero-rating. Petitioner claims that it generated zero-rated sales for the period January to December 2015 amounting to P333,187,322.22 from its operations as a solar energy provider. 73 Petitioner also asserts that it is registered with the Department of Energy ("DOE") 74 and Bureau of Investments ("BOI") 75 as a renewable energy ("RE") developer of solar resources. Petitioner then contends that the P333,187,322.22 sales generated from electricity sold through the Wholesale Electricity Spot Market ("WESM") qualifies for VAT zero-rating. 76 Petitioner's claims cannot, however, be sustained as it failed to establish the existence of VAT zero-rated sales which is a mandatory requirement 77 in a VAT refund claim. ETHIDa Section 15 (g), Chapter VII of Republic Act ("R.A.") No. 9513 , otherwise known as the Renewable Energy Act of 2008 , provides that sale of power generated from RE sources by RE developers, duly certified by DOE in consultation with BOI, is subject to zero-rated VAT, to wit: "CHAPTER VII GENERAL INCENTIVES xxx xxx xxx SECTION 5. Incentives for Renewable Energy Projects and Activities . RE developers of renewable energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non-power applications, as duly certified by the DOE, in consultation with the BOI , shall be entitled to the following incentives: xxx xxx xxx (g) Zero Percent Value-Added Tax Rate. The sale of fuel or power generated from renewable sources of energy such as , but not limited to, biomass, solar , wind, hydropower, geothermal, ocean energy and other emerging energy sources using technologies such as fuel cells and hydrogen fuels, shall be subject to zero percent (0%) value-added tax (VAT) , pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337. All RE Developers shall be entitled to zero-rated value added tax on its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities. This provision shall also apply to the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors . . ." 78 Sections 25 and 26, Chapter VII of R.A. No. 9513 further provides that the DOE Certification shall serve as basis for the entitlement of RE developers to incentives but is without prejudice to further requirements that may be imposed by the concerned agencies charged with the administration of fiscal incentives; to wit: "CHAPTER VII GENERAL INCENTIVES xxx xxx xxx SECTION 25. Registration of RE Developers and Local Manufacturers, Fabricators and Suppliers of Locally-Produced Renewable Energy Equipment . RE Developers and local manufacturers, fabricators and suppliers of locally-produced renewable energy equipment shall register with the DOE , through the Renewable Energy Management Bureau. Upon registration, a certification shall be issued to each RE Developer and local manufacturer, fabricator and supplier of locally-produced renewable energy equipment to serve as the basis of their entitlement to incentives provided under Chapter VII of this Act . SECTION 26. Certification from the Department of Energy (DOE). All certifications required to qualify RE developers to avail of the incentives provided for under this Act shall be issued by the DOE through the Renewable Energy Management Bureau. The DOE, through the Renewable Energy Management Bureau shall issue said certification fifteen (15) days upon request of the renewable energy developer or manufacturer, fabricator or supplier: Provided, That the certification issued by the DOE shall be without prejudice to any further requirements that may be imposed by the concerned agencies of the government charged with the administration of the fiscal incentives abovementioned ." 79 Section 33, Chapter IX of R.A. No. 9513 also requires the DOE, in consultation with relevant government agencies and RE stakeholders, to promulgate the implementing rules and regulations of the Act. Thus, DOE issued DOE Circular No. DC2009-05-0008 on 25 May 2009 or the Rules and Regulations Implementing Republic Act No. 9513 ("IRR") , which provides: "PART III Incentives for Renewable Energy Projects and Activities RULE 5 General Incentives and Privileges for Renewable Energy Development SECTION 13. Fiscal Incentives for Renewable Energy Projects and Activities . DOE-certified existing and new RE Developers of RE facilities, including Hybrid Systems, in proportion to and to the extent of the RE component, for both Power and Non-Power Applications, shall be entitled to the following incentives: A. Income Tax Holiday (ITH) xxx xxx xxx G. Zero Percent Value-Added Tax Rate The following transactions/activities shall be subject to zero percent (0%) value-added tax (VAT) , pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337: (a) Sale of fuel from RE sources or power generated from renewable sources of energy such as , but not limited to, biomass, solar , wind, hydropower, geothermal, ocean energy, and other emerging energy sources using technologies such as fuel cells and hydrogen fuels; (b) Purchase of local goods, properties and services needed for the development, construction, and installation of the plant facilities of RE Developers; (c) Whole process of exploration and development of RE sources up to its conversion into power, including, but not limited to, the services performed by subcontractors and/or contractors." 80 For sales to qualify as subject to zero-rated VAT, Section 18, Part III, Rule 5 of the IRR of R.A. No. 9513 provides the conditions for availment of the incentives as follows: "PART III Incentives for Renewable Energy Projects and Activities RULE 5 General Incentives and Privileges for Renewable Energy Development SECTION 18. Conditions for Availment of Incentives and Other Privileges . A. Registration/Accreditation with the DOE For purposes of entitlement to the incentives and privileges under the Act , existing and new RE Developers, and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall register with the DOE, through the Renewable Energy Management Bureau) (REMB). The following certifications shall be issued : (1) DOE Certificate of Registration issued to an RE Developer holding a valid RE Service/Operating Contract. For existing RE projects, the new RE Service/Operating Contract that the RE Developer has executed with the DOE subject to the Transitory Provision in Rule 13, Section 39. The DOE Certificate of Registration shall be issued immediately upon award of an RE Service/Operating Contract covering an existing or new RE project or upon approval of additional investment. Any investment added to existing RE projects shall be subject to prior approval by the DOE. (2) DOE Certificate of Accreditation issued to RE manufacturers, fabricators, and suppliers of locally-produced RE equipment, upon submission of necessary requirements to be determined by the DOE, in coordination with the DTI. B. Registration with the Board of Investments (BOI) The RE sector is hereby declared a priority investment sector that will regularly form part of the country's Investment Priority Plan (IPP), unless declared otherwise by law. To qualify for the availment of the incentives under Sections 13 and 15 of this IRR, RE Developers and manufacturers, fabricators, and suppliers of locally-produced RE equipment, shall register with the BOI . The registration with the BOI shall be carried out through an agreement and an administrative arrangement between the BOI and the DOE, with the end-view of facilitating the registration of qualified RE facilities. The applications for registration shall be favorably acted upon immediately by the BOI, on the basis of the certification issued by the DOE. C. Certificate of Endorsement by the DOE RE Developers , and manufacturers, fabricators, and suppliers of locally-produced RE equipment shall be qualified to avail of the incentives provided for in the Act only after securing a Certificate of Endorsement from the DOE , through the REMB, on a per transaction basis. The DOE, through the REMB, shall issue said certification within fifteen (15) days upon request of the RE Developer or manufacturer, fabricator, and supplier; Provided , That the certification issued by the DOE shall be without prejudice to any further requirements that may be imposed by the government agencies tasked with the administration of the fiscal incentives mentioned under Rule 5 of this IRR." 81 As required by the foregoing provisions, the following documents must be secured by a RE Developer in order to qualify for VAT zero-rating, as contemplated under RA No. 9513 and its IRR : i. DOE Certificate of Registration; ii. Registration with the BOI; and iii. Certificate of Endorsement from the DOE on a per transaction basis. Records show that petitioner was issued a DOE Certificate of Registration (Registration No. SESC 2013-09-037) on 29 October 2018, 82 a BOI Certificate of Registration (No. 2014-004) on 7 January 2014, 83 and BOI Certificate of Registration (No. 2014-209) on 20 November 2014. 84 However, there is no showing that petitioner was issued a Certificate of Endorsement by the DOE, through the REMB, on a per transaction basis. Without this third requirement, petitioner's alleged sales, if any, do not qualify for VAT zero-rating. In fact, the DOE Certificate of Registration recognizes that it is issued subject to petitioner's compliance with the IRR : ". . . This Certificate of Registration shall serve as the basis of entitlement to incentives of San Carlos Solar Energy, Inc. under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (Act), subject to performance of its obligations under the Contract and compliance with the provisions of the Act, its Implementing Rules and Regulations (IRR) and applicable DOE directives, circulars, and other issuances which may be promulgated from time to time by the DOE in pursuance of its powers under the Act. This certification is issued consistent with the existing requirements provided under the Act, its IRR and pertinent DOE guidelines. . ." 85 AIDSTE It is settled that tax refunds, as in the instant case, are in the nature of a claim for exemption. Not only is the law construed in strictissimi juris against the taxpayer; the pieces of evidence presented entitling a taxpayer to exemption are also strictissimi scrutinized and must be duly proven. 86 Accordingly, it is the claimant's burden to prove the factual basis of a claim for refund or tax credit. 87 In view of the foregoing, the Court finds it unnecessary to discuss the remaining issue on the apportionment of the alleged input VAT resulting to disallowance of the amount of P40,624,825.97 from petitioner's claim for VAT refund. WHEREFORE , in light of the foregoing considerations, the instant Petition for Review filed by petitioner is hereby DENIED for lack of merit. SO ORDERED. (SGD.) MARIA ROWENA MODESTO-SAN PEDRO Associate Justice Erlinda P. Uy, J. , concurs. Ma. Belen M. Ringpis-Liban, J. , inhibited. Footnotes 1. See Petition for Review, Records, Vol. 1, pp. 10-74, with annexes. 2. See Pre-Trial Order; Records, Vol. 3, p. 2454. 3. See Pre-Trial Order, Records, Vol. 3, p. 2455. 4. Id. 5. See Exhibit "P-1," Records, Vol. 4, p. 2539; See also Exhibit "R-4," BIR Records, Folder 2, pp. 1-174. 6. See Exhibit "P-2," Records, Vol. 4, p. 2543. 7. See Exhibit "P-3," Records, Vol. 4, p. 2544. 8. See Exhibit "P-4," Records, Vol. 4, p. 2545. 9. Ibid . 10. See Petition for Review, Records, Vol. 1, pp. 10-74, with annexes. 11. See Summons dated 4 May 2017, Records, Vol. 1, pp. 131-132. 12. See Summons dated 4 May 2017, Records, Vol. 1, pp. 131-132; See also Notification dated 12 May 2017, Records, Vol. 1, p. 133. 13. Ibid . 14. See Motion for Extension of Time to File Answer, Records, Vol. 1, pp. 134-137. 15. See Order dated 25 May 2017, Records, Vol. 1, p. 138. 16. See Resolution dated 23 August 2017, Records, Vol. 1, pp. 145-146. 17. See Records Verification dated 4 August 2017, Records, Vol. 1, p. 140. 18. See Motion to Admit Attached Answer with attached Answer, Records, Vol. 1, pp. 147-164. 19. See Answer, Records, Vol. 1, pp. 156-162. 20. See Motion to Declare Respondent Commissioner of Internal Revenue in Default, Records, Vol. 1, pp. 165-170. 21. See Resolution dated 8 September 2017, Records, Vol. 1, pp. 171-173. 22. Ibid . 23. See Respondent's Pre-Trial Brief dated 12 January 2018, Records, Vol. 1, pp. 182-186. 24. See Petitioner's Pre-Trial Brief dated 5 March 2018, Records, Vol. 1, pp. 828-1788. 25. See Minute Resolution, Records, Vol. 3, pp. 1828-1833; See also Order dated 10 May 2018, Records, Vol. 3, pp. 1834-1837. 26. Ibid . 27. See Compliance dated 18 May 2018, Records, Vol. 3, pp. 1839-1842. 28. See Order dated 29 May 2018, Records, Vol. 3, pp. 1846-1849. 29. See Minute Resolution dated 2 July 2018, Records, Vol. 3, pp. 1859-1860. 30. See Joint Motion for Extension to File Joint Stipulation of Facts and Issues dated 25 May 2018, Records, Vol. 3, pp. 1848-1845. 31. See Order dated 29 May 2018, Records, Vol. 3, pp. 1846-1849. 32. See Joint Stipulation of Facts and Issues, Records, Vol. 3, pp. 1850-1855. 33. According to the parties, considering that 9 June 2018 is a Saturday and work in courts and government was suspended on 11 June 2018 due to inclement weather, the parties timely filed their JSFI. 12 June 2018 is a national non-working holiday. 34. See Resolution dated 29 June 2018, Records, Vol. 3, pp. 1856-1858. 35. See Pre-Trial Order, Records, Vol. 3, pp. 2453-2461. 36. See Exhibits "P-387" and "P-387-A"; Records, Vol. 3, pp. 1975-2451. 37. See Minute Resolution dated 3 September 2018, Records, Vol. 3, pp. 2435-2436. 38. See Exhibits "P-1429" and "P-1429-A," Records, Vol. 1, pp. 219-777; See also Exhibits "P-1430" and "P-1430-A", Records, Vol. 3, pp. 1887-1966; See also Exhibits "P-1431" and "P-1431-A," Records, Vol. 3, pp. 2462-2471. 39. See Exhibits "P-1432" and "P-1432-A," Records, Vol. 3, pp. 2462-2464 and pp. 2472-2483. 40. See Order dated 21 September 2018, Records, Vol. 4, p. 2490. 41. See Order dated 4 September 2018, Records, Vol. 4, pp. 2487-2489; See also Order dated 17 October 2018, Records, Vol. 4, p. 2497; Order dated 4 December 2018, Records, Vol. 4, p. 2506, See also Order dated 12 December 2018, Records, Vol. 4, p. 2511. 42. See Third Division's Records Verification Report dated 29 January 2019, Records, Vol. 4, p. 2668; See also Order dated 29 January 2019, Records, Vol. 4, p. 2669. 43. See Resolution dated 26 September 2019, Records, Vol. 4, pp. 2722-2726. 44. See Order dated 10 October 2019, Records, Vol. 4, pp. 2728-2729. 45. Ibid . 46. See Formal Offer of Evidence dated 11 October 2019, Records, Vol. 4, pp. 2730-2734. 47. See Third Division's Record Verification Report dated 7 November 2019, Records, Vol. 4, p. 2736. 48. See Resolution dated 26 November 2019, Records, Vol. 4, pp. 2739-2741. 49. Ibid . 50. See Minute Resolution dated 7 January 2020, Records, Vol. 4, p. 2758. 51. See Respondent's Memorandum dated 23 December 2019, Records, Vol. 4, pp. 2746-2757. 52. See Petitioner's Memorandum dated 3 February 2020, Records, Vol. 4, pp. 2761-2782. 53. See Resolution dated 14 January 2020, Vol. 4, p. 2760. 54. See Resolution dated 7 February 2020, Records, Vol. 4, p. 2764. 55. See Statement of Issues, Pre-Trial Order, Records, Vol. 4, p. 2455. 56. See Petitioner's Memorandum, Records, Vol. 4, pp. 2772-2778. 57. See Respondent's Memorandum, Records, Vol. 4, pp. 2747-2753. 58. Metro Rail Transit Corporation v. Commissioner of Internal Revenue , CTA Case No. 9016, 4 December 2019; Makati Agro Trading, Inc. v. Commissioner of Internal Revenue , CTA Case No. 9735, 10 June 2020; and Jinzai Experts, Inc. v. Commissioner of Internal Revenue , CTA Case No. 9473, 18 February 2020. 59. Emphasis and underscoring supplied. 60. G.R. No. 183408, 12 July 2017. 61. Citation omitted; Emphasis supplied. 62. G.R. No. 207112, 8 December 2015. 63. See Respondent's Memorandum, Records, Vol. 4, p. 2747. 64. Citations omitted; Emphasis and underscoring supplied. 65. See Exhibit "P-2," Records, Vol. 4, p. 2543. 66. Exhibit "P-2," Records, Vol. 4, p, 2543. 67. See Exhibit "P-4," Records, Vol. 4, p. 2545. 68. G.R. Nos. 206079-80 and 206309, 17 January 2018. 69. Emphasis and underscoring supplied. 70. G.R. No. 231581, 10 April 2019. 71. Citations omitted; Emphasis and underscoring supplied. 72. See Respondent's Memorandum, Records, Vol. 4, p. 2747. 73. See Petition for Review, Records, Vol. 1, p. 13. 74. See Petition for Review, Records, Vol. 1, p. 12; See also Exhibit "P-16," Records, Vol. 1, p. 340 and Exhibit "R-4," BIR Records, Folder 2, p, 162. 75. See Petition for Review, Records, Vol. 1, p. 13; See also Exhibit "P-18," Records, Vol. 1, pp, 344-351 and Exhibit "R-4," BIR Records, Folder 2, p. 160; See also Exhibit "P-19," Records, Vol. 1, pp. 352-359. 76. See Petition for Review, Records, Vol. 1, p. 13. 77. See Section 112 (A), National Internal Revenue Code of 1997, as amended. 78. Emphasis supplied. 79. Emphasis and underscoring supplied. 80. Emphasis supplied. 81. Emphasis and underscoring supplied. 82. See Exhibit "P-16," Records, Vol. 1, p. 340; See also Exhibit "R-4," BIR Records, Folder 2, p. 162. 83. See Exhibit "P-18," Records, Vol. 1, pp. 344-351; See also Exhibit "R-4," BIR Records, Folder 2, p. 160. 84. See Exhibit "P-19," Records, Vol. 1, pp. 352-359. 85. Emphasis and underscoring supplied. 86. Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue , G.R. No. 159490, 18 February 2008. 87. Eastern Telecommunications Philippines, Inc. v. Commissioner of Internal Revenue , G.R. No. 183531, 25 March 2015.