Amertron, Inc. v. Commissioner of Internal Revenue

SECOND DIVISION [C.T.A. CASE NO. 9893. January 4, 2022.] AMERTRON, INCORPORATED , petitioner , vs. COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION BACORRO-VILLENA , J p : At bar is a Petition for Review 1 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 P18,557,498.15. 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. It 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) 000-418-589-000 as shown in its Certificate of Registration. 2 It alleges that it accumulated an aggregate input VAT Amounting to P19,222,854.80 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 claim 3 for the refund of the foregoing amount with the BIR's VAT Credit Audit Division (VCAD) . However, through a letter dated 20 June 2018 4 (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 Summons 5 to respondent who filed his Answer 6 to the petition on 25 September 2018. Thereafter, petitioner and respondent filed their Pre-Trial Briefs on 28 November 2018 7 and 04 December 2018, 8 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 February 2019, the parties filed their JSFI. 10 Accordingly, the Court issued a Pre-Trial Order on 06 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 13 and the documents contained in the Universal Serial Bus (USB) drive 14 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 of P1,655,245.55. With no other witnesses to present, the Court, in an Order dated 16 September 2019, 15 gave petitioner five (5) days within which to file its Formal Offer of Evidence (FOE) . Likewise, respondent was given five (5) 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 (30) days to file their respective memoranda. Later or on 23 September 2019, petitioner filed its FOE 16 while Respondent filed his Comment 17 on 30 September 2019. In a Resolution dated 04 December 2019, 18 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 a "Motion for Partial Reconsideration 19 (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 2020, 20 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, 21 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", 22 "P-296", "P-317", "P-362", "P-364" to "P-365", "P-395", "P-405", "P-413", "P-428", "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", "P-1459" to "P-1460", 23 "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", "P-3110", "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" 24 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" 25 for being unreadable or not properly scanned. In the interim , per Records Verification 26 on 01 December 2020, petitioner failed to file its memorandum, while respondent filed his Memorandum 27 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 110 (B), in relation to Section 112 (A) and (C) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (RA) No. 10963, 29 otherwise known as Tax Reform for Acceleration and Inclusion (TRAIN) Law. The pertinent provisions read as follows: xxx xxx xxx Sec. 110. Tax Credits . xxx xxx xxx (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 (70%) 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. xxx xxx xxx Sec. 112. Refunds or Tax Credits of Input Tax. (A) Zero-Rated or Effectively Zero-Rated Sales . Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however , That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further , That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally , That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales. xxx xxx xxx (C) Period within which Refund of Input Taxes shall be Made. In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided , That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided , however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code. xxx xxx xxx 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 questioned the veracity of petitioner's documentary exhibits. 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 FIFTY-SEVEN THOUSAND FOUR HUNDRED NINETY-EIGHT AND FIFTEEN CENTAVOS (P18,557,498.15) 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 112 (A) and (C) 30 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 Actual Date of Filing of Administrative Claim January to March 2016 (1st Quarter) 31 March 2018 28 March 2018 31 April to June 2016 (2nd Quarter) 30 June 2018 July to September 2016 (3rd Quarter) 30 September 2018 October to December 2016 (4th Quarter) 31 December 2018 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 (90) days or until 26 June 2018, to decide on petitioner's administrative claim. Considering that respondent issued a letter dated 20 June 2018 32 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 Revenue 33 (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: xxx xxx xxx 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 Sections 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; (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 of 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. xxx xxx xxx 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 of unutilized 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 106 (A) (2) (a) (1), (2) and (b), 34 and 108 (B) (1) and (2) 35 of the NIRC 36 of 1997, as amended, provide 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 P2,184,141,876.42 and P1,988,893,167.12, respectively, and detailed as follows: Exhibit Period Exempt Sales Zero-Rated Sales "P-8" January to March 2016 (1st Quarter) P- P1,014,465,087.02 "P-9" April to June 2016 (2nd Quarter) 763,792,892.70 332,516,024.66 "P-10" July to September 2016 (3rd Quarter) 699,335,385.65 321,633,096.44 "P-11" October to December 2016 (4th Quarter) 721,013,598.07 320,278,959.00 Total P2,184,141,876.42 P1,988,893,167.12 However , as the ICPA noted, 37 petitioner erroneously reported the P716,057,754.72 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: Period Exempt Sales Zero-Rated Sales January to March 2016 (1st Quarter) P716,057,754.72 P298,407,332.30 April to June 2016 (2nd Quarter) 763,792,892.70 332,516,024.66 July to September 2016 (3rd Quarter) 699,335,385.65 321,633,096.44 October to December 2016 (4th Quarter) 721,013,598.07 320,278,959.00 Total P2,900,199,631.14 P1,272,835,412.40 Based on petitioner's Schedule of Zero-Rated Sales, 38 its total zero-rated sales for CY 2016 can be attributed to the actual export sale of goods under Section 106 (A) (2) (a) (1) of the NIRC of 1997, as amended. The said section further states: xxx xxx xxx SEC. 106 . Value-Added Tax on Sale of Goods or Properties . (A) Rate and Base of Tax . . . . xxx xxx xxx (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales . The term 'export sales' means: (1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)[.] xxx xxx xxx Based on the foregoing, in order for an export sale of goods to qualify as zero-rated under Section 106 (A) (2) (a) (1) of the NIRC of 1997, as amended, the following requirements must be met: 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. 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), (B) (1) and (2) (c) of the NIRC of 1997, as amended, and Sections 4.113-1 (A) (1), (B) (1) and (2) (c) of Revenue Regulations (RR) No. 16-2005, 39 provide respectively: xxx xxx xxx 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 xxx xxx xxx (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: xxx xxx xxx (c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; xxx xxx xxx 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 services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt. All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt . The following information shall be indicated in VAT invoice or VAT official receipt: (1) A statement that the seller is a VAT-registered person, followed by his TIN; (2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided , That: xxx xxx xxx (c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt[.] 40 xxx xxx xxx 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. : xxx xxx xxx 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 (P25.00) 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. . . xxx xxx xxx 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. xxx xxx xxx Thus, only export sales supported by the aforementioned documents shall qualify for VAT zero-rating under Section 106 (A) (2) (a) (1) of the NIRC of 1997, as amended. As per the ICPA's verification 41 of petitioner's Schedule of Zero-Rated Sales, 42 CTBC Bank Daily Transaction Listing, 43 BDO Export Advances, 44 Airway Bill/Bill of Lading, 45 and sales invoices, 46 only P171,120,035.98 (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 wit: Description Exhibit Amount 1. Sales with discrepancy in remittance amount "P-14" to "P-48" P738,233,291.22 2. Sales without proof of inward remittance "P-49" to "P-185" 261,710,496.50 3. Zero-rated sales without airway bill/bill of lading "P-186" to "P-247" 201,178,943.59 4. Zero-rated sales without original invoice "P-248" to "P-249" 19,345,052.75 5. Zero-rated sale with discrepancy remittance "P-250" 1,800.59 6. Valid zero-rated sales "P-250" to "P-270" 171,120,035.98 Upon further scrutiny of the ICPA Report with other submitted documentary evidence, the Court finds that the details of the amount of P171,120,035.98 (that the ICPA identified in his report) do not match the details in the sales invoices marked and submitted by petitioner as evidence, to wit: Per ICPA Report 47 Per petitioner's evidence 48 Exhibit No. SI No. Date Amount in USD Exhibit No. SI No. Date Amount in USD P-250 61335 25-Jan-16 764,249.37 P-250 61639 12-Dec-16 513,400.68 P-251 61360 25-Jan-16 440,333.39 P-251 61641 19-Dec-16 190,232.20 P-252 61436 18-Apr-16 295,628.35 P-252 61645 15-Dec-16 2,424.59 P-253 61455 25-Apr-16 78,834.93 P-253 61647 15-Dec-16 84.10 P-254 61459 02-May-16 41,236.89 P-254 61623 10-Nov-16 54.62 P-255 61490 09-May-16 160,806.73 P-255 49 - - - P-256 61514 06-Jun-16 179,667.30 P-256 61616 14-Nov-16 9.56 P-257 61516 13-Jun-16 8,060.98 P-257 61632 07-Nov-16 90.89 P-258 61518 15-Jun-16 326,044.68 P-258 61633 21-Nov-16 339.05 P-259 61521 27-Jun-16 8,152.17 P-259 61617 14-Nov-16 26.31 P-260 61542 11-Jul-16 20,673.61 P-260 61619 07-Nov-16 68,056.32 P-261 61553 25-Jul-16 565,682.74 P-261 61637 28-Nov-16 231,123.47 P-262 61558 01-Aug-16 12,126.68 P-262 61618 14-Nov-16 309,857.88 P-263 61561 08-Aug-16 36,073.88 P-263 61630 28-Nov-16 65,782.30 P-264 61568 22-Aug-16 21,851.29 P-264 61620 21-Nov-16 321,256.43 P-265 61570 29-Aug-16 19,149.40 P-265 61490 09-May-16 160,806.73 P-266 61572 05-Sep-16 33,891.57 P-266 35955 16-Jun-16 22,830.13 P-267 61578 19-Sep-16 59,384.35 P-267 35911 31-May-16 203.80 P-268 61583 26-Sep-16 94,039.09 P-268 35745 26-May-16 2,237.38 P-269 61600 17-Oct-16 202,546.41 P-269 35740 24-May-16 11,187.35 P-270 61619 07-Nov-16 68,056.32 P-270 35706 30-Mar-16 432.17 Total 3,436,490.33 1,194,239.77 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 ICPA Report 50 Per petitioner's evidence 51 Exhibit No. SI No. Date Amount in USD Exhibit No. SI No. Date Amount in USD P-250 61335 25-Jan-16 764,249.37 P-161 61335 25-Jan-16 764,249.37 P-251 61360 25-Jan-16 440,333.39 P-160 61360 25-Jan-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 78,834.93 P-254 61459 02-May-16 41,236.89 P-172 61459 02-May-16 41,236.89 P-255 61490 09-May-16 160,806.73 P-265 61490 09-May-16 160,806.73 P-256 61514 06-Jun-16 179,667.30 P-189 61514 06-Jun-16 179,667.30 P-257 61516 13-Jun-16 8,060.98 P-187 61516 13-Jun-16 8,060.98 P-258 61518 15-Jun-16 326,044.68 P-186 61518 15-Jun-16 326,044.68 P-259 61521 27-Jun-16 8,152.17 P-188 61521 27-Jun-16 8,152.37 P-260 61542 11-Jul-16 20,673.61 P-193 61542 11-Jul-16 20,673.61 P-261 61553 25-Jul-16 565,682.74 P-203 61553 25-Jul-16 565,682.74 P-262 61558 01-Aug-16 12,126.68 P-214 61558 01-Aug-16 12,126.68 P-263 61561 08-Aug-16 36,073.88 P-210 61561 08-Aug-16 36,073.88 P-264 61568 22-Aug-16 21,851.29 P-211 61568 22-Aug-16 21,851.29 P-265 61570 29-Aug-16 19,149.40 P-208 61570 29-Aug-16 19,149.40 P-266 61572 05-Sep-16 33,891.57 P-215 61572 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 61583 26-Sep-16 94,039.09 P-216 61583 26-Sep-16 94,039.09 P-269 61600 17-Oct-16 202,546.41 P-223 61600 17-Oct-16 202,546.41 P-270 61619 07-Nov-16 68,056.32 P-260 61619 07-Nov-16 68,056.32 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--vis the air waybill documents based on petitioner's Schedule of Zero-Rated Sales, 52 to wit: Per Sales Invoice Per Air Waybill Exhibit No. SI No. Name Address Exhibit No. Air Waybill No. Name Address P-161 61335 Avago Technologies International Sales Pte., Ltd. Locked Bag #211, Pejabat Serahan Bayan Lepas 11900 Bayan Lepas, Penang Malaysia P-3428 6UB2017 Avago Technologies Trading Ltd. 63 Alexandra Terrace No. 03-07 Harbour Link Warehouse Singapore P-160 61360 P-3424 6UB2005 P-179 61436 P-3456 6UB7372 P-181 61455 P-3457 6UB8215 P-172 61459 P-3459 6UB8292 Avago Technologies Mfg. Pte. Ltd. 1150 Depot Road Harbourlink Warehouse Singapore P-265 61490 P-3474 6XJ0062 Avago Technologies Trading Ltd. 63 Alexandra Terrace No. 03-07 Harbour Link Warehouse Singapore P-189 61514 P-3451 6XJ1512 P-187 61516 P-3464 6XJ1876 P-186 61518 P-3452 6XJ1513 P-188 61521 P-3461 6XJ2910 P-193 61542 P-3466 6XJ4872 P-203 61553 P-3465 6XJ2928 P-214 61558 P-3467 6XJ5228 P-210 61561 P-3478 6XJ6269 Avago Technologies 1150 Depot Road Singapore P-211 61568 P-3488 6XJ5280 Avago Technologies Trading Ltd. 63 Alexandra Terrace No. 03-07 Harbour Link Warehouse Singapore P-208 61570 P-3485 6XJ6737 P-215 61572 P-3472 6XJ2977 P-218 61578 P-3494 6XJ8825 P-216 61583 P-3486 6XJ6789 P-223 61600 P-3495 6XJ8806 P-260 61619 P-3497 7CE2003 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 Revenue , 53 the Supreme Court held: xxx xxx xxx 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. . . xxx xxx xxx 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. SO ORDERED. (SGD.) JEAN MARIE A. BACORRO-VILLENA Associate Justice Juanito C. Castaeda, Jr. and Lanee S. Cui-David, JJ. , concur. Footnotes 1. Filed on 27 July 2018, Division Docket, pp. 10-20. 2. Exhibit "P-5", USB. 3. Exhibit "P-12", id. 4. Exhibit "P-13", id. 5. Division Docket, p. 62. 6. Id. , pp. 70-74. 7. Id. , pp. 88-93. 8. Id. , pp. 94-97. 9. See Order dated 31 January 2019, id. , p. 104. 10. Id. , pp. 111-115. 11. Id. , pp. 142-145. 12. Exhibit "P-3501", id. , pp. 275-291. 13. Exhibit "P-2", id. , pp. 169-274, with annexes. 14. Exhibit "P-2-B". 15. Division Docket, p. 404. 16. Id. , pp. 408-419. 17. Id. , pp. 420-435. 18. Id. , pp. 438-440. 19. Id. , pp. 441-445. 20. See Resolution dated 22 June 2020, id. , pp. 472-473. 21. Id. , pp. 483-487. 22. Exhibit Description "P-51", "P-63", "P-85", "P-107" to "P-109", "P-149", "P-151" and "P-255" Sales invoices supporting Petitioner's zero rated sales for the year 2016. 23. Exhibit Description "P-296", "P-317", "P-362", "P-364" to "P-365", "P-395", "P-405", "P-413", "P-428", "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" Sales invoices supporting Petitioner's VAT exempt sales for the year 2016. 24. Exhibit Description "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", "P-3110", "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" Various sales invoices, official receipts, delivery receipts, and collection receipts supporting Petitioner's local purchases of goods and services for 2016. 25. 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-2688", "P-2930" to "P-2931", "P-3027", "P-3089" to "P-3091" and "P-3383" Various sales invoices, official receipts, delivery receipts, and collection receipts supporting Petitioner's local purchases of goods and services for 2016. 26. Division Docket, p. 488. 27. Id. , pp. 449-457. 28. Id. , p. 490. 29. 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, 155, 171, 174, 175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249, 254, 264, 269, AND 288; CREATING NEW SECTIONS 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, AND 265-A; AND REPEALING SECTIONS 35, 62, AND 89; ALL UNDER REPUBLIC ACT NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES. 30. Supra at pp. 6-7. 31. Exhibit "P-12", supra at note 3. 32. Exhibit "P-13", supra at note 4. 33. G.R. No. 188260, 13 November 2013; Citation omitted. 34. 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. xxx xxx xxx (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales . The term 'export sales' means: (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); (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); xxx xxx xxx (b) Foreign Currency Denominated Sale . The phrase 'foreign currency denominated sale' means sale to a nonresident of goods, except those mentioned in Sections 149 and 150, 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). 35. Sec. 108 . Value-Added Tax on Sale of Services and Use or Lease of Properties . xxx xxx xxx (B) Transactions Subject to Zero Percent (0%) Rate . The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate: (1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); (2) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); xxx xxx xxx 36. Prior to the changes brought about by TRAIN. 37. Exhibit "P-2", ICPA Report, Division Docket, p. 175. 38. Exhibit "P-2", Annex 1, id. , pp. 183-188. 39. Consolidated Value-Added Tax Regulations of 2005. 40. Emphasis supplied. 41. Exhibit "P-2", Table 11, ICPA Report, Division Docket, p. 176. 42. Exhibit "P-2", supra at note 38. 43. Exhibit "P-1537", USB. 44. Exhibits "P-1510" to "P-1536", id. 45. Exhibits "P-3422" to "P-3499", id. 46. Exhibits "P-14" to "P-265", id. 47. Exhibit "P-2", Annex 1-5, ICPA Report, Division Docket, p. 198. 48. USB marked on 27 July 2020. 49. 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. 50. Exhibit "P-2", supra at note 47. 51. Supra at note 49. 52. Exhibit "P-2", supra at note 43. 53. G.R. No. 222428, 19 February 2018, citing Atlas Consolidated Mining and Development Corporation v. Commissioner of Internal Revenue , 569 Phil. 483 (2008); Commissioner of 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).