CBK Power Co. Limited v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [C.T.A. CASE NO. 8246. June 10, 2014.] CBK POWER COMPANY LIMITED , petitioner , vs .COMMISSIONER OF INTERNAL REVENUE , respondent . [C.T.A. CASE NO. 8302. June 10, 2014.] CBK POWER COMPANY LIMITED , petitioner , vs .COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION BAUTISTA , J p : The consolidated Petition for Review filed on March 30, 2011, 1 and Amended Petition for Review filed on April 8, 2013, 2 pursuant to Section 112 (A) of the 1997 National Internal Revenue Code, as amended, 3 seek for the issuance of tax credit certificates in the respective amounts of P17,784,968.91, for unutilized input taxes on local purchases and importations of goods other than capital goods, local purchases of services, payments for services rendered by non-residents, including unutilized amortized input taxes on capital goods, all attributable to zero-rated sales covering the period from January 1, 2009 to March 31, 2009; and P5,781,915.24, for unutilized input taxes on importations of goods other than capital goods, attributable to zero-rated sales covering the period from April 1, 2009 to June 30, 2009. FACTS OF THE CASE Petitioner, CBK Power Company Limited, is a partnership duly organized and existing under and by virtue of the laws of the Philippines, with principal office at the National Power Corporation Compound, Kalayaan, Laguna. On the other hand, respondent is the duly appointed Commissioner of Internal Revenue, vested with authority to act as such, including, inter alia ,the power to decide, approve and grant refunds or tax credit of erroneously or illegally collected internal revenue taxes as provided by law, with office address at the Bureau of Internal Revenue ("BIR") National Office Building, Diliman, Quezon City. On November 26, 2010, petitioner filed with the BIR Revenue District Office No. 55 of Laguna, its administrative claim in the amount of P17,784,968.91, for unutilized input taxes on local purchases and importations of goods other than capital goods, local purchases of services, payments for services rendered by non-residents, including unutilized amortized input taxes on capital goods covering the period from January 1, 2009 to March 31, 2009. Also, on February 24, 2011, petitioner filed with the BIR Large Taxpayers Service, Revenue District Office No. 121, BIR National Office Building, Agham Road, Diliman, Quezon City, its administrative claim in the amount of P31,680,290.87, for unutilized input taxes on its local purchases and importations of goods other than capital goods, local purchases of services, including unutilized amortized input taxes on capital goods covering the period from April 1, 2009 to June 30, 2009. Due to respondent's inaction, on March 30, 2011, petitioner filed a Petition for Review, docketed as CTA Case No. 8246 , 4 regarding its claim in the amount of P17,784,968.91, covering the period from January 1, 2009 to March 31, 2009. On June 27, 2011, respondent filed her Answer, 5 interposing the following Special and Affirmative Defenses: "4. Petitioner is not entitled to [a] refund or tax credit in the amount of P17,784,968.91 representing alleged unutilized input tax because it failed to submit all the necessary and relevant documents pertaining to the above-mentioned amount with respondent (sic) in the administrative claim for refund or tax credit; HAcaCS 5. In an administrative claim for refund or tax credit of input taxes attributable to zero-rated sales, a VAT[-]registered person must submit complete documents to support its application for refund pursuant to Section 112(D) (sic) of the Tax Code of 1997. Otherwise, there will be no sufficient compliance with the filing of an administrative claim for refund, which is a condition sine qua non prior (sic) to the filing of judicial claim; 6. To support its claim, it is imperative for petitioner to prove and present the following, viz. : a. The registration requirements of a value-added taxpayer in compliance with Section 6(a) and (b) of Revenue Regulations No. 6-97 in relation to Section 4.107-a(a) of Revenue Regulations No. 7-95, and Section 236 of the National Internal Revenue Code of 1997 (NIRC of 1997); b. The invoicing and accounting requirements for VAT-registered persons, as well as the filing and payment of VAT in compliance with the provisions of Sections 113 and 114 of the NIRC of 1997; c. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98. It is worthy of emphasis that Section 112(D) (sic) of the NIRC of 1997 requires the submission of complete documents in support of the application filed with the Bureau of Internal Revenue before the 120-day audit period shall apply, and before the taxpayer could avail of judicial remedies as provided for in the law. Hence, petitioner's failure to submit proof of compliance with the above-stated requirements warrants [the] immediate dismissal of the petition for review; d. That the input taxes of P47,425,306.79 (sic) allegedly paid by petitioner on its domestic purchases of non-capital goods and services, services rendered by non-residents and importation of non-capital goods for the period April 1, 2008 to December 31, 2008 (sic) were attributable to its zero-rated sales and such have not been applied against any output tax and were not carried over in the succeeding taxable quarter or quarters; e. That petitioner's administrative claim for tax credit or refund of [its] unutilized input tax (VAT) was filed within two (2) year[s] after the close of the taxable quarter when the sales were made in accordance with Sections 112(A) and (D) (sic) of the NIRC of 1997; f. The judicial claim was filed within the period prescribed in Section 112(D) (sic) of the NIRC of 1997; g. That petitioner's domestic purchases of goods and services were made in the course of the trade or business, properly supported by VAT invoices and/or official receipts and other documents, such as subsidiary purchase journal, showing that it actually paid VAT in accordance with Sections 110(A)(2) and 113 of the NIRC of 1997, and in pursuance (sic) to Section 4.104-5(a) and (b) of Revenue Regulations No. 7-95 (RE: Substantiation of Claims for Input Tax Credit);[and] h. The requirements as enumerated under Section 4.104-2 of Revenue Regulations [No.] 7-95 (Re: Persons who can avail of the Input Tax Credits). 7. In Ang Tibay vs. Court of Industrial Relations, G.R. No. L-46496 ,the Highest Court stated the primary rights which must be respected even in an administrative proceeding: xxx xxx xxx Petitioner is mandated to present evidence to support its administrative claim and such evidence will be used as basis for the decision of the quasi-judicial body. If there is lack of evidence, then the decision will probably be contrary to petitioner. Only the evidence presented will be reviewed by the quasi-judicial body. An administrative claim is meant to expedite the proceedings where all the relevant evidence is presented. Petitioner, however, instead chose not to submit any evidence to support its claim; and 8. Furthermore, in an action for refund the burden of proof is on the taxpayer to establish its right to refund (sic) and failure to sustain the burden is fatal to the claim for refund/credit. This is so because exemptions from taxation are highly disfavored in law and he who claims exemption must be able to justify his claim by the clearest grant of organic or statutory law. An exemption from the common burden cannot be permitted to exist upon value implications (Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466, cited in Collector of Internal Revenue vs. Manila Jockey Club, Inc.,98 Phil. 670) ." 6 On the other hand, on June 28, 2011, petitioner filed another Petition for Review, docketed as CTA Case No. 8302 , 7 regarding its claim in the amount of P31,680,290.87, covering the period front April 1, 2009 to June 30, 2009. On September 2, 2011, respondent filed her Answer, 8 interposing the following: "5. Petitioner's alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau of Internal Revenue (BIR); 6. The amount of P31,680,290.87 being claimed by petitioner as alleged unutilized input VAT on its alleged local purchases and importations of goods other than capital goods, alleged local purchases of services, including alleged unutilized amortized input taxes on capital goods exceeding P1 Million, for the period April 1, 2009 to June 30, 2009 allegedly attributable to zero-rated sales is not properly documented; 7. Petitioner must prove that it has complied with the provisions of Section 112(A) and 112(B) (sic) of the Tax Code of 1997, as amended; 8. Proof of compliance with the prescribed checklist of requirements to be submitted involving claim for VAT refund pursuant to Revenue Memorandum Order No. 53-98, otherwise there would be no sufficient compliance with the filing of the administrative claim for refund, the administrative claim thereof being mere pro-forma, which is a condition sine qua non prior (sic) to the filing of judicial claim in accordance with the provision of Section 229 of the Tax Code of 1997. Further Section 112(C) of the Tax Code of 1997, as amended, requires the submission of complete documents in support of the application filed with the BIR before the 120-day audit period will apply, and before the taxpayer could avail of judicial remedies as provided for in law .Hence, petitioner's failure to submit proof of compliance with the above-stated requirements warrants [the] immediate dismissal of the petition for review; 9. Petitioner must likewise prove that it has complied with the invoicing requirements mentioned in Sections 110 and 113 of the Tax Code of 1997, as amended, in relation to the provisions of Revenue Regulations [No.] 7-95; 10. In an action for refund, the burden of proof is on the taxpayer to establish its right to refund (sic) and failure to sustain the burden is fatal to the claim for refund/credit (Asiatic Petroleum Co. vs. Llanes, 49 Phil. 466 cited in Collector of Internal Revenue vs. Manila Jockey Club, Inc.,98 Phil. 670) ; acSECT 11. Tax refunds are in the nature of tax exemptions. As such, they are regarded as in derogation of sovereign authority and to be construed strictissimi juris against the person claiming the exemption (Commissioner of Internal Revenue vs. S.C. Johnson and Son, Inc., et al. ,209 SCRA 87 (1999)) and further, claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and, as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 1211) ; 12. Petitioner must likewise comply with the provisions of Section 112(C) of the Tax Code of 1997, as amended, which provides: xxx xxx xxx 13. The power of taxation will not be surrendered except in words too plain to be mistaken. The reason is that the State cannot strip itself of this highest attribute of sovereignty its most essential power of taxation by vague or ambiguous language. Since tax refunds are in the nature of tax exemptions, these are deemed to be in derogation of sovereign authority and to be considered in strictissimi juris against the person or entity claiming the exception (Commissioner of Internal Revenue vs. Solidbank Corporation, 416 SCRA 436) .It must be indubitably shown to exist, for every presumption is against it (Davao Light & Power Co.,Inc. vs. Commissioner of Customs, 44 SCRA 122) . Ignoring the above teaching of the Supreme Court and adopting the interpretation favorable to petitioner cannot be done because it runs afoul of its ruling that those who claim to be exempt from the payment (here, claim for a refund) of a particular tax must do so under clear and unmistakable terms found on the statute .They must be able to point to some positive provision, not merely a vague implication (Asiatic Petroleum Co.,Ltd. vs. Llanes, 49 Phil. 466) ,of the law creating that right (Espaol vs. Philippine Veterans Administration, 137 SCRA 314) ." 9 On October 14, 2011, the Court ordered the consolidation of CTA Case No. 8302 ,with CTA Case No. 8246 , pursuant to Section 1 of Rule 31 of the 1997 Rules of Civil Procedure. 10 On December 1, 2011, for failure of respondent to appear during Pre-Trial, and upon motion of petitioner, the Court declared the former as in default and allowed the latter to present its evidence ex-parte. 11 The same was confirmed in a Resolution dated December 23, 2011. 12 On May 2, 2013, the Court granted petitioner's Motion for Leave of Court to File Attached Amended Petition for Review for CTA Case No. 8302 . 13 Accordingly, the Amended Petition for Review was admitted by the Court. In the Amended Petition for Review for CTA Case No. 8302 ,petitioner seeks the reduced amount of P5,781,915.24 for unutilized input taxes on its importations of goods other than capital goods for the period covering April 1, 2009 to June 30, 2009, 14 taking into consideration the Letter dated February 19, 2013 issued by respondent. On June 11, 2013, the Court submitted the consolidated cases for decision. 15 Hence, this Decision. ISSUE The sole issue for the Court's determination is that: WHETHER OR NOT PETITIONER IS ENTITLED FOR THE ISSUANCE OF TAX CREDIT CERTIFICATES IN THE TOTAL AMOUNT OF P23,566,884.15 FOR THE PERIODS COVERING JANUARY 1, 2009 TO MARCH 31, 2009, AND APRIL 1, 2009 TO JUNE 30, 2009. RULING OF THE COURT The Court finds the Petition for Review and Amended Petition for Review partly meritorious. The subject claim in the amount of P23,566,884.15, consisted of the following input taxes: DHCcST 1st Quarter 2nd Quarter Total Input VAT - 2009 16 - 2009 17 Claim Input Taxes on Importations of Goods Other P335,565.00 18 P5,781,915.24 19 P6,117,480.24 than Capital Goods Input Taxes on Domestic Purchases of Goods 6,024,501.87 20 - 6,024,501.87 Other than Capital Goods Input Taxes on Domestic Purchases of Services 10,414,723.92 21 - 10,414,723.92 Input Taxes on Services Rendered by Non- 474,530.30 22 - 474,530.30 Residents Amortization of Input Taxes on Capital Goods Exceeding P1 Million: Input Tax Deferred on Capital Goods Exceeding P1 Million from Previous Quarter 4,626,744.08 23 Add: Input Tax on Capital Goods Exceeding P1 Million Purchased this Quarter 1,469,860.78 24 Total Unamortized Input Tax on Capital Goods Exceeding P1 Million 6,096,604.86 Less: Input Tax on Capital Goods Exceeding P1 Million Deferred for the Succeeding Period 5,560,957.04 25 Amortization of Input Taxes on Capital Goods Exceeding P1 Million 535,647.82 - 535,647.82 TOTAL CLAIMED UNUTILIZED INPUT TAXES P17,784,968.91 P5,781,915.24 P23,566,884.15 ============ =========== ============ Accordingly, Section 112 (A) of the 1997 National Internal Revenue Code ("NIRC"), as amended, allows the refund or tax credit of unutilized input taxes attributable to zero-rated or effectively zero-rated sales, to wit: "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." Thus, enumerated hereunder are the requisites that must be complied with: 1) the claimant must be a value-added tax ("VAT")-registered person; 2) there must be zero-rated or effectively zero-rated sales; 3) input taxes were incurred or paid; 4) input taxes are attributable to zero-rated or effectively zero-rated sales; 5) input taxes were not applied against any output VAT liability; and 6) both administrative and judicial claims for refund were seasonably filed. At the outset, the Court finds it appropriate to first determine petitioner's compliance with the sixth requirement that the administrative and judicial claims were timely filed. As earlier-quoted, Section 112 (A) of the 1997 NIRC, as amended, provides that the application for refund or tax credit of unutilized excess input VAT must be filed within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Based on the records, petitioner filed its administrative claim on November 26, 2011 covering the period from January 1, 2009 to March 31, 2009; while it filed on February 24, 2011, its administrative claim covering the period from April 1, 2009 to June 30, 2009. Applying therefore Section 112 (A) of the 1997 NIRC, as amended, petitioner had until March 31, 2011 and June 30, 2011, respectively, within which to file its administrative claims for refund/tax credit. The Court, thus, finds the administrative claims filed well within the two (2)-year period. Also, Section 112 (C) of the 1997 NIRC, as amended, provides as follows: "Sec. 112. Refunds or Tax Credits of Input Tax. xxx xxx xxx (C) Period within which Refund or Tax Credit of Input Taxes shall be Made. In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. IaAHCE In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty-day period, appeal the decision or the unacted claim with the Court of Tax Appeals." It has been settled that the Commissioner of Internal Revenue has one hundred twenty (120) days from the date of submission of the complete documents in support of the application for tax refund/credit within which to grant or deny the claim; and in case of full or partial denial thereof, the taxpayer has thirty (30) days from receipt within which to elevate the same to this Court; nonetheless, if the Commissioner of Internal Revenue fails to act thereon within the allotted one hundred twenty (120) days, the taxpayer has thirty (30) days to appeal the said inaction to this Court. Based on the records, the following hereunder are the relevant dates: Taxable Close of Date of Filing of End of 30 days CTA Quarter- Taxable Administrative End of 120 from the lapse of Date of Filing of Case No. CY 2009 Quarter Claim days the 120 days Judicial Claim 8246 1st Qtr March 31, 2009 November 26, 2010 March 26, 2011 April 25, 2011 March 30, 2011 26 8302 2nd Qtr June 30, 2009 February 24, 2011 June 24, 2011 July 24, 2011 June 28, 2011 27 From the foregoing, the judicial claims filed by petitioner for the first (1st) and second (2nd) quarters of taxable year 2009 were timely filed. To continue, for the first requisite that the claimant must be a VAT-registered person as borne by the records, petitioner is registered as a VAT entity with TIN/VAT No. 205-760-474-000; it was issued a BIR Certificate of Registration OCN 1RC0000050243 dated April 10, 2000 by the BIR Revenue District Office No. 55 (San Pablo City, Laguna), which was updated on May 11, 2005, thus, it was issued a BIR Certificate of Registration. OCN 1RC0000195405; and that on January 12, 2011, it received a letter from respondent dated December 21, 2010, informing it about its classification as a Large Taxpayer under the Large Taxpayers Service pursuant to Revenue Regulations No. 17-2010, dated November 16, 2010, and under the jurisdiction of Revenue District Office No. 121 effective January 1, 2011 28 thus, the Large Taxpayers Service issued a BIR Certificate of Registration OCN 8RC0000019901 dated April 10, 2000. 29 From the foregoing, petitioner is a VAT-registered person, and has clearly complied with the first requisite. Onto the second requisite that there must be zero-rated or effectively zero-rated sales Section 108 (B) (7) of the 1997 NIRC, as amended, provides that sale of power generated through renewable sources of energy is among the transactions subject to zero percent (0%) VAT, to wit: "(B) Transactions Subject to Zero Percent (0%) Rate. xxx xxx xxx (7) Sale of power or fuel generated through 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." In relation thereto, Section 4.108-5 (b) (7) of Revenue Regulations No. 16-2005, 30 which implements the afore-quoted provision, qualifies the applicability of such zero-rating as follows: "(b) Transactions Subject to Zero Percent (0%) VAT Rate. The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate: xxx xxx xxx (7) Sale of power or fuel generated through renewable sources of energy such as, but not limited to, biomass, solar, wind, hydropower, geothermal and steam, ocean energy, and other emerging sources using technologies such as fuel cells and hydrogen fuels; Provided, however, That zero-rating shall apply strictly to the sale of power or fuel generated through renewable sources of energy, and shall not extend to the sale of services related to the maintenance or operation of plants generating said power." While Section 4.108-3 (f) of the same Revenue Regulations provides: "SEC. 4.108-3. Definitions and Specific Rules on Selected Services. xxx xxx xxx (f) Sale of electricity by generation, transmission, and distribution companies shall be subject to 10% VAT on their gross receipts; Provided, That sale of power or fuel generated through 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 0% VAT. aEcADH 'Generation companies' refers to persons or entities authorized by the Energy Regulatory Commission (ERC) to operate facilities used in the generation of electricity. For this purpose, generation of electricity refers to the production of electricity by a generation company or a co-generation facility pursuant to the provisions of RA No. 9136 (EPIRA).They shall include all Independent Power Producers (IPPs) and NPC/Power Sector Assets and Liabilities Management Corporation (PSALM)-owned generation facilities." Therefore, to qualify for VAT zero-rating, petitioner must prove that it is engaged in the sale of power or fuel generated through renewable sources of energy. It is undisputed that petitioner is a special purpose entity, the sole purpose of which is to engage in all aspects of (a) the design, financing, construction, testing, commissioning, operation, maintenance, management and ownership of Kalayaan II pumped-storage hydroelectric power plant, the new Caliraya Spillway, and other assets located in the Province of Laguna; and (b) the rehabilitation, upgrade, expansion, testing, commissioning, operation, maintenance and management of the Caliraya, Botocan and Kalayaan I hydroelectric power plants and their related facilities located in the Province of Laguna, as shown in its Securities and Exchange Commission Registration and Amended Articles of Partnership. 31 Also, petitioner has entered into a Second Accession Undertaking with the National Power Corporation ("NPC"),Industrias Metalurgicas Pescarmona, S.A. ("IMPSA"),and CBK Power Corporation on September 20, 2000 32 wherein it became a party to the Build-Rehabilitate-Operate-Transfer ("BROT") Agreement dated November 6, 1998. 33 Under the BROT Agreement and by virtue of the Second Accession Undertaking, petitioner shall cause and be responsible for the rehabilitation, construction, operation and maintenance of the Caliraya, Botocan, and Kalayaan hydroelectric power plants and other civil structures for the purpose of generating electricity for the NPC. In consideration thereof, NPC shall pay petitioner Capital Recovery Fees and Operation and Maintenance Fees and other fees in accordance with the BROT Agreement. 34 In performing its obligations under the BROT Agreement and the Accession Undertaking, petitioner entered into an Agreement with IMPSA Construction Corporation designated as Turnkey Contract 35 on August 18, 2000, by virtue of which IMPSA, as Contractor, undertook the design, engineering, procurement, supply of all plant and materials, rehabilitation, construction, commissioning, testing, completion and handover of such power plants, together with the civil structures, access roads and other works as specified in the BROT Agreement. 36 Petitioner then generates electricity through its Caliraya, Botocan and Kalayaan I hydroelectric power plants, as well as from the Kalayaan II hydroelectric power plant. The plants generate electricity by drawing water from an upstream reservoir, passing the water through a penstock and in the process utilizing the force of gravity to rotate the turbines. The turbines in turn rotate the generators, thereby generating electricity. 37 Petitioner's Caliraya, Botocan, Kalayaan I and Kalayaan II power plants were likewise found by the Energy Regulatory Commission ("ERC") to be compliant with the pertinent rules and regulations as evidenced by the Certificates of Compliance ("COC") 38 issued by the ERC to petitioner. And a verification of various sales invoices 39 and official receipts 40 issued by petitioner to NPC showed that for the first (1st) and second (2nd) quarters of 2009, it has derived revenues from sales of electricity to NPC in the amount of P1,949,421,902.14 which was reflected in its Quarterly VAT Returns, as follows: Exhibit Period Zero-rated Sales "BB-1-002e" 1st Quarter P1,113,056,584.68 "BB-2-002e" 2nd Quarter 836,365,317.46 Total P1,949,421,902.14 ============== With the foregoing sales of electricity generated through a renewable source of energy, particularly, hydropower, the Court finds that the same qualifies for VAT zero-rating under Section 108 (B) (7) of the 1997 NIRC, as amended. Then next to the third requisite that input taxes were incurred or paid petitioner reflected in its Quarterly VAT Returns for the first (1st) and second (2nd) quarters of 2009 its claimed input taxes in the amount of P23,566,884.15, broken down as follows: Exhibit Period Input VAT "BB-1-002a" 1st Quarter P17,784,968.91 "BB-2-002a" 2nd Quarter 5,781,915.24 Total P23,566,884.15 ============= To prove that it has incurred/paid the aforesaid input VAT, petitioner submitted various suppliers' invoices, official receipts, Bureau of Customs ("BOC") Import Entries and Internal Revenue Declarations ("IEIRD"),BOC and bank official receipts, 41 which were examined by the Court-commissioned Independent Certified Public Accountant ("CPA"),Ms. Myra Celeste O. Dabalos. cTDIaC Upon scrutiny of the Independent CPA's Report 42 and the related supporting documents, the Court finds that the input taxes in the amount of P702,904.61 should be disallowed for non-compliance with the substantiation requirements under Sections 110 (A) 43 and 113 (A) and (B) 44 of the 1997 NIRC, as amended, in relation to Sections 4.110-2, 45 4.110-3, 46 4.110-8, 47 and 4.113-1 48 of Revenue Regulations No. 16-05. 49 Below is the detailed breakdown of the disallowed input VAT of P702,904.61: Exceptions Exhibit Input VAT Input taxes on domestic purchase of goods supported by "DD-5" P4,423.23 documents other than VAT invoice Supported by other non-VAT document, 1st Quarter Input taxes on domestic purchase of goods supported by "DD-7" 61,710.78 VAT invoice but not an original copy, 1st Quarter Input taxes on domestic purchase of goods supported by "DD-8" 5,235.00 VAT invoice not issued in the name of .petitioner (e.g., Power Co. Ltd.) but with TIN and address of petitioner Input taxes on domestic purchases of goods supported by "DD-9" 58.93 VAT invoice not issued in the name of petitioner (e.g., CBK only),1st Quarter Input taxes on domestic purchase of goods supported by "DD-10 " 18,344.99 TIN sales invoice, 1st Quarter Input taxes on domestic purchase of goods supported by "DD-13" 14,119.23 VAT invoice but not dated within the VAT-taxable year, 1st Quarter Input taxes on domestic purchase of goods supported by "DD-14" 72,450.00 VAT invoice that is not BIR registered, 1st Quarter Input taxes on domestic purchase of goods with "DD-17" 174.79 correction on the year of the invoice date without counter signature, 1st Quarter Input taxes on domestic purchase of services supported "DD-23" 29,693.58 by documents other than VAT OR (i.e.,VAT invoice, etc.), 1st Quarter Input taxes on domestic purchase of services supported "DD-24" 18,301.21 by documents other than VAT OR (i.e.,statement of account, non-VAT invoice, etc.),1st Quarter Input taxes on domestic purchase of services supported "DD-26" 493.75 by VAT OR not issued in the name of petitioner (e.g.,EME Phils. Services Corp. and CBR Power Co. Ltd.) but with TIN and address of petitioner and the amount of tax was not separately shown Input taxes on domestic purchase of services supported "DD-27" 4,505.03 by VAT OR not issued in the name of petitioner (e.g.,CBK only, CBK New-Spillway, CBK Training Center) but without TIN and/or address of petitioner, 1st Quarter Input taxes on domestic purchase of services supported "DD-28" 22,422.85 by TIN OR only, 1st Quarter Input taxes on domestic purchase of services supported "DD-31" 187,801.33 by VAT OR dated within the VAT-taxable year Input taxes on domestic purchase of services supported "DD-32" 1,189.68 by VAT OR that is not BIR-registered, 1st Quarter Input taxes on domestic purchase of services with "DD-34" 39,594.02 correction in the OR date without counter signature Double claiming of input tax on domestic purchase of "DD-40" 180.48 services Input taxes on domestic purchase of services supported "DD-41" 2,972.51 by VAT OR. However, the sentence: "This is not a source of input tax" is printed in the VAT OR, 1st Quarter Input taxes on domestic purchase of goods and services "DD-42" 32,698.72 without supporting documents, 1st Quarter Overclaimed input tax on domestic purchase of "DD-44" 4,768.41 goods/services due to erroneous computation (i.e., arithmetical error, 1st Quarter Overclaimed portion of input tax arising from forex rate "DD-46" 25,580.99 used on foreign currency denominated purchases of goods and services, 1st Quarter Input taxes on domestic purchase of services supported "DD-49" 97,499.10 by VAT OR which is not an original copy Input taxes on importation of goods supported by a "DD-50" 58,686.00 document other than an original copy of the IEIRD and BOC OR Total P702,904.61 ========= In addition, the claimed input VAT in the amount of P737,559.61, as detailed below, should be disallowed for non-compliance with the substantiation requirements under the VAT law and regulations: Vendor O.R./ O.R./ Exhibit "CC-" Input VAT Invoice No. Invoice Date 1) Input VAT without supporting documents Multiple J Enterprises - - - P18,325.49 Rejoice Tyre Gallery & Auto Center - - - 1,339.28 Asee Enterprises - - - 1,917.88 Multiple J Enterprises - - - 34,815.00 Phil. Environmental & Technical Systems and Services, Inc. - - - 38,941.20 Hitachi Asia Limited - - - 263,718.69 Kokusai Commerce - - - 34,012.22 Sumitomo Corporation - - - 71,243.16 Tecnored Ingeniera - - - 64,991.49 Viking Cars, Incorporated - - - 9,510.01 Airfreight 2100, Inc. - - - 80.43 Airfreight 2100, Inc. - - - 80.43 Airfreight 2100, Inc. - - - 55.26 Airfreight 2100, Inc. - - - 72.52 Globe Telecom - - - 151.83 Viking Cars, Incorporated - - - 1,356.31 Center Lane Car Rental Services - - - 780.00 Subtotal P541,463.72 2) Input VAT on domestic purchases of services supported by VAT ORs but the amount of VAT was not separately shown Counterflow Movers, Inc. 2425 1/9/2009 010001-010002 P24,816.37 Counterflow Movers, Inc. 2425 1/9/2009 010001, 010003 9,720.25 PLDT 000072575 2/4/2009 010105-010106 107.14 Firstly & Foremost Resort Corp. 0602 2/10/2009 010015-010017 101.24 Firstly & Foremost Resort Corp. 0602 2/10/2009 010015-010017 2,555.42 Firstly & Foremost Resort Corp. 0601 2/10/2009 010033-010039 717.60 PLDT 000072576 2/4/2009 010097-010098 910.69 PLDT 000072572 2/4/2009 010099-010100 133.63 PLDT 000072573 2/4/2009 010101-010102 369.78 PLDT 000072574 2/4/2009 010103-010104 123.81 PLDT 000072577 2/4/2009 010107-010108 121.63 PLDT 000072578 2/4/2009 010109-010110 292.39 PLDT 000072579 2/4/2009 010111-010112 121.63 PLDT 000072580 2/4/2009 010113-010114 738.21 PLDT 000072581 2/4/2009 010115-010116 235.77 PLDT 000072582 2/4/2009 010117-010118 157.38 PLDT 000072583 2/4/2009 010119-010120 1,066.20 PLDT 000072584 2/4/2009 010121-010122 139.63 PLDT 000072585 2/4/2009 010123-010124 927.23 PLDT 000072586 2/4/2009 010125-010126 577.80 PLDT 000072587 2/4/2009 010127-010128 126.13 PLDT 000072588 2/4/2009 010129-010130 854.51 PLDT 000072589 2/4/2009 010131-010132 151.90 PLDT 000072590 2/4/2009 010133-010134 347.71 PLDT PKPOR0002 2/13/2009 010206-010207 1,910.53 PLDT PKPOR0002 2/13/2009 010206, 010208 151.08 PLDT PKPOR0002 2/13/2009 010206, 010209 151.08 PLDT PKPOR0002 2/13/2009 010206, 010210 151.08 PLDT PKPOR0002 2/13/2009 010206, 010211 156.54 Firstly & Foremost Resort Corp. 0604 2/26/2009 020012-020019 885.13 Gencars-San Pablo, Inc. 23045 3/16/2009 020024-020025 306.11 PLDT 000075268 3/10/2009 020097-020098 123.81 PLDT 000075269 3/10/2009 020099-020100 122.76 PLDT 000075265 3/10/2009 020101-020102 10,236.57 Qconsult, Inc. 0111 2/19/2009 020103-020104 4,320.00 Banahaw Telephone Corp. 40894 3/3/2009 020112-020114 78.57 Banahaw Telephone Corp. 40894 3/3/2009 020112-020114 78.57 Banahaw Telephone Corp. 40894 3/3/2009 020112-020114 78.57 Toyota, Batangas, City 170866 3/16/2009 020138-020140 159.00 Airfreight 2100, Inc. 1204459 2/16/2009 020162-020163 41.89 Airfreight 2100, Inc. 1204484 3/2/2009 020164-020165 89.80 New World International Development Phils.,Inc. 14085 3/5/2009 020240-020243 9,115.39 PLDT PKPOR0002 3/11/2009 020246-020247 2,393.77 PLDT PKPOR0002 3/11/2009 020246, 020248 151.08 PLDT PKPOR0002 3/11/2009 020246, 020249 151.08 PLDT PKPOR0002 3/11/2009 020246, 020250 151.08 PLDT PKPOR0002 3/11/2009 020246, 020251 171.28 Firstly & Foremost Resort Corp. 0621 3/27/2009 030073-030074 1,891.52 PLDT 000077286 3/27/2009 030100-030101 910.69 PLDT 000077301 3/27/2009 030102-030103 121.63 PLDT 000077302 3/27/2009 030104-030105 364.69 PLDT 000077303 3/27/2009 030106-030107 121.63 PLDT 000077304 3/27/2009 030108-030109 121.63 PLDT 000077305 3/27/2009 030110-030111 153.63 PLDT 000077306 3/27/2009 030112-030113 121.63 PLDT 000077307 3/27/2009 030114-030115 1,182.86 PLDT 000077308 3/27/2009 030116-030117 142.36 PLDT 000077309 3/27/2009 030118-030119 121.63 PLDT 000077310 3/27/2009 030120-030121 524.53 PLDT 000077311 3/27/2009 030122-030123 126.13 PLDT 000077312 3/27/2009 030124-030125 139.63 PLDT 000077313 3/27/2009 030126-030127 13,878.45 PLDT 000077316 3/27/2009 030128-030129 133.63 PLDT 000077317 3/27/2009 030130-030131 355.93 PLDT 000077318 3/27/2009 030132-030133 79.88 PLDT 000077319 3/27/2009 030134-030135 13,511.15 PLDT 000077479 3/31/2009 030140-030141 107.14 Rejoice Tyre Gallery & Auto Center 0216 3/17/2009 030146-030147 192.86 WorldBest Logistics Phils.,Inc. 0448 3/31/2009 030151-030152 1,139.15 WorldBest Logistics Phils.,Inc. 0448 3/31/2009 030151, 030153 94.87 New World International Development Phils.,Inc. 14383 3/27/2009 030190-030191 720.00 New World International Development Phils.,Inc. 14383 3/27/2009 030190, 030192 720.00 Firstly & Foremost Resort Corp. 0588 1/31/2009 030214-030220 5,113.36 Firstly & Foremost Resort Corp. 0588 1/31/2009 030214, 030221- 030227 576.79 Firstly & Foremost Resort Corp. 0588 1/31/2009 030214, 030228- 030234 829.53 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235-030245 865.74 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235, 030246- 030260 1,407.88 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235, 030261- 030267 850.53 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235, 030268- 030269 187.50 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235, 030270- 030271 187.50 Firstly & Foremost Resort Corp. 0589 1/31/2009 030235, 030272- 030277 679.66 PLDT 000070622 1/14/2009 030349-030350 133.63 PLDT 000070623 1/14/2009 030351-030352 461.53 PLDT 000070624 1/14/2009 030353-030354 123.81 PLDT 000070625 1/14/2009 030355-030356 198.75 PLDT PKPOR0002 1/20/2009 030414-030415 2,139.91 PLDT PKPOR0002 1/20/2009 030414, 030416 165.95 PLDT PKPOR0002 1/20/2009 030414, 030417 151.08 PLDT PKPOR0002 1/20/2009 030414, 030418 154.08 PLDT PKPOR0002 1/20/2009 030414, 030419 169.10 Tricom Dynamics, Inc. 162163 1/9/2009 030439-030440 469.29 Subtotal P128,431.69 3) Input VAT on domestic purchase of goods supported by VAT invoice but the amount of VAT was not separately shown Jems Technik Corp. 0385 3/17/2009 030799-030800 P40,193.34 Subtotal P40,193.34 4) Input VAT on domestic purchase of goods supported by VAT invoice with correction in the date but without counter signature MFT International Corporation 2902 1/22/2009 010239-010240 P22,071.43 Subtotal P22,071.43 5) Input VAT on domestic purchase of goods supported by a VAT invoices that is not BIR-registered Canon Marketing (Phils.),Inc. 500983 3/18/2009 030863-030864 P4,285.71 Subtotal P4,285.71 Eastern Aluminum Glass Supply 13486 11/28/2008 030212-030213 P750.00 Subtotal P750.00 R. Ong Shell Gasoline Station 2089 3/18/2009 031133, 031153 P120.95 R. Ong Shell Gasoline Station 2090 3/18/2009 031133, 031169 101.50 R. Ong Shell Gasoline Station 2763 3/26/2009 031133, 031172 141.27 Subtotal P363.72 Total P737,559.61 ========== Thus, from the total input VAT claim in the amount of P23,566,884.15, only the amount of P22,126,419.93, as computed below, has been duly substantiated: aAcDSC Claimed Input VAT P23,566,884.15 Less: Disallowances Per CPA Report P702,904.61 Per Court's further verification 737,559.61 1,440,464.22 Valid Input VAT P22,126,419.93 ============ And for the fourth and fifth requisites that the input taxes are attributable to zero-rated or effectively zero-rated and the same were not applied against any output tax the Court finds that petitioner's reported sales for the first (1st) and second (2nd) quarters of 2009 were all zero-rated, thus, the substantiated input VAT in the amount of P22,126,419.93 is entirely attributable thereto and was not applied against any output tax. In addition, in its reported unutilized input taxes for the first (1st) and second (2nd) quarters of 2009 in the respective amounts of P17,784,968.91, 50 and P31,680,290.87, 51 the same were deducted as "VAT Refund/TCC claimed" in the said Quarterly VAT Returns for the same taxable quarters preventing the carry-over or application of such input taxes in the next taxable quarter/s. In sum, the Court finds that petitioner is entitled to the reduced amount of P22,126,419.93, representing unutilized input VAT incurred in relation to its zero-rated sales of electricity to the NPC for the first (1st) and second (2nd) quarters of 2009. WHEREFORE ,the consolidated Petition for Review and Amended Petition for Review are hereby PARTLY GRANTED .Accordingly, respondent is hereby ORDERED to ISSUE a TAX CREDIT CERTIFICATE ,in favor of petitioner, in the reduced amount of P22,126,419.93, representing unutilized input VAT incurred in relation to its zero-rated sales of electricity to the NPC for the first (1st) and second (2nd) quarters of 2009. SO ORDERED . (SGD.) LOVELL R. BAUTISTA Associate Justice Amelia R. Cotangco-Manalastas, J., concurs. Footnotes 1. Records ,CTA Case Nos. 8246 & 8302, pp. 1-49, with Annexes; docketed as CTA Case No. 8246. 2. Id. ,at pp. 1439-1642, with Annexes; docketed as CTA Case No. 8302. 3. 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 or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. 4. Supra ,note 1. 5. Records, CTA Case Nos. 8246 & 8302, pp. 68-73. 6. Id. ,at pp. 69-72. 7. Records ,CTA Case No. 8302, pp. 1-44, with Annexes. 8. Id. ,at pp. 61-67. 9. Id. ,at pp. 62-66. 10. Id. ,at pp. 81-82. 11. Records ,CTA Case Nos. 8246 & 8302, p. 125. 12. Id. ,at p. 127. 13. Id. ,at pp. 1653-1655. 14. Id. ,at pp. 1439-1642. 15. Id. ,at p. 1701. 16. Exhibit "BB-1-002". 17. Supra ,note 14. 18. Exhibit "BB-1-002", line 21H. 19. Exhibit "BB-2-002", line 21H. 20. Exhibit "BB-1-002", line 21F. 21. Exhibit "BB-1-002", line 21J. 22. Exhibit "BB-1-002", line 21L. 23. Exhibit "BB-1-002", line 20B. 24. Exhibit "BB-1-002", line 21D. 25. Exhibit "BB-1-002", line 23A. 26. Supra ,note 1. 27. Supra ,note 7. 28. Records ,p. 2 and p. 68. 29. Exhibit "M". 30. Entitled "Consolidated Value-Added Tax Regulations of 2005", dated September 1, 2005. 31. Records, p. 2 and p. 68. 32. Exhibit "D". 33. Exhibit "C". 34. Exhibit "N". 35. Exhibit "E". 36. Exhibit "N". 37. Ibid. 38. Exhibits "F" to "I". 39. Exhibits "II-1" to "II-102". 40. Exhibits "MM-0001" to "MM-0146". 41. Exhibits "CC-010001" to "CC-010268," "CC-020001" to "CC-020417," "CC-030001" to "CC-031250," "CC-040001" to "CC-040352," "CC-050001" to "CC-050545," "CC-060001" to "CC-061332". 42. Exhibit "DD". 43. SEC. 110. Tax Credits. (A) Creditable Input Tax. (1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax: (a) Purchase or importation of goods: (i) For sale; or (ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or (iii) For use as supplies in the course of business; or (iv) For use as materials supplied in the sale of service; or (v) For use in trade or business for which deduction for depreciation or amortization is allowed under this Code, except automobiles, aircraft and yachts. (b) Purchase of services on which a value-added tax has been actually paid. (2) The input tax on domestic purchase of goods or properties shall be creditable. (a) To the purchaser upon consummation of sale and on importation of goods or properties; and (b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs. However, in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee. (3) A VAT-registered person who is also engaged in transactions not subject to the value-added tax shall be allowed tax credit as follows: (a) Total input tax which can be directly attributed to transactions subject to value-added tax; and (b) A ratable portion of any input tax which cannot be directly attributed to either activity. The term "input tax" means the value-added tax due from or paid by a VAT-registered person in the course of his trade or business on importation of goods or local purchase of goods or services, including lease or use of property, from a VAT-registered person. It shall also include the transitional input tax determined in accordance with Section 111 of this Code. The term "output tax" means the value-added tax due on the sale or lease of taxable goods or properties or services by any person registered or required to register under Section 236 of this Code. 44. SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. (A) Invoicing Requirements. A VAT-registered person shall, for every sale, issue an invoice or receipt. In addition to the information required under Section 237, the following information shall be indicated in the invoice or receipt: (1) A statement that the seller is a VAT-registered person, followed by his taxpayer's identification number (TIN);and (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. (B) Accounting Requirements. Notwithstanding the provisions of Section 233, all persons subject to the value-added tax under Sections 106 and 108 shall, in addition to the regular accounting records required, maintain a subsidiary sales journal and subsidiary purchase journal on which the daily sales and purchases are recorded. The subsidiary journals shall contain such information as may be required by the Secretary of Finance. 45. SEC. 4.110-2. Persons Who Can Avail of the Input Tax Credit. The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT-registered person shall be creditable: (a) To the importer upon payment of VAT prior to the release of goods from customs custody; (b) To the purchaser of the domestic goods or properties upon consummation of the sale; or (c) To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty or fee. 46. SEC. 4.110-3. Claim for Input Tax on Depreciable Goods. Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (P1,000,000.00),regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner: (a) If the estimated useful life of a capital good is five (5) years or more The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided by 60 and the quotient will be the amount to be claimed monthly. (b) If the estimated useful life of a capital good is less than five (5) years The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed One million pesos (P1,000,000.00),the total input taxes will be allowable as credit against output tax in the month of acquisition; Provided, however ,that the total amount of input taxes (input tax on depreciable capital goods plus other allowable input taxes) allowed to be claimed against the output tax in the quarterly VAT Returns shall be subject to the limitation prescribed under Sec. 4.110-7 of these Regulations. The aggregate acquisition cost of a depreciable asset in any calendar month refers to the total price agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired in installment for an acquisition cost of more than P1,000,000.00 will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed P1,000,000.00. 47. SEC. 4.110-8. Substantiation of Input Tax Credits. (a) Input taxes for the importation of goods or the domestic purchase of goods, properties or services is made in the course of trade or business, whether such input taxes shall be credited against zero-rated sale, non-zero-rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau: (1) For the importation of goods import entry or other equivalent document showing actual payment of VAT on the imported goods. (2) For the domestic purchase of goods and properties invoice showing the information required under Secs. 113 and 237 of the Tax Code. (3) For the purchase of real property public instrument i.e. ,deed of absolute sale, deed of conditional sale, contract/agreement to sell, etc. ,together with VAT invoice issued by the seller. (4) For the purchase of services official receipt showing the information required under Secs. 113 and 237 of the Tax Code. A cash register machine tape issued to a registered buyer shall constitute valid proof of substantiation of tax credit only if it shows the information required under Secs. 113 and 237 of the Tax Code. (b) Transitional input tax shall be supported by an inventory of goods as shown in a detailed list to be submitted to the BIR. (c) Input tax on "deemed sale" transactions shall be substantiated with the invoice required under Sec. 4.113-2 of these Regulations. (d) Input tax from payments made to non-residents (such as for services, rentals and royalties) shall be supported by a copy of the Monthly Remittance Return of Value Added Tax Withheld (BIR Form 1600) filed by the resident payor in behalf of the non-resident evidencing remittance of VAT due which was withheld by the payor. (e) Advance VAT on sugar shall be supported by the Payment Order showing payment of the advance VAT. 48. 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: (a) The amount of tax shall be shown as a separate item in the invoice or receipt; (b) If the sale is exempt from VAT, the term "VAT-exempt sale" shall be written or printed prominently on the invoice or receipt; (c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt; (d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale. (3) In the case of sales in the amount of one thousand pesos (P1,000.00) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section. 49. Supra ,note 30. 50. Exhibit "BB-1-002a". 51. Exhibit "BB-2-002a".