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SECOND DIVISION

COMMISSIONER OF G.R. No. 230016

INTERNAL REVENUE,
Petitioner, Present:

PERLAS-BERNABE, S.A.J ,
Chairperson,
-versus- GESMUNDO,
LAZARO-JAVIER,
LOPEZ, and
ROSARIO,* JJ
PHILEX MINING
CORPORATION,
Respondent. Promulgated:

x----------------------------------------------------------- --------x

DECISION

LOPEZ, J.:

While the tax law requires mandatory compliance with the keeping of
subsidiary journals and the filing of monthly value-added tax (VAT)
declarations, the Court will not deny the request for refund on the sole basis
that the taxpayer failed to comply with these requirements when the law
does not provide for its compliance by the taxpayer to be entitled for refund.
The Court may not construe a statute that is free from doubt; neither can we
impose conditions or limitations when none is provided for. 1

This Petition for Review on Certiorari2 under Rule 45 of the Rules of

Court seeks to set aside the Decision 3 dated October 19, 20 16 and

• Designated as additional Member per Special Order No. 2797 dated November 5, 2020.
Commissioner of Internal Revenue v. American £>:press International. Inc., 500 Phil. 586, 608 (2005).
2
Rollo, pp. 15-27.
3
Id. at 3 1-44; penned by Associate Justice Esperanza R. Fabon-Victorino, with the concurrence of
Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castaneda, Jr., Lovell R.
Bautista, Erlinda P. Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, and Ma. Belen M.
Ringpis-Liban.

t
Decision 2 G.R. No. 230016

Resolution4 dated February 14, 2017 of the Court of Tax Appeals (CTA) En
Banc in CTA EB No. 1334, which affirmed the CTA Division's Decision5
dated March 31, 2015 and Resolution6 dated June 24, 2015 in CTA Case
Nos. 8553 and 8562, ordering the Commissioner of Internal Revenue (CIR)
to refund in favor of Philex Mining Corporation (Philex Mining) the amount
of P51,734,898.99, representing its unutilized input VAT attributable to its
zero-rated sales for the second and third quarters of the taxable year (TY)
2010.

ANTECEDENTS

Philex Mining is a domestic corporation engaged in the mmmg

business, such as the exploration and operation of mining properties and the
commercial production, marketing, and exportation of mineral products. 7 It
is a VAT-registered taxpayer with duly approved Application for Zero-Rate
effective April 12, 1998.8 During the second and third quarters of TY 2010,
Philex Mining sold and shipped mineral products to Pan Pacific Copper Co.,
Ltd., Louise Dreyfus Commodities Metals Suisse SA, and Heraeus Ltd. 9

On February 13, 2012, Philex Mining filed its amended quarterly

VAT returns for the second and third quarters to reflect excess input tax
arising from its zero-rated sales. 10 On June 7, 2012 and June 22, 2012, it
filed claims for refund of P45,048,921.68 and P51,464,383.81 with the
Department of Finance's One-Stop Shop Center (DOF-OSS) and attached to
the Claimant Information Sheet Nos. 62442 and 22002, the letters dated May
4, 2012, containing a list of documents to support its claims. 11

Thereafter, Philex Mining filed two (2) separate petitions for review
before the CTA Division on October 9, 2012 (docketed as CTA Case No.
8553) and on October 25, 2012 (docketed as CTA Case No. 8562). 12 The
Court granted the motions to consolidate the two (2) cases and to
commission an Independent Certified Public Accountant (ICPA) on
February 14, 2013. 13 Thereafter, trial ensued.

Ruling of the CTA

On March 31, 2015, the CTA Division partly granted Philex Mining's
4
Id. at 46-48; penned by Associate Justice Esperanza R. Pabon-Victorino, with the concurrence of
Presiding Justice Roman G. Del Rosario and Associate Justices Juanita C. Castaneda, Jr., Lovell R.
Bautista, Erlinda P. Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, Ma. Belen M. Ringpis-Liban,
and Catherine T. Manahan.
5
Id. at 50-79; penned by Associate Justice Amelia R. Cotangco-Manalastas, with the concurrence of
Associate Justices Juanita C. Castafieda, Jr. and Caesar A. Casanova.
6
Id. at 81-84.
7
Id. at 50-51, and 55.
8
Id.at51.
9
Id.at67.
10 ld.at51-52.
11
Id. at 52.
i2 Id.
13
Rollo, p. 54.

I
 Decision 3 G.R. No. 230016

petitions. 14 It held that Philex Mining timely filed its administrative and
judicial claims for a refund within the period prescribed under Sections 112
(A) and (C) of the 1997 National Internal Revenue Code (NlRC), as
amended15 (Tax Code), and that it attached to the Claimant Information
Sheets the required documents to support its claims. The CTA Division
examined the pieces of documentary evidence submitted by Philex Mining
and evaluated the report issued by the ICPA, and concluded that Philex
Mining sufficiently proved its entitlement to a refund for its unutilized input
VAT attributable to its zero-rated sales for the second and third quarters of
TY 2010, but in the reduced amount of PSl,734,898.99. The dispositive
portion of the Decision reads:

WHEREFORE, premises considered, the instant Petition for

Review is hereby PARTIALLY GRANTED. Accordingly, [the
Cornrnissioner of Internal Revenue] is hereby ORDERED to REFUND in
favor of [Philex Mining Corporation] the amount of l"Sl,734,898.99,
representing its unutilized and excess input VAT attributable to its
zero-rated sales for the second and third quarter[s] of 2010.

SO ORDERED. 16 (Emphases in the original.)

The CIR moved for reconsideration alleging that the judicial claim for
refund was premature, Philex Mining did not submit to the DOF-OSS the
required checklist of documents, and Philex Mining failed to comply with
the accounting requirements, specifically the keeping of subsidiary sales
journal and subsidiary purchase journal, and the filing of monthly VAT
declarations.

On June 24, 2015, the CTA Division denied the CIR's motion for
reconsideration for lack of merit. 17 The CTA Division reiterated that the
judicial claim was timely filed and that Philex Mining submitted complete
documents to support its claims. As regards non-compliance with the
accounting requirements, the CTA Division held that there was nothing in
Section 112 (A) of the Tax Code that required the presentation of subsidiary
journals or the filing of monthly VAT declarations so that the taxpayer may
be entitled to a refund or the issuance of tax credit certificate of its claimed
excess input tax.

Discontented, the CIR appealed to the CTA En Banc reiterating the

arguments raised in his motion for reconsideration filed with the CTA
Division. On October 19, 2016, the CTA En Banc affirmed the CTA

14
Supra note 5.
15
Value Added Tax (VAT) Reform Act, as amended by Republic Act No. 9337; approved on May 24,
2005.
16
Rollo, p. 78.
17
Supra note 6. The dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the instant Motion for Reconsideration is hereby
DENIED for lack of merit.
SO ORDERED. Id at 84. (Emphases in the original.)

cl
Decision 4 G.R. No. 230016

Division's findings and conclusion and disposed: 18

WHEREFORE, the Petition for Review filed by [the]

Connnissioner of Internal Revenue on August 5, 2015, is hereby
DENIED, for lack of merit. Accordingly, the assailed Decision and
Resolution dated March 31, 2015 and June 24, 2015, respectively
promulgated by [the] Court in Division in CTA Case Nos. 8553 & 8562,
are hereby AFFIRMED.

SO ORDERED. 19 (Emphases in the original.)

Failing at reconsideration, 20 the CIR, through the Office of the

Solicitor General, filed the instant petition with this Court, raising the sole
issue:

CONTRARY TO THE FINDINGS OF THE CTA EN BANC, TAX

DECLARATIONS AND SUBSIDIARY JOURNALS FORM PART OF
THE REQUIREMENTS OF THE LAW FOR THE GRANT OF TAX
CREDIT OR REFUND, AND IT IS THE OBLIGATION OF
RESPONDENT TO PROVE COMPLIANCE THERETO. 21

RULING

The petition is bereft of merit.

First off, it is not disputed that Philex Mining was engaged in zero-rated
export sales under Section 106 (A)(2)(a)(1)22 of the Tax Code and that it
imported goods other than capital goods and purchased services in relation
to such sales for the second and third quarters of TY 2010. 23

Under Section 112 (A), 24 a taxpayer engaged in zero-rated sales may

apply for the issuance of a tax credit certificate, or refund of excess input tax

18
Supra note 3.
19 Rollo, p. 43.
20
Supra note 4. The dispositive portion of the Resolution reads:
WHEREFORE, the Motion for Reconsideration filed by [the] Commissioner of internal
Revenue on November 16, 2016 is hereby DENIED, for lack of merit.
SO ORDERED. Id. at 48. (Emphases in the original.)
21
Rollo, p. 20.
22
SEC. 106. Value-Added Tax on Sale of Goods or Properties. -
(A) Rate and Base of Tax. - xx x
xxxx
(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 actaal shipment of goods from the Philippi.'les to a foreign country, irrespective
of any shipping arrangement that may be agreed upon which may influence or determine the transfer of
o-wnership of the goods so exported and. paid for in accepiable 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);
xxxx
23
Rollo, pp. 62-64, 73.
24
SEC. 112. Refunds or Tax Credits ofInput Tax. -
(A) Zero-Rated or Ejfective(v Zero-Rated Sales. -- Any VAT-registered persor½ whose sales are
zero-rated or effectively zero-rated may, witli.in nvo (2) years after Lhe close of the taxable quarter when
the sales were made~ apply for the issua11ce of a tax credit certificate or refund of creditable input ta,"X due

tf
 Decision 5 G.R. No. 230016

due or paid, attributable to the sale, subject to the following conditions: (1) the
taxpayer must be VAT-registered; (2) the taxpayer must be engaged in sales
which are zero-rated or effectively zero-rated; (3) the claim must be filed
within two (2) years after the close of the taxable quarter when such sales
were made; (4) the creditable input tax due or paid must be attributable to such
sales, except the transitional input tax, to the extent that such input tax has not
been applied against the output tax; 25 and (5) in case of zero-rated sales under
Section 106 (A)(2)(a)(l), the acceptable foreign currency exchange proceeds
have been duly accounted for in accordance with Bangko Senta[ ng Pilipinas
rules and regulations. 26

The issue hinges on the fourth requisite.

The CIR posits that Philex Mining did not comply with the requirement
of Section 4.113-3 27 of Revenue Regulations (RR) No. 16-2005 28 to keep,
preserve, and maintain subsidiary sales and purchase journals. Likewise,
Philex Mining failed to prove that it filed the monthly VAT declarations
required under Section 114 (A) 29 of the Tax Code, as implemented by
Section 4.114-1 30 of RR No. 16-2005. The CIR opines that prior compliance
with these requirements is a condition sine qua non in claiming unutilized
zero-rated input VAT because the subsidiary journals and monthly VAT
declarations will assist the CIR and the courts in determining whether Philex
Mining incUITed input taxes in connection with its zero-rated sales and
whether the input taxes were not applied against any output tax liability. 31

or paid attributable to such sales, except trausitional input tax, to tbe extent that such input tax has not
been applied against output tax: [Providedj, however, That in the case of zero-rated sales under Section
106(A)(2)(a)(l) x x x, 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): xx
X.
25
Commissioner ofInternal Revenue v. Deutsche Knowledge Services Pte. Ltd., G.R. No. 234445, July 15,
2020.
26
AT&T Communications Services Phils., Inc. v. Commissioner of Internal Revenue, 640 Phil. 613,617
(2010).
27
SEC. 4.113-3. Accounting Requirements. - Notwithstanding tbe provisions of Sec. 233, all persons
subject to VAT under Sec. 106 and 108 oftbe Tax Code shall, in addition to the regular accounting
records required, maintain a subsidiary sales journal and subsidiary purchase journal on which every sale
or purchase on any given day is recorded. The subsidiary journal shall contain such information as may
be required by the Commissioner of Internal Revenue.
xxxx
28
Consolidated Value-Added Tax Regulations of2005 dated September 1, 2005.
29
SEC. 114. Return and Payment of Value-added Tax. -
(A) In General. - Every person liable to pay the value-added tax imposed under this Title shall file a
quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following
the close of each taxable quarter prescribed for each taxpayer: Provided, however, That
VAT-registered persons shall pay the value-added ta.x on a monthly basis.
xxxx
30
SEC. 4.114-1. Filing ofReturn and Payment of VAT. --
(A) Filing of Return. - XX X
Amounts reflected in the monthly VAT declarations for tbe first two (2) montbs ofthe quarter shall
still be included in the quarterly VAT return which reflects the cumulative figures for the taxable quarter.
Payments in the monthly VAT declarations shall, however, be credited in the quaiterly VAT return to
arrive at the net VAT payable or excess input tax/over-payment as of the end of a quarter.
xxxx
The monthly VAT Declarations (BIR Form 2550M) of taxpayers whether large or non-large shall
be filed a,-,d the taxes paid not later t,'lan the 20"' day followi.'lg the end of each month.
31
Rollo, p. 24.

I
Decision 6 G.R. No. 230016

The CIR is mistaken.

It is elementary rule in statutory construction that when the words of a

statute are clear, plain, and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. 32 The plain-meaning
rule or verba legis, expressed in the maxim index animi sermo, or speech is
the index of intention, rests on the valid presumption that the words
employed by the legislature in a statute correctly express its intention or will,
and preclude the court from construing it differently. 33 Verba legis non est
recedendum. From the words of a statute there should be no departure.
Furthermore, every part of the statute must be interpreted with reference to
the context, i.e. that every part of the statute must be considered together
with the other parts, and kept subservient to the general intent of the whole
enactment. 34

Guided by the foregoing principles, we see no reason to depart from

the findings and conclusion of the CTA. As the CTA aptly held, and as will
be discussed below, there was nothing in the Tax Code or in RR No. 16-2005
that would suggest that the subsidiary journals and monthly VAT declarations
are part of the substantiation requirements that must be complied with to
support a claim for tax refund or credit. 35

Under Section 110 (A) 36 of the Tax Code, creditable input taxes must
be evidenced by a VAT invoice or official receipt, which must, in turn, be
issued in accordance with Sections 113 37 and 237. 38 Related to these

32
Philippine Amusement and Gaming Corp. (PAGCOR) v. Philippine Gaming Jurisdiction Inc. {PEJI),
604 Phil. 547, 553 (2009).
33 Id.
34
Paras v. COMELEC, 332 Phil. 56, 63. (1996)
35
See rollo, pp. 83-84.
36 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:
xxxx
37
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
(2) AV AT official receipt for every lease of goods or properties, and for every sale, barter or
exchange of services.
(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:
(a) The amount of the tax shall be shm.vn as a separate item in the invoice or receipt;
xxxx
(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 ihe invoice or receipt;
xxxx
(3) The date of transaction, quantity, unit cost and description of the goods or properties or
nature of the service; xx x.
xxxx

t
Decision 7 G.R. No. 230016

prov1s10ns, Sections 4.110-8, 4.113-1 (A) and (B) of RR No. 16-2005

enumerate the documents required and information that must appear on the
face of the official receipt, to substantiate the input tax on importation of
goods other than capital goods and on domestic purchases of services, viz.:

SEC. 4.110-8. Substantiation ofInput 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, x x
x:

(I) For the importation of goods - import entry or other

equivalent document showing actual payment of VAT on the imported
goods.

xxxx

(4) For the purchase of services - official receipt showing the

information required under Secs. 113 and 237 of the Tax Code.

xxxx

SEC. 4.113-l. lnvoicing Requirements. -

(A) A VAT-registered person shall issue: -

xxxx

(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
InvoiceNAT Official Receipt shall not give rise to any input tax.

xxxx

(B) Information contained in VAT invoice or VAT official

receipt. - The fol!owing information shall be indicated i...>:t VAT invoice
or VAT official receipt:

38
SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. -- All perso:r..s 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 sale or commercial invoices, prepared at least in
duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of
service: Provided, hawe1;er, That where the receipt is issued to cover payment made as rentals,
commissions, compensation or fees, receipts or invoices shall be issued which shall show the name,
business style, if any, a.."'1.d address of the purchaser, customer or client.
xxxx

I
 Decision 8 G.R. No. 230016

( 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:

xxxx

(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[.] xx x. (Emphases supplied.)

From the foregoing, it is apparent that importation of non-capital goods

must be evidenced by import entry declarations or any equivalent document;
and the domestic purchase of services, by VAT official receipts showing: (1)
that the seller is a VAT-registered person; (2) the Tax Identification Number
(TIN) of the seller; (3) the word "zero-rated sale" was written or printed
prominently on the receipt in case of zero-rated sales; (4) the date of
transaction, nature of service, as well as the name, business style, if any, and
address of the purchaser; and (5) the TIN of the purchaser. 39 Case law states
that failure to comply with the invoicing requirements is sufficient ground to
deny the claim for refund or tax credit. 40 Too, Revenue Memorandum
Circular No. 42-2003 41 only provides for non-compliance with the invoicing
requirements as a ground for denial of the claim for refund or credit, viz.:

Q-13: Should penalty be imposed on TCC application for failure of

claimant to comply with certain invoicing requirements,
(e.g., sales invoices must bear the TIN of the seller)?

A-13 Failure by the supplier to comply with the invoicing

requirements on the documents supporting the sale of goods
and services will result to the disallowance of the claim for
input tax by the purchaser-claimant.

If the claim for refund/TCC is based on the existence of

zero-rated sales by the taxpayer but it fails to comply with the
invoicing requirements in the issuance of sales invoices
(e.g. failure to indicate the TIN), its claim for tax
credit/refund of VAT on its purchases shall be denied
considering that the invoice it is issuing to its customers does
not depict its being a VAT-registered taxpayer whose sales
are classified as zero-rated sales. xx x. (Emphases supplied.)

The reason for strict compliance with invoicing requirements is only a

"VAT invoice/official receipt" can give rise to any input tax from domestic

" See Section 237 of the Tax Code.

40
Eastern Telecommunications Phils., Inc. v. Commissioner of Internal Revenue, 693 Phil. 464, 472
(2012).
41
Clarifying Certain Issues Raised Relative to the Processing of Claims for Value-Added Tax (VAT)
Credit/Refu,,d, Including Those Filed with the Tax :md Revenue Group, One-Stop Shop Inter-Agency
Tax Credit and Duty Drawback Center, Department of Finance (OSS) by Direct Exporters; dated July
15, 2003.

}
 Decision 9 G.R. No. 230016

purchase of goods or service. 42 Without input tax, there is nothing to refund.

On the other hand, the particulars recorded in the subsidiary journals do not
affect the character of an invoice or receipt as a "VAT invoice/official
receipt." A taxpayer's books of accounts include the journal and the ledger
and their subsidiaries, or their equivalents. 43 The general journal is a book of
original entry in which the transactions affecting the taxpayer's business are
recorded consecutively day by day as they occur. 44 It is a chronological, or
date order, record of the transactions of a business. The general journal may
consist of several books such as sales book, purchase book, cash book, and
such other books as the taxpayer may find convenient for his business. 45 A
subsidiary sales journal is a repository of day-to-day sales, while a subsidiary
purchase journal records all purchases. Evidently, subsidiary journals may be
sources of information from which the CIR may utilize in making
assessments 46 but their submission is not indispensable to substantiate the
input taxes.

The language used in Section 110 is plain, clear, and unambiguous. To

be creditable, the input taxes must be evidenced by validly issued invoices
and/or official receipts containing the information enumerated in Sections 113
and 237. The law does not require that subsidiary journals where the sales and
purchases (and the output taxes and their corresponding input taxes) were
recorded, are also kept. Indeed, courts may not, in the guise of interpretation,
enlarge the scope of a statute and include therein situations not provided nor
intended by the lawmakers. To do so would be to do violence to the language
of the law and to invade the legislative sphere. 47

In Western Mindanao Power Corp. v. Commissioner of Internal

Revenue 48 (Western Mindanao Power Corp.), the Court held that "[t]he
taxpayer claiming the refund must x x x comply with the invoicing and
accounting requirements mandated by the NIRC, as well as by revenue
regulations implementing them." 49 We reiterated this rule in Bonifacio Water
Corp. v. Commissioner ofInternal Revenue50 (Bonifacio), and most recently,
in Site! Phils. Corp. v. Commissioner of Internal Revenue 51 (Site!). This
pronouncement, however, cannot support the CIR's position that prior
compliance with the accounting requirements under Section 4.113-3 of RR
No. 16-2005 is a condition precedent to the claim for refund or credit. In all

42
See Microsoft Phils., Inc. v. Commissioner ofInternal Revenue, 662 Phil. 762, 769 (2011).
43
Bookkeeping Regulations, Revenue Regulations No. V-1 ( As Amended), Sec. 2, par. 2; dated March 17,
1947.
44
Bookkeeping Regulations, Revenue Regulations No. V-1 (As Amended), Sec. 2, par. 4; dated March 17,
1947.
45
Bookkeeping Regulations, Revenue Regulations No. V-1 (As Amended), Sec. 4; dated March i7, 1947.
46
See Commissioner ofInternal Revenue v. Philex: _l\llining Corp., G.R. No. 233942 (Notice), February 21,
2018.
47
Canel v. Mayor Decena, 465 Phil. 325, 333 (2004).
48
687 Phil. 328 (2012).
49
Id. at 340.
50
714 Phil. 413 (20i3).
51
805 Phil. 464 (2017).

I
 Decision 10 G.R. No. 230016

these cases, the taxpayer's failure to maintain subsidiary journals was not
raised as an issue.

In Western Mindanao Power Corp., the CTA denied the taxpayer's

claim for a refund because the taxpayer's official receipts do not contain the
word "zero-rated." In sustaining the CTA, we ruled that the failure to print the
phrase "zero-rated" on the VAT official receipts was fatal to the claim for
refund of input VAT on zero-rated sales.

In a claim for tax refund or tax credit, the applicant must prove not
only entitlement to the grant of the claim under substantive law. It must also
show satisfaction of all the documentary and evidentiary requirements for
an administrative claim for a refund or tax credit. Hence, the mere fact that
petitioner's application for zero-rating has been approved by the CIR does
not, by itself, justify the grant of a refund or tax credit. The taxpayer
claiming the refund must further comply with the invoicing and
accounting requirements mandated by the NIRC, as well as by revenue
regulations implementing them.

xxxx

In fact, this Court has consistently held as fatal the failure to print
the word "zero-rated" on the VAT invoices or official receipts in claims for
a refund or credit of input VAT on zero-rated sales, even if the claims were
made prior to the effectivity ofR.A. 9337. Clearly then, the present Petition
must be denied. 52 (Emphasis supplied.)

In Bonifacio, the taxpayer indicated in its official receipts a name not

approved by the Securities and Exchange Commission (SEC). The Court
ruled that the absence of official receipts issued in a name approved and
authorized by the SEC was tantamount to non-compliance with the
substantiation requirements under the law. Thus:

From the foregoing, it is clear that petitioner must show satisfaction

of all the documentary and evidentiary requirements before an
administrative claim for refund or tax credit will be granted. Perforce, the
taxpayer claiming the refund must comply with the invoicing and
accounting requirements mandated by the Tax Code, as well as the
revenue regulations implementing them.

Thus, the change of petitioner's name to "Bonifacio GDE Water

Corporation," being unauthorized and without approval of the SEC, and the
issuance of official receipts under that name which were presented to
support petitioner's claim for tax refund, carmot be used to allow the grant
of tax refund or issuance of a tax credit certificate in petitioner's favor. The
absence of official receipts issued in its name is tantamount to
non-compliance with the substantiation requirements provided by law and,
hence, the CTA En Banc' s partial grant of its refund on that ground should
be upheld. 53 (Emphasis supplied; citation omitted.)

52
Supra note 48, at 340-341.
53
Supra note 50.

l
Decision 11 G.R. No. 230016

Meanwhile, the invoices and official receipts issued by the

taxpayer-claimant in Site! were not imprinted with its TIN followed by the
word "VAT." We ruled that the invoices and official receipts cannot be
considered as VAT invoices or official receipts that would give rise to any
creditable input VAT in favor of Sitel.

The CTA Division also did not err when it denied the amount of
f'2,668,852.55, allegedly representing input taxes claimed on Sitel's
domestic purchases of goods and services which are supported by
invoices/receipts with pre-printed TIN-V. In Western Mindanao Power
Corp. v. Commissioner of Internal Revenue, the Court ruled that in a
claim for tax refund or tax credit, the applicant must prove not only
entitlement to the grant of the claim under substantive law, he must
also show satisfaction of all the documentary and evidentiary
requirements for an administrative claim for a refund or tax credit
and compliance with the invoicing and accounting requirements
mandated by the NIRC, as well as by revenue regulations
implementing them. The NIRC requires that the creditable input VAT
should be evidenced by a VAT invoice or official receipt, which may
only be considered as such when the TIN-VAT is printed thereon, as
required by Section 4.108-1 of RR 7-95.

xxxx

In the same vein, considering that the subject invoice/official

receipts are not imprinted with the taxpayer's TIN followed by the word
VAT, these would not be considered as VAT invoices/official receipts and
would not give rise to any creditable input VAT in favor of Sitel. 54
(Emphasis supplied; citations omitted.)

In the foregoing cases, the issue was limited to non-compliance with

the invoicing requirements. The Court's statement that accounting
requirements must be complied with in addition to the invoicing requirements
to entitle the claimant for refund or credit is, at best, merely an obiter dictum
that is not binding as a precedent. An obiter dictum is an opinion expressed by
a court upon some question of law, which is not necessary to the decision of
the case before it. It is a remark made, or opinion expressed, by a judge, in his
decision upon a cause, "by the way," that is, incidentally or collaterally, and
not directly upon the question before him, or upon a point not necessarily
involved in the determination of the cause, or introduced by way of
illustration, or analogy or argument. 55

Likewise, the CIR's reliance on Taganito 1\lfining Corp. v.

Commissioner ofInternal Revenue56 is misplaced. In that case, Taganito was
asking for the refund of input tax related to its importation of dump trucks,
which it claimed to be a capital good. In denying the refund, t..1-ie Court
explained:

54
Supra note 51, at485-487.
55
Villanueva, Jr. v. CA, 429 Phil. 194,202 (2002); Delta Motors Corp. v. CA, G.R. No. i21075, July 24,
1997, 342 Phil. 173, 186 (1997).
56
748 Phil. 774 (2014).

I
Decision 12 G.R. No. 230016

Assuming arguendo that Taganito had submitted the valid import

entries, its claim would still fail. Its claim of refund of input VAT relates to
its importation of dump trucks, allegedly a purchase of capital goods. In this
regard, Sections 4.110-3 and 4.113-3 of R.R. No. 16-05, as amended by
R.R. No. 4-2007, provide:

SECTION. 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 (Pl,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 a
capital good. The claim for input tax credit shall commence
in the 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 (Pl,000,000.00), the total input
taxes will be allowable as credit against output tax in the
month of acquisition.

Capital goods or properties refers to goods or

properties with estimated useful life greater than 1 year
and which are treated as depreciable assets under Sec.
34(F) of the tax Code, used directly or indirectly in the
production or sale of taxable goods or services.

xxxx

SECTION 4.113-3. Accounting Requirements. - x

xx

A subsidiary record in ledger form shall be

maintained for the acquisition, purchase or importation
of depreciable assets or capital goods which shall
contain, among others, information on the total input tax
thereon as well as the monthly input tax claimed in VAT
declaration or return. (Emphases in t.1:te original.)

J
 Decision 13 G.R. No. 230016

Taganito argues that tlJ.e report of the independent CPA shows that
purchases and input VAT paid/incurred were properly recorded in its books
of accounts. In addition, it avers that the Balance Sheet in its 2006 Audited
Financial Statements showing an account item for property and equipment
under its non-current assets indicates that details are found on Note 7 on
page 19 of the Notes to Financial Statements, which provide the complete
details ofits subsidiary ledger. It also alleges that the pertinent IERIDs were
reviewed by the independent CPA and they clearly state that the items
imported were dump trucks, and that its Vice-President for Finance testified
what consists of its purchases of capital goods.

These arguments cannot be given credence.

First, Taganito failed to prove that the importations pertaining to the

input VAT are in the nature of capital goods and properties as defined in
[Sections 4.110-3 and 4.113-3]. It points to the report of the independent
CPA which allegedly reviewed the IERIDs and subsidiary ledger
containing the description of the dump trucks. Nonetheless, the petitioner
failed to present the actual IERIDs and subsidiary ledger, which would
constitute the best evidence rather than a report merely citing them. It did
not give any reason either to explain its failure to present these documents.
The testimony of its Vice-President for Finance would be insufficient to
prove the nature of the importation without these supporting documents.

Second, even assuming that the importations were duly proven

to be capital goods, Taganito's claim still would not prosper because it
failed to present evidence to show that it properly amortized the
related input VAT over the estimated useful life of the capital goods in
its subsidiary ledger, as required by [Sections 4.110-3 and 4.113-3].
This is made apparent by the fact that Taganito's claim for refund is
for the full amount of the input VAT on the importation, rather than
for an amortized amount, and by its failure to present its subsidiary
ledger. 57 (Emphasis supplied.)

The Court required Taganito to submit the subsidiary ledger, an

accounting requirement under Section 4.113-3 of RR No. 16-2005, because
the importation of dump trucks was alleged to be a purchase of capital goods.
As such, the related input tax on the purchase must be amortized over the
estimated useful life of the goods under Section 4.110-3 of RR No. 16-2005.
The subsidiary ledger contained the information on the total input tax on the
importation and the monthly input tax claimed. It is the best evidence to
establish the proper amortization of claimed input tax. Since Taganito failed
to introduce in evidence the subsidiary ledger, the Court denied the claim for
refund.

Distinct from the foregoing, t._½.e presentation of subsidiary journals in

the instant case is not indispensable. For one, the subject of the claim for
refund is input tax on Hie importation of goods other than capital goods and
domestic purchases of services. 58 Also, the CTA was able to determine the
existence of Philex Min.ing's valid creditable input VAT attributable to its

57
Id. at 787-789.
58

y
Rollo, p. 73.
 Decision 14 G.R. No. 230016

zero-rated sales by probing all the official receipts, quarterly VAT returns,
and the import entry declarations submitted. The CTA evaluated the ICPA's
report and concluded that Philex Mining incurred input taxes in connection
with its zero-rated sales and the input taxes were not applied against any of its
output tax liability. 59

Similarly, there was nothing in Section 112 (A) and RR No. 16-2005
th.at require prior filing of monthly VAT declarations as a condition precedent
to the entitlement for refund. While admittedly, Section 114 (A) 60 of the Tax
Code, as implemented by Section 4.114-1 61 of RR No. 16-2005, requires the
taxpayer to pay VAT on a monthly basis, the Tax Code and relevant revenue
regulations do not provide denial of the claim as a consequence of
non-compliance. The failure to pay VAT every month may give rise to the
payment of penalties but it does not affect the taxpayer's entitlement to its
claim for refund as long as it has sufficiently shown that the VAT has in fact
been paid. Here, the CTA examined the voluminous documents submitted by
Philex Mining and concluded that Phil ex Mining sufficiently proved payment
of creditable input VAT for the second and third quarters of TY 2010.

In all, Philex Mining's failure to maintain subsidiary sales and purchase

journals or to file the monthly VAT declarations should not result in the
outright denial of its claim for refund or credit of unutilized input VAT
attributable to its zero-rated sales. These are not part of the requirements for
Philex Mining to be entitled thereto. Section 112 (A) of the Tax Code is very
clear; no construction or interpretation is needed. The Court may not construe
a statute that is free from doubt; neither can we impose conditions or
limitations when none is provided for. 62 While tax refunds are in the nature
of tax exemptions and are construed strictissimi Juris against the taxpayer,
tax statutes shall be construed strictly against the taxing authority and
liberally in favor of the taxpayer, for taxes, being burdens, are not to be
presumed beyond what the statute expressly and clearly declares. 63 Verily,
the CTA did not err in ruling that the absence of subsidiary sales journal,

59
Id. at 73-78.
60
SEC. 114. Return and Payment of Value-added Tax. -
(A) In General. - Every person liable to pay the value-added tax imposed under this Title shall file a
quarterly return of the amount of his gross sales or receipts within twenty-five (25) days following the
close of each taxable quarter prescribed for each taxpayer: Provided, however, That VAT-registered
persons shall pay the value-added tax on a monthly basis. xx x.
61
SEC.4.114-1. Filing ofReturn and Payment of VAT. -
(A) Filing of Return. - XX X
xxxx
Amounts reflected in the monthly VAT declarations for the first two (2) months of the quarter shall
still be included in the quarterly VAT return which reflects the cumulative figures for the ta,'<able quarter.
Payments in the monthly VAT declarations shall, however, be credited in the quarterly VAT return to
arrive at the net VAT payable or excess input taYJover-payment as of the end of.a quarter.
xxxx
The monthly VAT Declarations (BIR Form 2550M) of taxpayers whether large or non-large shall
be filed and the taxes paid not later than the 20th day following the end of each month.
xxxx
62
Commissioner qflnternal Revenue v. American Express lnternatio:?-a!, Inc., 500 Phil. 586,608 (2005).
63
Republic ofthe Phils. v. Jncermediate Appellate Court, 273 Phil. 573, 579 (J 991).

I
 Decision 15 G.R. No. 230016

subsidiary purchase journal, and monthly VAT declarations is not sufficient

to deprive Philex Mining of its right to a refund.

In any event, the CIR' s allegation that Philex Mining failed to prove its
creditable input tax attributable to its zero-rated sales necessarily involves
factual issue and, thus, is evidentiary in nature which cannot be entertained in
the present petition where only questions of law may be generally raised. The
Court is not a trier of facts; it is not our duty to look into the documents
submitted during trial in order to test the truthfulness of their contents. 64
Besides, the findings of fact of the CTA, which, by the very nature of its
functions, dedicated exclusively to the study and consideration of tax
problems and has necessarily developed an expertise on the subject, are
generally regarded as final, binding, and conclusive upon this Court. The
findings shall not be reviewed nor disturbed on appeal unless a party can
show that these are not supported by evidence, or when the judgment is
premised on a misapprehension of facts, or when the lower courts
overlooked certain relevant facts which, if considered, would justify a
different conclusion. Here, we find no cogent reason to depart from this
general principle.

FOR THESE REASONS, the Petition for Review on Certiorari is

DENIED.

SO ORDERED.

WECONClJR:

1AO-u,,.J
ESTELA ~8:RLAS-BERNABE
Senior Associate Justice
Chairperson

.GESMUNDO Al>lf/ lff:;,;,,O,JA

VIER
Associate Justice

64
Supra note 46.
Decision 16 G.R. No. 230016

. nOSARIO
Associate Justice

ATTESTATION

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

ESTELA M1~S-BERNABE
Senior Associate Justice
Chairperson, Second Division

CERTIFICATION

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

Division Chairperson's Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.

ChiefJustice