MAIBARARA GEOTHERMAL, INC., v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY En Bane MAIBARARA GEOTHERMAL, CTA EB NO. 2111 INC., (CTA Case Nos. 9119, 9201 , Petitioner, 9254, and 9336) -versus- Present: DI~ L ROSARIO, P.J., CASTANEDA, JR., UY, Rl NG PIS-LIBAN, MANAHAN, BACORRO-VILLENA, and MODESTO-SAN PEDRO, JJ. COMMISSIONER OF INTF.R NAL REVENUE, Promul ga ted: Respondent. NOV 2 6 2020 ~ = X -----------------------------------------------------------------------------------------~ -:"S<O' ---3-.:-:t"l---;;.-;;..._X' DECISION MODESTO-SAN PEDRO, J.: The Case This is a Petition for Rcvicw 1 pursuant to Section 3(b), Rule 8 of the Revised Rules of the Court of Tax Appeals ("RRCTA "Y fil ed by petitioner aga inst respondent, seeking the reversal an d settin g aside of th e Dccis ion,3 dated 4 M arch 2019, and the Rcso lution, 1 dated 9 Jul y 2019, both rendered by the Co urt ofTax Appeals ("CT/\" ) Special First Di v is ion (hereinafter referred to as the "Court in Di v ision" ), and pray ing for the refund of petitioner's ~ 1 Petition for Review, Rullo, pp. 9-74, with anne,cs. A.M. No. 05- 11-07-CTA, 22 November :wos. 1 Decis ion dated 4 March 2019, Court in Divis ion Docket (CTA Case Nos. 9119, 920 I. 9254, and 9336), Vol. V, pp. 2654-2669. 4 Reso lut ion dated 9 Ju l) 2019. Court in Di vision Dod.ct (CTA Case Nos. 9119,920 1.9254. a nd 9336). Vo l. V. pp. 2762-2767.

IJECISION CTA �8 NO. 2111 (CTA Case No~. 9119. 92()1_ 925�1. and 9336) Page 2 of 1,1 unutilized input VAT paid on purchases of goods and services attributable to zero-rated sales for the I", 2"d, 3'"d, and 4'11 quarters of taxable year 2013 in the total amount of PSI ,572,707.81. The Parties Petitioner Maibarara Geothermal, Inc. ("Maibarara") is a corporation duly organized and existing under the laws of the Philippines. It is registered with the Department of Energy ("DOE") as an "REDeveloper of Geothermal Energy Resources" and with the Board of Investments ("BOI") as a "New Renewable Energy Developer of a 20 MW Maibarara Geothermal Power Generation Project." Petitioner is a VAT-registered taxpayer with Taxpayer's Identification Number (TIN) 007-843-328-000, and its business address is at the 7th Floor, JMT Building, ADB Avenue, Ortigas Center, Pasig City. Respondent Commissioner of Internal Revenue ("CIR") is duly- appointed and empowered to perform the duties of its office, including, among others, the duty to act on and approve claims for refund as provided by law, with office address at the Bureau of internal Revenue ("BIR") National Office Building, Diliman, Quezon City. The Facts Petitioner claims for refund of its alleged unutilized input taxes attributable to zero-rated sales/receipts for the I", 2"d, 3'd, and 4th quarters of taxable year 2013 in the total amount ofP81,572,707.81.5 As found by the Court in Division, petitioner filed with Revenue District Office ("RDO") No. 43A four (4) separate administrative claims for refund of its alleged unutilized input VAT attributable to zero-rated sales for the four (4) quarters of taxable year 2013 6 as follows: Q!'a_.-te_.- Date Filed Amount Claimed I'' 26 March 20 15 ------- ----------- 2nd -- P9,027,372.28 ---------- )rl - 26June2015 18September 2015 69,816,295.84 4th I 0 December 2015 -- -- --------- --- 1,621,7JL\.5 ~--- TOTAL 1,107,245.17 P81,57_2,707.~LJ ~ 5 Petition for Review, Rollo, p. 9. '' Decision dated 4 March 2019. Court in Division Docket (CTA Case Nos. 9119.9201,9254. and 9336). Vol. V, pp. 2654-2669.

DECISION CTA tB NO. 2111 (CTA Cast! Nos. 9119,9201. 92.'i.1. aml9336) Following respondent's non-action on such claims, petitioner filed four (4) separate Petitions for Review on 18 August 2015, 16 November 2015, 5 February 2016, and 25 April 2016, docketed as CTA Case Nos. 9119, 920 I, 9254, and 9336, respcctivcly. 7 The Court in Division granted the consolidation of CTA Case Nos. 920 I and 9254 with CrA Case No. 9119 in its Resolution dated 5 May 2016.8 Meanwhile, the CTA Third Division ordered the consolidation of CTA Case No. 9336 with CTA Case No. 9119, subject to the approval of the Court in Division, in its Resolution dated 14 June 2016,9 which was subsequently approved in the Court in Division's Resolution, dated I July 2016. 10 On 4 March 2019, the Court in Division rendered the assailed Decision denying the consolidated Petitions for Review for lack of merit. Aggrieved, petitioner filed its Motion for Reconsideration before the Court in Division on 25 March 2019. 11 Respondent no longer filed its Comment/ Opposition. 12 On 9 July 2019, the Court in Division promulgated the assailed Resolution denying petitioner's Motion for Reconsideration. On 31 July 2019, petitioner filed a Motion for Extension of Time to File the Petition for Review, 13 which the Court l~n Bane granted 14 on 5 August 2019, giving petitioner until 17 August 2019 to file its Petition. Petitioner filed the instant Petition for Revicw 15 on 16 August 2019, and respondent was directed 16 to file its Comment thereto within ten (I 0) days from notice. Respondent did not file its Commcnt. 17 On 27 November 2019, the Court En Bane gave due course to the Petition for Review and submitted the same for tr dccision. 18 7 Ibid. ' Resolution dated 5 May 2016. Court in Division Docket (CTA Case Nos. 9119,9201,9254. and 9336). Vol. II, pp. 764-767. 9 Resolution dated 14 June 2016. Court in Division Docket (CTA Case Nos. 9336), pp. 93-95. 10 Resolution dated I July 2016. Court in Division Docket (CTA Case Nos. 9119.9201.9254, and 9336). Vol. II, pp. 791-794. 11 Motion for Reconsideration. Court in Division Docket (CTA Case Nos. 9119. 9201. 9254, and 9336). Vol. V, pp. 2715- 2748. " Records Verification dated 31 May 2019. Court in Division Docket (CTA Case Nos. 9119,9201,9254. and 9336). Vol. V. p. 2756. 13 Motion for Extension of Time to File Petition for Review. Rollo. pp. 1-7. 14 Minute Resolution dated 5 August 20\9, Rollo. p. 8. 15 Petition for Review, Rollo, pp. 9-74. with annexes. 16 Resolution dated 16 September 2019. Rollo. pp.75-77. 17 Records Verification dated II November 2019, Rollo. pp. 78. 18 Resolution dated 27 November 2019. Rollo. pp. 79-81.

DECISION CTA LB NO. 21 11 (Cl A Case Nos. 91 Pi. 4201. lJ2:'d. and lJJJ6 l The Assigned Errors 19 Petitioner makes the following assignment of errors for the Court En Bane's resolution: A. The Honorable Special First Division erred in ruling that petitioner failed to comply with the requirement that the taxpayer is engaged in zero-rated or effectively zero-rated sales; B. The Honorable Special First Division erred in ruling that petitioner failed to comply with the requirement that the input taxes claimed are attributable to zero- rated or efteetively zero-rated sales; C. The Honorable Special First Division, by denying the petitioner of their refund, deprived petitioner of their property without due process of law; and D. The Honorable Special First Division erred in ruling that petitioner is not entitled to the refund ofthe amount of PSl ,572,707.81 representing its unutilized input VAT attributable to its zero-rated sales for the year 2013. The Ruling of the Court En Bane The Court En Bane finds no reason to reverse the assailed Decision and Resolution of the Court in Division. Petitioner failed to prove the existence of zero-rated sales upon which the 2013 input VAT may be attributed. Petitioner insists that, from the wording of Section 112(A), there is no requirement that the zero-rated or effectively zero-rated should be made during the same period as when the input taxes sought to be refunded were~ incurred or paid.211 19 Petition for Review dated 13 August 2019. CT A EB No. 21 I I. Rollo. pp. 15-16. 20 /d., p. 24.

OECISIOOi CTA UJ NO. 2111 (Cl A Case Nos. Y119. 92() I. 92:'i�l. <111<l l)JJ6l Page5ofl,1 We agree with petitioner's contention that the existence of zero-rated or effectively zero-rated sales need not be in the same period as that when the input taxes subject of the claim were incurred or paid. However, the presence of zero-rated sales during the period of claim, regardless of the period when the claimed input VAT was incurred, must nonetheless be established. It is precisely for this reason that the two (2)-year prescriptive period to claim refund of unutilized input VAT commences after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made and not after the close of the taxable quarter when the purchases were made and the corresponding input VAT were incurred. Section 112(A) ofthe Tax Code provides that a VAT-registered person, whose sales are zero-rated or c!Tcctivcly zero-rated, may apply for issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales within two (2) years after the close of the taxable quarter when such sales were made, to wit: "Section 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 e!Tcetively 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 (8)(1) and (2). the acceptable f'oreign 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 or the transactions. it shall be allocated proportionately on the basis of the volume of sales;. . ."21 A plain reading of Section 1I 2(A) would show that the existence of zero-rated sales is crucial in a claim for unutilizcd input VAT. Section 112(A) reckons the two (2)-year prescriptive period from the close of the taxable quarter when the sales were made and not when claimed input VAT were incurred or paid. The mandate is very clear. When the law speaks in clear and categorical language, there is no occasion for interpretation; there is only room for application.22 (/-- 21 Emphasis and underscoring supplied. 22 Nippon Express (Philippines) Corporation v. Commissioner of Internal Revenue, G.R. No. 196907, 13 March 2013.

DECISIO"' CTA EB NO. 2111 (CIA Case Nos_ 9119,9201. 9251. and 9336) Page 6 of lrl Significantly, as cited by petitioner, the Supreme Court reiterated, in San Roque Power Corporation v. Commissioner ofInternal Revenue,23 the requirements for a claim for refund or tax credit to prosper, to wit: "To claim refund or tax credit under Section 112(A), petitioner must comply with the following criteria: ( 1) the taxpayer is VAT registered; (2) the taxpayer is engaged in zero-rated or effectively zero-rated sales; (3) the input taxes are due or paid; (4) the input taxes arc not transitional input taxes; (5) the input taxes have not been applied against output taxes during and in the succeeding quarters; (6) the input taxes claimed are attributable to zero- rated or effectively zero-rated sales; (7) for zero-rated sales under Section I 06(A)(2)(1) and (2); 106(8); and I08(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with 8SP rules and regulations; (8) where there arc both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (9) the claim is filed within two years after the close of the taxable quarter when such sales were made. "2"1 Petitioner also cites San Roque Power Corporation v. Commissioner of Internal Revenue,25 CST Philippines, Inc. v. Commissioner of Internal Revenue,26 Commissioner oj1nternal Revenue v. KEP (Philippines) Realty Corporation,27 and Maibarara Geothermal v. Commissioner of Internal Revenue28 in proffering the view that there is no requirement that there should be zero-rated or effectively zero-rated sales during the same period as when the input taxes sought to be refunded were incurred or paid. While there is no requirement that the zero-rated sales should be present in the same period that the claimed input taxes are incurred or paid, the presence of zero-rated or effectively zero-rated sales must nonetheless be established during the period of claim or in any subsequent period. Nowhere in the aforementioned cases was it ruled that substantiating the zero-rated sales may be dispensed with. As diametrically opposed to petitioner's assertion, the Supreme Court in Luzon Hydro Corporation v. Commissioner ofInternal Revenue,29 clearly and categorically pronounced the necessity of establishing the presence of 'l- zero-rated sales on the part of the taxpayer to obtain tax credit or refund of unutilized input VAT. The Supreme Court held in this wise: ~l G.R. No. 180345,25 November 2009 citing Intel Technology of the Philippines. Inc. v. Commissioner of Internal Revenue. G.R. No. 166732, 27 April 2007. 14 Emphasis and underscoring supplied. " G.R. No. 180345, 25 November 2009. 26 CTA Case No. 7718, 23 June 20 I0. 27 CTA EB No. 1504 (CTA Case No. 8983) 18 August 2017. " CTA Case No. 8871. 8937, 8999. and 9042. 27 December 2017. 29 G.R. No. 188260,13 November2013.

DECISION CTA �8 NO. 21 II (CTA Casl: Nos. 9119, 920 l. lJ25�L and 9336) "A claim for refund or tax credit for unutilized input VAT may be allowed only if the following requisites concur, namely: (a) the taxpayer is VAT- registered; (b) the taxpayer is engaged in zero-rated or etlectively zero-rated sales; (c) the input taxes are due or paid; (d) the input taxes are not transitional input taxes; (e) the input taxes have not been applied against output taxes during and in the succeeding quarters; (t) the input taxes claimed are attributable to zero-rated or eflcctivcly zero-rated sales: (g) for zero-rated sales under Sections I 06 (A) (2)( I) and (2 ); I06 (B); and I 08 (B) (I) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas; (h) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and (i) the claim is filed within two years after the close of the taxable quarter when such sales were made. The petitioner did not competently establish its claim for refund or tax credit. We agree with the CTA En Bane that the petitioner did not produce evidence showing that it had zero-rated sales for the four quarters of taxable year 200 I. As the CTA En Bane precisely found, the petitioner did not reflect any zero-rated sales from its power generation in its four quarterly VAT returns, which indicated that it had not made any sale of electricitv. Had there been zero-rated sales, it would have reported them in the returns. Indeed, it carried the burden not only that it was entitled under the substantive law to the allowance of its claim for refund or tax credit but also that it met all the requirements for evidentiary substantiation of its claim before the administrative ot1lcial concerned, or in the de novo litigation before the CTA in Division. Although the petlttoner has correctly contended here that the sale of electricity by a power generation company like it should be subject to zero- rated VAT under Republic Act No. 9136, its assertion that it need not prove its having actually made zero-rated sales of electricity by presenting the VAT official receipts and VAT returns cannot be upheld. It ought to be reminded that it could not be permitted to substitute such vital and material documents with secondary evidence like financial statements."30 Following the doctrine that zero-rated sales must be substantiated from which the claimed input VAT can be attributed, the Court En Bane, in Maibarara Geothermal v. Commissioner ofInternal Revenue,31 affirmed the findings of the Court in Division which allowed the refund of input VAT incurred in 2012 which are attributable to the duly substantiated zero-rated sales for the first quarter of 2014. In the present case, petitioner claims for refund of unutilized input VAT attributable to its zero-rated sales/ receipts for the four (4) quarters of taxable 4- year 2013.32 30 Emphasis and underscoring supplied. 31 Commissioner of Internal Revenue v. Maibarara Geothermal, Inc .. CTA EB No. 1863 (CTA Case Nos. 8871, 8937, 8999, and 9042). 4 October 2019. " Exhibits P-9, P-10, P-1 L P-12. P-13. P-14, P-15. and P-16. Court in Division Docket CTA Case Nos. 9119, 920L 9254, and 9336, Vol. IV, pp. 1887-1916.

DECISION CTA EB NO. 2111 (CTA Case Nos. 9119. 9201.92:'d. and LJ336) As found by the Court in Division, an examination of petitioner's Quarterly VAT Returns filed for taxable year 2013 reveals that petitioner had no sales declared during the said period 33 The CoUJ1 in Division also found through the testimony of petitioner's witness that its first commercial sale was in2014. 3 ~ Petitioner contends that its submission of quarterly VAT returns and amended VAT quarterly VAT returns from the l '' qum1cr of taxable year 2011 to the 1st quarter of 2014, income tax returns and audited financial statement from the taxable year 20 I0 up to taxable year 2013, Electricity Supply Agreement with Trans-Asia Oil and Energy Development Corporation, Billing Statement No. 0001, and Official Receipt No. 0501 dated 25 March 2014 are sufficient to establish the existence of zero-rated sales from its operations as a renewable energy developer. 35 A perusal of the petitioner's Official Receipt No. 0501, however, reveals that the pertinent details such as payor's name, date of transaction, payor's TIN, and nature of service performed, arc illegible. Without the required information the zero-rated sales cannot be duly substantiated for petitioner's failure to establish the existence of zero-rated sales upon which the claimed unutilizcd input VAT may be attributed. Petitioner's failure to establish the existence of zero-rated sales during the period of claim, i.e. taxable year 2013, or in any subsequent year, is fatal to its action, and this Court is constrained to deny petitioner's claim for input VAT refund. Petitioner failed to establish that it is engaged in zero-rated sales. Petitioner claims that it is engaged in zero-rated sales and is duly registered with the Board of Investments as a "new renewable energy developer" and that it is registered with the Department of Energy ("DOE")Y' Petitioner thus claims that it is entitled to VAT zero-rating treatment of its sale of fuel or power generated from renewable sources of energy and its purchases of local supply of goods, properties, and services related to the development, construction, and installation of its power facilities. 37~ .u Decision dated 4 March 2019, Coutt in Division Docket (CTA Case Nos. 9119,9201,9254, and 9336), Vol. V, pp. 2666-2668. 14 !hid. 35 Petition for Review, Rollo, pp. 37-39. 36 Petition for Review. Rollo, p. 12. 37 Ibid.

DECISION CTA EB NO. 2111 (CTA Cnse Nos. Y119. 920 I. 92:'i.l. cmd 9JJ6l We disagree. Section 15 (g) ofRepublic Act ("R.A. '') No. 9513, otherwise known as the Renewable Energy Act of2008, pertinently reads as follows: "CHAPTER VII GENERAL INCENTIVES Section 15. lncentivesfhr Renewahle Energy Projects and Activities.- RE developers of renewable energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non-power applications. as duly certified by the DOE, in consultation with the BOI. shall be entitled to the following incentives: (g) Zero Percent Value-Added Tax Rate. The sale of fuel or power generated from renewable sources of energy such as, but not limited to, biomass, solar. wind. hydropower. geothermal. ocean energy and other emerging energy sources using technologies such as fuel cells and hydrogen fuels. shall be subject to zero percent (0%) value-added tax (VAT), pursuant to the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337. All REDevelopers shall be entitled to zero-rated value added tax on its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities. This provision shall also apply to the whole process of exploring and developing renewable energy sources up to its conversion into power, including but not limited to the services performed by subcontractors and/or contractors."�'" In relation thereto, the DOE issued Department Circular No. 2009- 05-0008 on 25 May 2009, the pertinent portion of which is Part III, Rule 5 Section 13.G of the Implementing Rules and Regulations ("IRR'') of R.A. No. 9513, which reads: ��PART Ill Incentives for Renewable Energy Projects and Activities Rule 5 General incentives and Privileges for Renewable Energy Development SEC. 13. Fiscal Incentives for Renewable Energy Projects and Activities. DOE-certified existing and new RE Developers of RE facilities, including Hybrid Systems. in proportion to and to the extent~ 38 Emphasis and underscoring supplied.

DECISION CTA t.B NO. 2111 (C r/\ ('a~e Nos lJII9. lJ201. '-l~:'i-1. anti lJ.l3hJ Page 10 of [rl of the RE component, tor both Power and Non-Power Applications, shall be entitled to the following incentives: G. Zero Percent Value-Added Tax Rate The following transactions/activities shall be subject to zero percent (0%) value-added tax (VAT), pursuant to the National Internal Revenue Code (NIRC) of J 997. as amended by Republic Act No. 9337: (b) Purchase of local goods, properties and services needed for the development, construction, and installation of the plant facilities of RE Developers; (c) Whole process of exploration and development of RE sources up to its conversion into power. including. but not limited to, the services performed by subcontractors and/or contractors."19 Based on the foregoing, all RE Developers arc entitled to zero-rated VAT on its purchases of local supply of goods, properties, and services needed for the development, construction, and installation of plant facilities. Furthermore, the VAT zero-rating applies to the whole process of exploration and development of renewable energy sources up to its conversion into power, including the services performed by contractors or subcontractors. To avail of zero-rated VAT, a taxpayer must, however, comply with the conditions laid down under Part Ill, Rule 5 of the IRR ofR.A. No. 9513. Section 18 (A), (B), and (C) thereof reads: "SEC. 18. Conditions f(Jr Availment of Incentives and Other Privileges. A. Registration!Accreditotion l1'ith the DOE For purposes of entitlement to the incentives and privileges under the Act, existing and new RE Developers, and manufacturers, fabricators, and suppliers of locally- produced RE equipment shall register with the DOE, through the Renewable Energy Management Bureau) (REMB). The following certifications shall be issued: (I) DOE Certfficate of Registration- issued to an RE Developer holding a valid RE Service/Operating Contract. For existing RE projects, the new RE Service/Operating Contract that the RE Developer has ~ 39 Emphasis and underscoring supplied.

DECISION CTA tB NO. 2111 (CTA Case Nlls. 9119. 9201. lJ2S�L and 9336) Page II of 14 executed with the DOE subject to the Transitory Provision in Rule I3, Section 39. The DOE Certificate of Registration shall be issued immediately upon award of an RE Service/Operating Contract covering an existing or new RE project or upon approval of additional investment. Any investment added to existing RE projects shall be subject to prior approval by the DOE. (2) DOE Certificate of Accreditation issued to RE manufacturers, fabricators, and suppliers of locally- produced RE equipment, upon submission of necessary requirements to be determined by the DOE, in coordination with the DTI. B. Registration with the Board o/fnvestment.\ (BOI) The RE sector is hereby declared a priority investment sector that will regularly form part of the country's Investment Priority Plan (IPP). unless declared otherwise by law. To qualify for the availment of the incentives under Sections 13 and 15 of this IRR, RE Developers and manufacturers, fabricators, and suppliers of locally-produced RE equipment, shall register with the BOI. The registration with the BOI shall be carried out through an agreement and an administrative arrangement between the BOI and the DOE. with the end-view of facilitating the registration of qualified RE facilities. The applications for registration shall be favorably acted upon immediately by the BOLon the basis of the certification issued by the DOE. C. Certificate of"Endorsement hy the DOE RE Developers, and manufacturers, fabricators, and suppliers of locally- produced RE equipment shall be qualified to avail of the incentives provided for in the Act only after securing a Certificate of Endorsement from the DOE, through the REMB, on a per transaction basis. The DOE, through the REMB. shall issue said certification within fifteen (15) days upon request of the RE Developer or manufacturer, fabricator. and supplier: Provided, That the certification issued by the DOE shall be without prejudice to any further requirements that may be imposed by the government agencies tasked with the administration ofthe fiscal incentives mentioned under Rule 5 of this IRR." As required under the foregoing provisions, the following I documents must be secured by a Rl: Developer in order to qualify for VAT zero-rating, as contemplated under RA No. 9513 and its IRR, to wit:

DECISIO'I CTA tB NO. 2 I 11 (CTA Case No~- 91 19. 920 I. 92:'�1. nnd 43J(J) Page 12 of 1,1 1.) DOE Certificate of Registration; 2.) Registration with the BOI; and 3.) Certificate of Endorsement by the DOE. Here, records show that petitioner was issued a DOE Certificate of Registration No. GRESC 2011-01-025 on 5 January 2011 40 and a Certificate of Registration No. 2011-006 by the Board of Investments on 7 January 20]].41 However, there is no showing that petitioner was issued a Certificate of Endorsement by the DOE on a per transaction basis. Without this third requirement, petitioner's alleged sales, if any, do not qualify for VAT zero- rating. Petitioner was not deprived of property without due process of law because refunds arc strictly construed against the claimant- taxpayer. Petitioner claims that the denial of its claim is tantamount to deprivation of property without due process of Jaw contrary to the fundamental principle of the Constitution. We find this contention unmeritorious. It is settled that statutes that grant tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the taxing authority. Tax refunds in relation to VAT arc in the nature of such exemptions.42 Accordingly, it is the claimant's burden to prove the factual basis of a claim for refund or tax credit. 13 Navigating on the same premise that tax refunds are construed strictissimijuris against the taxpayer, every claim for refund subject to review ofthis Court should pass through strict scrutiny and evaluation ofthe evidence presented by both parties. This Court is guided by the pronouncement of the Supreme Court in the case of Atlas Consolidated Mining and Development g. 40 Exhibit "P-3", Court in Division Docket (CTA Case Nos. 9119,9201.9254, and 9336), Vol. IV, p. 1856. 41 Exhibit "P-4", Court in Division Docket (CTA Case Nos. 9119, 920 I. 9254, and 9336), Vol. IV, p. 1857. 42 Panasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue, G.R. No. 178090. 8 February 20 I0. 43 Eastern Telecommunications Philippines. Inc. v. Commissioner of Internal Revenue, G.R. No. 183531, 25 March 2015.

DECISION CTA EB NO. 2111 {CTA Case Nos. 9119. 9201. 925�1. and 933(1) Page 13 of ltl Corporation vs. Commissioner of Internal Revenue,'1'1 which laid down the stringent standards to be observed in making a conclusion on a judicial claim for refund, the pertinent part of the decision reads: "In fine, we reiterate our consistent ruling that actions for tax refund, as in the instant case. are in the nature of a claim for exemption and the law is not only construed in ~�trictin�imi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption is (sic) strictissimi scrutinized and must be duly proven."45 In view of the foregoing, the denial of petitioner's claim for refund docs not equate to any deprivation of propct1y without due process of law. As exhaustively discussed in the preceding sections, petitioner failed to establish the existence of zero-rated sales upon which the claimed input VAT is attributed and has failed to submit sufficient evidence to establish that its sales, if any, is subject to zero-rating. WHEREFORE, in light of the foregoing considerations, the instant Petition for Review filed by Maibarara Geothermal, Inc. is hereby DENIED for lack of merit. Accordingly, the assailed Decision dated 4 March 2019 and Resolution dated 9 July 2019, both rendered by the Court in Division, are hereby AFFIRMED. SO ORDERED. MARIA R( WE CONCUR: Presiding Justicc ON LEAVE JUANITO C. CASTANIWA, JR. Associate Justice 44 G.R. No. 159490, February 18. 2008. 45 Emphasis and underscoring supplied.

DECISION CTA �8 NO. 2111 (CTA Cast: Nns. 9119. 9201. 92:'i,f. and 9JJ6) Page 1<1 of 1-1 ERL~.lJY Associate Justice ON,~../~ MA. BELEN M. RINGPIS-LIBAN Associate Justice ('7~-;:~ (With due respect, I join the Disse~ting (Jpini"~illena) CATHERINE T. MANAHAN .. Associate Justicc �>.senting Opinion) 'ACORRO-VILLENA CERTIFICATION Pursuant to Article VI!!, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ROMAN G. DEL-ROSARIO Presiding Justice~

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC MAIBARARA CTA EB NO. 2111 GEOTHERMAL, INC., (CTA Case Nos. 9n9, 9201, 9254, and 9336) Petitioner, -versus- Present: DEL ROSARIO, J!L, CASTANEDA, JR., UY, RINGPIS-LIBAN, MANAHAN, BACORRO-VILLENA, and MODESTO-SAN PEDRO, fl. COMMISSIONER OF INTERNAL REVENUE , Promulgated: Respondent. NQV 2 6 2~ ~ ~~ ~~ X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --: -� DISSENTING OPINION BACORRO-VILLENA, L.: With all due respect, I beg to differ with the conclusions reached in the ponencia of our esteemed colleague, Associate Justice Maria Rowena Modesto-San Pedro. As stated in the ponencia, the denial of petitioner's application for refund was essentially anchored on two grounds: (1) the non- presentation of the Certificate of Endorsement by the DOE on a per transaction basis; and, (2) petitioner's failure to establish its zero-rated sales.,

CTA EB No. 2111 (CTA Case Nos. 9119, 9201, 9254 & 9336) MAIBARARA GEOTHERMAL, INC. v. CIR DISSENTING OPINION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X In the ponencia, it provides: As required under the foregoing provisions, the following documents must be secured by a RE Developer in order to qualify for VAT zero-rating, as contemplated under RA No. 9513 and its IRR, to wit: 1.) DOE Certificate of Registration; 2.) Registration with the BOI; and 3.) Certificate of Endorsement by the DOE.' However, the requirement as to the DOE Certificate of Endorsement must be read together with the Specific Terms and Conditions2 issued by BOI that read: 8. The enterprise shall be entitled to the following incentives under the administration of the BOI. a) Income Tax Holiday for Seven (7) Years from October 2013 or date of commissioning, whichever is earlier. The enterprise shall secure the following: i. From the DOE-REMB, a Certificate of Endorsement that the enterprise is in good standing for availment of the ITH incentive prior to filing of application for issuance of the certificate of ITH entitlement with the BOl; and b) Duty-Free Importation of RE Machinery, Equipment and Materials including control and communication equipment, within the first ten (10) years from the issuance of the BOI certificate of registration. The enterprise shall secure from the DOE-REMB a Certificate of Endorsement that the enterprise is in good standing for the availment of this incentive. The Endorsement shall be on a per transaction basis. "Per transaction" means per application for incentives~ 2 Decision, p. 12. Exhibit "P-5", Division Docket, Volume IV, p. 1858-1864.

CTA EB No. 2111 (CTACase Nos. 9119,9201,9254 & 9336) MAIBARARA GEOTHERMAL, INC. v. CIR DISSENTING OPINION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X 9� The enterprise shall also be entitled to the following incentives under R.A. 9513 to be administered by appropriate government agencies subject to the Rules and Regulations of the respective administering government agencies. e) Zero-Percent Value-Added Tax Rate The sale of power generated by the enterprise as well as its purchases of local supply of goods, properties and services needed for the development, construction and installation of its plant facilities and the whole process of exploration and development of RE sources up to its conversion into power shall be subject to zero percent value-added tax pursuant to the NIRC.3 Clearly from the foregoing, the DOE Certificate of Endorsment is required only in order for petitioner to enjoy the ITH and the duty- free incentives. Such requirement is not needed for VAT zero-rating hence, the non-presentation of the same should not bar petitioner's application for VAT refund. As regards petitioner's failure to establish its zero-rated sales, the ponencia states that "petitioner claims for refund of unutilized input VAT attributable to its zero-rated sales/receipts for the four (4) quarters of taxable year 2013". I respectfully disagree. In all of petitioner's Application for VAT Refund\ it consistently states that the input VAT that it sought to be refunded is attributable to its first sales of renewable energy in the First (1s1) Quarter of 2014. As aptly determined by this Court in another VAT refund case of petitioner, Commissioner of Internal Revenue v. Maibarara Geothermal, Inc. 5, which allowed the refund of its input VAT incurred in 2012'/� 3 Emphasis and underscoring supplied. 4 Exhibits "P-9" to "P-16", Division Docket, pp. 1887-1916. 5 CTAEBCaseNo. 1863, 140ctober2019.

CTA EB No. 2111 (CTA Case Nos. 9119, 9201, 9254 & 9336) MAIBARARA GEOTHERMAL, INC. v. CIR DISSENTING OPINION X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -X petitioner has sufficiently established its zero-rated sales in the 1st Quarter of 2014. All told, I vote to (1) GRANT herein petitioner's Petition for Review filed on 16 August 2019; and, (2) REMAND the case to the Special First Division for the determination of the other requisites of a valid claim for VAT refund i.e., attributability and substantiation of the subject input VAT claim for refund. JEAN 1nruuq .M:. 1\.\...VIU\.V-VILLENA