MAIBARARA GEOTHERMAL, INC. v. COMMISSIONER OF INTERNAL REVENUE (Consolidated with 8937, 8999 & 9042)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION MAIBARARA GEOTHERMAL, CTA CASE NOS. 8871,8937 INC., 8999 & 9042 Petitioner, Members: -versus- BAUTISTA, Chairperson, FABON-VICTORINO, and RINGPIS-LIBAN, Jl. COMMISSIONER OF INTERNAL Promulgated: REVENUE, 20ff Respondent. X-----------------------------------------------------------------------------------------------X AMENDED DECISION RINGPIS-LIBAN, .�: For the Court's resolution is petitioner's Motion for Reconsideration, flied on August 22, 2017, without respondent's comment as per Records Verification dated September 22, 2017. Petitioner moves for the reconsideration of the Decision dated August 2, 2017, the dispositive portion of which reads: WHEREFORE, premises considered, the Petitions for Review flied on August 18, 2014, on November 26, 2014, on February 25, 2015, and on May 13, 2015 are DENIED for lack of merit. SO ORDERED. Petitioner raises the following allegations in its motion: 1. The Court should grant the claim for refund on petitioner's r input Value Added Tax (VAT) on importations;

AMENDED DECISION CfA CASE NOS. 8871, 8937, 8999 & 9042 2. The Court should grant the claim for refund on petitioner's input VAT on purchases of local supply of goods, properties and services not related to the development, construction and installation of its plant f~cilities and not related to the whole process of exploration and development of Renewable Energy (RE) sources up tb its conversion into power; and 3. Petitioner is entitled to claim a refund or to be credited with input VAT shifted to it by its suppliers. Petitioner alleges that only local purchases of goods, services and properties related to RE are subject to zero percent VAT under Republic Act (RA) No. 9531 or the Renewable Epergy Act of 2008 (RE Law). According to petitioner, Section 15 of the RE Law expressly subjects only local purchases of goods, services and properties related to RE to zero percent VAT. There is even no mep.tion of importations. Since the RE Law is clear artd unambiguous in that only local purchase of goods, services and properties related to RE are subject to zero percent VAT, petitioner argues that the Court should have allowed petitioner's claim for tax refund or tax credit on the irtput VAT on its importations. Petitioner further avers th~t importations are subject to 12% VAT pursuant to the Destination Princip~e or Cross-Border Doctrine. Furthermore, petitioner alleges that Section 109 of the National Internal Revenue Code (NIRC) of 1997, as amended, exempts certain importations from VAT. All in all, the NIRC of 1997, as amended, allegedly treats importations as either subject to 12% VAT or exempt from VAT. Nowhere in Title IV of the NIRC of 1997, as amended, will one find that importations are subject to a zero percent VAT rate. Thus, since neither the RE Law nor the NIRC of 1997, as amended, exempts importations of RE Developers, the same is subject to a 12% VAT and the input VAT on said importations may be claimed by petitioner. Petitioner also claims that it is the statutory taxpayer of the VAT as the importer, thus, entitled to claim inp1.1t VAT on the importations. In addition to the input VAT on its importations, petitioner disagrees on the blanket denial of all of its local purchases. Petitioner claims that the purchases referred in Section 15 of the RE Law pertains to those "needed for the development, construction and (

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 installation of plant facilities" and to those relating to the "whole process of exploring and developing renewable energy sources up to its conversion into power" (also referred to as "REdevelopment and conversion", for brevity). This being the case, it allegedly follows that in case of general local purchases of goods and services nat needed for the development, construction and installation of plant facilities or to the whole process of exploring and developing renewable energy sounces up to its conversion into power, but necessary for the everyday operation of RE Developer, such purchases unrelated to RE development and conversion remain to be subject to VAT at the regular rate of 12%. Petitioner claims that the local purchases of services pertat.rung to security details or services, general management fees (except for geochemist or geothermal consultants), furniture, office space rentals and other rentals, flowers for decoration, graphics and printing services and auditing and accounting services do not fall within the coverage of VAT zero-rating of local purchases under Section 15 of the RE Law. By their nature, these are not necessary for the development, cohstruction and installation of plant facilities and to the whole exploration and development of the renewable sources up to its conversion into power as tluey relate to operation and maintenance expenses, which have been correctly subjected to VAT at 12%. Lastly, petitioner claims that it is entitled to a refund or to be credited with input VAT shifted to it by its $uppliers. Petitioner claims that as a general rule, the proper party to seek refund of indirect tax is the statutory taxpayer, not the person on whom it is shifted to. However, in the cases of Philippine Airlines, Im: vs. Commissioner rifInternal Revenue1 and Commissioner rif Internal Revenue and Commissioner rif Customs vs. Philippine Airlines, Inc. 2 the Supreme Court held that the propriety of a tax refund claim is , hinged on the kind of exemption, which forms its basis. If the law confers an exemption from both direct and indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim. According to petitioner, this is a case where the party to which the economic burden is shifted is provided an exemption from both direct and indirect taxes. Petitioner explains that based on Section 15 of the RE Law, petitioner is r exempt from direct tax, i.e., income tax. As to the indirect taxes, the provision 1 G.R. No. 198759, July 1, 2013. 2 G.R. Nos. 212536-37, August 27, 2014.

AMENDED DECISION erA CASE NOS. 8871, 8937, 8999 & 9042 states that petitioner's local purchases are subject to zero-rating. This is from the viewpoint of the purchaser. From the perspective of the seller/local supplier, the sale to RE Developers is zero-rated. In effect, the RE Law exempts an RE Developer from VAT and thus, effectively subjects the sale of goods or supply of services to zerd-rated VAT. Considering that the local suppliers passed on the VAT to petitioner and that petitioner's local purchases ate, in effect, zero-rated VAT under the RE Law, petitioner argues that it must be allowed to claim a tax refund or tax credit even if it is not the statutory taxpayer under the law and only bears the economic burden of the VAT. Petitioner also cites the case of Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue3, where this Court allowed an RE Developer to claim input VAT on local purcha$es of goods and services. The same ruling should allegedly apply to the instant case. The Court finds the motion to be pardy meritorious. It must be emphasized that petitioner itself claims in its Memorandum flied on August 22, 2017 that it incurred and paid input VAT on certain purchases of goods and services relative to the development, construction and installation of its renewable energy facilities necessary to generate the power sold.4 Accordingly, the Court held that these purchases are zero-rated pursuant to Section 15(g) of RA No. 9513 or the Renewable Energy Act of 2008; thus, no input VAT can be refunded on these transactions. Nevertheless, the Court finds that a reconsideration of the assailed Decision is necessary considerilllg petitioner's detailed discussion on its importation and the nature of its local purchases, as well as its summarized substantiation. With regard to the input VAT on importation, the Court agrees with petitioner that it is not zero-rated. As correcdy pointed out by petitioner, the RE Law does not provide for the zero-rating of an RE Devel<bper's importation. In fact, the same law provides for the incentives pertaining to RE Developers' importations, which is limited to an exemption from payment of tariff duties. Specifically, Section 15(b) of theRE Law reads: r 3 erA case Nos. 8082 and 8106, August 9~ 2017. 4 erA Case No. 8871, docket, vol. VI, pp. 2667 and 2692.

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 SEC. 15. Incentives for Renewable Energy Prqjects and Activities. - RE developers of renewabLe energy facilities, including hybrid systems, in proportion to and to the extent of the RE component, for both power and non-power applications, as duly certified by the DOE, in consultation with the BOI, shall be entitled to the following incentives: XXX XXX XXX (b) Duty-free Importation of RE Machinery, Equipment and Materials -Within the fi~st ten (10) years upon the issuance of a certification of an RE developer, the importation of machinery and equipment, and materials and parts thereof, including control and communication equipment, shall not be subject to tariff duties: Provided, however, That the said machinery, equipment, materials and parts are directly and actually needed and used exclusively in the RE facilities for transformation into energy and delivery of energy to the point of use and covered by shipping documents in the name of the duly registered operator to whom the shipment will be directly delivered by customs authorities: Provided,further, That endorsement of the DOE is obtained before the importa:tion of such machinery, equipment, materials and parts are made. (Emphasis supplied) It is clear from the above provision that petitioner's importation as an RE Developer is only exempt from tariff duties, provided certain conditions are met, and does not include the zero-rating of or exemption from VAT. As significantly discussed by petitioner, if the law truly intends to exempt or zero rate the importation of an RE Developer, the law could have similarly worded the incentives given to an RE Developer and an RE Commercialization, the latter of which is exempt from botlu. tariff duties and VAT on its importation as follows: SEC. 21. Incentives for RE Commercialization. - All manufacturers, fabricators an(! suppliers of local.[y-produced RE equipment and components duly recognized and accredited by the DOE, in consultation with DOST, DOF and DTI, shall, upon registration with the BOI, be entitled to the privileges set forth under this section. XXX XXX XXX (a) Tax and Dutyfree Importation of Components, Parts and Materials. - All shipments necessary for the manufacture and/or fabrication of RE equipment and components shall be r exempted from importation tariff and duties and value added

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 tax: Provided, however, That the said components, parts and materials are: (i) not manl(lfactured domestically in reasonable quantity and quality at competitive prices; (ii) directly and actually needed and shall be used exclusively in the manufacture/ fabrication of RE equipment; and (iii) covered by shipping documents in ilie name of the duly registered manufacturer/ fabricator to whom the shipment will be directly delivered by customs authorities: Provided, further, That prior approval of the DOE was obtained before the importation of such components, parts and materials; (Emphasis supplied) It can be deduced from the foregoing that the law does not intend to exempt an RE Developer, such a!S petitioner in this case, from payment of VAT on importation. There is likewise nothing in the law which shows that an RE Developer's importation is zero-rated. Thus, the input VAT on importation, which clearly does not pertain to purchase of local supply of goods or properties, is not zero-rated and may therefore be refunded. As to petitioner's allegation that a portion of its purchases pertain to those which are not needed for th� development, construction and installation of plant facilities or to the whole process of exploring and developing renewable energy sources up to its conversion into power, petitioner explains that these allegedly includes purchases pertaining to security details or services, general management fees (except for geochemist or geothermal consultants), furniture, office space rentals and other rentals, flowers for decoration, graphics and printing services and auditing and accounting services which are mainly operation and maintenance expenses. At this juncture, it must be stressed that under Section 8 of RA No. 1125, as amended, the CTA is categorically described as a court of record. As cases flied before it are litigated de novo, party-litigants shall prove every minute aspect of their cases. Thus, petitioner should sufficiently prove its case. Considering the foregoing, what is left to be determined at this point is whether petitioner sufficiently substantiated its allegation that the claimed input VAT indeed pertains to importations and to purchases of local supply of goods, properties and services not needed for the development, construction and installation of plant facilities or to the whole process of exploring and developing renewable energy sources up to its conversion into power, which are not zero-rated, but rather subiect to regular VAT rate; and thus can be refunded. Petitioner's quarterly VAT returns for the four quarters of CY 2012 reflected input VAT on importation of goods other than capital goods in the aggregate amount ofP7,053,203.65, broken down as follows: r

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 CTACaseNo. Exhibit 8871 CY 2012 Inp_utVAT (FOE black 8937 1st Quartelf p 805,000.00 binder) 8999 2nd Quartet 307,932.65 9042 3rd Quartet 3,165,437.00 P-21 4th Quartet 2,774,834.00 P-22 Total p 7,053,203.65 P-23 P-24 Out of the declared amount of P7,053,203.65, petitioner was able to substantiate only the amount of P6,959,106.62 with Bureau of Customs (BOC) Import Entry & Internal Revenue Declarations (IEIRDs) and Statements of Settlement of Duties and Taxes, detailed as follows: Date Supplier N arne Input VAT IEIRD Exhibit Statement Exhibit of (FOE black Settlement binder) of Duties and Taxes l'r Quarter 29-Feb- Pioneer Petrotech Services, p 423,431.00 C-17418 12 Inc. P-335 R-20365 P-335-1 P-336 R-32731 P-336-1 31-Mar- P-337 R-46910 P-337-1 12 Nielsons Safety Systems LLC 101,893.00 C-28785 31-Mar- 12 Top-Co LP 279,676.00 C-39993 subtotal p 2"u Quarter 31-May- AB Sandvik Materials 805,000.00 12 Technology p P-338 R-92136 P-338-1 31-May- 55,571.00 C-81476 P-339 R-94996 P-339-1 P-358 R-93733 P-358-1 12 FT Anugerah Ceria Mandiri 20,817.00 C-84341 P-340 R-84042 P-340-1 31-May- 98,884.00 C-84068 12 PT Sagatrade Murni 30-Jun- Hunting Welltonic Asia Pte 38,563.62 C-75837 12 Ltd p 213,835.62 subtotal p C- 3'd Quarter 168,470.00 110807 P-341 R-124873 P-341-1 Energy Asia Group Private 31-Jul-12 Limited 12,115.00 C-99936 P-342 R-110792 P-342-1 10,194.00 C- Pioneer Petrotech Service 249,721.00 P-343 R-116227 P-343-1 31-Jul-12 Calgary 653,195.00 105518 31-Aug- Pioneer Petrotech Service C- P-344 R-150461 P-344-1 12 Calgary 134338 P-345 R-161105 P-345-1 31-Aug- C- 12 Safety System UK Ltd. 141187 31-Aug- Neway Valve (Suzhou) Co., 1,304,633.00 C-94669 P-346 R-114700 P-346-1 12 Ltd. 25,811.00 C-89946 P-359 R-98470 P-359-1 31-Aug- 12 Ohtake Trading Co., Ltd. 31-Aug- Pioneer Petrotech Services

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 12 Inc. 206,402.00 C- P-347 R-132569 P-347-1 207,473.00 111745 P-348 R-132751 P-348-1 30-Sep- 312,409.00 P-349 R-169944 P-349-1 12 Steel World Co., Ltd. C- P-360 R-188474 P-360-1 15,014.00 111766 30-Sep- P$,165,437.00 P-350 R-139008 P-350-1 12 Steel World Co., Ltd. C- P-351 R-139553 P-351-1 149839 P-352 R-144027 P-352-1 30-Sep- Rotork Controls (Singapore) P-361 R-150054 P-361-1 12 Pte Ltd. C- P-353 R-159022 P-353-1 164550 P-354 R-228759 P-354-1 30-Sep- P-355 R-181537 P-355-1 12 Steel World Co Ltd. p C- P-356 R-260299 P-356-1 175,925.00 116744 subtotal 4'h Quarter 795,196.00 C- 31-0ct- 116798 326,470.00 12 Steel World Co., Ltd. C- 31-0ct- 638,481.00 130945 12 Steel World Co., Ltd. 86,918.00 C- 31-0ct- 125711 359,559.00 12 Fuji Electric Co., Ltd. C- 31-0ct- Neway Valve (Suzhou) Co 7,277.00 146328 12 Ltd. 385,008.00 C- 30-Nov- Pioneer Petrotech Services p~ .,774,834.00 197619 p~ ,959,106.62 12 Inc. C- 30-Nov- Valvitalia (Suzhou) Valves 151816 12 Co., Ltd. Wujian Economic C- 31-Dec- Neway Valve (Suzhou) Co., 219801 12 Ltd. 31-Dec- American International 12 Industries subtotal Total As to the alleged local purchases not directly related to RE development and conversion in the amount of P1,034,058.09, petitioner submitted official receipts (ORs) in support thereof. Upon scrutiny of the ORs presented, only the amount of P327,104.31, out of the claimed amount of P1,034,058.09, was properly substantiated with ORs and was found to be unrelated to its RE development and conversion. Furthermore, the Court noted exceptions amounting to P706,953.78. While a perusal of the ORs relating to these exceptions shows that the same p�rtains to management fees, there is nothing in the records which would help �the Court to determine if they are directly related or unrelated to petitioner's RE development and conversion activities, thus, should not be refunded. The breakdown of the said amounts is presented hereunder: Date Supplier N arne In_putVAT Exhibit (FOE OR black No. binder) A. Properly Substantiated Input VAT on lodal purchases unrelated to RE 1st Quarter 31-lan-12 Petroenergy Resources Corporation p 6,087.76 000039 P-63

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 22-Feb-12 Blackhounds Security_and Investigation 8,580.52 1796 P-66 29-Feb-12 Petroenergy Resources Co_!Poration 6,087.76 000044 P-67 29-Feb-12 SGVand Co 7,207.20 092453 P-70 Alphabet Communications Graphics and 27-Mar-12 Print 2,919.64 0056 P-72 09-Mar-12 Blackhounds Security anp Investigation 21-Mar-12 Blackhounds Security an\1 Investigation 4,290.26 1825 P-73 30-Mar-12 Petroenergy Resources Corporation subtotal 4,290.26 1859 P-74 2nd Quarter 20-Apr-12 Petroenergy Resources Corporation 6,087.76 000047 P-75 11-May-12 Blackhounds Security_ an~ Investigation 24-May-12 Blackhounds Security_ an~_ Investigation p 45,551.16 31-May-12 Petroenergy Resources Cb_rporation 28-Jun-12 Petroenergy Resources CP_!Poration p 6,087.76 000051 P-124 subtotal 3rd Quarter 3,786.31 1945 P-125 20-Jul-12 Blackhounds Security an<(l Investigation 27-Jul-12 Blackhounds Security and! Investigation 3,861.10 1966 P-126 30-Sep-12 Petroenergy Resources Cbrporation 24-Aug-12 Blackhounds Security and Investigation 6,087.76 000055 P-128 24-Aug-12 Blackhounds Security and Investigation 31-Aug-12 Petroenergy Resources Corporation 6,087.76 000057 P-132 21-Sep-12 Blackhounds Security'_ and Investigation 31-Jul-12 Petroenergy Resources C(>rporation p 25,910.69 subtotal 4th Quarter p 3,885.72 2071 P-176 09-0ct-12 Blackhounds Security and Investigation 19-0ct-12 Blackhounds Security and Investigation 3,786.31 2083 P-177 31-0ct-12 Petroenergy Resources C<Drporation 12-Nov-12 Blackhounds Security and Investigation 6,087.76 000072 P-179 16-Nov-12 Blackhounds Security an~ Investigation 03-Dec-12 J and D Iworxstation Intt1riors Inc 3,786.31 2132 P-181 29-Nov-12 Petroenergy Resources C<!>rporation 14-Dec-12 Blackhounds Security andi Investigation 4,282.11 2135 P-182 14-Dec-12 Blackhounds Security_andi Investigation 28-Dec-12 Petroenergy Resources C<J>rporation 6,087.76 000067 P-184 28-Dec-12 Terraprime Inc subtotal 3,914.59 2179 P-186 Total 6,087.76 000063 P-189 p 37,918.32 p 3,786.31 2219 P-247 2303 P-248 3,282.32 000077 P-250 2325 P-254 6,087.76 2339 P-255 0047 P-258 3,282.36 000081 P-259 2438 P-263 3,391.81 2440 P-264 000089 P-266 82,500.00 0419 P-269 6,087.76 3,318.09 3,318.09 6,087.76 96,581.88 p 217,724.14 p 327,104.31 B. Exceptions Purchase ifseroice supported by VAT OR but without the address if petitioner 06-Feb-12 Royale Flower Shoppe p 375.00 9387 P-65 696.43 7288 P-71 Purchase ifsemice supported by VAT OR but the input VAT amount was not separately shown 15-Feb-12 Work at Print Inc Purchase ifseroim supported by VAT ORr but cannot be ascertained as not pertainin)!, to petitioner's RE development

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 31-Jan-12 Petroenergy Resources Corporation 58,823.53 000040 P-64 29-Feb-12 Petroenergy Resources Corporation 58,823.53 000043 P-68 30-Mar-12 Petroenergy Resources Corporation 58,823.53 000048 P-77 20-Apr-12 Petroenergy Resources Corporation 58,823.53 000052 P-122 31-May-12 Petroenergy Resources Gorporation 58,823.53 000056 P-127 28-Jun-12 Petroenergy Resources Corporation 58,823.53 000058 P-130 28-Sep-12 Petroenergy Resources Corporation 58,823.53 000074 P-180 31-Aug-12 Petroenergy Resources Corporation 58,823.52 000069 P-183 31-Jul-12 Petroenergy Resources Corporation 58,823.53 000064 P-187 31-0ct-12 29-Nov-12 Petroenergy Resources Corporation 58,823.53 000079 P-252 25-Dec-12 Petroenergy Resources Gorporation 58,823.53 000083 P-261 Petroenergy Resources Corporation 58,823.53 000088 P-268 Grand Total Total p 706,953.78 P1,034,058.09 From the foregoing, petitioner's valid input VAT amounts to only P7,286,210.93, computed as follows: Valid input VAT on importations p 6,959,106.62 Valid input VAT on local purchases not related to RE 327,104.31 Total Valid Input VAT p 7,286,210.93 Since petitioner had no other types of sales, except zero-rated sales, for the first quarter of CY 2014, the valid input VAT of P7,286,210.93 is entirely attributable to the valid zero-rated receipts for the same quarter in the amount of P39,032,500.005 arising from the sale of electricity to Trans-Asia Oil and Energy Development Corporation. Furthermore, although petitioner carried over the claimed input VAT of P9,165,912.74, which includes the refundable amount of P7,286,210.93, to the succeeding quarters, the same was. not applied against any output VAT in the said quarters and remained unutilized until it was deducted as "VAT Refund/TCC claimed" in its Amended Third Quarterly VAT Return for CY 2014 and First Quarterly VAT Ret:rurn for CY 2015, in the respective amounts ofP1,865,128.356 and P7,300,784.397. In view thereof, the Court finds that petitioner is entitled to the refund of the amount of P7,286,210.93, representing its unutilized input VAT on importation of goods (other than capital goods) and local purchases not needed for RE development and convedion which petitioner incurred in the four quarters of CY 2012, and attributable to its zero-rated sales for the first quarter ofCY 2014. I 5 Exhibit "P-33", Line 17. 6 Exhibit "P-37", Line 23D, FOE black binder. 7 Exhibit "P-39", Line 23D, FOE black binder.

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 As regards petitioner's allegation that it is entitled to a refund or to be credited with input VAT shifted to it by its suppliers, petitioner cites Philippine Airlines, Inc. vs. Commissioner if Internal Revenul and Commissioner ifInternal Revenue if Customs and Commissioner vs. Philippine Airlines, Inc. 9 alleging that if the law , confers an exemption from both direct and indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. Petitioner explains that coqsidering that the local suppliers passed on the VAT to petitioner and that petitioner's local purchases are, in effect, zero-rated VAT under the RE Law, petitioner must be allowed to claim a tax refund or tax credit even if it is not the statutoty taxpayer under the law and only bears the economic burden of the VAT. It must be noted that the Philippine Airlines case cited by petitioner pertains to excise tax and not VA1. Also, unlike in the Philippine Airlines case, the instant case does not involve exemption from VAT, but rather the zero- rating of its input VAT as provided by law. Furthermore, as between the Philippine Airlines case and the more recent Coral Bcry case10 cited by this Court in the assailed Decision, which specifically ruled on a claim for refund of input VAT on transactions that was lat~r found by the Supreme Court to be zero- rated, the latter jurisprudence is more analogous to the factual circumstances of the instant case which also pertains to refund of input VAT on transactions that are zero-rated as provided by bw. To reiterate, based on the pronouncement of the Supreme Court in the Coral Bcry case, if despite the zero-rating of purchases, petitioner paid the input VAT, petitioner's recourse is not against the government, but against the seller who shifted to it the output VAT. The pertinent portion of the Supreme Court ruling is again quoted as follows: "The petitioner's principal office was located in Barangay Rio Tuba, Bataraza, PalaWJan. Its plant site was specifically located inside the Rio Tuba ]Export Processing Zone - a special economic zone (ECOZONE) created by Proclamation No. 304, Series of 2002, in relation to Republic Act No. 7916. As such, the purchases of goods and services by the petitioner that were destined for consumption within the ECOZONE should be free of VAT; hence, no input VAT should then be paid on such purchases, rendering the petitioner not entitled to claim a tax refund or credit. Verity, if the petitioner had paid the input VAT, the CTA wjas correct in holding that the petitioner's proper recourse was not against the 8 G.R. No. 198759, July 1, 2013. 9 G.R. No. 212536-37, August 27, 2014. �1 Coral Bay Nickel Corporation vs. Commis'5ioner ofInternal Revenue, G.R. No. 190506, June 13, 2016.

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 Government but against the seller who had shifted to it the output VAT following RMC No. 42-03, which provides: In case the supplier alleges that it reported such sale as a taxable sale, the substantiation of remittance of the oiutput taxes of the seller (input taxes of the exporter-buyer) can only be established upon the thorough audit of the suppliers' VAT returns and corresponding books and records. It is, therefore, imperative that the processing office recommends to the concerned BIR Office the audit of the records of the seller. In the meantime, the claim for input tax credit by the expqrter-buyer should be denied without prejudice to the claimant's right to seek reimbursement of the VAT paid, if any, from its supplier. We should also take into consideration the nature of VAT as an indirect tax. Although the seller is statutorily liable for the payment of VAT, the amount of the tax is allowed to be shifted or passed on to the buyer. However, reporting and remittance of the VAT paid to the BIR remained to be the selle~/supplier's obligation. Hence, the proper party to seek the ~ax refund or credit should be the suppliers, not the petitioner."11 (Emphasis supplied) While the Supreme Court considers the nature of VAT as an indirect tax, the reporting and remittance of the VAT paid to the BIR remains the seller's obligation. Thus, even assuming that petitioner paid the input VAT on its purchases which are subject to 2Jero percent, the supplier/seller is still the proper party to claim for the tax refund, and not petitioner. Lastly, as to petitioner's claim that the Court should also apply to this case its ruling in Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue 12 which allegedly allowed an RE Developer to claim input VAT on , local purchases of goods and services, the Court stresses that the Mindanao case involves taxable year 2008 which is not yet covered by the law applicable in this case, RE Law13. Thus, the Court finds the said allegation bereft of merit. 11 Ibid. 12 CTA Case Nos. 8082 & 8106, August 9, 4017. 13 RA No. 9513 or the RE Law was approvcld only on December 16, 2008, and took effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 WHEREFORE, premises considered, petitioner's Motion for Reconsideration is PARTIALLY GRANTED. Accordingly, the Decision of this Court dated August 2, 2017, i$ amended to read as follows: "WHEREFORE, premises considered, the Petitions for Review filed on August 18, 2014, on November 26, 2014, on February 25, 2015, and on May 13, 2015 are PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the amount of P7,286,210.93, representing its unutilized input VAT on importation of goods (other than capital goods) a,nd local purchases not directly related to RE development and conversion incurred in the four quarters of CY 2012, and attributable to its zero-rated sales for the first quarter of CY 2014. SO ORDERED." SO ORDERED. ~. ~ _g\.._ MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: (On Leave) LOVELL R. BAUTISTA Associate Justice ATTtESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. so ate Justice cting Chairperson

AMENDED DECISION CTA CASE NOS. 8871, 8937, 8999 & 9042 CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were t:!eached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice