FILMINERA RESOURCES CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY Third Division FILMINERA RESO URCES CTA CASE NO. 8938 CORPORATION, Petitioner, Members: versus - Bautista, Chairperson Fa bon-Victorino, and Ringpis-Liban, II. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. JAN 3 1 2017 x--------------------------------------------------------------~~----!~~~~~~-~----x DECISION BAUTI STA, J: The Case Before the Court is a Petition for Review1 filed by petitioner Filminera Resources Corporation ("FRC") on November 27, 2014, pursuant to Section 7(a)(2)2 of Republic Act ("RA") No. 11253, as 1 Records, CTA Case No. 8938, Vols . 1 to 3, Petition for Review ("PFR"), pp. 6-1518, with annexes. 2 "Sec. 7. Jurisdiction.- The Court of Tax Appeals shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, wher<> the National Internal Revenue Code or other applicable law provides a specific period for action: Provided, that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal revenue Code shall be deemed a denial; xxx" 3 An Act Creating the Court of Tax Appeals, as amended. (

DECISION CTA CASE NO. 8938 Page 2of21 amended by RA No. 92824 and RA No. 95035, in relation to Section 3(a)(1)6, Rule 4 of the Revised Rules of the Court of Tax Appeals ("RRCTA")7, which seeks for the Court to render ju~gment ordering respondent Commissioner of Internal Revenue ("CIR") to refund or to issue a tax credit certificate ("TCC") in favor of petitioner in the amount of Seventy Six Million Three Hundred Thirty Three Thousand One Hundred Seven and 78/100 Pesos (Php76,333,107.78) representing unutilized or unapplied creditable input Value-Added Tax ("VAT") for the 4th quarter of fiscal year ("FY") ended June 30, 2012.8 The Parties Petitioner FRC, formerly "Base Metals Mineral Resources Corporation"9, is a domestic corporation duly organized in accordance with Philippine laws,IO with the primary purpose of carrying on the business of"operating coal mines; and of prospecting, exploration and of mining, milling, concentrating, converting, smelting, treating, refining, preparing for market, manufacturing, buying, selling, exchanging and otherwise producing and dealing in all other kinds of ores, metals[] and minerals, hydrocarbons, acids and chemicals, and in the products and by-products of every kind and description and by whatsoever process, the same can be or may hereafter be produced; to 4 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, Otherwise Known as the Law Creating the Court of Tax Appeals, and for Other Purposes. sAn Act Enlarging the Organizational Structure of the Court of Tax Appeals, Amending for the Purpose Certain Sections of the Law Creating the Court of Tax Appeals, and for Other Purposes. 6 "Sec. 3. Cases within the jurisdiction of the Court in Division. - The Court in Division shall exercise: (a) Exclusive original over or appellate jurisdiction to review by appeal the following: xxx (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code or other applicable law provides a specific period for action: Provided, that in case of disputed assessments, the inaction of the Commissioner of Internal Revenue within the one hundred eighty day-period under Section 228 of the National Internal Revenue Code shall be deemed a denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily constitute a formal decision of the Commissioner of Internal Revenue on the tax case; xxx" 7 A.M. No. 05-11-07-CTA, November 22, 2005. s Records, Vol. 1, PFR, p. 19. 9 Id., Vol. 4, Exhibit "P-2," Certificate of Filing Amended AOI with Amended AOI, pp. 2097-2111. to Id. (

DECISION CTA CASE NO. 8938 Page3of21 purchase, lease, option, locate, or otherwise acquire, own, exchange, sell, or otherwise dispose of pledge, mortgage, deed in trust, hypothecate, and deal in mines, mining claims, mineral[] lands, coal[] lands, timber land, water and water rights, and other property both real and personal."ll It is registered with the Large Taxpayers Excise Audit Division 1, as a VAT-registered entity with Taxpayer's Identification No. ("TIN") 000-153-880-000 and OCN 8RC0000036160 since January 1, 1997.12 It was also issued an Authority to Print("ATP") VAT Official Receipts with Serial Nos. 0001 to 1000, with OCN 9AU000029006213 and Serial Nos. 0001 to 2500, with OCN 8AU000011816114. Respondent CIR is empowered to perform the duties of his office, including among others, the duty to act on and to approve claims for refund or issuance of certificate of tax credit as provided by law; with office address at the BIR National Office Building, Agham Road, Diliman, Quezon City.IS The Facts Philippine Gold Processing and Refining Corp. ("PGPRC"), formerly registered as LFT Processing Corporation,16 is a domestic corporation duly organized in accordance with Philippine laws,17 with the primary purpose of engaging in the "business of processing, milling, crushing, refining, smelting, concentrating, amalgamating and beneficiating mineral resources, and the products or by-products thereof, of every kind and description and by whatsoever process, method, or mode in which such activities can be carried out; and in conjunction with the foregoing[,] to build, construct, operate, purchase, lease or otherwise acquire such processing, milling, refining, and beneficiating plants, machinery, tools and other equipment[] whatsoever, which are necessary and incidental in carrying out the foregoing purpose, and to carry on the business of preparing for market, buying, selling, at wholesale, and exchanging mineral resources and the products or by-products thereof[.]"18 11 Records, Vol. 4, Exhibit "P-2," Certificate of Filing Amended AOI with Amended AOI, pp. 2097-2111. 12 Id., Vol. 3, Exhibit "P-3," BIR LTS Certificate of Registration, p. 1628. 13 Id., Exhibit "P-28," Authority to Print Official Receipts, pp. 1739-1742. 14 Id., Exhibit "P-29," Authorihj to Print Official Receipts, pp. 1743-1745. 15 Id., Joint Stipulation of Facts and Issues ("JSFI"), p. 1879. 16 Id., Vol. 4, Exhibit "P-5," LFT Processing Corporation's SEC Certificate of Registration, pp. 2112-2139. 17 Records, Vol. 4, Exhibit "P-6," PGPRC's Certificate of Filing ofAmended AOI, pp. 2140-2152. 1s Id. at 2142-2143.

DECISION CTA CASE NO. 8938 Page4of21 PGPRC is registered with the Board of Investments ("BOI'') with Registration No. 2008-04219, issued on February 7; 2008 on a non- pioneer status as a New Producer of Gold and Silver Dore.2o On July 5, 2007, petitioner and PGPRC entered into an Ore Sales and Purchase Agreement21 whereby petitioner will exclusively sell to PGPRC pre-production ore and ROM ores mined from the former's facilities.22 On August 3, 2009, Assistant Commissioner - Legal Service James H. Roldan, wrote23 to Sycip Gorres Velayo & Co., informing the latter that the input VAT on PGPRC's purchases of goods and services, including input VAT on importation of capital equipment, attributable to zero-rated sales are available as tax credit or refund pursuant to Section 112 of the 1997 NIRC. For the period starting April to June 2012, petitioner issued to PGPRC VAT Zero-Rated Official Receipts ("OR") for the "settlement of ore sales," as follows: EXHIBIT ORNO. DATE AMOUNT PERIOD P-1424 149 5/18/2012 USD 6,276)04.31 Apr-12 P-1625 151 6/15/2012 May-12 P-1826 153 7/16/2012 5,574,040.11 Jun-12 5,977,729.06 Petitioner filed its Amended Quarterly VAT Return or BIR Form No. 2550-Q27 for the 4th Quarter of FY ended June 30,2012 on July 25, 2012. On June 30, 2014, petitioner filed its Application for Tax Credits/Refunds28 (BIR Form No. 1914) for the period April1, 2012 to June 30, 2012, claiming for a TCC in the amount of Seventy Six Million 19 Records, Vol. 3, Exhibit "P-7," PGPRC's Board of Investments ("BOI") Certificate of Registration pp. 1693-1701, with annexes. 20 !d. 21 Id., Vol. 3, Exhibit "P-4," Ore Sales and Purchase Agreement, p. 1637. 22 Id. at1629-1651. 23 !d., Exhibit "P-10," pp. 1709-1712. 24 Id., Exhibit "P-14," Official Receipt No. 149, p. 1725. 25 Records, Vol. 3, Exhibit "P-16," Official Receipt No. 151, p. 1727. 26 Id., Exhibit "P-18," Official Receipt No. 153, p. 1729. 27 Id., Vol. 4, Exhibit "P-12," pp. 2064-2069, with annexes. 28 !d., Vol. 3, Exhibit "P-9," BIR Form No. 1914Applicationfor Tax Credits/Refunds, p. 1708.

DECISION CTA CASE NO. 8938 Page 5 of21 Three Hundred Thirty Three Thousand One Hundred Seven and 78/100 Pesos (Php76,333,107.78), representing unutilized or unapplied creditable input VAT. On November 27,2014 and claiming no action from respondent on its application for VAT refund, petitioner filed the instant Petition for Review.29 On December 17, 2014, the Court issued Summons3o to respondent, with an order to file an Answer to the Petition for Review within fifteen (15) days from receipt thereof. On January 14, 2015, respondent filed a Motion for Extension of Time to File Answer31 praying for an extension of thirty (30) days or until February 19, 2015, within which to file an Answer; which was granted by the Court in its Order32 dated January 20,2015. On February 18, 2015, respondent filed an Urgent Motion for Additional Time to File Answer33 praying for an additional period of ten (10) days, or until March 1, 2015 within which to file an Answer. This was granted by the Court in a February 25, 2015 Resolution34. On March 2, 2015, respondent filed an Answer35, alleging that taxes remitted to the BIR are presumed to have been made in the regular course of business and in accordance with provisions of law; that petitioner's claim for refund is subject to administrative routinary investigation/examination; that it is incumbent upon petitioner to prove that it is entitled to the refund; that bare allegations unsubstantiated by evidence is not equivalent to proof; and that petitioner failed to discharge the burden of proving that its sales are VAT zero-rated as contemplated under Section 112 (A) of the 1997 National Internal Revenue Code, as amended (" 1997 NIRC").36 29 Records, Vols. 1 to 3, Petition for Review ("PFR"), pp. 6-1518, with annexes. 30 Id., Vol. 3, p. 1519. 31 Id. at 1520-1523. / 32 !d. at 1524. 33 Id. at 1526-1529. 34 !d. at 1531-1532. 35 Records, Vol. 3, Answer, pp. 1554-1572. 36 !d., Special and Affinnative Defenses, pp. 1555-1569.

DECISION CTA CASE NO. 8938 Page 6of21 On April 29, 2015, respondent filed Respondent's Pre-Trial Brief37; while petitioner filed its Pre-Trial Brief38 on April30, 2015. During the May 5, 2015 hearing, the Court granted the parties ten (10) days within which to submit their Joint Stipulation of Facts and Issues ("JSFI").39 On May 13, 2015, the parties, through their respective counsels, filed their JSFI.40 Thereafter, the Court issued a Pre-trial Order41 ("PTO") on June 15,2015. During the hearing on June 26, 2015, petitioner presented and qualified Atty. Clifford E. Chua ("Atty. Chua") as an Independent Certified Public Accountant ("ICPA"),42 who then took his oath and obliged to submit his ICPA report within a period of thirty (30) days from June 26, 2015, or until July 26, 2015.43 Consequently, on July 20, 2015, Atty. Chua submitted his ICPA Report.44 During trial, petitioner presented the following witnesses: (1) Ms. Joy P. Dompor ("Ms. Dompor"),45 treasurer of petitioner, who testified that petitioner's transactions are subject to VAT at zero percent (0%) rate because it exclusively supplies and/ or sells its pre- production ore and ROM ore to PGPRC, a BOI-registered producer of gold and silver ore, hence, considered as export sales;46 and (2) Atty. Chua47, court-commissioned ICPA, who testified that he conducted an examination of the documents supporting petitioner's claim, and thereafter prepared an ICPA Report.48 37 Records, Vol. 3, pp. 1576-1581. 38 Id. at 1582-1589. 39 Id., Minutes ofHearing dated May 5, 2015, p. 1871; as confirmed in a Resolution dated May 19, 2015, see pp. 1885-1886. 40 Id., JSFI, pp. 1879-1883. 41 Id., PTO, pp. 1913-1918. 42 Id., Minutes of Hearing dated June 26, 2015, p. 1919. 43 Records, Vol. 3, Minutes ofHearing dated June 26, 2015, pp. 1919-1920; as confirmed in a Resolution dated July 8, 2015, see pp. 1927-1928. 44 Id., Report on the Results of Procedures Performed, pp. 1929-1959. 45 Id., Minutes ofHearing dated August 11, 2015, p. 1962. 46 Id., Exhibit "P-1253," Judicial Affidavit offoy P. Dompor, pp. 1594-1867, with annexes. 47 Id., Vol. 4, Minutes ofHearing dated November 23, 2015, p. 2030. 48 Id., Vol. 3, Exhibit "P-1255," Judicial Affidavit ofAtty. Clifford E. Chua, pp. 1966-1979. (

DECISION CTA CASE NO. 8938 Page 7of21 During the hearing on November 23,2015, counsel for petitioner was granted twenty (20) days to file its Formal Offer of Evidence ("FOE").49 On December 9, 2015, petitioner filed a Motion for Additional Time [To File Formal Offer of Evidence]so, praying for additional period of twenty (20) days within which to file its FOE; which was granted by the Court in Resolutionsl dated December 18, 2015. On December 20,2015, petitioner filed its FOE52, offering Exhibits "P-1" to "P-8," "P-8-A," "P-8-A-1" to "P-8-A-39," "P-8-B," "P-9" to "P- 35," "P-36" to "P-431," "P-432" to "P-488," "P-489," "P-490" to "P-553," "P-554" to "P-1205," "P-1206" to "P-1252," "P-1253" to "P-1253-A," "P- 1254" to "P-1254-A," and "P-1255" to "P-1255-A." On January 27,2016, the Court resolved53 to admit all of petitioner's exhibits. During the hearing on February 16, 2016,54 counsel for respondent manifested that they have no witnesses to present since no report of investigation was submitted by the BIR examiners. Thus, both parties were granted thirty (30) days, or until March 17, 2016, within which to simultaneously file their respective memoranda.ss On March 14, 2016, petitioner filed its Memorandum (For the Petitioner).56 On the other hand, respondent filed a Manifestation57 on March 17,2016, adopting the arguments raised in the Answer filed on February 27, 2015 as her (now "his") Memorandum. On March 29, 2016, the Court resolved58 to submit the case for decision; hence, this Decision. 49 Records, Vol. 4, Minutes of Hearing dated November 23, 2015, p. 2030; as confirmed in a Resolution dated December 9, 2015, see pp. 2032-2033. 5o Id. at 2034-2037. 51 Id. at 2039. 52 Id., Petitioner's Formal Offer of Evidence ("FOE"), pp. 2040-2063. 53 Id. at 2169-2170. 54 Id., Minutes of Hearing dated February 16, 2016, p. 2171; as confirmed in a Resolution dated February 29, 2016, seep. 2174. 55 Records, Vol. 4, Minutes of Hearing dated February 16, 2016, p. 2171; as confirmed in a Resolution dated February 29, 2016, seep. 2174. 56 Id., Memorandum [For the Petitioner], pp. 2180-2197. 57 Id. at 2198-2200. ss Id. at 2202.

DECISION CTA CASE NO. 8938 Page 8 of21 The Issues59 WHETHER PETITIONER IS ENTITLED TO RECOVER BYWAY OF REFUND AND/OR ISSUANCE OF TCC ITS ALLEGED UNUTILIZED CREDITABLE INPUT VAT FOR THE PERIOD APRIL 1, 2012 TO JUNE 30, 2012 IN THE AMOUNT OF PHP76,333,107.78 ALLEGEDLY REPRESENTING ITS DOMESTIC PURCHASES; AND WHETHER PETITIONER HAS COMPLIED WITH THE SUBMISSION OF COMPLETE DOCUMENTS IN SUPPORT OF ITS ADMINISTRATIVE CLAIM FOR REFUND AND THE SUBSTANTIATION REQUIREMENT FOR ZERO-RATED TRANSACTIONS. Petitioner's Arguments6o Petitioner alleges that it has sufficiently proven its entitlement to a refund and/ or issuance of a TCC of its unutilized creditable input taxes for the 4th Quarter of FY ending June 30, 2012; and that its domestic purchases of goods and services, which are considered as export sales, are subject to VAT at zero percent (0%). Petitioner also contends that PGPRC is a bona fide BOT-registered enterprise on a non-pioneer status with incentive, being located in a less developed area, as a new producer of gold and silver ore; that in view of the Ore Sales and Purchase Agreement with PGPRC, the revenues derived by PGPRC, from its export sales of the processed gold and silver ore, are subject to VAT at zero percent (0%) rate; that suppliers of PGPRC for goods and services are entitled to VAT-zero rating of all its sales made to it; and that this was confirmed by respondent, in BIR Ruling dated August 3, 2009, which states that all the domestic purchases of various goods and services by PGPRC for the 4th Quarter of FY year ending June 30, 2012 shall be considered zero- rated transactions. Lastly, it maintains that is has fully complied with all the requirements under Section 112(A) of the 1997 NIRC; that it filed its claim within the two (2)-year period prescribed by law, which commenced to run after the close of the taxable quarter when the sales 59 Records, Vol. 3, PTO, p. 1914. 60 Id., Memorandum [For the Petitioner], pp. 2180-2197.

DECISION CTA CASE NO. 8938 Page 9of21 were made; and that its claim IS substantiated by documentary evidence. Respondent's Counter-Arguments61 On the other hand, respondent counter-argues that taxes remitted to the BIR are presumed to have been made in the regular course of business and in accordance with provisions of law; that petitioner's claim for refund is subject to administrative routinary investigation/examination; that it is incumbent upon petitioner to prove that it is entitled to the refund; that bare allegations unsubstantiated by evidence is not equivalent to proof; and that petitioner failed to discharge the burden of proving that its sales are VAT zero-rated as contemplated under Section 112 (A) of the 1997 NIRC.62 The Ruling of the Court The Court has jurisdiction over the instant case. The Court must first determine whether it has jurisdiction over the case at bar. Anent the timeliness of filing the administrative and judicial claims for refund, Section 112(A) of the 1997 NI~C, provides as follows: 63 SEC. 112. Refunds or Tax Credits ofInput Tax.- (A) Zero-Rated or Effectively Zero-Rated Sales.- any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, excepf 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 61 Records, Vol. 3, Answer, pp. 1554-1571. 62 Id., Special and Affirmative Defenses, pp. 1555-1569. 63 Underscoring ours.

DECISION CTA CASE NO. 8938 Page 10of21 Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales. XXX XXX XXX (C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsections (A) and (B) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals. XXX XXX xxx64 Corollary, Section 4.112-1(d) ofRevenue Regulations ('RR") No. 16- 200565 states the following: Sec. 4.112-1. Claims for Refund/Tax Credit Certificate of Input Tax. XXX XXX XXX (d) Period within which refund or tax credit certificate/refund ofinput taxes shall be made In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate/refund for creditable input 64 Underscoring ours. 65 Consolidated Value-Added Tax Regulations of 2005, effective November 1, 2005. I

DECISION CTA CASE NO. 8938 Page 11 of21 taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with subparagraph (a) above. In case of full or partial denial of the claim for tax credit certificate/refund as decided by the Commissioner of Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals (CTA) within thirty (30) days from the receipt of said denial, otherwise the decision shall become final. However, if no action on the claim for tax credit certificate/refund has been taken by the Commissioner of Internal Revenue after the one hundred twenty (120) day period from the date of submission of the application with complete documents, the taxpayer may appeal to the CTA within 30 days from the lapse of the 120-day period.66 Based on Section 112(A) of the 1997 NIRC, petitioner has two (2) years from the close of the taxable quarter when the sales were made to file its administrative claim. Further, Section 112(C) ofthe 1997 NIRC, in relation toRR No. 16-2005, states that if no action was taken by the CIR after the one hundred twenty (120) day period from the date of submission of the application with complete documents, the taxpayer may appeal to the CTA within thirty (30) days therefrom. The period involved in the case at bar is April1, 2012 to June 30, 2012. Therefore, the administrative claim is due two (2) years from June 30, 2012 or on June 30, 2014. Records disclose that petitioner timely filed its Application for Tax Credits/Refunds67 on June 30,2014. Thereafter, petitioner had one hundred and twenty (120) days or until October 28, 2014 to await the CIR's decision. However, the CIR did nothing after petitioner filed its administrative claim. According to the testimony of Ms. Dompor, "there was no specific action taken by the BIRon the administrative claims for refund of petitioner."68 This testimony of Ms. Dompor remains uncontroverted by respondent. Consequently, petitioner had thirty (30) days from October 28, 2014 or until November 27,2014 to file its judicial claim with the CTA. I 66 Underscoring ours. 67 Records, Vol. 3, Exhibit "P-9," p. 1708. 68 Id. at 1608.

DECISION CTA CASE NO. 8938 Page 12of21 Therefore, on November 27, 2014, petitioner timely filed the instant Petition for Review,69 for reference: QUARTER ADMIN DUE ADMIN ENDOF120 + 30 DAYS FROM JUDICIAL CLAIM DATE CLAIM FILED DAYS THE EXPIRATION FILED Close of 4th Qtr.: June 30, 2012 (2YRS. FROM OF120DAYS CLOSE OF QTR) June 30, 2014 October 28, 2014 November 27, 2014 November 27, 2014 June 30, 2014 To elaborate as to the running of the periods, in the recent case of Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) v. Commissioner ofInternal Revenue7o, the Supreme Court ruled that:71 Upon the filing of an administrative claim, respondent is given a period of 120 days within which to (1) grant a refund or issue the tax credit certificate for creditable input taxes; or (2) make a full or partial denial of the claim for a tax refund or tax credit. Failure on the part of respondent to act on the application within the 120-day period shall be deerned a denial. Note that the 120-day period begins to run from the date of submission of complete documents supporting the administrative claim. If there is no evidence showing that the taxpayer was required to submit - or actually submitted - additional documents after the filing of the administrative claim, it is presumed that the complete documents accompanied the claim when it was filed.72 Applying this to the instant case, the one hundred twenty (120)- day period began to run from June 30,2014, the date when petitioner filed its administrative claim. Thus, respondent had until October 28, 2014 within which to decide the administrative claim. In Rohm Apollo Semiconductor Philippines v. Commissioner of Internal Revenue73, the Supreme Court reminded taxpayers that when the one hundred twenty (120)-day period lapses and there is inaction on the part of the CIR, they must no longer await for a decision thereafter. The CIR's inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within 69 Records, CTA Case No. 8938, Vols. 1 to 3, Petition for Review ("PFR"), pp. 6-1518, with annexes. 7o G.R. No. 182737, March 2, 2016. n Underscoring ours. n Underscoring ours. 73 G.R. No. 168950, January 14, 2015.

DECISION CTA CASE NO. 8938 Page 13 of21 thirty (30) days from the lapse of the one hundred twenty (120)-day waiting period, this period is mandatory and jurisdictional. As enunciated by the Supreme Court in Commissioner ofInternal Revenue v. San Roque Power Corporation, et al.74, strict compliance with the mandatory 120+30-day period is necessary for a claim for tax refund or credit. Having found that both administrative and judicial claims for refund were filed on time, the Court has jurisdiction over the case at bar. Petitioner is entitled to the issuance of a TCC, albeit at a reduced amount. The Court will now proceed to address the issue of whether petitioner is entitled to the refund or the issuance of a TCC representing its alleged unutilized input VAT attributable to its zero- rated sales. Under Section 112(A) of the 1997 NIRC, in order to be entitled to a refund/ tax credit of unutilized input VAT, the following requisites must be satisfied: 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; and 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. Having determined compliance with the third requirement, the Court will proceed to discuss the other requisites. 74 G.R. Nos. 187485, 196113, and 197156, October 8, 2013, 690 SCRA 336.

DECISION CTA CASE NO. 8938 Page 14 of21 As to the first requisite, petitioner is indeed a VAT-registered entity, as shown in its Certificate of Registration No. OCN8RC0000036160 dated January 1, 1997, with Tax Identification Number 000-153-880-000.75 PGPRC, a BOl-registered entity, exports one hundred percent (100%) of its processed gold and silver ores. Its exports are paid for in foreign currency duly accounted for based on the rules and regulations of the BSP. Thus, as the exclusive supplier of Pre- production Ore and ROM Ore of PGPRC, petitioner argues that all its sales thereto are entitled to VAT zero-rating pursuant to Section 106(A)(2)(a)(5) of the 1997 NIRC, and Section 4.106-5(a)(5) of RR No. 16- 2005, which provide: 1997 NIRC SEC. 106. Value-added Tax on Sale ofGoods or Properties.- (A) Rate and Base of Tax.- xxx XXX XXX XXX (2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales.- The term 'export sales' means: XXX XXX XXX (5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of1987, and other special laws. RR No. 16-2005 SECTION 4.106-5. Zero-rated Sales of Goods or Properties- XXX XXX XXX The following sales by VAT -registered persons shall be subject to zero-percent (0%) rate: ( 75 Records, Vol. 3, Exhibit "P-3," p. 1628.

DECISION CTA CASE NO. 8938 Page 15of21 (a) Export sales.- 'Export Sales' shall mean: XXX XXX XXX (5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws. XXX XXX XXX For purposes of zero-rating, the export sales of registered export traders shall include commission income. The exportation of goods on consignment shall not be deemed export sales until the export products consigned are in fact sold by the consignee: and Provided, finally, that sales of goods, properties or services made by a VAT-registered supplier to a BOI-registered manufacturer/ producer whose products are 100% exported are considered export sales. A certification to this effect must be issued by the Board of Investment (BOI) which shall be good for one year unless subsequently reissued by the BOI. Based on the afore-quoted provisions, petitioner must comply with the following requisites in order for its sales to be considered zero-rated: 1. the taxpayer seller must be VAT-registered; 2. the buyer must be a BOT-registered manufacturer/ producer; and 3. the buyer's products must be one hundred percent (100%) exported, as shown by a certification issued by the BOI. Petitioner submitted a BOI Certification76 issued on July 17,2012, which certified that based on the information given, PGPRC exported one hundred percent (100%) of its total sales volume for the period July 1, 2011 to June 30,2012, and the same has been issued pursuant to the Guidelines on the issuance of BOI Certification per Revenue 76 Records, Vol. 4, Exhibit "P-8-a," p. 2157. (

DECISION CTA CASE NO. 8938 Page 16of21 Memorandum Order ("RMO") No. 9-2000 entitled "Tax Treatment ofSales ofGoods, Properties and Services made by VAT-registered Suppliers to HOI- registered Manufacturers-Exporters with 100% Export Sales." With the submission of the said document, the Court finds petitioner's sales as zero-rated. In its Quarterly VAT Return for the Fourth77 (amended) Quarter of FY ending June 30, 2012, petitioner's declared total sales/receipts, broken down as follows: EXHIBIT SALES AMOUNT "P-12," line 15A Vatable Sales "P-12," line 17 Zero-rated Sales Php 1,393,178.57 TOTAL 898,414,147.45 PHP 899,807,326.02 For the Fourth Quarter of FY 2012, petitioner generated total sales in the amount of Php899,807,326.02. From this amount, the receipts of Php898,414,147.45 were derived from ore sales to PGPRC and declared by petitioner in its Amended Quarterly VAT Returns as zero-rated sales. However, scrutiny of petitioner's supporting invoices and schedule of output tax78 reveals that the total zero-rated sales is only Php898,269,147.45. The difference of Php144,933.70 (Php898,414,147.45less Php898,269,213.75) should be denied instantly: PERIOD CUSTOMER ORE SALES INUSD FOREX INPHP 309,537,198.81 April 2012 Phil. Gold Processing Refining Corp. 7,293,009.4279 42.44380 300,333,845.27 May 2012 Phil. Gold Processing Refining Corp. 288,398,169.67 June 2012 Phil. Gold Processing Refining Corp. 6,914,080.8881 43.43882 898,269,213.75 Total Per Invoices 6,810,356.5783 42.34784 144,933.70 Difference 898,414,147.4585 TOTAL PER VAT RETURN 21,017,446.87 Petitioner's zero-rated sales were evidenced by sales invoices stamped with the words"zero-rated." As such, its receipts/collections 77 Records, Vol. 4, Exhibit "P-12," p. 2064. ( 7B Id., Vol. 3, Exhibit "P-12," part of attachments. 79 Id., Exhibit "P-20." 80 Id., Exhibit "P-12," Schedule of Output Tax. 81 Id., Exhibit "P-22," p. 1733. 82 Id., Exhibit "P-12," Schedule of Output Tax. 83 Records, Vol. 3, Exhibit "P-24," p. 1735. 84 Id., Exhibit "P-12," Schedule of Output Tax. 85 Id., line 17.

DECISION CTA CASE NO. 8938 Page 17of21 from its zero-rated ore sales to PGPRC are substantiated but only up to 99.83% of the total sales, broken down as follows: DETAILS AMOUNT PERCENTAGE Vatable Sales Php 1,393,178.57 0.15% Zero-rated Sales 898,269,213.75 99.83% Difference 144,933.70 0.02% TOTAL Ph� 899,807,326.02 The Court shall now determine whether petitioner incurred input taxes in connection with its zero-rated sales of Php898,269,213.75 and if such input taxes were not applied against any output VAT liability of petitioner. As reflected in its Quarterly VAT Return for the 4th quarter of FY ending June 30,2012, petitioner incurred input VAT in the amount of Php76,333,107.78, broken down as follows: PERIOD PARTICULARS INPUT VAT 4th Quarter Domestic Purchases of Goods 4th Quarter Domestic Purchases of Services Php 1,220,520.42 86 TOTAL 75,112,587.3687 PHP 76,333,107.78 In support of the aforesaid input VAT, petitioner submitted various suppliers' invoices and ORs, which were all examined by the Court-commissioned ICPA, Atty. Chua. In the ICPA Report88 dated July 15, 2015, Atty. Chua was unable to account for the input tax amounting to Php1,124,523.97 (Php76,333,107.78 less Php75,208,583.81). The Court agrees with this finding, thus the said amount should be deducted outright from the total claim, detailed as follows: !CPA FINDING AMOUNT EXHIBIT Purchases with supporting documents (No exceptions noted) Php "P-36" to Summary of input VAT with no proper 68,790,630.63 1,711,580.57 "P-431" supporting documents Php 7,800.00 Summary of input VAT from local purchases "P-432" to 2,591,819.46 1,272,083.21 "P-488" where the TIN of the company is not indicated "P-489" Summary of input VAT where there are noted alterations in the supporting documents "P-490" to Summary of input VAT where the amount in words is not indicated "P-553" "P-554" to "P-1205" 86 Records, Vol. 3, Exhibit P-12," line 21F. 87 Id., line 21]. 88 Id. at 1936-1937.

DECISION 834,669.94 "P-1206" to CTA CASE NO. 8938 PHP 6,417,953.18 "P-1252" Page 18 of21 75,208,583.81 Summary of input VAT where the address of the company is not indicated TOTAL Upon scrutiny of the ICPA Report, together with petitioner's supporting documents, the Court finds that aside from the input VAT of Php6,417,953.18 omitted by the ICPA for the Fourth Quarter of FY 2012, the following input taxes in the amount of Php877,255.38 shall be disallowed for not being properly substantiated by VAT invoices or ORs in accordance with Sections 110(A) and 113(A) and (B) of the 1997 NIRC, and as implemented by Sections 4.110-8 and 4.113-1 ofRR No. 16- 2005, as amended, detailed as follows: SUPPLIER'S NAME INPUT VAT EXHIBIT With Noted Alterations or Additions in the Supporting OR Without P-41 P-42 Counter Signature of the Authorized Representative of the Supplier P-44 P-45 Agatep Associates, Inc. Php 18,000.00 P-46 P-83 Agatep Associates, Inc. 18,000.00 P-90 P-96 Astron Communication System 1,410.00 P-100 P-111 Astron Communication System 6,567.86 P-124 P-125 Astron Communication System 16,016.79 P-131 P-155 Imagenet 25,000.00 P-157 P-159 New World 3,960.00 P-199 P-205 New World 3,300.00 P-224 P-225 New World 1,500.00 P-240 P-263 St. Francis Square 8,983.11 P-270 P-273 St. Francis Square 3,333.61 P-274 P-275 St. Francis Square 2,434.22 P-276 P-280 Toph, Inc. 6,000.00 P-307 P-308 Encarline 9,600.00 P-309 P-317 Encarline 9,600.00 P-430 First United Travel 1,728.00 P-278 P-279 First United Travel 144.00 First United Travel 306.50 Leonardo Vicente 2,400.00 Makati Shangrila 7,602.81 Quartz Construction 11,967.90 St. Francis Square 7,185.33 St. Francis Square 2,207.13 St. Francis Square 361.71 Sunvar Incorporated 9,737.43 Toph, Inc. 6,000.00 Towers Watson 7,800.00 Advance Automotive Center 2,560.71 Encarline 3,308.71 Encarline 360.00 First United Travel 360.00 First United Travel 1,248.00 Toph, Inc. 6,000.00 Sub-total PhE 204,983.82 Without Authorized Signature Aden Remote Site 433,548.51 Aden Remote Site 238,723.05 Sub-total PhE 672,271.56 TOTAL PHP 877,255.38 (

DECISION CTA CASE NO. 8938 Page 19of21 Therefore, out of petitioner's input VAT claim for the Fourth Quarter of FY 2012 in the amount of Php76,333,107.78, only the amount of Php67,913,375.25 represents valid input tax. However, as discussed earlier, these input taxes cannot be claimed in full since only 99.83% of the actual zero-rated sales declared per VAT Return were found to be valid. Thus, such jnput tax credits shall be allocated accordingly: DETAILS AMOUNT Input VAT Claim Php 76,333,107.78 Less: Exceptions Per ICPA Report Php 6,417,953.18 Per Court Findings 877,255.38 Unaccounted Difference 1,124,523.97 Php 8,419,732.53 Substantiated Input VAT Php 67,913,375.25 Percentage of Zero-rated Sales 99.83% INPUT VAT ATTRIBUTABLE TO ZERO-RATED SALES PHP 67,797,922.51 =--====-~~---- As to whether or not the said input VAT was applied against any output VAT and/or carried over to the succeeding taxable quarters, petitioner's Quarterly VAT Return for the subject period of claim showed that petitioner had no output tax liability against which the claimed input VAT may be applied or credited. In addition, the claimed input VAT was not carried-over by petitioner in its succeeding quarter since it was deducted as "VAT Refund/TCC claimed" from the total available input tax in its Fourth89 Quarterly VAT Return for the FY 2012. Therefore, petitioner is entitled only to the properly substantiated amount of Php67,797,922.51, as claim for refund arising from its unutilized input VAT from zero-rated transactions. In view of the foregoing, petitioner was able to sufficiently prove its entitlement to a TCC of its unutilized excess input VAT attributable to its zero-rated sales for the Fourth Quarter of FY ending June 30, 2012, albeit in the reduced amount of Php67,797,922.51. WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Respondent Commissioner of Internal Revenue is hereby ORDERED TO ISSUE A 89 Records, Vol. 3, Exhibit "P-12," line 230, pp. 1718-1723. (

DECISION CTA CASE NO. 8938 Page 20of21 TAX CREDIT CERTIFICATE in favor of petitioner Filminera Resources Corporation in the reduced amount of SIXTY SEVEN MILLION SEVEN HUNDRED NINETY SEVEN THOUSAND NINE HUNDRED TWENTY-TWO AND 51/100 PESOS (PHP67,797,922.51 ). SO ORDERED. LOVELL r.HAUTISTA Associate Justice WE CONCUR: R1. ABON-VICTORINO MA. BELEN M. RINGPIS-LIBAN 1sof-iate Justice Associate Justice ATTESTATION I attest 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's Division. LOVELL ~BAUTISTA Associate Justice Chairperson

DECISION CTA CASE NO. 8938 Page21 of21 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 Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Justice