COMMISSIONER OF INTERNAL REVENUE v. CRESCENT PARK 6-24 PROPERTY HOLDINGS, INC.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC CTA EB NO. 1230 (CTA Case No. 8202) COMMISSIONER OF INTERNAL REVENUE, Petitioner, -versus- Present: Del Rosario, P.J., Castaneda, Jr. Bautista, Uy, Cas an ov a, F a b on -Victorino, Mindaro-Grulla, Cotangco-Manalastas, Ringpis-Liban_, ]]. CRESCENT PARK 6-24 PROPERTY HOLDINGS, INC., Respondent. Promulgated: AUG 11 2016 ;;: ~a.,m. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -~ DECISION RINGPIS-LIBAN, J. Before the Court En Bane is a Petition for Review filed by petitioner Commissioner of Internal Revenue (CIR) on October 15, 2014, praying that the Amended Decision1 dated June 18, 2014 (Assailed Decision), and the Resolution2 (Assailed Resolution) dated September 10, 2014 of the same Special First Division of the Court (Court in Division) be reversed and set asid e / 1 Rollo CTA EB Case No. 1230, pp . 5018, with Annexes. 2 Ibid . pp. 31-38.

CTA EB NO. 1230 (CTA Case No. 8202) DECISION Page2of13 THE FACTS The facts as culled from the records of the case are as follows: "Petitioner is a VAT-registered entity as evidenced by Bureau of Internal Revenue ("BIR") with Certificate of Registration No. 9RC0000236971 VAT and Taxpayer's Identification Number 007-080-781-000 VAT. Petitioner was established to buy and acquire by purchase, lease or otherwise, lands, and interest in land and to own, hold, improve, promote, develop, subdivide and manage any land owned, held or occupied by the corporation or belonging to them, to construct, erect and manage or administer buildings such as condominiums, apartments, hotels, restaurants, stores or other structures now or hereafter erected on any land owned, held or occupied by the petitioner. On October 18, 2008, pettttoner purchased from 6-24 Property Holdings Inc. ("6-24 PHI"), a domestic corporation engaged in leasing of building spaces, two parcels of land xxx located at 30th and 31st Streets, Bonifacio Global City, Taguig City, each consisting of one thousand six hundred (1 ,6000) square meters or an aggregate area of three thousand two hundred (3,200) square meters and covered by Transfer Certificate of Title Nos. 1787-P and 17890-P, respectively, issued by the Registry of Deeds of Taguig City. As indicated in the Deed of Sale, the subject lands were sold for a total of P376,324,401 with a corresponding VAT of FORTY FIVE MILLION ONE HUNDRED FIFTY EIGHT THOUSAND NINE HUNDRED TWENTY EIGHT and 12/100 PESOS (P45,158,928.12). xxx 6-24 PHI is likewise registered with the Philippine Economic Zone Authority (PEZA) with Registration Certificate No. 07-03-f (IT) as ecozone Facilities Enterprise. It is operating at E-Square Information Technology Park Bonifacio Global City, Taguig City. xxx Petitioner and 6-24 PHI, likewise, entered into a long term lease agreement whereby the entire subject lands were leased by petitioner to 6-24 PHI to be used by the latter for the purpose of building and/or maintammg thereon a PEZA-registered information technology building or facility. The lease is valid for twenty five years with automatic renewal for twenty five (25) years/

CTA EB NO. 1230 (CTA Case No. 8202} DECISION Page3of13 Petitioner filed its application for tax credit certificate/refund for the unutilized VAT input taxes in the amount of FORTY FIVE MILLION ONE HUNDRED FIFTY EIGHT THOUSAND NINE HUNDRED TWENTY EIGHT and 12/100 PESOS (45,158,928.12) along with all supporting documents on July 26,2010, with the Revenue District Office No. 47, East Makati."3 On December 16, 2010, Crescent Park 6-24 Property Holdings Inc. (Crescent) filed a Petition for Review before the Court in Division. In the Answer4, the CIR avers that the alleged claim for issuance of tax credit certificate is still subject to administrative routinary investigation/examination by the respondent's Bureau; that the taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable; that Crescent's claim for refund or issuance of tax credit certificate in the amount of P45,158,928.12, as alleged unutilized input VAT for the 4th quarter to zero-rated sale of services, were not fully substantiated by proper documents, such as sales invoices, official receipts and others pursuant to Revenue Regulations No. 7-95 in relation to Section 113 and 237 of the 1997 Tax Code; that Crescent's sales of goods and services to various alleged clients do not qualify as effectively zero-rate VAT; and that Crescent failed to comply with the conditions under Section 112 (A) (B) (C) of the 1997 Tax Code. After trial on the merits and upon the submission of the parties' memorandum, the case was submitted for decision on December 20, 2012.5 On October 24, 2013, the Court in Division rendered its Decision6 denying Crescent's Petition for Review on the reason that it failed to prove that the alleged sale of services to 6-24 is subject to zero-rating. On November 29, 2013/ Crescent filed its "Motion for Reconsideration," praying that the decision be reversed and set aside. On June 18, 2014,8 the Court in Division rendered the questioned Amended Decision granting Crescent's Petition for Review. On July 3, 2014, the CIR flied a "Motion for Reconsideration, praying that the Decision dated October 24, 2013 be reinstated/Y"" 3 Docket, CTA Case No. 8202, pp. 6-8. 4 Ibid. pp. 5-15, with Annexes. 5 Ibid. Resolution page 732. 6 Ibid. pp. 736- 752. 7 1bid. pp. 755-768, with Annexes. 8 1bid. pp. 798-807.

CTA EB NO. 1230 (CTA Case No. 8202) DECISION Page4of13 On September 10, 2014,9 the Court in Division rendered the Assailed Resolution, denying for lack of merit the CIR's "Motion for Reconsideration." Aggrieved, the CIR flied before the Court En Bane this Petition for Review. In the Resolution10 dated February 27, 2015, respondent Crescent was directed by the Court En Bane to file its comment in this case. On April 30, 2015, Crescent filed its "Comment/Opposition (To Petitioner's Compliance flied on February 4, 2015 and Petition for Review dated 14 October 2014)." In the Resolution dated May 22, 2015,11 the Court gave due course to the Petition for Review and ordered the parties to ftle their respective memoranda. Respondent Crescent flied its Memorandum on August 10, 2015.12 Per Records Verification Report of the Judicial Records Division of this Court dated August 11, 2015,13 the CIR failed to ftle her Memorandum. In the Resolution14 dated August 28, 2015, this case was deemed submitted for decision. ISSUES The issues for the Court En Bane's resolution are: 1. Whether the Court of Tax Appeals has no jurisdiction over the Judicial Claim for Refund/Tax Credit since Crescent Park ftled its claim for refund as early as July 5, 2010 and not July 26, 2010; 2. Whether Crescent had no duly registered official receipts at the time the sales transaction was made; and 3. Whether the Court in Division erred in holding that Crescent Park 6-24 Property Holdings, Inc. is entitled to refund or issuance of tax credit certificate in the amount of Forty Five Million One Hundred Fifty Eight Thousand Nine Hundred Twenty Eight and 12/100 Pesos (P45,158,928.12) o~ 9 Ibid. pp. 828-835. 10Rollo, CTA EB No. 1230, pp. 8-9. 11 Ibid pp. 111-112. 12 Ibid. pp. 108-121. 13 Ibid. page 122. 14 Ibid. pp. 124-125.

CTA EB NO. 1230 {CTA Case No. 8202) DECISION PageS o/13 its unutilized input VAT attributed to its zero-rated sale of services in 2008. ARGUMENTS Petitioner CIR argues that the administrative claim for refund filed on July 5, 2010 and the administrative claim for refund filed on July 26, 2010, both worded similarly, have legal effects that cannot be set aside by the Court; that respondent Crescent's allegation that the administrative claim for refund was ftled on July 26, 2016 is false and inaccurate; that it was surprisingly discovered by petitioner's counsel that Crescent earlier filed a similar claim for refund on July 5, 2010 when Crescent submitted its formal offer of evidence; that the Court in Division failed to consider that the official receipts that Crescent issued to 6-24 PHI as proof of its alleged sales of services for the 4th quarter of taxable year 2008 reveal that the Authority to Print BIR Permit, as appearing on the official receipts, was secured only on April 5, 2011; that at the time of the sales transactions were made, Crescent had no duly registered official receipts in violation of the invoicing requirement. On the other hand, respondent Crescent argues that the Court has jurisdiction over the instant case; that the CIR is bound by her stipulations; that the issue of jurisdiction and prescriptive period to file claim for refund have been passed upon by the Court in Division; that the July 5, 2010 and July 26, 2010 administrative claims for refund pertain to two different taxable periods; that the period covered by the July 5, 2010 administrative claim is from January 1, 2009 to March 31, 2009, while the July 26, 2010 administrative claim is from October 1, 2008 to December 31, 2008; that raising the issue of jurisdiction over the subject matter at any stage of the proceedings is barred by estoppel; and the Court in Division has already declared that Crescent has properly substantiated its refund claim. RULINGS OF THE COURT EN BANC Jurisdiction of the Court In its attempt to overturn the Court in Division's Amended Decision granting Crescent's claim for refund and the Resolution denying the CIR's Motion for Reconsideration, the CIR avers that there are legal effects in filing two administrative claims for refund. If the administrative claim for refund was ftled on July 5, 2010, the CIR has 120 days within which to act on the application for refund. If the CIR does not act within the said 120 days, then the respondent has 30 days from the lapse of the 120 days within which to appeal the inaction to the Court of Tax Appeals (CTA). So, from July 5, 2010, the CIR has until November 2, 2010 within which to act on the application for refund. Thereafter, respondent has from November 2, 2010 or until Decembey

CTA EB NO. 1230 (CTA Case No. 8202) DECISION Page6of13 2, 2010 within which to appeal to the CTA. In this case, Crescent filed its Petition for Review before the Court in Division on December 16, 2010. In the proceedings before the Court in Division, the CIR, instead of presenting its evidence, executed a Supplemental Joint Stipulation of Facts,15 wherein the parties admitted that: "1. On July 5, 2010, petitioner flied an application (BIR Form 1914) and letter request with the Revenue District Office (RDO) No. 47- East Makati, of the Bureau of Internal Revenue for the issuance of tax credit certificate of its unutilized input VAT attributable to its zero- rated sales allegedly incurred in fourth quarter of 2008 and carried over to the first quarter of 2009, in the amount of Forty Five Million One Hundred Fifty Eight Thousand Nine Hundred Twenty Eight & 12/100 pesos (P45,158,928.12) xxx 2. On July 16, 2010, petitioner flied a letter notice dated July 15, 2010 with the Revenue District Office (RDO) No. 47 of the Bureau of Internal Revenue formally withdrawing its application and letter request for the issuance of tax credit certificate filed on July 5, 2010. XXX 3. On July 26, 2010, petitioner flied an application (BIR Form 1914) and letter request with the Revenue District Office (RDO) No. 47- East Makati, of the Bureau of Internal Revenue for the issuance of tax credit certificate of its unutilized input VAT attributable to its zero-rated sales allegedly incurred in fourth quarter of 2008 in the amount of Forty Five Million One Hundred Fifty Eight Thousand Nine Hundred Twenty Eight & 12/100 pesos (P45,158,928.12) xxx 4. Petitioner flied its Amended Quarterly VAT Return for the third (3r~ quarter of 2010 on April12, 2011 xxx" Contrary to the position taken by the CIR, this Court ruled that the CIR is bound by her stipulations in the Supplemental Joint Stipulation of Facts dated August 14, 2012. The CIR admitted that the July 5, 2010 administrative claim was withdrawn and a new administrative claim was flied on July 26, 2010. Hence, the CIR cannot claim that the instant case was flied beyond the prescriptive period. Besides, it was already settled that the Court has jurisdiction over the instant case. As stated in the Decision, Assailed Amended Decision and Assailed Resolution, Crescent seasonably flied its Petition for Review/ 15 Docket, pp. 670-672, with Annexes.

CTA EB NO. 1230 {CTA Case No. 8202) DECISION Page lo/13 Decision dated October 24, 2013: "It is admitted that the instant case pertains to a claim for refund of input VAT incurred in the 4th quarter of 2008. It is equally admitted that petitioner reported the alleged zero-rated sales only when the lease payments were received in the 1st quarter of 2009. Hence, the two-year prescriptive period should be reckoned from the end of the 1st quarter of 2009 or on March 31, 2009 when the alleged zero-rated sales were made. Counting from said date, petitioner had two years or until March 31, 2011 to file its administrative claim. Evidently, petitioner seasonably flied its administrative claim on July 26,2010. Section 112 of the NIRC of 1997, as amended, also provides that respondent had one hundred twenty (120) days from filing to act on the claim. Upon receipt of the adverse decision or expiration of 120-day period, petitioner had thirty days to elevate the case to this Court. In the instant case, the 120-day period ended on November 23, 2010. Thus, petitioner had 30 days on until December 23, 2010 to file its judicial claim for refund. Clearly, the instant Petition for Review was also flied on time on December 16, 2010."16 Assailed Decision dated June 18,2014: "As stated in the assailed Decision of October 24, 2013, both the administrative and the Judicial claims for refund/tax credit were seasonably filed by petitioner on July 26, 2010 and December 16,2010, respectively, in accordance with the provision of Section 112 of the NIRC, as amended, and the ruling in the case of Commissioner of Internal Revenue vs. Aichi Forging Compaf!Y of Asia, Inc. (Aichi)." 17 Assailed Resolution dated September 10, 2014: "It was never disputed that both the administrative and judicial claims for refund/tax credit were seasonably filed by petitioner on July 26, 2010 and December 16, 2010, respectively, in accordance with the provision of Section 112 of the NIRC oy 16 Decision, page 12. 17 Amended Decision, page 23.

CTA EB NO. 1230 {CTA Case No. 8202) DECISION PageBo/13 1997, as amended and the ruling in the case of Commissioner of Internal Revenue vs. Aichi Forging Company ofAsia, Inc. (Aichi)."18 Whether Crescent had duly registered official receipts at the time the sales transactions were made The CIR claims that Crescent's lack ofBIR's Authority to Print (ATP) at the time Crescent issued the receipts for the subject sales transactions is fatal to its claim for refund since it is tantamount to failure to comply with the mandatory invoicing requirements on documents supporting zero-rated sale of semces. After consideration, this Court finds the CIR's argument meritorious. While it is true that printing the ATP on the invoices or receipts is not required since there is no law, rule or regulation requiring it, however, it is imperative that at the time the sales transactions were made, the receipts issued evidencing the zero-rated sales transactions must be duly registered official receipts. To be entitled to refund or tax credit certificate, petitioner must comply with all the requisites for a VAT refund/ tax credit of input tax paid attributable to zero-rated sales under Section 112(A) of the NIRC of 1997, as amended, to wit: 1) that there must be zero-rated or effectively zero-rated sales; 2) that input taxes were incurred or paid; 3) that such input taxes are attributable to zero-rated or effectively zero-rated sales; 4) that the input taxes were not applied against any output VAT liability; and 5) that the claim for refund was filed within the two-year prescriptive period. To prove that the sales transactions are zero-rated for purposes of refund or tax credit, the taxpayer must prove compliance with the substantiation requirements provided in Section 113 (A) in relation to Sections 237 and 238 of the NIRC, as amended. Sec. 113. Invoicing and Accounting Requirements for VAT-Registered Persons./ 18 Resolution, page 4.

CTA EB NO. 1230 {CTA Case No. 8202) DECISION Page9of13 (A) Invoicing Requirements - A VAT - registered person shall Issue: XXX (2) A VAT official receipt for every lease of goods or properties, and for every sale, barter, or exchange of semces. Sec. 237. Issuance ofReceipts or Sales or Commercial Invoices.- All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and designation of merchandise or nature of service: Provided however, That where the receipt is issued to cover payment made as rentals, commissions, compensations or fees, receipts or invoices shall be issued which shall show the name, business style, if any, and address of the purchaser, customer or client. Sec. 238. Printing ofReceipts or Sales or Commercial Invoices. All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. All persons who print receipt or sales or commercial invoices shall maintain a logbook/register of taxpayer who availed of their printing services. The logbook/register shall contain the following information/

CTA EB NO. 1230 {CTA Case No. 8202) DECISION Page 10of13 (1) Names, Taxpayer Identification Numbers of the persons or entities for whom the receipts or sales or commercial invoices are printed; and (2) Number of booklets, number of sets per booklet, number of copies per set and the serial number of the receipts or invoices in each booklet. An examination of Exhibits "GG-1" to "GG-12" reveals that there were no duly registered official receipts at the time the zero-rated sales transactions were made because the ATP appearing on the receipts were secured on "4/5/2011" or April 5, 2011. It appears that the subject transactions occurred long before Crescent was able to secure from the BIR an authority to print the subject receipts. Hence, the issuance of the subject receipts is an afterthought of the transactions made in 2009. To illustrate: Petitioner's Official Receipts Date of Date of Authority Exhibits to Print/BIR Number transaction Permit "GG-1" 4/5/2001 "GG-2" OR No. 0003 2/17/2009 4/5/2011 "GG-3" OR No. 0004 6/2/2009 4/5/2011 "GG-4" OR No. 0005 6/11/2009 4/5/2011 "GG-5" OR No. 0006 6/11/2009 4/5/2011 "GG-6" ORNO. 0007 4/30/2009 4/5/2011 "GG-7" OR No. 0008 5/10/2009 4/5/2011 "GG-8" OR No. 0009 9/11/2009 4/5/2011 "GG-9" OR No. 00010 10/1/2009 4/5/2011 "GG-10" OR No. 00011 11/1/2009 4/5/2011 "GG-11" OR No. 00012 12/1/2009 4/5/2011 "GG-12" OR No. 00013 1/27/2010 4/5/2011 OR No. 00014 1/28/2010 In the case of Silicon Philippines, Inc. (Former!J Intel Philippines Manufacturing, Inc.) vs. CIR,'9 the Supreme Court ruled that: "Printing the ATP on the invoices or receipts is not required It has been settled in Intel Technology Philippines, Inc v. Commissioner ofInternal Revenue that the ATP need not be reflected or indicated in the invoices or receipts because there is no law or regulation requiring it. Thus, in the absence of such law or regulation, failure to print the ATP on the invoices or receipts should not result in the outright denial of a claim or invalidation of the invoices or receipts for purposes of claiming a refund/ 19 G.R. No. 172378, January 17, 2011.

CTA EB NO. 1230 (CTA Case No. 8202} DECISION Page11 o/13 ATP must be secured from the BIR But while there is no law requiring the ATP to be printed on the invoices or receipt, Section 238 of the NIRC expressly requires persons engaged in business to secure an ATP from the BIR prior to printing invoices or receipts. Failure to do so makes the person liable under Section 264 of the NIRC. This brings us to the question of whether a claimant for unutilized input VAT on zero-rated sales is required to present proof that it has secured an ATP from the BIR prior to the printing of its invoices or receipts. We rule in the affirmative. Under Section 112 (A) of the NIRC, a claimant must be engaged in sales which are zero-rated or effectively zero-rated. To prove this, duly registered invoices or receipts evidencing zero- rated sales must be presented. However, since the ATP is not indicated in the invoices or receipts, the only way to verify whether the invoices or receipts are duly registered is by requiring the claimant to present its ATP from the BIR. Without this proof, the invoices or receipts would have no probative value for the purpose of refund. In the case of Intel, we emphasized that: "It bears reiterating that while the pertinent provisions of the Tax Code and the rules and regulations implementing them require entities engaged in business to secure a BIR authority to print invoices or receipts and to issue duly registered invoices or receipts, it is not specifically required that the BIR authority to print be reflected or indicated therein. Indeed, what is important with respect to the BIR authority to print is that it has been secured or obtained by the taxpayer, and that invoices or receipts are duly registered." The absence of BIR's ATP at the time of sales transactions in 2009, is fatal to Crescent's claim for refund since it is tantamount to non-compliance with the mandatory invoicing requirements on documents supporting the sale of goods and services. Therefore, Crescent was not able to satisfy the legal requirements for its entitlement to refund/tax credit. Well-settled in this jurisdiction is the fact that actions for tax refund, as in this case, are in the nature of a claim for exemption and the law is construed in strictissimijuris against the taxpayer. The pieces of evidence presented entitlin~

CTA EB NO. 1230 (CTA Case No. 8202) DECISION Page 12ofl3 a taxpayer to an exemption are also strictissimi scrutinized and must be duly proven.20 In this case, Crescent was not able to prove that it is entitled to a refund or issuance of a tax credit certificate for its unutilized input VAT attributed to its zero-rated sale of services in 2008 in the amount of Forty Five Million One Hundred Fifty Eight Thousand Nine Hundred Twenty Eight and 12/100 Pesos (P45, 158, 928.12). WHEREFORE, the Petition for Review is PARTIALLY GRANTED. The Court has jurisdiction over the instant case. However, Crescent Park 6-24 Property Holdings, Inc.'s petition for refund is denied. Accordingly, the Amended Decision dated June 18, 2014 and Resolution dated September 10, 2014 are reversed. SO ORDERED. ~- ~ j ' - MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR: SARlO Presiding Justice ~~C.~~* Q LOVE~AUTISTA .(UANITO c. CASTANEDA,(R.. Associate Justice Associate Justice ~ . CAESAR A. CASANOVA Associate Justice ERL~P.UY Associate Justice ESPE fm.2Lor.rt o ~N-. M~~. C~ MINDARO-GRULLA Associate Justice 20 Atlas Consolidated Mining and Development Corporation vs. Commissioner ofInternal Revenue, G .R. No. 159490, February 18, 2008.

CTA EB NO. 1230 (CTA Case No. 8202) DECISION Page 13of13 d'1,~~ ~ 0~~ AMELIA R. COTANGCO- MANALASTAS Associate Justice CERTIFICATION Pursuant to Article VIII, 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. Presiding Justice