GR 197663; (March, 2018) (Digest)
G.R. No. 197663 & G.R. No. 197770, March 14, 2018
TEAM ENERGY CORPORATION, Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent. REPUBLIC OF THE PHILIPPINES, Petitioner, v. TEAM ENERGY CORPORATION, Respondent.
FACTS
Team Energy Corporation, a VAT-registered power generator, sold electricity to the National Power Corporation (NPC), transactions classified as zero-rated sales. For the taxable year 2003, it filed administrative and subsequent judicial claims for refund or credit of unutilized input VAT amounting to P83,465,353.50. The Commissioner of Internal Revenue opposed the claims, arguing improper documentation and asserting that NPC’s tax exemption did not extend to its suppliers.
The Court of Tax Appeals (CTA) in Division partially granted the claim but significantly reduced the refundable amount to P70,700,533.01. It disallowed certain portions due to Team Energy’s failure to submit required VAT invoices or official receipts to substantiate some of its zero-rated sales and input VAT payments. Both parties appealed to the CTA En Banc, which affirmed the Division’s decision with a further reduction to P11,161,392.67, leading to these consolidated Petitions for Review before the Supreme Court.
ISSUE
Whether Team Energy is entitled to a refund or credit of its claimed unutilized input VAT for the year 2003.
RULING
The Supreme Court denied Team Energy’s petition and granted the Republic’s petition, thereby denying the claim for refund. The Court emphasized that a claimant for VAT refund carries the burden of proving not just the legal entitlement but also the factual basis of the claim with strict compliance with invoicing requirements. Input VAT on local purchases must be substantiated with a VAT invoice, while input VAT on services must be supported by an official receipt.
The Court found that Team Energy failed to meet this burden. A substantial portion of its claimed input VAT was supported by documents other than VAT invoices or official receipts, such as provisional receipts, debit memos, and credit memos. These documents are not the prescribed substantiation documents under the Tax Code and relevant regulations. Consequently, these claims were properly disallowed. The Court upheld the CTA En Banc’s factual findings, which are accorded finality absent proof of grave abuse of discretion. Since Team Energy did not adequately prove the input VAT payments through the mandated evidence, it is not entitled to the refund. The prescriptive period for filing the claim was deemed complied with, but the claim failed on its merits due to insufficient substantiation.