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Nippon vs CIR

31\epublic of tbe tlbilippines petitioner Nippon Express (Philippines)


$->upreme QCourt Corporation (Nippon Express), is
CERTl.J.:!.!P -n,ci:: COP\ engaged in zero-rated sales of services
!)~T,\' (not goods or properties). foif
:Jftilanila Decision 2 G.R. No. 191495
THIRD DIVISION THE FACTS
NIPPON EXPRESS (PHILIPPINES) Petitioner Nippon Express repaired to the
CORPORATION, Court via its petition for
Petitioner, review on certiorari under Rule 45 of the
G.R. No. 191495 Rules of Collli to assail the
Present: 15 December 2009 Decision of the Court of
Thin! Division Tax Appeals (CTA) En Banc in
AUG t 7 2016 CT A EB No. 492. The CTA En Banc
VELASCO, JR., J., Chairperson, affirmed the ruling of the CT A
BERSAMIN, Second Division in CT A Case No. 7429
- versus - denying the refund claim of Nippon
COMMISSIONER OF INTERNAL Express.
REVENUE, The present controversy stemmed from an
Respondent. application for the issuance
LEONEN, of a tax credit certificate (TCC) of Nippon
MARTIRES, and Express' excess or unutilized
GESMUNDO, JJ input tax attributable to its zero-rated
Promulgated: sales for all four taxable quarters in
x------------------------------ 2004 pursuant to Section 112 of the
DECISION National Internal Revenue Code
MARTIRES, J.: (NIRC).
In a claim for refund under Section 112 of The Antecedents
the National Internal Nippon Express is a domestic corporation
Revenue Code (N/RC), the claimant must registered with the Large
show that: (1) it is engaged in Taxpayer District Office (LTDO) of the
zero-rated sales of goods or services; Bureau of Internal Revenue (BIR).
and (2) it paid input VAT that are Revenue Region No. 8-Makati, as a Value
attributable to such zero-rated sales. Added Tax (VAT) taxpayer. 1
Otherwise stated, the claimant must On 30 March 2005, Nippon Express filed
prove that it made a purchase of taxable with the LTDO, Revenue
goods or services for which it paid Region No. 8, an application for tax credit
VAT (input), and later on engaged in of its excess/unused input taxes
the sale of goods or services subject to attributable to zero-rated sales for the
VAT (output) but at zero rate. There is a taxable year 2004 in the total amount
refundable sum when the amount of P27,828,748.95.
of input (VAT (attributable to zero-rated By reason of the inaction by the BIR,
sale) is higher than the claimant's Nippon Express filed a Petition
output VAT during one taxahle period for Review before the CTA on 31 March
(quarter). 2006.2 In its Answer, respondent
The issue in the present petition Commissioner of Internal
Cl1ncerns the proof that the claimant, Revenue (CIR) interposed the defense,
among

Page 1 of 13
Nippon vs CIR
others, that Nippon Express' excess input Aggrieved, Nippon Express moved for
VAT paid for its domestic reconsideration or new trial
purchases of goods and services but was rebuffed by the CTA Division in
attributable to zero-rated sales for the four its Resolution5 of 5 May 2009.
quarters of taxable year 2004 was not Hence, Nippon Express filed on 10 June
fully substantiated by proper 2009 a petition for review with the
documents. 3 CTA En Banc.
The Ruling of the CT A Division The Petition for Review before
After trial, the CTA Division (the the CT A En Banc
court) found that Nippon Express' In its appeal before the CTA En Banc,
evidentiary proof of its zero-rated sale of Nippon Express alleged that it
services to PEZA-registered had fully complied with the invoicing
entities consisted of documents other than requirements when it submitted sales
official receipts. Invoking /Iii/ invoices to support its claim of zero-rated
Rollo, pp. 94-95. see Decision, dated 15 sales. Nippon argued that there is
December 2009. promulgated by CTA En nothing in the tax laws and regulatiorts
Banc in CTA EB that requires the sale of goods or
No. 492. pp. 2-3. properties to be supported only by sales
Id. at 80. invoices, or the sale of services by
Id. at 96. official receipts only. Thus, as Nippon
Decision 3 G.R. No. 191495 Express put it, the CT A Division
Section 113 of the NIRC, as amended by erred in holding that the sales invoices
Section 11 of Republic Act (R.A.) and their supporting documents are
No. 9337, the court held the view that the insufficient to prove Nippon Express' zero-
law provided for invoicing rated sales.
requirements of VAT-registered persons The Ruling of the CT A En Banc
to issue a VAT invoice for every As stated at the outset, the CT A En Banc
sale, barter or exchange of goods or affirmed the decision of the
properties, and a VAT official receipt CT A Division. The CT A En Banc
for every lease of goods or properties, and disposed as follows'fiJ'(
for every sale, barter or exchange Id. at 142.
of services. Noting that Nippon Express is Id. at 145-150.
engaged in the business of Decision 4 G.R. No. 191495
providing services, the court denied the "WHEREFORE, the Petition for Review
latter's claim for failure to submit is DISMISSl~D.
the required VAT official receipts as proof Accordingly, the impugned Decision of the
of zero-rated sales. The Court in Division dated
dispositive pmiion of the CTA Division's December 5, 2008 and its Resolution
Decision, dated 5 December 2008, promulgated on May 5, 2009 in CTA
reads: Case No. 7429 are AFFIRMED.
WHEREFORE, premises considered, the SO ORDERED.''6
instant Petition for Worth mentioning is the lone dissent
Review is hereby DENIED DUE registered by Presiding Justice
COURSE, and accordingly, (P J) Ernesto D. Acosta who opined that
DISMISSED for lack of merit. an official receipt is not the only
SO ORDERED.4 acceptable evidence to prove zero-rated
sales of services. He ratiocinated:

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Nippon vs CIR
Sections 113 and 237 of the 1997 In its petition, Nippon Express reiterated
National Internal Revenue its stance that nowhere is it
Code (NIRC) x x x made use of the expressly stated in the laws or
disjunctive term "or" which connotes implementing regulations that only official
that either act qualifies as two different receipts can support the sale of services, or
evidences of input VAT. xx x It is that only sales invoices can
indicative of the intention of the support the sale
lawmakers to use the same of goods or properties. Nippon Express also
interchangeably in the sale of goods or adopted at
services. length the dissenting opinion
This is bolstered by the fact that Section of P J Acosta, viz the use of the disjunctive
113 of the 1997 NIRC has term
been amended by Section 11 of Republic "or" in Section 237 of the NIRC connoting
Act (RA) No. 9337, wherein the the interchangeable nature o~
amendatory provisions of the law Id. at I I I.
categorically required that VAT invoice Id. at I 13-115.
shall be issued for sale of goods while VAT Decision 5 G.R. No. 191495
official receipt for the sale of either VAT invoice or official receipt as
services, which is absent in the amended evidence of sale of goods or
law. Since this amendment took services; the lack of any statutory basis
effect on July L 2005, the same cannot be for the exclusivity of official receipts
applied in the instant case which as proof of sale of service; and the non-
involves a claim for refund for taxable retroactivity of R.A. No. 9337,
year 2004. RA 9337 cannot apply enacted in 2005, to the petitioner's case.
retroactively to the pre.Judice of In addition, Nippon Express posed the
petitioner given the well-entrenched query on whether it may still
principle that statutes, including be allowed to submit official receipts, in
administrative rules and regulations addition to those already produced
operate prospectively only, unless the during trial, in order to prove the
legislative intent to the contrary is existence of its zero-rated sales.
manifest by express terms or by necessary By way of Comment,8 the CIR impugns
implication. the petition as it essentially
Equally relevant are Section llO of the seeks the re-evaluation of the evidence
1997 NIRC and Section presented during trial which cannot
4.106-5 of Revenue Regulations No. 7- be done in a petition for review under
95. x x x A reading of both Rule 45. Likewise, the CIR argues
provisions would show the intention to that the evidence of the sale of service, as
accept other evidence to the CT A held, is none other than
substantiate claims for VAT refund, an official receipt. In contrast, the sales
particularly the use of either a VAT invoice is the evidence of a sale of
invoice or official receipt. 7 goods. Since the petitioner's transactions
Nippon Express opted to forego the filing involve sales of services, they
of a motion for should have been properly supported by
reconsideration; hence, the direct appeal official receipts and not merely by
before the Court. sales invoices.
The Present Petition for Review THE COURT'S RULING
We deny the petition.

Page 3 of 13
Nippon vs CIR
The judicial claim of Nippon \\
Express was belatedly filed. 12
The thirty (30)-day period of SEC. 112. Refunds or Tax Credits qf'lnput
appeal is mandatory and Tax. -
jurisdictional, hence, the (A) Zero-rated or Effectively Zero-rated
CTA did not acquire Sales.- Any VAT-registered
jurisdiction over Nippon person, whose sales are zero-rated or
Express' judicial claim. effectively zero-rated may, within
I. two (2) years after the close of the taxable
First, we observe that much of the CT A's quarter when the sales were
discussion in the assailed made, apply for the issuance of a tax
decision dwelt on the substantiation of the credit certificate or refund of
petitioner's claim for refund of creditable input tax due or paid
unutilized creditable input VAT. It did not attributable to such sales, except
touch on the subject of the court's transitional input tax, to the extent that
jurisdiction over the petition for review such input tax has not been applied
filed before it by Nippon Express. against output tax:
Neither did the CIR bring the matter to xx xx
the attention of the court a quo./iJil (D) Period within which Refund or Tax
Id. at 205-224. Credit of Input Taxes shall be
Decision 6 G.R. No. 191495 Made. - In proper cases, the
Nonetheless, even if not raised in the Commissioner shall grant a refund or issue
present petition, the Court is not the
prevented from considering the issue on tax credit certificate for creditable input
the court's jurisdiction consistent taxes within one hundred twenty
with the well-settled principle that when ( 120) days from the date of submission of
a case is on appeal, the Court has complete documents in support
the authority to review matters not of the application filed in accordance with
specifically raised or assigned as error if Subsections (A) and (B) hereof
their consideration is necessary in In case of full or partial denial of the
reaching a just conclusion of the case.9 claim for tax refund or tax credit,
The matter of jurisdiction cannot be or the failure on the part of the
waived because it is conferred by law Commissioner to act on the
and is not dependent on the consent or application within the period prescribed
objection or the acts or omissions of above, the taxpayer affected
the parties or any one of them. 10 Besides, may, within thirty (30) days from the
courts have the power to motu receipt of the decision denyin~
proprio dismiss an action over which it the claim or after the expiration of the one
has no jurisdiction pursuant to hundred twenty-day
Section 1, Rule 9 of the Revised Rules of period, appeal the decision or the unacted
Court. 11 claim with the Court of Tax
Concerning the claim for refund of excess Appeals. (emphases supplied) fo!'I
or unutilized creditable See Aichi Forging Company of Asia v.
input VAT attributable to zero-rated CTA, G.R. No. 193625, 30 August 2017,
sales, the pertinent law is Section 112 citing Silicon
of the NIRC 12 which reads:
\()

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Nippon vs CIR
Philippines, Inc. (j(Jrmer~v Intel two (2) years reckoned from the close of
Philippines Manuf(u:turing Inc.) v. CIR, 757 the taxable quarter when the
Phil. 54, 69 (2015); pertinent zero-rated sales were made.
Silicon Philippines, Inc. (j(mnerly Intel From the submission of complete
Philippines Man11fc1ct11ring, Inc.) v. documents to support the
CIR, 727 Phil. 487, 499 administrative claim, the CIR is given a
(2014). 120-day period to decide. In case of
Id., citing Nippon Express (Philippines) whole or partial denial of or inaction on
Corporation v. CIR, 706 Phil. 442, 450-451 the administrative claim, the
(2013). taxpayer may bring his judicial claim,
SECTION I. Defenses and objections not through a petition for review, before
pleaded- Defenses and objections not pleaded the CT A who has exclusive and appellate
either in a jurisdiction. 14 The period to
motion to dismiss or in the answer are appeal is thirty (30) days counted from
deemed waived. However, when it appears the receipt of the decision or
from the pleadings inaction by the CIR.
or the evidence on record that the court The 30-day period is further emphasized
has no jurisdiction ol'er the subject in Section 11 of R.A.
matter, that there is No. 1125, as amended by R.A. No. 9282, or
another action pending between the same the CTA charter, which reads:
parties for the same cause, or that the action 13
is barred by a SEC. 11. Who May Appeal; Mode of
prior judgment or by statute of Appeal; Effect of Appeal. - Any
limitations, the court shall dismiss the claim. party adversely affected by a decision,
(emphasis supplied) ruling or inaction of the
Before the amendments introduced by Commissioner of Internal Revenue, the
R.A. No. 9337 and R.A. No. 9361. R.A. No. Commissioner of Customs, the
9337 took effect on Secretary of Finance, the Secretary of
I November 2005; R.A. No. 9361 on 28 Trade and Industry or the Secretary
November 2006. Recently, R.A. No. I 0963 (or of Agriculture or the Central Board of
the TRAIN Assessment Appeals or the
Law) amended Section 112 of the NIRC. Regional Trial Courts may file an appeal
Notably, the 120-day period was shortened to with the CT A within thirty (30)
ninety (90) days afrer the receipt of such decision or
days. ruling or after the expiration of
Decision 7 G.R. No. 191495 the period fixed by law for action as
Under the aforequoted provision, a VAT- referred to in Section 7(a)(2) herein.
registered taxpayer who has (emphases supplied) f'll/
excess and unutilized creditable input Based on the second paragraph of Section
VAT attributable to zero-rated sales 4 of the NIRC which states:
may file an application for cash refund or Section 4. Power of the Commissioner to
issuance of TCC (administrative Interpret Tax Laws and to Decide Tax
claim) before the CIR who has primary Cases. -The power to
jurisdiction to decide such interpret the provisions of this Code and
application. 13 The period within which to other tax laws shall be under the exclusive
file the administrative claim is and original

Page 5 of 13
Nippon vs CIR
jurisdiction of the Commissioner, subject (Commissioner) v. Aichi Forging Company
to review by the Secretary of Finance. a/Asia, Inc. 15 and Commissioner
The power to decide disputed v. San Roque Power
assessments, refunds of internal revenue Corporation/Taganito Mining Corporation v.
taxes, fees or other charges, Commissioner/Phi/ex Mining
penalties imposed in relation thereto, or Corporation v. Commissioner (San
other matters arising under this Code or Roque), 16
other laws or p011ions the Court interpreted the 30-day period of
thereof administered by the Bureau of appeal as mandatory and
Internal Revenue is vested in the jurisdictional. Thus, noncompliance
Commissioner, subject to the with the mandatory 30-day period
exclusive appellate jurisdiction of the renders the petition before the CT A void.
Court of Tax Appeals. The ruling in said cases as to the
14 Based on Section 7 (a) of R.A. No. 1125, mandatory and jurisdictional character of
as amended by R.A. No. 9282. It reads: the 30-day period of appeal was
Sec. 7. Jurisdiction. - The CT A shall reiterated in a litany of cases thereafter.
exercise: Pertinently, the CT A law expressly
a. Exclusive appellate jurisdiction to provides that when the CIR fails
review by appeal, as herein provided: to take action on the administrative claim,
I. Decisions of the Commissioner of the "inaction shall be deemed a
Internal Revenue in cases involving disputed denial" of the application for tax refund or
assessments, credit. The taxpayer-claimant
refunds of internal revenue taxes, fees or must strictly comply with the mandatory
other charges, penalties in relation thereto, period by filing an appeal with the
or other matters CTA within thirty days from such
arising under the National Internal inaction, otherwise, the court cannot
Revenue or other laws administered by the validly acquire jurisdiction over it.
Bureau of Internal In this case, Nippon Express timely filed
Revenue; its administrative claim on
2. Inaction by the Commissioner of 30 March 2005, or within the two-year
Internal Revenue in cases involving disputed prescriptive period. Counted from
assessments, refunds such date of submission of the claim with
of internal revenue taxes, fees or other supporting documents, the CIR
charges, penalties in relations thereto, or had 120 days, or until 28 July 2005, the
other matters arising last day of the 120-day period, to
under the National Internal Revenue decide the claim. As the records reveal,
Code or other laws administered by the the CIR did not act on the
Bureau of Internal application of Nippon Express. Thus, in
Revenue, where the National Internal accordance with law and the cited
Revenue Code provides a specific period of jurisprudence, the claimant, Nippon
action, in which case Express, had thirty days from such
the inaction shall be deemed a denial; x x inaction "deemed a denial," or until 27
x August 2005, the last day of the 30-
Decision 8 G.R. No. 191495 day period, within which to appeal to the
In the seminal cases of Commissioner of CT A.
Internal Revenue However, Nippon Express filed its petition
for review with the CT A

Page 6 of 13
Nippon vs CIR
only on 31 March 2006, or two hundred allow it to submit in evidence the official
forty-six (246) days from the receipts of its zero-rated sales in
inaction by the CIR. In other words, the addition to the sales invoices and other
petition of Nippon Express was documents already presented before
belatedly filed with the CT A and, the CTA. Considering our finding as to the
following the doctrine above, the court CT A's lack of jurisdiction, it is
ought to have dismissed it for lack of thus futile to even consider or allow such
jurisdiction. official receipts of Nippon
The present case is similar to the case of Express.
Philex Mining Corporation II.
(Phi/ex) in the consolidated cases of San In view of the lack of jurisdiction of the
Roque. In that case, Philex: CT A, we shall clarify and
( 1) filed on 21 October 2005 its original resolve, if only for academic purposes, the
VAT return for the third quarter of focal issue presented in this
taxable year 2005; (2) filed on 20 March petition, i.e., whether the sales invoices
2006 its administrative claim for and documents other than official
refund or credit; (3) filed on 17 October receipts are proper in substantiating zero-
2007, its petition for review with the rated sales of services in
CTA. 17 As in this case, the CIR did not connection with a claim for refund under
act on Philex's claim-fit"/ Section 112 of the NIRC.
15 646 Phil. 710 (2010). Substantiation requirements
1 to be entitled to refund or tax
'' 703 Phil. 310 (2013). credit under Sec. 112, NIRC
17 ld. at 36 l. As stated in our introduction, the burden
Decision 9 G.R. No. 191495 of a claimant who seeks a
The Court considered Philex to have refund of his excess or unutilized
timely filed its administrative creditable input VAT pursuant to Section
claim on 20 March 2006, or within the 112 of the NIRC is two-fold: (1) prove
two-year period; but, its petition for payment of input VAT to suppliers;
review with the CT A on 1 7 October 2007, and (2) prove zero-rated sales to
was late by 426 days. Thus, the purchasers. Additionally, the
Court ruled that the CT A Division did not taxpayerclaimant
acquire jurisdiction. has to show that the VAT payment made,
Due to the lack of jurisdiction of the CTA called input VAT, is
over the Nippon Express attributable to his zero-rated sales.
petition before it, all the proceedings held Be it noted that under the law on VAT, as
in that court must be void. The contained in Title IV of the
rule is that where there is want of NIRC, there are three known taxable
jurisdiction over a subject matter, the transactions, namely: (i) sale of goods
judgment is rendered null and void. 18 It or properties (Section
follows that the decision and the 106); (ii) importation (Section 107);
resolution of the CTA Division, as well as and (iii) sale of fiJ41
the decision rendered by the CTA 18 Aichi Forging Company of Asia v.
En Banc on appeal, should be CTA, supra note 9, citing Paulino v. Court of
vacated dr set aside. Appeals, 735 Phil.
As noted previously, Nippon Express 448, 459 (2014).
asked leave from this Court to Decision 10 G.R. No. 191495

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Nippon vs CIR
services and lease of properties (Section xx xx
108). Both sale transactions in Section 237. Issuance qf'Receipts or Sales
Section 106 and 108 are qualified by the or Commercial Invoices. - All
phrase 'in the course of trade or persons subject to an internal revenue tax
business,' whereas importation in Section shall, for each sale or transfer of
107 is not. merchandise or for services rendered
At this juncture, it is imperative to point valued at Twenty-five pesos (1!25.00)
out that the law had set apart or more, issue duly registered receipts or
the sale of goods or properties, as sales or commercial invoices,
contained in Section 106, from the sale of prepared at least in duplicate, showing
services in Section 108. the date of transaction, quantity,
In establishing the fact that taxable unit cost and description of merchandise
transactions like sale of goods or or nature of service: Provided,
properties or sale of services were made, however, That in the case of sales,
the law provided for invoicing and receipts or transfers in the amount of
accounting requirements, to wit: One hundred pesos (Pl 00.00) or more, or
Section 113. Invoicing and Accounting regardless of the amount, where
Requirements fhr VAT-Registered the sale or transfer is made by a person
Persons. - liable to value-added tax to another
(A) Invoicing Requirements. - A VAT- person also liable to value-added tax; or
registered person shall, for every where the receipt is issued to
sale, issue an invoice or receipt. In cover payment made as rentals,
addition to the information required commissions, compensations or fees,
under Section 23 7, the following receipts or invoices shall be issued
information shall be indicated in the which shall show the name, business
invoice or receipt: style, if any, and address of the purchaser,
( 1) A statement that the seller is a VAT- customer or client: Provided,
registered person, followed further, That where the purchaser is a
by his taxpayer's identification number VAT-registered person, in addition
(TIN); and to the information herein required,
(2) The total amount which the purchaser the invoice or receipt shall further
pays or is obligated to show the Taxpayer Identification Number
pay to the seller with the indication that (TIN) of the purchaser. fa.II/
such amount includes the Decision 11 G.R. No. 191495
value-added tax. The original of
(B) Accounting Requirements. -- each receipt or invoice shall be issued to
Notwithstanding the provisions of Section the purchaser,
233, all persons subject to the value-added customer or client at the time the
tax under Sections 106 and 108 transaction is effected, who, if engaged
shall, in addition to the regular in business or in the exercise of
accounting records required, maintain a profession, shall keep and preserve the
subsidiary sales journal and subsidiary same in his place of business for a period
purchase journal on which the daily of three (3) years from the close
sales and purchases are recorded. The of the taxable year in which
subsidiary journals shall contain such invoice or receipt was issued, while
such information as may be required by the
the Secretary of Finance.

Page 8 of 13
Nippon vs CIR
duplicate shall be kept and preserved by In this instance, Section l 08 of the NIRC
the issuer, also in his place of of 1997, as amended,
business, for a like period. (emphases provides:
supplied) SEC. I 08. Vt1lue-aclcletl
The CT A En Banc held the view that Ttu: 011 Sale of Services and Use or
while Sections 113 and 23 7 used Lease of Properties.-
the disjunctive term "or," it must not be xx xx
interpreted as giving a taxpayer an (C) Determination of the Tax -The tax
unconfined choice to select between shall be computed by
issuing an invoice or an official multiplying the total amount indicated in
receipt. 19 To the court a quo, sales the official receipt by one-
invoices must support sales of goods or -------e-le_v_e_n_th_(_l_/_11_)_(.e mphases
properties while official receipts must supplied) fJJI(
support sales of services.20 19 Rollo. p. 22.
We agree. 20 Id. at 24.
Actually, the issue is no longer novel. 21 747Phil.337(2014).
In AT&T Communications Services Decision 12 G.R. No. 191495
Philippines, Inc. v. Commissioner thus:
(AT&T), 21 we interpreted Sections 106 Comparatively, Section 106 of the same
and 108 in conjunction with Sections Code covers sale of goods,
113 and 23 7 of the NIRC relative to the SEC. 106. Value-added Tax 011 Sale
significance of the difference of Good~ or Properties,-
between a sales invoice and an official xx xx
receipt as evidence for zero-rated (D) Determination of the Tax. - The tax
transactions. For better appreciation, we shall be computed by
simply quote the pertinent multiplying the total amount indicated in
discussion, viz: the invoice by one-eleventh
Although it appears under [Section 113] (I/\ 1). (emphases supplied)
that there is no clear Apparently, the construction of the
distinction on the evidentiary value of an statute shows that the
invoice or official receipt, it is legislature intended to distinguish the use
worthy to note that the said provision is a of an invoice from an official
general provision which covers receipt. It is more logical therefore to
all sales of a VAT registered person, conclude that subsections of a statute
whether sale of goods or services. It under the same heading should be
does not necessarily follow that the construed as having relevance to its
legislature intended to use the same heading. The legislature separately
interchangeably. The Court therefore categorized VAT on sale of goods from
cannot conclude that the general VAT on sale of services, not only by its
provision of Section 113 of the NIRC of treatment with regard to tax but
1997, as amended, intended that also with respect to substantiation
the invoice and official receipt can be used requirements. Having been grouped
for either sale of goods or under Section 108, its subparagraphs, (A)
services, because there are specific to (C), and Section 106, its
provisions of the Tax Code which subparagraphs (A) to (0), have significant
clearly delineates the difference between relations with each other.
the two transactions. xx xx

Page 9 of 13
Nippon vs CIR
Settled is the rule that every part of the goods, debtor or creditor, or person
statute must be considered rendering services and client or
with the other parts. Accordingly, the customer. 25
whole of Section 108 should be read At this point, it is worth mentioning that
in conj unction with Sections 113 and 23 7 the VAT law at issue in
so as to give life to all the Manila Mining was Presidential Decree
provisions intended for the sale of No. 1158 (National Internal
services. There is no conflict between Revenue Code of 1977). That a distinction
the provisions of the law that cover sale of between an invoice and receipt
services that are subject to zero was recognized even as against the NIRC
rated sales; thus, it should be read of 1977 as the legal backdrop is
altogether to reveal the true legislative authority enough to dispel any notion
. 21 intent. - harbored by the petitioner that a
Contrary to the petitioner's position, distinction between the two, with the legal
invoices and official receipts are effects that follow, arose only
not used interchangeably for purposes of after the enactment of R.A. No. 9337. For
substantiating input V AT;23 or, for emphasis, even prior to the
that matter, output VAT. Nippon Express enactment of R.A. No. 9337, which clearly
cites Commissioner v. Manila delineates the invoice and
Mining Corporation (Manila Mining/4 as official receipt, our Tax Code has already
its authority in arguing that the made the distinction.26
law made no distinction between an The Manila Mining case proceeded to
invoice and an official receipt. We have state -
read said case and therein found just These sales invoices or receipts issued by
quite the opposite. The Manila Mining the supplier are
case in fact recognized a difference necessary to substantiate the actual
between the two, to wit: amount or quantity of goods sold and
~2 their selling price, and taken collectively
21 are the best means to prove the
24 input VAT payments. 27
A "sales or commercial invoice" is a While the words "invoice" and "receipt" in
written account of goods sold said decision are
or services rendered indicating the prices seemingly used without distinction, it
charged therefor or a list by cannot be rightfully interpreted as
whatever name it is known which is used allowing either document as
in the ordinary course of substantiation for any kind of taxable sale,
business evidencing sale and transfer or whether of goods/properties or of services.
agreement to sell or transfer goods A closer reading of Manila
and services.""' Mining indeed shows that the question on
Id. at 356-357. whether an invoice is the proper
KEPCO v. CIR, 650 Phil. 525, 542 (20 I 0). documentary proof of a sale of goods or
505 Phil. 650 (2005). properties to the exclusion of an
Decision 13 G.R. No. 191495 official receipt, and vice versa, official
A "receipt" on the other hand is a written receipt as the proof of sale of services
acknowledgment of the to the exclusion of an invoice, was not the
fact of payment in money or other pivotal issue.
settlement between seller and buyer of

Page 10 of 13
Nippon vs CIR
It was in Kepco Philippines Corporation v. neither does the law intend the two to be
Commissioner (Kepco/8 used alternatively. 29
that the Court was directly confronted In Kepco, the taxpayer tried to
with the adequacy of a sales invoice substantiate its input VAT on
as proof of the purchase of services and purchases of goods with official
official receipt as evidence of the receipts and on purchases of services with
purchase of goods. The Court initially invoices. The claim was appropriately
cited the distinction between an denied for not complying with the
invoice and an official receipt as expressed required standard of substantiation. The
in the Manila Mining case. We Court reasoned that the invoicing
then declared for the first time that a VAT and substantiation requirements should
invoice is necessary for every sale, be followed because it is the only
barter or exchange of goods or properties way to determine the veracity of the
while a VAT official taxpayer's claims. Unmistakably, the
receipt properly pertains to every lease of indispensability of an official receipt to
goods or properties, and for every substantiate a sale of service had
sale, barter or exchange of services. Thus, already been illustrated jurisprudentially
we held that a VAT invoice and a as early as Kepco.
VAT receipt should not be confused as The doctrinal teaching in Kepco was
referring to one and the same thing; further reiterated and applied in
the law did not intend the two to be used subsequent cases.
alternatively. We stated"'1 Thus, in Luzon Hydro Corp. v.
25 Id. at 665. Commissioner,30 the claim for
26 AT & T Communications Services refund/tax credit was denied because the
Philippines, Inc. v. Cf R, supra note 21 at proof for the zero-rated sale
335. consisted of secondary evidence like
27 Supra note 24 at 666. financial statements.
28 Supra note 23. Subsequently, in AT&T, 31 the Court
Decision 14 G.R. No. 191495 rejected the petitioner's assertion
[T]he VAT invoice is the seller's best proof that there is no distinction in the
of the sale of the goods evidentiary value of the supporting
or services to the buyer while the VAT documents; hence, invoices or receipts
receipt is the buyer's best evidence may be used interchangeably to
of the payment of goods or services substantiate VAT. Apparently, the
received from the seller. Even though taxpayer-claimant presented a number of
VAT invoices and receipts are normally bank credit advice in lieu of valid VAT
issued by the supplier/seller alone, official receipts to demonstrate its
the said invoices and receipts, taken zero-rated sales of services. The CT A
collectively, are necessary to denied the claim; we sustained the
substantiate the actual amount or denial.
quantity of goods sold and their selling Then, in Takenaka Corporation-
price (prool ol transaction), and the best Philippine Branch v. Commissioner,32
means to prove the input VAT the proofs for zero-rated sales of services
payments (proof of payment). Hence, VAT were sales invoices. The claim
invoice and VAT receipt was likewise denied.
should not be confused as referring to one Most recently, in Team Energy
and the same thing. Certainly, Corporation v. Commissioner of

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Nippon vs CIR
Internal Revenue/Republic of the sales of services. Likewise, there is no
Philippines v. Team Energy Corporation,33 need to pass upon the issue on
:e sustained the CTA En Bane's whether sales invoices or documents other
disallowance of the petitioner's claim for!'/ than official receipts can support
- Id. at 542. a sale of service considering the CTA's
10 721 Phil. 202(2013). lack of jurisdiction. Even so, we
11 Supra note 21. find that VAT official receipts are
11 G.R. No. 193321, indispensable to prove sales of services
190ctober20l6,806SCRA485. by a VAT-registered taxpayer.
r ' G.R. Nos. 197663 & 197770, 14 March Consequently, the petitioner is not entitled
2018. to
Decision 15 G.R. No. 191495 the claimed refund or TCC.
input taxes after finding that the claimed WHEREFORE, for lack of jurisdiction,
input taxes on local purchase of the 5 December 2008
goods were supported by documents other Decision and 5 May 2009 Resolution of the
than VAT invoices; and, Court of Tax Appeals Second
similarly, on local purchase of services, by Division in CTA Case No. 7429, and the
documents other than VAT 15 December 2009 Decision of the
official receipts. Court of Tax Appeals En Banc in CT A-EB
Irrefutably, when a VAT-taxpayer claims Case No. 492, are
to have zero-rated sales of hereby VACA TED and SET ASIDE.
services, it must substantiate the same SO ORDERED.
through valid VAT official receipts, 34 Petition for Review, rollo, p. 57; see
not any other document, not even a sales also Decision of the CTA Second Division,
invoice which properly pertains to dated 5 December
a sale of goods or properties. 2008, rollo, p.137.
In this case, the documentary proofs Decision 16
presented by Nippon Express to WE CONCUR:
substantiate its zero-rated sales of PRESBITER<)1J. VELASCO, JR.
services consisted of sales invoices and As~-'6"ciate Justice
other secondary evidence like transfer hairperson
slips, credit memos, cargo manifests, ATTESTATION
and credit notes.34 It is very clear that G.R. No. 191495
these are inadequate to support the I attest that the conclusions in the above
petitioner's sales of services. Decision had been reached in
Consequently, the CT A, albeit without consultation before the case was assigned
jurisdiction, correctly ruled that Nippon to the writer of the opiofun of the
Express is not entitled to its claim. Court's Division.
In sum, the CT A did not acquire J. VELASCO, JR.
jurisdiction over Nippon Express' Decision 17 G.R. No. 191495
judicial claim considering that its petition CERTIFICATION
was filed beyond the mandatory Pursuant to Section 13, A11icle VIII of the
30-day period of appeal. Logically, there is Constitution and the
no reason to allow the petitioner Division Chairperson's Attestation, I
to submit further evidence by way of certify that the conclusions in the
official receipts to substantiate its zerorated above Decision had been reached in
consultation before the case was

Page 12 of 13
Nippon vs CIR
assigned to the writer of the opinion of the az:
Court's Division. ANTONIO T. CARPIO
Divi·if ·.~) SI It (~' ~~~\:-.r . il·rl< , · •" Senior Associate Justice
l h fr d l>. . ) r < o ,, , .... (Per Section 12, R.A. No. 296,
I\' I•·• ' ·' 1011 The Judiciary Act of 1948, as amended)
AUG l 7 2018

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