DOLE Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

CUI-DAVID, J.:

-}{ Before this Court is a Petition for Review filed on November 13, 20 19 by petitioner Dole Philippines, Inc. 1 ("Petitioner"), against respondent Commissioner of Internal Revenue ("CIR" or "Respondent"), under Section 3(a), Rule 8, 2 in relation to Section 3(a)(¹), Rule 43 of the Revised Rules of the Court of Ta}{ Appeals 4 ("RRCTA"), praying that judgment be rendered ordering respondent to refund petitioner the denied portion of its claim for refund of unutilized input value-added ta}{ ("VAT") attributable to zero-rated sales for the period from April 1, 2017 to March 31,2018 in the aggregate amount ofP325,271,543.33. ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

THE PARTIES

Petitioner Dole Philippines, Inc. is a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal address at Cannery Site, Cannery, Polomolok, Sarangani Economic Development Zone, South Cotabato.s Petitioner's primary purpose is "to acquire, own, lease, hold, cultivate, develop, operate and maintain agricultural lands, grazing lands, farms, plantations, orchards and, gardens, cattle and other ranches, and to plant, grow, cultivate and harvest pineapples and other agricultural crops and raise and breed cattle and other kinds of animals therein and thereon; to produce, process, can, manufacture, freeze, preserve, refine, pack, buy and sell and otherwise deal in and with said cattle, other animals, pineapples, other agricultural crops, and other products of the land, including the products and by-products thereof, and for such and be such purposes to acquire, construct, lease, own, maintain and operate cold storage plants, slaughter houses, canneries, mills, factories, railroads, airplanes, ships, lighters, docks, piers, warehouses, storage and shipping facilities, buildings, structures and works of all kinds, wireless plants, instruments and apparatus, and all machinery, equipment and appliances which may be required, needed or used in connection therewith, for making manufacturing, storing, maintaining and transporting its crops, supplies, products and other property, and for other purposes incidental to any of its business; and to acquire, construct, maintain and operate pumping plants, irrigation systems and other works for the development, conservation, storage, transmission and utilization of water, including artesian wells, shafts, tunnels, pipe lines, ditches, flunes, dams, reservoirs and other works, and to do all of the things incidental to or proper in the business of acquiring water for its own use. "6 It is registered with the Bureau of Internal Revenue ("BIR") as a VAT-registered taxpayer with Tax Identification Number ("TIN") 000-428-573.7 Its branches throughout the Philippines are likewise cegisteced with the B!R.' ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Respondent

Commissioner of Internal

Revenue

is empowered to perform the duties of his office, including acting upon on protest cases and approval of claims for refund or tax credit as provided by law and implementing regulations. He can be served with notices at BIR National Office Bldg., BIR Road, Diliman, Quezon City.9

THE FACTS

On June 28, 2019, petitioner filed an Application for Tax Credits 1 Refunds (BIR Form No. 1914), 10 with a Sworn Statement executed by Ms. Rhodora U. Cagampan, 11 under Section 112 of the National Internal Revenue Code ("NIRC") of 1997, as amended, for the refund of VAT, in the amount of P1,218,800,809.92 for the period from April 1, 2017 to March 31, 2018 with the BIR's VAT Credit Audit Division ("VCAD"). On October 16, 2019, petitioner received the VAT Refund Notice12 dated August 29, 2019, and Tax Verification Notice No. TVN2018000083093 13 dated June 28, 2019, issued by respondent, partially granting petitioner's administrative claim in the amount of"P893,529,266.59. Petitioner filed a Petition of Review on November 13, 2019. 14 On January 31, 2020, within the extended time granted by the Court, 15 respondent filed his Answer.16 The Pre-Trial Conference was initially set on February 27, 2020. 17 However, on February 13, 2020, petitioner filed a Motion to Reset Pre-Trial Conference, 18 which the Court granted. 19 Petitioner's Pre-Trial Brief was filed on June 23, 2020,20 Respondent's Pre-Trial Briefwas submitted on June 26, ~ 9 Par. 3.², Petition for Review, Docket- Vol. I, p. 8. 10 Exhibit "P-68", Docket- Vol. II, pp. 954 to 955. 11 Exhibit "P-70". Docket- Vol. II, p. 970. 12 Exhibits "P-73-A" and "P-73-B", Docket- Vol. II, pp. 974 to 975. ll Exhibit "P-73", Docket- Vol. II, p. 973. 14 Docket- Vol. I, pp. 6 to 36. 15 Respondent's Motion for Extension ofTime to File Answer, Docket- Vol. I, pp. 193 to 196; Order dated December 9, 2019, Docket- Vol. I, p. 198; Respondent's Motion for Additional Time to File Answer, Docket- Vol. I, pp. 199 to 202; Order dated January 8, 2020, Docket- Vol. I, p. 204. "Docket- Vol. I, pp. 206 to 215.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

2020.21 The Pre-Trial Conference was eventually held on June 29, 2020.22 On July 20, 2020, petitioner filed a Manifestation, 23 stating that the parties have disagreed on certain stipulations of issues; thus, they will no longer file a Joint Stipulation of Facts and Issues. In the Resolution dated July 29, 2020,24 the Court noted the Manifestation.

On September 8, 2020, respondent transmitted the BIR Records of this case, consisting of one (1) folder, consecutively numbered as pages 1 to 58.25 The trial ensued, wherein the parties presented their respective documentary and testimonial evidence. Petitioner offered the testimonies of the following individuals, namely: (1) Mr. Rhodora U. Cagampan, 26 Tax Manager of Dole Asia Company Ltd.; and (2) Ms. Sonia D. Segovia,27 the Court-commissioned independent certified public accountant ("ICPA").28 The Report of the !CPA was submitted on January 12, 2021, consisting of eight (8) binders.29 Petitioner filed its Formal Offer of Evidence on February 26, 2020.30 On March 5, 2021, respondent posted a Motion to Admit Attached Comment on Petitioner's Formal Offer of Evidence. 31 In its Resolution dated March 22, 2021, 32 the Court granted the Motion and admitted the attached Comment/ Opposition (to Petitioner's Formal Offer of Evidence) with Manifestation. 33 v " Docket- Vol. I, pp. 560 to 563. 22 Order dated, and Minutes of the hearing held on, June 29,2020, Docket~ Vol. II, pp. 564 to 565. 23 Docket~ Vol. II, pp. 583 to 584. 24 Docket~ Vol. II, p. 592. 25 Docket~ Vol. II, pp. 6 I 0 to 612. "Exhibit "P-75", Docket~ Vol. I, pp. 270 to 559; Minutes of the hearing held on, and Order dated, October 14, 2020, Docket~ Vol. II, pp. 626 to 627. 27 Exhibit "P-4 70", Docket~ Vol. II, pp. 655 to 702; Minutes of the hearing held on, and Order dated, February I, 202 I, Docket~ Vol. II, pp. 703 to 704. 28 Oath a/Commission dated October 14, 2020, Docket- Vol. II, p. 628; Minutes of the hearing held on, and Order dated, October 14, 2020, Docket~ Vol. II, pp. 626 to 627. "Exhibit "P· 77-A".

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In the Resolution dated July 12, 2021, 34 the Court admitted petitioner's offered exhibits, except for the following: 1 Exhibits "P-1" "P-2" "P-2-A" "P-3" "P-3-A" to "P- .

' ' ' '

3-Z" "P-11" "P-11-A" to "P-11-C" "P-12" "P-13-

, ' ' ' A", "P-13-B", "P-54" to "P-65", "P-68", "P-69", "P- 71" to "P-73", and "P-74", for failure to submit the duly marked exhibits with the indication that the same are accordingly the original computer print- out, certified true copies or faithful reproduction of the originals; and

2. Exhibit "P-88-ae", "P-1 05-abl", "P-1 05-aew", "P- 248-aw" "P-251-ak" "P-315-a" "P-334-b" "P- ' ' ' ' 334-d" "P-441-wo" "P-441-agb" "P-442-em" "P- ' ' ' ' 442-ig", "P-442-pe", "P-442-aag", "P-442-acq", and "P-442-aml", as the foregoing documents could not be found in the USB containing the softcopies of the exhibits identified in the I CPA Report. Consequently, on August 3, 2021, petitioner filed a Motion for Partial Reconsideration to the Resolution dated July 12, 2021, 35 praying that this Court admit the denied exhibits. Respondent filed his Manifestation on November 24, 2021.36 In the Resolution dated February 14, 2022, 37 the Court granted petitioner's Motion for Partial Reconsideration and admitted Exhibits "P-1" "P-2" "P-2-A" "P-3" "P-3-A" to "P-3- , ' ' ' Z", "P-11", "P-11-A" to "P-11-C", "P-12", "P-13-A", "P-13-B", "P- 54" to "P-65" "P-68" "P-69" "P-71" to "P-73" "P-74" "P-88-ae" ' ' ' ' ' ' "P-105-abl", "P-105-aew", "P-248-aw", "P-251-ak", "P-315-a", "P-334-b" "P-334-d" "P-441-wo" "P-441-agb" "P-442-em" "P- ' ' ' ' ' 442-ig", "P-442-pe", "P-442-aag", "P-442-acq", and "P-442-aml". In the meantime, respondent, for his part, offered the testimony of Revenue Officer ("RO") Daniel Carlo C. Perez;;

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Respondent's Formal Offer of Evidence was filed on December 1, 2021.39 Petitioner filed its Comment/ Opposition (To the Respondent's Formal Offer of Evidence). 40 In the Resolution dated February 14, 2022,41 the Court admitted all respondent's offered exhibits. On March 8, 2022, respondent filed his Memorandum, 42 while petitioner filed its Memorandum on March 9, 2022.43 The present case was submitted for decision on March 14, 2022.44 However, on March 28, 2022, petitioner filed an Urgent Motion to Re-Open the Case. 45 Respondent failed to file his comment/ opposition thereon. 46 In the Resolution dated June 16, 2022,47 the Court denied petitioner's Urgent Motion to Re-Open the Case for lack of merit and submitted the present case for decision anew. Hence, this Decision.

THE ISSUE

Petitioner raised the following issue for the resolution of

the Court:

WHETHER PETITIONER IS ENTITLED TO THE DENIED

PORTION OF CLAIM FOR REFUND ON THE EXCESS AND

UNUTILIZED INPUT VALUE-ADDED TAX (VAT) FOR THE

PERIOD APRIL 1, 2017 TO MARCH 31,2018 AMOUNTING TO 1'325,271,543.33.

PETITIONER'S ARGUMENTS

Petitioner argues that it is a VAT-registered taxpayer whose sales are entitled to VAT zero-rating. 48 Petitioner cites 39 Docket- Vol. II, pp. I 036 to I 040. 40 Docket- Vol. II, pp. 1042 to 1043. "Docket- Vol. II, pp. 1046 to 1048. 42 Docket- Vol. II, pp. 1049 to 1057. 43 Docket- Vol. II, pp. 1059 to 1099. 44 Resolution dated March 14,2022, Docket- Vol. II, p. I 101. 45 Docket- Vol. II, pp. I 102 to I 104. 46 Records Verification dated June 7, 2022 issued by the Judicial Records Division of this Court, Docket- Vol. II, p. I 126.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Section 1 06(A)(2)(a) of the NIRC of 1997, as amended, as the legal basis for its zero-rating. 49 Petitioner further avers that it had unutilized and unapplied input tax credits from April 1, 20 17 to March 31, 2018 directly attributable to its zero-rated sales in the aggregate amount of Pl,218,800,809.92.50 Petitioner also claims that it timely filed its administrative claim for refund within the two- year prescriptive period,51 and that it timely filed its Petition for Review with the Court. 52 Petitioner then argues that it should have been refunded the denied portion ofP325,271,543.33 covering the period from April 1, 2017 to March 31, 2018.53 It states that respondent erred in imputing output VAT from its zero-rated sales to Board of Investments ("BOI"), Subic Bay Metropolitan Authority ("SBMA"),

and Clark Development Corporation

("CDC")

enterprisess4 as they are allegedly properly classified as zero- rated sales under Revenue Regulations ("RR") No. 16-2005, as amended. Petitioner likewise impugns respondent's allocation of additional input VAT amounting to 1"51,333.07 to alleged unremitted export sales.ss Petitioner further assails respondent's findings that it overclaimed input

VAT

amounting to 1"2,404,031.31, contending that petitioner only claimed input taxes properly substantiated with official receipts and invoices. 56 Petitioner assails respondent's findings that it claimed input VAT amounting to P22, 146,144.05 that is out of period and argues that these were incurred from April 1, 20 17 to March 31, 2018.57 Petitioner assails the disallowance ofP754, 178.95 of its input VAT for allegedly being purchases from non-VAT registered suppliers based on the verification of the Integrated Tax System ("ITS"), contending that these are supported by invoices and official receipts from VAT-registered suppliers. sa 49 /d., p. 8.

50 !d., p. 8.

51 !d., p. 9.

52 /d., p. 12.

53 !d., p. 13.

"!d., p. 15.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Further, petitioner claims that, contrary to respondent's findings, t-686,204.43 of its input VAT were from petitioner's suppliers who were properly issued with Authority to Print,59 t-949,485.63 of its input VAT were evidenced by invoices and official receipts that are readable,60 t-52,409.19 of its input VAT were not claimed twice,6 1 t-402,274.97 of its input VAT were evidenced by official receipts and invoices in which the Authority to Print is indicated,62 t-56,544.48 of its input VAT and t-40,077.44 of its final withholding

VAT

were substantiated,63 t-61,520.00 of its input VAT were separately billed in the Bureau of Customs ("BOC") Statement of Settlement of Duties and Taxes ("SSDT"),64 t-15,186,044.55 of its input VAT were collaborated [sic] with other supporting documents despite the fact that the invoices contained alterations, 65 t-1,382,553.27 of its input VAT were not overclaimed but "pertain to the difference between the petitioner's actual amount of input VAT allocable to exempt sales per VAT returns versus VCAD's computed allocation of input VAT on exempt sales"66, and P2,933,642 of its input VAT on importation were properly supported with sales invoice, import entry, and other documents showing actual payment of VAT.67 Petitioner further argues that the imposition of the compromise penalty amounting to P12,500.00 is improper considering that the same is without its conformity. 58 However, petitioner agrees with the finding of respondent that input tax in the amount of P1,075,123.00 pertains to the bond already refunded by the BOC69 and that its deferred input VAT amounting to P5, 144,460.88 should be disallowed. 70 59 !d., p. 26.

60 !d., p. 26.

61 !d., p. 26.

62 !d., p. 27.

63 !d., p. 27.

"!d., p. 27.

65 !d., pp. 27-28.

60 !d., p. 28.

67 !d., p. 29.

68 !d., pp. 28-29.

69 !d., p. 27.

70 !d., p. 28.

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

RESPONDENT'S ARGUMENTS

Respondent argues that petitioner failed to comply with the mandatory requirements for claiming a refund or tax credit. 71 According to respondent, petitioner's input VAT on Big Ticket purchases in the amount ofP973,750 was disallowed for failure to attach supporting documents, such as a debit note or sales invoice, for being supported by altered invoices, and for being out-of-period.72 Respondent also posits that petitioner's input tax on importations in the amount of P2,933,642 was likewise disallowed for failure to present the corresponding invoices and/or out-of-period SSDT.73 Respondent states that petitioner has additional over- claimed input VAT in the amount of P1,382,553.27 pertaining to the discrepancy on input tax claimed based on Net Available Input Tax per VAT returns of fiscal year ("FY") 2018 as against the Application for Tax Credits/Refunds (BIR Form No. 1914).74 According to respondent, petitioner's zero-rated sales were not properly substantiated, resulting in an allocated and disallowed input tax amount of P18,409,246.48.75 Finally, respondent states that refund claims are construed strictly against the claimant for the same partake of the nature of exemption from taxation and, as such, they are looked upon with disfavor.76

THE COURT'S RULING

The Petition for Review is partly meritorious. The Court has iurisdiction over the instant Petition.

Before proceeding to the merits of the case, We shall determine whether the Court has jurisdiction to take cognizance of this case.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Section 7(a)(1) of Republic Act ("RA") No. 9282, 77 amending RA No. 1125,78 provides that: Section 7. Jurisdiction.- The CTA 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 [Emphasis and underscoring supplied.] The above provision is implemented by Section 3(a)(1), Rule 4 of the RRCTA,79 to wit: Section 3. Cases within the jurisdiction of the Court in Division. -The Court in Division shall exercise:

(a) Exclusive original or appellate jurisdiction to review by appeal the following:

(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 [Emphasis and underscoring supplied.] The records show that on October 16, 2019, petitioner received the VAT Refund NoticeBO dated August 29, 2019, and Tax Verification Notice No. TVN201800008309381 dated June 28, 2019, issued by respondent, partially granting petitioner's administrative claim in the amount of P893,529,266.59. Under Section 3(a), Rule 882 of the RRCTA, petitioner had 77 An Act Expanding the Jurisdiction of the Court ofT ax 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 ofT ax Appeals, and for Other Purposes, 30 March 2004. 78 An Act Creating the Court of Tax Appeals, June 16, 1954. 79 A.M. No. 05-ll-07·CTA, November 22, 2005. 80 Annex "A", Petition for Review. 81 Annex "B". Petition for Review. 82 Section 3. Who May Appeal; Period to File Petition. -(a) A party adversely affected by a decision, ruling or the inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and

Dole Philippines, Inc. v. Commissioner of Internal Revenue thirty (30) days from receipt of the partial denial on October 16, 2019, or until November 15, 2019, to file a Petition for Review before the CTA.

Petitioner timely filed its Petition of Review on November 13, 2019.83 Having settled that the Petition was timely filed, We likewise rule that the Court has the requisite jurisdiction to take cognizance of this Petition under Section 3(a)(1), Rule 484 of the RRCTA.

We now proceed to the merits of the case. Section 112(A) and (C) of the NIRC of 1997, as amended, provides:

SEC. 112. Refunds or Tax Credits of Input 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, except 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 Section 108 (8)(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. Provided, finally, That for a person making sales that are zero-rated under Section 108(8) (6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales.

\. •• / Industry, the Secretary of Agriculture, or a Regional Trial~~ in the exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days after receipt of a copy of such decision or ruling, or expiration of the period fixed by Jaw for the Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the Commissioner of Internal Revenue on claims for refund of internal revenue taxes erroneously or illegally collected, the taxpayer must file a petition for review within the two-year period prescribed by law from payment or collection of the taxes. 83 Docket- Vol. I, pp. 6 to 36. 84 Section 3. Cases Within the Jurisdiction of the Court in Divisions. The Court in Divisions shall exercise:

(a) Exclusive original or appellate jurisdiction to review by appeal the following: ( 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.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(B) ...

(C) Period within which Refund of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund for creditable input taxes within ninety (90) days from the date of submission of the official receipts or invoices and other documents in support of the application filed in accordance with Subsections (A) and (B) hereof: Provided, That should the Commissioner find that the grant of refund is not proper, the Commissioner must state in writing the legal and factual basis for the denial. In case of full or partial denial of the claim for tax refund, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim, appeal the decision with the Court of Tax Appeals: Provided, however, That failure on the part of any official, agent, or employee of the BIR to act on the application within the ninety (90)-day period shall be punishable under Section 269 of this Code. Based on the foregoing and as culled from jurisprudence, particularly Commissioner of Internal Revenue vs. Toledo Power Co.,85 the requisites for claiming unutilized or excess input VAT under Section 112 of the NIRC of 1997, as amended, are as follows:

As to the timeliness of the filing of the administrative and judicial claims:

1. The claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;86

2. In case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of [90] days, the judicial claim shall be filed with this Court within 30 days from receipt of the decision or after the expiration of the said [90]- day period;B7 Concerning the taxpayer's registration with the BIR:

3. The taxpayer is a VAT-registered person;BB 85 G.R. Nos. 195175 & 199645, 10 August 2015, 766 SCRA 20-33. 86 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 155732, April27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc., G.R. No. 182364,³ August 2010. 87 Steag State Power, Inc:. (Formerly State /'ower Development C01poration) vs. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo Semiconductor Philippines vs. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015. 88 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In relation to the taxpayer's output VAT:

4. The taxpayer is engaged in zero-rated or effectively zero-rated sales;B9

5. For zero-rated sales under Sections 106 (A) (2) (1) and (2); 106 (B); and 108 (B) ( 1) and (2) of the NIRC of 1997, as amended, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with the Bangko Sentral ng Pilipinas ("BSP") rules and regulations;9° As regards the taxpayer's input VAT being refunded:

6. The input taxes are not transitional;91

7. The input taxes are due or paid;92

8. The input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;93 and

9. The input taxes have not been applied against output taxes during and in the succeeding quarters.94 We discuss each requisite in seriatim. First and second requisites:

Petitioner's

administrative and fudicial claims for refund were timely filed.

The first requisite pertains to filing the claim for a tax credit or refund of input VAT before the BIR within two (2) years from the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. 89 !d.

90 !d.

91 !d.

'12 !d.

93 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 94 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In the present case, petitioner seeks to refund its unutilized input taxes attributable to its VAT zero-rated sales for the four taxable quarters or for the period covering from April 1, 2017 to March 31, 2018.

Counting two years from the close of the subject taxable quarters, petitioner had until the following dates to file its administrative claim:

Close ofthe

Last Day to File

Period Covered

Taxable Quarter

Administrative

Claim

l"t Quarter

(April 1 to June

June 30, 2017 June 30, 2019 30, 2017) 2nd Quarter

(July 1 to

September 30, 2017 September 30, 2019 September 30, 2017) ard Quarter

(October 1 to

December 31, 2017 December 31, 2019 December 31, 2017 4th Quarter

(January 1 to

March 31, 2018 March 31, 2020 March 31, 2018) Records reveal that on June 28, 2019, petitioner filed an Application for Tax Credits / Refunds (BIR Form No. 1914)95 with a Sworn Statement executed by Ms. Rhodora U. Cagampan.96 Accordingly, We rule that the administrative claim for refund was seasonably filed. The second requisite is to the effect that the judicial claim for refund must have been filed within thirty (30) days from receipt of respondent's decision or after the expiration of the ninety (90)-day period under the afore-quoted Section 112(C) of the NIRC of 1997, as amended. Notably, under Section 4.108-5 of RR No. 13-2018,97 all applications filed from January 1, 2018 shall be processed and decided within ninety (90) days from the filing of the VAT 95 Supra at note 10.

'··I 96 Supra at note II.

~ 97 Regulations Implementing the VAT Provisions under the RA No. 10963, Further Amending RR No. 16-2005, as Amended, March 15, 2018.

Dole Philippines, Inc. v. Commissioner of Internal Revenue refund application, while those filed before January 1, 2018, shall still be governed by the one hundred twenty (120) days processing period.

In this case, from filing petitioner's administrative claim on June 28, 2019, respondent had ninety (90) days, or until September 26, 2019,98 to act on the claim. Records show that on August 29, 2019, or before the lapse of the 90 days, respondent issued the VAT Refund Notice partially denying petitioner's administrative claim. However, petitioner received the VAT Refund Notice dated August 29, 2019 only on October 16, 2019;99 thus, it had 30 days from October 16, 2019 or until November 15, 2019, to file a judicial claim. Petitioner timely filed its judicial claim via the present Petition for Review 1oo on November 13, 2019.

Based on the foregoing, petitioner has complied with the first and second requisites. Third requisite: Petitioner is a VAT-registered entity.

In determining whether petitioner is VAT-registered, reference may be made to its BIR Certificate of Registration (BIR Form No. 2303).

A perusal of petitioner's Certificates of Registration for its Head Office 10 1 and its branches 102 indeed reveals that it is a VAT-registered taxpayer. As this is undisputed, We rule that the third requisite has been complied with. Having settled that petitioner is a VAT-registered taxpayer, and its administrative and judicial claims have been timely filed, We now proceed to determine whether it is entitled to its claim for refund of unutilized input VAT attributable to zero-rated sales.

98 The 90'" day from June 28, 2019 is September 26, 2019; Exhibits "P-73-A" and "P-73-B", Docket- Vol. I, pp. 556 to 557.

<}Q Par. 2.3, Petition for Review, Docket --Vol. I, p. 7; Exhibits "P-73-A" and "P-73-B", Docket- Vol. I, pp. 556 to 557. 100 Docket- Vol. I, pp. 6 to 35. 101 Supra at note 7.

102 Supra at note 8.

Type

Vatable

p

Sales

Zero

Rated

Sales

Exempt

Sales

Total

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Fourth and Rfth requisites: Petitioner had zero-rated sales or effectively zero-rated sales from April 1, 2017 to March 31, 2018 but only in the amount of ?31,384,368,317.33.

The fourth and fifth requisites require that the taxpayer be engaged in zero-rated or effectively zero-rated sales. For zero- rated sales under Sections 106(A)(2)(a)(1), (2) and (b), and 108(8)(1) and (2), of the NIRC of 1997, as amended, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations. In its Amended Quarterly VAT Returns for the period covering April 1, 2017 to March 31, 2018, petitioner reported total sales of P36,785,576,550.64, which include vatable sales amounting to P2,660,376,823.43, zero-rated sales amounting to P33,665, 195,868.50, and exempt sales amounting to P460,003,858.71, as shown below: lat Quarter 2"d Quarter

3"' Quarter

4"' uarter Exhibit "P-450-c"

Exhibits "P-29"103

Exhibits "P-35"104 and

Exhibit "P-450-k"

Total

and "P-450-e" "P-450-g" 482,892,177.20 p 530,575,094.07 p 1,098,117,625.79 p 548,791,926.37 p 2,660,376,823.43 7,595,583,535.40 8,0 16,662,548.70 9,057,437,267.87 8,995,512,516.53 33,665,195,868.50 99,800,626.19 106,274,290.52 138,792,991.18 115,135,950.82 460,003,858.71 1'8 178 276 338.79 P8 653,511,933.29 PlO 294 347,884.84 P9 659 440,393.72 P36 785 576,550.64 Petitioner alleged that its zero-rated sales were derived from its export sales of goods to Dole Asia Holdings Pte. Ltd. 105 ("DAH") and sales to export-oriented entities registered with the BOI, SBMA, PEZA, and CDC, 106 which were paid for in acceptable foreign currency and accounted for in accordance with the BSP rules and regulations, during the period April 1, 2017 to March 31, 2018, under Section 106(A)(2)(a)(1) and (5) of the NIRC of 1997, as amended, to wit:

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Customer

BOI/SBMA/

Amount

CDC Re~~:istered Century Pacific Agricultural Ventures,

BOI

1'40,744,193.57 Inc.

General Tuna Corporation

BOI

2,920,155.24

General Tuna Corporation

BOI

115,280.00

Hi-Las Marketing Corporation

BOI

46,134.01

Philbest Canning Corporation

BOI

2,065,000.00

Amley Food Corporation

BOI

17,800.00 Gem Foods International, Inc.

SBMA

1,277,796.65 Millbrae Exports, Inc.

CDC

2,095,710.00 Millbrae Exports, Inc.

CDC

(⁴,040.00)107

Total Zero-rated Sales to Export

p 49,278,029.47108

Oriented Entities

Non-Resident

Dole Asia Holdings ("DAH") Pte. Ltd.

Foreign

33,615,800,744.79109

Corporation

Total Zero-rated Sales

P33,665,078, 744.26

Total Zero-rated Sales per VAT Return

P33,665, 195,868.50

Difference

(P

117 ,094.24) As can be gleaned from the table above, the total zero-rated sales accounted for is lower than the P33,665, 195,868.50 zero- rated sales declared per amended Quarterly VAT return by P117,094.24. Ms. Sonia D. Segovia, the Court-commissioned !CPA, noted in her report that the difference of Pll7 ,094.24 between the total zero-rated sales in the Summary List of Sales ("SLS") 110 amounting to P33,665, 195,868.50 and Schedule of

Zero-Rated

Sales

of

Goods

111 amounting to P33,665,078,774.26, pertains to Corrugated Sales which was declared in both regular VAT-subject sales and zero-rated sales in the SLS. 11 2 Thus, the zero-rated sales declared per VAT return were overstated.

Accordingly, only the total amount of P33,665,078,744.26 will be considered and be subjected to further scrutiny, while the Pll7 ,094.24 export sales will automatically be disallowed VAT zero-rating absent any document supporting the same. The relevant provision in determining whether petitioner's sales are subject to VAT at zero percent (0%) is Section 106(A)(2)(a)(1) and (⁵) of the NIRC of 1997, as amended, as quoted hereunder for easy reference: ~ 107 Exhibit "P-162-a"; Pertains to Sales Returns and Adjustment, hence, deducted. 10M Petition for Review, Docket- Vol. I, pp. 20 to 21.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"SEC. 106. Value-Added Tax on Sale of Goods or Properties. -

(A)

Rate and Base of Tax. - 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:

(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

(5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws." Relative thereto, Section 4.106-5 ofRR No. 16-2005,113 as amended by RR No. 4-2007,1 14 provides: "SEC. 4.106-5. Zero-Rated Sales of Goods or Properties. The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: (a) Export Sales. - 'Export Sales' shall mean:

(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported, paid for in acceptable foreign currency or its equivalent in goods and services, and accounted for in accordance with the rules and regulation of the Bangko Sentral ng Pilipinas (BSP); 113 Consolidated Value-Added Tax Regulations of2005, September I, 2005. 114 Amending Certain Provisions of Revenue Regulations No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of2005, February 7, 2007.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(5)

Transactions

considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987 and other special laws. ·considered export sales under Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That pursuant to EO 226 and other special laws, even without actual exportation, the following shall be considered constructively exported: (1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones pursuant to Republic Act (RAJ Nos. 7916. as amended. 7903, 7922 and other similar export processing zones; (3) sale to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority pursuant to RA 7227: (4) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); @ sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not. 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 re-issued by the BOI." [Underscoring supplied} Moreover, petitioner must comply with the pertinent invoicing requirements, containing all the required information under Section 113(A) and (B) of the NIRC of 1997, as amended, to wit:

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons.- (A) Invoicing Requirements. - A VAT-registered person shall issue:

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

(B) Information Contained in the VAT Invoice or VAT Official Receipt. - The following information shall be indicated in the VAT invoice or VAT official receipt:

(1) A statement that the seller IS a VAT- registered person, followed by his taxpayer's identification number (TIN);

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value- added tax: Provided, That:

(a) The amount of the tax shall be shown as a separate item in the invoice or receipt;

(b) If the sale is exempt from value- added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt;

(c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt; (d)

If the

sale involves goods, properties or services some of which are subject to and some of which are VAT zero- rated or VAT-exempt, the invoice or receipt shall clearly indicate the breakdown of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated component of the sale.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and

(4) In the case of sales in the amount of One thousand pesos (1"1,000.00) or more where the sale or transfers is made to a VAT -registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer, or client." [Emphasis supplied.] The above provision on invoicing requirement is further implemented by Section 4.113-l(A) and (B) of RR No. 16- 2005,115 as amended, to wit: SEC. 4.113-1. Invoicing Requirements. - (A) A VAT-registered person shall issue:-

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT-registered persons are required to print their TIN followed by the word "VAT" in their invoice or official receipts. Said documents shall be considered as a "VAT Invoice" or "VAT official receipt". All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax. VAT invoice/ official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt. - The following information shall be indicated in VAT invoice or VAT official receipt:

(1) A statement that the seller is a VAT-registered person, followed by his TIN;

(2) The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That:

(a) The amount of tax shall be shown as a separate item in the invoice or receipt;

(b) If the sale is exempt from VAT, the term "VAT- exempt sale" shall be written or printed prominently on the invoice or receipt;

115 Supra at note 113.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(c) If the sale is subject to zero percent (0%) VAT, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt;

(d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero- rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the VAT on each portion of the sale shall be shown on the invoice or receipt. The seller has the option to issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale.

(3) In the case of sales in the amount of one thousand peso (Pl,OOO.OO) or more where the sale or transfer is made to a VAT- registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section. In addition to the above requirements, the sales invoices ("Sis") and official receipts ("ORs") must be duly registered with the BIR as prescribed under Section 237, in relation to Section 238 of the NIRC of 1997, as amended, to wit: SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale or 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 description of merchandise or nature of service ..... SEC. 238. Printing of Receipts 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. [Underscoring supplied] Thus, only the sales of goods or services supported by the Sis and ORs, having the required information, shall qualify for VAT zero-rating.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Export Sales of goods to DAH Based on the foregoing, for petitioner's export sales of goods to qualify as zero-rated pursuant to

Section

106(A)(2)(a)( 1) of the NIRC of 1997, as amended, the following essential elements must be present:

1. The sale was made by a VAT-registered person;

2. There was a sale and actual shipment of goods from the Philippines to a foreign country; and

3. The sale was paid for in acceptable foreign currency accounted for in accordance with the rules and regulations of the BSP.

Corollary thereto, We have consistently ruled that any VAT-registered person claiming for VAT zero-rating on its export sale of goods must present to the Court at least three (3) types of documents, as follows:

1. The sales invoice as proof of sale of goods;

2. The export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and

3. The bank credit advice, certificate of bank remittance, or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services.116 Consequently, only export sales supported by the above- stated documents shall qualify for VAT zero-rating under Section 1 06(A)(2)(a)( 1) of the NIRC of 1997, as amended. Anent the first element, as discussed earlier, petitioner was able to prove that it is a VAT-registered person. As to the second and third elements, petitioner adduced before this Court, in support of its zero-rated sales, its sales invoices, 117 bills of lading and/or airways bills, 118 export, .J 11 " Commissioner of Internal Revenuer. !'art Barton Development Corp., C.T.A. EB Case No. 1743 (CTA Case No. ~ 1 8490), January 21, 2019; Oceanago/d (Philippines), Inc. v. Commissioner of Internal Revenue, CTA EB Case No. 2358 (CTA Case No. 9112) (Resolution). June 21, 2022.

Dole Philippines, Inc. v. Commissioner of Internal Revenue declarations, 119 bank statements, 120 and summary of inward remittances121 which the ICPA examined. Petitioner claims that it sold its products to Dole Asia

Holdings

("DAH")

Pte.

Ltd.

in the total amount of P33,615,800,744.79122 under the following Intercompany Sales

Agreement:

1. Packaged Foods Intercompany Sales Agreement 123 between DAH Pte. Ltd. and Dole Philippines, Inc.; and

2. Intercompany Sales Agreement 124 between DAH Pte. Ltd. and Dole Philippines, Inc.- Stanfilco Division. However, based on respondent's computation of input VAT allocation to zero-rated sales,125 the total export sales to DAH amounting to P33,615,800,744.79 was adjusted to P28,806,756,419.64, computed as follows:

Export Sales to DAH

Less: Adjustments

VCAD Adiustment

Unremitted export sales (see Schedule 6 ofVCAD

Working Paper- Export Sales

and Dollar Remittances page 613 (23,814.26 (iiJ, 50.801-

TARD Adjustments

Direct Export Sales which were invalidated by reasons enumerated in Sub-Annex C. I -

DOLEFIL

Direct Export Sales which were invalidated by reasons enumerated in Sub-Annex C.2 -

Stanfilco

Direct Export Sales which were invalidated by reasons enumerated in Sub-Annex C.3 -

Dolefil Copperwires and

Corrugated Boxes

119 Exhibits "P-441-a" to "P-441-auk". 120 Exhibits "P-438-a'" to "P-438-ad'". 121 Exhibits "P-439-a'" to "P-439-aa"'. 12Z Sub-Annex "C.4", BIR Records, p. 25. 123 Exhibit "P-13'", Docket- Vol. I, pp. 408 to 414.

I'

1,209 764.41127 4,494,586,935.85128 188 348,718.03129 77,587,326.60130 124 Exhibit "P-13-A'", Docket- Vol. I, pp. 415 to 423. 125 Annex "C" of Exhibit "R-3"', BIR Records, pp. 47 & 56. 120 Sub-Annex "C.4", BIR Records, p. 25. 127 Table V-2. Exhibit "P-77", p. 32. 128 Table V -3, Exhibit "P-77", pp. 32 to 95. 129 Table V-4, Exhibit "P-77'", pp. 95 to 101. 130 Table V-5, Exhibit "P-77", p. 101.

Amount

I' 33,615 800,744.79126

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Insufficient Remittance of Zero-

Rated Sales

47 311,580.26131

Total Adjustments

4 809 044,325.15

Adjusted Export Sales to DAH

p 28,806,756,419.64 To summarize, respondent disallowed petitioner's export sales to DAH in the total amount of !'4,809,044,325.15 based on the following grounds:

No.

Disallowances

Amount

Unremitted export sale (see Schedule 6 ofVCAD 1

Working Paper - Export Sales and Dollar

Remittances page 613 (23,814.26(iil50.80) f' 1,209,764.41 2 Direct Export Sales which were not properly substantiated (Sub-Annexes C.1 to C.4) 4,807,834,560.74 Total disallowances p 4,809,044,325.15 Upon further scrutiny of the pieces of evidence presented, We find that the disallowances made by respondent are partly tenable, as follows:

1. The disallowance of unremitted export sales in the total amount ofP1,209,764.41 is proper. Although petitioner offered SIno. 291024132 evidencing the sale of goods to Beijing Weian Trading Co. Ltd., it failed to show proof of actual shipment. A perusal of the alleged bill oflading133 and SI no. 291024 indicates that the invoice has incomplete details (such as the date of shipment, vessel name, and voyage number); thus, the Court cannot ascertain if the bill of lading corresponds to the shipment of goods in the said invoice. Since there was no proof of actual shipment, discussing the proof of its inward remittance is futile. Moreover, it can be noted that this was also included in the disallowances under "insufficient remittance to zero-rated sales," amounting to P47,311,580.26.134 Hence, the disallowances due to insufficient remittance to zero-rated sales should be reduced by !'1,209,764.41; and

2. Upon further verification of the documents submitted before the Court, We find that instead of the total export sales amounting to P4,807,834,560.74, only the total amount of !'2,232,314,333.05 should be disallowed for being not adequately substantiated, as itemized below: 131 Table V-6, Exhibit "P-77'', p. 101. 132 Exhibit "P-172-a".

133 Exhibit "P-442-a".

134 Table V-6, Exhibit "P-77", p. 101. rl

Dole Philippines, Inc. v. Commissioner of Internal Revenue l.

Export sales supported by a blurred bill of Ladina f"BL''J

Invoice

BL/Airway

Proof of Inward

Bill

Remittance

Date

Invoice

Page

Exhibit

Exhibit

Exhibit

No.

No.

04/08/2017

"P-173-a"

90546 "P-442-b"

"P-439-a"

2 04/19/2017

"P-174-a"

90795 !'P-442-c" "P-439-b" 1 04/22/2017 "P-174-b" 90796 "P-442-d" "P-439-b" 1 11/15/2017 ''P-177-a" 95002 "P-442-t" "P-439-i" 3 01/10/2018

"P-186-a"

96004 "P-442-ai" "P-439-i" 13 06/21/2017

"P-193-a"

92124 ''P-442-bc" "P-439-d" 6 06/24/2017 "P-193-b" 92144 "P-442-bd" "P-439-d" 6 06/28/2017 ~~P-193-c" 92261 "P-442-be" "P-439-d" 8 12/07/2017 "P-210-g" 95400 ''P-442-ew" ''P-439-i" 12 12/07/2017 "P-210- 95401 ''P-442-ex" "P-439-i" 12 h" 12/07/2017 "P-210-i" 95404 "P-442-ev" "P-439-i" 12 12/07/2017 "P-210-i" 95406 ''P-442-ez" "P-439-i" 12 12/07/2017 "P-210-k" 95408 "P-442-fa" ''P-439-i" 12 12/07/2017

"P-212-a"

95405 "P-442-fg" "P-439-i" 12 12/07/2017 "P-212-b" 95407 "P-442-fh" ''P-439-i" 12 12/07/2017 "P-212-c" 95410 "P-442-fi" ''P-439-i" 12 12/07/2017

"P-213-a"

95409 "P-442-fi" ''P-439-i" 12 12/31/2017 "P-238-o" 95861 ''P-442-lu" "P-439-i" 10 06/22/2017 ''P-279-c" 92234 ''P-442-aaz" "P-439-d" 8 09/06/2017 "P-292-b" 93677 "P-442- "P-439-f' 11 ada" 12/21/2017 "P-319-d" 95718 • 'P-442-afi" "P-439-i" 6 01/05/2018 "P-319- 95938 "P-442- "P-439-j" 12 h" afm" 12/21/2017

"P-320-a"

95715 ''P-442-aft" "P-439-i" 5 01/05/2018 ''P-323-a" 95939 ''P-442-agf' "P-439-i" 12 06/20/2017

"P-332-1"

92117 "P-442- "P-439-d" 6 akk" 06/30/2017 "P-332-o" 92278 "P-442- "P-439-d" 9 akn" 07/04/2017

"P-332-v"

92406 "P-442- "P-439-d" 12 aku" 07/04/2017 "P-332- 92407 "P-442-akv" "P-439-d" 12 w" 01/25/2018

"P-340-v"

96320 "P-442-aot" "P-439-k" 3 02/16/2018 "P-343-k" 96713 ''P-442-aro" "P-439-k" 11 03/15/2018 "P-345-g" 97291 "P-442-asl"

"P-439-1"

8 05/27/2017

"P-367-a"

91542 ''P-442-avr" ''P-439-c" 6 06/07/2017 "P-367-b" 91848 ''P-442-avs" '' P-439-c" 13 03/22/2018 ''P-380-c" 97527 "P-442- "P-439-m" 2 awr" 03/23/2018 ''P-380-e" 97535 "P-442- "P-439-m" 2 awt" 03/28/2018

"P-422-a"

86504 "P-442-bbi" ''P-439-aa" 11

Subtotal

p

Amount

I'

15,978.49 15,978.49 15,978.49 16 656.16 16,656.16 18 346.64 16,490.81 16 490.81 287,278.73 294,040.66 316,838.88 907 095.30 835,177.69 793 412.34 541,840.41 2,039,695.63 3 003 302.12 334,486.41 1,290,685.95 263,428.31 1,843 184.94 2,772,806.34 4,382,300.89 5,682,620.99 422,043.06 394,107.48 5,044,028.55 302,184.53 1,390 048.17 1,319 581.30 7 668,876.53 16,178.60 18,489.82 4,223,943.33 266,044.77 443,433.73 47,229,731.48 2.

Export sales supported by a bill of lading with mismatched BL number indicated in the sales invoice I without BL number indicated in the sales invoice

Invoice

BL/Airway

Proof of Inward

Date

Bill

Remittance

Amount

Exhibit

Invoice

Exhibit

Exhibit

Page

No.

No.

10/11/2017 0 P-174-c" 94364 ''P-442-e" "P-439-h" 2

I'

16,656.16 10/14/2017 "P-174-d" 94378 "P-442-f' "P-439-h" 2 16,656.16 10/18/2017 0 P-174-e" 94457 "P-442-g" "P-439-h" 10 16 656.16 ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue

94480 | ‘P-442-h” “P-174-g” P-174-i” “P-174-j” | 94687 94870 | ‘'P-442-m” | "P-439-h” | 9 | 16,656.16 | “P-176-b" | 94887 | “P-442-n” | "P-439-h” | 9 | ~‘16,656.16 | “P-176-c” | 95017 | "'P-442-0” | 11/22/2017 [“P-176-d" | 95118 | “P-442-p" | “P-4390-7 [| 6 | 16,656.16] | 11/24/2017 | P-176-e" | 95119 | "P-442-q” | “P-430-1” [6 | 16,656.16 | | 12/01/2017 | “P-176-g" | 95240 | “"P-442-s” [| “P-4390-7 [ 8 | 16,656.16 | “P-439-h” | 9 | 707,694.93 | 11/29/2017 95235 P-449-x” P-439-i” 8 13,238.86 16,164.57 10/04/2017 90501 | ''P-442-ab” 10/04/2017 90493 | ‘'P-442-ac” 17,993.14 16,018.29 “P-442-ae” 10/04/2017 90502 | ‘'P-442-af? | ‘P-439-a” 1 09/04/2017 | ‘P-185-a” | 90722 | “P-442-ag” | “P-439-b” | 2 | 683,417.23 762,587.46 01/24/2018 "P-186-<" | 96263. | 'P_449-ak” | ‘P-439-k” “*P-187-c” 05/11/2017 “P-442-aq” 05/11/2017 _| “P-187-g” “P-188-c” |_ 91049 | “P-442-au" |_"P-439-b" [9 | _—-2,990,358.74 | | 04/30/2017 | “P-188-d" | 91050 | “P-442-av” [ “P-439-b” [9 | __1,100,169.79 | | 04/30/2017 | “P-188-e" | 91051 | "P-442-aw” | “P-439-b” | 9 | _1,100,583.38 | 91084 | “P-442-ay" “P-191-a” “P-442-ba” 1,235,035.01 11,779.15 “"P-193-f" 11,779.15 92696 | ‘'P-442-bi” | "“P-439-e” [| 4 [11,779.15 | 08/09/2017 | P1?% | 93126 | “P-442-bjr 11,779.15 09/13/2017 | ‘P-193-j” | 93806 | ‘P-442-bI” “P-442-bm” | “P-439-g" | 3 “P-193-1" | 93947 09/23/2017 | “P23 | 93067 | “p-442-bo" | “p-439-¢" | 4 09/27/2017 ned 94158 | "P-442-bp” | “P-439-" 8 | 14pre⁶.71| 09/30/2017 | ‘'P-193-0” | 94159 | "'P-442-bq” | ‘‘P-439-g” [ 8 [| 16,656.16] ‘P-442-br” | ‘'P-439-g" | 9 =| 16,656.16 | | 10/07/2017 | “P-193-q" [94185 _| “P-442-bs” | “P-439-g" | 9 | 16,656.16 | 06/12/2017 | ‘'P-195-b” | 07/22/2017 | P-196-a" | 92802 | *P-442-bw” | "P-439-e" | 6 | 350,334.65, “P-214-1" | 90834 04/13/2017 _| ''P-218-b” “P-225-k" | 96616 | “P-442-gx” | "P-439-k” [9 | _-2,512,212.61 |

12/10/2017 _| ‘P-227-a”

Dole Philippines, Inc. v. Commissioner of Internal Revenue eee. cre x ‘*P-227-c” "P-439-k” 12/27/2017 “P-229-i”

“P-229-)” “P-439-1”

‘*P-229-k”

"P-229-1"

o 01/16/2018 | P2"⁷ | 96135 aie “P.439-j” 2,147,831.09 ‘*P-439-e” “P-439-e” “*P-439-e”

“*P_439-¢”

11,779.15 11,779.15 11,779.15 11,779.15 01/17/2018 | ‘P-247-i” | 96139 | ''P-442-bbz” | ‘P-439-j” 2,249,158.88 01/17/2018 | ‘'P-247-j" | 96140 | ‘P-442-bea” | ‘P-439-}” 1,639, 144.27 05/03/2017 | 'tP-255-g” | 91131 | ‘P-442-vx” | 'P-439-b” 674,059.62 04/19/2017 | ''P-265-a” | 90959 | '*P-442-ym” | ‘P-439-b” 332.24 07/26/2017 | ‘'P-272-a” | 92869 | ‘tP-442-zm” | ‘P-439-e”7 | 9 | 742,845.60 04/03/2017 | '‘P-273-a” | 90482 'P.439-a” 16,018.29 04/03/2017 | ‘'P-273-b” | 90483 | ‘P-442-zo” | ‘'P-439-a” 16,018.29 04/03/2017 | ‘P-273-c”| 90484 'P.439-a” 16,018.29 04/03/2017 | '*P-273-d”| 90485 | ‘P-442-zq” 16,018.29 04/03/2017 | ‘*P-273-e” | 90486 '*P-439-a” 16,018.29 04/03/2017 | ‘P-273-f | 90487 '*P-439-a” 16,018.29 04/03/2017 | ‘'P-273-g” | 90488 “'P-439-a” 16,237.71 04/03/2017 | ‘P-273-i” | 90490 | ‘P-442-zv” | ‘P-439-a” 16,237.71 04/10/2017 | ‘P-273-)” | 90495 | ‘P-442-zw” | ‘'P-439-a” 16,091.43 04/03/2017 | ‘'P-274-a” | 90573 | ‘'P-442-zy” | ‘'P-439-a” 541,158.32 06/10/2017 gi956 | P82 | p.4g9-ar 1,138,888.71 04/21/2017 _| ‘“*P-279-a” | 90960 | ‘'P-442-aax” | ‘“P-439-b” | 8 | 359.18 07/14/2017 pare 92661 | “P-442-abe” 3,201.40 04/03/2017 | ‘'P-280-a” | 90574 | 'P-442-abf” 741,128.93 04/03/2017 | ‘P-280-b”| 90575 eae 744,932.35 04/13/2017 | ‘*P-290-a” | 90686 | ‘P-442-acd” | ‘P-439-b” 45,414.26 04/13/2017 | “P-290-b” | 90687 | ‘'P-442-ace” | ‘P-439-b” 238,419.69 04/13/2017 | 'P-290-c” | 90688 | ''P-442-acf’ | ‘'P-439-b” 1,621,352.83 04/13/2017 | ''P-290-d” | 90689 | ‘'P-442-acg” | ‘'P-439-b” 1,635,726.11 04/09/2017 | ‘P-291-c” | 90662 | ‘'P-442-acp” | ‘P-439-a” 6,698,066.62 05/16/2017 91364 | ‘'P-442-adc” | “P-439-c” 3,592,935.40 07/20/2017 | “P-294-b”| 92702 i "*P_439-e” 655,969.33 04/13/2017 | ‘P-295-a” | 90679 | ‘P-442-ade” 1,555,325.59 07/22/2017 | “P-296-a"| 92707 ie “P.439-e" 11,779.15 p.DOALe “P.442- 07/26/2017 | “P-296-b”| 92826 adh” 07/29/2017 | "'P-296-c” | 92839 “P-442-adi” 08/02/2017 | ‘'P-296-d” | 92978 ‘*P-442-adj” Ce D.D0K_ a” *P-442- 08/05/2017 | ‘*P-296-e” | 92990 adhe” me fee Dole Philippines, Inc. v. Commissioner of Internal Revenue it nn a ee ee ew ee re en en en en ne eee een men ene rer ere nn= x 06/05/2017 P-339-a 91836 ann” P-439-c 13 9,110,464.41 06/30/2017 | ‘P-354-a” | 92280 ie **P-439-d” | 9 | 325,651.63 05/17/2017 91426 naa “P_439-c” 330.75 03/03/2018 | ‘P-363-a”| 96995 | ‘'P-442-avd” | ‘P-439-1" 2,680,250.86 01/26/2018 | ‘P-367-c” | 96267 | ‘'P-442-avt” | ‘'P-439-k” 14,276.71 08/16/2017 | ‘*P-388-a” | 93271 **P-442-ayl” **P-439-f" 11,897.26 08/19/2017 | “P-388-b”| 93294 | 2 “P.439-P 14,276.71 08/23/2017 | “P-388-c” | 93439 pa “pager | 5 14,276.71 | i) ao] aN 7 “tS 08/30/2017 | “P-388-e"| 93643 | P44?

08/26/2017 | ‘P-388-d” | 93462 | ‘'P-442-ayo” | ‘'P-439-f" 6 16,656.16 **P-439-f" 10 14,276.71 09/02/2017 | “P-388-f | 93655 | ‘‘P-442-ayq” | P-442-ayq” | “'P-439-F" | 10 | 16,656.16 | 09/06/2017

“P-439-1”

“P-439-p” | 8 | _2,213,807.83 | “P-396-b” |_ 82968 | “P-442-ayy” | ““P-439-p” [| 8 | 1,573,056.25 | “P-398-b” | 82892 | ''P-442-aze” | “"P-439-p” | 6 | 2,518,100.33 | [06/02/2017 | “P-400-b” | 83252 | “'P-442-azi” | “P-439-q” | 6 | 1,496,068.69 | 06/15/2017 | ‘P-400-c” | 83412 | ‘P-442-azj” | ‘P-439-r” 5, 383,441.32 02/24/2018 | ''P-400-d” | 86154 | ''P-442-azk” | ‘‘P-439-z” 1,234,752.00 03/22/2018 “p-4oo-f' | 86431 | “Pa "p.439-aa" | 9 | 1,694,576.78 10/17/2017 | ‘'P-406-a” | 84751 | ''P-442-azr” | ‘'P-439-v” 1,010,417.92 02/12/2018 | ''P-406-b” | 86020 | 'P-442-azs” | ‘'P-439-y” 658,376.64 03/21/2018 | ‘'P-406-c” | 86413 **P-442-azt” | 'P-439-aa” 1,081,227.90 04/25/2017 | ‘P-409-a" | 82822 ai **P-439-p” 361,247.04 05/16/2017 | ‘‘P-409-b” | 83048 | ‘‘P-442-azv “*P-439-q” 2,453.91 05/16/2017 | “P-409-c” | 83048 “Pa “P_439-q” 04/24/2017 | “P-411-a"| 82810 vee “P_439-p” 04/24/2017 | ‘'P-411-b” | 82811 | ‘'P-442-bac” | ‘‘P-439-p” 29,407.07 78,525.04 240,831.36 263,457.25 178,588.14 537,765.18 07/11/2017 P-411- 83686 | ‘P-442-bai *P.439-s” 08/02/2017 | ‘'P-411-k” | 83918 | ‘'P-442-bal” | ‘‘P-439-s” 11/23/2017 “411- | gsigy | P-442- | ep _g39-we n bao 12/07/2017 | “P-411-0” | 85333 ae “P_439-w” 03/26/2018 | ‘'P-411-s” | 86491 *P-442-bat” | ‘'P-439-aa” 03/26/2018 | “P-411-t” |} 86491 haar | SP-439-aa” 03/26/2018 | P"'! | g6491 | “P-442-bav"| “P-439-aa” 04/12/2017 | “P-412-a”| 82669 “Pa “P.439-p” 1 _ rg BSS part od + ‘ — 1 nN 226,851.90 11,221.59 21,641.64 _ 1 co] 10 351,877.11 289,797.60 08/10/2017 |"P-412-b"| s4o1a | P48?) | wpago-t” 31,749.23 11/22/2017 | “P-412-d"| 85172 | “P-442-baz” | “P-439-w’ |__7 369,034.44 = Dole Philippines, Inc. v. Commissioner of Internal Revenue 12/06/2017 ''P-412-e" 85326 "P-442- ''P-439-w" 11 bba" 01/09/2018

"P-415-a"

85671 "P-442- "P-439-x" 11 bbc" 07/14/2017 ''P-416-a" 83725 "P-442- ''P-439-s" 4 bbd" 02/13/2018 ''P-419-a" 86038 "P-442- "P-439-y" 12 bbh" 09/07/2017 ''P-429-a" 84323 "P-442- "P-439-t" 12 bbp" 462,125.14 665,188.16 152,396.29 430,032.02 554,492.57

Subtotal

p 118 336 107.81 3.

Export sales supported by a bill of lading without the date o_f shipment

Invoice

BL/Airway

Proof of Inward

Date

Bill

Remittance

Amount

Exhibit

Invoice

Exhibit

Exhibit

Page

No.

No.

07/02/2017 "P-325-i" 92398 "P-442- ''P-439-d" 11

I'

1,287,802.80 agp"

Subtotal

p 1,287,802.80 4.

Export sales not sul'J'(>_rted by a bill of lading and/or proof of inward remittance

Invoice

BL/Airway

Proof of Inward

Date

Bill

Remittance

Amount

Exhibit

Invoice

Exhibit

Exhibit

Page

No.

No.

04/01/2017

"P-175-a"

90365 - ''P-439-a" 1

I'

13,695.85 04/12/2017 "P-175-b" 90672 - ''P-439-a" 5 13,695.85 04/15/2017 "P-175-c" 90698 - "P-439-b" 2 15,978.49 05/11/2017

~~P-192-a"

91237 - "P-439-b" 14 343,744.65 05/24/2017

"P-194-a"

91517 - "P-439-c" 6 16 178.60 06/15/2017 ''P-199-a" 91982 - "P-439-d " 3 1,778 109.76 08/23/2017 ''P-220-a" 93486 - "P-439-f' 7 1 363,023.76 02/02/2018

~'P-228-a"

96399 - "P-439-k" 5 14,276.71 01/31/2018 ''P-230-a" 96398 - "P-439-k" 5 16,656.16 02/07/2018 "P-230-b" 96517 - "P-439-k" 8 16,656.16 02/09/2018 "P-230-c" 96518 - "P-439-k" 8 14 276.71 02/14/2018 "P-230-d" 96619 - "P-439-k" 9 16,656.16 02/16/2018 ''P-230-e" 96620 - "P-439-k" 9 14 276.71 02/23/2018 "P-230-f' 96755 - "P-439-k" 11 14,276.71 05/06/2017

"P-281-a"

91193 - "P-439-b" 13 570,296.75 05/09/2017 "P-281-b" 91264 - "P-439-b" 14 570,296.75 05/09/2017 "P-281-c" 91265 - "P-439-b" 14 359.18 05)24/2017 "P-281-d" 91572 - ''P-439-c" 7 445 766.11 06/05/2017 "P-281-e" 91959 - "P-439-d" 1 688.32 07/03/2017 "P-281-f' 92430 - "P-439-d" 12 754_,_586.62 08/11/2017 "P-281-g" 93296 - "P-439-f' 2 368.52 08/16/2017 "P-281- 93366 "P-439-f' 4 340.88 h" - 12/08/2017 "P-281-i" 95417 - "P-439-i" 12 362.52 02/03/2018 "P-281-j" 96471 - "P-439-k" 7 111,882.40 03/20/2018 "P-281-k" 97474 -

"P-439-1"

12 4,377.59 03/20/2018

"P-281-1"

97475 -

"P-439-1"

12 4,153.50 03/12/2018 ''P-288-a" 97274 - - - 710,951.47 03/12/2018 "P-288-b" 97276 - - - 642,390.11 01/11/2018

"P-316-a"

96043 - "P-439-j" 14 636,182.04 03/23/2018 "P-334-d" 97506 - ''P-439-m" 2 10,198,161.08 05/28/2017 ''P-368-a" 91656 - ''P-439-c" 9 343,701.98 05/31/2017 "P-368-b" 91663 - ''P-439-c" 9 16,178.60 06/01/2017 ''P-368-c" 91680 - "P-439-c" 9 828,105.56 06/03/2017 "P-368-d" 91695 - "P-439-c" 10 16,178.60 06/06/2017 ''P-368-e" 91840 - ''P-439-c" 13 343,701.98 Dole Philippines, Inc. v. Commissioner of Internal Revenue 06f10f2017 "P-368-r' 91867 - '' P-439-c" 14 18,489.82 06h4l2017

"P-368-Il"

91980 - "P-439-d" 3 18 489.82 06/17/2017 "P-368- 91983 "P-439-d" 3 18,489.82 h" - 06f29f2017 "P-368-i" 92267 - "P-439-d" 9 844 086.11 07/0112017 "P-368-i" 92282 - "P-439-d" 9 16 490.81 07f05f2017 "P-368-k" 92409 - "P-439-d" 12 16,490.81 06116/2017

"P-368-1"

92512 - "P-439-d" 14 63,951.78 oi/15/2017

"P-369-a"

92662 - "P-439-e" 3 585 585.67 03/1272018

"P-375-a"

97275 - - - 644 029.62 03f28f2018

"P-386-a"

97561 - ''P-439-m" 3 13,887.64 03/3072018 "P-386-b" 97562 - "P-439-m" 3 13 887.64 09f08f2017

"P-389-a"

93679 - "P-439-r' 11 16 656.16 04/2612017

"P-390-a"

90933 - "P-439-b" 7 16 180.61 05f03/2017 "P-390-b" 91064 - "P-439-b" 9 16 180.61 05f06f2017 ''P-390-c" 91087 - "P-439-b" 10 16,180.61 05110/2017 "P-390-d" 91224 - ~~P-439-b" 14 16,180.61 05f13f2017 "P-390-e" 91242 - "P-439-b" 14 16,180.61 05117/2017 "P-39o-r· 91365 - ''P-439-c" 3 16,180.61 05f20f2017

"P-390-Il"

91378 - ''P-439-c" 3 16,180.61 01/17/2018 ''P-394-a" 96146 - "P-439-i" 16 273,548.59 01fl7f2018 "P-394-b" 96167 - "P-439-i" 7 335.88 10/04/2016 ''P-40 1-a" 80605 - - - 806,944.24 11f15f2017 ''P-407-a" 85064 - ''P-439-w" 2 851,926.40 06/12/2017 ''P-408-a" 83363 - - - 18,187.74 o3724i2018 ''P-420-a" - - - - 71,288,825.75 03/12/2018

"P-282-a"

97268 "P-442- 881,208.35 aba" - - 03f12f2018 "P-282-b" 97270 ''P-442-abr" - - 890 426.30 03/12/2018 "P-282-c" 97271 "P-442-abs" - - 652 135.45 03f12f2018 ''P-283-a" 97256 ''P-442-abt" - - 766,588.52 03/12/2018 "P-283-b" 97258 "P-442- 766,588.52 abu" - - 03f12f2018 "P-283-c" 97259 ''P-442-abv" - - 766,588.52 03/12/2018 ''P-284-a" 97273 "P-442- 759,219.58 abw" - - 03/12/2018 ''P-285-a" 97261 "P-442- 1,361,137.85 abx" - - 03/12/2018 "P-285-b" 97262 "P-442- 1,125,080.62 abv" - - 0:371272018

"P-286-a"

97264 "P-442-abz" - - 745,415.59 03/12/2018

"P-287-a"

97265 ''P-442-aca" - - 745,415.59 0:3712/2018 "P-287-b" 97267 "P-442-acb" - - 608,834.86 04/16/2017 "P-290-e" 90780 "P-442- 644,956.65 ach" - - 02/16/2018 ''P-297-a" 96723 "P-442-adl" - - 9 936,424.88 03/12/2018 ''P-370-a" 97257 "P-442- 766,588.52 avu" - - 03112/2018 .. P-371-a" 97272 "P-442-avv" - - 759 219.58 03/12/2018

"P-372-a"

97263 "P-442- 1 ,436, 935.25 - - aV\V" 03112/2018 ''P-373-a" 97260 ''P-442-avx" - - 5 720 047.57 03f12f2018 ''P-374-a" 97266 "P-442-avv" - - 745,415.59 03/12/2018 "P-374-b" 97269 ''P-442-avz" - - 798 997.26 12/13/2017 ''P-403-a" 85406 ''P-442-azo" - - 280,679.03 07/14/2017 "P-411-j" 83719 "P-442- 22,054.18 bak" - -

Subtotal

p 126,654,059.57 5.

Export sales supported by blurred sales invoices/sales invoices with incomplete or missina oaae/s)

Dole Philippines, Inc. v. Commissioner of Internal Revenue

BL/ Airway

Proof of Inward

Bill Remittance

No. No.

Date Amount

05/05/2017 ‘P-442-a0” P 414,104.18 12/26/2017 1,815,073.58 12/26/2017 154,945.31 02/14/2018 | “P-225-1” | 96618 | “P-442-gy” | “P-439-k” | 9 | 1,601,244.98 12/27/2017 1,211,703.26 08/10/2017 1,878,391.53 12/27/2017 12/27/2017 04/13/2017 12/27/2017 12/27/2017 12/27/2017 | “P-274-4"| 95796 oe “p_439-;” 435,741.12 02/16/2018 | “P-301-a”| 96716 vee “P.439-k” 2,759,795.51 12/20/2017 | ‘tP-321-b” | 95674 ‘*P_439-;” 29,727 ,076.22 _ as” 03/3/2018 97008 ee “p.43q-” | 3 670,427.51 03/30/2018 97604 pa “p.439-m” | 4 24,091,660.49 03/9/2018 97166 | ‘'P-442-atp” | ‘'P-439-1” 6 1,320,780.66 03/3/2018 | ''P-362-0” | 97007 | ‘'P-442-ava” | ‘‘P-439-1” 3 828,823.22 03/23/2018 | ‘P-380-f | 97537 oP ae 2 4,325,064.63 Subtotal P107,253,514.12

6. Export sales with different amounts per sales invoice

| Invoice BL/ Airway Proof of Inward

Date al Bill Remittance — - Amount No. No.

08/14/2017 | ‘'P-423-a” | 84044 | ‘'P-442-bbj” | ‘'P-439-t” P 2,961,184.49 03/01/2018 | “P-424-a”) 86186 ie “P.439-2” 6 | 545,051.97 04/08/2017 | ‘P-426-a”| 82646 “pa 5,486,386.45 Subtotal P_ 8,992,622.92

7. Export sales supported by a bill of lading with corrections but not countersigned

Invoice BL/ Airway Proof of Inward

Date a Bill Remittance — ; Amount No. No.

ee ” *P-442- ee 39 11/22/2017 P-412-c 85157 bav” P-439-w P 2,883,956.21 Subtotal P 2,883,956.21

8. Export sales dated outside the period of the claim

Invoice BL/ Airway Proof of Inward

Bill Remittance

Date Invoice Page Amount

Phe | ne | Exhibit Wo.

No. No.

| 04/02/2018 | “p-421-a"| 36552 [T3819 506.84 | | 04/02/2018 | “P-421-b” | 86553 [| 150,189.10 | | 04/02/2018 | “P-421-c” [| se562 [| - 56,968.28 | |_ 04/02/2018 | “P-42i-a”[ 86572 | - 207,950.92 | Dole Philippines, Inc. v. Commissioner of Internal Revenue 04/02/2018 I "P-421-e" 86573 - - - 36 252.54

Subtotal

p 770,867.68 9.

Export sales without supportin documents

Invoice

BL/Airway

Proof of Inward

Date

BUl

Remittance

Amount

Invoice

Page

Exhibit

No.

Exhibit

Exhibit

No.

03/21/2017

"P-222"

- - - - I' 234,400 539.84 03/25/2017

"P-223"

- - - - 261 692,674.60 07/15/2017

"P-376"

- - - - 9 000.91 07/15/2017

"P-377"

- - - - 1,582,000.66 07/15/2017

"P-377"

- - - - 3 921.29 06/17/2017

"P-378"

- - - - 1 175 756 828.58 03/24}2018

"P-387"

- - - - 21 771,562.13 04/11/2017 to

"P-430"

77,587,326.60 02/08/2018 03/20/2018

"P-432"

- - - - 25,400,026.92 -

"P-433"

- - - - 20 701 788.93

Subtotal

P1,818,905 670.46

Total Additional Disallowances

P2,232.314,333.05 In sum, only the total amount of P31,382,276,647.33 satisfied the essential elements to qualify as VAT zero-rated sales under Section 1 06(A)(2)(a)( 1) of the NIRC of 1997, as amended, computed as follows:

Export Sales to DAH

Less: Disallowances

Disallowances sustained by the Court p 1,209,764.41 Disallowances per Court's further verification 2,232,314,333.05

Total Valid Export Sales

Considered Export Sales to BOI, PEZA, SBMA, and CDC-registered entities.

Amount

1"33,615,800, 744.79135 2,233,524,097.46 P31,382,276.647.33 Petitioner claims that it also derived its zero-rated sales to export-oriented entities registered with the BOI, SBMA, PEZA, and CDC, in the aggregate amount of P49,278,029.47, broken down as follows:

801/SBMA

Customer

/CDC

Amount

Registered

Century Pacific Agricultural Ventures,

BOI

p 40,744,193.57 Inc.

General Tuna Corporation

BOI

2,920,155.24

Dole Philippines, Inc. v. Commissioner of Internal Revenue

General Tuna Corporation

80I

115,280.00

Hi-Las Marketing Corporation

80I

46,134.01

Philbest Canning Corporation

80I

2,065,000.00

Amley Food Corporation

80I

17,800.00 Gem Foods International, Inc.

S8MA

1,277,796.65 Millbrae Exports, Inc.

CDC

2,091,670.00

Total Zero-rated Sales to Export

p 49,278,029.47

Oriented Entities

To recall, respondent imputed additional output VAT in the amount of P5,918,954.44 against petitioner and deducted the same from petitioner's input VAT refund claim. 136 The amount of P5,918,954.44 can be traced from petitioner's claimed zero-rated sales to export-oriented entities registered with the BOI, SBMA, PEZA, and CDC ofP49,278,029.47. Under Section 106(A)(2)(a)(5) of the NIRC of 1997, as amended, and as implemented by Section 4.106-5 ofRR No. 16- 2005, as amended by RR No. 4-2007, for a "considered export sale" to qualify as zero-rated, the following essential elements must be present:

1. The sale was made by a VAT registered person; and,

2. There was a sale of goods or services to an entity entitled to incentives under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987 ("OIC"), and other special laws.

As for the first essential element, it is already settled that petitioner is a VAT-registered person. As for the second essential element, any VAT-registered person claiming VAT zero-rated "considered export sales" must present, among others, the following documents:

1. The sales invoice as proof of sale of goods; and

2. The proof of entitlement to zero-rating under the OIC or other special laws.

As for the first type of document, petitioner presented the sales invoices 137 in support of its alleged "considered export sales" to the following customers: 136 Refer to Exhibit "R-2", 8/R Records (Exhibit "R-5"), p. 22. V 137 "P-157.1-a" to "P-157.1-ns"; "P-157.2-a" to "P-157.2-1"; "P-158-a" to "P-158-aj"; "P-160-a" to "P-160-h"; "P-162- a" to "P-162-e".

CTA Case No, 10212 Dole Philippines, Inc. v. Commissioner of Internal Revenue

Customer Name

goods to BOI-registered entities Century Pacific Agricultural Ventures, Sale o Inc.

General Tuna Corporation 2,920,155.24

General Tuna Corpo

Philbest Canning Corporation

Amley Food Corpora

Sale o

Hi-Las Marketing Corporation

goods to SBMA-registered entit Sale o “P-157.1”; “P-158;

ration 115,280.00 P-157.1 2,065,000.00 | “P-157.2”; ”P-159” tion 17,800.00 “P-157.2” goods to PEZA-registered entit No supporting Gem Foods International, Inc. 1,277,796.65 | “P-160” to “P-161” Sale o

Oriented Entities

However, goods to CDC-registered entit Millbrae Exports, Inc. 2,091,670.00

Total Zero-rated Sales to Export

“P- 162”

after careful examination of the sales invoices presented, the Court finds that only the “considered export sales” to Millbrae Exports, Inc. and Amley Foods Corporation in the amounts of ?2,091,670.00 and P17,800.00, respectively, are duly supported by invoices and may be accorded VAT zero- rating. In contrast, the remaining portion of ?47,168,559.47 must be disallowed outright for failure to comply with the invoicing requirements under the NIRC of 1997, as amended, and RR No. 16

DATE

1. TIN OF THE PURCHASER NOT INDICATED IN THE INVOICE ISSUED BY

PETITIONER

A. CENTURY PACIFIC AGRICULTURAL VENTURES INC.

04/03/2017 04/06/2017 04/06/2017 04/06/2017 04/06/2017 04/10/2017 04/10/2017 04/10/2017 04/10/2017 04/11/2017 04/06/2017 "P-157.1-g" -2005, as amended, to wit:

EXHIBIT REF. | INVOICE NO. | AMOUNT "P-157,1-a" 8671 P 14,000.91 "P-157.1-b" 8672 80,761.59 "P-157.1-c" 8673 378,336.00 "P-157.1-d" 8670 37,230.00 "P-157.1-e" 8674 104,181.75 "P-157.1-f"

8677 18,377.59

8678 19,739.72

"P-157,1-h" 8679 438,865.20 04/11/2017 04/11/2017 138 Exhibit “P-163”.

'P-157.1-i" "P-157.1-}" 172,368.00 "P-157,1-k" 8696 102,600.00 "P-157. 1-1" "P-157.1-m’ 8698 289,668.00 "P-157.1-n" 8700 275,788.80 "P-157. 1-0" "P-157.1-p" 8702 115,809.75 = Dole Philippines, Inc. v. Commissioner of Internal Revenue 04/21/2017 "P-157.1-t" 04/21/2017 "P-157.1-u" 04/26/2017 "P-157. 1-w" 04/26/2017 "P-157.1-x" 04/26/2017 "P-157.1-y" 04/26/2017 "P-157, 1-2" 8732 "P-157.1-be" "P-157. 1-bd" 05/24/2017 05/25/2017 05/25/2017 05/25/2017 05/25/2017 05/30/2017 05/30/2017 06/01/2017 06/01/2017 Dole Philippines, Inc. v. Commissioner of Internal Revenue 06/02/2017 06/02/2017 06/02/2017 06/02/2017 06/05/2017 06/05/2017 06/06/2017 06/13/2017 06/14/2017 06/14/2017 06/14/2017 06/15/2017 06/15/2017 07/17/2017 07/21/2017 07/21/2017 07/21/2017 07/21/2017 07/21/2017 07/21/2017 07/24/2017 07/24/2017 08/01/2017 08/03/2017 08/04/2017 08/04/2017 08/05/2017 08/05/2017 08/05/2017 08/05/2017 08/05/2017 08/08/2017 08/08/2017 08/08/2017 08/08/2017 08/09/2017 08/09/2017 08/14/2017 08/14/2017 08/15/2017 08/15/2017 08/15/2017 08/15/2017 08/15/2017 08/15/2017 08/16/2017 08/16/2017 08/16/2017 08/16/2017 08/16/2017 08/16/2017 08/16/2017 "P-157.1-bs" 8818 "P-157.1-bt" 8819 "P-157. 1-bu "P-157.1-bv" 8821 "P-157.1-bw" 8826 "P-157,1-by" 8830 “P-157.1-bz" 8841 "P-157.1-cc" 8844 103,953.24 1,030.75 259,889.16 46,507.25 37,440.00 209,355.30 305,908.80 37,280.32 ran on ~] ~]

IS

N

~] wo cd ?

?

189,254.00 60,300.00 127,440.00 2 113,280.00

Wire

Arlo;

m1 W]e 7b ALO] a+o NyO!O;h

NYAS IN|

O}/@!o] Mfalo;n a 0 | el o ° fo) 78 380.00 "P-187. ew" "P-157.1-ds 13789 "P-157.1-dt" 13790 66,818.25 363,600.00 Dole Philippines, Inc. v. Commissioner of Internal Revenue "P-157. 1-fg" Dole Philippines, Inc. v. Commissioner of Internal Revenue 10/30/2017 "P-157, 1-gc" 14366 233,415.00 11/15/2017 “P-157, 1-gd" 14508 121,540.00 11/15/2017 "P-157.1-ge" 14509 189,222.00 11/15/2017 11/15/2017 11/21/2017 11/21/2017 11/21/2017 11/21/2017 14532 16,169.00 14533 115,200.00 14534 73,320.00 14681 74,405.52 14682 79,145.64 14683 134,842.05 12/13/2017 14684 42,480.00 12/13/2017 14685 275,022.00 12/13/2017 14686 53,865.00 12/18/2017 14696 245,440.00 12/18/2017 14697 108,342.00 12/20/2017 127,440.00 12/20/2017 215,460.00 12/22/2017 12/26/2017 01/03/2018 01/03/2018 01/03/2018 01/03/2018 01/03/2018 01/03/2018 01/03/2018 01/04/2018 "P-157.1-hx" Dole Philippines, Inc. v. Commissioner of Internal Revenue 01/12/2018 01/12/2018 01/12/2018 01/12/2018 01/15/2018 01/16/2018 01/16/2018 01/16/2018 01/17/2018 01/17/2018 01/17/2018 01/17/2018 01/17/2018 01/17/2018 01/17/2018 01/17/2018 01/18/2018 01/18/2018 01/18/2018 01/18/2018 01/19/2018 01/19/2018 01/22/2018 01/22/2018 "P-157.1-je" 01/22/2018 01/23/2018 01/23/2018 "P-157.1-jh" 01/24/2018 "P-157.1-ji" 01/24/2018 01/24/2018 01/26/2018 01/31/2018 01/31/2018 01/31/2018 02/01/2018 02/01/2018 02/01/2018 "P-157.1-jr" 02/02/2018 "P-157.1-js" 02/02/2018 "P-157.1-jt" 15105 02/02/2018 "P-157.1-ju" 02/06/2018 "P-157.1-jv" 02/06/2018 "P-157.1-jw" 15107 02/06/2018 02/06/2018 15114 02/06/2018 "P-157,1-jz" 15115 02/06/2018 "P-157.1-ka" 15116 02/06/2018 "P-157.1-kb" 15117 02/06/2018 "P-157.1-ke" 15119 02/07/2018 "P-157.1-kd" 15110 02/07/2018 "P-157,1-ke" 15111 51,279.48 72,720.00 125,685.00 288,465.03 3,024.00 639.00 w ro) iS) - fo) 3 co un o oo

Oo

oO t an iS a oO oe) ays ro)

3S

aN bo uN 0 [o} (o)

Oo

, 3,517.92 69,800.00 31,382.08 7,272.00 12,600.00 182,600.55 187,620.00 22,680.00 12,210.00 3,968.25 39,234.60 156,959.55 792,929.61 48,636.00 84,960.00 134,877.96 14,605.92 3,024.00 6,219.36 10,439.55 154,395.45 9,908.64 14,388.00 209,280.00 861.84 142,778.16 143,640.00 107,730.00 35,910.00 79,361.10 91,008.00 84,960.00 61,371.60 30,088.80 186,264.00 53,865.00 175,168.98 42,480.00 31,999.20 161,595.00 93,865.00 71,820.00

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"P-157.1-ko" 02/08/2018 02/08/2018 02/08/2018 02/08/2018 02/09/2018 15136 53,865.00 02/09/2018 02/09/2018 02/15/2018 "P-157.1-1a" 02/15/2018 "P-157.1-Ib" 02/17/2018 "P-157. 1-1g" 02/17/2018 "P-157.1-Ih" 15159 "P-157. 1-1 15169 "P-157.1-Is" "P-157, 1-1" 03/09/2018 "P-157. 1-12" 15330 03/09/2018 "P-157.1-ma" 15331 03/09/2018 "P-157,1-mb" 15332 03/09/2018 "P-157.1-mc" 15333 03/12/2018 "P-157.1-md" 15344 03/12/2018 "P-157.1-me" 15345 03/13/2018 "P-157.1-mf" 15350 03/14/2018 "P-157.1-mg" 15351 03/14/2018 "P-157.1-mh" 15352 03/14/2018 "P-157.1-mi" 15353 "P-157, 1-mk" 15361 03/16/2018 "P-157.1-ml" 15362 161,987.76 03/16/2018 "P-157.1-mn" 44,760.00 40,900.00 Dole Philippines, Inc. v. Commissioner of Internal Revenue "P-157.1-mq' 15367 "P-157.1-mr" 15368 "P-157.1-mt’ 15370 03/21/2018 03/21/2018 03/21/2018 03/26/2018 03/26/2018 03/26/2018 "P-158-j" 06/30/2017 06/30/2017 06/30/2017 263,181.80 07/03/2017 64,792.34 07/03/2017 171,639.94 07/04/2017 61,824.85 54,601.89 112,066.82 15,502.74 103,747.44

We

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Kann nnn nena nner nn en nnn nn nnn cnn nnn x [subtotal | CC Cid CP 4,29 5,354.57 | B. GENERAL TUNA CORPORATION P 57,640.00 115,280.00 364,353.92 42,856.00 [subtorat =| CdS Cd 8, 085,495.24 | C. PHILBEST CANNING CORP.

"P-157.2-h" 15336 147,500.00

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Kernan nn nn nnn nnn nn ne ene ne nnn enn nnn enn nnn en ne tern ner nnn nnn nnn nnn nna ennences x “subtotal [| —SSsS*~C=~“—~—SSSCté‘“*;CSCS*SCSSCS C= 22, 500.00 | 13334 [subtotal | SOs~=“*“*~*s‘“dCS*“‘“‘(‘CNC*dSCOC*#WCOC~*«SY;«8894:10 ——~roras id SP 780,778.91.

2. PURPORTED INVOICES WERE NOT FORMALLY OFFERED A. CENTURY PACIFIC AGRICULTURAL VENTURES INC. (Annex P-159 of Exhibit P.77) Posyi7/2oi7_ | TS 7020806 | (293,220.00 | Pp osjagjaoi7 TT 8805 23,131.80 | | 05/29/2017, | CT 88H “$e | 223,719.30 | 06/28/2017, — | T8878 126,522.65 | Pp orsisjaoiy_— | 8927 216,170.66 | | 01/16/2018. | CTC 8064630 (383,351.12) | oiyaayaoig | 9 285,621.36 | oi/2a/aoig | Cs 8071584 (22,681.35) _o2/os/aoig, | sd 8078176 (183,141.00) | 03/06/2018 | C=C 8089360 (48,638.91) | o3/oe/2oig | TS 8089361 (1,024,955.14) Posyovjzois | tz PS, 220.75 subtotal | (491,161.00) | B. PHILBEST CANNING CORP. (Annex P-159 of Exhibit P-77) P04/22/20i7,_— | —C(iti‘idEC (tO | 147,500.00 Po7is/2017_— | 7992631 | 147,500.00 | 07/26/2017 | CSC 7995354 | 147,500.00 | [subtotat || 44 500.00 C. GEM FOODS INTERNATIONAL, INC. (Annex P-161 of Exhibit P-77) —osjoraoi7_ | SS™S~<~idtCS~iSSSCYSCSSCS~« BOSS | o7/sij2oiy_ [9761 14,769.42 Pp o7/3ijaoiy_ [| iC 997262, P8598 -o7/3ijaoy_ [997263 887.82 07/31/2017, | 997264 | 63,303.72 | | osjos/20i7_— | 000810 | 2,023.00 02/09/2018 | 15139 02/15/2018 15140 [subtotal | OSsSC—~—“—SCS*idSC“‘~;‘C(S!t*dCC «20,807.88 D. HI-LAS MARKETING CORPORATION (Annex P-163 of Exhibit P-77) an Dole Philippines, Inc. v. Commissioner of Internal Revenue 08/09/2017 8001057

I'

18,411.83 08/09/2017 8001058 2,985.95 08/09/2017 8001059 5,310.38 08/09/2017 8001060 19,425.86 sub-total 46,134.01

TOTAL

417,780.56

Grand Total

p 47,168,559.47 As to the second essential element, to prove that its customers, Milbrae Exports, Inc. and Amley Foods Corporation, are duly registered with the BOI and CDC, respectively, petitioner submitted the Certifications issued by the respective agencies, to wit:

Customer

Proof of VAT

Certification

Exhibit

%of Export

Name

Zero-rating

Period

No.

Sales

BOI Certification January 1 to

"P-77- 93.48% for the

Amley Food

was issued on period January

Corporation

February 27, December 31,

C"I39 I "P-

1 to December

2017 2017 443-a" 31,2016

CDC Certificate

March 1, 2016

Millbrae of Registration

to April 30, "P-445-b" Exports, Inc.

and Tax

2018

Exemption

Upon examination, We find that the sales made to Millbrae Exports, Inc. in the amount of P2,091 ,670.00 are indeed zero- rated export sales based on the certification issued by the CDC on February 17, 2016.

With regard to sales to Amley Food Corporation, We cannot consider the same subject to VAT zero-rating. In Commissioner of Internal Revenue vs. Fi.lminera Resources Corporation (Fi.lminera casej,l 40 the Supreme Court ruled that sales made to a BOI-registered buyer are export sales subject to the zero percent rate if the following conditions are met:

1. The buyer is a BOI-registered manufacturer/producer;

2. The buyer's products are 100% exported; and

3. The BOI certifies that the buyer exported 100% of its products. For this purpose, the BOI Certification is vital for the seller-taxpayer to avail of zero-rating benefits. The certification is evidence that the buyer exported its entire "' Docket- Vol. ll, p. 674.

Dole Philippines, Inc. v. Commissioner of Internal Revenue products and shall serve as authority for the seller to claim for refund or tax credit.

Relative thereto, petitioner must present the following documents:

1. The buyer's Certificate of Registration with the BOI; and,

2. The BOI Certification that the buyer exported 100% of its products.

A cursory examination of the BOI Certification issued to Amley Food Corporation shows that petitioner fell short in proving that Amley Food Corporation's products for the period subject of the present claim, i.e., from April1, 2017 to March 31, 2018, are 100% exported. To emphasize, the BOI's records show that Amley Food Corporation has exported 93.48% of its sales value from January 1 to December 31, 2016. Thus, petitioner's sales of P17,800.00 cannot qualify for a VAT zero rating.

In sum, petitioner's valid zero-rated sales for the period covering April 1, 2017 to March 31, 2018 amounted to P31,384,368,317.33, as determined below:

Considered

Export Sales to DAH

Export Sales

Total

Reported Zero-Rated

Sales (based on the amended Quarterly VAT

Returns)

I'

33 615,917,839.03

I'

49,278,029.47 I' 33 665,195,868.50

Less: Adjustments

-

Unsupported Zero-Rated

Sales

(117,094.24) (117 094.24) Disallowances sustained by the Court for failure to establish compliance with the essential elements to qualify for VAT zero-rating (1,209,764.41)

Disallowances per

Court's further verification for failure to establish compliance with the essential elements to qualify for VAT zero-rating (2,232 314,333.05) (4 7' 186,359.4 7)141 /2 280 710,456.93) Valid zero-rated sales p 31,382,276,647.33 p 2,091,670.00 1'31,384,368,317.33 141 1'47,168,559.47+1'17,800.00

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Sixth requisite: The input VAT claimed by petitioner are not transitional input taxes.

The input taxes are not transitional, as understood under Section 111 (A) of the NIRC of 1997, as amended, to wit: "SEC. 111. Transitional/ Presumptive Input Tax Credits. - (A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to rules and regulations prescribed by the

Secretary

of Finance, upon recommendation of the Commissioner, be allowed input tax on his beginning inventory of goods, materials and supplies equivalent to two percent (2%) of the value of such inventory or the actual value- added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax."

As held by the Supreme Court in Fort Bonifacio

Development Corporation

vs.

Commissioner of Internal

Revenue, 142 transitional input tax credit operates to benefit newly VAT-registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the transition period from non-VAT to VAT status, the transitional input tax credit alleviates the impact of the VAT on the taxpayer. Since there is no showing that the claimed input taxes are transitional, petitioner has complied with the sixth requisite for the grant of an input VAT refund.

Seventh

reauisite:

Not

all input taxes being claimed are due or paid.

Anent the seventh requisite in claiming a VAT refund, it is indispensable for petitioner to provide supporting documents proving that the input taxes claimed during the period covering April 1, 2017 to March 31, 2018 were due or paid under Section 11 O(A) of the NIRC of 1997, as amended, to wit:

Dole Philippines, Inc. v. Commissioner of Internal Revenue

SEC. 110. Tax Credits.- (A) Creditable input Tax. -

(1) Any input tax evidenced by a VAT invoice or official receipt issued in accordance with Section 113 hereof on the following transactions shall be creditable against the output tax:

(a) Purchase or importation of goods:

(1) For sale; or (ii) For conversion into or intended to form part of a finished product for sale including packaging materials; or (iii) For use as supplies in the course of business; or (iv) For use as materials supplied in the sale of service; or

(v) For use in trade or business for which deduction for depreciation or amortization is allowed under this Code.

{b) Purchase of services on which a value-added tax has actually been paid.

(2) The input tax on domestic purchase or importation of goods or properties by a VAT-registered person shall be creditable:

(a) To the purchaser upon consummation of sale and on importation of goods or properties; and

(b) To the importer upon payment of the value-added tax prior to the release of the goods from the custody of the Bureau of Customs.

Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code shall be spread evenly over the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (1'1 ,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, finally, That in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the ~

Dole Philippines, Inc. v. Commissioner of Internal Revenue purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee. The above provisions are implemented by Sections 4.110- 1 to 4.110-3 of RR No. 16-2005, which read as follows: "SECTION 4.110-1. Credits For Input Tax.- "Input tax" means the VAT due on or paid by a VAT-registered person on importation of goods or local purchases of goods, properties, or services, including lease or use of properties, in the course of his trade or business. It shall also include the transitional input tax and the presumptive input tax determined in accordance with Sec. 111 of the NIRC of 1997, as amended. It includes input taxes which can be directly attributed to transactions subject to the VAT plus a ratable portion of any input tax which cannot be directly attributed to either the taxable or exempt activity. Any input tax on the following transactions evidenced by a VAT invoice or official receipt issued by a VAT-registered person in accordance with Sees. 113 and 237 of the NJRC of 1997, as amended, shall be creditable against the output tax:

(a) Purchase or importation of goods ( 1) For sale; or

(2) For conversion into or intended to form part of a finished product for sale, including packaging materials; or

(3) For use as supplies in the course of business; or

(4) For use as raw materials supplied in the sale of services; or

(5) For use in trade or business for which deduction for depreciation or amortization is allowed under the NIRC of 1997, as amended,

(b) Purchase of real properties for which a VAT has actually been paid;

(c) Purchase of services in which a VAT has actually been paid;

(d) Transactions "deemed sale" under Sec. 106 (B) of the NTRC of 1997, as amended;

(e) Transitional input tax allowed under Sec. 4.111 (a) of these Regulations;

Dole Philippines, Inc. v. Commissioner of Internal Revenue

(f) Presumptive input tax allowed under Sec. 4.111 (b) of these Regulations;

(g) Transitional input tax credits allowed under the transitory and other provisions of these Regulations. SECTION 4.110-2. Persons Who Can Avail of the Input Tax Credit. -The input tax credit on importation of goods or local purchases of goods, properties or services by a VAT- registered person shall be creditable:

(a) To the importer upon payment of VAT prior to the release of goods from customs custody;

(b) To the purchaser of the domestic goods or properties upon consummation of the sale; or

(c) To the purchaser of services or the lessee or licensee upon payment of the compensation, rental, royalty or fee. Relative thereto, Section 4.110-8 of RR No. 16-2005 provides for the substantiation requirements of input tax credits as follows:

"SEC. 4.110-8. Substantiation of Input Tax Credits. -

(a) Input taxes for the importation of goods or the domestic purchase of goods, properties or services is made in the course of trade or business, whether such input taxes shall be credited against zero-rated sale, non-zero-rated sales, or subjected to the 5% Final Withholding VAT, must be substantiated and supported by the following documents, and must be reported in the information returns required to be submitted to the Bureau:

(1) For the importation of goods- import entry or other equivalent document showing actual payment of VAT on the imported goods.

(2) For the domestic purchase of goods and properties - invoice showing the information required under Sees. 113 and 237 of the Tax Code.

(3) For the purchase of real property- public instrument i.e., deed of absolute sale, deed of conditional sale, contract/agreement to sell, etc., together with VAT invoice issued by the seller.

(4) For the purchase of services- official receipt showing the information required under Sees. 113 and 237 of the Tax Code.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Verily, to prove entitlement to credits for input taxes due and paid, petitioner must not only present the supporting documents prescribed under Section 4.110-8 ofRR No. 16-2005 but also, these documents must comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, and as implemented by Section 4.113-1(A) and (B) of RR No. 16-2005, which were quoted earlier.

Based on its Amended Quarterly VAT Returns143 for the period covering April 1, 2017 to March 31, 2018, petitioner reported current input tax from various purchases of goods and services amounting to P1,538,046,028.73, out of which the amount of P1,218,800,809.92 144 is the subject of its administrative claim for refund 145, as shown below:

FY

FY

FY

FY

1st Qtr 2018 2nd Qtr 2018 3rd Qtr 2018 4th Qtr 2018

Particulars

P-450-c P-29/P-450-e

P-35/P-450·£

P-450-k

Total

Deferred

from the previous quarter p 20,153,348.91 I' 17,048,737.55 I' 14,161,000.03

Less: Deferred for

the succeeding _ p"riod 17,048 737.53 14,161 000.04 11,568,171.62 Amortized input tax on capital goods exceeding !'1M 3,104 611.38 2 887,737.51 2,592 828.41

Input

tax on domestic purchases of goods other than capital goods 92,222,554.55 129,437,440.44 178 735,782.68

Input

Tax

on importation of goods other than capital goods 56,150,842.00 65,856,117.10 119,303,871.30

Input

tax on domestic purchases of services 120,840,418.54 108 281,885.32 152 080 513.68

Services

Rendered

by

Non-Residents

5,341,028.73 9,563 209.48 11,091 999.61

Creditable

Withholding VAT

(reflected as

Others in

VAT

Returns)

8,505.86 6,946.99 5,004.15 Total Input tax during the ' period P277 667,961.06 1'316,033,336.84 1'463,809 999.83 Less: Output tax 57,947,061.26 63 669,011.29 131 774,115.09

Excess

Input

tax 1'219,720,899.80 P252,364,325.55 1'332 035,884.74 143 Exhibits "P-450-c", "P-29"/"P-450-e", "P-35"/"P-450-g", and "P-450-k". 144 With discrepancy ofPO.OI. 145 Exhibit "P-69", Docket- Vol. 1, pp. 539 to 551. p 11,568,171.64 I' 62,931 258.13 9 280 906.18 52,058,815.37 2,287,265.46 10,872,442.76 244,961,566.10 645,357,343.77 76,416,213.00 317 727,043.40 143,823 321.73 525 026,139.27 13,026,744.28 39,022,982.10 19,620.44 40 077.44 1'480,534,731.01 p 1 538 046 028.74 65,855,031.16 319 245,218.81 1'414,679,699.85 p 1,218,800,809.93

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Out of the reported input VAT of P1,538,046,028.74 during the period of claim, respondent found that petitioner's allowable input VAT amounted to P1,422,392,553.50, 146 while the remaining input VAT amounting to P115,653,475.24 was disallowed due to the alleged non-compliance with the invoicing requirements, among others. Moreover, the additional amount of P209 ,618,068.1 0 was deducted from petitioner's claim for refund, which represents the output VAT imposed upon petitioner, compromise penalty, and the input VAT allocated to sales allegedly not qualified for zero-rating, as well as exempt sales.

To the point of being repetitive, the input VAT amount of P325,271 ,543.33 was disallowed for refund by respondent, and, thus, has been the subject of the present claim before the Court. To support its input taxes from importations and domestic purchases of goods and services, petitioner submitted the

Single

Administrative

Document

("SAD"),

Temporary

Assessment Notices, and SSDT147 issued by the BOC and VAT sales invoices and official receipts 148 issued by its various suppliers.

The denied portion of petitioner's claim for refund of the excess and unutilized input tax aggregating P325,271,543.33 are accounted for as follows149;

ICPA

Report,

Annexed

to No.

Table Nos. 6

Particulars

Amount

Exhibit "P-77"

Exhibits

and 10 lSO Item No.

The total amount of disallowed input VAT due to

Non-compliance with

the invoicing Item Nos. 1 requirements,

I

to 4, 6 to 14, double/over-claimed input VAT, insufficient/no 16, 20, & 21 supporting documents, invalid ATP/failure to indicate ATP, and supported by out-of-period

VAT Sis or ORs

2 Item No.5

Non-VAT

per

ITS

verification 146 Exhibit "R-5", BIR Records, p. 47. 147 Exhibits "P-170-a" to "P-170-1". 148 Exhibits "P-78-a" to "P-155-b". 149 See Exhibit "P-77", pp. 7, 12 to 14. 150 Exhibit "P-77", pp. 5 to 6. Annex B, pp.

"P-78" to

20-22

"P-106"

"P-1 08"

Annex C,

p. to "P- 23 121"

"P-122"

Annex D, p.

to "P- Pll4,899,296.26 24 128"

Annexes F to "P-130"

N, pp. to "P- 24-27 !56" AnnexP, o. 29

"P-164"

Annexes s to "P-166" T, pp.

to "P- 29-30.

171" 754,178.95 Annex E, p. 24 "P!29" Dole Philippines, Inc. v. Commissioner of Internal Revenue

Total

Disallowances

pertaining to Input VAT P115,653,475.23 durin2 the neriod

Additional

output

VAT

"P-157.1" 3 Item No. 15 based on considered 5,918,954.44 AnnexO, p.28 "P- export sales without prior to ao"uroved VAT zero-ratin2 163" 4 Item No. 17 Allocation of input tax on 51,333.07 Annex Q, p. 29

"P-165"

unremitted exoort sales

Item

Nos.

The total amount of input AnnexR o. 29 - 5 VAT allocable to exempt 19,226,034.11 18 & 22 sales Annex U, p. 30 - The total amount of 6 Item No. 23 disallowed input

VAT

184,409,246.48 Table V-1, p. allocable to sales not 31 aualified for zero-rated 7 Item No. 19

Compromise Penaltv

12,500.00

Total Disallowances

P325,271,543.33 Based on the ICPA report, out of the input VAT of 1"115,653,475.23,

We

find the following disallowances amounting to 1"92,561,103.84 proper, thus, shall be sustained:

Disallowed Input

Annexed

No.

Particulars to Exhibit

Exhibits

Amount

VAT perCIR

"P-77"

The total amount of

Annex

B, "P-86" to "P- p 42,669,750.22 disallowed input DO. 21-22 106" VAT due to Non- AnnexC, p.

"P-1 09' to "P-

2,324,802.13 compliance with the 23 121" invoicing AnnexO, p.

"P-123" to "P- 21,984,083.28 requirements, 24 128" insufficient/ no

Annexes F

"P-130" to "P- 1 supporting 1'114,899,296.28 to N, 156" 18,504,135.80 documents, invalid DO. 24-27 ATP/failure to AnnexP, p.

indicate ATP, and 29

"P-164"

5,144,460.88 supported by out-of- period VAT Sis or

Annexes 8

"P-166" to "P- ORs (Item Nos. 1 to to T,

169" and "P-

I, 179,692.58 4, 6 to 14, 16, 20 & pp. 29-30.

171" 21\

Non-VAT

per

ITS

Annex

E, 2 verification (Item No.

754,178.95

"P-129"

754,178.95 51

p. 24

Grand Total

Pll5 653 475.23 p 92 561 103.84 In addition, upon further verification, the Court finds that the total amount of 1"17,602,110.62 should likewise be disallowed for the reasons stated below:

1. Inout VAT not declared seoarately

Exhibit

Name of Supplier

Date

SI/OR No.

Input VAT Amount

No.

VAT

REG.

"P-78-

TIN

iv"

MALLBERRY SUITES

01/12/2018

OFFICIAL

I'

409.07

RECEIPT

NO. 336531 "P-85-

SARANGANI

VAT

REG.

b" RESOURCES CORP.

05/05/2017 TIN

144,020.98

OFFICIAL

v

Dole Philippines, Inc. v. Commissioner of Internal Revenue

RECEIPT

NO. 3249

Subtotal

p 144,430.05

2. Overdeclared input VAT

Exhibit

Name of Supplier

Date

SI/OR No.

Input VAT Amount

No.

VAT

REG.

TIN

"P-78-

ECCO HARDWARE INC

03/08/2018 CHARGE

I'

30.72 cq"

SALES

INVOICE

NO. 85774

VAT

REG.

"P-108-

ADELA

M.

BUSTOS

TIN

a"

TRUCKING

2/21/2018

OFFICIAL

33,019.00

RECEIPT

NO. 0089

VAT

REG.

"P-108-

ADELA

M.

BUSTOS

TIN

c"

TRUCKING

3/5/2018

OFFICIAL

46,106.65

RECEIPT

NO. 0090 "P-122-

VAT

REG.

RVB MACHINE SHOP

TIN

m" to &

ENGINEERING 03/15/2018 CHARGE

14,400.00 "P-122- q"

SERVICES

INVOICE

NO. 7521

Subtotal

p 93 556.37

3. Input Vat supported by blurred OR/SI

Exhibit

Name of Supplier

Date

SI/OR No.

Input VAT Amount

No.

VAT

REG.

TIN

SALES

INVOICE

NO.

816- 000096719, 816- 000095037, 816- 000094286, "P-78-

ACE

HARDWARE

816- ay"

PHILIPPINES INC

07/06/2017 000091921,

I'

362.51 817- 000107250, 817- 000107833, 817- 000105952, 815- 000096070, 816- 000094289

VAT

REG.

"P-78-

REACHEM

03/23/2018 TIN

SALES

1,178.57 cy"

INDUSTRIES INC

INVOICE

NO. 34429

Subtotal

p 1,541.08

4. Input VAT supported by ORs but failed to indicate the nature of service rendered

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Exhibit

Name of Supplier

Date

SI/OR No.

Input VAT Amount

No.

VAT

REG.

"P-78-

TIN

cz" to

NMC

CONTAINER 04/06/2017 OFFICIAL

I'

25,074.44 "P-78- LINES, INC.

RECEIPT

dg" NO.

0162747

VAT

REG.

"P-78-

TIN

dh" to

NMC

CONTAINER 04/06/2017 OFFICIAL

18,806.98 "P-78- LINES, INC.

RECEIPT

dn" NO.

0162748

VAT

REG.

"P-78-

TIN

do" to

NMC

CONTAINER 04/06/2017 OFFICIAL

19,886.98 "P-78- LINES, INC.

RECEIPT

ds" NO.

0162749 "P-78-

DS

DYNATEC

VAT

REG.

dv" to

INDUSTRIAL

TIN

"P-78-

SOLUTIONS

AND

04/27/2017 OFFICIAL

33,840.00 ee"

ENGG

RECEIPT

NO. 0055

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

ef"

TRADING

AND

05/20/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0666

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

eg"

TRADING

AND

05/20/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0667

VAT

REG.

"P-78-

PPLM

INDUSTRIAL

TIN

eh"

CORPORATION

06/08/2017 OFFICIAL

15,600.00

RECEIPT

NO. 5423 "P-78-

VAT

REG.

ej"

to AERON

EQUIPMENT

TIN

"P-78-

SALES

&

RENTAL 06/22/2017 OFFICIAL

24,357.01 em"

SERVICES

RECEIPT

NO. 001005

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

en"

TRADING

AND

07/02/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0668

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

eo"

TRADING

AND

07/02/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0669

VAT

REG.

"P-78-

BET AN CALIBRATION

TIN

ep"

TECHNIQUE

07/05/2017 OFFICIAL

13,500.00

RECEIPT

NO. 19657 ·- -"---· "P-78-

LEADING

VAT

REG.

eq" BLDG .INTELLIGENCE

07/14/2017 TIN

41,280.00

(LBI)PHILS INC

OFFICIAL

Dole Philippines, Inc. v. Commissioner of Internal Revenue

RECEIPT

NO. 078

VAT

REG.

"P-78-

DOLE ASIA COMPANY

TIN

er"

LIMITED

07/27/2017 OFFICIAL

67,387.41

RECEIPT

NO. 02804

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

es"

TRADING

AND

08/01/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0670

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

et"

TRADING

AND

08/01/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0671

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

eu"

TRADING

AND

08/21/2017 OFFICIAL

5,508.00

SERVICES

RECEIPT

NO. 0657

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

ev"

TRADING

AND

08/21/2017 OFFICIAL

7,344.00

SERVICES

RECEIPT

NO. 0658

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

ex"

TRADING

AND

08/30/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0672

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

ey"

TRADING

AND

08/30/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0674

VAT

REG.

"P-78-

MONARK EQUIPMENT

TIN

08/31/2017 OFFICIAL

2,856.84 ez"

CORP

RECEIPT

NO. 00951

VAT

REG.

"P-78- J.E.

PALERMO

TIN

fa"

CONSTRUCTION

&

09/06/2017 OFFICIAL

83,247.37

MATERIALS SU

RECEIPT

NO. 3890

VAT

REG.

"P-78- MT.MATUTUM

TIN

fb"

HEALTH

CARE 09/07/2017 OFFICIAL

6,477.76 FOUNDATION, INC.

RECEIPT

NO. 230262

VAT

REG.

"P-78-

DOLE

ASIA

TIN

go" COMPANY,LTD(DPGSL

09/20/2017 OFFICIAL

489,951.01

PHILIPPINES)

RECEIPT

NO. 02838

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gp"

TRADING

AND

09/30/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0675

Dole Philippines, Inc. v. Commissioner of Internal Revenue

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gq"

TRADING

AND

10/01/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0662

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gr"

TRADING

AND

10/01/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0663

VAT

REG.

TIN

"P-78-

WRU CORPORATION

10/19/2017 OFFICIAL

18,214.29 gs"

RECEIPT

NO.

0003406

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gt"

TRADING

AND

10/30/2017 OFFICIAL

2,160.00

SERVICES

RECEIPT

NO. 0676

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gu"

TRADING

AND

10/30/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0682

VAT

REG.

"P-78-

RTX

ELECTRONICS

TIN

gy"

TRADING

AND

11/30/2017 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0678

VAT

REG.

TIN

"P-78-

2GO GROUP INC

12/08/2017 OFFICIAL

4,203.21 ha"

RECEIPT

NO.

0541336 "P-78-

VAT

REG.

hb" to

SOUTH

COT ABA TO

TIN

"P-78-

INTEGRATED

PORT

12/11/2017 OFFICIAL

153.60 he"

SERVICES

RECEIPT

NO. 206930 "P-78-

VAT

REG.

hf" to

KPS

TRUCKING

TIN

"P-78-

SERVICES

12/12/2017 OFFICIAL

50,127.47 hh"

RECEIPT

NO. 0035 "P-78-

VAT

REG.

hi" to

KAICOSH

TIN

"P-78-

CORPORATION

12/13/2017 OFFICIAL

41,396.58 ht"

RECEIPT

NO.Oll4 "P-78-

VAT

REG.

TIN

hv" to

GRANDCITY HOTEL

12/21/2017 OFFICIAL

2,070.01 "P-78- hy"

RECEIPT

NO. 121140 "P-78-

VAT

REG.

ia"

to SOUTH

COT ABA TO

TIN

"P-78-

INTEGRATED

PORT

12/23/2017 OFFICIAL

2,379.84 ib"

SERVICES

RECEIPT

NO. 207543

Dole Philippines, Inc. v. Commissioner of Internal Revenue

"P-78-

VAT

REG.

ig"

to TNL

EXPRESS

TIN

"P-78-

WORLDWIDE CORP

01/05/2018 OFFICIAL

1,584.00 ij"

RECEIPT

NO. 7055 "P-78-

VAT

REG.

ik" to

KAICOSH

TIN

"P-78-

CORPORATION

01/09/2018 OFFICIAL

47,880.12 it"

RECEIPT

NO. 0121

VAT

REG.

"P-78-

TIN

iu"

MALLBERRY SUITES

01/12/2018 OFFICIAL

231.43

RECEIPT

NO. 336531 "P-78-

VAT

REG.

iw"

to IRELAN'S

TIN

"P-78-

ENTERPRISES

01/12/2018 OFFICIAL

2,886.00 ix"

RECEIPT

NO. 6802 "P-78-

VAT

REG.

iy"

to IRELAN'S

TIN

"P-78-

ENTERPRISES

01/19/2018 OFFICIAL

6,120.00 jc"

RECEIPT

NO. 6803

VAT

REG.

" P-78-

RTX

ELECTRONICS

TIN

jv"

TRADING

AND

02/15/2018 OFFICIAL

2,280.00

SERVICES

RECEIPT

NO. 0679

VAT

REG.

"P-78-

R

&

G

RUIZ

TIN

jw" CONSTRUCTION, INC.

03/01/2018 OFFICIAL

12,978.60

RECEIPT

NO. 0106

VAT

REG.

TIN

"P-78- kd"

SGS PHILIPPINES INC

03/07/2018 OFFICIAL

RECEIPT

300.00 NO.

0156907 "P-78-

VAT

REG.

ke" to

TIN

"P-78-

KAICOSH CORPOR

03/12/2018 OFFICIAL

14,487.81 kl"

RECEIPT

NO. 0160

VAT

REG.

"P-78-

ASIAN

MARINE

TIN

km"

TRANSPORT CORP

03/12/2018 OFFICIAL

49,345.71

RECEIPT

NO. 58032

VAT

REG.

"P-78-

ASIAN

MARINE

TIN

kn"

TRANSPORT CORP

03/12/2018 OFFICIAL

218,628.00

RECEIPT

NO. 58037

VAT

REG.

"P-78-

AJ SUELA & REDUCTO

TIN

kr"

TRUCKING SERVICES

03/16/2018 OFFICIAL

1,865.99

RECEIPT

NO. 5874 "P-78-

ASIAN

MARINE

VAT

REG.

ks"

TRANSPORT CORP

03/20/2018 TIN

52,736.79

Dole Philippines, Inc. v. Commissioner of Internal Revenue

OFFICIAL

RECEIPT

NO. 58035

VAT

REG.

"P-78-

R

&

G

RU!Z

TIN

kt" CONSTRUCTION, INC.

03/22/2018 OFFICIAL

31,800.00

RECEIPT

NO. 0108

VAT

REG.

"P-81-

TIN

a" NARCISO FARM, INC.

06/01/2017 OFFICIAL

6,804,000.00

RECEIPT

NO. 0301

VAT

REG.

"P-83-

DOLE

ASIA

TIN

a" COMPANY,LTD(DPGSL

04/07/2017 OFFICIAL

300,134.94

PHILIPPINES)

RECEIPT

NO. 02761

VAT

REG.

"P-83-

DOLE

ASIA

TIN

b" COMPANY,LTD(DPGSL

05/04/2017 OFFICIAL

363,430.18

PHILIPPINES)

RECEIPT

NO. 02769

VAT

REG.

DOLE

ASIA

TIN

"P-83-c" COMPANY,LTD(DPGSL

06/05/2017 OFFICIAL

790,903.60

PHILIPPINES)

RECEIPT

NO. 02780

VAT

REG.

"P-83-

DOLE

ASIA

TIN

d" COMPANY,LTD(DPGSL

06/29/2017 OFFICIAL

537,068.86

PHILIPPINES)

RECEIPT

NO. 02789

VAT

REG

"P-84-

DOLE

ASIA

TIN.

a" COMPANY,LTD(DPGSL

07/27/2017 OFFICIAL

357,409.40

PHILIPPINES)

RECEIPT

NO. 02806

VAT

REG.

"P-108-

ADVENT TRANSPORT

TIN

b"

SERVICES

03/02/2018 OFFICIAL

103.53

RECEIPT

NO. 0059 .

VAT

REG.

"P-122-

TROPILAND

TIN

v" to "P-

ENTERPRISES

04/12/2017 OFFICIAL

57,036.00 122-x"

RECEIPT

NO. 5026

VAT

REG.

"P-112-

TIN

y" to "P-

CMKT ENTERPISES

03/01/2018 OFFICIAL

40,649.09 122-ac"

RECEIPT

NO. 423

VAT

REG.

"P-134-

DAVAO

INT'L

TIN

a"

CONTAINER

08/11/2017 OFFICIAL

1,386.97

TERMINAL INC

RECEIPT

NO. 115833

VAT

REG.

"P-134-

DAVAO

INT'L

TIN

b"

CONTAINER

11/30/2017 OFFICIAL

4,160.92

TERMINAL INC

RECEIPT

NO. 126781

Dole Philippines, Inc. v. Commissioner of Internal Revenue

I

I

I

IP

10,704,150.74

5. Input VAT without supporting documents

"P-79"

I VARIOUS SUPPLIERS I -

I -

6 658,432.38

I

I

I

p 6,658,432.38

TOTAL

P17,602, 110.62 Considering the foregoing, out of the input VAT of Pll5,653,475.23 (previously disallowed by respondent), the Court finds that the amount of P5,490,260. 77 was properly supported in accordance with the invoicing and substantiation requirements under the law and regulations, computed as follows:

Total input VAT for the period covering April!, 2017 to March 31, 2018 accounted for by petitioner (Item Nos. 1 to 14, 16, 20 & 21) p 115,653,475.23

Less: Disallowances

Per !CPA report 92,561,103.84 Per the Court's further verification 17,602,110.62

Total Disallowances

(11 0, 163,214.46) Valid Input VAT per this Court's verification P5,490,260. 77 Hence, petitioner complied with the seventh requisite, i.e., the input taxes are due or paid, but only in the amount of P5,490,260.77.

As for the deferred input VAT amounting to P5,144,460.88 and bond already refunded by

BOC

amounting to P1,075,123.00, or in the aggregate amount of P6,219,583.88, petitioner is already amenable to these disallowances. 15I Eighth requisite: A portion of the input taxes claimed by petitioner are attributable to zero-rated or effectively zero- rated sales.

The eighth requisite is that the input VAT claimed is attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero- rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated based on sales volume.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

As discussed earlier, petitioner declared in its Amended Quarterly VAT returns for the period covering April 1, 2017 to March 31, 2018 a total sales off'36,785,576,550.64 consisting of VAT-subject sales amounting to f'2,660,376,823.43, zero- rated sales amounting to f'33,665, 195,868.50, and exempt sales amounting to f'460,003,858.71. However, since petitioner's valid input VAT for the same quarter in the total amount of f'1,427,882,814.27152 cannot be identified to specific sales, this Court shall proportionately allocate the said input VAT based on the volume of petitioner's sales, thus:

Total Zero-Rated Sales

VAT Returns

p 3 868.50

Divided by the Reported Total Sales per

VAT Returns

Total VA Table Sales per VAT Returns

p 2,660,376,823.43

Divided by the Reported Total Sales per

Quarterly VAT Returns

p 36,785,576,550.64

Multiplied by Total Valid Input VAT

p 1,427,882,814.27 Valid input VAT allocated to VA Table sales p 103,266,190.23

Total Exempt Sales per VAT Returns

p 460,003,858.71

Divided by the Reported Total Sales per

Quarterly VAT Returns

p 36 '785 ,576,550.64

Multiplied by Total Valid Input VAT

p 1,427,882,814.27 Valid input VAT allocated to Exempt sales p 17,855,683.29 Thus, with regard to petitioner's compliance with the eighth requisite, only the amount of f'1,306,760,940.76 represents its valid input VAT attributable to the total declared zero-rated for the subject period of the claim. Ninth requisite: Petitioner's input taxes have not been applied against output taxes during and in the succeeding quarters 152 To properly determ n petitioner's refundable amount, we shall consider the valid input VAT in its entirety, i.e., the total valid input VAT as per BIR's findings (1'1,422,392,553.50) and this Court's findings (1'5,490,260. 77).

Dole Philippines, Inc. v. Commissioner of Internal Revenue

As regards the ninth requisite, petitioner reported output taxes from its taxable sales for the 1st to 4th quarter of FY 2018 in the aggregate amount ofP319,245,218.80, to wit: FY ending March 2018

Output VAT

1st Quarterl53 p 57,947,061.26 2nd Quarterl54 63,669,011.29 3rd Quarter!ss 131,774,115.09 4th Quarterl56 65,855,031.16

Total

p 319,245,218.80 In the recent case of Chevron Holdings, Inc. (Formerly Caltex Asia Limited) vs. Commissioner of Internal Revenue, 157 the Supreme Court held that the input tax attributable to zero-rated sales, may, at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12% VAT-able sales, and any unutilized or "excess" input tax may be claimed for refund or the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety, and such option is vested with the taxpayer-claimant, to wit: "Thus, the input tax attributable to zero-rated sales may, at the option of the VAT-registered taxpayer, be: (1) charged against output tax from regular 12% VAT-able sales. and any unutilized or "excess" input tax may be claimed for refund of the issuance of tax credit certificate; or (2) claimed for refund or tax credit in its entirety. It must be stressed that the remedies of charging the input tax against the output tax and applying for a refund or tax credit are alternative and cumulative. Furthermore, the option is vested with the taxpayer-claimant.

" [Emphases and underscoring supplied.]

Applying the foregoing, records show that petitioner chose the first option, i.e., it computed its claim for refund in the aggregate amount ofP1,218,800,809.92 by offsetting its output tax from the regular VATable sales against its available input taxes for the l•t to 4th quarters of FY ending March 2018, as shown hereafter:

'"Line 15ll, Exhibit "P-450-a".

Dole Philippines, Inc. v. Commissioner of Internal Revenue

It is clear from the foregoing that petitioner opted to claim a refund of its unutilized or "excess" input tax, which is the amount after charging the input tax allocated to zero-rated sales against its output tax liabilities. Following the same computation, since petitioner's valid input VAT allocated to sales subject to the 12% VAT in the amount of P103,266, 190.23, as earlier determined, is not enough to cover its output VAT liability amounting to P319,245,218.80, the output VAT still due amounting to P215,979,028.57 shall then be charged against its valid input

VAT

attributable to total reported zero-rated sales of P1,306,760,940.76, leaving an excess input VAT attributable to total zero-rated sales of P1,090,781,912.18, as herein computed:

Output VAT

p 319,245,218.80 Less: Valid Input VAT allocated to sales 103,266,190.23 subject to 12% VAT

Output VAT Still Due

p 215,979,028.57 Valid input VAT allocated to zero-rated p 1,306,760,940.76 sales

Less: Output VAT Still Due

215,979,028.57 Excess Input VAT attributable to p 1,090,781,912.18 zero-rated sales However, as discussed earlier, petitioner was able to properly substantiate only the total amount of P31 ,384,368,317.33 out of its total declared zero-rated sales of P33,665, 195,868.50. Consequently, only the input VAT of P1,016,881,096.42 is attributable to the said valid zero-rated sales ofP31,384,368,317.33, as computed below:

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Excess Input VAT attributable to p 1,090, 781,912.18 total reported zero-rated sales

Divided by Total Reported Zero-rated

r 33,665,195,868.50 sales Multiplied by Valid zero-rated sales r 31,384,368,317.33 Excess Input VAT attributable to p 1,016,881,096.42 valid zero-rated sales However, since respondent had already issued a TCC in the amount of P893,529,266.59 in favor of petitioner for its input VAT on domestic purchases, the said amount of P893,529,266.59 shall be offset against the valid input VAT attributable to zero-rated sales ofP1,016,881,096.42, as found by this Court, to determine the amount of input VAT still to be refunded to petitioner.

Thus, for the 1st to 4th quarters of FY 2018, petitioner is still entitled to the refund of the amount of P123,351,829.83 (P1 ,016,881,096.42 less P893,529,266.59). Although petitioner carried over the claimed amount of P1,218,800,809.92 in its succeeding quarters/period, the same remained unutilized until it was deducted as "VAT Refund/TCC claimed"15B in its Quarterly VAT Return for the 4th quarter of FY ending

March

2019, albeit, only in the amount of P1,199,574,775.84, since the discrepancy of which amounting to P19,226,034.08159 pertains to input VAT allocable to exempt sales which were already deducted and do not anymore form part of the petitioner's allowable input tax to be carried over, as disclosed in its VAT Returns for the 1st to 4th quarters of FY ending March 2018. Accordingly, the subject claim no longer formed part of the excess input VAT off>1,332,824,668.48 as of the end of the 4th quarter of FY ending March 20 19, to be carried over to the next quarters. Such being the case, the excess valid input VAT of P123,351,829.83 was not utilized or applied against any output tax liability during the 1st quarter of FY 2020 and in the succeeding quarters. 158 Exhibit "P-450-m", Line 23D. 159 FY ending Input Tax allocable

March 2018 to Exempt Sales

I st Quarter p 3,387,096.62 2nd Quarter 3.R79.258.45 3rd Quarter 6,174,493.83 4th Quarter 5,785,185.18

Total

p 19,226,034.08 y

Exhibit (Line

23C)

"P-450-a"

"P-450-e" "P-450-g" "P-450-k"

Dole Philippines, Inc. v. Commissioner of Internal Revenue

In fine, petitioner was able to satisfy the ninth requisite and has sufficiently proven its entitlement to the refund or issuance of TCC in the amount of P123,351,829.83, representing excess and unutilized input VAT attributable to its zero-rated sales for the 1st to 4 1h quarters of FY ending March 2018.

Respondent's imposition of a compromise penalty is not proper.

Respondent imposed compromise penalty amounting to P12,500.00 for failure to supply the correct information and deducted the same from petitioner's input VAT claim. Petitioner argues that it cannot be compelled to pay the compromise penalty since a compromise agreement implies a mutual agreement between the parties regarding the thing or subject matter that is so compromised, and the choice of paying or not paying it distinctly belongs to the taxpayer. This Court agrees with petitioner. Under Revenue Memorandum Order ("RMO") No. 7- 2015,160 compromise penalties are the only amounts suggested in settlement of criminal liability. They may not be imposed or exacted on the taxpayer if a taxpayer refuses to pay the proposed compromise penalties. It is well-settled that the Court has no jurisdiction to compel a taxpayer to pay the compromise penalty because, by its very nature, it implies a mutual agreement between the parties with respect to the thing or subject matter which is so compromised, and the choice of paying or not paying it distinctly belongs to the taxpayer. 161 Absent a showing that petitioner consented to the compromise penalty herein, its imposition should be deleted. The imposition of the same without the conformity of the taxpayer is illegal and unauthorized.162 Hence, there being no compromise agreement between the parties in the instant case, the compromise penalty imposed by respondent should be cancelled. 160 The Revised Consolidated Schedule of Compromise Penal~ Violations of the National Internal Revenue Code. 161 The Philippines International Fair, Inc. vs. The Collector of Internal Revenue, et. a/., G.R. L-1298 and L-12932, March 3 I, I 962, 4 SCRA 781.

Dole Philippines, Inc. v. Commissioner of Internal Revenue

Final note An applicant for a tax refund or tax credit must not only prove entitlement to the claim but also comply with all the documentary and evidentiary requirements, such as VAT invoicing requirements provided by tax laws and regulations. 163 Well-settled is the rule that tax refunds or credits are strictly construed against the taxpayer, just like tax exemptions. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit. 164 However, once the requirements laid down by the NIRC of 1997, as amended, have been met, a claimant should be considered successful in discharging its burden of proving its right to refund. Thereafter, the burden of going forward with the evidence, as distinct from the general burden of proof, shifts to the opposing party, the respondent. It is then the turn of the latter to disprove the claim by presenting contrary evidence. 165

WHEREFORE, in light of the foregoing, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the additional amount of One Hundred Twenty-Three Million

Three Hundred Fifty-One Thousand Eight Hundred Twenty-

Nine Pesos and Eighty-Three Centavos (P123,351,829.83), representing petitioner's excess and unutilized input VAT attributable to its zero-rated sales for the 1st to 41h quarters of FY ending March 2018.

Associate Justice

Dole Philippines, Inc. v. Commissioner of Internal Revenue

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. ·ate Justice 2nd Divi,.·LUJ.<...-n.·cting Chairperson

CERTIFICATION

Pursuant to Section 13 of Article VIII of the Constitution, and the 2nd Division Acting 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's Division ROMAN G. DEL ROSARIO

Presiding Justice

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

Quezon City

SPECIAL SECOND DIVISION

DOLE PHILIPPINES, INC., Petitioner, CTA Case No. 10212

Members:

-versus- BACORRO-VILLENA, Acting Chairperson CUI-DAVID, fl.

COMMISSIONER OF

INTERNAL REVENUE,

Promulgated:

Respondent.

JUN 1 j/13 2023 X - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X 1:,. ,.,. .

SEPARATE OPINION

BACORRO-VILLENA, L.:

I concur with the ponencia of my esteemed colleague Associate Justice Lanee S. Cui-David in ruling that: (1) petitioner complied with the requisites for granting a claim for refund of unutilized input tax; (2) certain zero-rated sales must be disallowed for failure to show proof of actual shipment and/or incomplete supporting documents, failure to comply with the invoicing requirements (such as incorrect Tax Identification Number) and failure to formally offer some invoices; and, (3) some input taxes must be disallowed because of non-compliance with the invoicing requirements or blurred sales invoices/Official Receipts (ORs). However, with due respect, I espouse a different view as regards the computation of the refundable amount. In my previous Separate Opinion in the Court En Bane case of Maersk Global Services Centres (Philippines) Ltd. v. Commissioner of Internal Revenue', I outlined what I deem to be the correct steps in computing the amount of the refundable input value-added tax (VAT) based on the recent Supreme Court decision in Chevron Holdings, Inc. (formerly Caltex Asia Limited) v. Commissioner of Internal Revenue>

(Chevron))

CTA EB No. 2541 (CTA Case No. 9537), 27 April2023. G.R. No. 215159, 05 July 2022.

SEPARATE OPINION

Dole Philippines, Inc. v. CIR

1. Determine the amount of substantiated or valid input VAT;

2. Deduct from the substantiated or valid input VAT any input VAT directly attributable to a specific activity to arrive at the substantiated or valid input VAT not attributable to any activity; 3· Multiply the substantiated or valid input VAT not attributable to any activity by the ratio of Valid Zero-Rated Sales over Total Sales to determine the amount of substantiated or valid input VAT attributable to zero-rated sales; 4· Add to the amount computed in no. 3 any substantiated or valid input VAT directly attributable to zero-rated sales to arrive at the total substantiated or valid input VAT attributable to zero-rated sales; and, 5· Deduct from the total substantiated or valid input VAT attributable to zero-rated sales any input VAT already charged by the taxpayer-claimant against its output VAT liability and any input VAT carried-over instead. Applying the foregoing steps, I forward and submit the following illustration thereof, to wit:

Step 1-

Step 2-

Step 3-

Step 4-

Step s- It is observable from the Decision that the amount of substantiated or valid input VAT is 1'1,427,882,814.27. No input VAT is directly attributable to a specific activity. The amount of substantiated or valid input VAT attributable to zero-rated sales is computed as follows:

Total Valid Zero-Rated Sales

1'11,184,168, 117-11 Divided by the Reported Total Sales per Quarterly VAT Returns 16,78'i,';76,<;<;0.64

Multiplied by Total Valid Input VAT

1,427,882,814.27 Valid input VAT allocated to total valid zero-rated sales PI,218,227,478.24 No input VAT is directly attributable to a specific activity. Refundable amount is:

Output VAT

l'wl,24'i,218.8o

Total VATable Sales per VAT

Returns

1'2,660,176,821.41

Divided by the Reported Total

.

Sales per Quarterly VAT Returns

16,78'i,'i76,<;<;0.64 1, p

SEPARATE OPINION

Dole Philippines, Inc. v. ClR

Multiplied by Total Valid Input

VAT

Valid input VAT allocated to VA Table sales VAT paid per VAT Returns Input VAT attributable to zero-rated sales that was effectively applied against the output VAT 1,427,882,814.27 Valid input VAT allocated to total valid zero-rated sales Less: Input VAT attributable to zero-rated sales that was effectively applied against the output VAT Valid and substantiated input VAT that found to be unutilized and should be refundable Less: Already supported by a tax credit certificate (TCC) Amount still to be refunded 103,266,190.23 - 1'215,979>028.57 P1,218,227 ,478.24 215,979,028.57 Pl,002,248,449·67 893·529,266.59 Plo⁸,71Q,18l.o8 In contrast, the ponencia computed a refundable amount of 1'123.351,829.83 in the following manner:

Output VAT

1'319,245,218.8o Less: Valid Input VAT allocated to sales subject to 12% VAT 10J,266,190.23

Output VAT Still Due

1'215,979,028.57 Valid input VAT allocated to zero-rated sales l'1,J06,760,940·76

Less: Output VAT Still Due

215,979,028.57 Excess Input VAT attributable to zero-rated sales Pl,090,781,912.18 Excess input tax attributable to total reported zero-rated sales PJ.,OQO, 781,912.18 Divided by total reported zero-rated sales 3J,665,195,868.5o Multiplied by valid zero-rated sales J1,J84,J68,J17·33 Excess input tax attribntable to valid zero-rated sales P1,m6,881,o96.42 Less: Already supported by a tax credit certificate (TCC) 893.529,266.59 Amount still to be refunded P12J,J51,829.83 From the above, the difference resulted from the treatment of the "Input VAT attributable to zero-rated sales that was effectively applied against the output VAT" or "Output VAT Still Due" amounting to P215,979,o28.57· With due respect, I submit that such amount should be deducted from the valid input VAT allocated to total valid zero-rated sales and not just from the valid input VAT allocated to total zero-rated sales. It must be noted that the option of the VAT-registered taxpayer on whether to charge against output tax from regular 12% VAT -able sales and , any unutilized or "excess" input tax may be claimed for refund or thy

SEPARATE OPINION

Dole Philippines, Inc. v. ClR Page 4 ofS issuance of tax credit certificate, or whether to claim for refund or tax credit in its entirety, only applies to substantiated input tax attributable to valid zero-rated sales. This can be gleaned from the following computation of the Supreme Court in Chevron3, citing Section 4.110-44 of RR No. 16-2oos5, as amended by RR No. 4-20076 : 4 ' 6 Thus, the refundable input VAT is computed by getting the percentage of valid zero-rated sales over total reported sales (taxable, zero-rated, and exempt) multiplied by the properly substantiated input taxes not directly attributable to any of ~~e transactions., Supra at note 2; Citation omitted and emphasis supplied. SEC. 4.110-4. Apportionment of Input Tax on Mixed Transactions.- . .. Illustration: ERA Corporation has the following sales during the month: Sale to private entities subject to 12% Sale to private entities subject to 0% Sale of exempt goods Sale to gov't. subjected to 5% final VAT Withholding Total Sales for the month I' I 00,000.00 100,000.00 100,000.00 100,000.00 I' 400,000.00 The following input taxes were passed on by its VAT suppliers: Input tax on taxable goods 12% Input tax on zero-rated sales Input tax on sale of exempt goods Input tax on sa1e to government Input tax on depreciable capital good not attributable to any specific activity (monthly amortization for 60 months) I' 5,000.00 3,000.00 2,000.00 4,000.00 20,000.00 B. The input tax attributable to zero-rated sales for the month shall be computed as follows: Input tax directly attributable to zero-rated sale - !' 3,000.00 Ratable portion of the input tax not directly attributable to any activity: Taxable sales (0%) x Input tax not directly attributable

Amount of Total Sales

to any activity PlOO,OOO.OO x P20,000.00 - !' 5,000.00 400,000.00 Total input tax attributable to zero-rated sales for the month Consolidated Value-Added Tax Regulations of2005. !' 8,000.00 Amending Certain Provisions of Revenue Regulations No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax Regulations of 2005, Revenue Regulations No. 04- 07.

SEPARATE OPINION

Dole Philippines, Inc. v. CIR Page 5 ofS

Accordingly, Chevron Holdings is entitled to the refund of unutilized input tax allocable to its zero-rated sales for January 1 to December 31, 2oo6, in the total amount of P1,140,381.22, 103 computed as follows:

First

Second

Third

Fourth

Quarter

Quarter

Quarter

Quarter

Valid Zero-Rated

Sales

5.762,011.70 4,669.743·23 66,091.331.71 79,131,661.58

Divided by: Total

reported sales 313,164,583.06 272,400,438.61 299,500,840.65 501,152,183.16

Multiplied by: Valid

input tax not directly attributable to any activity 1,276,656.14 1,650,503.65 1,86o.385.53 4.294,269.68 Input tax attributable to zero- rated sales 23.489·59 28,294·48 410,534·26 678,062.88

TOTAL

PI,J40,18I.22 All told, I vote to PARTIALLY GRANT petitioner Dole Philippines, Inc.'s Petition for Review and ORDER respondent Commissioner of

Internal

Revenue

to refund the recomputed amount of P1.08,719•18J.o8.