Court of Tax Appeals · Second Division

Asurion Hong Kong Limited - Rohq vs. Commissioner of Internal Revenue

CTA Case No. 10413 April 24, 2025 RINGPIS-LIBAN

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

Quezon City

Second Division

ASURION HONG KONG LIMITED

- ROHQ,

CTA CASE N0.10413

Petitioner,

-versus-

COMMISSIONER OF INTERNAL

REVENUE,

Respondent.

:Lviembers:

RINGPIS-LIBAN, Chaitperson

MODESTO-SAN PEDRO, and

FERRER-FLORES, Jl.

Promulgated:

x-------------------------------------------------------------------~~~~}0~!~-~~~~-----------x

i: 2A c.,._.

AMENDED DECISION

RINGPIS-LIBAN,J:

Submitted before this Court are the following:

petitioner's Motion for Partial Reconsideration (Re: Decision dated September 10, 2024) filed on October 1, 2024, "Without respondent's comment per Records Verification dated January 7, 2025; and, 2.

respondent's Motion for Partial Reconsideration (of the Decision dated 10 September 2024) @ed through registered mail on October 4, 2024, and received by the Court on October 9, 2024, with petitioner's Comment (Re: Respondent's Motion for Partial Reconsideration dated October 3, 2024) filed on December 4, 2024.

On September 10, 2024, the Court promulgated a Decision partially granting petitioner's claim for refund of excess and unutilized input value- added tax ("VAT") attributable to its zero-rated sales of service for calendar year 2018 in a reduced amount as duly supported and proven by supporting documents, the dispositive portion of which reads as follow/

CTA Case No. 10413

"WHEREFORE, in light of the foregoing considerations, the present Petition for Rez1iew is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND in favor of petitioner the amount of Php3,158,884.98, representing petitioner's excess and unutilized input VAT attributable to its zero-rated sales/ receipts for the four (4) quarters of CY 2018.

SO ORDERED."

Undaunted, both parties implore the Court to take a second and hard look on the conclusions reached in the above Decision and prays that the same be partially reconsidered based on their respective Motions.

Petitioner's Motion for Partial Reconsideration

In its Motion, petitioner raises the following arguments for the Court's consideration, viz.:

a) the evidence on record sufficiently establishes that "New Asurion Europe Limited" and "Asurion Europe Limited" are one and the same entity;

b) that despite the absence of a Service Agreement with A cyan Co'rporation, it has adequately proven its compliance under Section 108(B)(2) of the Tax Code through its evidence; and, c) the input VAT are properly substantiated in accordance with the substantiation and invoicing requirements under the Tax Code and BIR revenue issuances.

After careful evaluation, the Court finds partial merit 111 petitioner's Motion for Partial Reconsideration.

Petitioner Jazled to establish that New Asztrion Europe Limited and Amrion Europe Limited are the same entity.

As to its first argument, pet1t10ner reiterates that it has sufficiently complied wid1 the requirement of presenting both the Certification of Non- Registration of Corporation/ Partnership issued by the Securities and Exchange Commission ("SEC") and proof of incorporation/ registration in a foreign country, as shown in Exhibits "P-5" and "P-7-b". 1 Petitioner further submits that its witnesses, namely, Nir. Santiago De Guzman II, petitioner's finance

/V'

Docket, pp. 638-648 and p. 670, respectively.

CTA Case No. 10413 manager, and Mr. Jay Ballesteros, the court-commissioned Independent Certified Accountant ("ICPA"), have also testified that Asurion Europe Limited and New Asurion Europe Limited pertain to the same entity. The Court is not swayed.

As previously held by the Court, for the VAT zero-rating of sale of services, the claimant must further comply with Section 108(B)(2) of the National Internal Revenue Code ("NIRC") of 1997, as amended,2 which essentially provides the following elements, vi~:

1. The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a non- resident person not engaged in business who is outside the Philippines when tll e services are performed;

2. The services fall under any of the categories under Section 108(B)(2), or simply, the services rendered should be other than 'processing, manufacturing or repacking goods';

3. The service must be performed in the Philippines by a VAT-registered person; and,

4. The payment for such services should be in acceptable foreign currency accounted for in accordance with Bangko Sentral ng Pilipinas ("BSP") rules.

In an attempt to comply with the first essential element, petltloner presented the SEC Certification rif Non-Registration rif Cotporation/ Partnership and the Anicfes rif Association registered in the United Kingdom of Great Britain and Northern Ireland as evidence. However, the said documents pertain to Asurion Europe Limited and not to New Asurion Europe Limited. Petitioner failed to submit proof that the said entities are one and the same. ]\fore so, the same ~ 2 "SEC. 108. Value-Added Tax on the Sale of Services/ Including Digital Services/ and the Use or Lease of Properties. - x x x.

(B) Transactions Subject to Zero Percent (0%) Rate- The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate.

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);

(2) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (SSP);"

CTA Case No. 10413 goes with petitioner's witnesses, their testimonies cannot reasonably conclude that Asurion Europe Limited and New Asurion Europe Limited pertain to one and the same entity.

The Court say again its consistent ruling that actions for tax refund or credit partakes the nature of a claim for exemption and the law is not only construed in strictissimi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption is strictissimi scrutinized and must be duly proven. The burden is on the taxpayer to show that it has strictly complied witl1 the conditions for the grant of the tax refund or credit. Since taxes are the lifeblood of the government, tax laws must be faithfully and strictly implemented as they are not intended to be liberally construed.3 As such, for failure to sufficiently show that New As uri on Europe Limited and I\surion Europe Limited are one and the same entity, the Court maintains its disallowance of Php4,277,421.16 (equivalent of US$79,746.92) pertatrung to petitioner's claimed zero-rated sales to New Asurion Europe Limited.

Petitioner jailed to establish the nature of the service rendered to Aryan Cotporation.

With regard to its second argument, pet1t10ner asserts that the submission of a service agreement is not an essential requisite under Section 108(B)(2) of the NIRC of 1997, as amended. Petitioner expounds that the said service agreement is not the only exclusive proof to show that the services rendered are other than "processing, manufacturing, or repacking goods." Petitioner cites the testimony of Mr. De Guzman II, who testified as to the nature of petitioner's business and the services it rendered to its clients; as well as the testimony of the ICF.A, in stating that while the zero-rated sales made to Acyan Corporation are not supported by service agreements, the said sales nonetheless ~ere duly supported by the SEC Certificate of Non-Registration, Company Registration Documents, and VAT official receipts ("Ors") to show the nature of petitioner's services with Acyan Corporation. The Court finds petitioner's argument misplaced.

Upon examination of Exhibit "P-26-4", which is the only OR issued to Acyan Corporation, the nature of the services rendered by petitioner is not apparent and does not corroborate the testimony of its witnesses. The subject OR merely states that the amount received was in partial/ full payment for "Purpose for Travel Cost", which does not convey what type of service was actually rendered. Correspondingly, the Court cannot reasonably determine /

3 Coca-Co/a Bottlers Philippines/ Inc. v. Commissioner of Internal Revenue, G.R. No. 222428, February 19, 2018.

CTA Case No. 10413 with the available evidence on record what such service entail -which would have been clear if petitioner submitted the service agreement it entered into with Acyan Corporation. Again, it bears stressing that actions for tax refund are in the nature of a claim for exemption and is therefore construed in strictissimi juris against the taxpayer.

As such, the Court upholds the disallowance in the amount of Php992,533.82 (equivalent ofUS$19,146.10) for failure to sufficiently prove the nature of the service rendered to Acyan Corporation. Petitioner's rifundable input VAT attribzttable to valid zero-rated sales shall include the amount if Php734,269.03 as dujy supported fry OR Lastly, with regard to the third argument, petitioner urges this Court to revisit its findings with respect to the absence of the indication of nature of services in its supporting documents. Petitioner claims that upon re-evaluation of its disallowed input VAT, it discovered that the VAT ORs and invoices were substantially compliant with the requirement of the indication of nature of services under the NIRC. Petitioner continues that the said VAT ORs made clear and specific reference to tl1e particular billing statements or invoices that were covered by petitioner's payment, thus, the nature of the services thereon can be easily ascertained from the related billing statements and invoices issued by their respective supplier.

The Court finds partial merit in petitioner's argument. To recall, under Section 113(B)(3) of the NIRC of 1997, as amended, the following information, among others, are required to be indicated in the Vr\ T invoice or VAT OR, to wit:

a) Date of transaction;

b) Quantity;

c) Unit cost; and d) Description of the goods or properties or nature of the service. A re-examination of the VAT ORs supporting the following claimed input taxes shows that petitioner did not indicate the nature of the service/ s in the ORs but only the phrase "Various SOA" or certain reference number/ s for which the payments received by petitioner were made. As pointed out by petitioner, these reference numbers pertain to the particular billing statements or invoices that were covered by petitioner's payments. Unfortunately, petitioner did not attach the said billing statements or invoices to the VAT ORs it presented before this Court. Without the said attachments, the Court remai~

CTA Case No. 10413 precluded from ascertaining the nature of the services for which the following claimed input VAT payments were made, as follows:

Exhibit + Date Name of Supplier OR No. Nature of Service Tax Base Input VAT J .

P-27-154 March 14, 2018 Bnowe 0796167 847843198 4,209.00 505.08

Communications Inc

P-27-155 March 02, 2018 Intellicare 0021426 DNS 5-52 45,837.00 5,500.44 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS ete 38,763.75 4,651.65 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS ete 10,688.92 1,282.67 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 IDNS ete 7,428.92 891.47 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS etc 6,515.17 781.82 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS ete 10,688.92 1,282.67 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS etc 33,791.83 4,055.02 —|— | P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS etc 900.00 108.00 P-27-156 March 13, 2018 Intellicare 0022027 80-004438/3-4 DNS etc 600.00 72.00 P-27-180 January 24, 2018 ‘Yesoro Allegre Inc 0002172 2979, 2971, 2992 154,880.00 18,585.60 P-27-180 January 24, 2018 ‘Tesoro Allegre Inc 0002172 2979, 2971, 2992 5,142,521.08 617,102.53 P-27-182 | March 28, 2018 ‘Tesoro Allegre Inc 0002270 | IR# 358347 ; att 3370 and 822,194.50 98,663.34 a P-27-182 March 28, 2018 ‘Vesoro Allegre Inc 0002270 | TR 3583. ; one 3570 and 155,813.92 18,697.67 P-27-182 March 28, 2018 ‘Tesoro Allegre Ine ooo2270 | TRF 3583AI ; coe 3570 and 5,142,521.08 617,102.53 P-27-232 June 06, 2018 Intellicare 0018518 DNS 5-55 43,887.50 5,266.50 P-27-235 June 06, 2018 Intellicare 0018517 DNS 5-56 41,579.42 4,989.53 illine tce 294 wi P-27-280 June 25, 2018 Tesoro Allegre Inc 0002371 Billing Invoice 2949, 3002, 955,340.33 114,640.84 : 3042, 3081 illing ice 2 2 P-27-280 June 25, 2018 Tesoro Allegre Inc 0002371 Billing Invoice 2949, 3002, 787,348.58 94,481.83 3042, 3081 P-27-280 June 25, 2018 ‘Tesoro Allegre Inc 0002371 Billing Invoice 2949, 3002, 152,800.00 18,336.00 ; 3042, 3081 dling roice 2 2 P-27-280 June 25, 2018 ‘Tesoro Allegre Inc 0002371 Billing eee oat 300°, 5,142,521.08 617,102.53 P-27-347 September 03, 2018 | Intellicare 0030857 nn pane 16, 00 5,800.00 696.00 “17and 1 P-27-347 September 03, 2018 | {ntellicare 0030857 aan ao 6, 00 3,492.50 419.10 P-27-347 September 03, 2018 "| Intellicare 0030857 Soe rand 6,00 3,492.50 419.10 P-27-347 September 03,2018 | Intellicare 0030857 aren 16, 00 7,956.00 954.72 P-27-347 September 03,2018 | Intellicare 0030857 nec 16, 00 1,746.25 209.55 0000449879-17 and 16, 00 P-27-347 September 03,2018 | Intellicare 0030857 8 O71 wane ° 3,978.00 477.36 . 80000449879-17 and 16, 00 P-27-347 September 03, 2018 | Intellicare 0030857 O71 ; ans 6,0 1,746.25 209.55 P-27-348 September 03, 2018 | Intellicare 0030858 DNS 5-59 44,200.92 5,304.11 P-27-376 July 26, 2018 Tesoro Allegre Inc 0002405 BS # 3044 and 3059 152,800.00 18,336.00 P-27-376 July 26, 2018 ‘Tesoro Allegre Inc 0002405 BS # 3044 and 3059 5,142,521.08 617,102.53 P-28-145 August 2, 2018 Intellicare 0028768 DNS 5-38 49,807.08 5,976.85 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 49,158.83 5,899.06 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 2,016.92 242.03 P-28-146 October 9, 2018 Intellicare 0033112 Various SO. 1,346.50 161.58 | P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 2,017.08 242.05 | P-28-146 Intellicare 0033112 Various SOA 1,346.50 161.58 October 9, 2018 | CTA Case No. 10413 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 1,346.50 161.58 P-28-146 October 9, 2018 Intellicare | 0033112 Various SOA 1,346.50 161.58 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 1346.50 | 161.58 P-28-146 T October 9, 2018 Intellicare 003311 2 | Various SOA 1,346.50 161.58 P-28-146 |__ October 9, 2018 Intellicare 0033112 i Various SOA 4,039.42 484.73 | P-28-146 i October 9, 2018 Intellicare {00531 12 | Various SOA 1,346.50 161.58 P-28-146 October 9, 2018 ~T Ttellicare | 0033112 | Various SOA 2,692.92 323.15 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA [ 6,051.17 726.14 P-28-146 October 9, 2018 Intellicare 0033112 Various SOA 2,692.92 r 323.15 P-28-146 October 9, 2018 | Intellicare 0033112 Various SOA 1,346.50 161.58 P-28-146 | October 9, 2018 Intellicare 0033112 Various SQA 1,908.50 | 229.02 P-28-146 October 9, 2018 | Intellicare ~ | 0033112 Various SOA 1,346.50 161.58 | P-28-146 October 9, 2018 Intellicare 0033112 Various SOA al 6,051.25 726.15 | P-28-147 December 13,2018 | Intellicare ~ | 0033112 [_ Various SOA OS 47,252.75 5,670.33 P-28-195 October 9, 2018 Intellicare 0033112 Various SOA -1,060.25 -127.23 P-28-195 October 9, 2018 | Intellicare 0033112 Various SOA -1,060.33 -127.24 P-28-195 October 9, 2018 Intellicare 0033112 Various SOA 946.67 113.60 P-28-195 October 9, 2018 Intellicare 0033112 Various SOLA 946.67 113.60 P-28-195 October 9, 2018 Intellicare 0033112 iL Various SOA -2,120.58 -254.47 | p-28-195 October 9, 2018 Intellicare 0033112 Various SOA -1,060.25 -127.23 P-28-195 October 9, 2018 Intellicare _| 0033112 Various SQA 300.00 | | 36.00 P-28-195 October 9, 2018 Intellicare 0033112 | Various SOA i 979.58 117.55 P-28-195 October 9, 2018 Intellicare 0033112 Vartous SQA 979.58 —_ 117.55 P-28-195 October 9, 2018 Intellicare 0033112 Various SOA -548.58 ~-65.83 | October 9, 2018 Intellicare 0033112 Various SOA i -548.58 -65.83 P-28-195 tf October 9, 2018 Intellicare 0033112 Various SOA 489.75 58.77 P-28-195 October 9, 2018 Intellicare 0033112 Various SOA 489.83 58.78 | p-28-195 October 9, 2018 Intellicare | 0033112 | Various SOA 946.67 113.60 P-28-195 | October 9, 2018 Intellicare 0033112 Various SOA 1,893.33 227.20 P-28-56 June 6, 2018 Intellicare | 0018154 DNS 5-54 48,219.25 5,786.31 | P-28-77 July 2, 2018 Intellicare 0026795 00-0318-210-118 TO 600.00 72.00 P-28-77 July 2, 2018 Intellicare 0026795 00-0318-210-118 300.00 36.00 P-28-78 July 2, 2018 Intellicare | 0026794 DNS 5-57 49,271.00 5,912.52 | P-28-79 August 2, 2018 Intellicare “} 0028768 DNS 5-58 8,065.83 967.90 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 5,377.25 645.27 P-28-79 August 2, 2018 Intellicare | 0028768 DNS 5-58 4,463.42 535.61 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 10,640.17 1,276.82 P-28-79 august 2, 2018 Intellicare 0028768 DNS 5-58 9,265.17 1,111.82 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 4,688.75 | 562.65 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 10,065.92 4,207.91 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 4,688.75 562.65 | P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 2,688.58 322.63 P-28-79 August 2, 2018 Intellicare | 0028768 jt DNS 5-58 2,688.58 322.63 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 | 2,231.67 267.80 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 5,777.00 693.24 | P-28-79 August 2, 2018 Intellicare a 0028768 DNS 5-58 3,088.42 | 370.61 P-28-79 August 2, 2018 Intellicare 0028768 DNS 5-58 | 7,377.33 885.28 [ 2-28-79 | August 2,2018 | Tntellicare 0028768 | DNS 5-58 7,551.83 906.22 p2-92 | _July5,2018 Se live Maintenance 0007536 23102 9,063.17 1,087.58 P-28-93 July 5, 2018 . ive Matnfenance 0007537 | 23100 - 88,459.42 10,615.13 | P-27-377 August 24, 2018 Vesoro Allegre Inc 0002458 BS # 3897, 3923, 3955 and 745,775.75 89,493.09 a“ CTA Case No. 10413 _ mi 4035 P-27-377 August 24, 2018 ‘Tesoro Allegre Inc 0002458 BS # 3897, foe » 3955 and 725,371.67 87,044.60 P-27-377 | August 24,2018 | ‘Lesoro Allegre Inc 0002458 | BS #3807, woe, 3955 and 152,844.67 18,341.36 P-27-377 | August 24, 2018 ‘Tesoro Allegre Inc 0002458 BS # 3897, tose 3955 and 5,258,091.17 630,970.94 | ——}.

P-27-378 September 26, 2018 ‘Tesoro Allegre Inc 0002492 BS # 3182, 3212 163,006.42 19,560.77 P-27-378 September 26, 2018 Tesoro Allegre Inc 0002492 BS # 3182, 3212 -4,000.00 -480.00 P-27-378 September 26, 2018 Tesoro Allegre Inc | 0002492 iz BS # 3182, 3212 5,366,438.08 643,972.57 P-27-443 a December 28, 2018 lntellicare 0037611 AR 00-0918-81; 00-0918-118 3,500.00 420.00 P-27-443 December 28, 2018 Intellicare | 0037611 AR 00-0918-81; 00-0918-118 3,300.00 396.00 P-27-444 December 13, 2018 Intellicare 0036875 DNS 5-62 [ 46,038.75 5,524.65 | p-27-4a4 December 13, 2018 | Intellicare 0036875 | DNs 5-62 9,170.83 1,100.50 P-27-444 December 13, 2018 Intellicare 0036875 DNS 5-62 { 9,370.75 1,124.49 | P-27-444 December 13, 2018 Intellicare 0036875 DNS 5-62 18,341.75 2,201.01 P-27-444 December 13, 2018 Intellicare 0036875 DNS 5-62 19,141.33 2,296.96 P-27-445 December 28, 2018 Intellicare 0037612 DNS 5-63 49,788.00 5,974.56 | P2745 December 28, 2018 | Intellicare 0037612 DNS 5-63 6,400.00 768.00 P-27-445 December 28, 2018 Intellicare 0037612 DNs 5-63 300.00 36.00 j P-27-445 December 28, 2018 Intellicare 0037612 | DNS 5-63 _ 1,800.00 216.00 P-27-445 December 28, 2018 | Intellicare 0037612 DNS 5-63 300.00 36.00 P-27-530 October 24, 2018 Tesoro Allegre Inc | 2529 BS # 3257, 3314 and 3287 155,724.67 18,686.96 P-27-530 October 24, 2018 Tesoro Allegre Inc 2529 BS # 3257, 3314 and 3287 5,366,438.08 643,972.57 P-27-531 November 12, 2018 Tesoro Allegre Inc 2547 BS # 3326, 3382 and 3353 738,057.92 88,566.95 P-27-531 November 12, 2018 T Tesoro Allegre Inc 2547 BS # 3326, 3382 and 3353 155,724.67 18,686.96 P-27-531 November 12, 2018 Yesoro Allegre Inc T 2547 [BS # 3326, 3382 and 3353 5,366,438.08 643,972.57 P-27-532 December 06, 2018 Tesoro Allegre Inc 2587 BS # 3459, 3438,3403, 3428 811,736.75 97,408.41 eas December 06, 2018 -} ‘Tesoro Allegre Inc 2587 BS # 3459, 3438,3403, 3428 155,724.67 18,686.96 P-27-532 December 06, 2018 Tesoro Allegre Inc 2587 BS # 3459, 3438,3403, 3428 82,839.92 9,940.79 L P-27-532 December 06, 2018 Yesoro Allegre Inc 2587 BS # 3459, 3438,3403, 3428 5,366,438.08 643,972.57 P-27-559 November 07, 2018 Tesoro Allegre Inc 2538 BS # 3401 4,766,630.25 571,995.63 P-27-559 November 07, 2018 ‘Tesoro Allegre Inc 2538 BS # 3401 1,753,715.17 210,445.82 [ P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 197,265.00 23,671.80 P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 88,817.00 10,658.04 P-27-560 December 28, 2018 | Intellicare 0037620 DNS 5-64 and 65 49,364.00 5,923.68 P-27-560 December 28, 2018 {ntcllicare 0037620 DNS 5-64 and 65 118,359.00 14,203.08 | P.27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 i 115,837.00 13,900.44 P-27-560 + December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 37,021.00 4,442.52 P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 78,906.00 9 468.72 P-27-560 December 28, 2018 Intellicare mi 0037620 | DNS 5-64 and 65 56,641.00 6.796.92 P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 39,453.00 4,734.36 P-27-560 December 28, 2018 | Intellicare 0037620 DNS 5-64 and 65 39,453.00 P-27-560 December 28, 2018 Intellicare 0037620, | DNS 5-64 and 65 49,364.00 5,923.68 P-27-560 December 28,2018 | Intellicare ~} 0037620 DNS 5-64 and 65 98,728.00 11,847.36 P-27-560 L December 28, 2018 | Intellicare 0037620 DNS 5-64 and 65 128,270.00 15,392.40 P-27-560 December 28, 2018 {| Intellicare 0037620 DNS 5-64 and 65 118,359.00 14,203.08 P-27-560 December 28, 2018 Intellicare | 0037620 DNS 5-64 and 65 27,068.33 3,248.20 P-27-560 December 28, 2018 | Intellicare 0037620 DNS 5-64 and 65 9,022.75 | P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 27,579.75 3,309.57 P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 8,464.50 1,015.74 P-27-560 December 28, 2018 Intellicare 0037620 DNS 5-64 and 65 9,022.75 1,082.73 ~~ 1'-27-560

P-27-560

P-27 -560

P-27-560

1'-27-560 1'-27-560

P-27-560

1'-27-560 1'-27-560

P-27-560

1'-27-560 1'-27-560

P-27-560

P-27-561

1'-27-561 1'-27-561

P-27-561

P-27 -561

1'-27-561 1'-27-561 1'-27 -561

P-27-561

P-27 -561

CTA Case No. 10413

[ p-27-562 | December 28, 2018 | Intellicase 0037610 80-00-04498/10-2A 215,616.00 25,873.92 P-27-562 | December 28,2018 | Intellicare 0037610 80-00-04498/10-2.A 456,519.00 54,782.28 P-27-562 | December 28, 2018 | Intellicare 0037610 iZ 80-00-04498/10-2.\ 47,948.00 5,753.76 | P27-562 December 28, 2018 | Intellicare 0037610 | 80-00-04498/10-2:\ 101,296.00 12,155.52 P-27-562 | December 28, 2018 | Intellicare 0037610 80-00-04498/10-2.\ 42,609.00 5,113.08 a TOTAL Php81,092,818.45 | Php9,731,138.21 Moreover, aside from petitioner’s failure to attach the related billing statements and invoices for the VAT ORs, the Court similarly observed that the teference numbers indicated in the VAT ORs supporting the following input taxes are unreadable/unclear, to wit:

sib Date Supnlice OR No. Le of Service epownin | Tax Base | Inpuc VAT P-27-233 Junc 06,2018 | Intellicare 0018516 90.09 0449870 [11,835.25 1,420.23 P-27-233 June 06,2018 | Intellicare 0018516 90.09 0449870 18,007.92 2,160.95 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 14,980.75 1,797.69 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 2aoaid2 | 2992.97 P-27-233 Junc 06,2018 | Intellicare 0018516 90.09 0449870 7,090.50 850.87 P-27-233 June 06,2018 | Intellicare [0018516 90 09 0449870 7,890.17 946.82 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 3,545.33 425.44 | P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 3,545.33 425.44 P-27-233 | June 06,2018 | Intellicare 7 o018si6 90.09 0449870 3,945.80 473.41 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 3,545.25 425.43 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 7,490.42 898.85 P-27-233 June 06, 2018 | Intellicare 0018516 90.09 0449870 6,002.67 720.32 p-27-233 Junc 06,2018 | Intellicare | 8516 90 09 0449870 12,470.67 1,496.48 P-27-233 June 06, 2018 | Intellicare 0018516 90 09 0449870 3,945.08 473.41 P-27-233 June 06, 2018 | Intellicare 0018516 90 09 0449870 4,430.50 | 531.66 P-27-233 June 06,2018 | Intellicare oo1gs16 | 90 09 0449870 9,289.42 1114.73 | P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 4,430.58 531.67 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 9,289.42 143 | P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 4,430.58 531.67 P-27-233 | June 06,2018 | Intellicare 0018516 90 09 0449870 13,291.58 1,594.99 P-27-233 June 06, 2018 Intellicare 0018516 90 09 0449870 18,578.83 2,229.46 P-27-233 Junc 06, 2018 | Intellicare 0018516 90 09 0449870 14,148.33 1,697.80 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 8,861.08 1,063.33 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 7,798.33 935.80 P-27-233 | June 06,2018 | Intellicare ——|_—_(0018516 90 09 0449870 8,861.08 1,063.33 P-27-233 June 06,2018 | Intellicare 0018516 90 09 0449870 3,300.00 396.00 | P-27-234 June 06,2018 | Intellicare 0018515 0000004498700 5,144.42 617.33 P-27-234 June 06, 2018 Inteilicare 0018515 0000004498700 5,144.42 617.33 | P-27-234 Jane 06,2018 | Intellicare 0018515 oo0000s498700 5,144.42 617.33 P-27-234 June 06,2018 | Intellicare 0018515 0000004498700 5,144.42 617.33 P-27-234 June 06,2018 | Intellicare 0018515 0000004498700 12,986.67 1,558.40 P-27-234 June 06,2018 — | Intellicare 0018515 0000004498700 16,947.75 | ___ 2,033.73 P-27-234 Junc 06,2018 | Intellicare 0018515 0000004498700 10,288.92 1,234.67 P-27-234 June 06, 2018 | Intellicare 0018515 0000004498700 10,288.92 1,234.67 P-27-234 | June 06,2018 | Intellicare [ 0018515 0000004498700 8,742.50 1,049.10 P-27-234 June 06,2018 | Intellicare 0018515 0000004498700 2867083 | 3,440.50 P-27-234 June 06,2018 | Intellicaze 0018515 0000004498700 135,459.92 16,255.19 “a CTA Case No. 10413 Total | | | | Php479,909.48 | Php57,589.06 Therefore, contrary to petitioner’s assertion, the mere indication of certain reference numbers in the VAT ORs supporting the aforesaid claimed input taxes in the amounts of Php9,731,138.21 and Php57,589.06, cannot be considered as compliant with the invoicing requirement under Section 113(B)(3) of the NIRC of 1997, as amended.

In the same way, the VAT ORs supporting the following input taxes in the amount of Php516,267.70 likewise failed to indicate the nature of the services related to petitioner’s payments. A careful scrutiny of the VAT ORs reveals that the reference numbers indicated by petitioner in its Motion for Partial Reconsideration as pertaining to the “Nature of Service” actually pertains to the serial numbers of the Bank of America checks issued by petitioner to its suppliers as payments for its purchases, to wit:

Beubi Date | Name of Supplier | OR No. Nature of Tax Base Input VAT

Bank of America

P-27-150 lebruary 14, 2028 Globe Telecom 3543684 (BOA) Php 329,523.08 | Php 39,542.77 | #1501195 | P2741 51 March 14, 2018 Globe Telecom 3556544 | BOA #1501233 320,192.83 38,423.14 P-27-152 | February 19, 2018 | Innove Communications Inc 0786215 BOA #1501176 4,008.08 480.97 P-27-153 February 14, 2028 Innove Communications Inc | 0782139 BOA #1501196 4,075.08 489.01 P-27-230 May 5, 2018 Innove Communications Inc 0804698 [ BOA #1501275 3,974.67 476.96 P-27-230 | May 5, 2018 Innove Communications Inc 0804698 BOA #1501275 835,900.00 [ 100,308.00 P-27-231 June 1, 2018 Innove Communications Inc 0817211 BOA #1501306 4,287.08 514.45 P-27-231 June 1, 2018 Innove Communications Inc 0817211 P BOA #1501306 | 87,000.00 10,440.00 P-27-340 July 25, 2018 | Globe Telecom 3650328 BOA 1501407 336,486.08 | 40,378.33 P-27-340 July 25, 2018 Globe Telecom 3650328 BOA 1501407 381,354.08 45,762.49 P-27-345 August 8, 2018 Innove Communications Inc. 0906763 BOA 1501424 87,000.00 10,440.00 P-27-346 September 17, 201 8 | Innove Communications Inc. 0896110 BOA 1501451 87,000.00 10,440.00 P-28-73 July 4, 2018 Innove Communications Inc. ft 0896747 | BOA 1501336 3,930.00 [ 471.60 P-28-74 July 4, 2018 Innove Communications Inc. 0896749 BOA 1501335 87,000.00 10,440.00 P-28-76 July 4, 2018 Innoeve Communications Inc. 0896748 BOA 1501386 87,000.00 10,440.00 P-28-141 September 1, 2018 Globe Telecom 3696438 BOA 1501527 365,017.42 43,802.09 | P-27-434 October 31, 2018 Globe Telecom 3708796 BOA 1501566 362,027.17 43,443.26 P-27-435 November 22, 2018 | Globe ‘Telecom 3717598 BOA 1501606 380,153.17 i 45,618.38 P-27-436 T December 26,2018 | Globe ‘Telecom 3730178 BOA 1501678 362,302.08 43,476.25 P-27-441 November 22, 2018 | Innove Communications Inc 929781 BOA 1501553 87,000.00 10,440.00 P-27-442 November 22, 2018 Innove Communications Inc 929780 [ BOA 1501607 87,000.00 10,440.00 Total —f | Php4,302,230.82 | Php516,267.70 Furthermore, the Court also observed that the disallowed input VAT of Php10,440.00 with supporting VAT OR marked as Exhibit “P-28-74, was credited twice by petitioner in its Mot#on for Partial Reconsideration in arriving at the assailed input VAT disallowance of Php11,784,548.15.

A

Exhibit

No.

P-27-181

P-27-279

CTA Case No. 10413

Finally, petltloner avers that the following exhibits evidently reveal that the nature of the services provided were clearly indicated on the face of the VAT ORs, contrary to the findings of this Court in its Decision, to wit:

Date

Name of

OR No.

Supplier

Nature of Service

Tax Base

Input VAT

TESORO

Rental+ CUS"\ +

February

ALEGRE

OR No.

Parking Feb 2018

Php

154,969.25

Php

18,596.31 22,2018 0002224

Utilities for Nov 26

INC

to Dec 25 2017

TESORO

Rental + CUS"\ +

Februaty

OR No.

Parking Feb 2018

ALEGRE

821,418.25 98,570.19 22,2018

INC

0002224

Utilities for Nov 26 to Dec 25 2017

TESORO

Rental + CUSA +

Februa~-y .ALEGRE OR No.

Parking Feb 2018

5,142,521.08 617,102.53 22,2018

INC

0002224

Utilities for Nov 26 to Dec 25 2017

I\Iay 11,

TESORO

OR No.

Per ICPA Re ort Per this Court's further verification

Total Disallowances per the Court's

Se tember 10, 2024 Decision Less:. reconsidered input VAT per petitioner's Motion for Partial

Reconsideration

Ph 6,547,175.06 11,892,007.95 Php18,439,183.01 734,269.03 17,704,913.98

CTA Case No. 10413

I Valid Input VAT, as amended Php3,912,000.73 I Since petitioner's sales for the first (1 ~t) to fourth ( 4rh) quarters of 2018 were all zero-rated, the valid input taxes are wholly attributable to the valid portion of said zero-rated sales. Considering the revised amount of valid input tax as herein computed, it follows that the refundable input VAT attributable to valid zero-rated sales shall be modified into the amount of Php3,888,799.15, thus:

Valid Input VAT

Php 3,912,000.73

Divided by: Declared Zero-rated Sales/Receipts

888,563,454.98

Multiplied by: Valid Zero-rated Sales/Receipts

883,293,500.00

Input VAT Attributable to Valid Zero-rated

Php3,888, 799.15

Sales/Receipts

That having been settled the Court shall now proceed to discuss the merit of respondent's 1v1otion.

Respondent's Motion for Partial Reconsideration

In his 1\fotion, respondent prays that petitioner's claim for refund of zero-rated input VAT be entirely denied based on the following grounds: 1) the exhibits of petitioner should not be given any probative value for being hearsay evidence;

2) petitioner failed to prove that the services were rendered in the Philippines;

3) that as a rule, services rendered by petitioner, an ROHQ based in the Philippines, to its parent company outside the Philippines and its related company do not fall under the transactions subject to zero-percent VAT rate; and, 4) petitioner failed to substantiate its claim for tax refund at the administrative level resulting to the denial of its claim for VAT refund, hence its judicial claim should also be dismissed. On the other hand, in its Comment, petitioner asserts that the evidence adequately shows that the contracted services were rendered in the Philippines. Petitioner points out that respondent did not raise the issue of probative value when petitioner flied its Formal Offer of Evidence (FOE) on June 29, 2022 or in its Supplemental FOE filed on May 26, 2023. Petitioner further asserts that ~

CTA Case No. 10413 its services were not rendered to its parent company in Hong Kong but to corporations other than its parent company which are doing business and established outside the Philippines (i.e., USA, UK, and Japan). Petitioner submits that in the course of trial, respondent failed to rebut the testimonies of its witnesses or present any countervailing evidence in proving that the subject services rendered to petitioner's foreign clients were performed within the Philippines .. As such, petitioner claims that other than the self-serving assertion of respondent, it is clear that the services rendered by petitioner to Asurion Insurance Services, Inc., Asurion Europe Limited, and Acyan Corporation are services not rendered to a parent company. Lastly, petitioner maintains that the Court is not bound by the observations, findings of fact and reasons for denial of the administrative claim and it may conduct its own independent fact- finding.

After due consideration, the Court finds respondent's l\~otion for Partial Reconsideration bereft of merit .

. A.t the outset, the first and fourth grounds raised by respondent are mere restatements of the matters in his Memorandum posted on January 4, 2023.4 All of which have already been considered and resolved by the Court in the Decision, and thus no longer need to be addressed further. Petitioner was able to sufficient!J prove that the services were rendered in the Philippines.

With regard to the second ground, respondent claims that petitioner failed to sufficiently establish that the services subject of the case were performed in the Philippines .

. Again, in the Decision, the Court held that while the Service Agreement entered into by petitioner with Asurion Insurance Services, Inc. does not contain a clause that categorically states that petitioner's services shall be exclusively rendered in the Philippines, petitioner's Finance Manager, Mr. Santiago De Guzman II, however testified, that the services enumerated in the Service Agreement were performed in tl1e Philippines. 5 This was further corroborated by the court-commissioned ICPA through his sworn statement.6 As such, the unrebutted and uncontradicted testimony of petitioner's witnesses stating that the services were rendered in the Philippines is sufficient proof to establish said fact.

Also worth noting is that respondent failed to raise his objections when petitioner presented its evidence. All objections to petitioner's evidence should have been raised during trial when the opportunity presented itself, especially 4 5 6 Docket, pp. 771-784.

Id/ Exhibit "17", p. 219.

Id/ Exhibit "P-18", p. 468.

CTA Case No. 10413 the rebuttal of the testimonies of petitioner's witnesses in relation to the performance of services in the Philippines. Hence, the Court maintains its ruling.

Petitioner did not render servzces to its parent compmry.

As to the third ground, respondent claims that the services rendered by petitioner, an ROHQ based in the Philippines, to its parent company outside the Philippines and related company do not fall under the transactions subject to zero-percent VAT rate based on the the Court of Tax Appeals (CTA) case of Instittttional Shareholder Services) Inc. Philippine ROHQ vs. Commissioner of Internal Revenue (CTA Case No. 7662) jttne 3) 2010).

Unfortunately, respondent is mistaken.

Suffice it to state that CTA. decisions do not constitute precedents. That is why CT A decisions are appealable to the Supreme Court, which may affirm, reverse, or modify said decisions as the facts and the law may warrant. Only decisions of the Supreme Court constitute binding precedents, forming part of the Philippine legal system.7 Nonetheless, in the cited case, the Court held that the mother company of the ROHQ may not be considered as an affiliate, subsidiary or branch, as the petitioner ROHQ and its mother company must be considered as one and the same entity for purposes of taxation. The same facts do not obtain in this case, as the subject services were rendered to Asurion Insurance Services, Inc., which is not petitioner's parent company.

Accordingly, nothing is left for this Court but to deny respondent's Motion for Partial Reconsideration.

WHEREFORE, premises considered, respondent's Motion for Partial Reconsideration (of the Decision dated 10 September 2024) is DENIED for lack of merit.

On the other hand, petitioner's Motion for Partial Reconsideration (Re: Decision dated September 10, 2024) is PARTIALLY GRANTED.

Accordingly, the Decision dated September 10, 2024 is hereby MODIFIED to read as follow~ 7 Commissioner of Internal Revenue v. San Roque Power Corporation et a!., G.R. Nos. 187485, 196113 and 197156, February 12, 2013.

CTA Case No. 10413

"WHEREFORE, in light of the foregoing consideration, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND in favor of. petitioner the amount of Php3,888,799.15 representing petitioner's excess and unutilized input VAT attributable to lts zero-rated sales for the four ( 4) quarters of the CY 2018.

SO ORDERED."

SO ORDERED.

WE CONCUR:

L ~

_,'--- l MA. BELEN M. RINGPIS-LIBAN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

~. ~ _,..__ MA. BELEN M. RINGPIS-LIBAN

Associate Justice

Chairperson

CTA Case No. 10413

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding jttstice