Royal Caribbean Cruises, Ltd., et al. vs. Commissioner of Internal Revenue

DECISION

f fJ FERRER-FLORES, J.:

The Petition for Review prays for the Court to render judgment ordering respondent to issue the corresponding tax credit certificate to the petitioner in the aggregate amount of P14,195,993.64, representing the partial denial of petitioner's administrative claim for refund of alleged "prescribed/out of period claim." 1

THE PARTIES

Petitioner Royal Caribbean Cruises Ltd., doing business under the name RCL Regional Operating Headquarters, is the regional operating headquarters (ROHQ) in the Philippines of a multinational company organized and existing under the laws of Liberia. It was issued a License to Transact Business in the Philippines under Securities and Exchange Commission (SEC) License No. FS201624326 issued by the SEC on October 18, 2016, with its principal business address at 12/F Unit 1201-P, Pacific Drive, Five E-com Center Building, Harbor Drive, Mall of Asia Complex, 1 Pre-Trial Order dated April 20, 2022, Docket - Vol. I, p. 354. \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Pasay City, Metro Manila, Philippines.2 It is registered with the Bureau of Internal Revenue (BIR) as a value-added tax (VAT) taxpayer under Tax Identification Number (TIN) 009-438-752-00000.3 Respondent is the Commissioner of Internal Revenue (CIR) vested by law to enforce and implement the provisions of the National Internal Revenue Code (NIRC) of 1997, as amended, and other related statutes and implementing rules and regulations, with office address at the Office of the Commissioner of Internal Revenue, BIR National Building, Quezon City.4

ANTECEDENTS (ADMINISTRATIVE LEVEL)

Petitioner filed with the BIR its original Quarterly VAT Returns (BIR Form No. 2550-Q) for the first, second, third, and fourth quarters of calendar year (CY) 2018 on the following dates:

CY 2018

I

Date of Filin

Return T

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- . i January 25, 20198 Q!!ginal On December 4, 2020, petitioner filed with the VAT Credit Audit Division (VCAD) of the BIR its Application for Tax Credits/Refund (BIR Form No. 1914),9 and Letter dated December 3, 2020, 10 requesting and applying for the issuance of a tax credit certificate/refund of unutilized input VAT, in relation to its zero-rated sales from October 1, 2018 to December 31, 2018 (Fourth Quarter ofCY 2018), amounting to !>17,172,969.28. Thereafter, on February 23, 2021, petitioner received the VAT Refund Notice dated February 2, 2021, issued by Assistant Commissioner Maria Luisa I. Belen, 11 informing petitioner as regards the input tax allowable for refund on local purchases amounting to !>2,347,228.34, while the amount of Pl4,825,740.94 was denied on the following grounds: \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Deductions from the Claim

Amount

1 Pr~scribed and/or out-of-period input VAT included in the I

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l ~!~~-~. (JQ!.g_ ;?.Q _?Q .!§.) _ - ..

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-j---~ J4 .. J~? .. ~~?. :.?4..1i I Disallowed input tax due to non-compliance with the 1 1 ! invoicing requirements pursuant to Sec. 113 of the NIRC I

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__ _____ _ ______ . _ ----· I P 14,825,740.94 i

PROCEEDINGS BEFORE THIS COURT

The denial of the P14,195,993.64 claim prompted petitioner to file the present Petition for Review via electronic mail (e-mail) on March 24, 2021, 12 with the physical copies thereof subsequently filed on May 17, 2021. 13 On June 10, 2021, a Resolution was issued by this Court14 requiring petitioner to present the original authenticated/apostilled Secretary's Certificate or a certified true copy thereof. Thus, on June 23, 2021 , petitioner filed its Compliance. 15 In response to the said Petition, and the summons served upon him, 16 respondent filed his Answer on October 27, 2021 ,17 alleging its special and affirmative defenses.

The Pre-Trial Conference was set and held on March 17, 2022. 18 Prior thereto, on March 9, 2022, Respondent's Pre-Trial Brief 9 was submitted simultaneously with the BIR Records,20 which consists of 315 pages; while petitioner's Pre-Trial Brief was filed on March 14, 2022.21 On March 31, 2022, the parties filed their Joint Stipulation of Facts and lssues,22 which was admitted and approved by the Court in its Resolution 12 Docket- Vol. 1, p. 8.

13 Docket-Vol.I , pp. 9to31 .

14 Docket - Vol. 1, pp. 229 to 230.

15 Docket- Vol. 1, pp. 231 to 237.

16 Docket- Vol. 1, p. 238.

17 Docket- Vol. I, pp. 247 to 258.

I

18 Notice of Pre-Trial Conference dated December 28, 2021 , Docket - Vol. 1, pp. 270 to 271 ; Minutes of the hearing held on, and Order dated, March 17, 2022, Docket - Vol. 1, pp. 324 to 326. 19 Docket- Vol. 1, pp. 299 to 302.

2° Compliance dated March 4, 2022, Docket- Vol. I, pp. 295 to 297.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

dated April 7, 2022,23 thereby deeming the termination of the Pre-Trial. The Pre-Trial Order dated April 20, 2022 was then issued by the Court.24 As trial ensued, the parties presented their respective documentary and testimonial evidence.

Petitioner offered the testimonies of the following individuals, namely:

(1) Mr. Joven Lee Raymundo,25 petitioner's Director of Accounting and Finance; and, (2) Ms. Maricelle L. Ricaforte,26 the Court-commissioned Independent Certified Public Accountant (ICPA).27 The Report of the said ICPA was submitted on August 2, 2022.28 On September 29, 2022, petitioner filed an Omnibus Motion with Manifestation/9 praying for the Court to: (1) allow the recall of its witness, Mr. Raymundo, for the introduction of secondary evidence; (2) hold in abeyance the submission of its formal offer of evidence; and, (3) note and reflect in the records ofthe case the change of its office address. No comment was filed thereon by respondent. 30 In the Resolution dated December 15, 2022,31 the Court (1) noted petitioner's Manifestation; (2) granted its Omnibus Motion; (3) ordered the filing of Supplemental Judicial Affidavit of Mr. Joven Lee Raymundo; ( 4) set the hearing for the recall of said witness; and, (5) gave petitioner a period of fifteen ( 15) days from the date of the presentation of its witness to file the formal offer of evidence. Thus, petitioner presented its recalled witness, Mr. Raymundo, on March 14, 2023.32 Within the period granted, petitioner filed its Formal Offer of Evidence on March 23, 2023.33 Respondent filed his Comment Re: Petitioner's Formal i

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Offer of Evidence on March 27, 2023.34 In the Resolution dated June 23, 2023,35 the Court admitted all of petitioner's offered exhibits, except Exhibits "P-33", "P-23 to P-43" and "P-44", for failure to specifically state the purpose oftheiroffer Consequently Exhibits"P-5-1" "P-8-1" "P-9-7toP-9-13" "P- .

' ' ' ' 14-1 ", "P-15-1 ", and "P-16-1" contained in the USB were also denied. Petitioner then filed an Omnibus Motion (For Partial Reconsideration, and to Admit Petitioner's Exhibits) on July 5, 2023,36 praying for the admission of the aforementioned denied exhibits for the purpose for which they were offered, sans any comment from the respondent. 37 For his part, respondent offered the testimonies of the following BIR personnel, namely: (1) Revenue Officer (RO) Denise R. Dayanan;38 and (2) RO Jennefer I. CoroneP9 On July 17, 2023, respondent filed his Formal Offer of Evidence,40 to which petitioner filed its Comment (On Respondent's Formal Offer of Evidence dated July 13, 2023) on July 20, 2023.41 In the Resolution dated September 4, 2023,42 the Court: (1) resolved petitioner's Omnibus Motion (For Partial Reconsideration, and to Admit Petitioner 's Exhibits) and admitted Exhibits "P-5-1 ", "P-8-1 ", "P-9-7 to P-9- 13" "P-14-1" "P-15-1" "P-16-1" "P-33" "P-23 to P-43" and "P-44"· and ' ' ' ' ' '

(2) admitted all of respondent's offered evidence. Petitioner's Memorandum was filed on October 12, 2023,43 while respondent's Memorandum was submitted on October 16, 2023.44 This case was considered submitted for decision on October 19, 2023.45 Hence, this Decision. }

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

THE ISSUE

The parties stipulated the following issue for the resolution of this Court, to wit:

Whether petitioner is entitled to tax refund for the alleged excess unutilized input VAT allocable and directly attributable to its alleged VAT zero-rated sales for the period from October 1, 2018 to December 31, 2018 (Fourth Quarter, CY 2018) amounting to 1>14,825,740.94, representing the partial denial of petitioner's administrative claim for refund.46 Petitioner's arguments:

Petitioner argues that the claim for refund should be granted because all the elements necessary are present. Particularly, petitioner claims that: it is a VAT -registered entity engaged in zero-rated sales of services other than processing, manufacturing, or repacking of goods; it rendered the services to a non-resident foreign corporation (NFRC) which were paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP); the input taxes are supported by VAT -registered invoices and official receipts (ORs ); the subject input taxes are not transitional taxes; the input taxes have not been applied against output taxes; and, the input taxes are attributable to its zero-rated sales for the fourth quarter of CY 2018.

Respondent's counter-arguments:

Respondent contends that the petition must be dismissed for failure of petitioner to substantiate its administrative claim for refund; that petitioner is not entitled to the claim for refund; that petitioner failed to comply with Section 112(A) ofthe NIRC of 1997, as amended; that it failed to comply with the invoicing requirements under Section 113 of the NIRC of 1997, as amended; and, that tax refunds are strictly construed against the taxpayer and in favor of the government.

THE COURT'S RULING

The present Petition for Review is partly meritorious. ~

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Requisites under the law for the refund or issuance of tax credit certificate of input VAT.

Section 112 of the NIRC of 1997, as amended by Republic Act (R.A.) No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law,47 provides, in part, as follows:

SEC. 112. Refunds or Tax Credits oflnput 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(B)(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 1 08(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales.

XXX

XXX

XXX

(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 provision, jurisprudence has laid down certain requisites which the taxpayer-applicant must comply with to successfully\ Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

obtain a credit/refund of input VAT. Said requisites are classified into certain categories, to wit:

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

1. the refund claim is filed with the BIR within two (2) years after the close of the taxable quarter when the sales were made· 48 '

2. in case of full or partial denial of the refund claim rendered within a period of 90 days from the date of submission of the official receipts or invoices and other documents in support of the application, the judicial claim shall be filed with this Court within 30 days from receipt of the decision,49 or after the expiration of the 90-day period; 5° With reference to the taxpayer's registration with the BIR:

3. the taxpayer is a VAT-registered person;51 In relation to the taxpayer's output VAT:

4. the taxpayer is engaged in zero-rated or effectively zero-rated sales· 52 '

5. for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B);53 and 108(B)(l) and (2), the acceptable foreign ~ 48 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010.

49 Refer to Energy Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 203367, March 17, 2021; Commissioner of Internal Revenue vs. CE Casecnan Water And Energy Company, Inc., G.R. No. 212727, February I, 2023; and Commissioner of Internal Revenue vs. Vestas Services Philippines, Inc., G.R. No. 255085, March 29, 2023. 50 Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) vs. Commissioner of Internal Revenue, G.R. No. 182737, March 2, 2016.

51 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., vs. Commissioner of Internal Revenue, supra. 52 Ibid.

53 Section 106(B) cited in Section 112(A) ofR.A. No. 8424 was later amended by R.A. No. 9337 to pertain to Section 106(A)(2)(b). Accordingly, Section 112(A), as amended by R.A. No. 9337, reads as follows: "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 1 06(A)(2)( a)( I), (2) and (b) and Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

currency exchange proceeds have been duly accounted for in accordance with the BSP rules and regulations;54 As regards the taxpayer's input VAT being refunded:

6. the input taxes are not transitional input taxes;55

7. the input taxes are due or paid; 56

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;57 and

9. the input taxes have not been applied against output taxes during and in the succeeding quarters. 58 In addition, in claims for VAT refund/credit, applicants must satisfy the substantiation and invoicing requirements under the NIRC of 1997, as amended, and other implementing rules and regulations. 59 Thus, petitioner's compliance with all the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero-rated sales.60 The invoicing and substantiation requirements should be followed because it is the only way\ Section 1 08(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 (SSP): 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 or 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." (Emphasis supplied) However, in view ofthe amendments introduced by RA No. 10963, Section 106(A)(2)(b) is now deleted. 54 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. vs. Commissioner of Internal Revenue, supra. 55 Ibid.

56 Ibid.

57 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner of Internal Revenue, supra. 58 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. vs. Commissioner of Internal Revenue, supra.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

to determine the veracity of the taxpayer's claims. 61 Moreover, it must be pointed out that compliance with all the VAT invoicing requirements provided by tax laws and regulations is mandatory. 62 Strict compliance with substantiation and invoicing requirements is necessary considering VAT's nature and VAT system's tax credit method, where tax payments are based on output and input taxes and where the seller's output tax becomes the buyer's input tax that is available as tax credit or refund in the same transaction. It ensures the proper collection of taxes at all stages of distribution, facilitates computation of tax credits, and provides accurate audit trail or evidence for BIR monitoring purposes. 63 Furthermore, it must be emphasized that in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case.64 Thus, it behooves petitioner to show compliance with each of the foregoing requisites and invoicing requirements. As a corollary, the absence of any ofthe said requisites is already a valid ground to deny the refund claim.

First

and second requisites:

Petitioner

timely filed its administrative and judicial claims.

The first requisite pertains to the filing of a claim for tax refund or tax credit of input VAT before the BIR, within two (2) years from the close ofthe taxable quarter when the zero-rated or effectively zero-rated sales were made. The present claim covers the period from October 1, 2018 to December 31,2018 or the fourth quarter ofCY 2018. Counting two (2) years from the close of the said quarter, the table below indicates the pertinent last day for the filing of an administrative claim, to wit:

I

CY 2018

I

Close of the taxable I Last day to file administrative ,

I

I

quarter

I

claim

I

lmm

Fourth Quarter

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December 31, 2018

I

December 31, 2020 i • ........................ ~····························-··-···············-········-·- ,,,,,, .... ! ,,,,,,,,,,,,,,,, ....................... ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, .. ,,,,,,,,,,,,, .. ,,,,,,,,,,,,,,,,,, ,,,,.,, ........... L ......................

··················-·············•·--··-·-··········•·•·••••••••••••••••••••••••••··--··-·······-··········-······· •• ··········•·····' 'PO'otion vs. Commission" of l nt"nal Revenue, G .R. No. 191495, July \ 23, 2018.

62 Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G .R. No. 183531 , March 25,2015.

63 Team Energy Corporation vs. Commissioner of Internal Revenue, et seq. , supra. 64 Edison (Bataan) Cogeneration Corporation vs. Commissioner of Internal Revenue, et seq., G.R. Nos. 201665 and 201668, August 30, 20 17; Commissioner of Internal Revenue vs. Philippine National Bank, G .R. No. 180290, September 29, 20 14; Commissioner o.flnternal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014; Dizon vs. Court ofTax Appeals, et al. , G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue vs. Manila Mining Corporation, G.R. No. 153204, August 31 , 2005.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Hence, petitioner timely filed its letter dated December 3, 2020, along with the Application for Tax Credits I Refunds (BIR Form No. 1914) in the amount ofP17,172,969.28 on December 4, 2020.65 As regards the second requisite, the same necessitates that the judicial claim must have been filed within 30 days from receipt of respondent's decision or after the expiration of the 90-day period under Section 112(C) of the NIRC of 1997, as amended. Thus, from the filing of petitioner's administrative claim on December 4, 2020, respondent had ninety (90) days therefrom or until March 4, 2021 to act on the said claim. Petitioner received the VAT Refund Notice dated February 2, 2021, which partially denied its claim for refund, within the ninety (90)-day period or on February 23, 2021.66 Counting thirty (30) days therefrom, petitioner had until March 25, 2021, within which to file its judicial claim for refund. However, due to the surge of Covid-19 cases, the Supreme Court (SC) ordered the physical closure of courts in the National Capital Judicial Region (NCJR) and nearby provinces, and suspended the time for filing of pleadings and other court submissions, beginning March 25, 2021, as follows:

Issuance

Date Issued

Subject Matter/Content

Announcement67

March 25, 2021 Physical Closure of NCJR Courts, Nearby !

Provinces on March 25-26, 2021 · i Announcement68 ' "In view of the rising cases of COVID-19 in the National Capital Region and the nearby provinces of Bulacan, Cavite, Laguna and Rizal ('Nearby Provinces'), Chief Justice Diosdado M. Peralta orders the physical closure of all courts and court offices in the NCJR (Supreme Court, Court of Appeals, Court of Tax Appeals, Sandiganbayan, and trial courts) and in nearby provinces beginning at 2 P.M. today, llfqr.qh.}~!. ... ?9.? . .!!. .... 1!:'2t.i!tt:?.f!!t:?.!.!.t:?.~! .... M.C!!..qh.?§!.?Q?!.: ... '' ...... ' March 27, 2021 I Re: Physical closure of courts in the National Capital Judicial Region and nearby provinces from March 29 to 31, 2021 and throughout the Holy

Week

"In view of the alarming surge ofCOVID-19 cases and upon consultation with the members of the Court En Bane, as well as the heads of the concerned offices, the physical closure of all courts and court offices (Supreme Court, Court of Appeals, Court of Tax Appeals, Sandiganbayan, and trial 65 Exhibits "P-19" and "P-20", Docket- Vol. 2, pp. 575 to 588. 66 Exhibits "P-4" and "R-5", BIR Records (Exhibit "R-6"), p. 31 0; Par. 7, Petition for Review, Docket- Voi.I,p.11.

67 The Supreme Court of the Philippines Website, March 25, 2021 , https://sc.judiciary.gov.ph/re-physical- cl osure-of-ncjr-courts-nearby -provinceson-march-25-26-2021/ 68 The Supreme Court ofthe Philippines Website, March 27, 2021 , https://sc.judiciary.gov.ph/re-physical- cl osure-of-courts-in-the-national-capital-judi cia!-region -and-nearby-provinces-from-march-2 9-to-3 1- 2021-and-throughout-the-holy-week/ '\

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

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Issuance

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·1' i courts) in the National Capital Judicial Region, and nearby i [ .

! provinces of Bulacan, Cavite, Laguna, and Rizal is hereby 1

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! EXTENDED effective March 29 (Monday) to March 31 1 ~c NO.i4~oil tMar~h28;2~~=~r~~~!!~i· ~g~- .1

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I COURTS

IN

THE NATIONAL

CAPITAL I

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REGIONS

AND

NEARBY I

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I COMMUNITY QUARANTINE FROM MARCH I

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129 TO APRIL 4, 2021

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I "Considering that the National Capital Region and nearby 1

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I provinces of Bulacan, Cavite, Laguna, and Rizal have been

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I placed under Enhanced Community Quarantine beginning

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1 1 March 29 until April 4, 2021, the filing periods of pleadings

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I and other court submissions that fall due during the period !

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I from March 29 to March 31, 2021 are hereby EXTENDED ~--- --------------------·------f ------------... ·---·--- _JI!l.!..I~!.f!..f!.f}l ca le_'!!f.q_!._EC!Y..~!_r;.q_u.J:.te_c!_f!...0.!!!._1P.!.!.!.~~._?_Q7.L ~~:~- I AC No. 15-2021 i April 3, 2021

I RE:

EXTENSION

OF

THE

PHYSICAL I

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I CLOSURE OF COURTS AND THE FILING !

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I COURT SUBMISSIONS IN LIGHT OF THE !

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I FURTHER EXTENSION OF THE ENHANCED I

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I COMMUNITY QUARANTINE FROM APRIL 5 1

I TO APRIL 11,2021.

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············------ ················-····-· ... ··----- 1-·-······· , AC No. 21-2021 I April 10, 2021

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Issuance

Date Issued

Subject Matter/Content

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The_ time (or fi!ing_ and service of pleadings and motions 1

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dunng thts penod IS SUSPENDED and shall resume seven i

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(7) calendar days counted from the first day of physical I r-Ae No. 29~2021·t-·-Aprii36:-2o21 ---~:en;~~ 1ili~~~:~-ENTS IN--COlfRTs--1

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ON 3- 14 MAy 2021

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1 "Considering that the National Capital Region, the provinces I

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I of A~ra, Bu~acan, Cavite, Lag~na, Quirino, and Rizal, _and ! !

I SantiGgo Czty, !sabela, contmue to be under Modified 1

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I Enhanced Community Quarantine (MECQ) until 14 May i

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2021, ALL first and second level courts, and appellate i 1 1 collegiate courts, and their judicial offices in the said areas I , . shall continue to be physically closed until/4 May 2021. xxx ! 1 1 xxxxxx.

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I The time for filing and service of pleadings and motions I

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I during this period in these areas is SUSPENDED and shall I 1 resume after seven (7) calendar days counted from the first j I AcNO. 33-2021 ~ MaYJ4,2o2i ~ ~1~~1z~f'-ilifJtiffii6i-i~~fj~Gi7-~ I "Considering that the National Capital Region and nearby I ...... L.

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provinces of Bulacan, Cavite, Laguna, and Rizal, together I 1 with some provinces and cities, have been placed under I

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General Community Quarantine (GCQ) starting 15 May until I 31 May 2021, all first and second level courts, and appellate I , 1 · collegi~te courts (except the Supreme Court), an~/ the judicial j offices m these areas under GCQ shall be physlcal/y opened t I with a skeleton force of at least thirty percent (30%) to at I i most fifty percent (50%), beginning 17 May 2021 until ! IIYr:!!~~r: IJJ!!f.~f!::: . - ... ············ ...... .. . .. - . . .... .............. ......... ... . . ........ . .

_I

From the foregoing SC issuances, all appellate collegiate courts within the NCR physically reopened on May 17, 2021. Counting seven (7) calendar days therefrom, the period for filing and service of motions, pleadings, and other court submissions resumed on May 24, 2021. As mentioned, petitioner filed the present Petition for Review via e-mail on March 24,2021 69 pursuant to CTAEn Bane Resolution No. 4-2021,70 and subsequently via personal submission on May 17, 2021. 71 Thus, the judicial claim was also timely filed.

Accordingly, the Court finds that petitioner complied with the above- stated first and second requisites. \ 69 Docket- Vol. 1, p. 8.

70 Pleadings, Motions and Other Court Submissions Filed by Email.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Third requisite: Petitioner is a VAT- registered entity.

Anent the third requisite, it is undisputed that petitioner is a VAT- registered entity with TIN 009-438-752-00000 as indicated in its BIR Certificate ofRegistration.72 Thus, petitioner has also shown compliance with the said requisite.

Fourth and fifth requisites: Petitioner had zero-rated sales/receipts for the fourth quarter of CY 2018 paid in acceptable foreign currency duly accounted for in accordance with the BSP rules and regulations.

The fourth and fifth requisites, respectively, require that the taxpayer is engaged in zero-rated or effectively zero-rated sales; and that for zero-rated sales under Sections 106(A)(2)(a)(1), (2) and (B)73 , 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 BSP rules and regulations.

Petitioner claims that it had VAT zero-rated sales for the period October 1, 2018 to December 31, 20 18; that these are service fees earned from the management consultancy services rendered to RCL Cruises Ltd. (Formerly RCL Worldwide Ltd.), also referred to as RCL UK, an NRFC engaged in business outside the Philippines; and, that said service fees were paid for in acceptable foreign currency inwardly remitted by RCL UK to the Philippines and duly accounted for in accordance with the BSP rules and regulations, thus, subject to VAT at zero percent (0%) rate pursuant to Section 108(B)(2) ofthe NIRC of 1997, as amended,74 which reads:

SEC. 108. Value-Added Tax on Sale of Services and Use or Lease of Properties. -

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(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:\ 72 Exhibit "P-3", Docket- Vol. 2, p. 490.

73 Section 1 06(B) cited in Section 112(A) of RA No. 8424 was later amended by RA No. 9337 to pertain to Section 106(A)(2)(b). However, in view of the amendments introduced by RA No. 10963, Section I 06(A)(2)(b) is now deleted.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

( 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 (BSP); xxx (Emphasis supplied) Based on the foregoing provision, certain essential elements must be present for a sale or supply of services to be subject to the VAT rate of zero percent (0% ), to wit:

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 the services are performed; 75 2) The services fall under any of the categories under Section 1 08(B)(2),76 or simply, the services rendered should be other than "processing, manufacturing or repacking goods"; 77 3) The service must be performed in the Philippines78 by a VAT- registered person; and, 4) The payment for such services should be in acceptable foreign currency accounted for in accordance with BSP rules.79 \ 75 Site/ Philippines Corporation (Formerly Clientlogic Phils. Inc.) vs. Commissioner of Internal Revenue, G.R. No. 201326, February 08, 2017; Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Accenture, Inc. vs. Commissioner of Internal Revenue, G.R. No. 190102, July 11 ,2012. 76 Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005.

77 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007.

78 /d.

79 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., supra; Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), supra.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

(1) RCL UK is an NRFC doing business outside the Philippines For the first essential element, in order to be considered as an NRFC doing business outside the Philippines, each entity must be supported, at the very least, by both a

Certification of Non-Registration

of Corporation/Partnership issued by the Philippine SEC, and proof of incorporation/registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate). The former establishes that the recipient of the service has no registered business in the Philippines, and that it is not engaged in trade or business within the Philippines; while the latter proves that the said recipient of the service is indeed foreign. The said documents have been consistently required by this Court for purposes of the said first essential element. In fact, in Commissioner of Internal Revenue vs. Deutsche Knowledge Services Pte. Ltd.,80 the Supreme Court affirmed the necessity of presenting the said documents in this wise: For purposes of zero-rating under Section 108(B)(2) of the Tax Code, the claimant must establish the two components of a client's NRFC81 status, viz.: (1) that their client was established under the laws of a country not the Philippines or, simply, is not a domestic corporation; and (2) that it is not engaged in trade or business in the Philippines. To be sure, there must be sufficient proof of both of these components: showing not only that the clients are foreign corporations, but also are not doing business in the Philippines. Such proof must be especially required from ROHQs such as DKS. That the law expressly authorizes ROHQs to render services to local and foreign affiliates alike only stresses the ROHQ's burden to distinguish among their clients' nationalities and actual places of business operations and establish that they are seeking refund or credit of input VAT only to the extent of their sales of services to foreign clients doing business outside the Philippines.

To recall, the CTA found that the SEC Certification of Non- Registration of Company and Authenticated Articles of Association and/or Certificates of Registration/Good Standing/Incorporation sufficiently established the NRFC status of 11 ofDKS's affiliates clients. The Court upholds these findings.

The Court accords the CTA's factual findings with utmost respect, if not finality, because the Court recognizes that it has necessarily developed an expertise on tax matters. Significantly, both the CT A Division and CT A En Bane gave credence to the aforementioned documents as sufficient proof of NRFC status. The Court shall not disturb its findings without any showing of grave abuse of discretion considering that the members of the \ 80 G.R. No. 234445, July 15, 2020.

81 That is, "Nonresident foreign corporation".

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

tax court are in the best position to analyze the documents presented by the parties.

In any case, after a judicious review of the records, the Court still do not find any reason to deviate from the court a quo 's findings. To the Court's mind, the SEC Certifications of Non-Registration show that these affiliates are foreign corporations. On the other hand, the articles of association/certificates of incorporation stating that these affiliates are registered to operate in their respective home countries, outside the Philippines are prima facie evidence that their clients are not engaged in trade or business in the Philippines. (Emphasis and underscoring supplied) In the present case, petitioner satisfied the first essential element as it proved that RCL UK is an NRFC doing business outside the Philippines, as evidenced by the Certification of Non-Registration of Company issued by the SEC,82 and its Apostilled Certificate of Incorporation on Change of Name with attached Memorandum and Articles of Association.83

(2) Services rendered by petitioner fall within the scope of other than ''processing, manufacturing or repacking goods" With regard to the second essential element, petitioner submitted its Cost Plus Agreement with RCL UK executed on January 1, 2017,84 indicating in Schedule 1 thereofl5 that the services to be provided by petitioner includes marine purchasing services, IT application support and services, IT operations support and services, and other services as and when agreed between the parties in accordance with Section CI. 7 of the said agreement. These services clearly fall within the scope of "services other than processing, manufacturing or repacking goods"; hence, petitioner fulfilled the second essential element.

(3) Services were rendered in the

Philippines

As to the third essential element, i.e., the services must be performed in the Philippines by a VAT -registered person, an examination of the above Cost Plus AgreemenF6 reveals that the same has no provision as to where the services are to be performed by petitioner. However, based on the testimony 82 Exhibit "P-5-1 ", USB (Offered and admitted as Exhibit "P-44"). 83 Exhibits "P-6" and "P-6-1 ", Docket- Vol. 2, pp. 491 to 516. 84 Exhibits "P-7" and "P-7-1 ", Docket - Vol. 1, pp. 447 to 456; USB (Offered and admitted as Exhibit "P- 44").

85 Exhibit "P-7-1", Docket- Vol. 1, p. 455.

86 Exhibits "P-7" and "P-7-1 ", Docket- Vol. 1, pp. 449 to 456; and USB (Offered and admitted as Exhibit "P-44").

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Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

of petitioner's Director of Accounting and Finance, Mr. Raymundo, in his Judicial Affidavit, petitioner sold, or otherwise rendered, services in the Philippines to RCL UK, an NRFC that is engaged in business outside the Philippines. 87 Thus, the Court finds the same sufficient to establish that the services were actually performed by petitioner in the Philippines. Correspondingly, petitioner satisfactorily complied with the said third essential element.

( 4) Service fees were remitted in acceptable foreign currency duly accounted for in accordance with BSP rules and regulations.

We proceed to the determination of the fourth essential element which corresponds to the fifth requisite that requires, for zero-rated sales under Sections 108(B)(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.

The foreign currency remittances referred to under Section 1 08(B)(2) must not only be duly accounted for in accordance with the rules and regulations of the BSP, but must also 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: 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: ~

p. 4-v.

DECISION

CT A Case No. I 0508 Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Page 19 of47

(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 break-down 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 components of the sale.

(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 (P1 ,000) or more where the sale or transfer 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.

These provisions are further implemented by Section 4.113-1(A) and (B) of Revenue Regulations (RR) No. 16-2005, as amended: 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 InvoiceN AT Official Receipt shall not give rise to any input tax. \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

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;

(c) Ifthe 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 pesos (Pl ,000.00) 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 and 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.- (A) Issuance. -All persons subject to an internal revenue tax shall, at the point of each sale or transfer of merchandise or for services rendered \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

valued at One hundred pesos (P 1 00) or more, issue duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: xxx

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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.

Since petitioner's claimed zero-rated sales are in the nature of sales of services under Section 1 08(B)(2) of the NIRC of 1997, as amended, petitioner is required to issue BIR-registered VAT ORs for the foreign currency proceeds of each sale transaction, of which the information contained therein must be in compliance with the applicable provisions previously cited. In its Quarterly VAT Return for the fourth quarter of CY 2018, petitioner declared total zero-rated sales/receipts in the amount of P515,127,148.92.88 The said sales/receipts represent the Philippine peso equivalent of US$9,745,122.00 collected by petitioner from RCL UK on December 26, 2018 per OR No. 000001 89 as payment for the abovementioned services rendered by petitioner for the periods January 1, 2017 to December 31,2017, and January 1, 2018 to October 2018.90 A scrutiny of the VAT OR91 supporting petitioner's foreign currency receipts of US$9,745,122.00 shows that the same is compliant with the invoicing requirements under the law and regulations. Moreover, petitioner presented the Certification of Inward Remittances issued by JPMorgan Chase Bank, N.A,92 proving that the amount of US$9,745,122.00 was inwardly remitted in US Dollars (USD) on December 26, 2018, and accounted for in accordance with BSP rules and regulations.~

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

As such, petitioner was able to establish that the entire reported amount of P515,127,148.92 represents valid zero-rated sales/receipts for the fourth quarter of CY 2018, hence, satisfying the fourth and fifth requisites for the grant of input VAT refund.

Sixth requisite: The input VAT being claimed does not appear to be transitional input taxes.

The claimed input taxes do not appear to be transitional input taxes, as understood under Section lll(A) of the NIRC of 1997, as amended. 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 period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact ofthe VAT on the taxpayer.93 Since there is no showing that the above-stated input VAT are transitional input VAT, the sixth requisite is likewise fulfilled. Seventh requisite: Out of petitioner's input VAT being claimed for refund, only the amount ofP7,038,142.81 was duly substantiated.

Anent the seventh requisite, it is important for petitioner to prove that input taxes claimed were actually due or paid in accordance with Section llO(A) of the NIRC of 1997, as amended, which states: 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:

(i) For sale; or'\

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

(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 ofthe value-added tax prior to the release ofthe goods from the custody ofthe 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 (P1 ,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, further, That the amortization of the input VAT shall only be allowed until December 31 , 2021 after which taxpayers with unutilized input VAT on capital goods purchased or imported shall be allowed to apply the same as scheduled until fully utilized: Provided, finally, That in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the 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 ofRR No. 16-2005, which provide 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 ofthe Tax Code.

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. \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

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 Tax Code shall be creditable against the output tax:

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 Tax Code 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 Tax Code,

(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;

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SECTION 4.110-2. Persons Who Can Avail ofthe 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. SECTION 4.110-3. Claim for Input Tax on Depreciable Goods. - Where a VAT -registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (Pl ,OOO,OOO.OO), regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner: \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

(a) If the estimated useful life of a capital good is five (5) years or more- The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided by 60 and the quotient will be the amount to be claimed monthly.

(b) If the estimated useful life of a capital good is less than five ( 5) years- The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed One million pesos (Pl ,000,000.00), the total input taxes will be allowable as credit against output tax in the month of acquisition; Provided, however, that the total amount of input taxes (input tax on depreciable capital goods plus other allowable input taxes) allowed to be claimed against the output tax in the quarterly VAT Returns shall be subject to the limitation prescribed under Sec. 4.110-7 of these Regulations. The aggregate acquisition cost of a depreciable asset in any calendar month refers to the total price agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired in installment for an acquisition cost of more than Pl ,OOO,OOO.OO will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed Pl ,000,000.00.

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If the depreciable capital good is sold/transferred within a period of five (5) years or prior to the exhaustion of the amortizable input tax thereon, the entire unamortized input tax on the capital goods sold/transferred can be claimed as input tax credit during the month/quarter when the sale or transfer was made but subject to the limitation prescribed under Sec. 4.110- 7 of these Regulations.

Thus, in order for petitioner to prove that its input taxes were actually due or paid, the same must be duly substantiated by supporting documents prescribed under Section 4.110-8 of RR No. 16-2005. Furthermore, said documents must likewise comply with the invoicing requirements under Sections 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, and implemented by Section 4.113-1(A) and (B) ofRR No. 16-2005. In its Quarterly VAT Return for the fourth quarter of CY 2018,94 petitioner reported total allowable input VAT of P17,172,969.28, which consists ofP14,195,993.64 input VAT carried-over from the previous period 94 Exhibit "P-17", USB.

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Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

and P2,976,975.64 input VAT for the fourth quarter of CY 2018, broken down as follows:

La VAT Cari Quer from CY20I8 Input VAT on Purchases of Goods Other than Capital

Goods

“Amortization of Input VAT on Capital Goods Exceeding

P1Million

Input VAT Deferred on Capital Goods Exceeding

FLMiliion from Previous Period 255,480.42 | | 15,641.64 2,976,975.64 P 17,172,969.28 Per the VAT Refund Notice dated February 2, 2021,” out of the P17,172,969.28 input VAT subject of petitioner’s administrative claim, respondent only granted the refund of P2,347,228.34, while the remaining P14,825,740.94 was denied due to the following grounds:

|

Input VAT |

Claim |

input VAT included in the claim P14 195,993. 64 | oS a ete Me. < Com ela lanl Tp fm innrnmnmnnnnimnmamanmsninininacsnenntn i

Reason for Disallowance

Disallowed input tax due to no compliance with the invoicing requirements pursuant to Section 113 of the NIRC of 1997, as amended 420,694.66 | 209,052.64 P14,825,740.94 Considering that petitioner is already amenable to respondent’s disallowance of input VAT due to non-compliance with the invoicing requirements under Section 113 of the NIRC of 1997, as amended, amounting to P420,694.66, as well as the input VAT from big-ticket purchases amounting to P209,052.64,”° petitioner therefore only assails the denial of input VAT amounting to P14,195,993.64 for allegedly being prescribed and/or out of period.

Citing the cases of Commissioner of Internal Revenue vs Mirant Pagbilao Corp.”’ and Luzon Hydro Corp. vs Commissioner of Internal Revenue,”* petitioner argues that the P14,195,993.64 input tax carry-over from previous quarters may still be claimed since it did not have any zero-rated sales for the first to third quarters of CY 2018, but only during the fourth quarter of CY 2018. "

% Exhibits “P-4” and “R-5”, BIR Records (Exhibit “R-6”), p. 310. Par. 84, petitioner’s Memorandum, Docket — Vol. 2, pp. 641 to 642. °? G.R. No. 172129, dated September 12, 2008.

°8 G.R. No. 188260 dated November 13, 2013.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Petitioner also claims that it complied with all the requirements set forth under Revenue Memorandum Circular (RMC) No. 42-2003 for the VAT input credits carried over from the previous period to be allowed for VAT refund. We agree with petitioner's contention.

Pertinent thereto is the case of Maibarara Geothermal, Inc. vs Commissioner of Internal Revenue,99 wherein the Supreme Court ruled that the two-year period to file a claim for refund/tax credit of input VAT must be reckoned from the end of the taxable quarter when the zero-rated or effectively zero-rated sale was made and not when the input VAT was incurred, to wit: This Court agrees with the CT A En Bane that the phrase "when the relevant sales were made" refers to zero-rated or effectively zero-rated sales, and not to the purchase of goods and services from which it incurred input VAT.

Through a plain reading of Section 112(A), it can be inferred that the phrase "when the sales were made" refers to zero-rated or effectively zero-rated sales. Based on the heading of Section 112(A), it is clear that the intent of the said provisions is to cover only the refund or tax credits of unutilized input VAT attributable to zero-rated or effectively zero-rated sales. This is further supported in the last sentence of Section 112(A) stating that "where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or 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." This proportional allocation of the input taxes if the taxpayer-claimant is engaged in both zero-rated or effectively zero-rated sales and taxable or exempt sales clearly shows the intent of Section 112(A) to restrict the refund or tax credit of unutilized input VAT only to those which are directly attributable to the zero-rated or effectively zero-rated sales.

Moreover, contrary to the assertion of petitioner, the phrase "when the relevant sales were made pertaining to the input VAT" as stated by this Court in Mirant, simply means that the input VAT that were incurred must be regarded as being related to such "relevant sales," which should be zero- rated or effectively zero-rated. In other words, there must be a direct relation or attributability of the purchases that incurred input VAT to the "relevant sales" that were made.

If We are to accept petitioner's interpretation of the ruling of this Court in Mirant, it will result in an absurd situation wherein the input VAT will be attributed from the "purchase" made by petitioner or the sales made by its supplier, and not from the sales made by petitioner, which is the taxpayer-claimant. As clearly provided in Section 112(A), the creditable \

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

input VAT must be attributable to the sales made by the taxpayer-claimant, in this case, the petitioner.

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As mentioned in Luzon Hydro Corporation, there must be evidence showing the existence of zero-rated or effectively zero-rated sales to which the input VAT being refunded must be attributable. As admitted by petitioner, it had no zero-rated or effectively zero-rated sales from the first to fourth quarters of taxable year 2011. Thus, the CT A En Bane correctly ruled as follows:

It is clear from the foregoing requisites that, it is essential for the taxpayer-claimant to prove that it had zero- rated or effectively zero-rated sales during the pertinent taxable quarter unto which the input VAT, which is sought to be refunded, can be attributed to. Thus, petitioner must first establish that zero-rated or effectively zero-rated sales unto which the input VAT can attributed to exist. It cannot be the other way around lest it is going to be putting the cart before the horse.

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XXX

Verily, for purposes of determining when petitioner can be said to be legally entitled to claim a refund of input tax due or paid, what should matter is not the date when the purchases of goods and services were made. Rather, it is the date when petitioner's zero-rated sales were made. For indeed, it is only at the time of such sale that petitioner can establish whether or not the input taxes due or paid were in fact directly attributable, or at least allocable, to its zero-rated sales.

Section 112(A) of the NIRC of 1997, as amended, does not require that zero-rated sales be made within the same period as the time when the expenses were incurred as the said provision only mandates that in order to claim for a refund/tax credit of input VAT, there must be zero-rated sales or effectively zero-rated sales to which the input VAT sought to be refunded are attributable. As can be seen in its Quarterly VAT Returns for the first to third quarters of CY 2018, petitioner did not declare any sales, i.e., sales subject to 12% VAT, sales to government, zero-rated sales and exempt sales, for the said periods. Nonetheless, it reported the subject claim ofP14,195,993.64 as input VAT incurred during the said quarters, as follows: P ·f I .

1

First Quarter

I Second Quarter I

Third Quarter i Total- First to I a! ICU ais i (Exhibit "P-1 4") i (Exhibit"P-1 5") !

(Exhibit "P-16")

i Third Quarters i f ~!Jt!"sb.~;;8~~~;~~~~~!? =-~Ei_~~-t~ I ------·· ····················~:~g--j - -··-·--- - ~~~~-+- --

-------~:§§ J-----·--------- §:§~ -1

L.i~~2~:!3:.~!i.~- $.~l~~~~:~i.2i~ ·········-- I ·:_:~:- : ~ 9;~9]· :::~=::.:: ·:~9~9.:oT::::=::

::·::::~-=~:I99 ] ·:::: ·.:=:::9.'99:!

~ . '

Royal Caribbean Cruises Ltd, under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Patticulars First Quarter | Second Quarter | Third Quarter j Total - First to — (Exhibit “P-14")___(Exhibit “P- __ (Exhibit “P-16")_ Third Quarters _

| Input VAT on Domestic |

| Purchase of Services _|_3,676,728.28 | __3,938,736.80 | _6,284,038.36 | _13,899,503.44 | | Total Input VAT on Domestic i i Purchase of Goods Other than |

Capital Goods and Domestic

_Purchase of Services

| Input VAT on Domestic

Purchases - Capital Goods

P_3,745,937.15 P_ 4,033,736.63 P 6,374,608.78 —-P14,154,282.56

| Input VAT on Purchases of

| Capital Goods Exceeding |

| P1Milion Deferred for the

| Succeeding Period

| Amortization of Input VAT on

| Capital Goods Exceeding | i i i 4 10,427.78 | PB 15,641.66 P 15,641.64 | PB 41,711.08 | P 3,756,364.93 P 4,049,378.29 P 6,390,250.42 | P14,195,993.64 | 302,405.36 | 286,763.70 | 271,122.06 | 271,122.06 | Considering that the aforesaid P14, 195,993.64 input VAT was incurred by petitioner in the generation of its zero-rated sales for the fourth quarter of CY 2018,’ the same is attributable thereto and may be the subject of a claim for refund thereof. Notably, the reported zero-rated sales during the fourth quarter of CY 2018 were the service fees for the services rendered by petitioner during the periods January 1, 2017 to December 31, 2017, and January 1, 2018 to October 2018.'°!

An examination of the suppliers’ invoices and ORs supporting petitioner’s input VAT claim of P14,195,993.64 disclosed that only the amount of P7,038,142.81 represents petitioner’s valid input VAT while the remaining amount of P7,157,850.83 must be disallowed for failure to meet the substantiation and invoicing requirements under the VAT law and regulations, detailed as follows:

Date of

Invoice/

OR

| Exhibit

No.

Invoice/

OR No.

Name of Supplier

=] ° a Q1, CY 2018 | | Q3, CY 2018 -I_PROPERLY SUPPORTED BY VAT INVOIC.

| “P-34-46” [ Philippine Vending

| nrmmmnmnpacOtporation ; “P-34-47” Philippine Vending ame < Corporation “p.34-48” | Philippine Vending LCorporation bee tO

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Exhibit

No. Name of Supplier

Philippine Vending

Invoice/

OR No.

Date of

Invoice/

“P-35-37” Asalus Corporation

Ql, CY 2018 “P.35-38”

Asalus Corporation 20888

21 February

2018

| Asalus Corporation

21218 ot ee ‘|Asalus Corporatior |_._P=35-45” | Asalus Corporation

H

6,621.00 | 20,724.52 | 7,956.38

“P-35-60” EM Zalamea

Actuarial Services, — Inc.

“P.35-65” | Federal Express -— ___.--|-Paeifie, LLC

“P-35-76” | Fieldmen Janitorial

ennnnennnsan SETVICES Corporation

“P-35-78” | Fieldmen Janitorial

—— | Services Corporation | :

“P-34-101” | Microbase Invoice 20 April 2018

Incorporated No. | | ——= 088 | gt 56 | tr 5 | “P-34-102” | Microbase | Invoice | 5 March 2018 | ' Incorporated No.

_" a 2 a | - | 1557.22 1557.22 | “P-35-185” | SGV & Co MK000894 21 February | ———E———— 83 01s | — 28,519.80 | | “P.35-186" | SGV& Co MK000897 | 26 February | a 45 | 2018 22,462.80) 4

(Sketch N' Doodle

Creative Print Design

“P-35-199” | Tan, Chandra Tiu

| (Sketch N' Doodle

Creative Print Design

Services)

(Sketch N' Doodle

| Creative Print Design

== || Services)

“P-35-201” | Tan, Chandra Tiu

(Sketch N' Doodle

Creative Print Design

ore Chandra Tiu

(Sketch N' Doodle

Creative Print Design

| Services)

i aa Tan, ChandraTiu

a EE

“p.34-39” | Microbase

Incorporated

Microbase

eeneyeareneateateeertnstentertrn reeenetseneesemensseneatfnreenettivinsetsnteeeeranreerreresatnssisenen i 8,400.00 | > |____8,400.00_

2884 20 March 2018

1,714.29 | te ag a wcsmaesneepemamnsinae sentence 12,304.69 ~ 998,366.93 |

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

11 April 2018

- . Date of Input VAT (In PHP)

Eshibit Name of Supplier Layolees Invoice/

No. OR No. pi Ql, CY 2018 Q2, CY 2018 Q3, CY 2018 Total “P-34-9 | Arex Health 6 April 2018 [nee COMPO a eS et ee ae “%-35-44""Asalus Corporation| 15249 | 18May 2018 | = 801.36 “p-35-79” | Fieldmen Janitorial 26228 4 May 2018 | vcnsmmmmemnaimneaseevices Corporation td es -“P-35-85” | Isla Lipana& Co. | [57253 | 4 May 2018 fe 82,800.00 a “P-34-50” | Philippine Vending 33527. | 23 March 2018 | ener COMPOFation es ee.

A May 2018 |

“P-35-20” | Angara Abello 125975 11 May 2018 |

Concepcion Regala

: and Cruz

5 June 2018

t SSS ee oe a soon, 080,00 ~ 103,000.00 | 2,482.06.

L us “P.35-172” =| 5,727.70 | [eee a Fall TES Sr | TE eel SkyCable Corporation | 814617 | 25 May 2018 | 44 735-173" | SkyCable Corporation | __ 816805 8 June 2018 ne feel 57143 |

“P-35-21” | Angara Abello 126110 18 May 2018

Concepcion Regala

— and Cry

|_P-35-49" "| Asalus Corporation | 26448 _—

“P.34-38” | GIFTING 12507 2 April 2018 |

SOLUTIONS

SPECIALISTS

annnond PHILS. ING. a || A 803.57.

[“P34-51” | Philippine Vending 23 March 2018 |

5,480.56

Corporation

*p.35-174" “P.35-175” “p_34-14” | Arex Health

“P3442”

_- _| Incorporated

SkyCable Corporation | __

| SkyCable Corporation i

| Arex Health

Corporation _

Arex Health

Corporation |

Corporation

Microbase

Philippine Vending

_Corporation

14 August 2018 |

“P.34-43” Microbase i i a __ Incorporated | fo 686.63 | 6,686.68 | “P-34-56” | Philippine Vending 36286 =| 15 June 2018 a, nee COMPOKAIOM “P.34-57” | Philippine Vending 36285 [ EE COMPO Ol nen’ fener 065,28 | 4,065.28 “P.34-58” Philippine Vending 37275, | 16 July 2018 | ence COTPOTAMIOM ea eS Fea SP cate 5125.72 nnn det 25. “P-34-59” | Philippine Vending 37271 16 July 2018 | — _Corporation 7 | 7,588.24

“P-34-60” Philippine Vending

— Corporation

DECISION . .

CTA Case No. 10508 . a Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of Internal Revenue ,

Page 32 of 47

Exhibit Name of Supplier | Invoice/ Lahey |___________—_Input VAT (in PHP) _____ No. OR No. OR Q1, CY 2018 Q2, CY 2018 Q3, CY 2018 38275 16 August 2018 | .

ae | Comporation ame ed Se eee Ce sD “P-34-63” | Philippine Vending | 38274 16 August 2018 | S| Corporation _ ca = _ “P-35-10” | 2GO Express, Inc. | 1712446 | 29 August 2018 | “P-35-16” ] 2GO Express, Inc. | 2023154 19 October 2018 -P735-32"___| Apex Five Ecom, Inc. | 30 | 17 August 2018 mt=35-33”....Apex Five Ecom, Inc. | 31 | 24 August 2018 “P-35-34” | Apex Five Ecom, Inc. 35 24 September 2018 “P-35-50” | Asalus Corporation | _ 27953 | 19 July 2018 ““P-35-51”_ | Asalus Corporation | __ 30298 | 23 August 2018 - Del Rosarioand Del , 14127 14 September Rosario. ee. ee 2018

Del Rosario and Del 14126 14 September

Se a 2018. ee ee a 12,817.62

Federal Express 1158402 | 4 October 2018

Pacific. LLC 2 ee! ees eh eet

Federal Express 1219238 12 December

| Pacific, LLC oe 2018 a . a | a AT5.AS TS 45

Federal Express 1219236 12 December :

Pacific, LLC | 2018 2018 _| SAS Management Inc. | _ 2939 __ |_7 August 2018 |

SkyCable Corporation

‘SkyCable Corporation | 854537 | 3 August 2018 Ee ee ae 3)

“P-35-179” | SkyCable Corporation | 838545 14 September

—————— a | onan a lei ss 2018 EE of 2 — 2 2,440.00 ‘® } “P.35-180" | SkyCable Corporation j ele = “P.35-190” | SGV & Co

/ 301450546 | 12 June 2017 |

| | Corporation ee | nent, 878.70 “P-34-71” Save Money Trading | 330884 “T"20 June 2016 | ened es Aol \ 1,932.21 | “P-34-72” | Save Money Trading , 330885 20 June 2016 _“P-34-73” | Save Money Trading 330886 | 20 June2016 i Inc. yerenvonngeenusanssrsbenssvesoysonsonssnensbnoussvesensssusensessenetrers spessmreareeenesness | “P-34-74” Save Money Trading r 339938 22 September a, a rn. Ce a

“P-34-75” | Alverstone Vault and 0546 27 December

Office Steel 2017

i Equipment oo _s

“P-34-95” | The Purefoods-Hormel | 13 December

| Company Inc.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Exhibit ncaa iat eae eels! a of | Input var In PHP No. ——o ORNo. | ie | QULCY 2018 = Q2,CY 2018 Q3,C¥ 2018 Total “p-34-8" | Arex Health = “6 April 2018 | Angara Abello i | Concepcion Regala : i re ee a BF aa a 34,023.00 | __34,023.00 |

“P-35-23” Angara Abello 133706 12 September

Concepcion Regala 2018 1

ee 00: ee ““P.35-61” | Exclusive Cars 41868

International Holdings

. - Inc.

“P-35-62” | Exclusive Cars

International Holdings

Inc.

“P-35-66” Federal Express _ 977500

———— | Pacific, LLC ie 1006688 “"P.35-67" Federal Express _ -—| Pasfi LLC. |

Federal Express 1029313

ees | Pacific, LLC.

“P-35-69” Federal Express

j Pacific, LLC.

“P-35-70” Federal Express

eee eee Pacific, LLC.

“P-35-71” | Federal Express

| “P-35- 86” _Isla Lipana & Co. _ “*P.35-95” PLDT Ine.

“*P.35-115” | PLD ic i a 2 4 { 4 ““P-35-125” | PLDT Inc. PELORO02 | 12 April2018 | | aes ten een ce eee meme)! Se | 22 | “p35. -129” | PLDT Inc. PELOROO2 | 12 April 2018 | ee i a es a s/s rs eri 7 BL “P-35-137” | PLDT Inc. ‘PELORO027 | 12 April 2018 7 i : ee ee ee | “P-35-110” PLDT Inc. PELORO02 | fe _ _|__.786696_| | “P-35-94” PLDT Inc. PELORO02 a | eee | 844195 | “P.35-98” | PLDT Inc. PELORO02 “P-35-99” PLDT Inc. PELORO02 2 eee 844191 “*P.35-101” | PLDT Inc. PELORO02 : ee OC ———— —

“P-35-102” | PLDT Inc PELOROO2 | 6June2018 |

es See OC ee a a “P.35- ual PLDT Inc. PELOROO2 | 6June2018 | ii | ne 844183 [on fe 72.00 | “P-35-104” | PLDT Inc. PELORO02 6June 2018 i es | 84456 po SAT | “P-35-105” PLDT Inc. PELORO02 6 June 2018 , H ir 844154 en as. en ne 4-8) | “P.35-106” | PLDT Inc. PELORO02 6June 2018 i fs po 8153 Ian non gonna a a. a Me “P-35-107” | PLDT Inc. PELORO02 6June 2018 | i i a ee el aon ““P.35-108” | PLDT Inc. PELORO02 iq 6June 2018 | | i ; ew | ee re 2A) er EPC “P.35-109” | PLDT Inc. | PELOR002 | 6-Jun-2018 7 i i A) ee ee ae | | [a 168.87 “P-35-113” | PLDT Inc. PELORO02 6-Jun-2018 _—es ISS gg | 44.00 I

Exhibit

P“p.34-15” | PLDT inc.

PLDT Inc.

| ia |

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Name of Supplier

“PLDT Inc.

| Allcard Plastics

| Philippines Inc,

Contrade Integrated |

(Alverstone Vault and

Office Steel

Sia, Melody Chua

(Alverstone Vault and

Office Steel

| Sia, Melody Chua |

Invoice/

OR No.

PELORO02 |

PELOR002

844173 [ee |

28 September

[2018

5 February

2018 Date of i

6-Jun-2018

6-Jun-2018

6-Jun-201

ets homens iran 4.

“6 June 2018 ee ae a i

6 June 2018

2018

14 February

2018

03 May 2018

1,607.14 | | eeevretrrrerorsmeenneenestoreenyntevsteteceseeen wt a err a hl ld 1,058.58

14 June 2018

fn otasconeoenrerortvonnsghacatoysnonseoeseenstntesttstetaseeneenseetstannnemnnnnar + 13,641.43 | | Q3, CY 2018 ssoensusensceneesssenssusoessnsenanns soi nbobannneth fnttecettensneseatee real nsenhaneeneiit ssesserecreerenoersotetatanescssseesn rreeresnenetnerensetioeneaneme 2

S&S

13,641.43

Exhibit

No.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Invoice/

OR No.

~ 30858

Name of Supplier

Sanctuary Sales_

J Sanctuary Sales

Date of

Invoice/

OR Q1, CY 2018 ap ssnnnen peter 1927043

Input VAT (In PHP

Q2, CY 2018 Q3, CY 2018 1927041

“P-35-154”

| Primo Archives and

| Records Management

| Primo Archives and

rapasew Pe \ExclusiveCars ra _|_ Security Agency, Inc.

| Records Management

Exclusive Cars

International Holdings

International Holdings

2018 34,801.97 | 2,927.89 | etna a ii Safeguard ih: Security Agency, Inc. |

| Investigation & |

ae : : 110.44 |

“P-35-157” | Safeguard | TM 6 April 2018

; Investigation & i —_— | Security Agency, Inc. jt ANS SS

“P-35-158” | Safeguard 1108 6 April 2018

Investigation &

t= ee eee . 7 | Safeguard i i 6 April 2018 | ~y

Investigation &

aE ,_ Security Agency, Inc. |

| “P-35-160” | Safeguard a

Investigation & i nesttqunrarrrmarrentetinnensesbononenninenenetns mine fsnneon

Total

14,920.63 23,828.61 _ 7,403.04 | 16,576.09 34,801.97 | shnsststsnenscnennnnsni —— a 2,927.89 ~ 64,800.00 129.60 | 4,445.53 2,258.70 |

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Exhibit Remeeeengp2 | “ipvatesl meee | Input VAT (In PHP | No. PP OR No. Q1,CY2018 | Q2,CY 2018 Q3, CY 2018 Total

OR

“P-35-162” | Safeguard 8 June 2018

Investigation &

_______| Security Agency, Ine. | | + an | 2,527.71 - | 2,527.71_| “P-35-163” | Safeguard 1104 13 July 2018 i

Investigation &

Security Agency, Inc. : of 283.59 | 783.59

[PaS1@ | Safeguard 1162/10 August 018 - |

Investigation &

= | Seeuriy Ageney,Ine | Le Fee tt est “P-35-165” | Safeguard 1121 7 “7 September | i

Investigation & 2018 H

|__| Seourity Ageney,Ino. | | E. Domestic purchases of goods and services supported by invoi invoices and ORs with aml ons but the countersignature thereon is different from that of the authorized signatory appearing on the invoice/OR; or the authority of the countersigner thereon cannot be | sseeegrvewsreenesemeserreessorescstesnentensemrs et ascertained eservvenneee - seonensuneneseressecanssonsenonts sapyseerneorsenncennnmesntvs > sevesregeneeenneeeensnmermneremtrinasssssnnionseseonssmnssttttensnsssneneanton sreseeremmeeenreernteesesseasssessepssssnnemeeretnnsenenssesonensennanversnanenqunansatantnesseammnse spoveeeeerevevescccssenenenrveverenssssssvanrerasentesessnasraaesemesneutte “P.34-16” | Contrade Integrated | 5066 4 April2018 | | | i i PEP Ie. ee ee |e : 1,287.60 | a 1,287.60

Contrade Integrated

Depot, Inc.

Contrade Inte:

Paae | Depot, In. | jf 872.00 | 1872.00 “P-34-19” | Contrade Integrated «8105 25 April 2018 | | - |Depot, Ing. = —E 438.80 | r “P.34-20” | Contrade Integrated 8294 26 April 2018 | | a ee: ae ss ee amen Pe? 27.

“P-34-21” | Contrade Integrated 8989 2 May 2018

See os Depot, Ine el L483 |

“P-34-22” | Contrade Integrated |

ea Depoing | r000 | 780,00_ “P-34-23” ~Conmade Integrated i _—— Depot, Ine 1,565.36,

“P-34-24” Contrade Integrated

—— 4 Depot, Ine. 784.20 | “P.34-25” | Contrade Integrated | nnn 22'S | eeenennnead 392,00,

“P-34-26” Contrade Integrated

ee * | Depot, In, “P-34-27” | Contrade Integrated i i B Depot, Ine. | 3 a. wo 10,54 2,010.54 “P3428 | Contrade Integrated _| Depot, Inc.

“P.34-29” | Contrade Integrated

“P-34-30” | Contrade Integrated

| Depot,Inc.

“P-34-31” | Contrade Integrated |

| “p.34.32” Conteade Ineevaell SS aL Depot, Inc.

“P.34-33” | Contrade Integrated eeennnntsnfe DEROb INC,

“P-34-34” | Contrade Integrated

_, Depot, Inc. — | rt eee LB anennaninanne SOL :OY. “P-34-35” | Contrade Integrated | 23143 16 Au August gust 2018 | | i | Depot, Inc. s 2 | we = aie “P-34-36” Contrade Integrated 24225 | 23 August 2018 | i | — Depot, Inc. — fap 2059.64 | 3,059.64 | “P-34-37” Contrade Integrated 24522 29 August 2018 i =a se * ; nnn mene CODD | nner 22:99.

“P.34-78” Alverstone Vault and | 616 27 February i

Office Steel 2018 |

|_____._, Equipment ____ L a es “P-34-79” | Alverstone Vault and 628 3 March 2018 i

| Office Steel | |

L ——— —ERMPME — — 348-7 “ zh fee BLT “P.34-80” Alverstone Vault and 661 28 March 2018 | i i | Office Steel i

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

| Exhibit Name of Sunol i Invoice/ tanto | No. a PP | ORNo. Ql, CY 2018 Q2, CY 2018 Q3, CY 2018 Total

Alverstone Vault and

Offi ice Steel eppeeapepaapa > ea hanna netsh inntntnsemmtnnninsninnnnhnnnnenentnrtnannniint P-35-3 1" oa ae _1 August 2018 | “P- 35-52” | AsalusCorporation = 31855 19 September -*P-35-87" _| Isla Lipana —_ |__ 58499 Tugs 2018 1 *p.35- i388” | § SGV & Co | MK000951 9 May 2018 | : i Ls i) hae, Va ae Uae | i ee eee 121,310.76 | 121 310.76 | “P-35-191” | SGV & Co MK001024 | 31 August 2018 | ep 35-193" | SGV & Co MK00i034 : 28 September | al a, ne ae FO lee OB 9,255.20 519,255.20 p.35-194” | SGV & Co /MK001036 | 4 October 2018 | a 4 oe ee eee. | 32,331.00 | cx 195” | SGV & Co [MK001036 | 4 October 2018 \ 96 a _G. Domestic, purchases. of services su supported by by ) VAT ORs 5 but the ‘nature 0 2 of services | “P-35-55” | .C.E. Inflatables& = = 252 "20 September | | een} Party Needs re" 2018, | | “p-35-56” | Choy, Jose Durango | —-253 ~ 20 September . C.E. Inflatables & 2018 3,000.00 | ' i Invoice | i i i No, i i i ' | 000224123 ————— Se [ee ne =~ 8,004.80 | 8,004.80 | | 2GO EXPRESS, INC. | Charge 31 May 2018 | | | | Sales i

| Invoice

No. | | 000224745 SS HGR | es =| 9,888:30 | 9,888.30.)

| “2GO EXPRESS, INC. | Charge 17 May 2018 | |

Sales |

| Invoice |

| 000223422 es . _— | '2GO EXPRESS, INC. | Charge 7 June 2018 i i Sales i Invoice No.

| 000225499 i SS ee a | aE 11,233.76 11,233.76 2GO EXPRESS, INC. Charge 2 July 2018 | i Sales | Invoice | i i No.

000227866 i _—s a {HGR | [eee Efe 6430.56 | 6,430.56 | | | 2GO EXPRESS, INC. Charge T 28 June 2018 | |

| Sales | |

i Invoice | i i \ _ aan ee a ee. | ee 14,036.55. |

Exhibit

No.

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Name of Supplier

j---··-·-· .. ···---·········· ......... ..

Aguja, Evangeline

Grace Ancheta

Invoice/

OR No.

Tax

lnvoic_ No.

103412

Date of

Invoice/

OR

Q1, CY 2018

Input VAT (In PHP)

Q2, CY 2018 1 Q3, CY 2018 i

Total

\

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

F Date of Input VAT (In PHP |

Name of Supplier Invoices Invoice/

OR No. OR Q3, CY 2018 Total Artemisplus Express SOA No. | 22 March 2018 |

Inc (KitchenCity 20181212 |

— | Express) - eee | Po | 4.07 | Artemisplus Express SOA No. | 19 March 2018 if

Inc (KitchenCity 20181213

— Express) Tt _ —- ——— ho, i a 1,783.93 | Artemisplus Express SOA No. 19 March 2018 i

Inc (KitchenCity 20181214

c___t | Express) _ s = 6429| nf 628 | Artemisplus Express SOA No. | 3 April 2018

Inc (KitchenCity 20181215

Artemisplus Express SOA No. 16 April 2018 | Inc (KitchenCity 20181217 i a Express) Bho. ag | eS ee 7d

Artemisplus Express SOA No 26 April 2018 |

Inc (KitchenCity 20181218

a! Express) 488.98 483,93 Artemisplus Express SOA No. | 26 April 2018 | |

Inc (KitchenCity 20181219 |

Express) ae aa SS a eee es 1 | Artemisplus Express SOA No. 26 April 2018 |

Inc (KitchenCity 20181220 |

|Express) Be = OO he 4.29 | Artemisplus Express SOA No. 26 April 2018

Inc (KitchenCity 20181221 |

misplus Express i

| Inc (KitchenCity

anne Express) i= SS 160.71

| Artemisplus Express

| Inc (KitchenCity i

a. | Express) eee ee | es 257.14 |

Artemisplus Express

Inc (KitchenCity

—— | Express). . cee nna e244 64 | 2,244.64 |

Artemisplus Express

Inc (KitchenCity |

ee a! ened 2B TSO | ee d293 7.50.

Cabalitan, Felipe B | |

(Banaag Pest Control)

as ee Aa =| 642.86

= Felipe B

(Banaag Pest Control)

ee ne 0-41: SD 7 ~ | 642.86 | 1 Cabalitan, Felipe B (Banaag Pest Control) i ae ie eo ee 642.86 | ___642.86 ii Exclusive Cars i i i

International Holdings |

———— Ee as 6,361.29

| Exclusive Cars Billing 28 February |

International Holdings | Statement 2018

Jn NO 3405 | [ssssaf 665.32

| Exclusive Cars Billing 28 February |

International Holdings {| Statement 2018 |

tne No 34104 | 55.4 a 552.94 i t Exclusive Cars Billing 28 February | i

International Holdings | Statement 2018

Inc. 0.

= = a ys es es ne

Exclusive Cars Billing 28 February

International Holdings | Statement 2018

| an aS Te. : No. 34270 | ld a ne =!)

[ Exclusive Cars Billing 28 February | |

International Holdings | Statement 2018

ae LIne nel NO. 34271 J SS ee 85.71

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Date of

Exhibit ' Invoice/ A

No. NameofSapglier | on Na, a Q1,CY2018 | Q2,cY2018 | Q3,CY2018 |

Exclusive Cars Billing

International Holdings | Statement

Billing

International Holdings | Statement 2018 i cee MC, NO. 34061 Eee —_—— aa 665.32 - Se ae | =a | mmmmnnnnO OD: 32 = Exclusive Cars | Billing 28 February i i International Holdings | Statement 2018 ; ;

ne, | No 34058 | 665.32} -| ns ne

Exclusive Cars Billing 28 February | '

International Holdings | Statement 2018

nna ANC, No. 33967 _| = Une 55294 an a i = 552.94 | r | Exclusive Cars Billing | 15 August 2018 | |

International Holdings : Statement |

ee |_Inc, _|_No. 37350 _ | . as Exclusive Cars | Billing | 18 August 2018 r

International Holdings | Statement | |

es 2 No. 37356 | ae?) eS | —) 761.32 | 761,32 | Globe TelecomInc | SOANo. | ' 000342587 | 56.68 | | 000358819 | | | i _—-. ___.245 — —— fo 29.99 | 29,99 | | Globe Telecom Inc SOA No. | 1 | | a a | ‘ 115.83 | . 115,83 = Se | ——————— : 2 = 1. eee ec obe Telecom Inc | SOA No. | | | i | 000366913 | = + : ee | 88 | Globe Telecom Inc SOA No. ; i i i: 000359765 | | i Se a — . SH 2,678.57 | : j Globe Telecom Inc SOA No i 000368308 i i Sa Ee eee ee) OTB ST ee 678,57. | | | Globe Telecom Inc SOA No. | ~ i 1 | 000374024 | aa en oe Sk a a | ee Ce

Globe Telecom Inc SOA No | |

000380205 a ee ae S| -| 25838 25838 [~ [¢ Globe Telecom Inc SOA No i 000380205 i ee 595 my | Globe Telecom Inc SOA No. | | | | | 000380205 i 882 | fe 2678.57 | 2,678.57 | "| Giobe Telecom Inc SOA No. | 000385309 | i i aa a 638 | . - {ssa | sa | — i Globe TelecomInc | SOA No. | | 000385309 | —o = : = [ 630 | — om A 93:35] 193.35.

Globe Telecom Inc SOA No. | i | 000375177 | | =e a 209 es es _ |

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

| Exhibit Tavaices | Date of Input VAT (In PHP | No. NameofSupplier | on No eet Q1,CY 2018 | Q2,CY2018 | Q3,CY 2018 Total |

Globe Telecom Inc

-iee— 4 ————— a a ee nna a /0 St) 2,678.57... i Globe Telecom Inc SOA No 000374024 ew SA A | Soe eS ne “Globe Telecom Inc SOA No.

000391410 | Saeee es BESO: s |) = eee ee ee es: 181.15 i “TFiuaecan Olympic | ~ Billing t |

Management Statement |

| Enterprises Inc | No, 524- | 2018 (not | | et ee ee ea eee ee tl 7,616.00, | 17,616.00 Horizon Land Property | Statement 8 December | | i i Devt Corp of Account 2017 No.

201700668 | ad + ——— . ae re jo — 139

JVC Hengun Billing | 6 February

Advertising Inc Statement 2018 |

— 2 eee | No134 | | somoof | st 00 | | LBC EXPRESS, INC. | Billing | 13 April 2018 | aml | Statement i | i | No.

EE — 139992 | — oe o | 748676 | 17,486.76 | i ‘LBC EXPRESS, ‘INC. Billing 20 March 2018 :

Statement |

| No. i 7 ee eee 8.23985 | | 18,230.85 | LBC. EXPRESS, INC. Billing 20 March 2018 | | i a 1,327.72 | 12,728.27.

=. 155,247.96.

L | if 7,726.09 i Moriah Apparel Ho Billing 17 November | | | i Inc | Invoice 2017 | |

| Service

a eee eS): es 7 21:7 > 5,156.25 | i New Creation _ OR No. 16 August 2018 | | Sa Digiser et et enema nefnnnnal 2439.29 | 12,439.29 i | New Creation OR No. 7 September | | | je WigiscreenInc | 0447 L 2018 ee) ee pom | bs | Philippine Vending i ee Corporation —— —— 3,146.56 | SS = 5,146.56. | i Sio, Gary Phi | Collection 7

| (Sanctuary Sales) | Receipt

——E——e———— |_.No, 07898 a ae 22) A | Donne 9215) | SkyCable Corporation OR No. 23 February | ee a |..0785445 | 2018 34,440.00 _ 34,440.00 | + SkyCable Corporation OR No. 23 March 2018 —_— 2 ee | en eS, a es ce 3 440.00 SkyCable Corporation | ORNo. | 6 April 2018 | | | | 9803644 | 14,854.84 | 14,854.84 | i SkyCable Corporation OR No. 20 April 2018 ——* | 0803650 | 2800.00 | 22,440.00

Smart

een Communications Ine | maese|— sysuor ne 37,435.95_|_ 103,884.98

South East Asia Billing 4 June 2018

i Speaker and Trainers Statement a ea 2 es as er hee 5? 32,142.86 |

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

, | Date of Name of Supplier Invoice! Invoice/ i No. OR No. OR Ql, CY 2018 Q2,CY 2018 Total | Tan, Chandra Tiu Billing 15 May 2018 i

(Sketch N' Doodle Invoice |

Creative Print Design No. . i = | Services) | 20180512 | 0000 | 500,00 | | Tan, Chandra Tiu Billing 15 May 2018 |

(Sketch N' Doodle Invoice

Creative Print Design No.

— i ee Tan, Chandra Tiu Billing

(Sketch N' Doodle Invoice

Creative Print Design No.

nner SOPVICES) 201805151 Tan, Chandra Tiu Billing |

| (Sketch N' Doodle Invoice

| Creative Print Design No. i

—— Services) 201805301 |

Tan, Chandra Tiu Billing

| (Sketch N' Doodle Invoice

| Creative Print Design No.

——o | Services) | 201805153 | Tan, Chandra Tiu | Billing | i (Sketch N' Doodle | Invoice | | Creative Print Design No.

oe | Services) _____| 201803071 | Tan, Chandra Tiu | Billing

| (Sketch N' Doodle | Invoice

| Creative Print Design = No. |

Ee Services) 1201803072 |

| Tan, Chandra Tiu Billing |

| (Sketch N' Doodle Invoice

| Creative Print Design No. | tne SETVACES) 201803073.

| Tan, Chandra Tiu Billing

| (Sketch N' Doodle Invoice

| Creative Print Design No. i

a __ Services) _ 201803074 |

_ Tan, Chandra Tiu Billing |

| (Sketch N' Doodle Invoice

| Creative Print Design No. | a | Services) ___| 201803075 | 86 | 7806 | Tan, Chandra Tiu Billing 16 June 2018 | |

| (Sketch N' Doodle Invoice | |

| | Creative Print Design No. | |__| Services) _ | 2oigosied | Po 4,050.18 | 14,050.18 | | Tan, Chandra Tiu Billing | 16June 2018 |

(Sketch N' Doodle Invoice |

| Creative Print Design No. i — | Services) | 201806162 | 767.86 | 17686 | | Tan, Chandra Tiu | Billing | 16 June 2018 | |

| (Sketch N' Doodle Invoice |

| Creative Print Design No |

ae | Services) | 201806163, | 2168.04 | 2168.04 [ | Tan, Chandra Tiu Billing 11 August 2018 | on (Sketch N' Doodle Invoice | i Creative Print Design No. | |

a __| Services) 201808112 | 4

| Tan, Chandra Tiu Billing 11 August 2018 | (Sketch N' Doodle Invoice i Creative Print Design No. i i onnnnnnnnnen e SCTVICES) oO 201808113 Tan, Chandra Tiu Billing 11 August 2018 |

| (Sketch N' Doodle Invoice

Creative Print Design No.

b ——_— Services) __| 201808114 | —! jhe Tan, Chandra Tiu Billing = 11 August 2018 |

(Sketch N' Doodle Invoice

Creative Print Design No. i snr SEEVICES) 201808115

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Exhibit

No. Name of Supplier ~| Tan, Chandra Tiu

Invoice/

OR No.

Billing |

Date of

Invoice/

August 201

: eo 8 Q3, CY 2018

11 August 2018 |

(Sketch N' Doodle Invoice

Creative Print Design No.

ear Services) | 201808116 Tan, Chandra Tiu Billing

(Sketch N' Doodle Invoice

Creative Print Design No.

eee SOPVICES) 3 201808117 Tan, Chandra Tiu Billing

(Sketch N' Doodle Invoice

Creative Print Design No.

a Services)

Billing

Statement

No. 0316 _| a ee

Sales

Invoice

No.

1281859

Sales

Invoice

Invoice

No.

1338035 | _ |

Sales

Invoice

No.

1338036

U-Bix Corporation

Invoice

No.

1338037

Invoice

No.

1338038

U-Bix Corporation

"U-Bix Corporation

Sales

Invoice

No.

Sales

Invoice

No.

1338040 —— 1338039

T

i i — a =

11 August 2018

semnseseeeetetensernenemnnseseeseeateeiiameeartvteneeneestneettgsedecngerennentetorereasentereeetaenereeieeieneetcteuneashitetsttertetesenetnupprnentatsnentnnsnniqansatnnseeranrneaernetateteenenth

Sales

Invoice

No.

1281938 osimanesoguascessam" Eee na ae

Sales

Invoice

No.

1281929 None.

2iFebruay | 2018 ee 2,115.36

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Exhibit Name of Supplier Kenoteet ee i No. OR No. OR QI, CY 2018

U-Bix Corporation Sales

Invoice 2018

No.

ee en 1343259 |

1 U-Bix Corporation Sales 28 February

Invoice 2018

No.

ee SS eee | 1343256

U-Bix Corporation Sales 28 February

Invoice 2018

No.

yreeeransenseestsnrenreente — on sstanerencnsanees sorersssscnssnssovecens sa __1343255 sseafeoseessennssanneestets semen tres cereertrnrecerns n rreres ere

U-Bix Corporation | Sales 28 February

Invoice | 2018

No.

1343260 Invoice 1 June 2018 i —_ | ee he ae Wellthy Solutions Inc Invoice 1June 2018;

ee i = | No. 14215 | Weillthy Solutions Inc |; Invoice 1 June 2018 SOOM aecahccence Rg

Wellthy SolutionsInc | Invoice | 18 July 2018

ee . — a

| Yiucon Unlimited

_ Concepts Inc

Artemisplus Express

Inc (KitchenCity

ee enfenEXPTOSS) a | ‘| 2GO EXPRESS, INC. | —— a a oo client — ——— ' | Microbase |

Incorporated

7,157,850.83 2,600,025.06 | 4,161,789.63 _3,756,364.93 Based on the foregoing, from the total input VAT claim of P14,195,993.64, petitioner satisfied the seventh requisite only to the extent of P7,038,142.81. {

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

Eighth requisite: The input VAT of P7,038,142.81 is entirely attributable to petitioner's zero-rated sales/ receipts for the fourth quarter of CY 2018.

As to the eighth requisite, the taxpayer-claimant must show that 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 attributed to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume.

In the present case, petitioner's Quarterly VAT Returns for the four quarters ofCY 2018 show that it had no sales subject to 12% VAT or exempt sales but only zero-rated sales in the amount ofP515, 127,148.92 for the fourth quarter of CY 2018. Clearly, the duly substantiated input taxes of P7,038,142.81 were incurred in the generation of its zero-rated sales of P515,127,148.92.

Thus, petitioner complied with the eighth requisite that the input VAT being claimed is attributable to zero-rated sales. Ninth requisite: The above input taxes have not been applied against output taxes during and in the succeeding quarters.

As already pointed out, petitioner had no sales subject to 12% VAT for CY 2018, correspondingly, it had no output tax liability against which the input VAT ofP7,038,142.81 may be applied or credited. Such being the case, although petitioner carried-over the subject claim in its amended Quarterly VAT Return for the first quarter of CY 2019, 102 the same remains unutilized as it had no output tax due for the said period. Moreover, it should be noted that the subject claim was deducted as "VAT Refund/TCC claimed" in the amended Quarterly VAT Return for the first quarter CY 2019, 103 thus, effectively preventing the carry-over or application of such input taxes in the next taxable quarter/s. Hence, petitioner is deemed to have fulfilled the ninth requisite.~ 102 Exhibit "P-18", Line 20A, USB.

\

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

In sum, petitioner has sufficiently proven its entitlement to the refund or issuance of tax credit certificate of its unutilized input VAT attributable to its zero-rated sales but only in the amount ofP7,038,142.81.

WHEREFORE, in light of the foregoing considerations, the present Petitionfor Review is PARTIALLY GRANTED.

Accordingly, respondent is ordered to refund or issue a tax credit certificate in favor of petitioner in the amount ofP7,038,142.81 representing petitioner's unutilized input VAT attributable to its zero-rated sales for the fourth quarter of calendar year 2018 or for the period covering October 1, 2018 to December 31,2018.

WE CONCUR:

~ . ~

--Y"--

MA. BELEN M. RINGPIS-LIBAN

Associate Justice

(On official business)

MARIA ROWENA MODESTO-SAN PEDRO

Associate Justice

ATTESTATION

ES

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.

~. ~~ MA. BELEN M. RINGPIS-LIBAN

Associate Justice

Royal Caribbean Cruises Ltd., under the name RCL Regional Operating Headquarters vs. Commissioner of

Internal Revenue

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 Decision were reached in consultation before the case was assigned to the writer ofthe opinion of the Court.

Presiding Justice