Court of Tax Appeals · Second Division

Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue

CTA Case No. 6128 May 25, 2012

REPUBliC OF THE PHiliPPINES

Coon ol Tax Appeals

QUEZON CITY

INTEL TECHNOLOGY PHILIPPINES,

INC.,

CTA CASE NO. 6128

Petitioner,

-versus -

Members:

ACOSTA,

CASTANEDA, JR., and

BAUTISTA, JJ.

COMMISSIONER OF INTERNAL

Promulgated:

REVENUE,

Respondent.

MAY 2 5 201V

\ /

J !o~ P·"',

X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - -

- - - - - - - - - f'" - - - -X

DECISION

CASTANEDA, JR., J.:

This is a remanded case involving a claim for refund in the amount of P11, 770,181.70 allegedly representing petitioner's unutilized VAT input taxes on its domestic purchases of goods and services for the period April 1, 1998 to June 30, 1998 attributable to its zero-rated sales for the said period. Initially, this case was decided by the Court of Tax Appeals (CTA original composition) prior to the effectivity of Republic Act (RA) No. 9282.¹ The facts of the case are as follows: ~

Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and is engaged primarily in the business of designing, developing, manufacturing and exporting advanced and large-scale integrated circuits components or IC's. 2 It is registered with the Philippine Economic Zone Authority (PEZA) as pioneer enterprise enjoying six (6) years Income Tax Holiday with Certificate of Registration No. 95-133 3 and with the Bureau of Internal Revenue (SIR) as a value-added tax (VAT) entity with Certificate of Registration No. 96-540-000713 and Tax Identification No. 004- 833-143.4 As a VAT-registered entity, petitioner reported input taxes it incurred from April 1, 1998 to June 30, 1998 in its Quarterly VAT Returns5 and Monthly VAT Declarations6 for the second quarter of 1998 filed and stamped received by the B I R or its agent. 7 On May 18, 1999, petitioner filed with respondent, through the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center of the Department of Finance, an application for tax credit/refund of VAT input taxes paid on its domestic purchases of goods and/or services directly used by the petitioner in its commercial operations, amounting to P11 ,770, 181.70, covering J<-

the period April 1, 1998 to June 30, 1998.8 Without action on the part of the respondent,9 petitioner filed this Petition for Review.10 In the Answer, respondent raised the following Special and Affirmative Defenses: 11 "4.

Petitioner being allegedly registered with the Philippine Economic Zone Authority, is exempt from all taxes, including value-added tax, pursuant to Section 24 of Republic Act No. 7916 in relation to Section 103 of the Tax Code, as amended by R.A. 7716. Since its sales are not zero-rated but are exempt from VAT, petitioner is not entitled to refund of input tax pursuant to Section 4.106-1 and 4.103-1 of Revenue Regulations No. 7 -95; 5.

Petitioner alleged claim for refund is subject to administrative routinary investigation/examination by the Bureau; 6.

The amount of P47,582,813.72 being claimed by petitioner as alleged VAT input taxes for the period of 01 July 1997 to 31 December 1997 was not properly documented (sic); 7.

In an action for refund the burden of proof is on the taxpayer to establish its right to refund, and failure to sustain the burden is fatal to the claim for refund/credit; 8.

Petitioner must show that it has complied with the provisions of Sections 204(c) and 229 of the Tax Code on the prescriptive period for claiming tax refund/credit; ~

CTA CASE NO. 6 128

Claims for refund are construed strictly against the claimant for the same partake the nature of exemption from taxation." After the parties filed their respective Pre-trial Briefs, the court ordered the submission of Joint Stipulation of Facts and Issues. On September 18, 2000, the parties filed their Joint Stipulation of Facts and Simplification of lssues,12 approved in a Resolution 13 dated September 21 , 2000. In the same Resolution, the pre-trial was considered terminated. During trial, petitioner presented and formally offered its documentary and testimonial evidence. In a Resolution dated November 5, 2002, Exhibits "A", "B", "C", "C-1 ", "0 ", "D-1 ", "E", "E-1 ", UF", "F-1 " to "F-6", "G" to "L", "H-2", "K-2", "G-1 " to "L-1 ", "H-3", "1-2", "K-3","L-2", "M", "N", "M-1 ", "N-1 ", "0 ", "0 -1", "0-2", "P","P-1 ", "P-2", "Q", "Q-1 ", "Q-2", "S", "T", "T-1","U-1" to "U-375", "V-1 " to "V-665", "W-1 " to "W-424", "X" to "X-669", and "Y" were admitted as part of petitioner's evidence.14 On the other hand, respondent's counsel manifested that the case has no report of investigation; thus, she moved for the submission of the case for decision. 15 On February 1, 2002 16 and February 26, 2002 17 petitioner and respondent, respectively, filed their Memoranda. On February 28, 2002, petitioner filed a "Motion to Admit" 18 the summary of VAT claimed deductions ~

CTA CASE NO. 6 128 as part of the exhibits of the petitioner. In a Resolution 19 dated March 21 , 2002, the Court granted the motion and submitted the case for decision. On June 21 , 2002, the Court granted petitioner's "Motion to Re-Open" the case for presentation of additional document.20 On August 29, 2002, the "Amended Formal Offer of Petitioner's Evidence"21 was filed. On November 5, 2002, the Court resolved to admit exhibits mentioned in the Amended Formal Offer of Petitioner's Evidence and submitted the case for decision. 22 The parties raised the following issues to be resolved by this court: 1.

Whether or not Petitioner's sales were actually export sales subject to zero-rated (sic) for VAT purposes; 2.

Whether or not the export proceeds of Petitioner were inwardly remitted in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas;

Whether or not the VAT input taxes have not been applied to the output tax for the period covered in its claim or any succeeding quarter or quarters;

Whether or not the VAT input taxes on domestic purchases of goods and services are attributable to Petitioner's zero-rated sales; and Jt-

Whether or not Petitioner is entitled to a refund of the VAT input taxes arising from domestic purchases of taxable goods and services from April1 , 1998 to June 30, 1998 in the amount of P11,770,181 .70.23 On April 21 , 2003, the Court of Tax Appeals (CTA original composition) prior to the effectivity of RA No. 9282, promulgated a Decision24 denying the petition for failure to substantiate its export sales with valid VAT export sales invoices which should contain BIR authority to print and Taxpayer's Identification Number VAT (TIN-V). The ruling reads: On the basis of all the foregoing , the documents submitted by petitioner in support of its claim cannot be considered as valid evidence to prove its zero-rated sales of goods for VAT purposes. Apparently, petitioner failed to substantiate its demand for refund/issuance of tax credit certificate.

WHEREFORE, in view of the foregoing , petitioner's claim for issuance of a tax credit certificate in the amount of P11 ,770,181 .70 allegedly representing its VAT input taxes on domestic purchases of goods and services for the period April 1, 1998 to June 30, 1998 is hereby DEN I ED.

SO ORDERED. 25

On May 14, 2003, petitioner filed a Motion for Reconsideration26 and a Supplemental Motion for Reconsideration on June 23, 200327 which the CTA denied in the Resolution28 dated September 1, 2003. Aggrieved by the Decision and Resolution of the CT A, petitioner filed a Petition for Review with the Court of Appeals (CA). In the Decision dated~

CTA CASE NO. 6 128

August 12, 2004, the CA affirmed the decision of the CT A which denied petitioner's claim for refund. Thus, by way of Petition for Review docketed as G.R. No.166732 petitioner appealed the denial of its claim to the Supreme Court. In its Decision29 dated April 27, 2007, the Supreme Court reversed the ruling of the CA and partially granted the petition. The case was remanded to the CTA for determination and computation of petitioner's tax credit/refund. The Supreme Court held:

In a claim for refund or issuance of a tax credit certificate attributable to zero-rated sales, what is to be closely scrutinized is the documentary substantiation of the input VAT paid, as may be proven by other export documents, rather than the supporting documents for the zero-rated export sales. And since petitioner has established by sufficient evidence that it is entitled to a refund or issuance of a tax credit certificate, in accordance with the requirements of Sections 106 (A)(²)(a)(1) and 112(A) of the Tax Code, then its claim should not be denied, notwithstanding its failure to state on the invoices the BIR authority to print and the TIN-V. Worthy of mentioning again is the fact that even the CTA and the CA have found petitioner to be legally entitled to a claim for refund or issuance of a tax credit certificate of its unutilized VAT input taxes on domestic purchases of goods and services attributable to its zero-rated sales. XXX XXX XXX Even as the Court now holds that petitioner is legally entitled to a refund or issuance of a tax credit certificate of its unutilized VAT input taxes on domestic purchases of goods and services attributable to its zero-rated sales, the case shall nevertheless be remanded to the CT A for proper determination and computation of petitioner's tax credit/refund, considering that in the Report of the independent auditor, Eliseo Aurellado, only the amount of P.9,688,809.00 was deemed as petitioner's valid claim for tax credit. According to Aurellado, the difference of P-2,081,372.32 from petitioner's input VAT claim of P-11 ,770,181.70 was not supported by sufficient documentary proof. The Court, not being a trier of facts, cannot certainly decide this factual circumstance. ~

CTA CASE NO. 6 128

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Decision dated August 12, 2004 of theCA in CA-G.R. SP No. 79327 is REVERSED and SET ASIDE. The instant case is REMANDED to the Court of Tax Appeals for the determination and computation of petitioner's tax crediUrefund.

SO ORDERED.

When the case was remanded to the CT A, petitioner's counsel moved that petitioner be granted cash refund instead of tax credit certificate on the ground that it already stopped its operation and is actually in the process of dissolution. Acting on said motion, the Court ordered petitioner to submit "Compliance," showing that indeed petitioner has stopped operation, hence the grant of cash refund instead of tax credit certificate. 30 Respondent did not file her comment or opposition to the petitioner's "Compliance and Manifestation" filed on April 23, 2012. Attached to the "Compliance and Manifestation"31 were the following documents: a.

Secretary's Certificate dated February 3, 2012 of Board Resolution dated 29 June 2010 shortening the Corporate Term to June 30, 201 0;32 b.

Duly received application with the BIR for the issuance of a Tax Clearance dated 30 December 201 0;33 and c.

E-Letter of Authority issued by the BIR dated May 12, 2011 .34 ~

In compliance with the Supreme Court's decision dated April 27, 2007 where it has been settled that petitioner is legally entitled to a refund, this court now proceeds to determine and compute petitioner's tax crediUrefund representing the VAT input paid on domestic purchases of goods and services for the period April 1, 1998 to June 30, 1998 attributable to its zero-rated sales. As regards the substantiation issue on the claimed input VAT payment of P11 ,770, 181 .70, the commissioned independent CPA, Mr. Eliseo A Aurellado, in his report dated May 18, 2001 ,35 noted the following exceptions and observations36 as far as the total claimed amount of unutilized input taxes are concerned:

Exceptions Findings Exception A No supporting documents Exception B Sold/billed to Intel Philippines Manufacturing, Inc.

Total Amount p 2,029,491 .77 51 ,880.54 p 2,081,372.31 Of the total disallowances of petitioner's input VAT arrived at by the commissioned independent CPA in the amount of P2,081 ,372.31 , only the amount of P2,068,280.85 37 represents petitioner's disallowed input VAT on purchased of goods and services and the remaining amount of P13, 091.4638 previously disallowed by the independent CPA should then be allowed for its available documents properly support the claimed input VAT. ~

However, further verification and examination of the records discloses that additional amount of P2, 153,422.07 of the input taxes claimed should be disallowed for failure to properly document the same, to wit: Findings Total Input VAT Input tax on purchase of goods/services supported by invoice/OR but dated outside the period of claim. p 1,209,653.71 Input tax on purchase of goods/services supported by invoice/OR but not in the name of petitioner. 275,428.34 Input tax on purchase of goods/services supported by "TIN-V" invoice/OR.

288,503.93 Input tax on purchase of goods/services not supported by the re_quired documents.

102,245.42 Input tax on purchase of goods supported by zero-rated sales invoice.

176,271 .76 Input tax on purchase of goods supported by invoice not registered with the SIR 101 ,318.91 Total Disallowances p 2,153,422.07 The details of these disallowances are as follows: Exhibit Supplier Invoice Date Input Tax Purchase of goods/services supported by invoice/OR but dated outside the period of claim.

Batch #1 U-15

ADD SERVICES & SUPPLY

03/22/98 14,400.00 U-16

ADD SERVICES & SUPPLY

03/22/98 15,454.55 U-17

ADD SERVICES & SUPPLY

03/22/98 30,909.09

ASIAN AUTOMATION & ROBOTICS

U-48 CORP.

03/10/98 209.09 U-77 ATS RESOURCE CENTER, INC. 03/25/98 2,424.00 AUTOMATED TOOL FAB.

U-78 RESOURCES 10/16/97 396.15 U-80 BASE CORP.

12/16/97 3,273.60

BENEDICT SAFETY SHOES & IND'L

U-88 SUPPLY 03/31/98 285.00

BENEDICT SAFETY SHOES & IND'L

U-89 SUPPLY 03/31/98 1,282.50 U-96 BLUE SKY TRADING COMPANY INC. 03/21/98 5,909.09 U-97 BOOKHAVEN, INC 03/31/98 8,513.64 U-98 BROWN DIRECT SALES CORP. 03/23/98 2,196.00 U-99, 100 BROWN DIRECT SALES CORP. 03/03/98 1,477.27 U-103 CHASE PACIFIC TECH.

03/23/98 271 .82 U-106 CHASE PACIFIC TECH.

03/30/98 86.36 U-109, 110 CITIMEX INC.

11/24/97 41 ,809.09 DECISION CTA CASE NO. 6 128 Page II of20 U-109, 111 U-112, 113 U-114 U-114 U-114 U-115 U-115 U-115 U-115 U-115 U-115 U-116 U-117 U-118 U-119 U-120 U-121 U-122 U-123 U-126 U-126 U-126 U-126 U-126

U-1 27

U-127 U-127 U-127 U-127 U-127 U-128 U-128 U-128 U-128 U-128 U-129 U-131 U-133 U-134 U-135 U-146 U-147 U-155, 156 U-157, 158 U-164 U-165 U-166 U-167 U-168 U-179 U-202 U-314 CITIMEX INC.

COMPUMEDICS CORP.

CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CORNERSTEEL SYSTEM CORP. CORNERSTEEL SYSTEM CORP. DATA CENTER DESIGN CORP. DELTA STAR POWER MFG. CORP. DIVERSO DIVERSO DIVERSO DIVERSO DIVERSO DIVERSO

OMS ENG'G & SERVICES

07/23/97 27,872.73 02/11/98 1,561 .82 03/26/98 7,333.26 03/26/98 6,807.00 03/26/98 4,673.10 03/26/98 7,769.80 03/26/98 7,378.92 03/26/98 6,700.50 03/26/98 6,552.94 03/26/98 4,338.45 03/26/98 6,426.07 03/22/98 3,829.40 03/19/98 5,907.55 03/19/98 7,862.59 03/18/98 4,749.14 03/23/98 7,259.21 03/22/98 7,258.76 03/23/98 6,234.63 01/20/98 7,024.07 03/31/98 7,228.71 03/31/98 6,703.60 03/31/98 6,491 .15 03/31/98 6,671 .28 03/31/98 3,844.42 03/31/98 6,470.09 03/31/98 7,309.35 03/31/98 7,016.72 03/31/98 7,389.81 03/31/98 6,386.45 03/31/98 3,027.19 03/31/98 4,855.67 03/31/98 6,470.31 03/31/98 6,840.17 03/31/98 7,113.16 03/31/98 6,378.87 03/31/98 7,962.46 01/23/98 845.82 03/10/98 1,106.18 03/03/98 5,454.55 03/09/98 7,669.09 03/26/98 2,080.70 03/31/98 32,498.00 10/15/98 6,818.1 8 09/08/98 4,363.64 02/13/98 5,1 84.00 01/28/98 12,527.46 01/20/98 9,931 .09 03/30/98 14,545.46 02/02/98 4,092.00 03/29/98 7,863.64 03/26/98 1,909.09 07/06/98 417.27

U-314 U-314 U-314 U-314 U-314 U-314 U-314 U-314 U-314 Batch #2 V-41 V-43 V-44 V-45 V-46 V-81 V-82 V-83 V-84 V-85 V-86 V-87 V-88 V-89 V-90 V-91 V-92 V-93 V-94 V-95 V-96 V-97 V-98 V-99 V-100 V-101 V-102 V-278 V-280 V-606 V-608 V-610 V-609 V-612 V-620 V-623 V-625 V-625 V-625

OMS ENG'G & SERVICES

EGO-TRIANGLE TECH.

EQUIPMENT TECH., INC. EQUIPMENT TECH ., INC. FLORO BLUE PRINTING LAS PINAS, INC GEM STATIONERY INC.

GEM STATIONERY INC.

GOLDEN PYRAMID TRADING

HEWLETT-PACKARD PHILS. CORP HEWLETT-PACKARD PHILS. CORP HOLLAND PACIFIC PAPER, INC. HOLLAND PACIFIC PAPER, INC. I & CS, INC.

INCA PLASTIC PHILS., INC.

INPHASE UNDUSTRIAL

CONSTRUCTION

INTEGRATED WASTE MANAGEMENT

07/06/98 8,116.36 07/06/98 1,500.00 07/06/98 1,636.36 07/06/98 1,622.83 07/06/98 4,545.45 07/06/98 7,868.09 07/06/98 4,818.18 07/06/98 5,636.36 07/06/98 5,236.36 Subtotal 532,882.76 3/24/1998 409.09 3/26/1998 259.09 2/20/1998 195.45 3/30/1998 2,644.40 1/26/1998 2,571.48 3/24/1998 1,781 .82 3/25/1998 52.18 3/26/1998 67.56 3/26/1998 58.18 3/26/1998 137.51 3/25/1998 268.25 3/25/1998 51.10 3/25/1998 280.38 3/25/1998 245.25 3/25/1998 302.38 3/25/1998 434.90 3/26/1998 263.95 3/25/1998 1,068.03 3/25/1998 56.94 3/25/1998 24.55 3/25/1998 973.93 3/26/1998 44.50 3/26/1998 104.43 3/25/1998 150.50 3/25/1998 46.10 3/25/1998 29.55 3/26/1998 61 .36 3/18/1998 1,310.68 3/18/1998 2,282.13 2/4/1998 1,835.00 2/23/1998 1,896.00 3/23/1998 1,797.82 1/4/1998 4,494.55 2/9/1998 2,036.36 3/28/1998 513.00 7/8/1998 14,261 .06 8/5/1998 890.91 8/5/1998 890.91 8/5/1998 890.91

V-625 V-625 V-625 Batch #3 W-411 W-412 W-413 W-14 W-27 W-28 W-29 W-32 W-33 W-34 W-35 W-36 W-37 W-38 W-40 W-41 W-42 W-44 W-47 W-48 W-49 W-50 W-51 W-54 W-59 W-77 W-79 W-80 W-81 W-82 W-83 W-84 W-85 W-86 W-87 W-92 W-93 W-94 W-95 W-97 W-97 W-98 W-103, 104 W-105, 106 W-1 16, 11 7 W-121

INTEGRATED WASTE MANAGEMENT

FILEMIX SYSTEMS & SERVICES, INC. J.E. AUTOMATED PARTS

JUNNA INDUSTRIAL SALES

KEMARS ENGG & SUPPLY CORP. LEAD MARKETING & IND'L INC. LINKAGE FIRST VENTURES, INC. LINKAGE FIRST VENTURES, INC. LIONAPEX

MABELLE PRINTING & TRADING

MACRO LABEL CENTER

MAGNETO ENTERPRISES

MAXTRONIX, INC.

MEDINA SALES CO. INC. MERCURY DRUG CORP.

MERCURY DRUG CORP.

MESCO INC.

MICROWILL PRECISION TOOLS

MIDDLE BY PHILIPPINES CORP.

MIRAGE IND'L RESOURCES

MOL TEN STEEL CORPORATION

MOLTEN STEEL CORPORATION

MONARK EQUIPT. CORP.

N.P. LIBALIB 8/5/1998 890.91 8/5/1998 2,672.73 8/5/1998 2,672.73 Subtotal 51,918.53 01/08/98 2,508.86 02/10/98 1,653.00 01/22/98 4,441 .73 03/18/98 1,250.00 03/11/98 2,181.82 03/20/98 20,490.91 03/11/98 13,502.73 01/14/98 809.09 03/13/98 1,590.91 03/13/98 2,386.36 03/11/98 436.36 03/13/98 12,863.64 03/23/98 1,454.55 03/18/98 250.00 03/16/98 2,168.18 03/20/98 21 ,818.18 03/03/98 4,363.64 02/17/98 68,181 .82 03/24/98 4,963.64 03/25/98 1,218.18 03/24/98 3,954.55 03/17/98 8,700.00 03/12/98 11 '163.64 03/02/98 7,118.18 11/27/97 755.89 03/31/98 4,309.01 01/03/98 1,651 .00 01 /03/98 705.68 01/03/98 6,168.18 01/03/98 783.64 01/03/98 168.76 01 /03/98 1,897.27 01/03/98 8,569.09 01/03/98 935.08 03/10/98 1,590.00 03/24/98 850.00 03/09/98 840.91 03/24/98 760.00 09/22/98 1,227.27 03/04/98 12,064.91 03/04/98 49.09 03/31/98 3, 196.36 03/26/98 826.36 03/25/98 1,994.09 07/17/98 82,954.55 02/12/98 200.00

W-125 W-134 W-173 W-173 W-173 W-173 W-173 W-187 W-187 W-190 W-191 W-192 W-193, 195 W-193, 197 W-199, 200 W-205 W-206 W-207 W-208 W-217 W-210 W-224 W-225 W-236 W-237 W-238 W-239 W-414 W-251 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 W-254 to 270 N.P. LIBALIB OKASAKIINDUSTRIAL CORP. PILTEL PILTEL PILTEL PILTEL PILTEL PLOT PLOT PLOT POLARIS

PRECY'S SUPERIOR PRODUCTS

PRIME SALES INC.

PROTECTIVE SYSTEMS

TECHNOLOGY INC.

PROTECTIVE SYSTEMS

TECHNOLOGY INC.

PVC INTERNATIONAL

RELIABLE TOOLING SYSTEM INC.

R-JELL MARKETING

RS UNITECH MFG. & TRDG. CORP. RS UNITECH MFG. & TRDG. CORP.

SEIKO SERVICE CENTER

STRAIGHTWAY TRADING

SYSTEMS CONTROLS

INSTRUMENTATIONS, INC. T.I.Q. MARKETING T.I.Q. MARKETING

TAIHON CHEMICALS INC

THE UNITED POL YRESINS, INC.

TRANE PHIL

TRELLEBORG TRELLEBORG TRI-S FILIPINAS, INC. TRITON COMM'S CORP.

TRITON COMM'S CORP.

UNIMATE INT'L. INC.

UNIWELL TECH . CORP.

UP-TOWN IND. SALES

WELL TECH SERVICE

CORPORATION WESOLV OPEN COMPUTING INC. WILLIAM & COMPANY PHILS INC.

WINCEL ENTERPRISES

AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. AMANTE AIR BALANCE INC. 09/25/98 120.00 09/25/98 1,336.02 09/25/98 120.00 09/25/98 100.00 09/25/98 100.00 09/25/98 100.00 09/25/98 100.00 09/25/98 621 .87 02/26/98 967.27 03/05/98 880.91 03/12/98 3,264.00 03/03/98 2,727.27 07/07/98 8,727.27 07/07/98 6,681.82 03/20/98 10,909.09 12/29/97 3,218.18 07/23/98 9,436.36 08/19/98 9,436.36 03/26/98 40,745.46 01/08/98 5,363.64 03/30/98 1,750.00 03/11/98 33,618.18 01/17/98 29,090.91 03/12/98 2,320.77 03/11/98 1,080.00 03/11/98 1,275.46 07/06/98 16,351 .05 03/31/98 4,484.18 07/06/98 1,227.27 01/22/98 7,396.55 03/17/98 20,000.00 02/11/98 4,887.27 02/11/98 4,939.64 02/04/98 2,618.18 Subtotal 624,852.42 Total 1,209,653.71 04/27/98 1,090.91 04/27/98 3,000.00 04/27/98 4,363.64 05/08/98 2,727.27 04/22/98 5,181 .82 05/20/98 3,272.73 06/08/98 1,090.91 06/08/98 3,272.73

U-94, 95 Batch #2 V-78 Batch #3 W-408 W-409 W-410 W-46 W-91 W-342, 343 W-342, 344, 345 W-342, 346, 347 W-342, 348, 349 W-342, 350, 351 W-342, 352, 353 W-342, 354, 355 W-342, 356, 357 W-342, 358, 359 W-415 W-421 W-422 W-423 W-424 Purchase of goods/services supported by "TIN-V" invoice/OR.

Batch #1 U-1 U-18 U-19 U-20 U-41 , 43 U-44, 45 U-46, 47 U-159 U-160

BETA ELECTRIC

06/17/98 100,000.00 Subtotal 124,000.01 FILCONFAB, INC.

4/2/1998 2,272.73 Subtotal 2,272.73 AUTOMATED TOOL FAB.

TECHNOLOGY CENTER

05/19/98 23,185.46

ASIA PACIFIC COMPUTER

MDA WOODCRAFT

SINOFIL PHILS., INC.

02/20/98 5,762.21 04/07/98 3,122.73 05/05/98 11 ,281 .82 Subtotal 115,738.53 5/19/1998 3,363.64 5/19/1998 2,943.18 5/19/1998 3,363.64 3/23/1998 2,113.64 3/23/1998 4,635.68 4/4/1998 4,510.91 4/4/1998 2,941 .36 5/2/1998 2,200.00 5/2/1998 4,472.73 5/2/1998 1,363.64 4/21/1998 4,963.91 4/21/1998 279.55 4/21/1998 2,987.45 4/21/1998 509.09 4/22/1998 3,1 05.09 4/21/1998 721.36 4/21/1998 2,454.55 4/21/1998 627.27 4/22/1998 1,730.91 4/21/1998 855.00 4/21/1998 1,318.18 4/21/1998 3,072.73 4/21/1998 602.18 4/22/1998 4,309.08 4/21/1998 2,163.64 4/14/1998 208.45 3/21/1998 5,600.00 Subtotal 67,416.85 04/15/98 1,080.00 04/20/98 14,236.36 04/16/98 11 ,072.73 03/30/98 3,250.00 04/30/98 16,663.64 04/29/98 20,544.55 04/23/98 2,570.00 05/26/98 3,570.27 06/01/98 2,590.91 05/30/98 3,927.27 04/20/98 14,861.00 04/07/98 9,672.73 04/03/98 1,309.09 Subtotal 105,348.55 Total

Purchase of goods/services not supported by the required documents.

Batch #1 U-3 U-5 Batch #3 W-228 W-302, 303 W-304, 305 W-306, 307 W-308, 309 W-310, 311 W-312, 313 W-312, 314 W-312, 315 Purchase of goods supported by zero-rated sales invoice. Batch #1 U-141 U-141 U-141 U-141 U-141 U-141 U-141 U-142 U-142 U-142 U-142 U-142 U-142 U-142 U-143 U-143 U-143 U-143 U-143 U-143 U-143 U-144 U-144 U-144 U-144 U-144 ABB KOPPEL INC.

ABB KOPPEL INC.

SCANDIA DESIGN

SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. SMART COMMUNICATIONS, INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. CONSOLIDATED IND'L GASES INC. 288,503.93 02/06/98 50,045.16 02/06/98 37,533.87 Subtotal 87,579.03 01/20/98 13,373.60 04/17/98 389.21 04/17/98 42.78 06/08/98 158.21 05/04/98 148.42 05/05/98 86.77 05/20/98 146.32 05/20/98 169.32 05/20/98 151 .76 Subtotal 14,666.39 Total 102,245.42 04/16/98 7,028.40 04/16/98 5,299.47 04/16/98 7,273.34 04/16/98 5,510.77 04/16/98 6,831 .92 04/16/98 6,750.99 04/16/98 6,260.24 04/16/98 6,938.33 04/16/98 5,751 .39 04/16/98 7,162.41 04/16/98 6,704.22 04/16/98 6,487.19 04/16/98 6,230.77 04/16/98 7,333.52 04/16/98 7,183.85 04/16/98 7,237.78 04/16/98 8,396.65 04/16/98 6,422.30 04/16/98 7,329.61 04/16/98 7,468.89 04/16/98 3,802.22 04/16/98 7,305.10 04/16/98 6,577.94 04/16/98 3,621.44 04/16/98 5,319.39 04/16/98 6,684.54

U-144 CONSOLIDATED IND'L GASES INC. 04/16/98 7,359.09 Total 176,271.76 Purchase of goods supported by invoice not registered with the BIR Batch #3 W-368 TELPLUS 05/19/98 49,410.90 W-369 TELPLUS 05/19/98 51 ,908.01 Total 101,318.91 Grand Total 2,153,422.07 Thus, petitioner was able to support by proper VAT invoices and/or official receipts input taxes in the amount of P7,548,478. 78, computed as follows:

Claimed Input Taxes for Refund Less: Disallowances per Commissioned Independent CPA's Report Adjustment on disallowances made by Commissioned Independent CPA as per this Court's further verification Additional disallowances per this Court's further verification Total Substantiated Amount p 11,770,1 81.70 p 2,081 ,372.31 (1 3,091.46) 2,153,422.07 4,221 ,702.92 p 7,548,478.78

WHEREFORE, premises considered, petitioner's claim for refund is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND in favor of petitioner the reduced amount of P7,548,478.78, representing petitioner's VAT input taxes on its domestic purchases of goods and services for the period April 1, 1998 to June 30, 1998.

SO ORDERED.

~·c.c.~a4 Q q--UANITO C. CASTANEDA, .JJC. Associate Justice

WE CONCUR:

t~~-~ ERNESTO D. ACOSTA Presiding Justice LOVE~~nR~ii'if~ISTA Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

I(~Lc - <Q~ ERNESTO D. ACOSTA Presiding Justice

Footnotes

1
An Act Expanding The Jurisdiction Of The Court of Tax Appeals (CTA), Elevating Its Rank To The Level of A Collegiate Court With Special Jurisdiction And Enlarging Its Membership, Amending For The Purpose Certain Sections Of Republic Act No. 1125, As Amended, Otherwise Known As The Law Creating The Court Of Tax Appeals, And For Other Purposes.
2
Paragraph I, Stipulation of Facts, Joint Stipulation of Facts and Simplification of Issues (JSFSI), docket, pp. 47-48.
3
Exhibit "A"; Paragraph 2, Stipulation of Facts, JSFSI, docket, p. 48.
4
Exhibit "B"; Paragraph 3, Stipulation of Facts, JSFSI, docket, p. 48.
5
Exhibit "F"
6
Exhibits "C" and "D"
7
Paragraph 4, Stipulation of Facts, JSFSI, docket, p. 48.
8
Exhibits "M" and "N"
9
Paragraph 7, Stipulation of Facts, JSFSI, docket, p. 49.
10
Docket, pp. 1-18.
11
Docket, pp. 20-2 1.
12
Docket, pp. 47-51.
13
Docket, p. 52.
14
Docket, p. 259.
15
Docket, p. 194.
16
Docket, pp. 199-209.
17
Docket, pp. 214-218.
18
Docket, pp. 220-224.
19
Docket, p. 227.
20
Docket, p. 235.
21
Docket, pp. 239-258.
22
Docket, p. 259.
23
Simplication of Issues, JSFSI, docket, pp. 49-50.
24
Docket, pp. 261-272.
25
Docket, p. 271.
26
Docket, pp. 274-280.
27
Docket, pp. 283-288.
28
Docket, pp. 294-298.
29
Docket, pp. 84 1-871 .
30
Docket, p. 960.
31
Docket, pp. 96 1-962.
32
Docket, p. 963.
33
Docket, pp. 964-967
34
Docket, pp. 968-970.
35
Exhibit "Q", Docket, pp. 143-1 84.
36
Exhibit "T", Docket, pp. 168- 174.
37
P2,081 ,372.3 I less P 13,091.46 (total 2nd batch, exception B of I CPA report).
38
2nd batch total, exception B ofiCPA report.