Procter and Gamble Asia, Pte., Ltd. vs. Commissioner of Internal Revenue

AMENDED DECISION

CASTANEDA, JR., J.:

STATEMENT OF THE CASE

This is a case remanded by the Supreme Court involving a Petition for Review filed by Procter & Gamble, pte. Ltd. ("PGAPL", for brevity) on September 27, 2007, seeking the refund or issuance of a tax credit certificate in the amount of FIFTY-THREE MILLION SIX

HUNDRED TWENTY-FOUR THOUSAND FOUR HUNDRED TWENTY-

SEVEN PESOS and 14/100 (P53,624,427.14), allegedly representing its input value-added tax (VAT) attributable to zero-rated sales for the periods of July 1 to September 30, 2005 and October 1 to December 31, 2005. ~

STATEMENT OF FACTS

As culled from the Supreme Court's Decision¹ in G.R. No. 204277 entitled Procter & Gamble Asia Pte Ltd. vs. Commissioner of Internal Revenue, the facts of this case are as follows: "Petitioner PGAPL is a foreign corporation duly organized and existing under the laws of Singapore, with a

Regional

Operating

Headquarters

(ROHQ)

in the Philippines. The ROHQ provides management, marketing, technical and financial advisory, and other qualified services to its related parties. PGAPL is registered as a Value Added Tax (VAT} taxpayer with the Bureau of Internal Revenue (8/R). On the other hand, respondent is the duly appointed Commissioner of Internal Revenue (CIR}, empowered to perform the duties of said office including, among others, the duty to act upon and approve claims for refunds or tax credits as provided by law. On October 24, 2005, and January 26, 2006, PGAPL filed with the BIR its Original Quarterly VAT returns for the Third and Fourth quarters of 2005, respectively. On April 4, 2007, PGAPL amended its Quarterly VAT returns for the last two quarters of 2005, reporting both sales subject to 10°/o VAT and zero-rated sales. For the last two quarters of 2005, PGAPL claimed it incurred unutilized input VAT amounting to P53,624,427.14. On August 21, 2007, PGAPL filed an administrative claim for tax refund with the BIR for input VAT attributable to its zero-rated sales covering the period July 2005 to September 2005 and October 2005 to December 2005. Claiming that the CIR has not acted on its application, PGAPL elevated the case to the CTA by filing a petition for review before the CTA division on September 21, 2oo1.r

The CTA Division dismissed PGAPL's petition. It ruled that the filing of the judicial claim for tax refund or credit before the CTA is premature, because the petitioner proceeded with its appeal even before the expiration of the 120-day period given to the CIR to decide on its claim for tax refund or credit of excess input VAT. Section 112 of the National Internal Revenue Code of 1997 (NIRC) provides that in case of denial of his claim for tax credit or refund or failure of the CIR to act on the application within 120 days, the taxpayer may, within 30 days from the receipt of the notice of denial or after the expiration of the 120-day period, appeal the decision or unacted claim with the CTA. The CTA Division emphasized that, as enunciated in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., compliance with the aforesaid 120- and 30-day periods is crucial in filing an appeal before the CTA (Aichi Doctrine). PGAPL moved for reconsideration, but the CT A denied its motion in a resolution dated March 7, 2011. The CTA Division struck down PGAPL's argument that respondent is already estopped from raising the issue of jurisdiction considering that it already actively participated in all stages of the proceedings and that the CTA has proceeded to try the case without bringing into petitioner's attention that it has no jurisdiction to do so. It ruled that parties are not barred from assailing the jurisdiction of the court, even when the case has already been tried and decided upon. Jurisdiction must exist as a matter of law and may not be conferred by the consent of the parties or by estoppel.

Thereafter, petitioner filed a petition for review before the CT A en bane. In its decision dated June 18, 2012, the CTA en bane affirmed the decision and resolution of the CTA Division. It found that PGAPL's administrative claim for excess input VAT credit or refund was timely filed with the BIR on August 21, 2007. However, its judicial claim before the CTA was filed on September 27, 2007, or only 37 days after it had filed its administrative claim. fo-

Based on these timelines, the CTA en bane held that PGAPL's petition was prematurely filed. Thus, the CTA had no jurisdiction to hear and decide its appeal. The CTA en bane reiterated that, based on Aichi, the premature filing of a taxpayer's claim for tax credit or refund on input VAT before the CTA warrants dismissal as the CTA did not acquire jurisdiction over the claim. The CTA en bane further held that, contrary to petitioner's claim, the Aichi Doctrine was not effectively abandoned by the Supreme Court in its rulings in Hitachi Global Storage Technologies Corp v. Commissioner of Internal Revenue, Silicon Philippines, Inc. v. Commissioner of Internal Revenue, and Kepco Philippines Corporation v. Commissioner of Internal Revenue. It observed that in PGAPL's cited cases, the issue of compliance with the 120- and 30-day periods under Section 112 of the NIRC was never squarely raised. Thus, Aichi remains the prevailing doctrine on the compliance with the 120- and 30-day periods.

The CTA en bane further ruled that Hitachi, Silicon, and Kepco could not have overturned Aichi. Such reversal would run counter to the constitutional mandate that no doctrine or principle of law laid down by the court in a decision rendered en bane or in division may be modified or reversed except by the Supreme Court sitting en bane. The CTA en bane also denied petitioner's motion for reconsideration. Hence, on December 28, 2010, PGAPL filed the present petition." Petitioner filed the Petition for Review on Certiorari with the Supreme Court entitled Procter & Gamble Asia Pte Ltd. vs.

Commissioner of Internal Revenue, with docket no. G.R. No. 204277. 2 On May 30, 2016, the Supreme Court rendered a Decision granting the petition, the dispositive portion of which provides: jic-

erA Case No. 7683

"WHEREFORE, premises considered, we GRANT the petition. The decision dated June 18, 2012, and the resolution dated November 8, 2012 of the erA en bane in erA EB Case No. 740 are hereby REVERSED and SET ASIDE. Accordingly, we REMAND the case to the erA Second Division for the proper determination of the creditable or refundable amount due to the petitioner, if any.

ISSUES TO BE RESOLVED11

The parties submitted the following issues to be resolved by this

Court:

1.

Whether or not petitioner's sales of services are zero- rated for VAT purposes under Section 108(8)(²) of the 1997 Tax Code. fr-

2.

Whether or not petitioner has carried over to the succeeding taxable quarter or quarters the alleged unutilized input VAT paid on goods and services attributable to its zero-rated sales for the periods covering July 2005 to September 2005 and October 2005 to December 2005 and applied the same amount in full to its output VAT liability for the said period.

3.

Whether or not the amounts of P19,496,365.57 and P34,128,061.57 being claimed by petitioner as unutilized input VAT for the periods covering July

2005 to September 2005 and October 2005 to

December 2005, respectively, or a total of P53,624,427.14 pertains in full to its zero-rated sales of services.

4.

Whether or not petitioner's sales of services to non- resident foreign corporations qualify as zero-rated sales.

5.

Whether or not petitioner complied with the substantiation requirements prescribed under Revenue Regulations (RR) No. 7-95 in relation to Sections 113 and 237 of the 1997 Tax Code. 6.

Whether or not petitioner is entitled to its claimed refund or tax credit in the amounts of P19,496,365.57 and P34,128,061.57, as alleged unutilized input VAT paid on goods and services attributable to its zero-rated sales, for the period covering July 2005 to September 2005 and October 2005 to December 2005, respectively.

THE COURT'S RULING

Petitioner's claim is anchored on Section 110(8) of the National Internal Revenue Code (NIRC) of 1997, as amended, which provides as follows: Jt--

"SEC. 110. Tax Credits.-

XXX

XXX

XXX

(B) Excess Output or Input Tax.- If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: Provided, That the input tax inclusive of input VAT carried over from the previous quarter that may be credited in every quarter shall not exceed seventy percent (70°/o) of the output VAT: Provided, howeve~ That any input tax attributable to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112."

Corollary to this, Section 112(A) and (C) of the NIRC of 1997, as amended, states:

"SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales. -Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero- rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated ~ proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero- rated sales.

XXX

XXX

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty

(30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals." Pursuant to the above provisions, in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated or effectively zero-rated sales, the following requisites must be satisfied:

1. the claimant must be a VAT-registered person;

2. there must be zero-rated or effectively zero-rated sales;

3. input taxes were incurred or paid;

4. such input taxes are attributable to zero-rated or effectively zero-rated sales;

5. said input taxes were not applied against any output VAT liability; and

6. the administrative and judicial claims for refund were filed within the prescribed period.J-

The Court shall first determine the last requisite which is the timeliness of filing of the administrative and judicial claims. Petitioner's administrative and judicial claims were timely filed In accordance with the above-quoted Section 112(A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a tax credit certificate or refund of excess input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Thus, as the subject claim is for the periods covering July 1 to September 30, 2005 and October 1 to December 31, 2005, said administrative claim must be filed on or before September 30, 2007, and December 31, 2007, respectively. As held by the Court of Tax Appeals En Banc2, petitioner timely filed its administrative claim for the subject periods on August 21, 2007.

As to whether petitioner timely filed its judicial claim, the Supreme Court had already settled the matter, when petitioner appealed this Court's En Bane Decision and Resolution dated June 18, 2012 and November 8, 2012, respectively, declaring that petitioner's case would fall under the exception in the observance of the period of filing judicial claims under Section 112. The High Court, in Procter & Gamble Asia Pte Ltd vs. Commissioner of Internal Revenue13, ruled that:

"SIR Ruling No. DA-489-03 is an exception to the Aichi Doctrine Under Section 112 of the NIRC, if the administrative claim for tax credit or refund of input taxes is not acted upon by the CIR within 120 days from the date of submission of complete documents in support of the application, the taxpayer affected may appeal the unacted claim with the CTA within 30 days from the expiration of the 120-day period. pv

In Aichi, this Court ruled that observance of the 120- and 30-day periods is crucial in the filing of an appeal before the CTA. By 'crucial,' this Court meant that its observance is jurisdictional and mandatory, not merely permissive.

XXX

XXX

XXX

Indeed, Aichiis the prevailing doctrine on the matter of mandatory compliance with the 120- and 30-day periods in the filing of judicial claims of tax credit or refund before the CTA. However, in the manner of most rules, the Aichi Doctrine is also subject to exceptions. In accordance with the equitable estoppel principle under Section 246 of the NIRC, we ruled in San Roque- Taganito that there are exceptions to the strict rule that compliance with the Aichi Doctrine is mandatory and jurisdictional, one of which is BIR Ruling No. DA-489-03. If the CIR issues a ruling, either a specific one applicable to a particular taxpayer or a general interpretative rule applicable to all taxpayers, and, as a result, misleads the taxpayers affected by the rule, into filing prematurely judicial claims with the CTA, the CIR cannot be allowed to later on question the crA•s assumption of jurisdiction over such claim.

Since then, this Court has consistently adopted the ruling in San Roque-Taganito in holding that BIR Ruling No. DA-489-03 is an exception to the Aichi Doctrine. We see no reason to disturb what is now a settled ruling. Therefore, as a general interpretative rule, all taxpayers may rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003, until its effective reversal by the AichiDoctrine adopted on October 6, 2010. Thus, judicial claims for tax credit or refund instituted before the CTA should be given due course, despite their failure to comply with the 120- and 30-day periods.

XXX

XXX

XXX /t-

PGAPL is presumed to have relied on SIR Ruling No. DA-489-03 in good faith.

Finally, the CIR questions PGAPL's good faith in relying on BIR Ruling No. DA-489-03. To the CIR, if PGAPL truly relied on the BIR ruling in good faith, it should have cited the ruling as basis as early as the proceedings before the CTA. The CIR claims that since PGAPL failed to establish that it acted in good faith, it cannot raise the exception set forth in BIR Ruling No. DA-489-03. We disagree with the CIR's reasoning. First, good faith is always presumed and this presumption can only be overcome by clear and convincing evidence. Good faith, or its absence, is a question of fact that is better determined by the lower courts. This Court cannot, without sufficient reason, throw out a presumption that arises as a matter of law and is well-entrenched in our legal system.

The mere allegation that the petitioner failed to raise BIR Ruling No. DA-489-03 before the CTA is insufficient to negate this presumption. Second, even if petitioner did not raise the BIR ruling before the CTA, we can take cognizance of an official act emanating from the BIR, an executive department of the government. Judicial notice of BIR Ruling No. DA-489-03 is all the more mandatory especially when it has been applied consistently by this Court in its past rulings. Based on the foregoing, we rule that the judicial claim that PGAPL filed with the CTA on September 27, 2007 (during the effectivity of BIR Ruling No. DA-489-03) was timely filed."

Hence, petitioner timely filed both its administrative and judicial claims. Jz--

We shall now proceed to determine petitioner's compliance with the other requisites.

Petitioner is a VAT-registered entity and had zero-rated sales/receipts during the subject periods Petitioner complied with the first requisite considering that it is a VAT-registered taxpayer with BIR Certificate of Registration No. 9RC000007178714 dated October 8, 199915• On the second requisite, i.e., the existence of zero-rated sales/receipts, petitioner claims that the services it rendered to its affiliates abroad, which were paid for in acceptable foreign currency and deposited with a Bangko Sentral ng Pilipinas (BSP) authorized agent bank and accounted for pursuant to the rules, circulars and regulations of the BSP, are transactions subject to zero percent (0°/o) VAT in accordance with Section 108(8)(2) of the NIRC of 1997, as amended, which states that: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -

XXX

XXX

XXX

(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°/o) rate:

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

(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);" In the case of Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc.16, the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108(8)(2) of the NIRC of 1997, as amended, the following requisites must be met:

1. the services must be other than processing, manufacturing or repacking of goods;

2. the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and

3. the recipient of such services is doing business outside the Philippines.

Petitioner is a foreign corporation duly organized and existing under the laws of Singapore and is maintaining a Regional Operating Headquarters in the Philippines, with office address at the 18/F Petron Megaplaza, 358 Sen. Gil Puyat Ave., Makati City, in accordance with the Certificate of Registration and License issued by the Securities and Exchange Commission (SEC), to provide management, marketing, technical and financial advisory and other qualified services to related companies. 17 Pursuant to the Business Services Agreements18 entered into between petitioner and its client-affiliates, petitioner shall provide its client-affiliates with accounting and financial reporting services, employee services, customer logistics financial services, purchases, business intelligence services, information technology business solution, workplace and other services within an agreed period including the subject taxable quarters of July 1, 2005 to December 31, 2005. These services clearly fall within the scope of "services other pt-

than processing, manufacturing or repacking of goods" contemplated by the afore-mentioned provision. For services rendered to its affiliates abroad, petitioner received US dollar payments which were accounted for in accordance with the BSP rules and regulations as evidenced by the Certifications19 of Inward Remittances issued by Citibank N.A., Philippine Branch and attested to by Ms. Teresita Sugay, Citibank's representative, through her Judicial Affidavit20 and duly supported by VAT zero-rated official receipts21 and credit notes22 issued by petitioner to its client-affiliates abroad.

In its Quarterly VAT Returns for July 1, 2005 to December 31, 2005, petitioner reflected a total amount of P1,132,160,726.03 zero- rated sales/receipts (equivalent to USD20,564,346.40), broken down as follows:

Taxable Quarters

Zero-Rated Sales/Receipts

Exhibit

(FY ended June 30, 2006) In Phil. Pesos

In US Dollars23

"D"

1st Qtr (July 1-Sept 30, 2005) 675,481,646.57 12,349,143.32

"F"

2nd Q_tr (Oct. 1-Dec. 31, 2005} 456L679,079.46 8L215,203.08

Total

1,132,160,726.03 20,564,346.40

While

the total amount of USD22,087,231.4124 inward remittances reflected per the Certifications issued by Citibank N.A., Philippine Branch is higher by USD1,522,885.01 when compared with the USD20,564,346.40 zero-rated sales/receipts per petitioner's Quarterly VAT Returns, the Court-commissioned Independent Certified Public Accountant (ICPA) firm, Constantino Guadalquiver & Co, through its Partner, Ms. Katherine 0. Constantino, was able to account for such discrepancy as pertaining to the following: (1) outward remittance - positive charges paid by customers; (2) non-VATable inward remittances; (³) June charges included in July outward remittances; (⁴) withholding taxes deducted from remittance; (⁵) bank fees; and (⁶) rounding-off difference, to wit: 25 jt--

Particular

Zero-rated sales/receipts per VAT return 1st quarter FY June 2006 (July-Sept) 2nd quarter FY June 2006 (Oct-Dec) Outward remittance - positive charges paid by customers Non vatable inward remittances June charges included in July outward remittances Withholding taxes deducted from remittance Bank fees Rounding off difference Total Inward remittances per Certifications of

Inward Remittances

Amount (in U.S.

Dollars)

Exhibit Reference

12 349 143.32

Exhibit "E"

8,215 203.08

Exhibit"G"

20 564 346.40

Exhibits "HHH" to

1,564 379.38

"HHH-3"

196,910.65

Exhibits "III" to "111-25"

(20,281.99) (218,063.14) (602.00) .11 22,087,231.41 To prove that its clients are non-resident foreign corporations doing business outside the Philippines, petitioner presented the following documents:

1.

Certifications of Non-Registration of Corporation/Partnership issued by the SEC of the Republic of the Philippines;26 2.

Affidavits executed by petitioner's foreign affiliates' officers with attached Certificates of Tax Withheld at Source, certified copies of License, Certificates of All Current Registered Matters, Certificates of Incorporation, Company Register,

Memorandum

and

Articles

of Association, Certificate of All Closed Registered Matters, Certification of Incorporation on Change of Name, Certified Extract of Commercial Register duly authenticated by consuls of the Republic of the Philippines; 27 3.

Hard Copy of Procter and Gamble Company and Subsidiaries report to the U.S. Securities and Exchange Commission; 28 and 4.

Business Services Agreements.29 However, each of the aforesaid documents, standing alone, is inadequate proof that petitioner's client is a non-resident foreign corporation doing business outside the Philippines.~

While

the

SEC

Certificates

of

Non-Registration

of Corporation/Partnership show that the named entities therein are not registered corporations or partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. Also, the Certificates of Tax Withheld at Source, certified copies of License, Certificates of All Current Registered Matters, Certificates of Incorporation, Company Register, Memorandum and Articles of Association, Certificate of All Closed Registered Matters, Certification of Incorporation on Change of Name, Certified Extract of Commercial Register duly authenticated by consuls of the Republic of the Philippines, and hard copy of Procter and Gamble Company and Subsidiaries report to the U.S. SEC only prove that the named entities therein were incorporated/organized abroad but do not establish that such entities are not doing business in the Philippines. Likewise, the service agreements only indicate the names and addresses of petitioner's customers to whom it renders services but they do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. In the case of Site! Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenu&0, the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and Agreements between Sitel and its foreign clients, may have established that Sitel rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. Therefore, in order to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC Certificate of Non- Registration and proof of incorporation/registration in a foreign country and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation.~

A careful scrutiny of the documents submitted shows that petitioner failed to establish that the following entities are non-resident foreign corporations doing business outside the Philippines:

Client

Reason for Disallowance

1.

P&G Maxfactor Godo Kaisha

Without SEC Certification of Non-

2.

P&G KK

Registration of Corporation/Partnership

Without

proof of foreign i ncorporationjreg istration in a foreign 3.

P&G GBS De Costa Rica Ltda

country Hence, petitioner's declared zero-rated sales/receipts from the afore-mentioned entities for the subject taxable quarters in the total amount of P145,553,023.38 (with equivalent US$2,651,761.83), detailed below, shall be denied VAT zero-rating: 31

Amount of Sales/Receipts

In USD in PHP

1st Quarter-July 1, 2005 to Sept. 30, 2005

P&G Maxfactor Godo Kaisha

1,011,472.52 55,331,003.16

P&G KK

492,461.49 26,981,613.95 .

P&G GBS De Costa Rica Ltda

19,053.00 1,037,180.19

Subtotal

1,522,987.01 83,349,797.30 2nd Quarter- Oct 1, 2005 to Dec. 31, 2005

P&G Maxfactor Godo Kaisha

808,101.39 44,568,344.93

P&G KK

320,673.43 17,634,881.15

P&G GBS De Costa Rica Ltda

- -

Subtotal

1,128,774.82 62,203,226.08 :

Total

2,651,761.83 145,553,023.38 J In sum, out of the P1,132,160,726.03 zero-rated sales/receipts reported by petitioner for the first and second quarters of FY ended June 30, 2006, only the amount of P986,607,702.65 represents its valid zero-rated sales/receipts, computed as follows: FY ended June 30, 2006 1st Quarter 2"d Quarter

(July 1 to Sept

(Oct. 1 to Dec.

30, 2005) 31, 2005)

Total

~R.ated Sales/Receipts per VAT Returns f' 675,481,646.57 f' 456,679,079.46 f'l,l32,160,726.03 31 Exhibit "V", Annex 1. i ~

Less:

Sales/Receipts from Entities Without SEC

Certification

of

Non-Registration

of

Corporation/Partnership

or

Proof of

Foreign Incorporation/Registration in a

Forei~n Country_

I

I

83 349J97.30 62 203 226.08 145 553 023.38

Valid Zero-Rated Sales/Receipts

PS92,131,849.27 P394,475L853.38 P9s&_L_&o⁷,702.&s I After having resolved that petitioner had VAT zero-rated sales/receipts for the subject periods in the total amount of P986,607,702.65, the Court proceeds to the determination of whether petitioner incurred input taxes in connection therewith and if said input taxes were not applied against any output VAT liability of petitioner. Petitioner incurred/paid input taxes attributable to zero- rated sales/receipts and said input taxes were not applied against any output

VAT

liability In its Quarterly VAT Returns for the first and second quarters of FY ended June 30, 2006, petitioner reflected a total amount of P87,341,820.12 input VAT arising from current domestic purchases of capital goods, domestic purchases of goods other than capital goods and domestic purchases of services, broken down as follows: FY ended June 30, 2006

I

1st Quarter 2"d Quarter

(July to Sept

(Oct to Dec

2005) 2005)

Total

Domestic Purchases -

capital goods p 872,916.35 p - p 872,916.35

Domestic Purchases -

goods other than capital goods 586,248.76 1,936,816.11 2,523,064.87

Domestic Purchases -

services 32,922 990.23 51,022 848.67 83 945_L838.90

Total

p 34,382,155.34 p 52,959,664.78 p 87,341,820.12 The ICPA compared petitioner's reported input VAT arising from current domestic purchases of goods other than capital goods and domestic purchases of services per VAT returns with that reflected per petitioner's schedules, and presented the following results: fb---

1st Quarter-July 2005 to September 200S32

Input VAT on

Domestic

Purchases of

Input VAT on

Goods other

Domestic

than Capital

Purchases of

Goods

Services

1st Quarter FY June 2006 (July to

September 2005)

Per VAT return P586,248.76 p 32,922,990.23 Amount per segregated purchases of goods p 536,679.77 Amount per Schedule of services

July 2005

p 8,005,002.62

August 2005

9,270,915.20

September 2005

15 625 002.09

Total per Schedule

p 536,679.77 p 32,900,919.91

Difference-- Amount per VAT

return is over (under) p 49,568.99 p 22,070.32

Total Input VAT on Domestic

Purchases of

Goods and

Exhibit

Services

Reference

Exhibit "D"

P33,509,238.99

to "D-2"

Annex 19

Exhibit "I"

P33,437 ,599.68 p 71,639.31 • According to the ICPA, the P49,568.99 difference in the domestic purchases of goods other than capital goods represents importation of goods other than capital goods excluded from the Schedule of Goods Purchased (Exhibit ''H") but included in the VAT return. Petitioner presented the broker's statement of account and supplier's commercial invoice (Exhibit "QQQ"). • Moreover, the P22,070.32 difference in domestic purchases of services is comprised of: o Purchases of services from Veterans Philippine properly supported by VAT official receipts (VAT input amounting to P4,070.31) which was included in the VAT return (Annex 70) and omitted in the Schedule of Services (Exhibit "!"), where the official receipt pertains to three purchases but only two services were included in the said Schedule; and}<-

o Purchase of Company service awards from Washington Jewelry supported by a VAT official receipt resulting in an input VAT amounting to P18,000.01 (Exhibit ''PPP"). The Court examined the related supporting documents and found the foregoing findings in order except for the P49,568.99 input VAT on importation. The broker's statement of account and supplier's invoice presented by petitioner do not prove the fact of payment of the P49,568.99 input VAT to the Bureau of Customs. Section 4.104-S(b) of Revenue Regulations No. 7-95 on "Substantiation of Claims for Input Tax Credit" requires the submission of import entry or other equivalent document showing actual payment of VAT on the imported goods. Thus, the input VAT claim of P49,568.99 shall be disallowed. 2'd Quarter- October 2005 to December 200513

Input VAT on

Domestic

Total Input VAT

Purchases of

Input VAT on on Domestic

Goods other

Domestic

Purchases of

than Capital

Purchases of

Goods and

Exhibit

Goods

Services

Services

Reference

2nd Quarter FY June 2005

(October to December 2005)

Exhibit "F" to

Per VAT return P1,936,816.11 P51,022,848.67 P52,959,664.78

"F-3"

Exhibit "J" and

"K", Amount 1;1er Schedule of services respectively

July 2005

P445,633.82 P⁸,857 ,587.60

August 2005

1,234,048.68 3,855,733.52

September 2005

257,133.58 14,438,219.09

Total per Schedule

P1,936,816.08 P27 ,151_L540.21 P29,088,356.29

Difference -- Amount per

VAT return is over (under) p 0.03 P23,871,308.46 P23,871,308.49 Based on the I CPA's audit, the total difference of P23,871,308.49 is broken down as follows: • The amounts of P17,682.50 and P17,831.00 pertain to the input VAT for October and December purchases which were included in the VAT return but omitted in the summary list (Exhibit ''K"). ~

The ICPA verified that this pertains to input VAT on stale checks (supported by system-generated journal voucher presented as Exhibit 'XX).

The Court finds the aforesaid input VAT in the amounts of P17,682.50 and P17,831.00 totalling P35,513.50, which are merely supported by a system-generated journal voucher, shall be disallowed from petitioner's claim. Section 110(A)(1)(b) and 110(A)(2)(a) in relation to Section 4.104-5(a) of RR No. 7-95 requires that the input VAT on domestic purchases of services must be substantiated by a VAT official receipt.

Thus, without supporting VAT official receipts, the amount of P35,513.50 cannot be claimed by petitioner as input VAT. • The amount of P6,938,599.91 represents deductible adjustments on the billings for service fees made by petitioner to Procter & Gamble Distributing (Philippines), Inc. as supported by Credit Notes Nos. 5530005883 and 5530005911 (Exhibits "YY" and 'ZZ). Petitioner represented that this amount should have been presented as a deduction from output tax. However, due to a system constraint with the BIR electronic filing and payment system ( eFPS) summary list attachment, petitioner, instead of showing an adjustment (deduction) from output tax, presented the same as an addition to creditable input VAT. The ICPA has verified the initial cash receipt and the subsequent return and summarized the findings under Annex 72 of the ICPA report.

o The ICPA has also verified that the amount formed part of the sales/receipts and output VAT reported in the months of:

Month reported in the VAT return

Official

as sales/receipts

Sales/Receipts

Receipt and Output VAT

Amount

Output VAT

Number

September 2005

p 8,227 835.91 p 822,783.59 1866

October 2005

41078970.22 4,107 897.59 1886

November 2005

13 023,372.15 1,302 337.21 1916

December 2005

7,055,820.86 705,582.09

DN 3238

p 69,385,999.14 p 6,938,599.91 ~ erA Case No. 7683 o The ICPA noted that there was no actual cash receipt from Procter & Gamble Distributing (Philippines), Inc. for the sales/receipts reported in December 2005 as the amount was applied/offset against the return of cash in December 2005. However, the amount of sales/receipt was verified to have formed part of the December 2005 VAT return.

o The ICPA was also able to verify that the deductible adjustment to the sales/receipts were all reported as additional input VAT in the 2nd quarter FY June 2006 VAT return. Cash was subsequently returned to customer Procter & Gamble Distributing (Philippines), Inc. on December 21, 2005. • The amount of P16,897,195.05 allegedly represents deductible adjustments on the billings for service fees made by petitioner to P&G Philippines, Inc. as supported by Credit Notes Nos. 5530005882 and 5530005910 (Exhibits ''LLL" and "MMMj. Petitioner represented that said amount should have been presented as a deduction from output tax. However, due to a system constraint with the BIR eFPS, petitioner, instead of showing an adjustment (deduction) from output tax, presented the same as an addition to creditable input VAT. The ICPA has verified the initial cash receipt and the subsequent return and summarized the findings under Annex 73 of the ICPA report.

o In line with this, the ICPA has also verified that the amount formed part of the sales/receipts and output VAT reported in the months of: Month reported

in the VAT

return as

Official

sales/ receipts

Sales/Receipts

Receipt and Output VAT

Amount

Out~utVAT

Number

September 2005

p 20 036,801.39 p 2 003,680.14 1865

October 2005

100,037,382.25 10 003,738.22 1884

November 2005

31175,110.00 3 171,511.00 1914

December 2005

17,182,656.88 1 718 265.69

DN 3239

p 168,971,950.52 p 16,897,195.05

Jh-

o The ICPA noted that there was no actual cash receipt from Procter & Gamble, Inc. reported in December 2005 as the amount was applied/offset against the return of cash in December 2005. However, the amount of sales/receipt was verified to form part of the December 2005 VAT return.

o The ICPA was also able to verify that the deductible adjustment to the sales/receipts were all reported as additional input VAT in the 2nd quarter FY June 2006 VAT return. Cash was subsequently returned to customer Procter & Gamble, Inc. on December 21, 2005.

Upon scrutiny of the Credit Notes supporting the deductible adjustments on petitioner's billings for services fees to Procter & Gamble Distributing (Philippines), Inc. and P&G Philippines, Inc., the Court found that the same accurately reflect the amounts of P6,938,599.91 and P16,897,195.05 as per the reconciliation below: 1st Quarter

Sales Amount

p 69,385 999.14

10% VAT

6,938,599.91

Total Sales/Receipts

p 76,324,599.05

Less: Credit Notes

No. 5530005883 (Exhibit "YY'') 53,251 350.63 No. 5530005911 (Exhibit ''ZZ'') 21,685,528.45

Difference (2% EWT)

p 1,387,719.97 2nd Quarter l

Sales Amount

p 168,971,950.52

10% VAT

16,897' 195.05

Total Sales/Receipts

p 185,869,145.57

Less: Credit Notes

No. 5530005882 (Exhibit ''LLL '') 129,680,118.30 No. 5530005910 (Exhibit ''MMM'') 52,809,588.23

Difference (2% EWT)

p 3,379,439.04 The Court agrees with the ICPA that the increase in input taxes to remedy the eFPS inability to adjust the Sales and Output Tax Payable amount for cancelled sales to Procter & Gamble Distributing (Philippines), Inc. and P&G Philippines, Inc. should be excluded from petitioner's creditable input tax. ;v-

Moreover, the said cancelled sales to Procter & Gamble Distributing (Philippines), Inc. and P&G Philippines, Inc. should be deducted from the sales/receipts subject to ten percent (10°/o) output VAT, in order to properly reflect the correct amount of 10°/o output VAT due for the second quarter. We now proceed to the substantiation of petitioner's input VAT claim on current domestic purchases of capital goods, domestic purchases of goods other than capital goods, and domestic purchases of services for the subject taxable quarters as reflected per petitioner's schedules.

Based on the ICPA report34, the Court disallows the input VAT of P2,785,360.39 for non-compliance with the substantiation requirements under Section 4.104-5 in relation to Section 4.104-1 of Revenue Regulations No. 7-95. Below is the breakdown of the input taxes of P2,785,360.39:

FY ended June 30, 2006 1st Quarter 2nd Quarter (July to Sept. 2005) (Oct. to Dec. 2005)

Total

Domestic Purchases of Ca_l!jtal Goods Input taxes claimed on purchases of capital goods which are supported by TIN VAT invoices not dated within the fiscal year

(Annex 77)

p 305 875.40 p 305,875.40 Domestic Purchases of Goods other than Capital Goods Input taxes claimed on purchases of goods which are not dated within the fiscal year:

a. Supported by VAT REG invoices

(Annex 26)

11,530.15 - 11 530.15

b. Supported by TIN VAT invoice

(Annex 27 and 28)

101 723.83 p 2 896.73 104 620.56 Input taxes claimed on purchases of goods supported by TIN NON VAT invoices

(Annex 31 and 32)

2,181.82 8,697.73 10 879.55 Input taxes claimed on purchases of goods supported by photocopied TIN VAT invoice not dated within the quarter but within the period of claim. The ICPA verified that the input VAT was not claimed within the quarter of the invoice date _(Annex 33). - 5,090.92 5 090.92 Input taxes claimed on purchases of goods included in the Schedule of Domestic

Purchase of Goods (Annex 19) and

Schedule of Goods purchases (Exhibit I) which are not covered by sales invoices

(Annexes 34 and 35)

11,758.15 7,040.77 18,798.92 34 Exhibit "V", pp. 19-26 and 29.

I

•

/L

Unallocated difference

Domestic Purchases of Services

Input taxes claimed on services where official receipts are not dated within thequarter or claim period but within the fiscal year:

a. Supported by VAT REG TIN official receipts (Annex 47)

b. Supported by TIN VAT official receipts (Annex 48) Input taxes claimed on purchase of services supported by VAT REG TIN official receipts which are not dated within the fiscal year (Annex 49) Input taxes claimed on purchase of services supported by NON VAT official receipts (Annex 52 and 53) Input taxes claimed on purchases of supported by VAT official receipts with exceptions:

a. Date of receipt not indicated (Annex 54)

b. Date of receipt has corrections

(Annex 55)

c. Official receipt number was handwritten (Annex 56)

d. BIR permit number not indicated

(Annex 57)

e. (Use of wrong TIN of petitioner

(Annex 58)

f. Not in the registered name of petitioner (Annex 59 and 60)

g. There is correction in petitioner's name (Annex 61) Input taxes claimed on purchase of services supported by VAT official receipts wherein "NON VAT Transaction" was typed on the face of the receipts (Annex 62 and 63) Input taxes claimed on services supported by photocopied documents (Annex 64 and 65) Input taxes claimed on purchase of services supported by documents other than VAT official receipts (Annex 66 and 67) Input taxes claimed on purchase of services supported by documents other than VAT official receipts (Annex 68 and 69)

TOTAL

- 0.03 0.03 - 288,157.63 288 157.63 - 119,285.64 119 285.64 - 367 036.54 367 036.54 18.18 62,204.55 62 222.73 144 637.39 - 144 637.39 - 208 065.87 208,065.87 2 512.29 - 2,512.29 87 321.82 - 87,321.82 - 40.00 40.00 179,736.49 52 431.70 232,168.19 372,282.22 - 372 282.22 64,726.41 161,325.43 226 051.84 65,065.89 2,860.80 67 926.69 36 187.37 4 485.82 40 673.19 93,728.27 16,454.55 110,182.82 p 1,479,285.68 P1,306,074.71 P2,785,360.39 ~

In addition, the Court observed that certain invoices and official receipts supporting petitioner's input VAT claim for the months of November and December 2005 do not show the VAT component separately from the purchase amount, which is in violation of Section 113(B)(2)(a) of the NIRC of 1997, as amended by Republic Act No. 9337, which became effective on November 1, 200535,to wit: "SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Persons. -

XXX

XXX

XXX

(B) Information Contained in the VAT Invoice or VAT

Official Receipt -

The following information shall be indicated in the VAT invoice or VAT official receipt:

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

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

(a) The amount of the tax shall be shown as a separate item in the invoice or receipt;" (Emphasis supplied) Therefore, the Court deems it proper to also disallow input VAT in the amount of P16,501,420.01 supported by VAT sales invoices and official receipts which are dated November 1, 2005 and onwards and do not separately indicate the amount of input VAT, tabulated hereunder:

Invoice/OR

Invoice/OR

Input Tax

Reference

Supplier

Date

Number

(Per Schedule)

Domestic Purchases of Goods other than

Capital Goods

UU-33

I MERCURY DRUG CORP

11/18/2005 18703309 p 1,021.73 35 R.A. No. 9337 was supposed to take effect on July 1, 2005 but due to constitutionality issues, it became effective only on November 1, 2005 upon the finality of the Supreme Court's September 1, 2005 Decision upholding the said law's validity. fo-.

UU-34

MERCURY DRUG CORP

UU-35

MERCURY DRUG CORP

UU-101

ARMVET COMMERCIAL PRESS

UU-125

PHILIPPINE VENDING CO

UU-126

PHILIPPINE VENDING CO

UU-141

HMK PARTY PACKAGERS INC

UU-150

OTT LOUIE PHILS INC

Subtotal

Domestic Purchases of Services

CENTER FOR LEADERSHIP AND

WW-1

CHANGE

WW-3

DIGITELONE

WW-5

EASTERN TELECOMMUNICATIONS

WW-6

EASTERN TELECOMMUNICATIONS

WW-7

EASTERN TELECOMMUNICATIONS

WW-8

EASTERN TELECOMMUNICATIONS

WW-8

EASTERN TELECOMMUNICATIONS

WW-9

EASTERN TELECOMMUNICATIONS

WW-10

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-11

GLOBE TELECOM

WW-12

GLOBE TELECOM

WW-13

GLOBE TELECOM

WW-13

GLOBE TELECOM

WW-13

GLOBE TELECOM

WW-13

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-14

GLOBE TELECOM

WW-19

GLOBE TELECOM

WW-20

GLOBE TELECOM

WW-20

GLOBE TELECOM

WW-20

GLOBE TELECOM

L_'!'.JW-21_ GLOBE TELECOM 11/18/2005 12/9/2005 12/13/2005 11/8/2005 11/9/2005 11/17/2005 12/19/2005 12/2/2005 12/12/2005 11/18/2005 11/29/2005 11/29/2005 12/16/2005 12/29/2005 11/9/2005 11/10/2005 11/15/2005 11/17/2005 12/1/2005 11/7/2005 12/6/2005 12/9/2005 18703308 370.93 18703457 986.59 48353 3,470.90 020670 10 538.55 020691 4,702.00 0053 560.00 5014 6,811.82 p 28,462.52:

8845 p 9 395.46 008856 95.24

E 313345

2,310.00

E 312796

987.76 i

E 312797

134.76 2 310.00

E 314207

2,147.23

E 314567

136.35

M 1983606

103.92 5 600.58 5 500.00 5 433.56 5 500.00 1,368.97 832.08 554.76

M 1983405

1 520.79

M 1983451

242.00 1 427.27 993.42 242.31

M 1983496

335.64 6,490.71 5,500.00 503.26 2,547.40 2,750.00 442.02 7 039.55 2,620.21 690.60

M 1984415

681.98

M 1983302

1 043.01 751.23 5,710.84

M 198742

583.36

M 1986719

640.01 ~

WW-21

GLOBE TELECOM

WW-21

GLOBE TELECOM

WW-21

GLOBE TELECOM

WW-21

GLOBE TELECOM

WW-22

GLOBE TELECOM

WW-23

GLOBE TELECOM

WW-23

GLOBE TELECOM

WW-23

GLOBE TELECOM

WW-24

GLOBE TELECOM

WW-24

GLOBE TELECOM

WW-25

GLOBE TELECOM

WW-25

GLOBE TELECOM

WW-25

GLOBE TELECOM

WW-25

GLOBE TELECOM

WW-25

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-27

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-28

GLOBE TELECOM

WW-33

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

12/13/2005 12/15/2005 12/21/2005 12/28/2005 11/24/2005 11/7/2005 12/14/2005 12/14/2005 148.56 238.28 4.22 121.00

M 1986558

1 667.31 589.84 391.89

M 1986833

242.00 1 508.59

M 1987349

285.13 564.62 121.00 9.55 164.77

M 1987601

150.21 242.91 248.73 163.86 235.72 288.42 547.92

M 1983897

324.30 795.51 425.07 75.53 360.25 201.90 211.44 365.91 26.48 0.95 313.41 1 501.57 104.00 261.21 421.73 242.00 152.07 15.65

M 1983303

46.19 62153 7 133.34 53 909.07 31,208.40 8 916.60 35 869.20 59 662.50 17,934.60 62154 --~~999.50 ?

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-34

HEWLETT PACKARD PHILIPPINES CO

WW-35

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-36

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-37

HEWLETT PACKARD PHILIPPINES CO

WW-38

HEWLETT PACKARD PHILIPPINES CO

WW-38

HEWLETT PACKARD PHILIPPINES CO

WW-39

IBM PHILIPPINES INC

WW-40

IBM PHILIPPINES INC

WW-41

IBM PHILIPPINES INC

WW-50

INFORMATION PROFESSIONALS INC.

WW-50

INFORMATION PROFESSIONALS INC.

WW-50

INFORMATION PROFESSIONALS INC.

WW-51

INFORMATION PROFESSIONALS, INC.

WW-51

INFORMATION PROFESSIONALS INC.

WW-51

INFORMATION PROFESSIONALS INC.

WW-52

INFORMATION PROFESSIONALS INC.

WW-52

INFORMATION PROFESSIONALS INC.

WW-52

INFORMATION PROFESSIONALS INC.

WW-52

INFORMATION PROFESSIONALS INC.

WW-53

INFORMATION PROFESSIONALS INC.

WW-53

INFORMATION PROFES~IONALS, INC. 12/23/2005 62310 12/28/2005 11/23/2005 60879 12/9/2005 61540 12/12/2005 189163 12/15/2005 189168 11/8/2005 188497 11/3/2005 10822 11/8/2005 10839 11/10/2005 10841 11/17/2005 10883 319 742.50 190 861.00 17,833.30 898 005.78 1,349 226.81 514,927.40 410,122.40 166,701.40 ;

.

28,600.00 1,790 048.30 4,423 554.10 89,430.00 44 196.40 26 750.00 10,396.10 165,550.00 109 390.90 59 662.50 41 908.40 80 209.60 41,018.40 77 003.00 4,458.30 59,662.50 71 325.20 56 175.10 136 196.50 28 600.00 17 833.30 77 003.00 54 659.00 1 759.22 1 759.22 160 019.34 430 636.80 149,827.30 8 448.00 408.02 11.29 16.94 896.47 130.24 1,219.59 1 589.98 1 562.89 5 478.00 1,371.18 1,987.14 !.k-

INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC, INFORMATION PROFESSIONALS, INC.

INFORMATION PROFESSIONALS, INC. | wyearens | sos0e _| 3 364.80 INFORMATION PROFESSIONALS, INC. | 11/22/2005 10908 306.55 INFORMATION PROFESSIONALS, INC. | 11/24/2005 10918 1,271.28 INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. INFORMATION PROFESSIONALS, INC. | 12/8/2005 10975 | 10990

WW-53

WW-53

WW-53

WW-53

WW-54

WW-54

WW-55

WW-56

WW-56

WW-56

WW-56

WW-56

WW-56

WW-56

WW-56

WW-57

WW-58

WW-58

WW-59

WW-59

WW-60

WW-61

WW-62

WW-63

WW-64

WW-64

WW-70

WW-71

WW-72

WW-73

WW-74

WW-75

WW-75

WW-75

WW-75

WW-75

WW-75

WW-75

WW-77

WW-78

WW-78

WW-79

WW-262

WW-262

WW-262

WW-87

WW-87

WW-87

INFORMATION PROFESSIONALS, INC. 10990 INFORMATION PROFESSIONALS, INC. sanejooe | x00 INFORMATION PROFESSIONALS, INC. | 12/15/2005 11009 INFORMATION PROFESSIONALS, INC. S yznnons | nosy | INFORMATION PROFESSIONALS, INC. | 12/22/2005 11042

MANDARIN ORIENTAL MANILA

PHILIPPINE LONG DISTANCE

RAF INTERNATIONAL FORWARDING

THE PENINSULA MANILA

THE PENINSULA MANILA Sanences |) aur | eee

THE PENINSULA MANILA 12/16/2005 312763

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA

THE PENINSULA MANILA 12/6/2005 311840

TNT EXPRESS WORLDWIDE PHILS INC 436121

TRIBIZINC 12/22/2005 123

U-BIX CORP

6750 AYALA AVENUE JOINT VENTURE 18,331.20 6750 AYALA AVENUE JOINT VENTURE 23,240.45 6750 AYALA AVENUE JOINT VENTURE 12/19/2005 15074 6,428.73

AIRFREIGHT 2100 INC

AIRFREIGHT 2100 INC 860.50 AIRFREIGHT 2100 INC 11/10/2005 | 061595 673.04

WW-90

ASIA SELECT INC

WW-90

ASIA SELECT INC

WW-90

ASIA SELECT INC

WW-91

ASIA SELECT INC

WW-91

ASIA SELECT INC

WW-91

ASIA SELECT INC

WW-92

ASIA SELECT INC

WW-92

ASIA SELECT INC

WW-93

BAYANTELINTERNATIONAL

WW-93

BAYANTELINTERNATIONAL

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-95

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-96

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

WW-97

BUSINESS PROCESS OUTSOURCING

144.92 317.07 115.32 1 204.41 1 262.22 11/10/2005 1942 2 048.61 13.31 12/16/2005 2067 2 011.51 2 447.70 11/14/2005

349227 E

3 083.64 2,864.00 2,092.00 2 107.09 3 099.18 1 799.55 1J56.36 1 599.09 1 599.09 1,676.18 11/9/2005 12055 11 394.73 1 961.64 2 493.09 2,922.91 2,288.91 1 280.73 2 158.55 1,830.00 11,881.00 12/9/2005 12469 1 720.00 1 676.18 1 676.18 1,950.00 1 811.00 1,800.00 2,350.00 1,720.00 1,602.09 1 617.00 1,461.00 1,483.00 1 641.00 1 572.00 1 641.00 1,404.00 1 717.00 1 760.00 1 717.00 12/16/2005 12496 1,409.00 I~

WW-97

BUSINESS PROCESS OUTSOURCING

WW-98

BUSINESS PROCESS OUTSOURCING

WW-98

BUSINESS PROCESS OUTSOURCING

WW-98

BUSINESS PROCESS OUTSOURCING

WW-98

BUSINESS PROCESS OUTSOURCING

WW-99

BUSINESS PROCESS OUTSOURCING

WW-99

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-100

BUSINESS PROCESS OUTSOURCING

WW-101

COMFACCORP

WW-104

COMPUTER PROFESSIONALS INC

WW-104

COMPUTER PROFESSIONALS INC

WW-105

BUSINESS PROCESS OUTSOURCING

WW-106

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-107

COMPUTER PROFESSIONALS INC

WW-108

COMPUTER PROFESSIONALS INC

WW-109

COMPUTER PROFESSIONALS INC

WW-109

COMPUTER PROFESSIONALS INC

WW-109

COMPUTER PROFESSIONALS INC

WW-109

COMPUTER PROFESSIONALS INC

WW-109

COMPUTER PROFESSIONALS INC

12/16/2005 11/11/2005 11/23/2005 12/22/2005 11/10/2005 12/9/2005 11/15/2005 11/17/2005 11/30/2005 12/8/2005 1 760.00 2 026.00 1950.00 1 771.00 12495 1455.00 24.73 12063 1 720.00 1 800.00 1 800.00 1 800.00 1,720.00 1 950.00 1 800.00 1 681.00 1,539.09 1 695.00 1 482.73 1482.73 1 640.91 1 567.18 1 557.64 1 501.73

I

1,640,91 I 1,711.82 1,599.09 1,815.55 2,080.15 1,958.79 1,677.71 12207 1,881.10 30583 251,499.99 813.45 2293 2 831.93 12468 1 634.55 2301 6,900.00 2,500.00 2 200.00 2 200.00 2,800.00 16 034.48 1 037.24 2305 2 270.11 2326 131.03 161.38 1 717.24 1 631.90 53.79 2339 53.79 ------- ;⁹---

WW-109

WW-110

WW-110

WW-110

WW-110

WW-110

WwW-110

WW-111

WW-111

WW-111

WW-111

WW-112

WW-113

WW-114

WW-115

WW-117

WW-118

WW-118

WW-118

WwW-119

Www-119

WW-121

WW-121

WW-121

WW-121

WW-121

WW-123

WW-123

WW-123

WW-123

-123

WW-125

WW-126

WW-127

COMPUTER PROFESSIONALS INC Po 1,717.24 COMPUTER PROFESSIONALS INC 203.45 COMPUTER PROFESSIONALS INC 2,417.88 COMPUTER PROFESSIONALS INC 448.16 COMPUTER PROFESSIONALS INC 1,920.00 12/16/2005 2403 .

COMPUTER PROFESSIONALS INC 15,906.93 2,800.00

COMPUTER PROFESSIONALS INC

COMPUTER PROFESSIONALS INC

COMPUTER PROFESSIONALS INC

COMPUTER PROFESSIONALS INC 12/22/2005 2409

COMPUTER PROFESSIONALS INC 12/28/2005 17,281.62

COMPUTER PROFESSIONALS INC

CONGLOW-THAILAND MARKETING

CORNERSTEEL SYSTEMS CORP

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES | wyoyeoos | cane _| 1,352.55 CUSTOMER TOUCHPOINT RESOURCES | 12//21/2005 0018 2,022.54

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES 1,207.85 CUSTOMER TOUCHPOINT RESOURCES 1,352.55 CUSTOMER TOUCHPOINT RESOURCES 106.68 11/11/2005 0267 CUSTOMER TOUCHPOINT RESOURCES 278.96

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES

CUSTOMER TOUCHPOINT RESOURCES | 11/18/2005 0002

| 0018034 2 CUSTOMER TOUCHPOINT RESOURCES 253.61 CUSTOMER TOUCHPOINT RESOURCES 366.30 CUSTOMER TOUCHPOINT RESOURCES 12/14/2005 0015 156.29 DESTINY INC 12/2/2005 0018034 227.09 DESTINY INC 12/2/2005 0018035 214.55 DNS SHUTTLE SERVICE INC 11/29/2005 5189 545.45 WW-128 | SERVICES 11/10/2005 0460 5,486.36 DP CASTILLAR MAINTENANCE Ss oa6 36 | WW-130__| SERVICES 3,636.36 DP CASTILLAR MAINTENANCE |g gs0.00 | SERVICES 12/8/2005 0462 1,850.00 SERVICES 12/27/2005 0463 421.49 CORP 12/15/2005 5531 116.55 F B CONSUMER RESEARCH SERVICES | 11/25/2005 2,200.00 INC 12/12/2005 0206 32.31

WW-130

WW-131

WW-132

WW-133

WW-135

WW-136

WW-136

WW-136

WW-138

GLOBAL ALLIANCE MANPOWER INC 836.97 GLOBAL ALLIANCE MANPOWER INC 5,746.11 GLOBAL ALLIANCE MANPOWER INC 11/10/2005 0426 788.28 12/16/2005 84990 272.73

JETS TROPHY INC

WW-139

WW-140

WW-141

WW-142

WW-144

WW-144

WW-148

WW-151

WW-152

WW-153

WW-154

WW-155

WW-156

WW-157

WW-158

WW-159

WW-160

WW-161

WW-162

WW-163

WW-164

WW-164

WW-164

WW-165

WW-165

WW-165

WW-165

WW-185

WW-185

-186

WW-186

WW-186

WW-186

WW-186

WW-186

WW-187

WW-187

WW-187

WW-187

WW-187

WW-187

WW-188

WW-188

WW-188

WW-188

WW-188

WW-188

WW-188

JETS TROPHY INC

LINK WORTH INTERNATIONAL INC

M.R. GUBATUN CUSTOMS BROKERAGE M.R. GUBATUN CUSTOMS BROKERAGE

MAXIBUILD INC 11/30/2005 639

NEEMDIRECT HOLDINGS INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

NIPPON HOUSING PHILIPPINES INC

PLDT 1,424.94

PLOT

PLDT 11/30/2005 | AB 376365

PLDT

PLDT

PLOT

PLDT 11/22/2005 | AB 375699

PRONTO EXPRESS DISTRIBUTION INC a 90.91

PRONTO EXPRESS DISTRIBUTION INC | 11/3/2005 61552

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC

12/9/2005 62133 PRONTO EXPRESS DISTRIBUTION INC 249.55 PRONTO EXPRESS DISTRIBUTION INC 90.91 PRONTO EXPRESS DISTRIBUTION INC 136.36 PRONTO EXPRESS DISTRIBUTION INC 119.41 12/28/2005 62397 .

3 PRONTO EXPRESS DISTRIBUTION INC 513.08 128.91 PRONTO EXPRESS DISTRIBUTION INC 63.64 PRONTO EXPRESS DISTRIBUTION INC 316.50 PRONTO EXPRESS DISTRIBUTION INC 406.20 PRONTO EXPRESS DISTRIBUTION INC 300.00 11/10/2005 61596

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC 136.36 PRONTO EXPRESS DISTRIBUTION INC 526.79

PRONTO EXPRESS DISTRIBUTION INC

PRONTO EXPRESS DISTRIBUTION INC 238.37 Z

WW-189

PRONTO EXPRESS DISTRIBUTION INC

WW-190

PRONTO EXPRESS DISTRIBUTION INC

WW-190

PRONTO EXPRESS DISTRIBUTION INC

WW-190

PRONTO EXPRESS DISTRIBUTION INC

WW-190

PRONTO EXPRESS DISTRIBUTION INC

WW-190

PRONTO EXPRESS DISTRIBUTION INC

WW-191

PRONTO EXPRESS DISTRIBUTION INC

WW-192

PTS CORP

WW-192

PTS CORP

WW-193

REUTERS LITD

WW-198

R.M. ENGINEERING SERVICES CO.

TELECOMMUNICATION & COMPUTER

WW-202

TECHNOLOGIES INC

WW-203

TNT EXPRESS WORLDWIDE PHILS INC

VETERANS PHILIPPINE SCOUT

WW-206

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-206

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-207

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-208

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-209

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-210

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-210

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-210

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-211

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-212

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-213

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-213

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-213

SECURITY AGENCY

VETERANS PHILIPPINE SCOUT

WW-213

SECURITY AGENCY

WW-214

VINTEL LOGISTICS INC

WW-215

YUTIVO CORP

WW-216

JONES LANG LASALLE PHILS INC

WW-217

JONES LANG LASALLE PHILS INC

WW-218

JONES LANG LASALLE PHILS INC

WW-219

JONES LANG LASALLE PHILS INC

WW-220

JONES LANG LASALLE PHILS INC

WW-221

JONES LANG LASALLE PHILS INC

WW-222

JONES LANG LASALLE PHILS INC

WW-223

JONES LANG LASALLE PHILS INC

WW-224

JONES LANG LASALLE PHILS INC

WW-225

JONES LANG LASALLE PHILS INC

11/11/2005 11/25/2005 11/25/2005 11/11/2005 11/9/2005 12/27/2005 12/8/2005 11/30/2005 11/7/2005 11/7/2005 11/8/2005 11/16/2005 12/7/2005 12/16/2005 12/23/2005 12/29/2005 11/9/2005 11/24/2005 12/20/2005 12/19/2005 12/7/2005 12/7/2005 11/23/2005 11/23/2005 12/29/2005 12/29/2005 12/29/2005 12/29/2005 61654 93.61 195.50 .

198.15 432.15 I 646.88 61849 123.79 61891 90.91 I 35.00.

12785 35.00 28927 31,428.90 1337 1,344.00 17588 3J69.09 433657 246.86

I

4,070.23 51583 4,070.23 I 51583 4,070.23 51584 4 o1o.23 I 51851 246.17 ' 4,070.23 4L070.23 i 52024 4 070.23 52066 4 070.23 52154 376.09 1,603.45 1 603.45 21.78 52163 1 603.45 852 875.35

D 53477

2 250.00 2060 2 442.63 2056 19 135.24 2049 2 870.30 2048 19,135.24 2032 189.20 2033 9 863.24 2070 19,135.25 2071 2,382.63 2074 2 352.63 2072 9,863.24 }t-

WW-226

JONES LANG LASALLE PHILS INC

12/29/2005 2075 189.20

WW-227

JONES LANG LASALLE PHILS INC

12/19/2005 2055 144,271.90 I

WW-228

JONES LANG LASALLE PHILS INC

12/29/2005 2073 131,154.94 I

WW-229

YUTIVO CORP

12/6/2005 53493 2 250.00

WW-230

YUTIVO CORP

12/28/2005 53426 2 250.00

WW-231

YUTIVO CORP

12/28/2005 53426 1,800.00 i

W-59

PLDT

11/22/2005

AB 375697

18,572.20

W-236

PLDT

11/22/2005

AB 375696

21,582.47

W-237

PLDT

11/22/2005

AB 375698

16,600.00

W-240

BASES CONVERSION DEVELOPMENT

11/10/2005

8119683 D

137,192.73 i

W-160

KALAYAAN ENGINEERING CO INC

1,174.05

W-160

KALAYAAN ENGINEERING CO INC

11/11/2005 12145 1,893.47

Subtotal

p 16,472,957.49

Total

p 16,501,420.01 Considering all the aforesaid disallowances, out of petitioner's reported input tax of P87,341,820.12 arising from current domestic purchases of capital goods, domestic purchases of goods other than capital goods and domestic purchases of services, only the amount of P44,134,162.27 represents petitioner's valid input VAT, computed as follows:

FY ended June 30, 2006 1st Quarter 2nd Quarter

{July to Sept

{Oct to Dec.

2005) 2005)

Total

Input Tax from Current Purchases

Per VAT Returns

Domestic Purchases - Capital

Goods

p 872 916.35 p 872 916.35 Domestic Purchases - Goods other than Capital Goods 586,248.76 p 1 936,816.11 2 523 064.87

Domestic Purchases - Services

32,922 990.23 51 022 848.67 83 945 838.90

Total

p 34,382 155.34 p 52 959 664.78 p 87 341 820.12 Less: Output VAT adjustments added to in_p_ut VAT

a. Deductible adjustment to sales/receips to Procter &

Gamble Distributing

(Philippines), Inc.

(6 938,599.91) (6 938 599.91)

b. Deductible adjustment to sales/receipts to Procter & Gamble Philippines, Inc. (16,897,195.05) (16 897,195.05) Input VAT from Current Purchases

Per VAT Returns as Adjusted

p 34 382 155.34 p 29,123 869.82 p 63 506,025.16

Less: Disallowances

Per ICPA report:

Input VAT not included per schedule but included in the return !

Jz--

a.

Input VAT on importation supported only by broker's statement of account and supplier's commercial invoice b.

Input VAT on stale checks supported only by system- generated journal voucher Input VAT per petitioner's schedule but not properly supported by VAT invoices (in cases of purchases of goods) or official receipts (in cases of purchases of servicesl Per this Court's further verification: Input VAT supported by VAT invoices or official receipts which are dated November 1, 2005 and onwards and do not separately show the input VAT Valid In~ut VAT (49 568.99) _{_49 568.99) (35 513.50) (35,513.50) (1 479 285.68) {1,306 074.71) (2,785,360.39) (16,501 420.011 (16,501,420.01) p 32,853,300.67 p 11,280,861.60 p 44,134,162.27 However, considering that petitioner is engaged both in taxable sales subject to zero percent (0°/o) and ten percent (¹⁰°/o) rates, and its input VAT cannot be directly or entirely attributed to specific sales, the Court shall allocate the valid input VAT proportionately on the basis of the volume of petitioner's sales pursuant to Section 112(A) of the NIRC of 1997, as amended, computed as follows: FY ended June 30, 2006 1st Quarter- 2"d Quarter (July 1, 2005 to (Oct. 1, 2005 to Sept 30, 2005} Dec. 31, 2005}

Total

(Exhibit "D'}

(Exhibit ''F'')

VATable Sales/ReceiQts Per Returns

P134,148,561.30 P249 187,466.40 p 383 336 027.70 Less: Adjustments for cancelled sales to:

Procter & Gamble Distributing

(Philippines), Inc.

(8,227,835.91) (61,158,163.23) (69 385 999.14) P&G Philippines, Inc.

(20,036,801.39) (148,935,149.13) (168,971,950.52) VATable Sales/ReceiQts, as adjusted P105,883,924.00 p 39 094,154.04 p 144 978 078.04

Zero-Rated Sales/Receipts

675,481,646.57 456 679,079.46 1,132,160 726.03 Total Sales/Receipts, as adjusted P781,365,570.57 P495 773,233.50 P1,277 138 804.07 Allocation Factor (Percentage of each j}p_e of sales to total sales :

VATable Sales

13.551138% 7.885491%

Zero-Rated Sales

86.448862% 92.114509%

Total

100.000000% 100.000000% Valid Inp_ut VAT P32,853,300.67 p 11,280,861.60 P44,134,162.27

I

.

J

'.)z- Input VAT Allocation Per Each Type of Sales (Allocation Factor multiplied by Valid Input VAT):

VATable Sales

p 4,451,996.¹¹ p 889,551.33 p 5,341,547.33

Zero-Rated Sales

28,401[304.56 10,391,310.27 38,792,614.94

Total

P32,853,300.6 7 Pll,280,861.60 P44,134,162.27 Since the input VAT allocated to VATable sales/receipts is not enough to cover petitioner's output tax due for each quarter, the input VAT allocated to zero-rated sales/receipts for the period July 1, 2005 to September 30, 2005 shall be utilized to pay for the remaining output tax, as shown below:

1st Quarter-July 1, 2005 to Sept. 30, 2005 VATable Sales/Receipts, as adjusted p 105,883,924.00 Output VAT due, as adjusted p 10 588 392.40 Less: Input VAT allocated to VATable sales/receipts 4,451,996.00

I

Balance of Output VAT due p 6 136 396.40 I Less: Input VAT allocated to zero-rated sales/receiQ_ts 28,401,304.56 I Excess Input VAT allocated to zero-rated sales/receipts p 22,264,908.16 Less: Amount being claimed 19,496,365.57 Excess Input VAT not claimed p 2,768,542.59 2"" Quarter- Oct. 1, 2005 to Dec. 31, 2005 VATable Sales/Receipts, as adjusted p 39,094,154.04 Output VAT due p 3,909,415.40 Less: Pa_yment during the quarter (Exhibit "0'') 2,215,225.66 Input VAT that needed to be applied p 1,694,189.74 Input VAT carry-over from previous quarter -input VAT allocable to zero-rated salesjreceiptsnot claimed for refund p 2,768,542.59 Input VAT allocated to VA Table sales/receipts for the quarter 889,551.33 Less: Amount applied this quarter 1 694,189.74 1,694 189.74 Input VAT carry-over to next quarter p 1,963,904.18 p - Excess Input VAT allocated to zero-rated sales/receipts p 10,391,310.27 It must be noted that while petitioner reported in its Quarterly VAT Return for the first quarter of FY ended June 30, 2006 an input tax carried over from previous quarter in the amount of P2,400,984.1336, petitioner failed to present VAT invoices or official receipts to prove the existence of such amount. Hence, the input tax carry-over of P2,400,984.13 cannot be applied against petitioner's ?--

output tax for the first quarter of FY ended June 30, 2006 pursuant to Section 110(A) and (B) 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:

XXX

XXX

XXX

(B) Excess Output or Input Tax. - If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters: xxx." Consequently, petitioner's refundable excess input VAT for the first and second quarters of FY ended June 30, 2006 amounted to P26,066,581.28, computed as follows: FY ended June 30, 2006 1st Quarter- 2"d Quarter

(July 1 to Sept

(Oct. 1 to Dec.

Particulars

30,2005}

31L2005)

Total

Excess Input VAT

p 19,496,365.57 p 10,391,310.27 p 29,887,675.84

Valid Zero-Rated Sales

p 592,131,849.27 P394 475 853.38 p 986 607 702.65

Total Declared Zero-Rated Sales

p 675 481 646.57 P456,679,079.46 P1,132 160,726.03

% of Valid Zero-Rated Sales to Total Declared

87.660687% 86.379226%

Zero-Rated Sales

Excess Input VAT Attributable to Valid

Zero-Rated Sales

P17,090,647.92 P8,975,933.36 p 26,066,581.28 Finally, it was established that the aforesaid excess input VAT was not carried over in the succeeding quarters. Records show that petitioner's entire excess input VAT claims for the periods July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005 in~ the respective amounts of P19,496,365.5737 and P34,128,061.5738 were deducted as "VAT Refund/TCC claimed" in the Quarterly VAT Returns for the same taxable quarters preventing the carry-over or application of such input taxes in the next taxable quarters. In fine, petitioner has sufficiently proven its entitlement to a refund or issuance of tax credit certificate in the amount of P26,066,581.28 representing its unutilized excess input VAT for the periods covering July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005, which is attributable to its zero-rated sales/receipts for the same period.

WHEREFORE, premises considered, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of P26,066,581.28 representing its unutilized excess input VAT attributable to zero-rated sales/receipts for the periods of July 1, 2005 to September 30, 2005 and October 1, 2005 to December 31, 2005.

WE CONCUR:

CAESA~SANOVA

Associate Justice

37 Exhibit "D", Line 25A. 38 Exhibit "F", Line 23D. ~~C-~~~g 5UANITO C. CASTANEDK,.JR.

Associate Justice

~N-M~~

.. c;'~ CIELITO N. MINDARO-GRULLA

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. ~a..-·" C.G..Yz_¥t ~ lffANITO C. CASTANEDA, JR.

Acting Presiding Justice