Dumex Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

BAUTISTA, [.:

The Case The Petition for Review seeks for the issuance of a tax credit certificate ("TCC") in the total amount of Fifty-Nine Million Nine Hundred Seventy Thousand Seven Hundred Ninety-Nine Pesos and Forty-Eight Centavos (PhP59,970,799.48), representing unutilized/ excess input value-added tax ("VAT") on importation of goods and domestic purchases of goods and services froi:n the commencement of its operations until the cancellation of its VAT registration.

The Parties Petitioner Dumex Philippines, Inc. ("DPI") is a domestic corporation duly organized and existing under the laws of the Republic of the Philippines, with principal address located at E. Rodriguez Jr.rv/ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 2 o£47 Avenue, Ugong Norte, Quezon City.l It is registered under Tax Identification Number ("TIN") 005-519-191-000 with Revenue District Office ("RDO") No. 40 of the Bureau of Internal Revenue ("BIR") in Cubao, Quezon City for VAT purposes.2 Respondent Commissioner of Internal Revenue (" CIR") is the public officer vested with the power to decide, approve and grant refunds or tax credits. She may be served with summons and other court process at the 2nd Floor BIR Building, Quezon Avenue, corner Scout Santiago, Quezon City.3 The Facts The relevant antecedents are succinctly recited by the Court En Bane in its Decision dated June 25,2013, as follows:4 "On July 20, 2007, petitioner's Board of Directors approved the cessation of its operations effective July 31, 2007.

On September 25, 2007, petitioner filed with BIR RDO No. 40 an Application for Tax Clearance, which was received by the BIRon September 26,2007. On September 26, 2007, petitioner, likewise filed an Application for Registration Information Update to cancel its VAT registration due to permanent closure of its business.

On November 5, 2007, petitioner also filed with the BIR an administrative claim for issuance of a TCC in the amount of PhP59,970,799.48, representing its unused/ excess input VAT credits as of August 31, 2007 from importation of goods and domestic purchases of goods and services.

1 Records, CTA Case No. 7790, p. 1. 2 !d., p. 3.

3 !d., p. 333.

~ 4 !d., pp. 834-835; penned by Associate Justice Lovell R. Bautista, with Associate Justice Olga Palanca- ( ·· Enriquez (Retired), and Associate Justice Amelia Cotangco-Manalastas concurring.

Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 3 o£47 And on May 26, 2008, due to respondent's inaction thereto, petitioner filed the ... Petition for Review. On June 16, 2008, respondent filed her Answer, interposing the following Special and Affirmative Defenses:

'5. Claims for refund are strictly construed against the taxpayer as the same partakes the nature of a tax exemption;

6. The [p]etitioner should prove its legal basis for claiming the amount being refunded;

7. The [p]etitioner should show proof that the [sic] it has unutilized input taxes; and

8. Failure on the part of the [p]etitioner to prove the same is fatal to its cause of action.' On July 21, 2008, the parties entered their Joint Stipulation of Facts and Issues, which was approved by the Court in a Resolution dated July 25, 2008. During trial, petitioner presented its evidence, while respondent was deemed to have waived her right to present evidence for failure to appear despite due notice.

On January 5, 2010, the Court issued a Resolution transferring the case to the Third Division of the Court [(hereinafter referred to as the "CTA-Third Division")], pursuant to CTA Administrative Circular No. 01-2010, entitled "Implementing the Fully Expanded Membership in the Court ofT ax Appeals" [ d]ated January 5, 2010. On August 23, 2011, the Court resolving respondent's [']Motion to Dismiss, with petitioner's Opposition/ Comment (to Respondent's Motion to /.

Dismiss)['], dismissed the same for lack of merit. (

CTA Case No. 7790 (CTA EB No. 917)

On September 26, 2011, the case was submitted for decision, considering petitioner's [']Memorandum (of Petitioner Dumex Philippines, Inc.)['] filed on June 25, 2011, sans respondent's [']Memorandum[']."S On April 3, 2012, the CTA-Third Division rendered its Decision denying petitioner's claim for failure of petitioner to present the Certificate of Tax Clearance (" CTC"), as prescribed in Sections 52(C) and 235 of the 1997 National Internal Revenue Code, as amended ("Tax Code"). The dispositive portion of which states: "WHEREFORE, the Petition for Review is hereby DENIED.

CTA Case No. 7790 (CTA EB No. 917)

Collection Division of BIR Revenue Region No. 7; b) Verification Slip dated July 5, 2012 issued by the Division Chief of the Collection Division of BIR Revenue Region No. 7; and, c) letter instructing the cancellation of petitioner's Certificate of Registration No. 3RC0000075223 issued by the Regional Director of Revenue Region No.7, Jonas DP Amora. Thereafter, the CTA-Third Division is directed to make a proper and immediate determination of the propriety of the claim for refund or tax credit certificate, and consequently, make a declaration of the specific amount of refund or tax credit certificate to which petitioner is entitled to, if any.

1. CTC dated July 5, 2012 issued by the Division Chief of the Collection Division of BIR Revenue Region No. 7, Ms. Ruth Vivian G. Gadia;

2. Verification Slip dated July 5, 2012 issued by the Division Chief of the Collection Division of BIR Revenue Region No.7, Ms. Gadia; and

3. Letter instructing the cancellation of petitioner's Certificate of Registration No. 3RC0000075223 issued by the Regional Director of Revenue Region No.7, Mr. Jonas DP Amora. On November 4, 2013,20 the CTA-Third Division resolved to set the case for the presentation of the aforestated documents including additional testimonies of witnesses21 who would identify and / authenticate the same. / 17 Emphasis Supplied. 1s Records, pp. 846-849. 19 Id., p. 847.

2o Id., pp. 851-852.

21 Revenue Region No.7 of the BIR Regional Director Jonas DP Amara, Administrative Officer of the Collection Division Amore Bati, and Secretary Melanie Capitan.

CTA Case No. 7790 (CTA EB No. 917)

After a postponement of the scheduled hearing on January 16, 2014,22 on the February 20, 2014 hearing,23 the following documents were marked:

Exhibit Description of the Document AAAA24 Judicial Affidavit of Regional Director of Revenue Region No. 7, Mr. Amora AAAA-125 Signature of Mr. Amora on page 2 of Exhibit

II AAAA"

BBBB26 Letter of Mr. Amora addressed to petitioner informing the latter that its Certificate of Registration numbered 3RC0000075223 has been cancelled.

BBBB-127 Signature of Mr. Amora on Exhibit "BBBB" While on the May 29, 2014 hearing,2s the following Exhibits were marked:

Exhibit Description of the Document CCCC29 CTC dated July 5, 2012 issued by the Division Chief of the Collection Division of BIR Revenue Region No. 7, Ms. Gadia CCCC-13° Name and signature of Ms. Gadia DDDD31 Verification Slip dated July 5, 2012 issued by the Division Chief of the Collection Division of BIR Revenue Region No. 7, Ms. Gadia DDDD-132 Signature of Ms. Gadia On July 22, 2014, the CTA-Third Division resolved to admit Exhibits "BBBB," "CCCC," and "DDDD," and ordered the parties to file simultaneously within fifteen (15) days their respective Supplemental~ Memoranda.33 22 Records, p. 859.

23 Id., p. 866.

24 Id., pp. 862-863.

2s Id., p. 863.

26 Id., p. 865.

27 Id.

28 Id., p. 889.

29 Id., p. 890.

3o Id.

31 Id., p. 891 32 I d.

33 Id., p. 889.

Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 8 o£47 In compliance with the order of the CT A-Third Division, petitioner filed its Supplemental Memorandum on June 9, 2014,34 while respondent failed to file her Supplemental Memorandum within the period granted.35 Thus, on August 20,2014, the CTA-Third Division promulgated a Resolution36 submitting the case for Amended Decision. The Issues37 I.

WHETHER THE PETITIONER INDEED CANCELLED

ITS VAT REGISTRATION DUE TO CESSATION OF

BUSINESS;

II.

WHETHER THE PETITIONER HAS ACCUMULATED

AND INCURRED EXCESS AND UNUTILIZED INPUT

VAT IN THE AMOUNT OF PHP59,970,799.48 ARISING FROM THE IMPORTATION OF GOODS AND

DOMESTIC PURCHASES OF GOODS AND SERVICES

WHICH WERE NOT APPLIED AGAINST ANY OUTPUT

TAX DURING THE PERIOD COVERED BY THE CLAIM; and III.

WHETHER THE UNUTILIZED INPUT VAT OF PETITIONER IS SUBSTANTIATED BY DOCUMENTARY EVIDENCE. The Ruling of the Court The prevailing rule on claims for tax credit or tax refund of excess and unutilized VAT on account of cessation of business is Section 112(B) of the Tax Code, which provides: "SEC. 112. Refunds or Tax Credits of Input Tax. - / XXX 34 Id., pp. 893-900.

35 Id., p. 906.

36 Id.

37 Id., p. 685.

XXX XXX Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page9 o£47 (B) Cancellation of VAT Registration. - A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106(C) of this Code may, within two (2) years from the date of cancellation, apply for the issuance of a tax credit certificate for any unused input tax which may be used in payment of his other internal revenue taxes." (Emphasis ours) From the above-quoted Section of the Tax Code, a taxpayer whose VAT registration has been cancelled due to retirement of business is entitled to a refund or issuance of a TCC when the following requisites are present:38 1.

It was a VAT-registered entity; 2.

Its VAT registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106 (C) of the Tax Code; 3.

It has unused input tax; and 4.

It has applied with the BIR for the issuance of TCC for such unused input tax within two (2) years from the date of the cancellation of its VAT registration. The Court finds it appropriate to determine first petitioner's compliance with the last requisite pertaining to the timeliness of the filing of the instant claim since it will determine the necessity of resolving the other requisites. Based on the records of the case, petitioner's Board of Directors resolved to cease its operations effective July 31, 2007, as evidenced by a Board Resolution dated July 20, 2007. Subsequent thereto, on September 26, 2007, petitioner filed an Application for Tax Clearance, and an Application for Registration Information Update to cancel its VAT registration with the respondent. Thus, effective October 1, 2007, petitioner's VAT registration is considered cancelled. Counting two (2) ted Swedish Steels Phils., Inc. vs. Commissioner of Internal Revenue,~ September 16, 2011.

CTA Case No. 7790 (CTA EB No. 917) years from the said date of cancellation, petitioner has until October 1, 2009 to apply for refund or the issuance of a tax credit certificate of its unused input tax.39 Therefore, the administrative claim filed with respondent on November 5, 2007, and the Petition for Review filed with the CTA- Third Division on May 26, 2008, were made within the prescribed period.40 Now the Court shall proceed to determine the other requisites. For the first requisite, it has been complied with as shown by petitioner's Certificate of Registration with the BIR.41 For the second requisite, relevant is the provision of Section 4.106- 2 of Revenue Regulations ("RR") No. 7-95, which provides: "SEC. 4.106-2. Procedures for claiming refunds or tax credits of input tax - XXX XXX XXX (b)Cancellation of VAT registration - A person whose VAT registration has been cancelled due to retirement from or cessation of status under Section 100(c) of the Code may, within two (2) years from the date of cancellation apply for the issuance of a tax credit certificate for any unused internal revenue taxes. However, he shall be entitled to a refund if he has no pending internal revenue tax liabilities." (Emphasis ours) From the foregoing, a person whose registration has been cancelled due to cessation of business must show that it has no pending internal revenue tax liabilities. ( 39 Records, p. 692.

4o Id.

CTA Case No. 7790 (CTA EB No. 917)

In the case SMI-ED Philippines Landholdings, Inc. vs.

Commissioner of Internal Revenue ("SMI-ED En Bane Case"),42 the CTA En Bane had the occasion to discuss the indispensable requirement of a CTC. The CTA En Bane ruled: "The rationale behind these Sections43 is to insure that no corporation may escape payment of taxes and other liabilities to the government simply by opting to dissolve the corporation and retire from business or reorganize its business." Undoubtedly, a CTC is an essential requirement for a claim of unutilized/ excess input VAT on importation of goods and domestic purchases of goods and services from commencement of its operations until the cancellation of its VAT registration, as prescribed by Section 112(B) of the Tax Code. In the instant case, the Court En Bane noted that petitioner filed an application for CTC on September 26, 2007, and it was only on July 5, 2012 when the CTC was issued by the respondent, or after the promulgation of the CTA-Third Division Decision and Resolution dated April3, 2012 and June 25, 2012, respectively.44 Taking now into account petitioner's presentation of the CTC,45 the second requisite is complied with.

For the third requisite, the Court shall consider the VAT invoicing requirements provided by Sections 4.104-5 and 4.108-1 of RR No. 7-95, and Section 4.113-1 of RR No. 16-2005, to wit: "SECTION 4.104-5. Substantiation of claims for input tax credit. -

(a) Input taxes shall be allowed only if the domestic purchase of goods, properties or services is made in the course of trade or business. The input tax should be supported by an invoice or receipt showing the information as required under Section 108 (a) and 238 of the Code. Input tax on purchases of real property should be supported by a 42 CTA EB No. 208 (CTA Case No. 6740), February 27,2008. 43 In reference to Section 4.106-2 of RR No. 7-95. 44 Records, CTA EB No. 917, penned by Presiding Justice Roman G. Del Rosario, with the concurrence of the Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Pabon-Victorino, Cielito N. Mindaro-Grulla, Amelia R. Cotangco- rV Manalastas and Ma. Belen M. Ringpis-Liban. 45Jd., p. 890.

Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 12 o£47 copy of the public instrument i.e. deed of absolute sale, deed of conditional sale, contract/ agreement to sell, etc., together with the VAT receipt issued by the seller. A cash-r~gister machine tape issued to a VAT registered buyer by a VAT -registered seller form a machine duly registered with the BIR in lieu of the regular sales invoice, shall constitute valid proof of substantiation of tax credit only if the name and TIN of the purchaser is indicated in the receipt and authenticated by a duly authorized representative of the seller.

(b) Input tax on importations shall be supported with the import entry or other equivalent document showing actual payment of VAT on the imported goods.

(c) Presumptive input tax shall be supported by an inventory of goods as shown in a detailed list to be submitted to the BIR.

(d) Input tax on 'deemed sale' transactions shall be substantiated with the required invoices.

(e) Input tax from payments made to non-residents shall be supported by a copy of the VAT declaration/ return filed by the resident licensee/lessee in behalf of the non-resident licensor/lessor evidencing remittance of the VAT due." (Emphasis ours) "SECTION 4.108-1. Invoicing Requirements- All VAT- registered persons shall, for every sale or lease of goods or properties or services, issue duly registered receipts or sales ~ or commercial invoices which must show:

1. the name, TIN and address of seller;

2. date of transaction; ~ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 13 o£47

3. quantity, unit cost and description of merchandise or nature of service;

4. the name, TIN, business style, if any, and address of the VAT -registered purchaser, customer or client;

5. the word 'zero rate' imprinted on the Invoice covering zero-rated sales; and

6. the invoice value or consideration. In the case of sale of real property subject to VAT and where the zonal or market value is higher than the actual consideration, the VAT shall be separately indicated in the invoice or receipt.

Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or receipts and this shall be considered as a 'VAT Invoice.' All purchases covered by invoices other than 'VAT Invoice' shall not give rise to any input tax. If the taxable person is also engaged in exempt operations, he should issue separate invoices or receipts for the taxable and exempt operations. A 'VAT Invoice' shall be issued only for sales of goods, properties or services subject to VAT imposed in Sections 100 and 102 of the Code. The invoice or receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records." (Emphases ours) ('-/"' "SEC. 4.113-1. Invoicing Requirements.-- (A) A VAT-registered person shall issue:-- CTA Case No. 7790 (CTA EB No. 917) 1. A VAT invoice for every sale, barter or exchange of goods or properties; and

2. A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services. Only VAT -registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or 'VAT official receipt.' All purchases covered by invoices/receipts other than VAT Invoice/VAT Official Receipt shall not give rise to any input tax.

VAT invoice /official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records.

(B) Information contained in VAT invoice or VAT official receipt. - The following information shall be indicated in VAT invoice or VAT official receipt: A statement that the seller is a VAT-registered person, followed by his TIN; The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the VAT; Provided, That: (l)A statement that the seller is a VAT-registered person, followed by his TIN;

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

.·

a. The amount of tax shall be shown as a separate item in the invoice or receipt; i Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 15 o£47

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

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

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

(3) In the case of sales in the amount of one thousand pesos (PhP1,000.00) or more where the sale or transfer is made to a VAT -registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section."46 (Emphases ours) The Court shall adopt the findings of the Independent Certified Public Accountant ("ICPA") Report47 dated March 23, 2009 on the following disallowed items: 1) Input VAT claims with no supporting documents: a) Missing APVs, CRVs, JVs and/ or 46 RR No. 16-05.

47 Records, pp. 176-213. I

CTA Case No. 7790 (CTA EB No. 917) supporting invoices and official receipts b) Input VAT claims supported by Draft Import Entry and Internal Revenue Declaration c) Input VAT claims with no supporting vatable invoices and/ or receipts d) Input VAT claims supported by photocopied VAT registered/VAT TIN invoices and receipts 2) Input VAT claims with supporting documents other than those enumerated in Section 4.110-7 of RR 16-2005 a) Input VAT claims supported by invoices on purchases of services, and official receipts for purchase of goods b) Supported by other documents c) Supported by Non VAT/Zero rated invoices and/ or official receipts d) Supported by invoices and receipts named to other Companies/ individual e) Input VAT claims were more than the actual input vat rate per invoices and/ or receipts f) Supported by Vatable invoices and/ or receipts which have no date g) Supported invoices and receipts with no VAT TIN h) Supported by duly VAT registered tape receipts without the necessary information such as the name, address and TIN of the purchaser i) Supported by invoices and receipts with no VAT registration j) Supported by invoices and/ or official receipts with tampered VAT registration and/ or VAT TIN TOTAL DISALLOWANCES PER ICPAREPORT 13,713,375.16 5,696,099.71 1,571,996.98 335,932.75 14,516,680.89 1,822,924.11 514,538.74 111,006.51 78,504.35 101,754.21 7,769.43 4,478.78 23,896.23 2,925.75 21,317,404.60 17,184,479.00 Php38,501,883.60y Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 17 o£47 Thus, the ICP A finds that the following items shall be the adjusted input VAT48 for the period June 1, 2000 to August 31, 2007: PARTICULARS

AMOUNT OF

INPUT VAT

1. Summary of Input VAT claims on importations of Php98,135,960.45 goods supported by Import Entry And Internal Revenue Declaration Form with reference import entry and serial numbers.

2. Summary of Input VAT claims on purchases of goods 77,37 4,352.40 and/ or services supported by VAT registered/VAT TIN Invoices and Official Receipts.

3. Summary of Input VAT claims on purchases of goods 7,990,924.20 and/ or services supported by Vatable invoices and/ or receipts attached to the system generated Payable Management Report and/ or CRVs which were properly posted in the General Ledger.

4. Summary of Input VAT claims supported by Debit 6,885,608.95 Notes/Debit Memos in reference to BIR Ruling [DA- 614-04] dated December 6, 2004 TOTAL Php190,386,846.00 The Court is now tasked to determine whether the alleged properly substantiated input VAT per ICPA Report in the total amount of Php190,386,846.00 have complied with the invoicing requirements prescribed in Sections 4.104-5 and 4.108-1 of RR No. 7-95 and Section 11 of Republic Act ("RA") No. 9337,49 as implemented in Sections 4.113-1 (A) and (B) of RR No. 16-2005. VAT on Importations Pursuant to Section 4.104-5(b) of RR No. 7-95, as amended by RR No. 16-2005, "input tax on importations shall be supported with the import entry or other equivalent document showing actual payment of VAT on the imported goods." Per ICP A Report, so the total allowable input tax on importations amount to PhP98,135,960.45, broken down as follows per year: 48 Id., ICPA Report, p. 192. 49 An Act Amending Sections 24, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, as amended, and for Other Purposes, ..--_,.. July 1, 2005.

SORecords, p. 193.

CTA Case No. 7790 (CTA EB No. 917)

YEAR 2000 2001 2002 2003 2004 2005 2006 TOTAL ALLOWABLE

INPUT VAT

PERICPA REPORT ---------------

PER ICPA REPORT

3,383,207.00 14,628,591.00 8,859,261.00 20,925,942.00 26,956,745.00 22,3051783.45 1,076,431.00 PhP98,135,960.45 A perusal of the Exhibits51 as marked by the ICPA, and considered by the ICP A as allowable input VAT on importations, show that there are importations which do not provide a breakdown and proof of payment of input VAT on importations. Below is a table that provides the allowable input VAT on importations per ICP A Report, per Court's further verification, and the allowable input VAT: ALLOWABLE DISALLOWANCE ALLOWABLE YEAR INPUTVATON

PER COURT'S

INPUTVATON IMPORTATIONS FURTHER IMPORTATIONS PERICPA VERIFICATION 2000 3,383,207.00 3,383,207 .OOi 0.00 2001 14,628,591.00 9,518,217.00ii 5,110,37 4.00 2002 8,859,261.00 348,892.00iii 8,510,369.00 2003 20,925,942.00 0.00 20,925,942.00 2004 26,956,745.00 899,567.00iv 26,057,178.00 2005 22,305,783.45 15,098,727.67V 7,207,055.78 2006 1,076,431.00 0.00 1,076,431.00 '-TOTAL PhP98,135,960.45 PhP29,248,610.67 PhP68,~~7,349. 78 Thus, from the total allowable input VAT per ICP A Report in the total amount of PhP98,135,960.45, the Court shall disallow the total amount of PhP29,248,610.67 for failure to comply with the substantiation requirements i.e., absence of breakdown of input VAT and absence of proof of payment, as prescribed by Section 4.104-5 of/

CTA Case No. 7790 (CTA EB No. 917)

RR No. 7-95, as amended by RR No. 16-2005. Therefore, the total allowable input VAT on importations is PhP68,887,349.78. Domestic purchases of goods and services The Court shall determine whether the input VAT claims on purchases of goods and/ or services supported by VAT registered/VAT TIN Sales Invoices ("Sis") and Official Receipts ("ORs") in the total amount of PhP77,374,352.40 have indeed complied with the substantiation requirements as provided in the ICP A Report. The Court deems it best to divide the discussion of this item into two portions, which is based on the periods covered, i.e. June 1 2000 to October 31, 2005; and November 1, 2005 to August 31, 2007. As for the period June 1, 2000 to October 31, 2005, the input VAT must be duly substantiated in accordance with Sections 4.104-5 and 4.108-1 of RR No. 7-95. While for the period November 1, 2005 to August 31, 2007, the input VAT must be duly substantiated in accordance with Section 11 of the RA No. 9337, as implemented in Sections 4.113-1 (A) and (B) of RR No. 16-2005.

INPUT VAT

PERIODS COVERED

CLAIMS PER ICPA

TOTAL REPORTS2 a) June 1, 2000 to June 1 to December October 31, 2005 31,2000 PhP4,994,606.44 i i 2001 5,679,915.33 2002 14,762,612.91 2003 12,436,165.80 2004 15,571,110.66 January 1 to October 31,2005 14,182,237.14 PhP67,626,648.28 b) November 1, 2005 November 1 to to August 31,2007 December 31, 2005 PhP2,837,548.58 2006 6,591,468.62 January 1 to August 31,2007 318,686.93 9,747,704.13 TOTAL PhP77,374,352.•g_ a) For the Period Tune 1, 2000 to October 31, 2005- PhP67,626,648.28 / ;

sz I d.

Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 20 o£47 Below is a table containing the list of Exhibits that should be disallowed for this period for failing to comply with the substantiation requirements under Sections 4.104-5 and 4.108-1 of RR No. 7-95. It must be noted that during this period the "VAT is computed by multiplying the total amount indicated in the SI or OR by 1/11," pursuant to Section 4.104-4 of RR No. 7-95. DATE EXHIBITS BOX DISALLOWED TOTAL NO.

INPUT VAT

1) Details in the OR and SI is no longer visible Year 2000

AAA 1-8

2 64.66 Year 2000

AAA 1-21

2 65.55 Year 2000

AAA 1-255

2 44.43 Year 2000

AAA 1-267

2 71.73 Year 2000

AAA 1-391

2 52.00 Year 2000

AAA 1-394

2 100.91 Year 2000

AAA 1-480

2 30.00 Year 2000

AAA 1-558

2 7.27 Year 2001 AAA2-54 3 217.27 Year 2001

AAA 2-190

3 227.27 Year 2001 AAA2-494 3 79.55 Year 2002

AAA 3-338

7 5,827.50 Year 2003 AAA4-3876 17 272.73 7,060.87 2) No SI was provided to support the input VAT claimed on domestic purchases of goods Year 2000

AAA 1-268

2 40.91 Year 2001

AAA 2-1117

5 5,000.00 Year 2002 AAA3-3282 11 117,090.91 122,131.82 3) No OR was provided to support the input VAT claimed on domestic purchases of services Year 2001 AAA 2-1098 to AAA 2-1113 5 5,829.81 Year 2001

AAA 2-1410

6 ..

Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 21 o£47 Year 2001 AAA 2-1689 to AAA 1696 Year 2002 AAA3-552 Year 2003 AAA4-264 Year 2003 AAA4-265 Year 2003 AAA4-1283 Year 2003 AAA4-1290 Year 2003 AAA 4-1773 to AAA 4-1782 Year 2003 AAA 4-2438 to AAA 4-2446 Year 2003 AAA 4-2448 to AAA 2449 Year 2003 AAA 4-2451 to AAA 4-2453 Year 2003 AAA 4-2455 to AAA 4-2458 Year 2003 AAA 4-2460 to AAA 4-2462 Year 2003 AAA4-2862 Year 2003 AAA4-3776 Year 2004

AAA 5-705 (APV

27697) Year 2004 AAA5-3674 Year 2004

AAA 5-3675

Year 2004

AAA 5-3676

Jan-05 to Oct-05

AAA 6-153

Jan-05 to AAA 6-264 to AAA Oct-05 6-269 Jan-05 to Oct-05

AAA 6-1816

52,920.00 6 1,984.63 7 1,467.33 12 1,000.00 12 65.00 13 11,025.00 13 2,822.40 14 3,696.94 15 1,513.60 15 803.55 15 623.37 15 1,735.70 15 1,084.03 16 184.51 17 90.91 19 69,759.01 22 8,183.00 22 8,166.67 22 8,166.67 23 45,000.00 23 27,712.37 25 9,463.69 4) Supporting Sis or ORs were issued not in the name of petitioner Year 2000

AAA 1-9

2 407.51 Year 2000

AAA 1-24

2 68.00 Year 2000

AAA 1-70

2 45.45 263,298.19 ~

CTA Case No. 7790 (CTA EB No. 917)

Year 2000

AAA 1-81

Year 2000

AAA 1-157

Year 2000

AAA 1-237

Year 2000

AAA 1-374

Year 2000

AAA 1-396

Year 2000

AAA 1-396

Year 2000

AAA 1-408

Year 2000

AAA 1-408

Year 2000

AAA 1-413

Year 2000

AAA 1-415

Year 2000

AAA 1-416

Year 2000

AAA 1-418

Year 2000

AAA 1-419

Year 2000

AAA 1-421

Year 2000

AAA 1-433

Year 2000

AAA 1-433

Year 2000

AAA 1-435

Year 2001 AAA2-8 Year 2001

AAA 2-346

Year 2001

AAA 2-520

2 17.50 2 14.64 2 23.48 2 36.34 2 94.47 2 17.00 2 68.73 2 42.50 2 43.53 2 33.36 2 26.59 2 12.73 2 26.84 2 15.91 2 46.75 2 8.50 2 55.71 3 22.73 3 1,818.19 3 75.82 3,022.28 5) Input VAT on domestic purchases of goods were supported by ORs instead Sis Year 2000

AAA 1-373

2 37.91 Year 2000

AAA 1-377

2 13.48 Year 2000

AAA 1-395

2 26.82 Year 2000

AAA 1-447

2 34.09_ ---··- I ~'- \ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 23 o£47 Year 2000

AAA 1-459

Year 2000

AAA 1-484

Year 2000

AAA 1-509

Year 2000

AAA 1-513

Year 2000

AAA 1-521

Year 2000

AAA 1-564

Year 2001 AAA2-20 Year 2001 AAA2-30 Year 2001 AAA2-34 Year 2001

AAA 2-140

Year 2001

AAA 2-141

Year 2001 AAA2-1269 Year 2002 AAA3-584 Year 2004 AAA5-1616 Year 2004

AAA 5-3834

2 90.41 2 38.82 2 11.82 2 66.36 2 30.73 2 27.32 3 23.45 3 12.00 3 70.63 3 17.27 3 24.00 5 36.45 7 144.55 20 67.73 22 31.81 805.65 6) Input VAT on domestic purchases of services were supported by Sis instead of ORs Year 2000

AAA 1-104

2 105.09 Year 2000

AAA 1-200

2 68.43 Year 2000

AAA 1-367

2 49.12 222.64 7) Input VAT on domestic purchases of services were supported by undated ORs Year 2003 AAA 4-2761 to AAA 4-2774 16 53,346.15 Year 2004 AAA 5-1657 to AAA 5-1663 20 71,837.47 Year 2004 AAA 5-1690 to AAA 5-1692 AAA 5-1694 to AAA 5-1715 20 59,108.47 184,292.09 8) No VAT was actually paid by petitioner based on the SI and OR provided Year 2002 I

AAA 3-963

I 8 l 21,666.671 21,666.67 I ....... -· Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 24 o£47 9) Input VAT on domestic purchase of services was supported by OR without BIR Authority to Print Year 2004

AAA 5-291

18 78,414.02 78,414.02 10) Missing Exhibits Year 2000

AAA 1-349

2 12.34 Year 2000

AAA 1-364

2 21.82 Year 2000

AAA 1-381

2 135.45 Year 2002 AAA3-132 7 10,636.36 Year 2004

AAA 5-1180

19 27,430.15 Year 2004 AAA5-2701 21 6,633.87 Year 2004 AAA5-2702 21 35,000.00 79,869.99 11) Excess input VAT claim Year 2001 AAA 2-555 to 2-577 4 0.08 Year 2001 AAA 2-1209 to AAA 2-1213 AAA 2-1218 to AAA 2-1221

AAA 2-1242

5 82,701.02 Year 2001 AAA 2-1389 to AAA 2-1390 6 3,140.61 Year 2001 AAA2-1391 6 550.00 Year 2001

AAA 2-1404

6 133.59 Year 2002 AAA 3-219 to AAA 3-222 7 258,143.54 Year 2002 AAA 3-2014 to AAA 3-2025 AAA 3-2027 to AAA 3-2028 AAA 3-2030 to AAA 3-2032 9 30,441.40 Year 2003 AAA4-388 12 97,181.82 Year 2003 AAA4-553 12 70,616.73 Jan-05 to AAA6-456 to AAA 6- Oct-05 457 AAA 6-459 to AAA 6-466 AAA 6-468 to AAA 6-478 23 8,583.65 551,492.44 - ------- ~ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 25 o£47 AAA 6-480 to AAA 6-485 AAA 6-491 to AAA 6-492

TOTAL DISALLOWED INPUT VAT

PhP1,~12,276.66 Consequently, only the remaining amount of Php66,314,371.6253 represents petitioner's valid input VAT for the period June 1, 2000 to October 31, 2005.

Accordingly, the disallowed input VAT on purchases of goods and services per year beginning June 1, 2000 to October 30,2005 may be summarized as follows:

INPUT VAT

PROPERLY YEAR

CLAIMS PER

DISALLOWANCES SUBSTANTIATED ICPAREPORT

INPUT VAT

June 1 to 4,992,253.43 December 31,2000 4,994,606.44 2,353.01vi 5,525,030.96 2001 5,679,915.33 154,884.37vii 2002 14,762,612.91 445,418.26viii 14,317,194.65 2003 12,436,165.80 246,062.44ix 12,190,103.36 2004 15,571,110.66 372,798.87X 15,198,311.79 January 1 to October 30, 2005 14,182,237.14 90,759.71 xi 14,091,477.43 TOTAL PhP67,626,648.28 PhP1,31~_,276.66 PhP66,314,371.62 b) For the Period November 1, 2005 to August 30, 2007- PhP9,747,704.13 The notable amendment in the invoicing requirements by Section 4.113-1 (B) of RR No. 16-05 of Section 4.108-1 of RR No. 7-95 is the mandatory requirement that "the amount of tax shall be shown as a separate item in the invoice of receipt." Below is the list of Exhibits thaV"'- complied with the aforementioned amendment: ( 53 Php67,626,648.28 less Php1,312,276.66 CTA Case No. 7790 (CTA EB No. 917)

RANGE OF

DATE EXHIBITS

FOR THE PERIOD

Nov-05 AAA 6-2956 to AAA 6-3239 Dec-05 AAA 6-3240 to AAA 6-3472

EXHIBITS THAT

COMPLIED WITH

SECTION 4.113-1 (B) OF RR NO. 16-05

AAA 6-2995

AAA 6-3170

AAA 6-3243

AAA 6-3244

AAA 6-3347

TOTAL ALLOWED INPUT VAT from Nov 1 to Dec 31, 2005 Jan-06 AAA 7-1 to AAA 7- 167

AAA 7-32

AAA 7-58

AAA 7-58

AAA 7-104

AAA 7-107

AAA 7-109

AAA 7-143

AAA 7-143

AAA 7-146

AAA 7-146

AAA 7-160

AAA 7-163

AAA 7-165

AAA 7-166

Feb-06 AAA 7-168 to AAA (Feb 1, 7-343

AAA 7-182

2006 12%

AAA 7-190

VAT)

AAA 7-203

AAA 7-204

- --- - - -------- BOX ALLOWED NO.

VAT 27 2,727.27 27 1,000.00 27 7,822.06 27 20,492.00 27 2,727.27 34,768.60 28 3,950.50 28 77.91 28 593.60 28 1,115.64 28 39,772.73 28 64,040.00 28 109.09 28 109.09 28 18.55 28 136.00 28 25.27 28 77.91 28 35.09 28 77.91 28 6,254.18 28 493.37 28 121.50 28 1/

CTA Case No. 7790 (CTA EB No. 917)

Mar-06 AAA 7-344 to AAA 7-577

AAA 7-240

AAA 7-267

AAA 7-268

AAA 7-269

AAA 7-271

AAA 7-285

AAA 7-289

AAA 7-291

AAA 7-308

AAA 7-317

AAA 7-321

AAA 7-336

AAA 7-337

AAA 7-338

AAA 7-339

AAA 7-353

AAA 7-357

AAA 7-364

AAA 7-401

AAA 7-407

AAA 7-421

AAA 7-442

AAA 7-444

AAA 7-503

AAA 7-513

74.09 28 76.22 28 717.86 28 2,488.39 28 522.70 28 321.43 28 6,370.71 28 626.79 28 1,860.00 28 631.61 28 482.14 28 89.36 28 253.63 28 128.57 28 109.09 28 128.57 28 37.71 28 30.07 28 375.00 28 600.00 28 49.08 28 74.53 28 33.96 28 94.50 28 3,400.00 28 39,150.00 ~ \

CTA Case No. 7790 (CTA EB No. 917)

Apr- AAA 7-578 to AAA June 7-826 2006 July- AAA 7-827 to AAA Dec.

7-1108 2006

AAA 7-519

AAA 7-520

AAA 7-520

AAA 7-527

AAA 7-527

AAA 7-536

AAA 7-564

AAA 7-585

AAA 7-745

AAA 7-751

AAA 7-796

AAA 7-798

AAA 7-799

AAA 7-806

AAA 7-807

AAA 7-808

AAA 7-818

AAA 7-823

AAA 7-930

AAA 7-931

AAA 7-931

AAA 7-932

AAA 7-966

AAA 7-986

AAA 7-1014

AAA 7-1014

28 842.13 28 92.68' 28 114.72 28 100.00 28 53.57 28 140.79 28 102.00 29 23,640.00 29 1,200.00 29 888.21 29 600.00 29 46.93 29 31.16 29 1,016.57 29 1,971.43 29 1,045.29 29 861.00 29 32.14 29 20.89 29 19.93 29 39.11 29 22.50 29 600.00 29 3,889.29 29 37.50 29 ~ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 29 o£47

AAA 7-1038

AAA 7-1052

AAA 7-1075

TOTAL ALLOWED INPUT VAT IN 2006

YEAR AAA-8-1 to AAA-8- 2007 43 AAA8-3

AAA 8-15

AAA8-21 AAA8-23 '------ - AAA8-28 -·--- 29 29 29 29 29 29 29 29 TOTAL ALLOWED INPUT VAT FROM JAN 1 TO AUGUST 30, 2007 24.64 46.07 53.57 1,200.00 214,466.47 600.00 600.00 600.00 152.14 600.00 2,552.14 Consequently, the computation of the disallowed input VAT claims for the period November 1, 2005 to August 31, 2007 is summarized, as follows: DISALLOWED

INPUT VAT

FOR FAILURE TO

PROPERLY YEAR

CLAIMS PER

COMPLY WITH

SUBSTANTIATED ICPAREPORT SECTION 4.113 (B)

INPUT VAT

OF RR NO. 16-05 November 1 to December 31,2005 2,837,548.58 2,802,779.98 34,768.60 2006 6,591,468.62 6,377,002.15 214,466.47 January 1 to August 31, 2007 318,686.93 316,134.79 2,552.14 TOTAL PhP9,747,704.13 PhP9,495,916.92 PhP251,787.21 Thus, out of the total amount of Php9,747,704.13 input VAT claim per ICP A Report found to be supported by VAT registered Sis and ORs for the period November 1 2005 to August 31, 2007, only the total amount of PhP251,787.21 shall be considered as allowable Input VAT since its respective Sis or ORs had expressly indicated "the amount of tax as a separate item" pursuant to Section 4.113-1 (B) (a) of RR No. 16-05/ · I Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 30 o£47 Hence, the Exhibits not found in table above which amounts to PhP9,495,916.92 shall be disallowed. Below is a summary of the disallowed input VAT claims on domestic purchases of goods and services for the period June 1, 2000 to October 31, 2005, and for the period November 1, 2005 to August 31, 2007:

PERIOD DISALLOWANCES COVERED a) June 1, 2000 June 1 to December to October 31,2000 31,2005 2001 2002 2003 2004 January 1 to October 31,2005 b) November 1, November 1 to 2005 to December 31,2005 August 31, 2006 2007 January 1 to August 31, 2007 Vatable invoices and/or receipts that are attached to system generated payable management report and/or Check Register Vouchers (CRVs) 2,353.01 154,884.37 445,418.26 246,062.44 372,798.87 90,759.71 2,802,779.98 6,377,002.15 316,134.79 TOTAL TOTAL PhP1,312,276.66 9,495,916.92 ----------- PhP10,808,193.58 On this portion, the Court shall discuss whether the input VAT claims on purchases of goods and/ or services supported by VAT registered/VAT TIN Sis and ORs attached to the system generated Payable Management Report and/ or Check Register Vouchers ("CRVs") in the total amount of PhP7,990,924.20 have indeed complied with the substantiation requirements as found in the ICPA Report. The Court shall divide the discussion into two basing on the periods, namely, (i) for the period June 1, 2000 to October 31, 2005; and~­ (ii) for the period November 1, 2005 to August 31, 2007. f

CTA Case No. 7790 (CTA EB No. 917)

For the period June 1, 2000 to October 31, 2005, the prevailing substantiation requirements are those provided in Sections 4.104-5 and 4.108-1 of RR No. 7-95, while the prevailing invoicing requirements for the period November 1, 2005 to August 31,2007 shall be those provided in Section 11 of RA 9337, as implemented in Sections 4.113-1 (A) and (B) of RR No. 16-2005.

a) For the period June 1, 2000 to October 31, 2005 The table below provides for the Exhibits that are disallowed after further verification by the Court for the period June 1, 2000 to October 31, 2005, for failing to present the Sis for each purchase of goods and ORs for each purchase of services, as required under Section 4.104-5 of RR No. 7-95, as follows:

RANGE OF

DATE EXHIBITS EXHIBIT BOX NO.

DISALLOWED VAT

FOR THE

AMOUNT PERIOD Year BBB-1-1 to BBB 1-9 to BBB 1-17 30 1,777.08 2000 BBB-1-318

BBB 1-27

30 127.26 BBB 1-34 to BBB 1-39 30 724.08

BBB 1-43

30 259.93

BBB 1-44

30 27.11 BBB 1-49 to BBB 1-53 30 1,205.94

DISALLOWED INPUT VAT IN 2000

PhP4,121.40 From the foregoing table, the disallowed input VAT on VA Table Sis and/ or ORs that are attached to system generated payable management report and/ or CRVs, for the period June 1, 2000 to October 30,2005, amounts to PhP4,121.40. b) For the period November 1, 2005 to August 31, 2007 There is a notable amendment in the invoicing requirements in Section 4.108-1 of RR No. 7-95 when compared with the invoicing requirements in Section 4.113-1 (B) of RR No. 16-05. The latter revenue regulation requires that "the amount of tax shall be shown as a separate item in the invoice or receipt." Consequently, the table below shall provide a list of exhibits which complied with the aforementioned requirements: ~·

CTA Case No. 7790 (CTA EB No. 917)

Range of Exhibits that complied with Date Exhibits for the period Section 4.113-1 (B) of RR 16-05 YEAR BBB-1-1 to

BBB 6-19

2006 BBB-1-318

BBB 6-28

ALLOWABLE INPUT VAT IN 2006

Allowed Input Box No.

VAT Amount 30 385.71 30 720.00 1,105.71 The Exhibits not found above shall be disallowed as it failed to comply with Section 4.113.1(B) of RR No. 16-05. Thus, the allowable input VAT attached to the system generated payable management report/and or CRVs per ICPA Report is in the total amount of PhP7,990,924.20. However, the Court shall disallow the total amount of PhP70,202.38 for failure to present the Sis for each purchase of goods or ORs for each purchase of services. Thus, the total allowable input VAT on VA Table Sis and/ or ORs that are attached to the system generated payable management report and/ or CRVs is PhP7,928,964.62. The table below summarizes the foregoing:

INPUT VAT

ATTACHED TO

SYSTEM COURT'S GENERATED YEAR PAYABLE DISALLOWANCES

ALLOWED INPUT

MANAGEMENT

UPON FURTHER

VAT

REPORT AND/OR

VERIFICATION

CRVS PER ICPA

REPORT June 1 to December 31, 2000 5,170,944.29 4,121.40 5,175,065.69 2001 1,178,225.17 .

0.00 1,178,225.17 2002 138,138.27 0.00 138,138.27 2003 843,898.72 0.00 843,898.72 2005 592,531.06 0.00 592,531.06 2006 67,186.69 66,080.98 1,105.71 TOTAL PhP7,990,924.20 PhP70,202.38 PhP7,928,964.62 /" CTA Case No. 7790 (CTA EB No. 917) Input VAT claims supported by Debit Notes/Debit Memos The amount PhP6,885,608.9554 representing input VAT claims supported by Debit Notes/Debit Memos shall be disallowed since the input tax are not supported by a SI or an OR, pursuant to Sec. 4.104-5 of RR No. 7-95 and Section 4.108-1 of RR No. 16-05. Properly Substantiated Input VAT pursuant to Secs.4.104-4, 4.104-5 and 4.108-1 o(RR 7-95 and Sees. 4.113-1 (A) and (B) of RR 16-05 In sum, the properly substantiated input VAT for the period June 1, 2000 to October 31, 2005 and the period November 1, 2005 to August 30, 2007, pursuant to Sections 4.104-4, 4.104-5, and 4.108-1 of RR No. 7- 95 and Sections 4.113-1(A) and (B) of RR No. 16-05 is computed as follows:

Input VAT claimed by Dumex per ICP A Report Less: Disallowances A. Per ICPA findings:

1. Input VAT claims with no supporting documents

2. Input VAT claims with supporting documents other than those enumerated in Section 4.110-7 of RR 16-2005 B. Per Court's Findings (as previously discussed):

1. Input VAT claims on Importations

2. Input VAT claims on Purchases of goods and/ or services supported by VAT registered Invoices and Official Receipts

3. Vatable invoices and/ or receipts that are attached to system generated payable management report and/ or CRVs

4. Input VAT claims supported by Debit 54 Annex F of Sum man; of Annexes for Exhibit "SSS" 55 Records, p.191.

228,888,729.6055 21,317,404.60 17,184,479.00 38,501,883.60 29,248,610.67 10,808,193.58 70,202.38 ~ Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 34 o£47 Notes/Debit Memos in reference to BIR

Ruling

[DA -614-04] dated December 6, 2004

PROPERLY SUBSTANTIATED INPUT

VAT 6,885,608.95 47,012,615.58 Php143,374,230.42 Since the output VAT in the amount of PhP171,266,703.9556 is found to be in order and the adjusted input VAT of petitioner in the amount of PhP143,374,230.42 per computation, is lesser than the former, then petitioner has no excess unutilized input VAT which may be refunded as provided on Sections 4.104-4, 4.104-5 and 4.108-1 of RR No. 7-95 and Sections 4.113-1 (A) and (B) of RR No. 16-05, to wit: Output Tax declared per VAT returns (from 2000 to August 2007) Less: Properly Substantiated Input VAT No Excess Unutilized Inp_ut VAT 171,266,703.95 143,374,230.42 PhP27,892,473.53

WHEREFORE, premises considered, petitioner's Petition for Review is hereby DENIED for lack of merit.

I CONCUR:

56 Id., p. 212.

LOVELL \{. BAUTISTA Assodate Justice ~L~ AMELIA R. COTANGCO-MANALASTAS Associate Justice

CTA Case No. 7790 (CTA EB No. 917)

ATTESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Associate Justice Chairperson CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Special Division. Presiding Justice YEAR2000 EXHIBIT DISALLOWED

REASON FOR DISALLOWANCE

INPUT VAT

zz 1-1 386,614.00 No proof of payment of input VAT zz 1-2 380,802.00 No proof of payment of input VAT zz 1-3 244,898.00 No proof of payment of input VAT zz 1-4 244,898.00 No proof of payment of input VAT zz 1-5 172,794.00 No proof of payment of input VAT zz 1-6 105,513.00 No proof of payment of input VAT ZZ1-7 95,339.00 No proof of payment of input VAT zz 1-8 260,643.00 No proof of payment of input VAT --

CTA Case No. 7790 (CTA EB No. 917) zz 1-9 zz 1-10 zz 1-11 zz 1-12 zz 1-13 zz 1-14 zz 1-15 zz 1-16 zz 1-17 zz 1-18 zz 1-19 TOTAL Disallowed Input VAT for Taxable Year 2000 ii YEAR2001 EXHIBIT ZZ2-3 Disallowed Input VAT due to No breakdown of input VAT zz 2-12 zz 2-15 zz 2-31 zz 2-32 245,789.00 No proof of payment of input VAT 203,305.00 No proof of payment of input VAT 203,305.00 No proof of payment of input VAT 164,007.00 No proof of payment of input VAT 144,036.00 No proof of payment of input VAT 101,856.00 No proof of payment of input VAT 96,677.00 No proof of payment of input VAT 91,158.00 No proof of payment of input VAT 84,595.00 No proof of payment of input VAT 83,971.00 No proof of payment of input VAT 73,007.00 No proof of payment of input VAT PhP3,383,207.00

AMOUNT OF

REASON FOR DISALLOWANCE

DISALLOWED

INPUT VAT

389,983.00 No breakdown of input VAT 389,983.00 246,677.00 No proof of payment of input VAT 126,109.00 No proof of payment of input VAT 147,510.00 No proof of payment of input VAT 129,118.00 No proof of payment of input VAT 1

CTA Case No. 7790 (CTA EB No. 917) zz 2-33 zz 2-34 zz 2-35 zz 2-36 zz 2-37 zz 2-38 zz 2-39 zz 2-40 zz 2-41 zz 2-42 zz 2-43 zz 2-44 zz 2-45 zz 2-46 zz 2-47 zz 2-48 zz 2-49 zz 2-50 zz 2-51 zz 2-52 zz 2-53 zz 2-54 zz 2-55 zz 2-56 125,140.00 No proof of payment of input VAT 157,776.00 No proof of payment of input VAT 127,364.00 No proof of payment of input VAT 123,623.00 No proof of payment of input VAT 128,209.00 No proof of payment of input VAT 129,466.00 No proof of payment of input VAT 130,681.00 No proof of payment of input VAT 273,249.00 No proof of payment of input VAT 154,855.00 No proof of payment of input VAT 268,268.00 No proof of payment of input VAT 139,102.00 No proof of payment of input VAT 265,425.00 No proof of payment of input VAT 148,691.00 No proof of payment of input VAT 151,213.00 No proof of payment of input VAT 146,055.00 No proof of payment of input VAT 142,286.00 No proof of payment of input VAT 137,504.00 No proof of payment of input VAT 138,743.00 No proof of payment of input VAT 265,311.00 No proof of payment of input VAT 480,951.00 No proof of payment of input VAT 150,279.00 No proof of payment of input VAT 127,486.00 No proof of payment of input VAT 145,616.00 No proof of payment of input VAT 135,142.00 No proof of payment of input VAT -~

CTA Case No. 7790 (CTA EB No. 917) zz 2-57 zz 2-58 zz 2-59 zz 2-60 zz 2-61 zz 2-62 zz 2-63 zz 2-64 zz 2-65 zz 2-66 zz 2-67 zz 2-68 zz 2-69 zz 2-70 zz 2-71 zz 2-72 zz 2-73 zz 2-74 zz 2-75 zz 2-76 zz 2-77 zz 2-78 zz 2-79 zz 2-80 ----- 129,753.00 No proof of payment of input VAT 131,765.00 No proof of payment of input VAT 128,309.00 No proof of payment of input VAT 224,295.00 No proof of payment of input VAT 124,152.00 No proof of payment of input VAT 117,146.00 No proof of payment of input VAT 131,366.00 No proof of payment of input VAT 117,048.00 No proof of payment of input VAT 115,003.00 No proof of payment of input VAT 144,947.00 No proof of payment of input VAT 129,984.00 No proof of payment of input VAT 145,682.00 No proof of payment of input VAT 11,545.00 No proof of payment of input VAT 133,282.00 No proof of payment of input VAT 136,050.00 No proof of payment of input VAT 147,562.00 No proof of payment of input VAT 134,137.00 No proof of payment of input VAT 148,045.00 No proof of payment of input VAT 151,920.00 No proof of payment of input VAT 132,010.00 No proof of payment of input VAT 129,789.00 No proof of payment of input VAT 133,962.00 No proof of payment of input VAT 126,804.00 No proof of payment of input VAT 126,804.00 No proof of payment of input VAT /

CTA Case No. 7790 (CTA EB No. 917) zz 2-81 zz 2-82 zz 2-83 zz 2-84 zz 2-85 zz 2-86 zz 2-87 zz 2-88 Disallowed Input VAT due to No Proof of Payment of Input VAT TOTAL Disallowed Input VAT for Taxable Year 2001 iii YEAR2002 EXHIBIT zz 3-23 zz 3-29 zz 3-58 TOTAL Disallowed Input VAT for Taxable Year 2002 iv YEAR2004 EXHIBIT 136,845.00 No proof of payment of input VAT 129,764.00 No proof of payment of input VAT 128,696.00 No proof of payment of input VAT 131,522.00 No proof of payment of input VAT 168,789.00 No proof of payment of input VAT 173,527.00 No proof of payment of input VAT 131,772.00 No proof of payment of input VAT 134,110.00 No proof of payment of input VAT 9,128,234.00 PhP9,518,217.00

AMOUNT OF

REASON FOR DISALLOWANCE

DISALLOWED

INPUT VAT

112,207.00 No proof of payment of input VAT 121,402.00 No proof of payment of input VAT 115,283.00 No proof of payment of input VAT PhP348,892.00

AMOUNT OF

REASON FOR DISALLOWANCE

DISALLOWED

INPUT VAT

CTA Case No. 7790 (CTA EB No. 917) zz 5-1 zz 5-29 zz 5-79 TOTAL Disallowed Input VAT for Taxable Year 2004 v YEAR2005 EXHIBIT zz 6-1 ZZ6-2 ZZ6-3 ZZ6-4 zz 6-5 ZZ6-6 zz 6-7 zz 6-8 ZZ6-9 zz 6-10 zz 6-11 zz 6-12 zz 6-13 zz 6-14 zz 6-15 zz 6-16 zz 6-17 zz 6-18 zz 6-19 zz 6-20 zz 6-21 zz 6-22 zz 6-23 ' --·· - ...

237,679.00 No proof of payment of input VAT 342,466.00 No proof of payment of input VAT 319,422.00 No proof of payment of input VAT PhP899,567.00

AMOUNT OF

REASON FOR DISALLOWANCE

DISALLOWED

INPUT VAT

369,381.00 No proof of payment of input VAT 298,421.00 No proof of payment of input VAT 259,407.00 No proof of payment of input VAT 340,457.00 No proof of payment of input VAT 330,153.00 No proof of payment of input VAT 344,035.00 No proof of payment of input VAT 351,648.00 No proof of payment of input VAT 284,966.00 No proof of payment of input VAT 265,382.00 No proof of payment of input VAT 350,144.00 No proof of payment of input VAT 345,599.00 No proof of payment of input VAT 275,680.00 No proof of payment of input VAT 344,956.00 No proof of payment of input VAT 316,910.00 No proof of payment of input VAT 345,454.00 No proof of payment of input VAT 273,435.00 No proof of payment of input VAT 286,402.00 No proof of payment of input VAT 286,845.00 No proof of payment of input VAT 350,101.00 No proof of payment of input VAT 251,929.00 No proof of payment of input VAT 345,347.00 No proof of payment of input VAT 341,161.00 No proof of payment of input VAT 291,012.00 No proof of payment of input VAT -·- - ,_,_,.·

CTA Case No. 7790 (CTA EB No. 917) zz 6-24 zz 6-25 zz 6-26 zz 6-27 zz 6-28 zz 6-29 zz 6-30 zz 6-31 zz 6-32 zz 6-33 zz 6-34 zz 6-35 zz 6-36 zz 6-37 zz 6-38 zz 6-39 zz 6-40 zz 6-41 zz 6-43 zz 6-44 zz 6-45 zz 6-47 zz 6-57 zz 6-58 zz 6-59 zz 6-65 328,542.00 284,019.00 276,093.00 263,395.00 274,360.00 363,406.00 174,993.00 343,129.00 343,008.00 306,831.00 105,072.13 225,422.00 276,917.00 371,298.00 294,199.00 307,382.00 282,558.00 319,410.00 336,786.00 329,694.00 403,318.00 288,825.54 374,374.00 411,786.00 149,617.00 415,468.00 No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT I No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT No proof of payment of input VAT - /

CTA Case No. 7790 (CTA EB No. 917)

TOTAL Disallowed Input VAT for Taxable Year 2005 vi DATE EXHIBITS BOX NO.

Year 2000

AAA 1-8

2 Year 2000

AAA 1-9

2 Year 2000

AAA 1-21

2 Year 2000

AAA 1-24

2 Year 2000

AAA 1-70

2 Year 2000

AAA 1-81

2 Year 2000

AAA 1-104

2 Year 2000

AAA 1-157

2 Year 2000

AAA 1-200

2 Year 2000

AAA 1-237

2 Year 2000

AAA 1-255

2 Year 2000

AAA 1-267

2 Year 2000

AAA 1-268

2 Year 2000

AAA 1-349

2 Year 2000

AAA 1-364

2 Year 2000

AAA 1-367

2 Year 2000

AAA 1-373

2 Year 2000

AAA 1-374

2 Year 2000

AAA 1-377

2 Year 2000

AAA 1-381

2 Year 2000

AAA 1-391

2 Year 2000

AAA 1-394

2 Year 2000

AAA 1-395

2 Year 2000

AAA 1-396

2 Year 2000

AAA 1-396

2 Year 2000

AAA 1-408

2 Year 2000

AAA 1-408

2 Year 2000

AAA 1-413

2 Year 2000

AAA 1-415

2 Year 2000

AAA 1-416

2 Year 2000

AAA 1-418

2 Year 2000

AAA 1-419

2 Year 2000

AAA 1-421

2 Year 2000

AAA 1-433

2 Year 2000

AAA 1-433

2 Year 2000

AAA 1-435

2 PhP15,098,727.67 DISALLOWED

REASON FOR DISALLOWANCE

VAT AMOUNT

Details in the OR/Invoice is no longer 64.66 visible 407.51 Not in the name of Dum ex Details in the OR/Invoice is no longer 65.55 visible 68.00 Not in the name of Dum ex 45.45 Not in the name of Dumex 17.50 Not in the name of Dumex 105.09 Sales Invoice was provided instead of OR 14.64 Not in the name of Dum ex 68.43 Sales Invoice was _r_rovided instead of OR 23.48 Not in the name of Dum ex Details in the OR/Invoice is no longer 44.43 visible Details in the OR/Invoice is no longer 71.73 visible 40.91 No Invoice was provided 12.34 Missing Exhibit 21.82 Missing Exhibit 49.12 Sales Invoice was __E_rovided instead of OR 37.91 OR was provided instead of Sales Invoice 36.34 Not in the name of Dum ex 13.48 OR was provided instead of Sales Invoice 135.45 Missing Exhibit Details in the OR/Invoice is no longer 52.00 visible Details in the OR/Invoice is no longer 100.91 visible 26.82 OR was provided instead of Sales Invoice 94.47 Not in the name of Dumex 17.00 Not in the name of Dum ex 68.73 Not in the name of Dumex 42.50 Not in the name of Dumex 43.53 Not in the name of Dum ex 33.36 Not in the name of Dum ex 26.59 Not in the name of Dum ex 12.73 Not in the name of Dum ex 26.84 Not in the name of Dum ex 15.91 Not in the name of Dum ex 46.75 Not in the name of Dumex 8.50 Not in the name of Dum ex 55.71 Not in the name of Dum ex /

CTA Case No. 7790 (CTA EB No. 917)

Year 2000

AAA 1-447

2 Year 2000

AAA 1-459

2 Year 2000

AAA 1-480

2 Year 2000

AAA 1-484

2 Year 2000

AAA 1-509

2 Year 2000

AAA 1-513

2 Year 2000

AAA 1-521

2 Year 2000

AAA 1-558

2 Year 2000

AAA 1-564

2

TOTAL DISALLOWED INPUT VAT

IN 2000

vii YEAR EXHIBITS BOX NO.

Year 2001 AAA2-8 3 Year 2001 AAA2-20 3 Year 2001 AAA2-30 3 Year 2001 AAA2-34 3 Year 2001 AAA2-54 3 Year 2001

AAA 2-140

3 Year 2001

AAA 2-141

3 Year 2001

AAA 2-190

3 Year 2001

AAA 2-346

3 Year 2001 AAA2-494 3 Year 2001 AAA2-520 3 Year 2001

AAA 2-555

to 2-577 4 Year 2001 AAA2- 1098 to AAA2- 1113 5 Year 2001 AAA2- 1117 5 Year 2001 AAA2- 1209 to AAA2- 1213 AAA2- 1218 to AAA2- 1221 AAA2- 1242 5 Year 2001 AAA2- 1269 5 Year 2001 AAA2- 1389 to AAA2- 1390 6 34.09 OR was provided instead of Sales Invoice 90.41 OR was provided instead of Sales Invoice Details in the OR/Invoice is no longer 30.00 visible 38.82 OR was provided instead of Sales Invoice 11.82 OR was provided instead of Sales Invoice 66.36 OR was provided instead of Sales Invoice 30.73 OR was provided instead of Sales Invoice Details in the OR/Invoice is no longer 7.27 visible 27.32 OR was provided instead of Sales Invoice PhP2,353.01 DISALLOWED

REASON FOR DISALLOWANCE

VAT AMOUNT

22.73 Not in the name of Dumex 23.45 OR was provided instead of Sales Invoice 12.00 OR was provided instead of Sales Invoice 70.63 OR was provided instead of Sales Invoice Details in the OR/Invoice is no longer 217.27 visible 17.27 OR was provided instead of Sales Invoice 24.00 OR was provided instead of Sales Invoice Details in the OR/Invoice is no longer 227.27 visible 1,818.19 Not in the name of Dumex Details in the OR/Invoice is no longer 79.55 visible 75.82 Not in the name of Dum ex 0.08 Excess Input VAT 5,829.81 No OR was Provided 5,000.00 No Invoice was Provided 82,701.02 Excess Input VAT 36.45 OR was provided instead of Sales Invoice I ' !

i 3,140.61 Excess Input VAT i I

CTA Case No. 7790 (CTA EB No. 917)

Year 2001 AAA2- 1391 6 Year 2001 AAA2- 1404 6 Year 2001 AAA2- 1410 6 Year 2001 AAA2- 1689 to

AAA 1696

6

TOTAL DISALLOWED INPUT VAT

IN 2001

viii 550.00 133.59 52,920.00 1,984.63 PhP154,884.37 YEAR EXHIBITS BOX

DISALLOWED VAT

NO.

Year 2002

AAA 3-132

7 Year 2002

AAA 3-219

to AAA 3- 222 7 Year 2002 AAA3-338 7 Year 2002 AAA3-552 7 Year 2002

AAA 3-584

7 Year 2002 AAA3-963 8 Year 2002 AAA3- 2014 to AAA3- 2025 AAA3- 2027 to AAA3- 2028 AAA3- 2030 to AAA3- 2032 9 Year 2002 AAA3- 3282 11

TOTAL ALLOWABLE INPUT

VAT IN 2002

ix YEAR EXHIBITS BOX NO.

Year 2003 AAA4-264 12 Year 2003 AAA4-265 12 Year 2003 AAA4-388 12 Year 2003 AAA4-553 12 Year 2003 AAA4- 1283 13 AMOUNT 10,636.36 258,143.54 5,827.50 1,467.33 144.55 21,666.67 30,441.40 117,090.91 PhP445,418.26

DISALLOWED VAT

AMOUNT 1,000.00 65.00 97,181.82 70,616.73 11,025.00 Excess Input VAT Excess Input VAT No OR was provided No OR was provided

REASON FOR DISALLOWANCE

Missing Exhibit Excess Input VAT Details in the OR/Invoice is no longer visible No OR was provided OR was provided instead of Sales Invoice No VAT was actually paid Excess Input VAT No Invoice was provided

REASON FOR DISALLOWANCE

No OR was provided No OR was provided Excess Input VAT Excess In_Eut VAT No OR was provided ------- - Amended Decision CTA Case No. 7790 (CTA EB No. 917) Page 45 o£47 Year 2003 AAA4- 1290 13 Year 2003 AAA4- 1773 to AAA4- 1782 14 Year 2003 AAA4- 2438 to AAA4- 2446 15 Year 2003 AAA4- 2448 to AAA2449 15 Year 2003 AAA4- 2451 to AAA4- 2453 15 Year 2003 AAA4- 2455 to AAA4- 2458 15 Year 2003 AAA4- 2460 to AAA4- 2462 15 Year 2003 AAA4- 2761 to AAA4- 2774 16 Year 2003 AAA4- 2862 16 Year 2003 AAA4- 3776 17 Year 2003 AAA4- 3876 17

TOTAL DISALLOWED INPUT

VAT IN 2003

X YEAR EXHIBITS BOX NO.

Year 2004 AAA5-291 18 Year 2004 AAA5-705 (APV 27697) 19 Year 2004 AAA5- 1180 19 Year 2004 AAA5- 1616 20 Year 2004 AAA5- 1657 to AAA5- 1663 20 2,822.40 No OR was provided 3,696.94 No OR was provided 1,513.60 No OR was provided 803.55 No OR was provided 623.37 No OR was provided 1,735.70 No OR was _provided 1,084.03 No OR was _provided 53,346.15 OR is undated 184.51 No OR was provided 90.91 No OR was provided Details in the OR/Invoice is no longer 272.73 visible PhP246,062.44

DISALLOWED VAT

REASON FOR DISALLOWANCE

I AMOUNT 78,414.02 NO BIR PERMIT indicated in the OR 69,759.01 No OR was provided 27,430.15 Missing Exhibit OR was provided instead of Sales 67.73 Invoice 71,837.47 OR is undated (./---

CTA Case No. 7790 (CTA EB No. 917)

Year 2004 AAA5- 1690 to AAA5- 1692 AAA5- 1694 to AAA5- 1715 20 Year 2004 AAA5- 2701 21 Year 2004 AAA5- 2702 21 Year 2004 AAA5- 3674 22 Year 2004 AAA5- 3675 22 Year 2004 AAA5- 3676 22 Year 2004 AAA5- 3834 22

TOTAL DISALLOWED INPUT

VAT IN 2004

xi YEAR EXHIBITS BOX NO.

Jan-05 to Oct-05 AAA6- 153 23 Jan-05 to AAA6- Oct-05 264to AAA6- 269 23 Jan-05 to AAA6- Oct-05 456 to AAA6- 457 AAA6- 459to AAA6- 466 AAA6- 468 to AAA6- 478 AAA6- 480 to AAA6- 485 AAA6- 491 to AAA6- 492 23 Jan-05 to AAA6- Oct-05 1816 25 I I 59,108.47 OR is undated I 6,633.87 Missing Exhibit 35,000.00 Missing Exhibit 8,183.00 No OR was_I>rovided 8,166.67 No OR was provided 8,166.67 No OR was provided OR was provided instead of Sales 31.81 Invoice PhP372,798.87

DISALLOWED VAT

REASON FOR DISALLOWANCE

AMOUNT 45,000.00 No OR was provided 27,712.37 No OR was provided 8,583.65 Excess Input VAT 9,463.69 no OR was provided ~·

CTA Case No. 7790 (CTA EB No. 917)

TOTAL DISALLOWED INPUT

VAT FROM JAN 1 TO OCT 30

2005 PhP90,759.71 ~