San Roque Power Corporation vs. Commissioner of Internal Revenue

AMENDED DECISION

Fa bon- Victorino, J. : On May 7, 2012, the Court promulgated the assailed Decision denying the instant Petition for Review for insufficiency of evidence.

The Court found the petitioner's evidence inadequate to sustain its claim that it is a generation company entitled to a refund or issuance of a tax credit certificate in the amount of Php26,645,244.93, representing its unutilized input value-added tax (VAT) from purchases of capital goods, other goods and services, as well as importation of goods for the period January 2008 to March 2009. In particular, petitioner j failed to present its Energy Regulatory Commission (ERC) Registration and Certificate of Compliance (COC), without which all of the reported zero-rated sales/receipts of Php8,671,202,381.65 cannot qualify for VAT zero-rating under Section 108(B)(7) of the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act (R.A.) No. 9337, in relation to Section 4.108-3 of Revenue Regulations No. 16-2005 and Section 4 of Rule 5 of the Implementing Rules and Regulations of R.A. No. 9136.

With a strong belief that it is entitled to the relief sought, petitioner filed a Motion for Reconsideration (with Motion for Leave of Court to Admit Evidence;t on May 29, 2012, praying that:

1.

This Honorable Court allow petitioner to present evidence on this Motion for Reconsideration or re-open the trial of this case for the reception of supplemental documentary and testimonial evidence, more particularly, its COC, in support of the Petition for Review; and 2.

This Honorable Court reconsider its Decision dated May 7, 2012 and, subsequently, issue an Order granting petitioner a refund in the amount of Twenty Six Million Six Hundred Forty Five Thousand Two Hundred Forty Four and 93/100 Pesos (Php26,645,244. 93).

Petitioner argues, among others, that its non-submission of the COC was due to an honest belief that its presentation is no longer necessary on account of the stipulation entered into by the parties in their Joint Stipulation of Facts and Issues as to petitioner's business and status as a power generation company. On May 31, 2012, respondent filed her Comment2 to which a Reply3 thereto was filed by petitioner on June 15, 2012. Petitioner's motion to reopen the case for presentation of additional documents was granted in the interest of substantial justice in the Resolution 4 dated July 13, 2012. On September 6, 2012, petitioner presented its Accountant, Ms. Lalaine A. Estayo, who identified the following exhibits:

Exhibit "EEE" "EEE-1" "FFF" 2 Docket, pp. 520-525. 3 Docket, pp. 530-539. 4 Docket, pp. 541-547. Description Supplemental Sworn Statement of Lalaine Estayo executed on August 6, 2012 Signature of Lalaine Estayo Certificate of Compliance (COC No. 04-06- GN¹-0064)

"GGG" Certificate of Compliance (COC No. 09-08- GNl -0064) In the same proceeding, petitioner orally offered the foregoing exhibits to establish that it is registered with the ERC and that it was issued with COC on June 16, 2004 and a renewed COC on August 17, 2009. All the additional exhibits of petitioner were admitted and the incident was deemed submitted in the Resolution dated September 19, 2012.

After a careful examination of all the evidence presented, this Court hereby partially grants the instant Petition for Review. As stated in the Decision dated May 7, 2012, the main issue for the resolution of the Court is whether petitioner is entitled to the refund or issuance of tax credit certificate in the amount of Php26,645,244.93, representing its alleged unutilized input VAT attributable to effectively zero-rated sales for the period covering January 1, 2008 to March 31, 2009. /

Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, provides the basis for refunds or tax credits of input tax attributable to zero-rated or effectively zero-rated sales, to wit: 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(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP):

Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be ./ allocated ratably between his zero-rated and non-zero-rated sales.

In the case of Silicon Philippines, Inc. vs. Commissioner of Internal Revenue, 5 the Supreme Court enumerated the requisites for refund/tax credit as follows: 1.

The taxpayer must be VAT registered; 2.

The taxpayer must be engaged in sales which are zero-rated or effectively zero-rated; 3.

The claim must be filed within two years after the close of the taxable quarter when such sales were made; and 4.

The creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax. As stated by the Court in the assailed Decision of May 7, 2012, petitioner is a duly registered VAT taxpayer with Tax Identification No. (TIN) 005-017-501-000. The Court also found that both the administrative and judicial claims for refund were seasonably filed by petitioner. Most importantly, the additional pieces of evidence formally offered by petitioner and admitted by the Court, proved that it is engaged in sales which are zero-rated or effectively zero-rated.

Petitioner was able to established that it was authorized by the ERC to operate power generation facilities, utilizing hydro and diesel as fuel, as evidenced by the ERC Certificates of Compliance dated June 16, 20046 and August 17, 20097 with attached Terms and Conditions of the Certificates of Compliance. Likewise, it was established that it actually generated receipts from the sale of electricity to the National Power Corporation (NPC) for the subject period based on the official receipts8 and the related sales invoices9 and credit memo10 issued by petitioner to NPC, journal vouchers 11 and bank documents12 . Such receipts from sale of electricity generated through renewable source of energy, i.e., hydropower, qualify for VAT zero-rating under Section 108(B)(7) of the NIRC of 1997, as amended by R.A. No. 9337, in relation to Section 4.108-3 of Revenue Regulations No. 16-2005 and Section 4 of Rule 5 of the Implementing Rules and Regulations of R.A. No. 9136. For the subject period covering January 1, 2008 to March 31, 2009 (fourth quarter of FY 2008 to fourth quarter of FY 2009), the official receipts submitted by petitioner reflected zero- /

rated receipts in the amount of only Php 8,143,908,947.05, detailed as follows:

Exhibit Date US Dollar Japanese Yen Philippine Peso AA1b 02/27/08 30 247 906.40 AA2b 03/27/08 30 247 906.40 AA3b 04/25/08 30 247 906.40 AA4b 02/27/08 484 215 000.00 185 890 138.50 AA5b 03/27/08 484 215 000.00 183 759 592.50 AA6b 04/25/08 484 215 000.00 200 222 902.50 AA7b 02/27/08 6 696 283.47 274 139 148.98 AA8b 03/27/08 7 120 410.14 289 394 829.32 AA9b 04/25/08 6 872 531.83 285 904 196.66 AA10b 05/28/08 30 247 906.40 AA11b 06/25/08 30 247 906.40 AA12b 07/25/08 30 247 906.40 AA13b 05/28/08 484 215 000.00 194 751 273.00 AA14b 06/25/08 484 215 000.00 201 966 076.50 AA15b 07/25/08 484 215 000.00 200 561 853.00 AA16b 05/28/08 6 421 893.44 270 091 994.30 AA17b 06/25/08 7 378 630.05 320 498 174.85 AA18b 07/27/08 7 998 686.65 356 397 481.06 AA19b 08/27/08 31 364 039.41 AA20b 08/27/08 4 310 582.64 AA21b 09/25/08 31 364 039.41 AA22b 10/28/08 31 364 039.41 AA23b 08/27/08 484 215 000.00 198 915 522.00 AA24b 09/25/08 483 466 549.40 203 200 990.71 AA25b 09/25/08 748 450.60 314 573.79 AA26b 10/24/08 484 215 000.00 211 844 062.50 AA27b 08/27/08 6 981 845.05 308 346 205.23 AA28b 09/25/08 9 078 726.47 413 999 005.76 AA29b 10/24/08 9 978 726.17 464 000 788.64 AA31b 11/26/08 31 364 039.41 AA32b 01/09/09 34 267 857.14 AA33b 01/09/09 5 199 989.86 AA34b 02/16/09 34 281 896.55 AA35b 11/26/08 484 215 000.00 243 414 880.50 AA36b 01/05/09 484 215 000.00 248 595 981.00 AA37b 02/05/09 484 215 000.00 252 808 651.50 AA38b 11/26/08 8 302 112.63 406 106 141.90 AA39b 01/06/09 6 619 022.54 328 250 568.78 AA40b 02/05/09 6 624 606.73 314 801 311.81 AA41b 03/10/09 34 281 896.55 AA42b 03/30/09 34 281 896.55 AA44b 03/13/09 258 328 702.50 AA45b 03/30/09 241 478 020.50

AA47b 03/13/09 AA48b 03/30/09 Total 309 381 431.55 322 976 731.88 8 143,908 947.05 On the other hand, petitioner's Quarterly VAT Returns for the same period reflected a total amount of Php 8,671,202,381.65 VAT zero-rated receipts, broken down as follows:

Zero-rated Exhibit Period Sales/Receipts 01/01/08 to F FY 2008 - 4th quarter 03/31/08 p 1 520 972 956.70 04/01/08 to H FY 2009 - 1st quarter 06/30/08 1 564 178 337.01 07/01/08 to J FY 2009 - 2nd quarter 09/30/08 1 779 022 199.41 10/01/08 to L FY 2009 - 3rd quarter 12/31/08 1 388 093 952.36 01/01/09 to N FY 2009 - 4th quarter 03/_31/09 2 418 934 936.17 Total P8,671 202,381.65 Clearly, the amount of Php 8,671,202,381.65 zero-rated receipts declared per petitioner's Quarterly VAT Returns is higher by Php 527,293,434.60 when compared with the zero-rated receipts of Php 8,143,908,947.05 shown per petitioner's official/ receipts.

In her report13 dated August 25, 2010, the Court- commissioned Independent CPA, Ms. Ma. Milagros F. Padernal, explained that the discrepancy of Php 527,293,434.60 pertains to petitioner's collections from sales made for the third quarter of FY 2008.

However, considering that petitioner failed to substantiate the amount of Php 527,293,434.60 with VAT zero- rated official receipts, the same shall be denied VAT zero-rating. Thus, petitioner's total valid zero-rated receipts amounted only to Php 8,143,908,947.05, computed as follows: Zero-Rated Receipts per VAT Return p 8 671 202 381.65 Less: Unsubstantiated Zero-Rated Receipts 527 293 434.60 Valid Zero-Rated Receipts P8,143,908,947 .OS The Court will now determine the amount of unutilized excess input VAT attributable thereto. Petitioner's Quarterly VAT Returns for the subject period of claim reflected the following output and input tax transactions: Jan-Mar 2008 Apr-June 2008 July-Sept 2008 (Exhibit F) (Exhibit H) (Exhibit J) Vatable Sales/Receipts p 135 356.25 p 226 760.00 Output Tax Due p 16 242 .75 p 27 211. 20

Less:

Allowable Input Tax Input Tax Carried Over from Previous Quarter/Excess over 70% Output VAT Input Tax Deferred on Capital Goods Exceeding P1Million from Previous Quarter Total Input Tax from Previous Quarter Current Transact ions Purchases of Capital Goods not exceeding P1Million Purchase of Goods exceedinq P1Million Domestic Purchases of Goods other than Capital Goods Importation of Goods Other than Capital Goods Domestic Purchases of Services Services rendered by non-residents Total Current Input Tax Total Available Input Tax Deduct ions from Less:

Input Tax Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period VAT Refund/TCC Claimed Input Tax in excess of 70% cap to be carried to next period Others Total Allowable Input Tax Tax Payable (Overpayment) Vatable Sales/Receipts Output Tax Due Less:

Allowable Input Tax Input Tax Carried Over from Previous Quarter/Excess over 70% Output VAT p 28 982 124.60 3 988 094.77 P32 970,219.37 39 033.22 459 412.62 859 994.28 122 157.00 1J20 507.19 p 3 201 104.31 p 36 171 323.68 p 4 043 947.23 775 715.52 92 571.43 p 31 259 089.50 P31,242 846.75 Oct- Dec 2008 (Exh . L) p 10 714.25 p 1 285.71 p 28 274 318.92 p 31 242 846.75 p 24 076 636.60 4 136 518.66 4 223 920.55 P35,379 365.41 p 28,300,557.15 43 630.15 7 343.79 439 184.52 218 755.81 1 289 896.61 1 442 495.86 279 507.00 64 067.00 7 891 068.73 2 287 732.01 464 282.49 37 095.24 P10 407 569.50 p 4 057/489.71 p 45 786 934.91 p 32 358 046.86 p 4 146 970.53 p 4 083 727.94 17 459 164.54 76 950.00 p 24 103 849.84 p 28 274 318.92 P24 076,638.64 p 28 274 318.92 Jan-Mar 2009 (Exh. N) Total p 411 616.08 p 784 446.58 p 49 393.93 p 94 133.59 p 28,982,124.60 p 32 830 123.19

Input Tax Deferred on Capital Goods Exceeding PlMillion from Previous Quarter Total Input Tax from Previous Quarter Current Transactions Purchases of Capital Goods not exceeding PlMillion Purchase of Goods exceeding PlMillion Domestic Purchases of Goods other than Capital Goods Importation of Goods Other than Capital Goods Domestic Purchases of Services Services rendered by non-residents Total Current Input Tax Total Available Input Tax Deductions from Less :

Input Tax Input Tax on Purchases of Capital Goods exceeding PlMillion deferred for the succeedinq period VAT Refund/TCC Claimed Input Tax in excess of 70% cap to be carried to next period others Total Allowable Input Tax Tax Payable (Overpayment) 4 083 727.94 4 453 835.34 3 988 094.77 P32,358 046.86 P37 283,958.53 p 32 970 219.37 197 614.86 287 622.02 778 931.50 381 502.04 2 277 786.49 1 380 725.10 1 634 377.40 6 607 489.25 10 281.00 71 182.00 547 194.00 2 638 056.80 2 343 601.78 16 880 966.51 119 202.93 620 580.66 p 4 927 197.33 p 4,628 278.08 p 27 221,638.93 p 37 285 244.19 p 41 912 236.61 p 60 191 858.30 p 4 453 835.29 p 4 470 355.23 p 4 470 355.23 10 830 397.50 29 065 277.56 p 32 831 408.90 p 26 611 483.88 p 26 656 225.51 P32,830 123.19 P26 562,089.95 p 26 562 091.92 Of the above reported input taxes, petitioner is claiming refund of the following input taxes in the total amount of Php 26,645,244.93, net of petitioner's output tax liability of Php 94,133.59: 14 /

Particulars Jan- Mar 2008 Input Taxes on Capital Goods :

Not Exceeding P1 Million 39 033.22 Exceeding P1Million (Amortization) 310 985.72 Input Taxes on Domestic Purchases:

Service's 1 720 507.19 Goods Other than capital Goods 859 994.28 Input Taxes on Importations of Goods Other Than Capital Goods 122 157.00 Input Taxes on Services Rendered By Non- Residents - Less: Output VAT 16 242.75 TOTAL 3 036 434.66 Apr - June 2008 43 630.15 351 785.64 7 891 068.73 1 289 896.61 279 507 .00 464 282.49 27 211.20 10 292 959.42 Period Covered Total Input July-Sept Oct-Dec Jan- Mar 2008 2008 2009 VAT 7 343.79 - 197 614.86 287 622.02 358 948.42 408 824.15 364 982.15 1 795 526.08 2 287 732.01 2 638 056.80 2 343 601.78 16 880 966.51 1 442 495.86 1 380 725 .10 1 634 377.40 6 607 489.25 64 067.00 10 281.00 71 182.00 547 194.00 37 095 .24 119 202 .93 - 620 580.66 - 1 285.71 49 393.93 94 133.59 4 197 682.32 4 555 804.27 4 562 364.26 26 645 244.93 The Court-commissioned ICPA summarized the results of her verification on petitioner's clai med input VAT in the amount of Php 26,739,378.08 before deduction of the output VAT of Php94,133.59, as fol lows:15 Exhibit Particulars Total Summary of Input Taxes on Capital Goods Not Exceeding P1 Million DO a.)

Supported by original VAT invoices in the Petitioner's name Dated in the current quarter p 264 329.16 Not dated withi n the taxable quarter but dated within the taxable year I Second quarter of 2009 23,292.86 Total Input Taxes on CG not exceeding Pl million p 287,622.02 15 Exhibit "CCC".

/

Summary of Input Taxes on Capital Goods Exceeding P1 Million EE Amortization During the Quarter p 1,860,008.92 Adjustment (Paragraph 38, Page 11 of 25) (64,482.98) Total Input Taxes on CG exceeding Pl P1,795,525.94 million Summary of Input Taxes on Domestic Purchases Purchases of Services FF a.)

Supported by original VAT ORs in the Petitioner's name Dated in the current quarter p 15 209,231.04 Not dated within the taxable quarter but dated within the taxable year First quarter of 2009 p 573 988.74 Second quarter of 2009 386 904.58 Third quarter of 2009 367 308.74 Not dated within the taxable year Fourth quarter of 2007 14 662.50 Fourth quarter of 2008 6,032.55 First quarter of 2009 1,641.43 First quarter of 2010 106 217.73 Third quarter of 2010 36 832.82 1,493,589.09 p 16,702,820.13 GG b.)

Supported by original VAT ORs in the acronym (SRPC) of Petitioner's name Dated in the current quarter p 343 347.83 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 4,763.57 p 348,111.40 HH c.)

Supported by original VAT ORs in the Petitioner's name with no BIR permit to print p 14,983.06 II d.)

Supported by original VAT ORs in the Petitioner's name marked as "Not a Valid Source of Input Tax" p 51,245.89 JJ e.)

Supported by original VAT ORs in the Petitioner's name but not in the Company's TIN p 168,278.87 KK f.)

Supported by original VAT ORs not in the Petitioner's name Dated in the current quarter p 5 983.62 Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 1,200.00 p 7,183.62 LL g.)

Supported by photocopies of VAT ORs in the Petitioner's name Dated in the current quarter p 1 614.03 I

Not dated within the taxable quarter but dated within the taxable year Fourth quarter of 2009 MM h.)

Downward adjustment to input taxes on purchases of services NN

i. ) Not supported by VAT ORs in the Petitioner's name Total Purchases of Services Purchases of Goods Other Than Capital Goods 00 j .)

Supported by original VAT invoices in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Third quarter of 2008 First quarter of 2009 Second quarter of 2009 Third quarter of 2009 Fourth quarter of 2009 Not dated within the taxableyear Third quarter of 2008 Fourth quarter of 2008 First quarter of 2009 Fourth quarter of 2009 First quarter of 2010 Third quarter of 2010 pp k.)

Supported by original VAT invoices in the acronym (SRPC) of Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable yea r Third quarter of 2008 First quarter of 2009 Second quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 Second quarter of 2010 Third quarter of 2010 QQ I.)

Supported by original VAT invoice in the Petitioner's name with no BIR perm it to print 9 027.3 1 p 10,641.34 p (8,330.04) p 119,405 .69 17,414,339.96 p 4 304 4 28.72 p 7 788.43 188 485.07 289 388.5 1 134 208.88 9 654. 92 8 271.58 220 746.35 1 331.57 557.14 268. 39 4 795.71 p e6s 496 .ss p 5 169,925.27 p 631 ,943.37 p 6 743.82 28 274.43 7 116.52 7 475.94 4 168.04 170.71 p 53 949.46 p 685 892.83 p 716.24

RR m.)

Supported by original VAT invoices in the Petitioner's name marked as VAT ZERO-RATED SALE Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 55 n.)

Supported by original VAT invoices not in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 Third quarter of 2009 TT o.)

Supported by photocopies of VAT invoices in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year First quarter of 2009 Second quarter of 2009 Third quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 Third quarter of 2009 uu p.)

Supported by original VAT invoice in the Petitioner's name subsequently classified as capital goods subject to amortization vv q.)

Not supported by VAT invoices in the petitioner's name Total Purchases of Goods other than Capital Goods Total Domestic Purchases Summary of Input Taxes on Importations of Goods ww a.)

Supported by original bank ORs and original IEIRDs XX b.)

Supported by original Bureau of Customs OR p 61,976.33 417.86 1,781.46 p 2 199.32 p 64 175.65 p 6 203.11 3 685 .71 12 685.71 p 16 371.42 p 22 574.53 p 2 257.97 p 301.07 535.71 184.07 552.87 3 038.57 p 4,612.29 p 6 870.26 p 70 345.07 p 53,615.95 p 6,074,115.80 P23,488,455. 76 p 535 767.06 482.00 yy j c.)

Not supported by bank/Bureau of Customs ORs and IEIRDs/IIDEs Total Input Taxes on Importations Summary of Input Taxes on Services by Non-Residents zz Supported by original suppliers' invoices in the Petitioner's name, BIR Form No. 1600 (Monthly Remittance Return of Value-Added Tax and Other Percentage Taxes Withheld) and EFPS payment confirmation receipts Total Input Taxes on Services by Non- Residents

GRAND TOTAL

10 944.64 p 547,193.70 p 620 580.66 p 620,580.66 P26,739,378.08 Based on the above ICPA's findings, input VAT in the total amount of Php 720,555.47 should be deducted from petitioner's input VAT claim, to wit: Exhibit Particulars Total Input Taxes on Domestic Purchases Purchases of Services FF a.)

Supported by original VAT ORs in the Petitioner's name Not dated within the taxable year Fourth quarter of 2007 p 14 662.50 First quarter of 2010 106 217.73 Third quarter of 2010 36 832.82 p 157,713.05 HH b.)

Supported by original VAT ORs in the Petitioner's name with no BIR permit to print p 14 983.06 II c.)

Supported by original VAT ORs in the Petitioner's name marked as "Not a Valid Source of Input Tax" p 51 245.89 JJ d.)

Supported by original VAT ORs in the Petitioner's name but not in the Company's TIN p 168,278.87 KK e.)

Supported by original VAT ORs not in the Petitioner's name /

Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 LL f.)

Supported by photocopies of VAT ORs in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Fourth quarter of 2009 NN g.)

Not supported by VAT ORs in the Petitioner's name Total Purchases of Services Purchases of Goods Other Than Capital Goods 00 h.)

Supported by original VAT invoices in the Petitioner's name Not dated within the taxable quarter but dated within the taxable year Third quarter of 2008 Not dated within the taxable year Third quarter of 2008 First quarter of 2010 Third quarter of 2010 pp i.)

Supported by original VAT invoices in the acronym (SRPC) of Petitioner's name Not dated within the taxable quarter but dated within the taxable year Third quarter of 2008 Not dated within the taxable year I Second quarter of 2010 Third quarter of 2010 QQ j.)

Supported by original VAT invoice in the Petitioner's name with no BIR perm it to print RR k.)

Supported by original VAT invoices in the Petitioner's name marked as VAT ZERO-

RATED SALE

Dated in the current quarter p 5 983 .62 1 200.00 p 7 183.62 p 1 614.03 9,027. 31 p 10 641. 34 p 119 405.69 p 529 451.52 p 7 788.43 8 271. 58 268.39 4 795.71 p 21,124.11 p 6 743 .82 4 168.04 170.71 p 11,082.57 p 716.24 p 61,976. 33 /

Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 ss 1.)

Supported by original VAT invoices not in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year Second quarter of 2009 Third quarter of 2009 TT m.)

Supported by photocopies of VAT invoices in the Petitioner's name Dated in the current quarter Not dated within the taxable quarter but dated within the taxable year First quarter of 2009 Second quarter of 2009 Third quarter of 2009 Not dated within the taxable year Fourth quarter of 2008 Third quarter of 2009 vv n.)

Not supported by VAT invoices in the petitioner's name Total Purchases of Goods other than Capital Goods Total Domestic Purchases Input Taxes on Importations of Goods yy o.)

Not supported by bank/Bureau of Customs ORs and IEIRDs/IIDEs Total Input Taxes on Importations

GRAND TOTAL

417.86 1,781.46 p 2 199.32 p 64 175.65 p 6 203.11 3 685.71 12 685.71 p 16 371.42 p 22,574.53 p 2,257.97 p 301.07 535.71 184.07 552.87 3 038.57 p 4,612.29 p 6 870.26 p 53 615.95 p 180,159.31 p 709,610.83 p 10,944.64 p 10,944.64 p 720 555.47

The input taxes under letters a, h and i shall be disallowed as the supporting invoices or official receipts are dated beyond the subject period. The input taxes under letters b, c, d, e, g, j, k, I, n and o shall also be denied for failure to meet the substantiation requirements under Sections 110(A) and 113(A) of the NIRC of 1997, as amended, in relation to Sections 4.110- 1, 4.110-8 and 4.113-1 of RR No. 16-05. The input taxes under letters f and m shall be disallowed for the reason that the supporting invoices or official receipts cannot be given evidentiary value for being mere photocopies in violation of the Best Evidence Rule.

Further scrutiny of the said report and petitioner's supporting documents reveals that aside from the disallowance of Php 720,555.47, the input VAT of Php 263,179.53 should as well be disallowed for either the supporting invoice or official receipt did not comply with the invoicing requirements under the VAT law and regulations or was dated outside the period of claim or there was an over-claim of input tax by petitioner, to wit: [ Exhibit Supplier's Name l Input VAT I

1. Purchase of goods supported by invoice dated outside the period of claim.

-- 009 Pacific Orient Winds Corp. p 26 412.00 Subtotal p 26,412.00

2. Purchase of goods supported by delivery receipt.

001118 Accent Micro Subtotal p 3 297.86 p 3,297.86

3. Purchases of goods or services supported by blank OR or not legible OR.

00176 SM ACA Shell Forbes p 328.16 00187 SM ACA Shell Forbes 244.12 00196 SM ACA Shell Forbes 170.78 00197 SM ACA Shell Forbes 268.05 00202 SM ACA Shell Forbes 201.52 00207 SM ACA Shell Forbes 221.21 00646 SM ACA Shell Forbes 451.26 00648 SM ACA Shell Forbes 204.74 00668 SM ACA Shell Forbes 370.82 00669 SM ACA Shell Forbes 330.41 00670 SM ACA Shell Forbes 393.91 00689 SM ACA Shell Forbes 414.74 00690 SM ACA Shell Forbes 389.70 00701 SM ACA Shell Forbes 351.88 00708 SM ACA Shell Forbes 576.25 00710 SM ACA Shell Forbes 219.59 00711 SM ACA Shell Forbes 326.85 00779 SM ACA Shell Forbes 338.88 00786 SM ACA Shell Forbes 369.79 00796 SM ACA Shell Forbes 367.64 00826 SM ACA Shell Forbes 315.56 00896 SM ACA Shell Forbes 292.94 00901 SM ACA Shell Forbes 304.72 00911 SM ACA Shell Forbes 320.90 00914 SM ACA Shell Forbes 294.28 00946 SM ACA Shell Forbes 354.88 00947 SM ACA Shell Forbes 210.72 001005 SM ACA Shell Forbes 299.56 001074 SM ACA Shell Forbes 236.40 001087 SM ACA Shell Forbes 153.16 001129 SM ACA Shell Forbes 210.47 001183 SM ACA Shell Forbes 181.33 001196 SM ACA Shell Forbes 185.85 001239 SM ACA Shell Forbes 170.29 001240 SM ACA Shell Forbes 198.90 001348 SM ACA Shell Forbes 211.84 Subtotal p 10 482.10 4.Purchases of goods or services supported by invoices or official receipts wherein VAT was not separately shown B.S. Benin Construction & GG9 Supplies p 763.64 PP30 Rivera's Hollow Blocks 1 325.46 PP83 Rivera's Hollow Blocks 360.00 Binalonan Alfonso Lumber & PP117 Hardware 70.71

PP118 PP153 PP174 PP180 PP330 PP1198 PP1201 008 00103 00108 00124 00138 00150 00177 00189 00193 00237 00238 00299 00303 00310 00333 00407 00471 00529 00577 00578 00594 00608 00662 00684 00688 00693 00695 00697 00699 00706 00735 00742 00780 00805 00830 00831 00851 00870 00878 00879 Binalonan Alfonso Lumber & Hardware Rivera's Hollow Blocks Rivera's Hollow Blocks Binalonan Alfonso Lumber & Hardware Binalonan Alfonso Lumber & Hardware Binalonan Alfonso Lumber & Hardware Rivera's Hollow Blocks SM ACA Shell Forbes Gerbaq Industrial Tech SM ACA Shell Forbes J. Tancio Enterprises, Inc. SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes Abstract Industrial Sales Forsanz Enterprise Forsanz Enterprise Forsanz Enterprise SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes Forsanz Enterprise Forsanz Enterprise Abstract Industrial Sales Forsanz Enterprise SM ACA Shell Forbes SM ACA Shell Forbes Forsanz Enterprise Bon Bon General Merchandise Shirts & Print Tradinq Corp. SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes Bumanlag Brass Products SM ACA Shell Forbes SM ACA Shell Forbes SM ACA Shell Forbes Forsanz Enterprise SM ACA Shell Forbes Bottle Zone Bumanlaq Brass Products SM ACA Shell Forbes SM ACA Shell Forbes Forsanz Enterprise SM ACA Shell Forbes 66.43 624.64 3 096.43 36.96 1 963.93 150.00 144.64 42.86 6 956.57 35.89 2 517.86 271.32 56.79 39.64 8 970.00 2507.14 675.00 3 037.50 244.19 305.35 272.37 3 616.07 3 037.50 12 910.71 2 410.71 418.32 432.20 3 278.57 14 378.57 3 369.64 393.85 356.21 280.39 350.95 387.68 1,446.43 362.74 434.00 321.46 3,133.93 350.08 4,500.00 1 446.43 370.68 261.83 3 037.50 339.52 I

00886 00887 00940 001084 001157 001188 Bottle Zone Bends Marketing Elan Premium Gifts Tionq San Marketing Southern Control Industrial Supply Bends Marketing Subtotal 9 375.00 5 944.29 578.57 34 224.00 5 357.14 5 944.29 P1571 584.58

5. Importation of goods supported by document which does not show actual payment of VAT. WW9 & WW9a Vibrosystem Inc p 920.00 Subtotal p 920.00

6. Over-claimed input tax on purchases previously classified as goods other than capital goods in the third quarter of FY 2009 but subsequently reclassified as capital goods subject to amortization in the fourth quarter of FY 2009 UU1 and CCC, Original input VAT claim p.ll, item no.

under goods other than 38 capital qoods p 70 345.07 Less: input tax amortization upon reclassification to capital goods 5 862.08 Overclaimed input tax p 64 482.99 Subtotal p 64,482.99 Total P263,179.53 Therefore, petitioner's valid input VAT claim amounts only to Php25,755,643.08, computed as follows: Input VAT Claim p 26 739/378.08 Less:

Disallowances Per !CPA's findings p 720,555.47 Per this Court's findings 263,179.53 Total p 983,735.00 Valid Input VAT Claim p 25,755,643.08

However, a portion of the creditable input VAT of Php 25,755,643.08 shall be applied against petitioner's reported output VAT liability of Php 94,133.59. Hence, only the remaining input VAT of Php 25,661,509.49 can be attributed to the entire zero-rated receipts declared by petitioner in the amount of Php 8,671,202,381.65.

Consequently, only the input VAT of Php 24,101,040.15 represents petitioner's refundable excess input VAT attributable to the valid zero-rated receipts of Php 8,143,908,947.05, as computed below: Valid Input VAT p 25,755,643.08 Less: Output VAT 94,133.59 Valid Excess Input VAT p 25,661,509.49 Valid Zero-Rated Receipts p 8,143,908,947.05 Divided by Total Reported Zero-Rated P8,671,202,381.65 Receipts Multiplied by Valid Excess Input VAT X p 25,661,509.49 Refundable Excess Input VAT attributable to the Valid Zero- Rated Receipts p 24, 101,040.15 Although petitioner carried-over the claimed excess input VAT of Php 26,645,244.88, including the refundable amount of Php24, 101,040.15, to the succeeding first16 and second 17 quarters of FY 2010, the same remained unutilized until it was

fully deducted as "VAT Refund/TCC Claimed"18 from the total available input tax as of the second quarter of FY 2010. Thus, the excess input VAT of Php 15,371,220.0919 to be carried-over to the third quarter of FY 2010 no longer included the claimed input VAT of Php 26,645,244.88.

WHEREFORE, petitioner's Motion for Reconsideration is hereby PARTIALLY GRANTED. The Decision dated May 7, 2012 is MODIFIED ordering respondent to refund or issue a tax credit certificate in favor of petitioner in the reduced amount of

TWENTY FOUR MILLION ONE HUNDRED ONE THOUSAND

FORTY AND 15/ 100 PESOS (Php 24,101,040.15), representing the latter's unutilized excess input VAT for the period January 1, 2008 to March 31, 2009 attributable to zero-rated receipts.