Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

DECISION

DEL ROSARIO, P.J.:

This case involves a Petition for Review filed by petitioner Air Liquide Philippines, Inc. on March 30, 2010, praying for the refund or issuance of a tax credit certificate in the total amount of Twenty-One Million Four Hundred Sixty Thousand Four Hundred Thirty-One Pesos and Forty-Eight Centavos (P21,460,431.48) representing its alleged unutilized input Value-Added Tax (VAT) for the 1st quarter of 2008.

THE PARTIES

Petitioner Air Liquide Philippines, Inc. is registered with the Bureau of Internal Revenue (BIR) as a value-added tax (VAT) entity under Certificate of Registration Number OCN 9RC000057089, effective March 9, 2006.1 1 Par. 1.3, Stipulation of Facts, Joint Stipulation of Facts & Issues (JSFI), Docket - Vol. II, p. 897~

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Respondent is the Commissioner of the BIR, with principal office at the sth Floor, BIR National Office Building, Agham Road, Diliman, Quezon City.2 He is vested with the power to decide tax cases, including claims for refunds and/or tax credits pursuant to Section 4 of 1997 National Internal Revenue Code (NIRC), as amended.3

ANTECEDENTS

On December 23, 2009, petitioner filed with the BIR- Revenue District Office No. 121, an application for tax credit/refunds of its unutilized input VAT for the pt Quarter of 2008.4 Alleging inaction on the part of respondent, petitioner filed a Petition for Review before the Court in Division on March 30, 2010,5 praying that the latter: (1) declare petitioner entitled to the issuance of a tax credit certificate in the total amount of P21,460,431.48, representing unutilized input VAT paid for the 1st quarter of 2008; and (2) order respondent to issue the tax credit certificate in favor of petitioner in the same amount.

On May 20, 2010, respondent filed his Motion to Dismiss.6 Petitioner then posted its Comment/Opposition (To Motion to Dismiss dated 13 May 2010)on June 9, 2010.7 In the Resolution dated September 1, 2010,8 this Court granted respondent's Motion to Dismiss.

On September 20, 2010, petitioner filed its Motion for

Reconsideration (Re:

Resolution dated 1 September 2010).9

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Respondent then posted his Comment/Opposition To Petitioner's Motion for Reconsideration on October 14, 2010. 10 Thereafter, petitioner filed its Reply (Re: Respondent's Comment/Opposition to Petitioner's Motion for Reconsideration dated 13 October 2010) on October 29, 2010.U In the Resolution dated November 12, 2010/2 this Court denied petitioner's Motion for Reconsideration. Petitioner then filed a Petition for Review on December 6, 2010 before this Court En Banc. 13 The case was docketed as CTA EB No. 704.

On February 27, 2012, this Court En Bane rendered a Decision, 14 the dispositive portion of which reads: "WHEREFORE, on the basis of the foregoing considerations, the Petition for Review is DISMISSED. Accordingly, the Resolutions dated 1 September 2010 and 12 November 2010 of the Court in Division are hereby AFFIRMED. Petitioner's claim for refund in the amount of P21,460,431.48 is DENIED on the ground that the judicial claim for the first quarter of 2008 was prematurely filed.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

"WHEREFORE, finding no reversible error committed by this Court in the assailed Decision promulgated on February 27, 2012, petitioner's 'Motion for Reconsideration (Decision of 27 February)' is hereby DENIED for utter lack of merit.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

"WHEREFORE, premises considered, the case 'Air Liquide Philippines, Inc. vs. Commissioner of Internal

Revenue/

docketed as

CTA

case No.

8052 is REMANDED to the CTA Special First Division for further proceedings.

During

trial, petitioner presented its testimonial and documentary evidence. It offered the testimonies of the following individuals, namely: (1) Mr. Frederic Andre Girault,32 petitioner's Chief Financial Officer; and (2) Ms. Cindy C. Torralba,33 petitioner's Manager for Finance; and (3) Mr. Edward D. Roguel,34 Court- commissioned Independent Certified Public Accountant (ICPA).35 The ICPA Report was submitted, through registered mail, on October 31, 2019.36 During the hearing held on February 13, 2020, respondent's counsel manifested that she would no longer present any evidence. 37 Petitioner filed its Formal Offer of Evidence on February 18, 2020.38 Respondent then filed his Comment/Opposition {To Petitioner's Formal Offer of Evidence dated February 17, 2020) on March 9, 2020.39 In the Resolution dated July 30, 2020,40 the Court admitted petitioner's exhibits, exceptfor the following: 31 Docket- Vol. III, pp. 1442 to 1456. 32 Exhibit "P-77", Docket- Vol. II, pp. 1061 to 1069; Minutes of the hearing held on, and Order dated, September I 0, 2019, Docket- Vol. III, pp. 1457 to 1461. 33 Exhibit "P-78", Docket - Vol. II, pp. 923 to 936; Minutes of the hearing held on, and Order dated, September 10, 2019, Docket- Vol. III, pp. 1457 to 1461. 34 Exhibit "P-81", Docket- Vol. Ill, pp 1609 to 1619; Minutes of the hearing held on, and Order dated, February 13, 2020, Docket- Vol. III, pp. 1622 to 1627; Oath of Commission dated October I, 2019, Docket- Vol. Ill, p. 1486. 35 Oath of Commission dated October I, 2019, Docket- Vol. III, p. 1486; Minutes of the hearing held on, and Order dated, October I, 2019, Docket- Vol. Ill, pp. 1483 to 1485, and 1487 to 1488, respectively.

36 Exhibit "P-80", Docket- Vol. III, pp. 1509 to 1592. 37 Refer to the Minutes of the hearing held on, and Order dated, February 13, 2020, Docket- Vol. III, pp. 1622 to 1627.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

1. Exhibits “P-1”, “P-6”, “P-11”, “P-11-a”, “P-13”, “P-13-a”, “P- 29”, “P-30”, “P-31”, “P-32”, “P-33”, “P-34", “P-35", “P-36", “p-37”, “P-38”, “p-39” “P-41” “p-42” “P-43”, “P-45”, “p- 46”, “p-47”, “p-49”, “p-51”, “p-53”, “p-54”, “p-59”, “P-60”, “P-61”, “P-62”, “p-63”, “p-65", “P-66”, “P-67”, “P-68”, “p. 69”, “P-70", “P-71", “P-72", “P-73", and = “P-75”, for failure to submit the duly-marked exhibits;

2. Exhibits “p-2”, “p-3”, “p-5”, “P-12”, “P-14”, “P-15”, “P-16”, “P-17", “P-18”, “P-19”, “P-20”, “P-21", “P-22”, “P-28”, ‘“p- 40”, “P-44", “P-48", “P-50”, “P-52”, “P-55", “P-56”, “P-57", “P-58", “P-64”, “P-74", “P-76” and submarkings, “P-26-24”, “P-26-87”, “P-82” and submarkings, “P-86”, “P-87”, and “P- 88”, for failure to present the originals for comparison;

3. Exhibit “P-4”, for not being found in the records of the case and for not being identified; and

4. Exhibits “P-26-5”, “P-26-6”, “P-26-9”, “P-26-11”", “P-26-20”, “P-26-138”, “P-26-240”, “P-26-247", “P-26-315”, “P-26-322”, “P-26-393”, “P-26-394”, “P-26-408”, “P-26-409”, “P-26-410”, “P-26-411”, “P-26-412", “P-26-413”, “P-26-414”, “P-26-415”, “P-26-416”, “P-26-417", “P-26-418”, “P-26-419”, “P-26-420”, “P-26-421”, “P-26-422”, “P-26-423”, “P-26-424”, “P-26-425”, “P-26-426”, “P-26-427", “P-26-428”, “P-26-429", “P-26-430”, “P-26-431”, “P-26-432”, “P-26-433”, “P-26-434", “P-26-435”, “P-26-436”", “P-26-437”, “P-26-438”, “P-26-439", “P-26-440”, “P-26-441”", “P-26-442”, “P-26-443”, “P-26-444”, “P-26-445”, “P-26-446”, “P-26-447”, “P-26-451”, “P-26-453”, “P-26-454”, “P-26-455”, “P-26-490”, “P-26-502”, “P-26-507”, “P-26-512”, “P-26-522”, “P-26-528", “P-26-530”, “P-26-546”, “P-26-556”, “P-26-564”", “P-26-575”, “P-26-576”", “P-26-579", “P-26-580”, “P-26-581”, “P-26-582”, “P-26-631”, “P-26-632”, “P-26-633”, “P-26-634”, “P-26-635”, “P-26-636”, “P-26-637", “P-26-638”, “P-26-643”, “P-26-646”, “P-26-649”, “P-26-653”, “P-26-655”, “P-26-656”", “P-26-685”", “P-26-701", “P-26-761”, “P-26-762", and “P-83” and submarkings, for not being found in the records of the case.

of

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Thus, on September 10, 2020, petitioner filed its Motion for Reconsideration (Re: Resolution dated 30 July 2020) on the denied exhibits.*_ Respondent failed to file his comment thereon.”

In the Resolution dated February 23, 2021,4? the Court partially granted the said Motion for Reconsideration (Re: Resolution dated 30 July 2020) of petitioner, and admitted Exhibits “P-1”, “P-2”, “P-3”, “P- 5”, “P-6”, “P-11”, “P-11-a”, “P-13”, “P-13-a”, “P-26-5”, “P-26-6”, “P- 26-9”, “P-26-11", “P-26-20", “P-26-240", “P-26-247", “P-26-315”, “P- 26-322", “P-26-502”, “P-26-507”, “P-26-556", “P-26-579", “P-26- 631”, “P-26-632”, “P-26-633”, “P-26-634”, “P-26-635”", “P-26-636”, “P-26-637”, “P-26-638”", “P-26-643”, “P-26-646”, “P-26-649”", “P-26- 653”, “P-26-761", “P-26-762”, “P-29", “P-30”, “P-31”, “P-32”, “P-33”, “P-34”, “P-35”, “P-36”, “P-37", “P-38”, “P-39”, “P-41”, “P-42”, “P-43”, “P-45”, “P-46”, “P-47”, “P-49”, “P-51”, “P-53”, “P-54”, “P-59”, “P-60”, “P-61”, “P-62”, “P-63”, “P-65”", “P-66”, “P-67”, “P-68”, “P-69”, “P-70”, “P-71", “P-72”, “P-73", “P-75", and “P-83” and submarkings; but the following exhibits were still denied, for not being found in the records, to wit: Exhibits “P-26-138”, “P-26-393”, “P-26-394”, “P-26- 408”, “P-26-409”, “P-26-410", “P-26-411”, “P-26-412”, “P-26-413”, “P-26-414”, “P-26-415”, “P-26-416”, “P-26-417”, “P-26-418”", “P-26- 419”, “P-26-420", “P-26-421", “P-26-422”, “P-26-423", “P-26-424”, “P-26-425”, “P-26-426", “P-26-427", “P-26-428”", “P-26-429”, “P-26- 430”, “P-26-431", “P-26-432”, “P-26-433”", “P-26-434”", “P-26-435”, “P-26-436", “P-26-437”, “P-26-438”, “P-26-439”, “P-26-440", “P-26- 441”, “P-26-442", “P-26-443”, “P-26-444”, “P-26-445", “P-26-446”, “P-26-447”, “P-26-451”, “P-26-453”, “P-26-454”, “P-26-455”, “P-26- 490”, “P-26-512”, “P-26-522”, “P-26-528”", “P-26-530", “P-26-546”, “P-26-564”, “P-26-575”, “P-26-576”", “P-26-580", “P-26-581”, “P-26- 582”, “P-26-655”, “P-26-656”, “P-26-685”, and “P-26-701”.

On May 21, 2021, petitioner filed its Memorandum,“ while the Memorandum of respondent was posted on May 15, 2021.*° ‘| Docket — Vol. III, pp. 1673 to 1677.

*2 Records Verification dated October 21, 2020 issued by the Judicial Records Division of this Court, Docket — Vol. IV, p. 2161.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

The case was considered submitted for decision on June 17, 2021.46

THE ISSUE

As stipulated, the sole issue for the Court's determination is as follows:

" ... Whether or not Petitioner is entitled to a refund/ tax credit of excess or unutilized input VAT payments for the first quarter of calendar year 2008 in the amount of

Twenty-One Million Four Hundred Sixty Thousand Four

Hundred Thirty-One Pesos and Forty-Eight Centavos

(P21,460,431.48)."47 Petitioner's arguments:

Petitioner argues that the administrative and judicial claims were seasonably filed; that it is a VAT-registered entity, and is engaged in VAT zero-rated sales; that it incurred and paid input VAT during the 1st quarter of 2008 from its domestic purchases of goods and services; that its input VAT for the 1st quarter of 2008 has not been applied against output taxes; and that its input VAT is directly attributable to its effectively zero-rated sales for the 1st quarter of 2008.

Respondent's counter-arguments:

Respondent counters that petitioner failed to prove that their sales of goods and services to Philippine Economic Zone Authority (PEZA)-registered enterprises qualified as effectively zero-rated sales; that the burden of proving entitlement to a refund lies with the claimant; and that the exhibits of petitioner should not be given any probative value for being hearsay evidence.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

THE COURT'S RULING

The present Petition for Review is denied. Requisites for the grant of the refund or issuance of a tax credit certificate under the

NIRC

Section 112(A) and (C) of the NIRC of 1997, as amended by Republic Act No. 9337,48 provides as follows: "SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: xxx.

XXX

XXX

XXX

48 AN ACT AMENDING SECTIONS 27, 28, 34, 106, 107, 108, 109, 110, Ill, 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. (!"]

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the Commissioner shall grant a refund or issue a tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty

(30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals."

Based on the foregoing provisions, jurisprudence has laid down nine (9) requisites which must be complied with by the taxpayer- claimant to successfully obtain a credit/refund of input VAT.

Said

requisites may be classified into certain categories, to wit: Timeliness of the filing of the administrative and judicial claims:

1. the claim is filed with the BIR within two years after the close of the taxable quarter when the sales were made;49

2. that in case of full or partial denial of the refund claim, or the failure on the part of the Commissioner to act on the said claim within a period of 120 days, the judicial claim is filed with this Court, within 30 days from receipt of the decision or after the expiration of the said 120-day period;50 49 Intel Technology Philippines. Inc. vs. Commissioner of Internal Revenue, G.R. No. 155732, April 27, 2007; San Roque Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009; and AT&T Communications Services Philippines, Inc., G.R. No. 182364, August 3, 2010. 50 Steag State Power, Inc. (Formerly State Power Development Corporation) vs. Commissioner of Internal Revenue, G.R. No. 205282, January 14, 2019; Rohm Apollo ()1/

Air Liqwde Philippines, Inc. vs. Commissioner of Internal Revenue

With reference to the taxpayer's registration with the BIR:

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

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

5. for zero-rated sales under Sections 106(A)(2)(a)(l) and (2); 106(B); and 108(B)(l) and (2) of the NIRC of 1997, as amended, the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations; 53 As regards the taxpayer's input VAT being refunded:

6. the input taxes are not transitional input taxes;54

7. the input taxes are due or paid; 55

8. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributed to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; 56 and

9. the input taxes have not been applied against output Semiconductor Philippines vs. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015.

51 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 52 !d.

53 !d.

54 !d.

55 !d.

56 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; and San Roque Power Corporation vs. Commissioner of Internal Revenue, supraf:!/;

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue taxes during and in the succeeding quartersY On the basis of afore-enumerated requisites, the Court shall now determine whether petitioner is entitled to a refund or tax credit of input tax on VAT zero-rated sales.

Petitioner's

and judicial timely filed administrative claims were Anent the first requisite, this Court has already ruled that petitioner's administrative claim was seasonably filed on December 23, 2009, per its Resolution dated September 1, 2010.58 With regard to the second requisite, which is directly related to this Court's jurisdiction over the present Petition for Review, the Supreme Court has decreed that this Court has acquired jurisdiction over the case. In its Resolution dated October 11, 2017 rendered in G.R. No. 202507,59 the High Court ruled in this wise: "The CTA erred in ruling that the petitioner's judicial claim was prematurely filed. In dismissing the petition for review filed before the tax court, the CTA First Division imposed strict compliance with the 120+30-day periods applied in claims for refunds or tax credit of input tax, as required under Section 112 of the NIRC xxx.

XXX

XXX

XXX

In CIR v. San Roque Power Corporation, 5° the Court indeed reiterated the need for parties to satisfy the foregoing provisions on the 120+30-day periods.

Non-

compliance therewith constitutes a violation of the doctrine of exhaustion of administrative remedies, which then renders the immediate filing of a CTA petition 57 Intel Technology Philippines, Inc. vs. Commissioner of Internal Revenue, supra; San Roque Power Corporation vs. Commissioner of Internal Revenue, supra; and AT&T Communications Services Philippines, Inc., supra. 58 Docket- Vol. I, pp. 129 to 140, at p. 134. 59 Docket- Vol. I, pp. 778 to 784. 60 703 Phil. 310 (2013)C1/

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue premature and without a cause of action. The CTA does not acquire jurisdiction over the petition; the dismissal of the petition becomes a necessary consequence. It should however be emphasized that in the same case of San Roque, the Court provided an exception to the general rule that mandates strict compliance, as it considered jurisprudence and a BIR issuance in effect prior to the Court's promulgation of its decision in Aichi.

The Court

clarified:

[S]trict compliance with the 120+ 30[-]day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No. DA-489-03

on 10 December 2003 to 6 October 2010

when the Aichi doctrine was adopted, which again reinstated the 120+ 30[-]day periods as mandatory and jurisdictional.

(Emphasis

supplied) It is pertinent that the petitioner's administrative and judicial claims for its unutilized input VAT payments were filed on December 23, 2009 and March 30, 2009, respectively. The petition for review filed with the CTA was brought during the effectivity of BIR Ruling No. DA- 489-03, by which the BIR expressly declared that 'the taxpayer-claimant need not wait for the lapse of the 120- day period before it could seek judicial relief with the CTA by way of Petition for Review.' From the time BIR Ruling No. DA-489-03 was issued on December 10, 2003, taxpayers could rely on its provisions until the Court's issuance of its decision in Aichi on October 6, 2010, where the Court held that the 120+30-day periods in Section 112 of the NIRC are mandatory and jurisdictional. This doctrine was reiterated by the Court in the recent case of

Visayas

Geothermal Power

Company

v.

Commissioner of Internal Revenue.

Given the circumstances, the petitioner's filing of the CTA petition on March 30. 2010. and 0'/

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue without waiting for the CIR's action on its administrative claim. was accePtable. The tax court validly acquired jurisdiction over the case; its ground for the dismissal of the petition was without legal basis." (Emphases and underscoring added) Clearly, petitioner has complied with the first and second requisites, i.e., that the administrative and judicial claims were both timely filed.

Petitioner is a VAT-registered taxpayer As stipulated by the parties,61 petitioner is registered with the BIR as a VAT entity under Certificate of Registration Number OCN 9RC000057089. Thus, petitioner has likewise shown compliance with the third requisite.

Petitioner

had zero-rated sales during the 1st quarter of 2008, but only in the amount of 1'123,908,965.20 Anent the fourth requisite, the applicable provisions are Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, which respectively provide as follows: "SEC. 106. Value-added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax. - xxx

XXX

XXX

XXX

(2) The following sales by VAT-registered persons shall be subject to zero percent (0%) rate:

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

(a) Export Sales. -The term 'export sales' means:

XXX

XXX

XXX

(5) Those considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investment Code of 1987, and other special laws;" (Emphases added) "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -

XXX

XXX

XXX

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent (0%) rate:

XXX

XXX

XXX

(3) Services rendered to persons or entities whose exception under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;" (Emphases added) Relative to the foregoing provisions, Sections 4.106-5 and 4.108-5 of Revenue Regulations (RR) No. 16-2005,62 as amended by RR No. 04-2007,63 which implements the aforecited provisions of the NIRC of 1997, as amended, also respectively provide as follows: "SEC. 4.106-5. Zero-Rated Sales of Goods or Properties. - xxx The following sales by VAT-registered persons shall be subject to zero percent (0%) rate: 62 SUBJECT: Consolidated Value-Added Tax Regulations of2005 63 SUBJECT: Amending Certain Provisions of Revenue Regulations No. 16-2005, As Amended, Otherwise Known as the Consolidated Value-Added Tax

Regulations of 2005 CYJ

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

(a) Export sales.- 'Export Sales' shall mean:

XXX

XXX

XXX

(5) Transactions considered export sales under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, and other special laws.

'Considered export sales under Executive Order No. 226' shall mean the Philippine port F.O.B. value determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer, or the net selling price of export products sold by a registered export producer to another export producer, or to an export trader that subsequently exports the same; Provided, That sales of export products to another producer or to an export trader shall only be deemed export sales when actually exported by the latter, as evidenced by landing certificates or similar commercial documents; Provided, further, That pursuant to EO 226 and other special laws.

even without actual exportation, the following shall be considered constructively exported:

(1) sales to bonded manufacturing warehouses of export-oriented manufacturers; (2) sales to export processing zones pursuant to Republic Act CRAl Nos. 7916. as amended. 7903. 7922 and other similar export processing zones; (3) sale to enterprises duly registered and accredited with the Subic Bay Metropolitan Authority pursuant to RA 7227;

(4) sales to registered export traders operating bonded trading warehouses supplying raw materials in the manufacture of export products under guidelines to be set by the Board in consultation with the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC); ill sales to diplomatic missions and other agencies and/or instrumentalities granted tax immunities, of locally manufactured, assembled or repacked products whether paid for in foreign currency or not." (Emphases added) Air Liqwde Philippines, Inc. vs. Commissioner of Internal Revenue "SEC. 4.108-5. Zero-Rated Sale of Services.-

XXX

XXX

XXX

(b) Transactions Subject to Zero Percent (0%) VAT Rate. - The following services performed in the Philippines by a VAT-registered person shall be subject to zero percent (0%) VAT rate:

XXX

XXX

XXX

(3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate;" (Emphases added) One of the special laws mentioned in the above prov1s1on, which specifically applies to this case, is Republic Act (RA) No. 7916, as amended by RA No. 8748, otherwise known as 'The Special Economic Zone Act of 1995'~ Sections 8 and 24 thereof respectively provide as follows:

"SECTION 8.

ECOZONE to be Operated and

Managed as Separate

Customs

Territory.

- The ECOZONE shall be managed and operated by the PEZA as separate customs territory. The PEZA is hereby vested with the authority to issue certificates of origin for products manufactured or processed in each ECOZONE in accordance with the prevailing rules of origin, and the pertinent regulations of the Department of Trade and Industry and/or the Department of Finance." (Emphases supplied) "SECTION 24. Exemption form National and Local Taxes. - Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. xxx." (Emphases supplied1fJ.

CfA Case Nos. 8052 Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

On the basis of the aforecited provisions, since the Ecozone is viewed as a foreign territory by legal fiction, sales of goods and services made by a VAT-registered person in the Philippine customs territory to an entity registered and operating within the Ecozone are considered exports to a foreign country subject to zero percent (0%) VAT. This was elucidated by the Supreme Court in Commissioner of Internal Revenue vs. Toshiba Information Equipment (Phils.), Inc., 64 to wit:

"This Court agrees, however, that PEZA-registered enterprises, which would necessarily be located within ECOZONES, are VAT-exempt entities, not because of Section 24 of Rep. Act No. 7916, as amended, which imposes the five percent (5%) preferential tax rate on gross income of PEZA-registered enterprises, in lieu of all taxes; but, rather, because of Section 8 of the same statute which establishes the fiction that ECOZONES are foreign territory.

xxx An ECOZONE or a Special Economic Zone has been described as - ... [S]elected areas with highly developed or which have the potential to be developed into agro-industrial, industrial, tourist, recreational, commercial, banking, investment and financial centers whose metes and bounds arc fixed or delimited by

Presidential

Proclamations. An ECOZONE may contain any or all of the following: industrial estates (IEs), export processing zones (EPZs), free trade zones and tourist/ recreational centers.

The national territory of the Philippines outside of the proclaimed borders of the ECOZONE shall be referred to as the Customs Territory.

Section 8 of Rep. Act No. 7916, as amended, mandates that the PEZA shall manage and operate the ECOZONES as a separate customs territory; thus, creating

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue the fiction that the ECOZONE is a foreign territory. As a result, sales made by a supplier in the Customs Territory to a purchaser in the ECOZONE shall be treated as an exportation from the Customs Territory. Conversely, sales made by a supplier from the ECOZONE to a purchaser in the Customs Territory shall be considered as an importation into the Customs Territory. Given the preceding discussion, what would be the VAT implication of sales made by a supplier from the Customs Territory to an ECOZONE enterprise? The Philippine VAT system adheres to the Cross Border Doctrine, according to which, no VAT shall be imposed to form part of the cost of goods destined for consumption outside of the territorial border of the taxing authority.

Hence, actual export of goods and services from the Philippines to a foreign country must be free of VAT; while, those destined for use or consumption within the Philippines shall be imposed with ten percent (10%) VAT." (Emphases supplied) In other words, while an ecozone is geographically within the Philippines, it is deemed a separate customs territory and is regarded in law as foreign soil. Sales by suppliers from outside the borders of the ecozone to this separate customs territory are deemed exports and treated as export sales. These sales are zero-rated or subject to tax rate of zero percent. 65 Based on Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, the following essential elements must be present in order for an export sale to qualify for VAT zero-rating under:

1. the sale was made by a VAT registered person; and

2. there was sale of goods or services to an entity entitled to incentives under Executive Order No. 226, 65 Commissioner of Internal Revenue vs. Sekisui Jushi Philippines, Inc., G.R. No. 149671, July 21, 2006.(j/

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue otherwise known as the Omnibus Investment Code of 1987 ("OIC"), and other special laws. As regards the first essential element, petitioner is a VAT- registered entity, as already established earlier. Relative to the second essential element, any VAT registered person claiming VAT zero-rated sales, such as petitioner, must present, among others, the following documents:

1. the sales invoice or official receipt as proof of sale of goods or services; and

2. any proof of the buyer's entitlement to tax incentives under other special laws (i.e.,

Certificates

of Registration with the PEZA pursuant to RA No. 7916, as amended, for the pertinent period/taxable year). For the first type of document, in proving its zero-rated sales, petitioner must comply with the pertinent invoicing requirements, containing all the required information under Section 113(A) and (B) of the NIRC of 1997, as amended, to wit: "SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons. - (A) Invoicing Requirements. -

A VAT-registered

person shall issue:

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

(B) Information Contained in the VAT Invoice or

VAT Official Receipt. -The following information shall be indicated in the VAT invoice or VAT official receipt:

(Jf

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

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

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

(a) The amount of the tax shall be shown as a separate item in the invoice or receipt;

(b) If the sale is exempt from value-added tax, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt;

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

(d) If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the break-down of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue separate invoices or receipts for the taxable, exempt, and zero-rated components of the sale.

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and

(4) In the case of sales in the amount of One thousand pesos (P1,000) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and Taxpayer Identification Number (TIN) of the purchaser, customer or client." The foregoing provisions are further implemented by Section 4.113-1(A) and (B) of RR No. 16-05, as amended, to wit-(!// Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue "SEC. 4.113-1.

Invoicing Requirements. - (A) A VAT-registered person shall issue:-

(1) A VAT invoice for every sale, barter or exchange of goods or properties; and

(2) A VAT official receipt for every lease of goods or properties, and for every sale, barter or exchange of services.

Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or 'VAT official receipt'. All purchases covered by invoices/receipts other than VAT 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:

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

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

(a) The amount of tax shall be shown as a separate item in the invoice or receipt;

(b) If the sale is exempt from VAT, the term 'VAT-exempt sale' shall be written or printed prominently on the invoice or receipt; (!1

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

(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 peso (P1,000.00) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and TIN of the purchaser, customer or client, shall be indicated in addition to the information required in (1) and (2) of this Section."

In addition to the above requirements, the invoices and official receipts must be duly registered with the BIR as prescribed under Section 237 in relation to Section 238 of the NIRC of 1997, as amended, to wit:

"SEC. 237.

Issuance of Receipts or Sales or

Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at Twenty- five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service: xxx" "SEC. 238.

Printing of Receipts or Sales or

Commercial Invoices. - All persons who are engaged in business shall secure from the Bureau of

Interna~

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same. No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner." In

Eastern

Telecommunications

Philippines, Inc.

vs.

Commissioner of Internal Revenue}6 the Supreme Court held: "An applicant for a claim for tax refund or tax credit must not only prove entitlement to the claim but also compliance with all the documentary and evidentiary requirements. Consequently, the old CTA, as affirmed by the CTA en bane, correctly ruled that a claim for the refund of creditable input taxes must be evidenced by a VAT invoice or official receipt in accordance with Section 110(A)(1) of the NIRC. Sections 237 and 238 of the same Code as well as Section 4.108-1 of RR No. 7-95 provide for the invoicing requirements that all VAT-registered taxpayers should observe, such as: (a) the BIR Permit to Print;

(b) the Tax Identification Number of the VAT-registered purchaser; and (c) the word 'zero-rated' imprinted thereon. Thus, the failure to indicate the words 'zero- rated' on the invoices and receipts issued by a taxpayer would result in the denial of the claim for refund or tax credit. xxx." (Emphasis added) Based on the foregoing jurisprudential pronouncements, it is vital for a taxpayer claiming tax refund/credit on its input taxes attributable to its zero-rated sales to prove that it had followed the invoicing requirements under the law.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

In its Quarterly VAT Return for the 1st quarter of 2008,67 petitioner declared total sales amounting to P257,254,403.16, which included zero-rated sales/receipts of P199,197,257.57, as shown as follows:

Vatable Sales/Receipts

P57,054,748.75

Zero-Rated Sales/Receipts

199,197,257.57

Exempt Sales/Receipts

1,002,396.84

Total Sales/Receipts

p 257,254,403.16 Petitioner submitted the invoices and official receipts in support of its declared zero-rated sales, which were sequentially enumerated in petitioner's Schedule of Zero-rated Sales.68 After examining the sum of the amounts in the said Schedule, this Court observes that there is a discrepancy in the amount of P235,556.93, which should be disallowed outright on the ground that the same is without supporting zero-rated invoice or official receipt, viz:

Zero-Rated Sales for

the 1st Quarter of 2008

Total Zero-Rated Sales per VAT Return

p 199,197,257.57

Total Zero-Rated Sales per Schedule

For the month of January 2008 (Exhibit "P-86") 69,967,257.15 For the month of February 2008 (Exhibit "P-87") 68,398,247.35 For the month of March 2008 (Exhibit "P-88") 60,596,196.14

Total

p 198,961,700.64

Difference

p 235,556.93 Upon further examination of the invoices and official receipts supporting its claimed zero-rated sales, in addition to the above disallowance, the sales in the total amount of P42,541,710.08 should likewise be disallowed since the invoices related to the pertinent sale of goods are not stamped or printed with the phrase "zero-rated sales", and some of its sale of services are without supporting VAT "zero-rated" official receipts, the details of which are as follows:

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Invoice

Name of Customer pDate® Amount of Sales | Exhibit No.

Supported by invoice not stamped/ printed with the phrase "zero-rated sales" 16,000.00 Franke Foodservice Systems Phils Inc | 1/3/2008 “p-23-43”

Franke Foodservice Systems Phils Inc | 1/8/2008

Franke Foodservice Systems Phils Inc | 1/8/2008

Franke Foodservice Systems Phils Inc 1/10/2008

Franke Foodservice Systems Phils Inc _| 1/10/2008

Franke Foodservice Systems Phils Inc | 1/11/2008

Franke Foodservice Systems Phils Inc

Philippines

Franke Foodservice Systems Phils Inc 1/23/2008 950.00 “P-23-386" ‘P-23-417” “p-23-418"

“P-23-419”

“P-23-496”

16,000.00 | “p-23-497” 1/31/2008 2/2/2008 203,130.00 “P-23-743"

Franke Foodservice Systems Phils Inc “P-23-744"

“P-23-745”

“P-23-747”

| Franke Foodservice Systems Phils Inc _

Franke Foodservice Systems Phils Inc “P-23-782”

AMI Semiconductor Philippines, Inc. “P-23-803”

Franke Foodservice Systems Phils Inc “P-23-832”

2/13/2008 , Franke Foodservice Systems Phils Inc 2/8/2008 1,900.00 | “P-23-748" Franke Foodservice Systems Phils Inc 2,850.00 | “P-23-833” Franke Foodservice Systems Phils Inc 2/18/2018 16,000.00 | “P-23-881” ISPL (Phils.) Inc. 2/18/2018 45,600.00 | “P-23-886” Franke Foodservice Systems Phils Inc 2/21/2008 9,600.00 | “P-23-937” 6? Date format: Month/Day/Year orf Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

“P-23-958"

Franke Foodservice Systems Phils Inc

“P-23-999”

“P-23-1000" AMI Semiconductor Philippines, Inc. 2/28/2008

Alplus Samsung C120

AGC Flat Glass Phils., Inc.

Franke Foodservice Systems Phils Inc 1,900.00 "P-23-1285” 3/5/2008 “P-23-1350"

Franke Foodservice Systems Phils Inc

Franke Foodservice Systems Phils Inc

CfA Case Nos. 8052 Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Name of Customer

Invoice

Amount of Sales

Date69

ISPL Phil Inc

3/19/2008 45,600.00

ISPL Phil Inc

3/19/2008 45,600.00 Franke Foodservice Systems Phils Inc. 3/24/2008 16,000.00 Franke Foodservice Systems Phils Inc. 3/24/2008 16,000.00 Franke Foodservice Systems Phils Inc. 3/24/2008 9,600.00 Franke Foodservice Systems Phils Inc. 3/24/2008 1,200.00 Franke Foodservice Systems Phils Inc. 3/24/2008 800.00 Franke Foodservice Systems Phils Inc. 3/24/2008 3,000.00 Franke Foodservice Systems Phils Inc. 3/27/2008 9,600.00 Franke Foodservice Systems Phils Inc. 3/27/2008 1,900.00 Franke Foodservice Systems Phils Inc. 3/27/2008 12,800.00 ISPL (Phils.) Inc.

3/27/2008 45,600.00 Franke Foodservice Systems Phils Inc. 3/31/2008 16,500.00 Franke Foodservice Systems Phils Inc. 3/31/2008 12,800.00 Franke Foodservice Systems Phils Inc. 3/31/2008 9,600.00 Franke Foodservice Systems Phils Inc. 3/31/2008 1,900.00 Shi Mfg. & Services (Phils.), Inc. 3/31/2008 6,500.00 Shi Mfg. & Services (Phils. ), Inc. 3/31/2008 6,500.00 AGC Flat Glass Phils. Inc.

3/31/2008 4,807,314.46 AGC Flat Glass Phils. Inc.

3/31/2008 5,903,710.89 Alplus-Sunpower Bldg. 2 3/31/2008 1,184,102.40 Imasen Philippine Manufacturing Corp. 3/31/2008 150,450.00 AGC Flat Glass Phils. Inc.

3/31/2008 516,513.71 Shi Mfg. & Services (Phils.), Inc. 3/31/2008 843,849.54 AMI Semiconductor Philippines Inc. 3/31/2008 400.00 AGC Flat Glass Phils. Inc.

3/31/2008 200.00

Sub-total

41,977,912.91 Sales of service not supported by "zero-rated" official receipts

Samsung Electro-Mechanic Philippines

1/2/2008 4,500.00 Amkor Technology Philippines Inc.

1/31/2008 36,400.00 Analog Devices Gen. Trias 1/31/2008 5,040.00

Cirtek Electronics Corporation

1/31/2008 2,050.00 Continental Temic Electronics Phils. 1/31/2008 4,200.00 Continental Temic Electronics Phils. 1/31/2008 2,500.00 Integrated Microelectronics Inc.- 1/31/2008 5,400.00

Isahava

Kyocera Kinseki Philippines, Inc.

1/31/2008 1,650.00 MSM Manila Inc.

1/31/2008 5,000.00 ON Semiconductor Phils., Inc.

1/31/2008 700.00 Ibiden Philippines, Inc.

1/31/2008 5,200.00

TANN Philippines

1/31/2008 375.00

Temic Automotive Philippines

1/31/2008 2,500.00

Yutaka Manufacturing Philippines Inc

1/31/2008 12,500.00

Samsung Electro-Mechanic Philippines

2/2/2008 4,500.00

Air Water Philippines Inc

2/29/2008 3,632.40

Amkor Technology Philippines Inc

2/29/2008 36,400.00

Analog Devices Gen Trias

2/29/2008 5,040.00 Exhibit No.

"P-23-1508"

"P-23-1509"

"P-23-1549"

"P-23-1550"

"P-23-1551"

"P-23-1552"

"P-23-1553"

"P-23-1554"

"P-23-1605"

"P-23-1606"

"P-23-1607"

"P-23-1610"

"P-23-1657"

"P-23-1658"

"P-23-1659"

"P-23-1660"

"P-23-1702"

"P-23-1703"

"P-23-1731"

"P-23-1732"

"P-23-1747"

"P-23-1753"

"P-23-1765"

"P-23-1767"

"P-23-1774"

"P-23-1789"

"P-23-27"

"P-23-601"

"P-23-603"

"P-23-607"

"P-23-608"

"P-23-609"

"P-23-610"

"P-23-612"

"P-23-614"

"P-23-619"

"P-23-621"

"P-23-622"

"P-23-623"

"P-23-625"

"P-23-649"

"P-23-1167"

"P-23-1168"

"P-23-1171"

(1')

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Invoice

Name of Customer Data’ Amount of Sales | Exhibit No.

Austria Microsystems Phils Inc 2/29/2008 2,000.00 | “P-23-1172” Cirtek Electronics Corporation 2/29/2008 2,050.00 | “P-23-1175” “p-23-1176" 2,500.00 | “P-23-1177" 2/29/2008 2,670.00 77,500.00

“P-23-1705”

Air Water Philippines Inc. “P-23-1771”" Amkor Technology Philippines Inc. “P-23-1772” Analog Devices Gen. Trias “P-23-1775”

Cirtek Electronics Corporation “P-23-1778"

“P-23-1779" 2,500.00 10,000.00 | “P-23-1799” Sub-total| 563,797.17, | GRAND TOTAL | P42,541,710.08) Moreover, for the second type of document in proving zero- rated sales, it must further be established that petitioner’s customers are indeed PEZA-registered entities subject to zero-rated VAT.

No.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Relative thereto, petitioner submitted the Letter of the then PEZA Director General, Lilia B. De Lima dated

November

30, 2010/0 confirming the issuance of VAT zero-rating certifications to the following clients of petitioner, to wit:

2008 VAT Zero

Rating

PEZA

PEZA Reg.

Date

Enterprise

Reg. No.

Date

No.

Issued

2PI MIRCROWAVE TECHNOLOGY

04-35

17 May 2004

- - 28 May 2007, AGC FLAT GLASS PHILIPPINES, 07-33 as amended 2008-561

31 January

INC.

on 29 June

2008 2007

AICHI FORGING COMPANY OF

03 March

18 04-17 2008-076

December

ASIA, INC.

2004 2007

AIR LIQUIDE PIPELINE UTILmES

SERVICES (ALPLUS), INC.

99-045

15 March 06

2008-417

22 January

Formerly Gateway Air Liquide

15 July 99

2008 Industrial Gas Co. Inc.

23 October

16 January

AIR WATER PHILIPPINES, INC.

02-055 2002 2008-298 2008

22 December

7 February

AMI SEMICONDUCTOR

04-83 2004 2008-741 2008

AMCOR ANAM ADVANCED

95-132

6 December

- - PACKING INC.

1995

AMKOR TECHNOLOGY

PHILIPPINES, INC.

00-092

3 September

2008-284

15 January

Formerly Amkor Technology

2003 2008

Philippines

9 August

21 January

AM PLUS TECHNOLOGIES INC.

07-13-L

2007 2008-367 2008 12

6 November

December

ANALOG DEVICES GE TRIAS, INC.

95-117 1995 2008-018 2007

30 January

1 February

AUSTRIAMICROSYSTEM, INC.

06-10 2006 2008-629 2008

BELL ELECTRONICS

CORPORATION

00-058

7 July 2000

- - CAM MECHATRONIC (PHILS.),

4 October

21 July

INC.

95-106 1995 2008-1254 2008 CARDINAL MRI CENTER INC.

- - - -

CASTEM PHILIPPINES

27 October

29 January

95-113 1995,as 2008-531

CORPORATION

amended on 2008 70 Exhibit "P-85". C1l No.

16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

2008 VAT Zero

Rating

PEZA

PEZA Reg.

Date

Enterprise

Reg. No.

Date

No.

Issued

25 June 2002

13

23 August

February

CEBU MICROELECTRONICS, INC.

93-40 1993 2008-807 2008

24 March

28 January

CIRTEK ELECTRONICS CORP.

98-022 1998 2008-442 2008

CONTINENTAL TEMIC

04-70

10 November

2008-439

23 January

ELECTRONICS INC.

2004 2008

11 September

3 CPL PACKAGING, INC.

01-055 2001, as 2008-1410

September

amended on

17 July 2007

2008

CRL ENVIRONMENTAL

- - - -

CORPORATION

EIGHTECH MANUFACTURING

00-102

19 December

2008-280

15 January

CORPORATION

2000 2008 3 April 1979, ESSILOR MFG. PHILIPPINES, INC.

79-04 as amended 2008-257

11 January

Formerly Bataan Optical, Inc.

on 25 2008

January 1994

EUROWOOD PRODUCTS AND

- - - -

TECHNIQUE MFG CORPORATION

15 January

96, as

8 February

FASTECH ELECTRONIQUE, INC.

96-004 amended on 2008-762 2008

2 October

1998

FRANKE FOODSERVICE SYSTEM

16 October

12 00-082 2008-027

December

PHILS., INC.

2000 2007 FUJIELASTOMERS MANILA CORP.

03-065

1 September

2008-998 - 2003

FUJITSU TEN CORPORATION OF

29 October

12 01-063 2008-025

December

THE PHILIPPINES

2001 2007

HEREAUS ELECTRONIC

21 March

21 97-026 2008-105

December

MATERIALS PHILS., INC.

1997 2007

HITACHI GLOBAL STORAGE

27 94-28

11 May 1994

2008-112

December

TECHNOLOGIES PHILS., CORP.

2007

HITACHI INDUSTRIAL

95-59

31 May 2008

2008-342

17 January

MACHINERY PHILIPPINES CORP.

2008 C1l No.

31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

2008 VAT Zero

Rating

PEZA

PEZA Reg.

Date

Enterprise

Reg. No.

Date

No.

Issued

HOYA GLASS DISK PHILIPPINES, 97-010

6 February

2008-203

8 January

INC.

1997 2008 27 IBIDEN PHILS., INC.

00-061

20 July 2000

2008-129

December

2007 IMASEND PHILIPPINES MFG., 96-114

11 January

2008-159

2 January

CORP.

1996 2008

INTEGRATED FLOW SYSTEMS

06-72

27 November

2008-1294

24 July

LLC.

2006 2008

15 August

INTEGRATED

1994,as

14 January

94-59 amended on 2008-266 MICROELECTRONICS, INC.

19 September

2008 2007

17 October

13 1-0MNI PRECISION, INC.

00-085 2000 2008-805

February

2008 19 IONICS EMS, INC.

00-039

17 April 2000

2008-083

December

2007

6 January

19 IONICS EMS, INC.

05-01-IT

2008-084

December

2005 2007 4 June 1996, 13 ISPL INC.

96-068 as amended 2008-816

February on 1 July

2005 2008 JGC PHILIPPINES, INC.

07-14-IT

27 February

2008-291

15 January

2007 2008

JU-YOUNG ELECTRONICS

91-044

29 November

2008-605

1 February

(PHILS.). INC.

1991 2008

KATOLEC PHILIPPINES

96-108

17 October

2008-324

17 January

CORPORATION

1996 2008

2 August

21 KEC-ASTRON PHILS., CORP.

96-091 2008-099

December

1996 2007

KEDICA PHILIPPINES

03-039

3 June 2003

2008-592

31 January

CORPORATION

2008

KOMYO PHILIPPINE LOGISTIC

98-010

3 February

2008-277

15 January

SERVICE CORPORATION

1998 2008

12 December

12 KYOCERA KINSEKI PHILS, INC.

97-016 2007 2008-007

December

2007 LAGUNA ELECTRONICS, INC.

93-02

17 October

2008-235

10 January

1998 2008

(JIJ

No.

48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

2008 VAT Zero

Rating

PEZA

PEZA Reg.

Date

Enterprise

Reg. No.

Date

No.

Issued

LEXMARK RESEARCH &

14

DEVELOPMENT CORPORATION

01-009-IT

17 July 2001

2008-837

February

2008 LITTELFUSE PHILS., INC.

00-060

14 July 2000

2008-691

5 February

2008

LUZON ELECTRONICS

95-121

14 November

2008-236

10 January

TECHNOLOGY, INC.

1995 2008 MAENO GIKEN, INC.

01-051

21 August

2008-427

23 January

2001 2008 MASUDA PHILIPPINES, INC.

93-66

28 December

2008-265

14 January

1993 2008

MINDANAO SILICON METAL

- - - -

CORPORATION

23 December

MITSUBA MANUFACTURING

99-081 1999, as 2008-349

18 January

BATANGAS CORPORATION

amended on 2008

12 April 2007

14 October

1996,as

5 February

MITSUBA PHILIPPINES CORP.

96-107 amended on 2008-694

12 January

2008 1998 MME TECHNOLOGIES, INC.

99-071

25 November

1999 - - MSM MANILA, INC.

29 January

Formerly Precision Springs Manila

97-009 1997, as 2008-384

21 January

amended on 2008

Incorporated

29 June 2004

20 December

20 NIDEC PHILIPPINES CORP.

2008-C-93

2008-093

December

2007 2007 NIDEC PHILIPPINES CORP.

01-028

4 April 2001

2008-207

8 January

2008 NIKKO MATERIALS PHILIPPINES, 96-080

3 July 1996

2008-231

10 January

INC.

2008

10 September

21 NSG MICRO OPTICS PHILS., INC.

03-068 2008-109

December

2003 2007

29 December

1993, as

31 January

NT PHILIPPINES, INC.

93-68 amended on 2008-0594

27 November

2008 1996 ~ No.

63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

2008 VAT Zero

Ratina

PEZA

PEZA Reg.

Date

Enterprise

Rea. No.

Date

No.

Issued

28 September

NXP SEMICONDUCTORS

1994, as

28 January

PHILIPPINES, INC.

94-77 amended on 2008-476 2008

3 January

2007 ON SEMICONDUCTOR PHILS., 07-36

2 July 2007

2008-217

8 January

INC.

2008 OPTODEV, INC.

97-051

10 July 1997

2008-232

10 January

2008

3 October

29

ORIENT SEMICONDUCTOR

96-102 2008-950

February

ELECTRONICS PHILIPPINES, INC.

1996 2008

PHILIPPINES ASSOCIATED

82-40

23 September

2008-218

9 January

SMELTING & REFINING CORP.

1982 2008

PHILIPPINE TOEI CHEMICAL

95-135

12 December

2008-1119

2 May

CORPORATION

1995 2008 14 May 1996, PRICON MICROELECTRONICS, 96-058 as amended 2008-672

4 February

INC.

on 10 May

2008 2005 04-34

17 May 2004

2008-1015

24 March

PSI TECHNOLOGIES, INC.

2008 ROHM ELECTRONICS PHILS., INC.

00-081

09 October

2008-170

3 January

2000 2008

SAMSUNG ELECTRO-MECHANICS

16 October

27 97-074 2008-138

December

PHILS., CORP.

1997 2007 SAN TECHNOLOGY, INC.

89-08

03 February

2008-537

7 January

1989 2008

3 August

13

SANRITSU GREAT

95-76 1995,as 2008-800

February

INTERNATIONAL CORP.

amended on 2008

26 July 2006

23 September

1981, as 27 SHELL GAS EASTERN, INC.

81-07 amended on 2008-0925

February

Formerly Shell Gas Phils., Inc.

29 March

2008 2007

SHI MANUFACTURING &

01-008

26 January

2008-254

11 January

SERVICES (PHILS.), INC.

2001 2008

SHIDENGEN PHILIPPINES

95-41

6 April1995

2008-445

28 January

CORPORATION

2008

OS August

28 SHIN-ETSU MAGNETIC PHILS., 99-048 2008-150

December

INC.

1999 2007 ~ No.

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

2008 VAT Zero

Rating

PEZA

PEZA Reg.

Date

Enterprise

Reg. No.

Date

No.

Issued

SHINKOZAN CORP. (MEGASTAMP) - - - -

SHOW A ALUMINUM

15 January

23 January

MANUFACTURING PHILS., 96-007 2008-438

CORPORATION

1996 2008

SUNPOWER PHILIPPINES

20 October

28 January

MANUFACTURING LTD. (BRANCH 03-055 2008-457

OFFICE)

2006 2008

TANN PHILIPPINES

02-016

16 April 2002

2008-0252

11 January

2008 TEAL PACIFIC, LLC - - - - TEAM PACIFIC CORP.

28-0ct

18 March

2010 - - TECHNOL EIGHT PHILS.

1 September

13 05-52 2008-043

December

CORPORATION

2005 2007 TEMIC AUTOMOTIVE (PHILS.), 04-33

17 May 2004

2008-435

23 January

INC.

2008

1 March

TI (PHILIPPINES), INC.

01-010 2001, as 2008-0451

28 January

Formerly Texas Instruments Clark

amended on 2008

07 June 2007

TOKYO STEEAL PHILIPPINES

97-036

07 May 1997

2008-1032

27 March

CORP.

2008

TONG HSING ELECTRONICS

94-72

19 September

2008-490

28 January

(PHILIPPINES), INC.

1994 2008 TST, INC.

- - - - VISHAY (PHILS.), INC.

04-32

17 May 2004

2008-215

8 January

2008 20

17 February

December

WU KONG SINGAPORE PTE., LTD.

95-21 1995 2008-096 2007

5 September

YAMAHA MOTORS PHILS. INC.

07-01-DM

2007

1 February

YKY PARTS CORPORATION

03-040

3 June 2003

2008-0614 2008

YOKOMAHA TIRE PHILIPPINES

- - - -

YUTAKA MANUFACTURING

94-31

23 May 1994

2008-394

21 January

(PHILIPPINES), INC.

2008 - Notably, in the said November 30, 2010 Letter of Director General De Lima, the PEZA indicated that the following entities are:

(1) with no certification issued, (2) with cancelled certification, (3) r1/

CfA Case Nos. 8052 Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue not PEZA-registered, (4) registered only in year 2010, or (5) not entitled to VAT zero-rating, to wit:

1. No Certification Issued:

2PI Microwave Technology

Bell Electronics Corporation

Fujielastomers Manila Corp.

MME Technologies, Inc.

2. Cancelled dated July 11, 2002 (Taken over Amkor Tech): Amcor Anam Advanced Packing, Inc.

3. Not registered with PEZA: Cardinal MRI Center, Inc.

CRL Environment! Corporation

Eurowood Products and Technique Mfg Corporation

Mindanao Silicon Metal Corporation

Shinkozan Corp. (Megastamp) Teal Pacific, LLC TST, Inc.

Yokohama Tire Philippines

4. Registered with PEZA only in 2010: Team Pacific Corp.

5. Not entitled to VAT zero-rating: Yamaha Motors Phils., Inc.

Moreover, the following entities were neither listed in the November 30, 2010 Letter of Director General De Lima, nor have PEZA certification for VAT zero-rating, to wit:

1. Amkor Anam Technology-P1

2. Eightech Tectron Phils. Inc.

3. HHIC-Phil Inc.

4. Nidec Subic Philippines Corporation

5. Pilipinas Shell Petroleum Corp- Shell Gas Eas

6. PSI Technologies Laguna Inc

7. Tong Hsing

8. Walk-In Customers -- In view the above findings, the sales made to the foregoing entities in the total amount of P20,899,537.41 shall not be accorded VAT zero-rating, detailed as follows: ()'1

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

1. No Certification Issued by PEZA 2/29/2008 | _P 400.00 | “P-23-1184” 2PI Microwave Technology, Inc. 1/31/2008 400.00 | “P-23-616” 2PI Microwave Technology Inc. 3/31/2008 “P-23-1788”

“P-23-10”

“P-23-576" “p-23-605"

Bell Electronics Corporation 2/29/2008

Bell Electronics Corporation 2/29/2008

Bell Electronics Corporation 3/1/2008

Bell Electronics Corporation 3/31/2008

Bel! Electronics Corporation 3/31/2008 Fujielastomers Manila Corp. 1/7/2008 Fujielastomers Maniia Corp. 1/15/2008 44,498.60 | “P-23-254” Fujielastomers Manila Corp. 53,459.32 | “P-23-347” Fujielastomers Manila Corp. 58,339.44 | _“P-23-436” “P-23-676" “P-23-770"

“P-23-902”

Fujielastomers Manila Corp.

Fujielastomers Manila Corp.

Fujielastomers Manila Corp. “P-23-1592” Fujielastomers Manila Corp. “P-23-1691”" MME Technologies, Inc. “Pp-23-17”

“P-23-71”

“P-23-94”

“P-23-99"

“P-23-101”

“P-23-169”

MME Technologies, Inc.

“P-23-297"

“P-23-352”

“P-23-380" "| Date format: Month/Day/Year yt Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue MME Technologies, Inc.

MME Technologies, Inc. 1/28/2008 MME Technologies, Inc.

25,478.83 9,819.29 | _“P-23-946” 13,724.88 2/28/2008 “p-23-1211” 15,194.27 | “P-23-1251” 3/3/2008

3/4/2008 “P-23-1271”

0" Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue one oe | Amount of Sales | Exhibit No.

“P-23-1371”

MME Technologies Inc 3/11/2008 14,347.45 | “P-23-1391” MME Technologies Inc 3/12/2008 21,225.23 | “P-23-1417" | “P-23-1445"

MME Technologies Inc 3/17/2008

MME Technologies Inc 3/17/2008 “P-23-1469”

MME Technologies Inc 3/19/2008

MME Technologies Inc 3/19/2008

MME Technologies Inc. 3/19/2008 MME Technologies Inc. 3/24/2008 MME Technologies Inc. 3/24/2008 19,826.17 | “P-23-1565” MME Technologies Inc. 9,851.14 | “P-23-1589” 10,366.98 | _“P-23-1594" _ MME Technologies Inc. 23,482.03 | “P-23-1625” 20,562.49 |_“P-23-1651”

“P-23-1683”

"P-23-1690"

[MME Technologies, Inc.

MME Technologies, Inc.

3/31/2008 28,137.46 | “P-23-1695” Sub-total 2,356,948.87

2. Cancelled dated Jul 11, 2002 (Taken over Amkor Tech 13,800.00 20,700.00 Amkor Anam Advanced Packaging, Inc. - P3 Sub-total|___-256,900.00|

3. Not registered with PEZA “P-23-599" “P-23-624" !

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

“P-23-660"

Sub-total

4. Registered with PEZA in 2010 on! 18,000.00 1/31/2008 265,419.42

Team Pacific Corporation

“P-23-654”

“P-23-655"

Team Pacific Corporation

Team Pacific Corp 301,737.61

Team Pacific Corporation

“P-23-1227”

3/31/2008 “P-23-1701”

3/31/2008 Team Pacific Corp.

Team Pacific Corp. 133,023.85 Sub-total 2,639,624.60| |

5. Not enlisted in the PEZA confirmation letter/Not certified by PEZA 1,500.00

Amkor Anam Technology-P1 “P-23-135”

Amkor Anam Technology-P1 “P-23-187”

Amkor Anam Technology-P1

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

“P-23-270" “p-23-271" 7,500.00

Amkor Anam Technology - P1

Amkor Anam Technology - P1

Amkor Anam Technology - P1 1/24/2008

Amkor Anam Technology - P1

Amkor Anam Technology - P1 “P-23-500”

Amkor Anam Technology - P1 “p-23-501"

Amkor Anam Technology-P1

“P-23-533”

Amkor Anam Technology - P1

Amkor Anam Technology - P1

Amkor Anam Technology P1

Amkor Anam Technology - P1 8,500.00

Amkor Anam Technology P1 “P-23-930”

Amkor Anam Technology P1 “P-23-941”

“P-23-974"

Amkor Anam Technology P1

Amkor Anam Technology P1 2/27/2008

2/29/2008

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue ee ee ee ee ee ee eee © oe ee ee ee eee

Invoice

Name of Customer Date”! Amount of Sales Exhibit No.

Amkor Anam Technology - P1

Amkor Anam Technology - Pi

“p-23-1091” 9,350.00 |_“P-23-1261” Amkor Anam Technology P1 3/5/2008 5,950.00 | “P-23-1281”

3/5/2008 “P-23-1282”

“P-23-1334”

“P-23-1335”

“P-23-1343”

8,500.00 | “P-23-1362" “P-23-1378" 5,100.00 | _“P-23-1379"

Amkor Anam Technology Pi

3/12/2008 4,250.00 4,250.00 |_“P-23-1409"

Amkor Anam Technology P1 “P-23-1436”

“P-23-1437”

“P-23-1482" Amkor Anam Technology P1 8,500.00 | _“P-23-1483” “P-23-1484"

“P-23-1487”

Amkor Anam Technology - P1 8,500.00 Amkor Anam Technology - P1 8,500.00 | “P-23-1567” Amkor Anam Technology - P1 3/26/2008 8,500.00 | _“P-23-1578” “p-23-1579"

Amkor Anam Technology - P1 “P-23-1612”

Amkor Anam Technology - P1 “P-23-1643”

Amkor Anam Technology - P1

Amkor Anam Technology - P1 “P-23-1663”"

Amkor Anam Technology - Pi “P-23-1664”

16,000.00 6,300.00 “P-23-78" “P-23-186" 1/18/2019 Eightech Tectron Phils., Inc. 1/29/2008 “P-23-471” Eightech Tectron Phils., Inc. 1/31/2008 16,000.00 | “P-23-521”

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Name of Customer

Invoice

Date”! Amount of Sales Exhibit No.

Eightech Tectron Phils., Inc. 2/8/2008 6,300.00 | “P-23-749" Eightech Tectron Phils., Inc 2/8/2008 16,000.00 | “P-23-750” I . - 6,300.00 16,000.00 16,000.00 6,300.00 Eightech Tectron Phils Inc 3/11/2008 6,300.00 | “P-23-1377” Eightech Tectron Phils Inc 3/17/2008 6,300.00 | “P-23-1453” | «6,300.00 | | 6,300.00 | _*P-

Nidec Subic Philippines Corp “P-23-29”

Nidec Subic Philippines Corp “p-23-371”

“P-23-1187”

"p-23-1764"

“P-23-41”

“P-23-161”

“P-23-303”

“p-23-425”

“P-23-663”

Tong Hsing “p-23-1193” “p-23-1197”

Page 45 of 60

Tong Hsing

Tong Hsing

Tong Hsing 3/18/2008 “P-23-1490”

Tong Hsing 12,500.00 | “P-23-1491” Tong Hsing 1,600.00 | “P-23-1495” Tong Hsing 1,600.00 | “P-23-1496” 2,400.00 |_“P-23-1497” 25,000.00 | _“P-23-1569" 1,400.00 | _“P-23-1797”

“P-23-1704”

10,649,225.09 Grand Total | P 20,899,537.41| si In addition, the sales in the total amount of P11,611,487.95 generated by petitioner from its PEZA-registered customers prior to the issuance of their respective PEZA certifications, as presented below, shall also be disallowed for VAT zero-rating, to wit:

Invoice

Name of Customer Date” Amount of Sales | Exhibit No.

PEZA Certificate for VAT-zero rating was issued only on January 31, 2008

“P-23-26”

PEZA Certificate for VAT-zero rating was issued only on February 1, 2008

“P-23-52”

“P-23-103" Austria Microsystems Phils. Inc 28,000.00 Austria Microsystems Phils. Inc 14,000.00 | “P-23-151” 21,000.00 14,000.00 ______7,000.00 | _“P-23-180" _ “23-227” Austria Microsystems Phils. Inc 1/15/2008 28,000.00 | “P-23-242” Austria Microsystems Phils. Inc 1/11/2008 7,000.00 Austria Microsystems Phils. Inc 1/16/2008 21,000.00 | “P-23-274" Austria Microsystems Phils. Inc 1/16/2008 7,000.00 | “P-23-275” 2 Date format: Month/Day/Year Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Invoice

Name of Customer Date” Amount of Sales | Exhibit No.

Austria Microsystems Phils. Inc 1/16/2008 14,000.00 Austria Microsystems Phils. Inc 14,000.00 Austria Microsystems Phils. Inc Austria Microsystems Phils. Inc 14,000.00 | “P-23-312” Austria Microsystems Phils. Inc “p-23-317” Austria Microsystems Phils. Inc “P-23-318” 1/18/2019 ,000.

Austria Microsystems Phils. Inc “P-23-325” Austria Microsystems Phils. Inc “P-23-522” Austria Microsystems Phils. Inc “P-23-604” PEZA Certificate for VAT-zero rating was issued only on July 21, 2008

Cam Mechatronics (Phils) Inc “P-23-397"

Cam Mechatronics (Phils) Inc “P-23-606”

CAM MECHATRONICS (PHILS) INC “p-23-1174" Cam Mechatronics (Phils) Inc. “P-23-1777" PEZA Certificate for VAT-zero rating was issued only on January 29, 2008 14,500.00 1/16/2008 14,500.00

“P-23-392”

PEZA Certificate for VAT-zero rating was issued only on January 28, 2008 Cirtek Electronics Corporation 25,000.00 | “P-23-11” Cirtek Electronics Corporation “p-23-129"

Cirtek Electronics Corporation “P-23-268"

PEZA Certificate for VAT-zero rating was issued only on January 23, 2008 1/2/2008 1/11/2008 7,500.00 PEZA Certificate for VAT-zero rating was issued only on September 3, 2008 800.00

3/31/2008 “P-23-1773"

PEZA Certificate for VAT-zero rating was issued only on February 8, 2008 Fastech Electronique, Inc 1/8/2008 2,850.00 | “P-23-128” PEZA Certificate for VAT-zero rating was issued only on January 8, 2008 Hoya Glass Disk Philippines, Inc. 1/2/2008 24,846.60 | “P-23-18” PEZA Certificate for VAT-zero rating was issued only on February 13, 2008 1/31/2008

1/31/2008 “P-23-575”

(wl

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Invoice

Name of Customer Date” Amount of Sales Exhibit No.

ISPL (Phils.) Inc.

ISPL (Phils.) Inc.

PEZA Certificate for VAT-zero rating was issued only on February 1, 2008 Ju-Young Electronics Phils., Inc. 1/31/2008 PEZA Certificate for VAT-zero rating was issued only on January 17, 2008 Katolec Phils. Corp 1/2/2008 “p-23-15” PEZA Certificate for VAT-zero rating was issued only on January 15, 2008 Komyo Phil. Logistics Service Corp. | 1/3/2008 “p-23-47” Komyo Phil. Logistics Service Corp. _| 1/7/2008 “p-23-79" Komyo Phil. Logistics Service Corp. _| 1/10/2008 “P-23-160” PEZA Certificate for VAT-zero rating was issued only on February 5, 2008

“P-23-80”

“p-23-338” 15,800.00 |_“P-23-403” PEZA Certificate for VAT-zero rating was issued only on January 10, 2008 PEZA Certificate for VAT-zero rating was issued only on January 23, 2008 PEZA Certificate for VAT-zero rating was issued only on January 14, 2008 1/11/2008 23,784.64 PEZA Certificate for VAT-zero rating was issued only on January 21, 2008 PEZA Certificate for VAT-zero rating was issued only on January 28, 2008 NXP Semiconductors Philippines Inc. | 1/4/2008 18,000.00 | “P-23-65” NXP Semiconductors Philippines Inc. | 1/7/2008 24,000.00 | “P-23-85”

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Name of Customer

NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc. NXP Semiconductors Philippines Inc.

NXP Semiconductors Philippines Inc.

Invoice

Date” Amount of Sales | Exhibit No.

1/7/2008 18,000.00 | “P-23-86” 1/7/2008 12,000.00 | “P-23-87” 1/8/2008 24,000.00 | “P-23-112” 1/8/2008 12,000.00 | “P-23-113” 1/9/2008 2,600.00 | “P-23-131” 24,000.00 | “P-23-132” “P-23-184" “P-23-191.”

“P-23-192”

“P-23-193”

“P-23-194”

“P-23-199”

“P-23-200" 1/11/2008 12,000.00 “P-23-201”" NXP Semiconductors Philippines Inc. | 1/11/2008 6,000.00 | “P-23-202” PEZA Certificate for VAT-zero rating was issued only on January 8, 2008 “P-23-48" ON Semiconductor Phils., Inc. “P-23-89” “p-23-91” PEZA Certificate for VAT-zero rating was issued only on February 29, 2008 “P-23-19"

Ss

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Name of Customer

Orient Semiconductor Electronics

Orient Semiconductor Electronics

Amount of Sales | Exhibit No.

16,500.00 | “P-23-939” 2/21/2008

Philippine Toei Chemical Corporation

Philippine Toei Chemical Corporation

PEZA Certificate for VAT-zero rating was issued only on May 2, 2008 2/27/2008 11,000.00 | “P-23-993” 1/2/2008 18,000.00 | “P-23-20” 1/31/2008 206,762.30 | “P-23-590”

Philippine Toei Chemical Corporation

Philippine Toei Chemical Corporation

Philippine Toei Chemicai Corporation

Philippine Toei Chemical Corporation

2/2/2008

PEZA Certificate for VAT

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

Pricon Microelectronics, Inc.

-zero rating was issued only on February 4, 2008 “p-23-97” “p-23-98” “p-23-126”

“P-23-145”

“p-23-175”

“P-23-233”

“p-23-235" “P-23-258"

“P-23-355”

“P-23-377”

“P-23-427”

“P-23-428"

“P-23-455”

“P-23-460" “p-23-482” “p-23-507”

“P-23-21”

“P-23-51" “P-23-70" “P-23-23"

“P-23-24”

“P-23-25" PSI Technologies Inc. 1/31/2008 1,657,609.03 | “P-23-554” PSI Technologies Inc. 1/31/2008 “P-23-591”

“P-23-592”

“P-23-644”

0)

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Invoice

Name of Customer Date” Amount of Sales Exhibit No PSI Technologies Inc. 2/2/2008 6,000.00 | “P-23-647”

PSI Technologies (USD)

PSI Technologies Inc 1,656,415.97 PSI Technologies Inc 21,794.40

PSI Technologies Inc

PSI Technologies Inc

PSI Technologies Inc “p-23-1218” PEZA Certificate for VAT-zero rating was issued only on February 13, 2008

Sanritsu Great International

Sanritsu Great International

Sanritsu Great International

Sanritsu Great International

Sanritsu Great International

Sanritsu Great International

PEZA Certificate for VAT-zero rating was issued only on January 11, 2008 Shi Mfg. & Services (Phils.), Inc. Shi Mfg. & Services (Phils.), Inc. PEZA Certificate for VAT-zero rating was issued only on January 28, 2008 Shindengen Philippiens Corp.

Shindengen Philippiens Corp. 1/16/2008 “P-23-299” PEZA Certificate for VAT-zero rating was issued only on January 23, 2008 “P-23-211" “P-23-334" Showa Aluminum Mfg., Phils. C Corp PEZA Certificate for VAT-zero rating was issued only on January 23, 2008

Temic Automotive Philippines

PEZA Certificate for VAT-zero rating was issued only on March 27, 2008 1/2/2008 6,300.00 “P-23-658" “p-23-1231” PEZA Certificate for VAT-zero rating was issued only on January 8, 2008 PEZA Certificate for VAT-zero rating was issued only on February 1, 2008 31,000.00 | “P-23-117” YKY Parts Corporation 1/18/2019 31,000.00 | “P-23-313” YKY Parts Corporation 1/21/2008 31,000.00 | “P-23-336” YKY Parts Corporation 1/21/2008 31,000.00 | “P-23-337” Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Name of Customer

Invoice

Amount of Sales

Date72

YKY Parts Corporation

1/25/2008 31,000.00

YKY Parts Corporation

1/25/2008 31,000.00 Exhibit No.

"P-23-413"

"P-23-414"

PEZA Certificate for VAT-zero rating was issued only on Januarv 21, 2008

Yutaka Manufacturing Philippines Inc

1/4/2008 17,600.00

"P-23-62"

Yutaka Manufacturing Philippines Inc

1/4/2008 17,600.00

"P-23-63"

Yutaka Manufacturing Philippines Inc

1/4/2008 6,710.00

"P-23-68"

Yutaka Manufacturing Philippines Inc

1/7/2008 26,400.00

"P-23-82"

Yutaka Manufacturing Philippines Inc

1/7/2008 3,355.00

"P-23-83"

Yutaka Manufacturing Philippines Inc

1/8/2008 26,400.00

"P-23-114"

Yutaka Manufacturing Philippines Inc

1/9/2008 17,600.00

"P-23-137"

Yutaka Manufacturing Philippines Inc

1/9/2008 8,800.00

"P-23-138"

Yutaka Manufacturing Philippines Inc

1/10/2008 17,600.00

"P-23-164"

Yutaka Manufacturing Philippines Inc

1/11/2008 17,600.00

"P-23-188"

Yutaka Manufacturing Philippines Inc

1/11/2008 8,800.00

"P-23-189"

Yutaka Manufacturing Philippines Inc

1/11/2008 17,600.00

"P-23-198"

Yutaka Manufacturing Philippines Inc

1/14/2008 26,400.00

"P-23-220"

Yutaka Manufacturing Philippines Inc

1/15/2008 17,600.00

"P-23-251"

Yutaka Manufacturing Philippines Inc

1/16/2008 8,800.00

"P-23-279"

Yutaka Manufacturing Philippines Inc

1/16/2008 17,600.00

"P-23-280"

Yutaka Manufacturing Philippines Inc

1/16/2008 8,800.00

"P-23-281"

Yutaka Manufacturing Philippines Inc

1/18/2019 26,400.00

"P-23-315"

Yutaka Manufacturing Philippines Inc

1/18/2019 17,600.00

"P-23-324"

TOTAL

p 11,611,487.95 In sum, out of the total declared zero-rated sales of P199,197,257.57 in the 1st quarter of 2008, the Court finds that only the amount of P123,908,965.20 are valid zero-rated sales, computed as follows:

Zero-rated Sales declared per Quarterly VAT Return p 199,197,257.57

Less: Disallowances

1. Zero-rated

Sales

without supporting documents (Difference between the amount declared and the total amount per schedule J 235.556.93

2. Sales not duly supported by VAT "zero- rated" sales invoices and official receipts 42,541,710.08

3. Sales related to entities not certified by PEZA as entitled for VAT zero-rating 20,899,537.41

4. Sales generated prior to the issuance of the PEZA certification for VAT zero-rating 11.611.487.95

Total Disallowances

75.288.292.37 Valid zero-rated sales p 123,908,965.20 cf/

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Such being the case, petitioner complied with the fourth requisite to successfully obtain a credit/refund of input VAT, but only insofar as the amount of P123,908,965.20, representing its zero- rated sales for the 1st quarter of 2008, is concerned. For the fifth requisite, the same is not applicable to petitioner, since the basis for its VAT zero-rating is Sections 106(A)(2)(a)(5) and 108(B)(3) of the NIRC of 1997, as amended, as earlier shown, and not Sections 106(A)(2)(a)(1) and (2); 106(B); and 108(B)(1) and (2) thereof. Thus, petitioner need not comply with the said requisite. The input taxes being claimed are not transitional input taxes The present claim in the total amount of P21,460,431.48 pertains to the input VAT incurred from domestic purchases and importation of goods and services during the 1st quarter of 2008. The said amount is broken down as follows:

Particulars

Input VAT

Purchases of Capital Goods not exceeding ~!Million ~ 75,779.54 Purchases of Capital Goods exceeding ~!Million 404,880.13 Domestic Purchase of Goods other than Capital Goods 6,970,808.31 Importation of Goods other than Capital Goods 2,843,716.00

Domestic Purchase of Services

11 165 247.50

Total

p 21,460,431.48 The above input taxes apparently are not transitional input taxes, as referred to under Section 111(A) of the NIRC of 1997, as amended, to wit:

"SEC.

111. Transitional/Presumptive

Input

Tax

Credits.- (A) Transitional Input Tax Credits. - A person who becomes liable to value-added tax or any person who elects to be a VAT-registered person shall, subject to the filing of an inventory according to rules and regulations prescribed by the

Secretary

of Finance, upon recommendation of the Commissioner, be allowed input cr1

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue tax on his beginning inventory of goods, materials and supplies equivalent for two percent (2%) of the value of such inventory or the actual value-added tax paid on such goods, materials and supplies, whichever is higher, which shall be creditable against the output tax." Transitional input tax credit operates to benefit newly VAT- registered persons, whether or not they previously paid taxes in the acquisitions of their beginning inventory of goods, materials and supplies. During the period of transition from non-VAT to VAT status, the transitional input tax credit serves to alleviate the impact of the VAT on the taxpayer.73 Since the input taxes being claimed are not transitional input VAT, petitioner thus complied with the sixth requisite. Petitioner's input VAT was due or paid, but only in the amount of P440,570.35 In support of the input VAT claim of P21,460,431.48, petitioner submitted various invoices, official receipts, import entry and internal revenue declarations and Bureau of Customs Confirmation74 which were examined by the ICPA.

Apropos, in the same way that there must be compliance with the invoicing requirements for its zero-rated sales, petitioner must likewise show compliance therewith as regards its purchases. Petitioner's compliance with all the VAT invoicing requirements is required to be able to file a claim for input taxes attributable to zero- rated sales.75 The invoicing and substantiation requirements should be followed because it is the only way to determine the veracity of the taxpayer's claims.76 More importantly, it must be emphasized 73 Fort Bonifacio Development Corporation vs. Commissioner of Internal Revenue, G.R. Nos. 158885 and 170680, April 2, 2008. 74 Exhibits "P-26" and its submarkings, and "P-27" and its submarkings. 75 JRA Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 171307, August 28,2013.

76 Nippon Express (Philippines) Corporation vs. Commissioner of Internal Revenue, G.R. No.l91495,July23,2018. &)

A

B

c

D

E

F

G

H

I

J

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue that compliance with all the VAT invoicing requirements provided by tax laws and regulations is mandatory.77 Out of the P21,460,431.48, the ICPA noted that the total input VAT of P20,711,373.7978 is supported by documents, but with the following noted exceptions, to wit:

Noted Exceptions

Input VAT

Exhibit

Certain local purchases of goods and services were not supported by VAT invoices and ORs p 1,499,193.55

"P-26A"

Certain invoices and official receipts without original copies 82,559.75

"P-26B"

Certain invoices and official receipts did not show the TIN of the Company 4,032,389.28

"P-26C"

Certain invoices and official receipts did not show the correct address of the Company 26,729.02

"P-260"

Certain invoices and official receipts were dated outside the year and period of claim or did not indicate any date at all 2,847,809.98

"P-26E"

Certain invoices and official receipts did not separately indicate the VAT 138,697.17

"P-26F"

Certain invoices and official receipts with alterations on the required information (i.e., date, TIN and address) pursuant to Section 4.113(B) of RR No. 16-2005 were without countersignature by an authorized representative of the supplier 171,605.34

"P-26G"

"P-26H"· "P-

I

No supporting documents 10,174,518.97

27H"

Amount claimed is higher than the amount

"P-261"·

I

per documents 1,735,330.57

"P-271"

Over-claimed input VAT from purchase of capital goods exceeding 1M for the month of

March 2008

2,540.17

"P-26J"

Total 1'20,711,373.80 The Court finds the ICPA findings on the input VAT with noted exceptions proper. Thus, the total amount of P20,711,373.80 should already be disallowed for not being properly substantiated by VAT invoices and official receipts as prescribed under Sections llO(A) and 77 Eastern Telecommunications Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 183531, March 25, 2015.

78 With P0.01 difference due to rounding off.~

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

113(A) and (B), 237 and 238 of the NIRC, as amended, in relation to Sections 4.110-2, 4.110-8 and 4.113-1 of RR No. 16-05, as amended. In addition, upon verification of the remaining input VAT of P749,057.69 (P21,460,431.48 less P20,711,373.79), the Court notes a discrepancy of P17,337.48. This discrepancy should be disallowed as well from petitioner's claim on the ground that the same is likewise without proper supporting document, to wit:

Particulars

Input VAT

Exhibit

Input VAT with no noted exception per ICPA Report p 749 057.69 Compared aqainst amount shown per Exhibit:

Input VAT on Purchases of Goods and Services

618,585.21

"P-26K"

Importation of Goods other than Capital Goods 113,135.00

"P-27K"

Total

731 720.21

Difference

p 17,337.48 Upon further examination of the documents supporting the input VAT with no noted exceptions under Exhibits "P-26K" and "P- 27K", the Court observes that included therein was a purchase of capital goods in the amount of P2,426,413.92 where the corresponding input VAT of P291,169.67 was claimed by petitioner. However, the supporting sales invoice revealed that the amount of purchase was only P185.00, with P19.82 input VAT. Thus, the difference of P291,149.85, as computed below, should likewise be disallowed, viz.:

Amount of

Purchase

Details

(Net of VAT)

Input VAT

Per Schedule

Superior Gas & Equipment Co., Inc.

(Exhibit "P-26K")

p 2,426 413.92 P291169.67 Sales Invoice No. 605707

Per Sales Invoice

Date: January 9, 2008

(Exhibit "P-26-7")

185.00 19.82

Difference

P2,426,228.92 P291,149.85 Correspondingly, out of the total input VAT claim of P21,460,431.48 for the 1st quarter of 2008, only the amount of P440,570.35, as computed below, represents petitioner's valid input VAT for the same period:Cf/

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Total Input VAT claim for refund/TCC

Less: Disallowances

Per ICPA Report

Per this Court's further verification

a. Difference between the total amount of input VAT with no noted exception per ICPA report against the total sum as shown in Exhibits "P26K"

and "P-27K"

b. Difference between the amount per Schedule (Exhibit "P-26") and the amount actually reflected in the supporting Sales Invoice (Exhibit "P-26-7")

Total Disallowances

Valid Input VAT

p 21,460,431.48 20,711,373.80 17,337.48 291,149.85 21,019,861.13 tt 440,570.35 Such being the case, for the purpose of the seventh requisite to successfully obtain a credit/refund of input VAT (i.e., that the input VAT was due or paid), petitioner has complied therewith, but only in the amount of P440,570.35.

A portion of petitioner's valid input taxes due or paid may be attributed to its zero-rated or effectively zero-rated sales To reiterate, the eight requisite is to the effect that the input taxes claimed are attributable to zero-rated or effectively zero-rated sales. However, where there are both zero-rated or effectively zero- rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributed to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume. Considering that petitioner is engaged in taxable sales subject to zero percent (0%), and twelve percent (12%) rates, as well as exempt sales, and its input VAT cannot be directly or entirely attributed to any of the transactions, this Court shall allocate the valid input VAT proportionately on the basis of the volume of its sales. Thus, the following computations: \!11

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Zero-Rated Sales per Quarterly VAT Return

p 199,197,257.57 Divided by the Reported Total Sales per Quarterly VAT Return p 257,254,403.16

Multiplied by Total Valid Input VAT

p 440,570.35 Valid input VAT allocated to total zero-rated sales p 341,142.48 Taxable Sales subject to 12% VAT per Quarterly VAT Return p 57,054,748.75 Divided by the Reported Total Sales per Quarterly VAT Return p 257,254,403.16

Multiplied by Total Valid Input VAT

p 440,570.35 Valid input VAT allocated to total sales subject to 12% VAT p 97,711.18

Exempt Sales per Quarterly VAT Return

p 1,002,396.84 Divided by the Reported Total Sales per Quarterly VAT Return p 257,254,403.16 Multiplied b}l Total Valid Input VAT p 440,570.35 Valid input VAT allocated to total exempt sales p 1,716.69 Correspondingly, for purposes of, and with regard to petitioner's compliance with, the eighth requisite, only the amount of P341,142.48 represents valid input VAT attributable to petitioner's total reported zero-rated sales.

Petitioner had no unutilized input taxes available for refund Having settled that petitioner had valid input VAT attributable to its zero-rated sales, this Court shall now determine whether the same was not applied against its output VAT liability during the subject quarter, and in the succeeding quarters, relative to the ninth requisite for the successful prosecution of an input VAT refund claim. For the 1st quarter of 2008, petitioner has output VAT liability in the amount of P6,846,569.85. 79 Since petitioner's valid input VAT allocated to sales subject to the 12% VAT in the amount of P97,711.18 is not enough to cover the said output VAT liability, the output VAT still due against petitioner is computed as follows:

Output VAT

p 6,846,569.85 Input VAT allocated to VATable sales 97,711.18 Output VAT still due p 6,748,858.67

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

The valid input VAT attributable to total reported zero-rated sales shall then be utilized against the said remaining output VAT liability of petitioner.

Apparently, the input VAT attributable to zero-rated sales of P341,142.48 is lower than the net output VAT payable of P6,748,858.67. Consequently, petitioner still has a net output VAT due of P6,407,716.19, as shown below: Output VAT still due p 6,748,858.67 Input VAT allocated to zero-rated sales 341,142.48 Net Output VAT still due p 6,407,716.19 Although petitioner's Quarterly VAT Return for the pt quarter of 2008 reflected the amount of Pl31,225,119.8580 as ''Input Tax Carried Over from Previous Period', petitioner failed to substantiate the same, and thus, cannot be used to pay the net output VAT still due of P6,407,716.19.

In this connection, it must be emphasized that in cases filed before this Court, which are litigated de novo, party-litigants must prove every minute aspect of their case.81 Verily, in claiming excess or unutilized input VAT from zero- rated transactions, it is the excess over the output VAT which should be refunded to the taxpayer or credited against other internal revenue taxes. Hence, it is important for the taxpayer to prove that it has enough prior year's excess input VAT credits to cover its output VAT liability for a particular period. Failing which, the ''Input Tax Carried Over from Previous Period' cannot be used to pay, or applied against, the output VAT.

80 Exhibit "P-9" (Line 20A).

81 Edison (Bataan) Cogeneration Corporation vs. Commissioner of Internal Revenue, etseq., G.R. Nos. 201665 and 201668, August 30, 2017; Commissioner of Internal Revenue vs. Philippine National Bank, G.R. No. 180290, September 29, 2014; Commissioner of Internal Revenue vs. United Salvage and Towage (Phils.), Inc., G.R. No. 197515, July 2, 2014; Dizon vs. Court of Tax Appeals, et al., G.R. No. 140944, April 30, 2008; Atlas Consolidated Mining and Development Corporation vs. Commissioner of Internal Revenue, G.R. No. 145526, March 16, 2007; and Commissioner of Internal Revenue vs. Manila Mining Corporation, G.R. No. 153204, August 31, 2005.

C1J

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

Consequently, petitioner cannot be said to have fulfilled the ninth requisite. More importantly, considering that there is no excess input VAT which may be the subject of a claim for refund or tax credit certificate under Section 112(A) of the NIRC of 1997, as amended, the present claim must necessarily fail. Well-settled is the rule that tax refunds are in the nature of tax exemptions. As such, they are regarded as derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the refund. 82 The claimant has the burden of proof to establish the factual basis of his or her claim for tax credit or refund.83 Petitioner, unfortunately, failed to discharge this burden.

WHEREFORE, in light of the foregoing considerations, the Petition for Review filed by Air Liquide Philippines, Inc. on March 30, 2010, praying for the refund or issuance of a tax credit certificate in the total amount of Twenty-One Million Four Hundred Sixty Thousand

Four

Hundred

Thirty-One

Pesos

and

Forty-Eight

Centavos

(P21,460,431.48) representing its alleged unutilized input Value- Added Tax (VAT) for the 1st quarter of 2008 is hereby DENIED for lack of merit.

Presiding Justice

82 Commissioner of Internal Revenue vs. S.C. Johnson & Son, Inc., G.R. No 127105, June 25, 1999.

83 Citibank NA. vs. Court of Appeals and the Commissioner of Internal Revenue, G.R. No. 107434, October 10, 1997.

Air Liquide Philippines, Inc. vs. Commissioner of Internal Revenue

WE CONCUR:

~~-;:./.& .. -4 ·~ 2-M r. ~-'f~ CATHERINE T. MANAHAN MARIAN IVYIF. RE~S-FAfARDO

Associate Justice

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ROMAN G. DEL ROSARIO

Presiding Justice