Macquarie Offshore Services Pty Ltd. - Philippine Branch vs. Commissioner of Internal Revenue

AMENDED DECISION

Fabon-Victorino, J.:

In the Decision dated July 15, 2015, the Court denied petitioner's claim for refund of excess and unutilized input value-added tax (VAT) for the fiscal year covering the period April 1, 2009 to March 31, 2010, in the amount of P10,359,678.44.

The ruling was based on the Court's finding that petitioner failed to prove that the services it rendered to Macquarie Financial Holdings Limited (rv1FHL) qualified as VAT zero-rated transactions under Section 108(8)(2) of the National Internal Revenue Code (NIRC) of 1997, as there was no evidence presented showing that MFHL was doing business outside the Philippines. On July 31, 2015, petitioner filed a Motion for New Trial to allegedly rectify the excusable lapses observed by the Court and indicated in the assailed Decision of July 15, 2015. Petitioner explained that the Securities and Exchange Commission (SEC), in issuing the Certification of Non- Registration of Company, inadvertently omitted the word "Limited" from the name of its foreign client Macquarie Financial Holdings Limited or MFHL. As a result thereof, the ; Court concluded that the said Certification was referring to another company not licensed to do business in the Philippines but not to petitioner's client MFHL. Annexed to the Motion for New Trial were the Affidavits of Merit attesting that the law firm's paralegal applied for a Certificate of Non-Registration of MFHL upon instruction and that the SEC issued the requested Certification but omitted the word "Limited" in the name of the Company. The said omission was learned only after petitioner received its copy of the adverse Decision on July 16, 2015. Also attached to the Motion was the SEC Certificate of Non-Registration dated July 30, 2015 indicating that Macquarie Financial Holdings Limited is a non-resident foreign coporation not engaged in business in the Philippines. Petitioner prayed that the adverse Decision be set aside and a new trial be conducted for the presentation of the Certificate of Non-Registration dated July 30, 2015 for MFHL. In the Resolution dated September 22, 2015 1, the Court granted petitioner's motion to which respondent interposed no objection, despite notice. Consequently, a new trial was conducted on November 23, 2015, during which petitioner presented and the Court admitted, among others, the formally offered Certificate of Non-Registration of MFHL issued by the SEC bearing the correct name of its foreign client MFHL. Hence, this Amended Decision. In the assailed Decision of July 15, 2015, the Court ruled that both the administrative and the judicial claims for refund/tax credit were seasonably instituted by petitioner, pursuant to Section 112 (A) and (C) of the NIRC, as amended.

The evidence as found by the Court also prove that petitioner is a duly registered VAT taxpayer2, which rendered services in the Philippines for the exclusive benefit of its non-resident foreign client, MFHL. The services rendered during the Fiscal Year 2010 were not in the same category as "processing, manufacturing or repacking of goods" for which petitioner was paid in Australian Dollars {AUD) 3 duly /

accounted for in accordance with the BSP rules and regulations4 .

Hence, the subject sales are VAT zero-rated pursuant to Section 108(8)(2) of the NIRC of 1997. In fine, petitioner was able to meet the requisites mandated under Section 112 (A) and (C) of the NIRC, as amended. However, the Court found petitioner unable to establish that MFHL, a non-resident foreign corporation is not doing business in the Philippines. The documents it presented at most showed that MFHL is registered and does business in Australia but they do not conclusively prove that MFHL does not do business in the Philippines. Moreover, the document that could have saved the day for petitioner, namely, the SEC Certificate of Non- registration of Company, was not considered by the Court as it referred to Macquarie Financial Holdings and not to Macquarie Financial Holdings, Limited (MFHL). To remedy the belatedly detected lapses, the Court, at the instance of petitioner and in the interest of justice, allowed the presentation of the Certification of Non- Registration of MFHL dated July 30, 20155 which sufficiently proved that MFHL, a foreign corporation, is not doing business in the Philippines. With the foregoing finding, the Court shall now determine whether petitioner was able to substantiate its zero-rated sales for the four quarters of FY 2010. In its VAT Returns for the four quarters of FY 2010, petitioner reflected the following zero-rated sales: Period Covered (FV Exhibit 2010) Amount c 1st Quarter p 61,913,339.95 D 2nd Quarter 74,958,221.29 E 3rd Quarter 971514,333.46 F 4th Quarter 147,984,025.89 TOTAL p 382,369,920.59 4 Exhibits MM, NN, 00, PP, QQ, RR, 55, TT, UU, and VV. 5 Exhibit CCC.

J

To prove that it generated zero-rated sales and that the corresponding foreign currency payments it received were accounted for in accordance with the rules and regulations of the BSP, petitioner offered in evidence its service invoices® official receipts’ and debit memos?® issued to its client MFHL, as well as the bank certifications of inward remittances’. The said amount consists of the following:

Service Official Amount in Invoice Receipt p AUD No. No.

e MFHL 15,991,248.29 457,644.73 | 000010 | 5/26/2009 | xx-1Q.¹ | 900005 6/11/2009 | XX-2.1 MFHL 21,042,562.71 556,865.67 | 000011 | 6/30/2009 | Xx-19.² | 000006 7/17/2009 | XX-2.2 MFHL 24,879,528.95 640,404.05 | 000013 | 8/10/2009 | xx-19.³ | 000007 | 8/24/2009 | Xx-2.3 | subtotal | 61,913,339.95 | 1654,914.45| | £| &#| | Second Quarter MFHL 27,581,893.12 | 687,226.31 | 000014 | 9/4/2009 a2 000008 | 9/14/2009 MFHL 24,629,437.62 | 596,780.09 | 000015 | 9/4/2009 MFHL 22,746,890.56 541,522.03 | 000016 | 10/30/2009 | xx-20.3 { 900009 | 11/25/2009 74,958,221.30| 1825,528.43| | | XX-2.5 Nx ns Third Quarter MFHL 30,217,972.33 707,328.40 | 000017 _| 11/13/2009 000009 MFHL 30,438,755.02 706,022.66 | 000018 | 12/29/2009 000010 MFHL 36,857,606.12 882,048.95 | 000019 | 1/29/2009 97,514,333.47| 2,29540001| | | ) ‘ . -3Q.1 . . -39.2 . . -3Q.3

MFHL 000020 | 2/22/2010 000010

MFHL 000013

. . -4Q.4 . . -4Q.5 . -4Q.6 .7 11/25/2009 | XX-2.5 3/28/2010 XX-2.6 XX-2.6 XX-2.7 3/28/2010 5/18/2010 8/8/2010 XX-2.8 MEHL

MEHL 000013

MEHL 000014

MEHL 000015

| _147,984,025.89 | 3,573,952.22| | | |_382,369,920.61"| 9,349,70511| | | However, petitioner’s zero-rated receipts in the total amount of P45,669,058.60 declared in the fourth quarter of FY 2010 and supported by zero-rated Service Invoice Nos. 000024 and 000029 are dated outside the period of claim, hence, must be_- disallowed. Thus, out of the P382,369,920.59 zero-rated receipts reported by petitioner, XX-2.7 XX-2.8 XX-2.9 5/18/2010 8/8/2010 8/23/2010 Total ° Exhibits XX-1Q.1 to XX-1Q.3; XX-2Q.1 to XX-2Q.3; XX-3Q.1 to XX-3Q.3; XX-4Q.1 to XX-4Q.7. ” Exhibits XX-2.1 to XX-2.9 8 Exhibits XX-3.1 to XX-3.16.

° Exhibits NN, OO, PP, QQ, RR, SS, TT, UU and W.

10 Higher than P0.02 due to rounding off.

only the amount of P336,700,861.99 qualifies for VAT zero- rating under Section 108(B)(2) of the NIRC of 1997, as determined below:

1st Qtr 2nd Qtr 3rd Otr 4th Qtr TOTAL Zero-Rated Receipts Per Returns p 61 913 339.95 p 74 958 221.29 p 97 514 333.46 p 147 984 025.89 p 382 369 920.59 Less: Zero-Rated Receipts supported by VAT service invoices dated outside the period of claim 51 No. 000024 46 456 810.09 46 456 810.09 51 No. 000029 (787 751.49l (787 751.4~1_ Valid Zero-Rated Receipts 1'61,913,339.95 1'74,958,221.29 P97 ,514,333.46 P102,314,967.29 P336,700,861.99 ----- -- After finding that petitioner had zero-rated receipts for the four quarters of FY 2010 in the total amount of P336,700,861.99, the Court must determine whether petitioner incurred or paid input taxes in connection therewith.

In its Quarterly VAT Returns for the four quarters of FY 2010, petitioner declared input VAT on its purchases of services and goods other than capital goods in the aggregate amount P9,217,810.79, broken down as follows: 1st Qtr 2nd Qtr 3rd Otr 4th Qtr TOTAL Domestic Purchase of Goods other than Capital Goods p 148 822.92 p 223 987.72 p 567 274.27 p 1 115 035.99 p 2 055 120.90 Domestic Purchase of Services 1 134 201.71 1 766 288.59 1 754 315.98 2 494 889.80 7 149 696.08 Services Rendered by Non- residents Total - - - 12 993.81 12 993.81 P1.283,024.63 1'1.990.276.31 P2.321.590.25 P3 622 919.60 1'9,217,810.79 To prove the foregoing, petitioner offered in evidence BIR Form 1600 with bank payment slips; various sales invoices and official receipts11 issued by its various suppliers. All these were examined by Independent Certified Public Accountant (ICPA) Jerome Antonio B. Constantino, whose findings are summarized in his two (2) separate reports dated January 2, 2013 12 and July 10, 2013 13, to wit: 11 Exhibits XX-5-lQ.l to XX-5-1Q.86; XX-5-2Q.1 to XX-5-2Q.125; XX-5-3Q.1 to XX-5-3Q.213; XX- j 5-4Q.1 to XX-5-4Q.315. 12 Exhibit XX.

13 Exhibit ZZ.

Findings

CfA CASE NO. 8337

Ref.

(Annexed to Exhibit XX 8t ZZ} 1st Quarter 2"d Quarter 3rd Quarter I. PROPERLY SUPPORTED BY VAT INVOICES, OFFICIAL RECEIPTS AND BIR FORM 1600 A. Input tax on domestic purchases of goods other than capital goods 2-1Q-1;

1 Supported by "TIN 2-2Q-1;

p 27,628.49 p 10,638.82 p 4,012.77 VAT" invoices 2-3Q-3;

2-40-1 Supported by "TIN VAT" invoices with corrections on Petitioner's name 2-1Q-2;

and/or TIN and/or 2 address and/or VAT 2-2Q-4;

amount but with 2-3Q-4;

121,194.43 77,910.51 216,519.79 countersignature of 2-4Q-3 the supplier according to the Petitioner Supported by "VAT 2-2Q-3;

3 2-3Q-1;

REG TIN" invoices 2-40-2 14,036.81 14,450.05 Supported by "VAT REG TIN" invoices with corrections on Petitioner's name 2-3Q-5;

4 and/or address but with countersignature 2-4Q-5 55,082.82 of the supplier according to the Petitioner Supported by "VAT REG TIN" invoices with corrections on Petitioner's name and/or TIN with countersignature of 2-3Q-7;

5 the supplier 2-4Q-13 36,825.00 according to the Petitioner and not dated within the taxable quarter but dated within the oeriod of claim Supported by "TIN VAT" invoices with corrections on Petitioner's name and/or TIN with countersignature of 2-2Q-5;

6 the supplier 2-3Q-8;

72,437.14 146,984.90 according to the 2-4Q-11 Petitioner but not dated within the taxable quarter but dated within the period of claim Supported by "TIN 2-3Q-14;

VAT" invoices not 2-40-12 2 197.61 7 dated within the taxable quarter but 1-3Q-3;

dated within the 1-4Q-4 2,104.73 period of claim Supported by "VAT 2-4Q-14 REG TIN" invoices not 8 dated within the taxable quarter but 1-3Q-2;

dated within the 1-4Q-7 3,966.41 oeriod of claim Supported by "TIN VAT invoices with 9 corrections on 2-4Q-9 Petitioner's name with countersignature of the suoolier I 4th Quarter Total I !

p 27,795.32 p 70,075.40 930,182.59 1,345,807.32 I 15,617.59 44,104.45 36,892.50 91,975.32 11,937.54 48,762.54 42,182.14 261,604.18 14 051.14 16,248.75 5,300.51 7,405.24 2,171.95 2,171.95 9,023.75 12,990.16 94,002.00 94,002.00 J according to the Petitioner and not dated within the taxable quarter but dated within the period of claim B. Input tax on domestic purchases of services 63,362.39 Supported by "TIN 7,200.00 1,961.21 34,835.33 19,365.85 = “1Q- ;

ee ey 25.50 316.72 58.92 Fao 14

VAT" ORS

74,341.08 107,836.97 209,904.24 563,664.24 955,746.53 1-2-3;

36,120.42 40,182.12 2,883.48 16,492.93 95,678.95 51.21 a 381.33 842,489.31 842,921.85 718,309.91 507,120.04 | — 1,023,303.69 95,035.46 2,343,769.10 according to the 3,744.41 60,000.00 _ 170,238.16 233,982.57 Petitioner Supported by "VAT REG TIN" ORs not 27,215.33 27,215.33 dated within the taxable quarter but .

dated within the 70,311.31 2,209.82 72,521.13 period of claim Supported "TIN VAT" 101.36 101.36 ORs with corrections P - - aa 7 on Petitioner's name 61,800.00 51,810.98 133,119.36 246,730.34 and/or address 5,160.00 10,061.23 316.82 15,538.05 and/or TIN and/or 106,347.47 1,194.86 107,542.33 | , N - ~ ase BoOw)t a Supported by "VAT REG TIN" ORs oa Supported by "TIN VAT" ORs with corrections on Petitioner's name, and/or TIN and/or address and/or VAT amount but with countersignature of the supplier according to the Petitioner Supported by "VAT REG TIN" ORs with corrections on Petitioner's name and/or address and/or TIN and/or date and/or VAT amount but with countersignature of the supplier VAT amount with countersignature of the supplier according to the Petitioner and not dated within the taxable quarter but dated within the period of claim Supported "VAT REG TIN" ORs with corrections on Petitioner's name and/or address with countersignature of the supplier according to the Petitioner but not dated within the taxable quarter but dated within the period of claim Supported by "TIN VAT" ORs not dated .

2-1-7;

2-2Q-9;

2-3Q-11

CfA CASE NO. 8337 within the taxable quarter but dated within the period of claim C. Input tax on services rendered by non-residents 1 Supported by BIR 2-4Q-10 form 1600 Subtotal 1,050,415.45 II. OTHER FINDINGS 988,193.52 A. Input tax on domestic purchases of goods other than capital goods 1 Supported by "VAT 2-4Q-17 TIN" sales invoices Supported by "VAT REG TIN" invoices with incomplete 2-3Q-15;

2 Petitioner's name (e.g. Macquarie 2-4Q-15 Offshore Services PTY LTD) Supported by "TIN VAT" invoices but with incomplete name (e.g. Macquarie Offshore Phils., 3 Macquarie Offshore 2-4Q-16 Services, Macquarie Offshore Services PTY LTD, Macquire Offshore Services, Macquarie Offshore Services) Supported by VAT invoices not in the name of the Petitioner (e.g.

Macquarie Capital Securities Phils. Inc. 4 and Macquarie Office) 2-4Q-29 and not dated within the taxable quarter (e.g. first, second and third quarter) but dated within the period of claim Supported by VAT invoices with corrections on 2-2Q-21;

Petitioner's name 5 without 2-3Q-17;

600.00 countersignature 2-4Q-19 and/or VAT amount not shown separately Supported by VAT 2-3Q-19;

6 invoices but not an 2-4Q-28 oriainal coov Supported by "TIN 7 VAT" without invoice 2-4Q-18 date Supported by 2-2Q-10;

8 document other than 2-3Q-18;

sales invoice (e.g.

112.50 OR service receipt) 2-4Q-20 Supported by "TIN VAT" invoice with 9 incomplete 2-3Q-30 Petitioner's name and VAT amount not shown separately Supported by "VAT REG TIN" invoices with incomplete 10 Petitioner's name 1-2Q-9;

(e.g. Macquarie 1-4Q-9 18,255.29 Offshore Services PTY LTD) but not dated within the taxable 12 993.81 12,993.81 2,100,667.13 2,916,838.43 7,056,114.53 2 256.70 2,256.70 45,652.80 7,090.18 52,742.98 4,144.80 4,144.80 1,283.15 1,283.15 17,583.46 2,710.71 20,894.17 6,825.75 101,171.36 107,997.11 840.00 840.00 466.07 14,572.23 15,150.80 13,071.43 13,071.43 24,101.72 42,357.01 11 quarter but dated within the period of claim Supported by "TIN VAT" invoices but with incomplete petitioner's name (e.g. Macquarie Offshore Services 1-2Q-10 LTD only) but not dated within the taxable quarter but dated within the period of claim B. Input tax on domestic purchases of services Supported by "TIN 2-1Q-8;

VAT" ORs but with 2-20-11 30 280.30 incomplete Petitioner's name (e.g. Macquarie Offshore Services PTY LTD, Macquarie 1 Offshore Services and Macquarie Offshore) 1-3Q-8 and/or without Petitioner's TIN and incomplete/no address and/or VAT amount not shown separately Supported by tape 2-1Q-9;

receipts with 2-2Q-15;

incomplete 2-3Q-22;

2,643.73 Petitioner's name 2-4Q-22 (e.g. Macquarie Offshore Services PTY 2 LTD, Macquarie Offshore and Macquarie Offshore 1-1Q-6;

Services, Macquarie 1-2Q-11 479.21 Securities) and/or without Petitioner's TIN and/or address 2-1Q-10;

3 Supported by "VAT 2-2Q-17;

REG" ORs 2-3Q-23;

765.48 2-4Q-25 Supported by "TIN 2-1Q-11;

ONLY", "TIN NON- 4 VAT", with stamped 2-2Q-18;

"TIN VAT" and "NON- 2-3Q-24;

24,641.40 VAT REG TIN" ORs 2-4Q-24 Supported by "VAT REG TIN" ORs but with incomplete 5 Petitioner's name 2-2Q-12;

(e.g. Macquarie 2-3Q-21 Offshore Services PTY and Macquarie Offshore) Supported by VAT OR 2-2Q-14;

not in the name of 2-3Q-27 6 the Petitioner (e.g.

Macquarie Securities 1-3Q-9 Philippines Incorporated) Supported by "VAT REG TIN" OR but with incomplete 7 Petitioner's name 2-2Q-13 (e.g. Macquarie Offshore) and VAT amount not shown separately 28,957.06 28,957.06 I 19 672.26 49,952.56 28,872.97 28,872.97 3,098.48 10,627.91 9,302.52 25,672.64 309.26 788.47 709.18 1,383.54 3,688.39 6,546.59 287,436.57 47,613.18 30,047.39 389,738.54 1,872.86 4,242.85 6,115.71 385.72 85.71 471.43 203.14 203.14 1,059.49 1,059.49 J 8 9 10 11 12 13 14 15 16 17 18

Supported by VAT OR not in the name of the Petitioner and not 2-3Q-16;

dated within the taxable quarter but 2-4Q-26 dated within the taxable year of claim Supported by VAT ORs but dated 2-3Q-25;

outside the taxable period of claim (e.g. 2-4Q-27 FY March 2009) Supported by "VAT REG TIN" OR without 2-2Q-16 date Supported by VAT 2-2Q-20;

ORs but not an original copy 2-3Q-29 Supported by document other than ORs (e.g. bank deposit slip, 2-1Q-12;

collection receipt, 2-2Q-19;

tape receipt, sales 2-3Q-28;

invoice, cash invoice, 2-4Q-23 advertising contract and statement of account) Supported by VAT ORs with incomplete Petitioner's name (e.g. Macquarie Offshore Services) without Petitioner's TIN and/or address and VAT amount is 2-3Q-26 not shown separately and not dated within the taxable quarter (e.g. second and fourth quarter) but dated within the period of claim Supported by "TIN VAT" ORs but with incomplete Petitioner's name and/or without 2-1Q-14;

Petitioner's TIN and/or address (e.g.

2-3Q-20;

Macquarie Offshore 2-4Q-21 Services PTY LTD, Macquarie Offshore Services and Macquarie Offshore) Supported by "TIN VAT" OR with corrections on Petitioner's name with countersignature 2-1Q-13 of the supplier according to the Petitioner but VAT amount not shown separately Supported by VAT 2-3Q-32 ORs but VAT amount not shown separately and not dated within the taxable quarter 1-4Q-11 Supported by VAT 2-3Q-31 ORs but VAT amount is not shown separately 1-2Q-8 Supported by tape 2-3Q-33 receipts but not BIR 465.53 180.00 645.53 7,601.27 189,119.09 196,720.36 9,811.61 9,811.61 533,150.15 51.54 533,201.69 6,895.56 2,958.21 12,537.90 385.71 22,777.38 6,586.91 6,586.91 2,580.00 26,640.00 136,184.73 165,404.73 52.18 52.18 202.62 202.62 1,270.04 1,270.04 3,278.20 3,278.20 44.69 44.69 257.14 257.14 ~-----;J 19 20 21 22 23 24 25 26 27 registered Supported by tape receipts with incomplete Petitioner's name (e.g. Macquarie only) 14Q-14 and not dated within the taxable quarter but dated within the period of claim Supported by "VAT REG TIN" ORs but with incomplete Petitioner's name (e.g. Macquarie Offshore only) and/or incorrect Petitioner's tin (e.g. 850) and/or 1-4Q-10 with corrections in the amounts and/or not dated within the taxable quarter (e.g. third quarter) but dated within the period of claim Supported by "VAT REG TIN" OR but 1-1Q-4 without petitioner's TIN and/or address Supported by "TIN VAT" OR but without 1-1Q-5 petitioner's TIN and/or address Supported by "TIN VAT" OR with corrections on Petitioner's address with countersignature 1-3Q-10 of the supplier according to the Petitioner but with incorrect petitioner's TIN Supported by "VAT REG TIN" ORs but VAT amount not shown separately and 1-2Q-7;

not dated within the taxable quarter (e.g. 1-4Q-13 first quarter) but dated within the period of claim Supported by "VAT REG TIN" ORs with corrections on Petitioner's TIN without countersignature 1-4Q-12 and/or not dated within the taxable quarter (e.g. third quarter) but dated within the period of claim Supported by "VAT REG TIN" ORs with corrections on Petitioner's name without countersignature and 1-4Q-16 not dated within the taxable quarter (e.g. third quarter) but dated within the period of claim Supported by "TIN VAT" ORs but not BIR 1-2Q-6 registered !

I 321.43 321.43 I 175.71 175.71 64.29 64.29 26.14 26.14 102.32 102.32 16.80 11,742.91 11,759.71 39,859.64 39,859.64 594.60 594.60 7,227.60 7,227.60 -- j 28

CfA CASE NO. 8337

Supported by "TIN VAT" OR but with 1-4Q-15 incorrect Petitioner's TIN 2-1Q-15;

2-2Q-22;

2-3Q-34;

C. Overclaimed Input 2-40-30 VAT 1-2Q-12;

1-3Q-11;

1-4Q-17 49.82 49.82 61,248.73 3,794.21 434.45 986.88 66,464.27 8.38 214.28 891.96 1,114.62 D. Underclaimed Input 1-3Q-12;

(11,504.85) VAT 1-4Q-18 (1 166.39) (10 338.46) E. The supporting 1-1Q-7;

documents not available 1-2Q-13;

306,071.03 at the time of 1-3Q-13;

102,932.16 82,602.46 (12,911.43) 133,447.84 verification 1-40-19 Total Subtotal 232,609.18 1,002,082.78 220,923.15 706,081.05 2,161,696.16 P1,283,024.63 P1,990,276.30 P2,321,590.28 P3,622,919.48 P9,217,810.6914 From the foregoing, the total amount of P2, 161,696.16 (under Item II. Other Findings) shall be disallowed outright for not being properly substantiated by proper supporting documents such as VAT invoices or official receipts prescribed under Sections 110(A), 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, and as implemented by Sections 4.110-1, 4.110-2, 4.110-8, 4.113-1 of RR No. 16-2005, as amended.

In addition, the input VAT claim in the total amount of P3,767,195.26, as presented below, shall be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the cited laws and regulations: Findings Exhibit 1st Otr 2nd Otr 3rd Otr 4th Otr A. Input tax on domestic purchases of goods other than capital goods Total

1. Supported by invoices with corrections on petitioner's name, and/or TIN, and/or address, and/or VAT amount but it cannot be ascertained whether the countersi!. natures thereon were made by the issuer Imavision Col])oration XX-5-1Q.3 p 2 160.00 p 2,160.00 Ultra Modular Concepts, Inc.

XX-5-10.4 9 072.00 9 072.00 Integrated Computer Systems Inc.

XX-5-1Q.5 86 924.57 86 924.57 Integrated Computer Systems Inc.

XX-5-1Q.6 18 996.43 18 996.43 Creative Trends Inc.

XX-5-10.63 1 320.00 1 320.00 Integrated Computer Systems Inc.

XX-5-1Q.7 2 721.43 2 721.43 Integrated Computer Systems Inc.

XX-5-2Q.10 p 72 437.14 72 437.14 Integrated Computer 1 392.86 I Systems Inc.

XX-5-20.5 1 392.86 West Woods Marketing XX-5-2Q.6 376.71 I Corp.

376.71 Integrated Computer Systems Inc.

XX-5-2Q.7 72 437.14 72 437.14 Creative Trends.Inc.

XX-5-2Q.76 820.80 820.80 !

14 With PO.lO difference against per Returns due to rounding off. J

Minuteman Printers, Inc.

XX-5-20.77 Creative Trends Inc.

XX-5-2Q.78 Integrated Computer Systems Inc.

XX-5-20.8 West Woods Marketing Corp.

XX-5-2Q.9 Integrated Computer Systems Inc.

XX-5-3Q.1 Integrated Computer Systems Inc.

XX-5-30.10 Integrated Computer Systems Inc.

XX-5-3Q.11 Integrated Computer Systems Inc.

XX-5-30.12 Integrated Computer Systems Inc.

XX-5-3Q.13 West Woods Marketing Corp.

XX-5-3Q.14 West Woods Marketing Corp.

XX-5-30.15 West Woods Marketing Corp.

XX-5-3Q.16 Great Year Industries Corp.

XX-5-3Q.17 West Woods Marketing Corp.

XX-5-30.2 West Woods Marketing Corp.

XX-5-3Q.3 Integrated Computer Systems Inc.

XX-5-3Q.4 Integrated Computer Systems Inc.

XX-5-30.5 Integrated Computer Systems Inc.

XX-5-3Q.52 Integrated Computer Systems Inc.

XX-5-30.53 Integrated Computer Systems Inc.

XX-5-3Q.54 Integrated Computer Systems Inc.

XX-5-3Q.6 Imavision Corporation XX-5-30.62 Great Year Industries Corp.

XX-5-30.64 Datacraft Phils. Inc. XX-5-3Q.7 Great Year Industries Corp.

XX-5-30.8 Integrated Computer Systems Inc.

XX-5-3Q.9 Integrated Computer Systems Inc.

XX-5-4Q.10 Integrated Computer Systems Inc.

XX-5-40.11 Integrated Computer Systems Inc.

XX-5-4Q.12 Integrated Computer Systems Inc.

XX-5-4Q.13 Integrated Computer Systems Inc.

XX-5-40.14 Integrated Computer Systems Inc.

XX-5-4Q.15 Integrated Computer Systems Inc.

XX-5-4Q.16 Integrated Computer Systems Inc.

XX-5-40.17 Integrated Computer Systems Inc.

XX-5-4Q.18 Integrated Computer Systems Inc.

XX-5-4Q.19 West Woods Marketing Corp.

XX-5-4Q.20 West Woods Marketing Corp.

XX-5-40.21 West Woods Marketinq XX-5-4Q.22 1 671.43 108.00 717.86 385.71 p 1 671.43 108.00 717.86 385.71 1 011.96 1 011.96 2 667.86 2 667.86 2 023.93 2 023.93 75 924.64 75 924.64 11 923.71 11 923.71 753.16 753.16 2 258.71 2 258.71 921.43 921.43 8 410.71 8 410.71 1 211.14 1 211.14 3 471.11 3 471.11 10 821.21 10 821.21 11 923.71 11 923.71 18 996.43 18 996.43 72 437.14 72 437.14 45 554.79 45 554.79 171.43 171.43 5 314.29 5 314.29 6 728.57 6 728.57 62 843.19 62 843.19 16 339.29 16 339.29 1 796.25 1,796.25 p 37 992.86 37 992.86 42 182.14 42 182.14 60 000.00 60 000.00 42 026.79 42 026.79 42 026.79 42 026.79 42 026.79 42 026.79 2 023.93 2 023.93 679.29 679.29 8 035.71 8 035.71 535.73 535.73 301.07 301.07 216.96 216.96 I

Corp.

XX-5- Innovend Corp.

40.223 XX-5- Innovend Coro.

40.224 West Woods Marketing Corp.

XX-5-40.23 Ace Hardware Phils., XX-5- Inc.

40.232 West Woods Marketing Corp.

XX-5-40.24 West Woods Marketing Corp.

XX-5-40.25 West Woods Marketing Coro.

XX-5-40.26 West Woods Marketing Corp.

XX-5-40.27 Integrated Computer Systems Inc.

XX-5-40.28 Integrated Computer Systems Inc.

XX-5-40.29 Integrated Computer Systems Inc.

XX-5-40.30 Integrated Computer Systems Inc.

XX-5-40.31 Integrated Computer Systems Inc.

XX-5-40.32 Integrated Computer Systems Inc.

XX-5-40.33 Integrated Computer Systems Inc.

XX-5-40.34 Integrated Computer Systems Inc.

XX-5-40.35 Integrated Computer Systems Inc.

XX-5-40.36 Integrated Computer Systems Inc.

XX-5-40.37 Integrated Computer Systems Inc.

XX-5-40.38 Integrated Computer Systems Inc.

XX-5-40.39 Integrated Computer Systems Inc.

XX-5-40.40 Integrated Computer Systems Inc.

XX-5-40.41 Integrated Computer Systems Inc.

XX-5-40.42 Integrated Computer Systems Inc.

XX-5-40.43 Integrated Computer Systems Inc.

XX-5-40.44 Integrated Computer Systems Inc.

XX-5-40.45 Integrated Computer Systems Inc.

XX-5-40.46 Integrated Computer Systems Inc.

XX-5-40.47 West Woods Marketing Corp.

XX-5-40.48 West Woods Marketing Coro.

XX-5-40.49 West Woods Marketing Corp.

XX-5-40.50 Datacraft Phils. Inc. XX-5-40.51 Audio 4 Design N Technoloqy XX-5-40.52 Integrated Computer Systems Inc.

XX-5-40.78 Integrated Computer Systems Inc.

XX-5-40.89 Integrated Computer Systems Inc.

XX-5-40.9 Integrated Computer Systems Inc.

XX-5-40.90 Integrated Computer Systems Inc.

XX-5-40.91 510.54 510.54 700.71 700.71 668.57 668.57 917.14 917.14 80.36 80.36 214.29 214.29 102.27 102.27 407.15 407.15 171.64 171.64 2 405.36 2 405.36 8 405.36 8 405.36 112.50 112.50 112.50 112.50 225.00 225.00 16 810.71 16 810.71 36 666.96 36 666.96 112.50 112.50 42 026.79 42 026.79 1 202.68 1 202.68 2 405.36 2 405.36 26.79 26.79 9 498.21 9 498.21 12 222.32 12 222.32 42 026.79 42 026.79 75 648.21 75 648.21 1 350.00 1 350.00 67 242.86 67 242.86 16 810.71 16 810.71 8 405.36 8 405.36 1 675.71 1 675.71 2 458.55 2 458.55 257.46 257.46 96 768.00 96 768.00 8,657.14 8 657.14 246 105.00 246 105.00 21 679.29 21 679.29 1 011.96 1 011.96 37 460.36 37 460.36 1 639.29 1 639~29

Integrated Computer Systems Inc.

XX-5-4Q.92 Integrated Computer Systems Inc.

XX-5-4Q.94 Sub-total

2. Overclaimed Input VAT Rustan's Supercenter, Inc.

(P221. 91-P91.88) XX-5-20.87 Sub-total 121 194.43 - B. Input tax on domestic purchases of services 8 548.39 8 548.39 24 053.57 24,053.57 150,347.65 363 504.66 1,075,852.42 1710899.16 130.03 130.03 130.03 - - 130.03

1. Supported by official receipts with corrections on petitioner's name, and/or TIN, and/or address, and/or VAT amount but it cannot be ascertained whether the countersianatures thereon were made by the issuer Jobstreet.com Philippines Inc.

XX-5-1Q.13 7 200.00 7 200.00 John Clements Consultants Inc.

XX-5-10.19 18 720.00 18 720.00 Business Process Outsourcing International Inc.

XX-5-1Q.20 403.80 403.80 John Clements Consultants Inc.

XX-5-1Q.21 7 800.00 7 800.00 Lantro Phils. Inc.

XX-5-1Q.22 7 698.00 7 698.00 Lantro Phils. Inc.

XX-5-1Q.23 8 995.46 8 995.46 Manila Bulletin Publishinq Corp.

XX-5-10.24 9 811.61 9 811.61 Manila Bulletin Publishing Corp.

XX-5-1Q.25 9 811.61 9 811.61 Manila Bulletin Publishing Corp.

XX-5-1Q.26 9 811.61 9 811.61 Manila Bulletin Publishing Corp.

XX-5-1Q.27 9 811.61 9 811.61 Manila Bulletin Publishinq Corp.

XX-5-10.28 9 811.61 9 811.61 Manila Bulletin Publishing Corp.

XX-5-1Q.29 9 811.61 9 811.61 Manila Bulletin Publishinq Corp.

XX-5-1Q.30 9 811.61 9 811.61 Quest Highlands Inc.

XX-5-1Q.31 60 000.00 60 000.00 Quest Highlands Inc.

XX-5-1Q.32 29 700.00 29 700.00 Quest Hiqhlands Inc.

XX-5-1Q.33 5 160.00 5 160.00 Skope Technology XX-5-1Q.70 1 339.29 1 339.29 Headstronq Phils. Inc. XX-5-10.73 74 928.00 74 928.00 King of Travel Inc.

XX-5-1Q.74 52.18 52.18 Galang Jovina Munez & Associates Law Offices XX-5-1Q.78 1 800.00 1 800.00 Galang Jovina Munez & Associates Law Offices XX-5-1Q.79 1 800.00 1 800.00 Galang Jovina Munez & Associates Law Offices XX-5-1Q.80 1 800.00 1 800.00 XX-5- Regus Centres Inc.

2Q.101 45 632.35 45 632.35 XX-5- Regus Centres Inc.

2Q.103 2 091.62 2 091.62 BT Communications XX-5- Phils. Inc.

2Q.107 32 530.72 32 530.72 XX-5- I-ZAPP Cebu Corp.

2Q.l14 19 339.80 19 339.80 XX-5- Ouest Hiohlands Inc.

2Q.118 60 000.00 60 000.00 XX-5- Quest Hiqhlands Inc.

20.119 5 160.00 5 160.00 Lantro Phils. Inc.

XX-5-2Q.23 722.40 722.40 Manila Bulletin Publishing Corp.

XX-5-2Q.27 9 811.61 9 811.61 I

Manila Bulletin Publishing Corp.

XX-5-2Q.28 Quest Hiohlands Inc.

XX-5-20.29 Quest Highlands Inc.

XX-5-20.30 Quest Highlands Inc.

XX-5-2Q.31 Quest Hiohlands Inc.

XX-5-20.32 Quest Highlands Inc.

XX-5-2Q.33 Headstronq Phils. Inc. XX-5-20.34 John Clements Consultants Inc.

XX-5-20.35 King of Travel Inc.

XX-5-2Q.66 Kino of Travel Inc.

XX-5-20.67 Galang Jovina Munez & Associates Law Offices XX-5-20.69 Galang Jovina Munez & Associates Law Offices XX-5-2Q.70 I-ZAPP Cebu Coro.

XX-5-20.89 Regus Centres Inc.

XX-5-2Q.95 Bernardo Maintenance XX-5- Services 3Q.148 Bernardo Maintenance XX-5- Services 30.149 XX-5- King of Travel Inc.

30.159 XX-5- Kino of Travel Inc.

3Q.160 XX-5- PhiiStar DailY. Inc.

30.163 Forte Showroom Corp.

XX-5-3Q.19 XX-5- Ascott Makati 30.212 XX-5- Reous Centres Inc.

30.213 Headstrong Phils. Inc. XX-5-3Q.25 Headstrong Phils. Inc. XX-5-3Q.26 Headstrono Phils. Inc. XX-5-30.27 Quest Highlands Inc.

XX-5-3Q.31 Quest Highlands Inc.

XX-5-3Q.32 Asalus Corp.

XX-5-30.34 Santa Fe Moving & Relocation Services Phils. Inc.

XX-5-3Q.43 Asalus Coro.

XX-5-30.44 Asalus Corp.

XX-5-30.45 Quest Highlands Inc.

XX-5-3Q.47 Quest Highlands Inc.

XX-5-3Q.48 _Quest Highlands Inc. XX-5-30.49 Quest Hiohlands Inc.

XX-5-30.50 King of Travel Inc.

XX-5-3Q.56 Headstrong Phils. Inc. XX-5-3Q.57 Quest Hiohlands Inc.

XX-5-30.58 9 811.61 9 811.61 46 800.00 46 800.00 5 160.00 5 160.00 32 370.00 32 370.00 60 000.00 60 000.00 5 160.00 5 160.00 109 610.88 109 610.88 20 280.00 20 280.00 52.07 52.07 52.07 52.07 1 800.00 1 800.00 1 800.00 1 800.00 4 868.69 4 868.69 2 934.24 2 934.24 1 378.81 1 378.81 1 350.06 1 350.06 104.36 104.36 50.25 50.25 6 998.39 6 998.39 9 551.39 9 551.39 8 109.25 81109.25 1 951.98 1 951.98 131 534.40 131 534.40 137 550.24 137 550.24 91 030.08 91 030.08 96 000.00 96 000.00 5 160.00 5 160.00 2 362.30 2 362.30 3 000.00 3 000.00 1 061.00 1 061.00 289.77 289.77 75 000.00 75 000.00 60 000.00 60 000.00 60 000.00 60 000.00 5 160.00 5 160.00 101.36 101.36 110 619.36 110 619.36 11.700.00 11 700.00

Publishing Corp. XX-5-3Q.72 Avanti People Partnership XX-5- International 49.239 Avanti People Partnership XX-5- International 49.245 Pest Away Corp. 4Q.248 Inc. 49.249 |g tn 6 811.61 14,040.00 14,040.00 17,550.00 17,550.00 Inc. 4Q.250 5,303.57 5,303.57 raga | I-ZAPP Cebu Corp 4Q.253 Consulting, Inc. 4Q.262 Fae Corp. XX-5-4Q Canon Marketing 05.40.66. Phils.), Inc. XX-5-4Q : Canon Marketing 0-5-4067. Phils.), Inc. XX-5-4Q Canon Marketing 5-40.68 Phils.), Inc. XX-5-4Q | | | | tz so.3a | 12,180.34 | || as080.00| 28,080.00 | pte 3.00] 16,430.00 | | a sa693| 4526-99 | | a sa603| 4,526.99 | | a sze93| 4526.99 | | asa ss| asa | sas 8} 5 | | aarzca| 2st | | area} 2772.0 | | sesco8 | 1,345.08 | | 57609] 5,760.29 | | -56 .66 .67 .68 Canon Marketing 0-5-40.69 | Phils.), Inc. XX-5-4Q9.69 Canon Marketing Phils.), Inc. XX-5-4Q.70 71 Canon Marketing x-5-40.72 | Phils.), Inc. XX-5-4Q9.72 Lantro Phils., Inc. XX-5-4Q.77 P| Quest Highlands Inc. XX-5-49.82 | 60,000.00 60,000.00 Santa Fe Moving & Relocation Services Phils., Inc. XX-5-49.84 377.14 377.14 | guptotar | | 296,078.00 | 475,988.06 829,874.61 181,955.71 1,783,896.38 Regus Centres, Inc. 3Q.183 Phils., Inc. 3Q.150 Quest Highlands, Inc. XX-5-49.60 Pf a| | Canon Marketing P| Phils.), Inc. XX-5-40 750.00} 9,750.00 | is5,880.00| 158,850.00 1,010.76 168,600.00 eis) | sac | Quest Highlands, Inc. XX-5-4Q.

3. Supported by official recei, Sybase Solutions Corp. XX-5-10.41 28,928.57 po

4. Supported by undated official receipt Rustan Coffee Corp. 29.109 80.36

5. Supported by documents other than VAT ORs Audio 4 Design N 5-30.18 | Technology Corp. XX-5-3Q Audio 4 Design N Technology Corp.

Audio 4 Design N Technology Corp.

| | a 60.00 | | 825.00 | pap fe 7365.00 XX-5-3Q .18 .ol 88 [TOTAL

[ P446,201.00 I P626,546.10 [ P1,260,675.03 [ P1,433,773.13 [ P3,767,195.26 I Hence, out of the claimed input VAT on domestic purchases of goods other than capital goods and services in the total amount of P9,217,810.79, only the input VAT of P3,288,919.37, as computed below, represents petitioner's valid input VAT on the said purchases: 1st Otr 2nd Otr 3rd Otr 4th_Qtr TOTAL Inout VAT Claim p 1 283 024.63 P1 990 276.31 P2 321 590.25 p 3 622 919.60 p 9 217 810.79 Less:

Disallowances oer ICPA Reoort 232 609.18 1 002 082.78 220 923.15 706 081.05 2 161 696.16 per this Court's verification 446 201.00 626 546.10 1 260 675.03 1 433 773.13 3 767 195.26 Substantiated Input VAT p 604,214.45 P361,647 .43 P839,992.07 Pl 483 065.42 P3.288.919.37 Next, the substantiation of the amortized portion of the input VAT on capital goods purchases exceeding PlMillion in the amount of P1,142,296.21, arose from the input tax deferred from the previous quarter in the amount of P475,083.86 and input VAT of P9,056,539.18 from purchases of capital goods during the four quarters of FY 2010, as shown below: Input Tax Deferred on Capital Goods exceeding P1 Million from Previous Quarter p 475 083.86 Add: Input Tax on Capital Goods exceeding P1 Million Purchased this Quarter 1st Quarter p 188,588.20 2"d Quarter 688,252.50 3'd Quarter 6,216,325.32 4th Quarter 1,963,373.16 9 056 539.18 Total: Unamortized Input Tax on Capital Goods exceeding P1 Million p 9 531 623.04 Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period 8 389 326.83 Amortization of Input Tax on Capital Goods exceeding Pl Million p 1 142,296.21 Based on the ICPA findings, the unamortized input VAT on capital goods from previous quarters amounts to P662,114.98, to wit:

Reference to ICPA Report (Exhibit Findings XX) Input VAT I. PROPERLY SUPPORTED Supported by "TIN-VAT" Official Receipts Annex 5-A p 486,177.10 II. OTHER FINDINGS I Supported by Invoices not registered with the BIR Annex 5-B 115,082.14 J

CfA CASE NO. 8337

Supported by VAT OR dated in the FY ended March 31, 2010 Supported by VAT OR dated outside the period of claim (FY March 2011) Subtotal Total Annex 5-C 30 427.87 Annex 5-D 30,427.87 175,937.88 P662,114.98 Per the schedule of VAT amortization, 15 the input VAT of P115,082.14 was amortized over 5 years (60 months), while the remaining amount of P547,032.86 was amortized over 2 years and 5 months (29 months) from July 2008. Thus, as of the beginning of April 2009, the unamortized portion or the deferred input tax on capital goods from previous quarter amounts to P475,083.85, computed as follows:

Amortization Reference from July to ICPA Est. Life 2008 to Report (in Monthly March 2009 Deferred Findings (Exh. XX) Input VAT months) Amort.

(9 mos.)_ Input Tax I. PROPERLY SUPPORTED Supported by "TIN-VAT" p p p Official Receipts Annex 5-A p 486,177.10 29 16 764.73 150 882.55 335,294.55 II. OTHER FINDINGS Supported by Invoices not registered with the Annex 5-B 115,082.14 60 1,918.04 17,262.32 97,819.82 BIR Supported by VAT OR dated in the FY ended Annex 5-C 30,427.87 29 1,049.24 9,443.13 20,984.74 March 31 2010 Supported by VAT OR !

dated outside the period Annex 5-D 30,427.87 29 1,049.24 9,443.13 20,984.74 !

of claim (FY March 2011) Subtotal Total 175,937.88 4,016.51 36,148.59 139,789.30 P662,114.98 P20,781.24 P187,031.13 P475,083.85 However, a second look at the invoices and official receipts related to the foregoing input taxes shows that the input VAT of P28,770.54 (P239,754.50 x 12°/o) supported by Invoice No. 08-06-144 16, which is part of the input VAT of P115,082.14, is also duly supported by Official Receipt No. 1091.17 Hence, the substantiated input VAT amounts to P514,947.64 (P486,177.10 + P28,770.54). Accordingly, the allowable input VAT for the four quarters of FY 2010 amounts to P206,930.84 (P51,732.71 per quarter), computed as follows:

15 Exhibit XX-6.

16 Exhibit XX-10.4.

17 Exhibit XX-10.1, 1 of 2. J

Estimated input VAT Input VAT Life for FY 2010 2 le sesinso 143 10.1 P 136,758.21 P 56,589.60 144 10.4 28,770.54 5,754.11 Tas | t03 | 193 | xx-10.2| 191,461.50| | —_79,225.45, 145 10.3 1093 191,461.50 3 79,225.45 29 29

08-08- XX- 29

148 10.2 | 1094 157,957.39 65,361.68 As to the input VAT on purchases of capital goods exceeding Pimillion for the four quarters of FY 2010 in the amount of P9,056,539.18, the ICPA summarized his findings as follows:

2 Supported by "VAT REG TIN" invoices Supported by "VAT REG bh 5 6 I. PROPERLY SUPPORTED Supported by "TIN VAT" 130-1 po P 96,428.57 | P 2,083,651.63 P| P 2,180,080.20 Invoices TIN" ORs ORS but with countersignature of the supplier according to the Petitioner Supported by "TIN VAT" and "VAT REG TIN" ORs with corrections on Petitioner's TIN but without countersignature of the supplier according to the petitioner Supported by "TIN VAT" ORs with corrections on the amount but with countersignature of the supplier according to the Petitioner Supported by "TIN VAT" Supported by "TIN VAT" invoices with corrections on the Petitioner's name P| 29,035.54 49,607.14 Af

AWNIGNI] 4

DOO Twnrite 7 57,456.00 100,800.00 2,068,182.00 265,414.29 369,293.42 _ 9,409.50 9,409.50 _ a 153,750.00 788,457.71 18,819.00 1,369,343.16 1,369,343.16 P 1,022.40 1,022.40 94,602.91 10,092.65 88,735.33 19,152.00 177,408.00 52,167.85 2,120,349.85 / 8 9 10 11

CfA CASE NO. 8337

Supported by "VAT REG TIN" OR not dated within the taxable 4-3Q-5 quarter (e.g. 4th quarter) but within the _Qeriod of claim Supported by "TIN VAT" invoices not dated 4-3Q-6;

within the taxable quarter but within the 4-4Q-2 period of claim Supported by "VAT REG TIN" invoices not dated within the taxable 4-4Q-5 quarter (e.g. 2nd quarter) but within the period of claim Supported by ''VAT REG TIN" OR with correction on amount but with countersignature of the supplier according to 4-3Q-7 the Petitioner and not dated within the taxable quarter (e.g. 4th quarter) but within the period of claim subtotal II. OTHER FINDINGS 1 Supported by "TIN VAT" 4-1Q-1;

invoice but not an oriainal copy 4-4Q-7 2 Supported by "VAT REG 4-3Q-8;

TIN" OR but not an original copy 4-4Q-8 3 Supported by "TIN VAT" OR but with incorrect 2-3Q-5 Petitioner's TIN (e.g. 484) 4 The supporting 33,835.68 33,835.68 75,084.12 15,016.82 90,100.94 9,201.60 9,201.60 :

80,740.51 80,740.51 - 688,252.50 5,022,912.60 1,629,746.48 7,340,911.58 - 188,588.20 72,144.00 260,732.20 67,200.00 6,000.00 73,200.00 206,250.00 206,250.00 i documents are not 2-3Q-6;

919,962.72 255,482.68 1,175,445.40 I available at the time of 2-4Q-3 verification TOTAL subtotal 188,588.20 - 1,193,412.72 333,626.68 1,715,627.60 P188,588.20 p 688,252.50 P6,216,325.32 P1,963,373.16 p 9,056,539.18 With the foregoing, the input VAT of Pl, 715,627.60 should be disallowed as it is not supported by proper documents.

In addition, the input VAT claim in the total amount of P3,091, 768.09, as presented below, should as well be disallowed for petitioner's failure to meet the substantiation requirements prescribed under the pertinent laws and regulations:

Findings Exhibit 2nd Qtr 3rd Qtr 4th Qtr Total

1. Supported by ORs and/or invoices the input VAT amount was not separately shown Barrington Carpets Inc. XX-9.4 p 428.40 p 428.40 XX- Alecto General Technology Corp. 9.56 p 78 214.29 78 214.29 - Sub-total 428.40 78,214.2JL __ 78,642.6!!_ I :.;

2. Supported by invoice with correction on petitioner's name without countersignature of the issuer Barrington Carpets, Ine wes. | oaonsol | to. | subtotas| | osonso| | -| ga 9.50

3. Supported by official receipts and/or invoices with corrections on petitioner's name and/or VAT amount but it cannot be ascertained whether the countersignatures thereon were made by the issu ti er XX- Barrington Carpets, Inc 9.24 P 7,527.60 7,527.60 XX- Barrington Carpets, Inc 1,881.90 1,881.90 XX- Alecto General Technology Corp. 156,428.57 156,428.57 XX- Alecto General Technology Corp. 109,741.06 109,741.06 XX- Alecto General Technology Corp. 69,717.86 69,717.86 XX- Lantro Phils., Inc 16,352.32 16,352.32 XX- Lantro Phils., Inc Alecto General Technology Corp. 9.35 XX- Lantro Phils., Inc ils. : 2,094.64 XX- Lantro Phils., Inc. 9.37 547,500.00 242,221.52 . 547,500.00 242,221.52 Lantro Phils., Inc 9.38 [tanto phi, ne, =| aes | Lantro Phils., Inc 9.39 [LantroPhis, ine, | 9a Lantro Phils., Inc 9.45 Salemaire industries Comp, | o%3_| a ee reissn| wozost| | ao, r40 st P_ 442,500.00 442,500.00 281,437.50 281,437.50 384,093.71 384,093.71 Salemaire Industries Corp.

54,870.53 14,812.50 —— 14 :

es zta20 | 6,214.20 fF 42,321.43 42,321.43 | Sub-totar 1,720,465.94 | _ 1,283,249.96 | _3,003,715.90 TOTAL P 1,720,465.94 | P 1,361,464.25 | P 3,091,768.09 Thus, out of the input tax of P9,056,539.18 on purchases of capital goods exceeding P1Million for the four quarters of FY 2010, only the amount of P4,249,143.49, as detailed below, was properly substantiated by VAT invoices/official receipts, computed as follows:

Input VAT on purchases of Capital Goods exceeding P1M 188,588.20 688,252.50 | P 6,216,325.32 | P 1,963,373.16 | P 9,056,539.18 Per ICPA Report 188,588.20 | 1,193,412.72 333,626.68 1,715,627.60 Per this Court's verification fe 9,837.90 1,720,465.94 1,361,464.25 3,091,768.09 P9,837.90 P ,252.

Tota! 188,588.20 9,837.90 2,913,878.66 1,695,090.93 4,807,395.69 Total substantiated input VAT on |» 268,282.23 | capital goods exceeding P1M fp P678,414.60 | P 3,302,446.66 | P 268,282.23 | P 4,249,143.49

| supper extant | antoer | arate | P| 6,507.14 : 9.7 —— comersteel Systems Comp, |e, 16,607.14 | T0066 | | (200,046.65 | | Corersteel Systems Corp. | xx-9.9 | | 970.29] | 97,480.29 | | Cornersteel Systems Corp. | xx-9.10 | | St 3aa.s2 {| | 181,314.82 | | Cornersteel Systems Corp. | xx. | | 360,720.00 | | Corersteel Systems Corp. | xx-9.12 | 60,067.29 | | Comerstee! Systems Corp. | xx-9.13 | | 145,051.86 | | Cornersteel Systems Corp. | xx-9.1a | 41,809.32 | | Cornersteel Systems Corp. | xx-9.15 | | (36,262.97 | | Cornerstee! Systems Corp, | xx-9.16 | | 19,496.06 | | Cornersteel Systems Corp. | xx-9.7 | 77,984.23 | | | Corerstee! Systems Corp. | xx-9.19 | | 167,237.28 | Salemaire Industries Corp XX-9.7 126,428.57| | 126,428.57 Cornersteel Systems Corp XX-9.8 | 209,046.65 | Cornersteel Systems Corp XX-9.20 19,285.71 fs Emerson Network Power (Phils) Inc. XX-9.21 102,180.00] is 102,180.00 Emerson Network Power (Phils) Inc. XX-9.22 251,853.43| 251,853.43 Emerson Network Power (Phils) Inc. XX-9.23 25,285.72 Fo 25,285.72 Walls in Motion XX-9.26 PY 13,285.71 Automatic Fire Sprinkler System Co. Ltd. | XX-9.27 Po Walls in Motion XX-9.28 P| 33,000.00 3,321.43 117,857.14 13,285.71 33,000.00 3,321.43 RCW Construction & Development Corp. XX-9.29 117,857.14 3,750.00 os || to os.65 | r0,052.65 | | ssois2 | ss.016.02 | | ae775.00| 30,775.00 | es eee Pp | 288,576.00 . 19,285.71 Emerson Network Power (Phils) Inc XX-9.40 Powergear Electrical Sales XX-9.41 Lantro Phils., Inc XX-9.47 Cornersteel System XX-9.48 RCW Construction & Development Corp. XX-9.49 RCW Construction & Development Corp XX-9.50 1,022.40 1,022.40 Functionsmith Sales & Services XX-9.52 9,201.60 9,201.60 Lantro Phils., Inc XX-9.61 7,878.91 7,878.91 Functionsmith Sales & Services XX-9.51 14,187.17 Functionsmith Sales & Services XX-9.64 14,187.17 Functionsmith Sales & Services XX-9.65 5,250.00 DB & B Philippines Inc XX-9.66 112,200.00 RCW Construction & Development Corp. XX-9.67 153,214.29 5,250.00 112,200.00 153,214.29 47,072.16 2,625.00 Meinhardt Philippines Inc XX-9.68 57,456.00 Functionsmith Sales & Services XX-9.69 Functionsmith Sales & Services XX-9.70 Functionsmith Sales & Services XX-9.71 Functionsmith Sales & Services XX-9.72 Cornersteel System XX-9.73 47,072.16 2,625.00 18,375.00 7,093.58 77,142.86 Cornersteel Systems Corp. XX-9.18

CfA CASE NO. 8337

Jones Lang Lasalle (Phils) Inc. XX-9.74 100 800.00 100 800.00 RCW Construction & Development Corp. XX-9.75 204 293.42 204 293.42 RCW Construction & Development Corp. XX-9.76 165 000.00 165 000.00 Meinhardt Philippines Inc. XX-9.78 19 152.00 19 152.00 RCW Construction & Development Corp. XX-9.79 41 250.00 41 250.00 RCW Construction & Development Corp. XX-9.80 58 928.57 58 928.57 RCW Construction & Development Corp. XX-9.81 6 696.43 6 696.43 RCW Construction & Development Corp. XX-9.82 46 875.00 46 875.00 TOTAL P678,414.60 P3 302 446.66 P268,282.23 1'4,249,143.49 However, pursuant to Section 110 (A) of the NIRC of 1997, as amended, as implemented by Section 4.110-3 of RR No. 16-2005, the input VAT claim on capital goods purchases attributable to zero-rated sales may be claimed either in full during the month of acquisition, or spread over a period of time, depending on the aggregate acquisition cost of the capital goods in the calendar month. If the aggregate acquisition cost exceeds P1 Million, the claim for input tax should be spread over 60 months or the estimated useful life of the capital goods, whichever is shorter. On the other hand, if the aggregate acquisition cost does not exceed P1 Million, the total input taxes shall be allowed as credit/refund in the month of acquisition Thus, while petitioner was able to substantiate the amount of P4,249,143.49, only the amortization 18 of the foregoing input taxes in the amount of P379,410.13, as detailed below, may be claimed by petitioner as valid input tax credits for the FY 2010: Annex of Exh Supplier XX&ZZ Exhibit 2nd Qtr 3rd Qtr 4th Otr Cornersteel Systems Corp. 4-2Q-1 XX-9.2 p 6 428.57 p Walls in Motion 4-20-2 XX-9.3 1 897.96 Automatic Fire Sprinkler System Co. Ltd.

4-2Q-2 XX-9.5 1 371.43 Salemaire Industries Corp. 4-20-3 XX-9.6 9 673.47 Salemaire Industries Corp. 4-20-3 XX-9.7 14 448.98 Cornersteel Systems Corp. 4-3Q-1 XX-9.8 p 13 936.44 Cornersteel Systems Corp. 4-30-1 XX-9.9 6 498.69 Cornersteel Systems Corp. 4-30-1 XX-9.10 12 087.65 Cornersteel Systems Corp. 4-30-1 XX-9.11 24 048.00 Cornersteel Systems Corp. 4-3Q-1 XX-9.12 6 864.83 Cornersteel Svstems CorP. 4-30-1 XX-9.13 9,670.12 Total 6 428.57 1 897.96 1 371.43 9 673.47 14 448.98 13 936.44 6 498.69 12 087.65 24 048.00 6 864.83 9A570.12 18 Based on the estimated life in months as presented in Annex 3a of the ICPA Report (Exhibit J XX).

Cornersteel Systems Corp. XX-9.14 Cornersteel Systems Corp. XX-9.15 19,238.40|/ | 19,238.40 11414915| ss 11,149.15 | | eo Se uzesre| | 205.7 | aren] | tn era.r2 | asyenze| | ayo.

| asssso] | asics] | ase ay amas) | arts | | Se fF S| Se | 2,787.29 2,417.53 Cornersteet Systems Corp. XX-9.16 Cornersteei Systems Corp. XX-9.17 Cornersteel Systems Corp. XX-9.18 Cornersteel Systems Corp. 4-3Q-1 XX-9.19 Cornersteel Systems Corp. XX-9.20 1,299.74 5,198.95 Emerson Network Power (Phils) a s0-1 | x%-9.21 | 4-30-1 XX-9.21 Emerson Network Power (Phils) aso | xx-9.22_ Inc. 4-3Q-1 XX-9.22 Emerson Network Power (Phils) a s0-1 | x%-9.23 | Inc. 4-3Q-1 XX-9.23 Walls in Motion 2,889.80 3 Automatic Fire Sprinkler System 430-3 | x%-9.27 | Co. Ltd. 4-3Q-3 XX-9.27 -3Q-3 RCW Construction & x9.29 | Development Corp. 4-3Q-4 XX-9.29 4 onl S 9 Walls in Motion XX-9.28 379.59 379.59 13,469.39 13,469.39 Inc. 4-39-4 | Xx-9.40 428.57 428.57 Powergear Electrical Sales XX-9.41 14,693.88 14,693.88 RCW Construction & | 31 450.00 | Development Corp. 4-30-4 | Xx-9.42 21,450.00 21,450.00 Inc. 4-39-5 | Xx-9.43 3,857.16 3,857.16 Barrington Carpets, Inc. xx-9.25 | | 9.9 | 9.79 Cornersteel Systems Corp. XX-9.44 | 8,581.04 | 8,581.04 Lantro Phils., Inc. xx-9.47 | | | pp 946.20 946.20 Cornersteel System XX-9.48 750.84 750.84 3,421.32 3,421.32 RCW Construction & | 440-3 | xx-9.49 | Development Corp 4-4Q-3 XX-9.49 . 1,181.72 1,181.72 RCW Construction & Development Corp 4-4Q XX-9.50 Functionsmith Sales & Services XX-9.51 Functionsmith Sales & Services XX-9.52 Functionsmith Sales & Services XX-9.64 945.81 - 34.08 34.08 Functionsmith Sales & Services XX-9.65 350.00 460.08 460.08 945.81 fe 350.00 fs 738.66 738.66 iasszaa| | t.857.14 | 598.50 598.50 2,500.00 2,500.00 Lantro Phils., Inc. XX-9.61 DB & B Philippines Inc xx-9.66 | _ 12,822.86 || az p22.86 Seveloorent orp | o-20-2 | 1x-9.67 | Development Corp. 2-29 XX-9.67 17,510.20 17,510.20 Meinhardt Philippines Inc. XX-9.68 656.401 | | 6,566.40 Functionsmith Sales & Services XX-9.69 3,138.14 P| 3,138.14 ionsmi - i7500[ sid 175.00 Functionsmith Sales & Services XX-9.71 1,225.00 P| 1,225.00 ionsmi a72.91| 472.91 Cornersteel System XX-9.73 5,142.86 P| 5,142.86 Jones Lang Lasalle (Phils) Inc. XX-9.74 1152000] i 11,520.00 Development Corp 2-39 XX-9.75 23,347.82 23,347.82 RCW Construction & 30-4 | «9.76 | Development Corp. 2-3Q XX-9.76 Seneca | aan | ca Development Corp 2-4Q XX-9.79 Seneca | aaa | ne Development Corp. 2-4Q XX-9.80 RCW Construction & | 540-2 | xx-9.81 | Development Corp. 2-4Q XX-9.81 -3 .

-4 .

-5 :

-6 .

-2 .

-2Q-2 .

-2Q-3 .

Functionsmith Sales & Services XX-9.70 -3Q-1 .

Functionsmith Sales & Services XX-9.72

-3Q-2 :

-3Q-3 :

-3Q-4 .

-3Q-4 .

-4Q-1 .

-2 :

-2 .

-2 .

209.26

RCW Construction & Development Corp.

2-4Q-2 XX-9.82 2 840.91 2 840.91 TOTAL p 72 015.68 p 291871.36 p 15 523.09 P379,410.13 In sum, petitioner's total substantiated input VAT for the four quarters of FY 2010 amounts to P3,875,260.34 , as computed below:

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr TOTAL Input VAT on domestic purchases of goods other than capital goods and services p 604 214.45 p 361 647.43 p 839 992.07 p 1 483 065.42 p 3 288,919.37 Input VAT deferred on capital goods exceedino P1M 51 732.71 51 732.71 51 732.71 51 732.71 206 930.84 Input VAT on capital goods exceeding P1M 72 015.68 291 871.36 15 523.09 379 410.13 Total Substantiated Input VAT 1!(;~5 L~47' ._!_(;_ J!4f.J5~95.82 P1183 596.14 p 1,550,321.22 P3,875,260.34 After applying petitioner's valid input VAT of P3,875,260.34 against its output VAT of P428.57 for the subject period of the claim, there remains an excess input VAT of P3,874,831.77, which can be attributed to the entire zero-rated sales/receipts declared by petitioner in the amount of P382,369,920.59. Accordingly, only the input VAT of P3,396,522.45 is attributable to the substantiated zero-rated sales of P336,700,861.99, as computed below: Substantiated input VAT p 655 947.16 p 485 395.82 p 1 183 596.14 p 1 550,321.22 p 3 875 260.34 Less: Outout VAT 428.57 428.57 Substantiated excess input VAT 655,947.16 485,395.82 1.183 596.14 1,549,892.65 3,874,831.77 Multiply by substantiated zero-rated sales 61 913 339.95 74 958 221.29 97 514 333.46 102 314 967.29 336 700 861.99 Divided by total declared zero-rated sales 61 913 339.95 74 958 221.29 97 514 333.46 147 984 025.89 382 369 920.59 Excess input VAT Allocated to zero- rated sales p 655 947.16 p 485.395.82 P1.183.596.14 P1,071,583.33 P3,396,522.45 Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns19, it remained unutilized until it was deducted as "VAT Refund/TCC claimed" in its Quarterly VAT Return for the fourth quarter of FY 2011 20 • Thus, the excess input VAT of P20,711,496.1221 as of the end of the fourth quarter of FY 2011 which was carried-over to the succeeding first quarter of FY 201222 no longer included the subject claim. In fine, petitioner has sufficiently established its entitlement to refund or issuance of tax credit certificate

representing unutilized input VAT attributable to its zero- rated sales for the four quarters of Fiscal Year ended March 31, 2010 in the amount of P3,396,522.45.

WHEREFORE, the Decision dated July 15, 2015 promulgated in the instant case is REVERSED and SET ASIDE.

Consequently, the Petition For Review dated September 9, 2011 filed by Macquarie Offshore Services Pty Ltd. - Philippine Branch, is hereby PARTIALLY GRANTED. Respondent Commissioner of Internal Revenue is ORDERED TO REFUND to petitioner the amount of P3,396,522.45 representing its excess and unutilized input value-added tax (VAT) attributable to its zero-rated sales for the fiscal year covering the period of April 1, 2009 to March 31, 2010.