Chartis Technology & Operations Management Corporation vs. Commissioner of Internal Revenue

AMENDED DECISION

CASANOVA, J.:

For resolution is petitioner's Motion for Reconsideration with Motion for New Trial\ filed on November 24, 2015, without respondent's comment despite notice per Records Verification2 dated January 12, 2016.

Petitioner seeks reconsideration of this Court's Decision3, promulgated on November 6, 2015, which dismissed petitioner's claim for refund or issuance of tax credit certificates (TCC) of its alleged excess and unutilized Input Value Added Tax (VAT) in the total amount of P56,815,398. 78 for fiscal year (FY) 2010 ended November 30, 2010.~

In the assailed Decision, the Court denied petitioner's claim for VAT refund for its failure to submit sufficient documents to prove that its clients are non-resident foreign corporations doing business outside the Philippines. In the Motion for Reconsideration with Motion for New Trial, petitioner manifests that it has fifty-one (51) non-resident foreign clients for FY ended November 30, 2010 in different territories scattered around the world. Petitioner requested its clients to furnish it with their consularized copies of incorporation documents, but the requests went unheeded. Petitioner was allegedly constrained to finish the presentation of its documentary and testimonial evidence without relevant incorporation documents. Petitioner avers that despite reasonable diligence and repeated reminders to its foreign clients, petitioner failed to receive the consularized copies of their incorporation papers.

Moreover, petitioner does not have absolute control over these foreign affiliates, at most, it can only request, but it does not have the authority to procure the documents from its source. Since the consularized documents remain unavailable, petitioner has gathered printed screenshots of the official online websites of the foreign government company registries, which are attached to its motion. Petitioner learned that, in recent cases, this Court has accepted printed screenshots as evidence to prove the fact that a non-resident foreign corporation is doing business outside the Philippines.

Petitioner argues that the said printed screenshots are akin to newly discovered evidence that shall materially alter the outcome of the case. Thus, petitioner prays that the Court grant its Motion for New Trial and admit these documents into evidence so that petitioner's claim for VAT refund may be granted in its entirety. In the Resolution4 dated February 12, 2016, the Court granted petitioner's Motion for New Trial and held in abeyance the resolution of petitioner's Motion for Reconsideration·~

Consequently, petitioner recalled its witness, Ms. Mary Cris Barayuga, petitioner's Senior Manager for Finance and Accounting. 5 Thereafter, petitioner filed its Supplemental Formal Offer of Evidence6 on August 1, 2016. In the Resolution7 dated September 20, 2016, the Court admitted as evidence Exhibits "M-1-a", "M-2-a", "M-3- a", "M-4-a", "M-6-a", "M-6-b", "M-7-a", "M-8-a", "M-8-b", "M-8-c", "M-9-a", "M-9-b", "M-9-c", "M-9-d", "M-10-a", "M- 11-a", "M-11-b", "M-12-a", "M-12-b", "M-13-a", "M-14-b", "M-15-a", "M-16-a", "M-17-a", "M-17-b", "M-17-c", "M-18- a", "M-18-b", "M-18-c", "M-18-d", "M-20-a", "M-20-b", "M- 21-a", "M-21-b", "M-21-c", "M-23-a", "M-23-b", "M-23-c", "M-24-a", "M-24-b", "M-24-c", "M-24-d", "M-24-e", "M-25- a", "M-26-a", "M-27-a", "M-29-a", "M-31-a", "M-31-b", "M- 31-c", "M-32-a", "M-32-b", "M-33-a", "M-33-b", "M-33-c", "M-34-a", "M-35-b", "M-36-a", "M-37-a", "M-38-a", "M-39- a", "M-40-a", "M-41-a", "M-43-a", "M-44-a", "M-44-b", "M- 47-a", "M-48-a", "M-49-a", "M-50-a", "M-51-a", "M-60", "M- 61", and "M-61-a".

Petitioner filed the Supplemental Memorandum (in support of Petitioner's Motion for Reconsideration dated 23 November 2015)8 on October 27, 2016, while respondent failed to file his supplemental memorandum despite notice per Records Verification9 dated November 21, 2016.

In the Supplemental Memorandum, petitioner asserts that its witness, Ms. Barayuga reiterated that petitioner's clients are foreign corporations existing, operating and doing business in foreign countries. In support of her testimony, Ms. Barayuga presented the consularized Certificates and Articles of Incorporation and similar documents, as well as printouts of the websites of various foreign government registries, showing that petitioner's clients are existing, operating and doing business in foreign countries. Petitioner maintains that it duly substantiated its claim for refund. Thus, taking into account the additional evidence presented, petitioner submits that it is entitled to the refund or issuance of a tax4

credit certificate for its unutilized/excess input VAT for the 1st to 4th quarters of FY 2010 amounting to P56,815,398. 78. To reiterate, the denial of the claim was mainly due to petitioner's failure to prove that it rendered zero-rated sales of services in accordance with Section 108(8)(2) of the National Internal Revenue Code (NIRC) of 1997, as amended. More particularly, petitioner failed to present proof of its foreign clients' incorporation, association or registration in a foreign country which should have satisfied the 2nd requisite to establish that the supply of services are considered VAT zero-rated as laid down in Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. 10 These requisites are as follows:

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

2. the recipient of such services is doing business outside the Philippines; and

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

Hence, in the Supplemental Formal Offer of Evidence, petitioner presented consularized foreign incorporation/registration documents and/or screenshots from various foreign government websites to prove its clients' foreign incorporation or registration. 11 With the admission of these documents12, the Court will now proceed in verifying petitioner's refundable claim. As stated in the assailed Decision, in order to be entitled to a refund or issuance of a tax credit certificate of input VAT paid, petitioner must prove the following:

1. the taxpayer is VAT registered;41L

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

3. the input taxes are due or paid;

4. the input taxes are not transitional input taxes;

5. the input taxes have not been applied against output taxes during and in the succeeding quarters;

6. the input taxes claimed are attributable to zero-rated or effectively zero-rated sales;

7. for zero-rated sales under Section 106(A)(2)(¹) and (²); 106(8); and 108(8)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with 8SP rules and regulations;

8. 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 attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and

9. the claim is filed within two years after the close of the taxable quarter when such sales were made.13 The first and ninth requisites were already passed upon in the Decision dated November 6, 2015. 14 We now proceed with the re- evaluation of the remaining requisites. Second and Seventh Requisites: Petitioner had zero- rated sales which were paid for in acceptable foreign currency duly accounted for in accordance with 8SP rules and regulations.~

For the fiscal year 2010, petitioner allegedly rendered services to the following non-resident foreign corporations which are either covered with individual Master Service Agreements or included in an Intercompany Service Agreement as listed by Ms. Maria Juvy M. Vargas and Ms. Mary Cris Barayuga, petitioner's Chief Financial Officer and Senior Manager for Finance and Accounting, respectively, in their Sworn Statements dated September 11, 201315 and June 15, 201616, respectively: 1 AIG Global Reinsurance Division 2 AIG Kazakhstan 3 AIG Travel Assist_ Inc. 4 AIU Insurance Company - Japan 5 American Home Assurance Australia 6 American Home Assurance Company Australia 7 American Home Assurance Company UAE 8 American Home Assurance Korea 9 American Home Assurance Singapore 10 Chartis Azerbaijan Insurance Co. 11 Chartis Chile Campania Seguros Generales S.A. 12 Chartis China 13 Chartis Claims 14 Chartis Europe S.A. 15 Chartis Europe S.A. Branch Office of Hungary 16 Chartis Europe S.A. Bulgaria Branch 17 Chartis Europe S.A. Czech Republic Branch 18 Chartis Europe S.A. Finland Branch 19 Chartis Europe S.A. Georgia Branch 20 Chartis Europe S.A. Poland Branch Office 21 Chartis Europe S.A. Slovak Republic Branch 22 Chartis Insurance Claims 23 Chartis Insurance Hong Kong 24 Chartis Insurance Indonesia 25 Chartis Insurance Ireland Limited 26 Chartis Insurance UK Ltd. 27 Chartis International 0 and S HO 28 Chartis Inti F&A 29 Chartis Malaysia Insurance Berhad 30 Chartis Romania Insurance Company SA 31 Chartis Southeast Asia Limited 32 Chartis Taiwan Insurance Co. Ltd. Chartis Technology and Operations Management (M) SDN

33 BHD

34 Chartis Technology_ and Operations Management - Ireland 35 Chartis UK Services, Ltd.

36 Chartis Ukraine Insurance Company OSC 37 Chartis Uzbekistan 38 Chartis Vietnam Insurance Company Limited 39 OSC Chartis 40 Direct DME Inc.

41 Guam Insurance Adjusters, Inc. 42 Intercompany Clearing House NY - Chartis Inti F&A 43 Lexinqton 44 New Hampshire Insurance Thailand 45 UBB Chartis Insurance Company_ Bulgaria 46 Alico AIG GID 47 Chartis MEMSA Insurance Co. - Oman Branch 48 Chartis MEMSA Insurance Company Limited 49 Chartis South Africa Ltd. 50 Health Direct Inc. 51 Tata AIG Gen Insurance Co. Ltd. - India Petitioner presented SEC Certifications of Non-Registration of Company17, Master Agreements for Professional Services18, Intercompany Services Agreement19 and consularized foreign incorporation/registration documents and/or screenshots from various foreign government websites20 to prove that its clients are non-resident foreign corporations doing business outside the Philippines.

In Deutsche Knowledge Services, Pte Ltd. vs. Commissioner of Internal Revenut#-1, this Court discussed the documentary requirements to prove that the recipients of services are non-resident foreign corporations doing business outside of the Philippines, to wit: "To prove that its clients are non-resident foreign corporations doing business outside the Philippines, petitioner presented the following documents:

1. SEC Certifications of Non-Registration of Company;

2. Certifications from different government agencies in the country of origin of petitioner's clients, all~

duly authenticated by the nearest consulate of the Philippines;

3. Intragroup Service Agreements; and,

4. Duetsche Bank List of Shareholdings 2008 However, the Court finds that the aforesaid documents per se do not constitute sufficient proof that petitioner's clients are non-resident foreign corporations doing business outside the Philippines. While the SEC Certificates of Non-Registration show that the named entities therein are not registered corporations/partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. Likewise, the Intra-Group Service Agreements only show the names of petitioner's customers to whom it rendered services but the same do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. Moreover, the Articles of Association and Certificates of Registration/Incorporation of Foreign Company only prove that the named entities therein were incorporated/organized abroad. However, they also do not establish that such entities are not doing business in the Philippines. To be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC certificate of non-registration of corporation/partnership and certificate/articles of foreign incorporation I association I registration. xxx" (Emphasis and underscoring supplied) As to the validity of screenshots of foreign government websites, this Court ruled in Chevron Holdings, Inc. [formerly Caltex (Asia) Limited] vs. Commissioner of Internal Revenue22 that "[B]eing official government registry of corporations, the Court is inclined to accept the printed screenshots of the official websites of othe~

foreign government's registry of companies as sufficient proof in lieu of the Certificates/ Articles of Foreign Incorporation/ Association." After a thorough examination of these documents presented, the Court finds that out of petitioner's 51 foreign clients, only the following entities can be considered non-resident foreign corporations doing business outside the Philippines: 1 AIG Kazakhstan 2 AIG Travel Assist Inc. 3 American Home Assurance Com_Qan_y UAE 4 Chartis Chile Campania Seguros Generales S.A. 5 Chartis Claims 6 Chartis Europe S.A. 7 Chartis Europe S.A. Branch Office of Hun_ga_!Y 8 Chartis Europe S.A. Bulgaria Branch 9 Chartis Europe S.A. Czech Republic Branch 10 Chartis Europe S.A. Finland Branch 11 Chartis Europe S.A. Poland Branch Office 12 Chartis Europe S.A. Slovak Republic Branch 13 Chartis Insurance Ireland Limited 14 Chartis Malaysia Insurance Berhad 15 Chartis Southeast Asia Limited 16 Chartis Technology and Operations _(_MJ SON BHD 17 Chartis UK Services Ltd. 18 Chartis Ukraine Insurance Company OSC 19 Chartis Uzbekistan 20 Direct DME Inc.

21 Guam Insurance Adjusters Inc. 22 New Hampshire Insurance Thailand 23 Chartis South Africa Ltd. 24 Health Direct, Inc. 25 Tata AIG Gen Insurance Co. Ltd. - India The names of the above-enumerated entities matched with those shown in both the Philippine SEC Certificates of Non- Registration of Company and consularized foreign incorporation/registration documents and/or screenshots from various foreign government websites. In its amended Quarterly VAT Returns23 for the FY 2010, petitioner reported an amount of P1,356,544,794.50 total sales, where P1,326,963,237.76 pertains to zero-rated sales, to wit~

Quarter VA Table Zero-Rated TOTAL pt p 7 276,101.73 p 402,399,346.27 p 409,675 448.00 2nd 7,153,406.38 214,520,912.15 221,674J318.53 3rd 7,548 669.02 389,793 750.70 397 342,419.72 4th 7 603,379.61 320,249,228.64 327,852,608.25 TOTAL P29,581,556.74 P1,326,963,237. 76 P1,356,544,794.50 Petitioner submitted its VAT official receipts and sales invoices24 to support its zero-rated sales which were scrutinized by the Court- commissioned Independent Certified Public Accountant (!CPA), Ms. Mary Ann Capuchino.

The Court finds it proper to disallow zero-rated sales amounting to P640,937,776.58 due to the following findings by the !CPA, as summarized in her report25 : ICPA Report Annex Reference Findin_gs Amount D Export sales pertaining to ICH IT transactions supported by VAT OR issued in the name of Chartis Int'l F&A stamped with zero-rated sales and with Certificate of Inward Remittance p 589 846,852.10 D Adjustments made to export sales with Chartis Int'l F&A (8 4401887.79) E Export sales pertaining to ICH IT transactions supported by VAT ORs issued in the name of Chartis Int'l F&A stamped with zero- rated sales and with Certificate of Inward Remittance with noted difference in the amount per invoice and per schedule of collection report 21 652J333.73 E Adjustments made to export sales with Chartis Int'l F&A with noted difference in the amount per invoice and per schedule of collection report (518,892.61) F Export sales not properly supported by VAT OR stamped with zero- rated sale but supported with Certificate of Inward Remittance 21 809 283.34 G Export sales supported by VAT OR with no CAS permit number indicated but supported with Certificate of Inward Remittance 8 323 122.78 H Export sales properly supported bby VAT OR stamped with zero- rated sale but not supported with original Certificate of Inward Remittance 6 552 908.05 I Export sales pertaining to ICH IT transactions supported by VAT OR issued in the name of Chartis Int'l F&A and with Certificate of Inward Remittances but not supported by VAT invoices 7 291152.22 Other adjustments (5 578 095.24) TOTAL P640,937 _L776.58

In addition to the ICPA's findings, the Court finds that P454,989,141.77 of petitioner's zero-rated sales must likewise be disallowed due to the following: !CPA Report Annex Amount in Reference Exh. No.

Client OR No.

Date USD Amount in PHP Sales supported by VAT zero-rated OR without date and without Certificate of Inward Remittance Chartis Europe SA, Branch Office of c P-3-0142 Hungary 259 $19231.96 P907. 844.63 Sales supported by VAT zero-rated OR but without Certificate of Inward Remittance B P-3-0010 Guam Insurance Adjusters Inc. 257 12/1/2009 3 114.55 147 000.53 B P-3-0012 New Hampshire Insurance Thailand 271 12/1/2009 89 948.96 4 246 040.66 B P-3-0017 Chartis Europe SA Bulgaria Branch 283 2/25/2010 15 471.26 719 568.31 Chartis Europe SA, Czech Republic B P-3-0020 Branch 286 2/25/2010 46 001.06 2 137 648.90 B P-3-0021 Chartis Europe SA Finland Branch 288 2/25/2010 88 224.97 4,097 762.14 B P-3-0023 Chartis Insurance Hongkonq 290 2/25/2010 164 686.86 7 612 120.54 Chartis Europe SA, Branch Office of B P-3-0024 Hungary 291 2/25/2010 34 411.12 1 594 880.00 B P-3-0028 Chartis Malaysia Insurance Berhad 296 2/25/2010 173 711.47 8 051 607.01 B P-3-0029 Chartis Europe SA Poland Branch 298 2/25/2010 47 663.88 2 211 265.86 Chartis Europe SA, Slovak Republic B P-3-0031 Branch 301 2/25/2010 38 022.04 1 768 405.09 B P-3-0032 New Hampshire Insurance Thailand 303 2/25/2010 32 082.10 1 480 685.15 B P-3-0033 AIG Travel Assist Inc. 304 2/25/2010 111 609.09 5 190 938.78 B P-3-0051 Direct DME Inc.

0000051 6/15/2010 10 552.00 487 502.40 B P-3-0056 Chartis Claims 0000062 7/5/2010 476 821.50 22 029 153.30 B P-3-0061 Direct DME Inc.

0000068 7/12/2010 10 552.00 489 190.72 B P-3-0066 Chatis Claims 0000079 7/30/2010 5 276.00 244 595.36 B P-3-0069 Chartis Claims 0000082 8/6/2010 494 193.46 22 500 628.23 B P-3-0072 Chartis Claims 0000085 8/19/2010 5 276.00 240 216.28 B P-3-0073 Chartis Claims 0000088 8/20/2010 502 870.43 22 895 690.68 B P-3-0075 Direct DME Inc.

0000093 8/25/2010 18 089.29 828 724.64 American Home Assurance B P-3-0086 Company, UAE 0000586 8/27/2010 254 865.88 11 604 043.54 B P-3-0091 Chartis Europe SA 0000102 9/2/2010 6 934.08 314 668.55 Chartis Technology and Operations B P-3-0123

(M) SON BHD

0000167 11/24/2010 3 500.00 154 255.50 c P-3-0139 Chartis Europe SA Bulgaria Branch 254 12/1/2009 1 971.91 93 084.01 c P-3-0146 Chartis Malaysia Insurance Berhad 264 12/1/2009 135 613.70 6 401 644.72 Chartis Europe SA, Slovak Republic c P-3-0150 Branch 269 12/1/2009 11 412.50 538 727.06 SUBTOTAL 2782876.11 128. 080 047.96 Sales supported by VAT zero-rated OR but petitioner failed to prove that client is a non-resident foreign corporation not doing business in the Philippines B P-3-0003 Chartis Insurance UK Ltd 312 2/4/2010 3 886.44 180 758.32 B P-3-0005 Chartis Insurance UK Ltd 314 2/18/2010 45 600.00 2 120 856.00 B P-3-0008 Chartis Insurance UK Ltd 317 2/25/2010 45 600.00 2 120 856.00 B P-3-0009 Chartis Azerbaijan Insurance Co. 253 12/1/2009 9 387.37 443 131.26 B P-3-0011 American Home Assurance Korea 263 12/1/2009 124 024.10 5 854 557.64 B P-3-0013 Chartis International O&S HO 272 12/1/2009 410 760.63 19 389 955.55 B P-3-0014 AIG Global Reinsurance Division 274 12/1/2009 1 672.85 78 946.96 Chartis Vietnam Insurance B P-3-0015 Company Limited 280 1/22/2010 7 440.91 342 467.88 B P-3-0018 Chartis International O&S HO 284 2/25/2010 573 180.15 26 658 608.80 B P-3-0019 Chartis China 285 2/25/2010 102 985.99 4 789 878.39 B P-3-0022 Chartis Europe SA Gerogia Branch 289 2/25/2010 12 325.82 573 273.90 B P-3-0025 Chartis Insurance Indonesia 292 2/25/2010 66 575.92 3 096 446.04 B P-3-0026 AIU Insurance Company - Japan 293 2/25/2010 25 616.50 1 191 423.41 B P-3-0027 American Home Assurance Korea 295 2/25/2010 227 147.14 10 564 613.49 B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B B c c c c c c

Chartis Romania Insurance P-3-0030 Comp_any SA P-3-0031 Chartis Taiwan Insurance Co. Ltd. P-3-0034 AIG Global Reinsurance Division Chartis Vietnam Insurance P-3-0035 Company Limited P-3-0036 Lexington P-3-0039 Chartis Insurance UK Ltd P-3-0040 Chartis Insurance UK Ltd P-3-0042 Lexinqton P-3-0046 OSC Chartis Chartis Vietnam Insurance P-3-0047 Company Limited Chartis Vietnam Insurance P-3-0049 Company Limited Chartis Vietnam Insurance P-3-0050 Company Limited P-3-0052 Chartis Insurance UK Ltd P-3-0053 Lexington P-3-0054 Chartis Insurance UK Ltd P-3-0055 AIG Global Services Malaysia P-3-0058 Chartis Insurance UK Ltd P-3-0060 Chartis Insurance UK Ltd P-3-0062 AIG Global Services Malaysia P-3-0063 AIG Global Services Malaysia P-3-0064 Chartis Insurance UK Ltd P-3-0065 Lexinqton P-3-0068 Chartis Insurance UK Ltd P-3-0070 AIG Global Services Malaysia P-3-0071 AIG Global Services Malaysia P-3-0076 Chartis Insurance UK Ltd P-3-0077 Lexington Chartis Vietnam Insurance P-3-0079 Company Limited Chartis Vietnam Insurance P-3-0082 Company Limited Chartis Vietnam Insurance P-3-0083 Company Limited P-3-0084 OSC Chartis P-3-0088 OSC Chartis UBB Chartis Insurance Company, P-3-0089 Bulgaria P-3-0090 Chartis Insurance UK Ltd P-3-0095 Lexington P-3-0097 Chartis Insurance UK Ltd P-3-0100 Lexinqton P-3-0107 Chartis Insurance UK Ltd P-3-0122 Chartis Insurance UK Ltd P-3-0124 Alico AIG Cid Chartis Vietnam Insurance P-3-0130 Company Limited P-3-0131 OSC Chartis P-3-0132 OSC Chartis P-3-0133 OSC Chartis UBB Chartis Insurance Company, P-3-0135 Bulgaria P-3-0136 OSC Chartis P-3-0138 Chartis Insurance Australia P-3-0140 Chartis China P-3-0141 Chartis Insurance Honqkong P-3-0143 Chartis Insurance Indonesia P-3-0144 AIU Insurance Company - Japan Chartis Kazakhstan Insurance Co. P-3-0145 JSC 299 302 305 309 0000034 0000037 0000040 0000043 0000419 0000420 0000476 0000478 0000052 0000054 0000056 0000057 0000065 0000067 0000069 0000070 0000073 0000074 0000081 0000083 0000084 0000094 0000095 0000495 0000516 0000549 0000550 0000591 0000592 0000101 0000109 0000111 0000122 0000131 0000166 0000616 0000666 0000706 0000711 0000714 0000673 0000716 248 255 258 260 261 262 2/25/2010 39 944.52 1 857 819.63 2/25/2010 247 861.54 11 321 494.28 2)25/2010 8 430.63 392 108.60 2/25/2010 3 480.76 161 013.00 4/28/2010 39 819.74 1 799 454.05 5/7/2010 45 600.00 2 027 376.00 5/14/2010 2 041.08 90 746.42 5/18/2010 39 438.68 1 753 443.71 3/31/2010 20 538.67 928 758.66 3)31/2010 9 490.00 429 137.80 5/31/2010 5 544.36 246 502.24 5/31/2010 13 898.71 617 936.64 6/15/2010 45 600.00 2 106 720.00 6/18/2010 35 771.70 1 652 652.54 6/24/2010 42 120.00 1,945 944.00 6/9/2010 25 269.59 1 062 325.11 7/8]2010 2 013.12 93 328.24 7)13/2010 2 097.00 97 216.92 7/14/2010 3 500.00 162 260.00 7/14/2010 2 663.00 123 456.68 7/20/2010 45 600.00 2 114 016.00 7/22/2010 40 592.00 1 881 845.12 7/27/2010 1 230.24 57 033.93 8/16/2010 2 663.00 121 246.39 8/16/2010 3 500.00 159 355.00 8/25/2010 45 600.00 2 076 168.00 8/26/2010 40 592.00 1 848 153.76 6}17/2010 17 648.14 815 344.07 6/29/2010 18 843.22 870 556.76 7/30/2010 5 142.53 238 407.69 7/30/2010 71900.66 3 333 314.59 8/31/2010 29 377.40 1 337 553.03 8/31/2010 198.90 8 986.10 9/2/2010 1 453.92 65 978.89 9/17/2010 40 592.00 1 842 064.96 9/21/2010 1118.40 50 752.99 10/13/2010 40 229.56 1 765 273.09 10/19/2010 1 202.28 52 756.05 11/23/2010 1 537.80 66 156.16 9/22/2010 14 462.50 656 308.25 10/29/2010 17 078.88 749 421.25 11/30/2010 25 753.00

1107 894.06

11/30/2010 42 762.20 1 839 629.85 11/30/2010 24 807.64 1 067 224.67 10/31/2010 312.00 13 690.56 11/30/2010 3 747.90 161 234.66 12/1/2009 1 307 721.08 61 730 973.60 12/1/2009 20 497.50 967 584.49 12/1/2009 176 701.96 8 341 216.02 12/1/2009 35 933.45 1 696 238.51 12/1/2009 11 674.00 551 071.17 12/1/2009 142.67 6 734.74 c c c c c c c c c c c c c c

P-3-0147 Chartis New Zealand (R0030) Chartis Romania Insurance P-3-0148 Company SA Chartis Singapore Insurance PTE P-3-0149 LTD P-3-0151 Chartis Taiwan Insurance Co. Ltd. P-3-0152 Chartis International O&S HO 2 Chartis Technology & Operations P-3-0153 Management - Ireland Chartis Vietnam Insurance P-3-0155 Company Limited Chartis Vietnam Insurance P-3-0157 Company Limited P-3-0158 OSC Chartis P-3-0159 Chartis Insurance Australia Chartis Technology & Operations P-3-0160 Management - Ireland Chartis Kazakhstan Insurance Co. P-3-0161 JSC P-3-0162 Chartis New Zealand_{R0030) Chartis Singapore Insurance PTE P-3-0163 LTD 265 266 268 270 273 256 250 278 277 282 287 294 297 300 12/1/2009 2 372.50 111 993.86 12/1/2009 88 380.17 4 171 985.90 12/1/2009 247 645.75 11 690 117.65 12/1/2009 101 020.60 4 768 677.43 12/1/2009 112 940.13 5 331 338.84 12/1/2009 268 816.63 12 689 489.03 12/14/2009 9 220.84 435 269.76 12/31/2009 2 869.14 135 437.76 12/31/2009 286 747.57 13 535 919.07 2/25/2010 386 405.83 17971735.15 2/25/2010 704 027.42 32 744 315.29 2/25/2010 2 173.60 101 094.15 2/25/2010 104.00 4 837.04 2/25/2010 125 489.21 5 836 503.16 SUBTOTAL (i 720 157.14 31.3398.366.66 Sales supported by VAT zero-rated OR but issued to International Banking & Finance Center c P-3-0154 Chartis Uzbekistan 275 12/1/2009 3 902.29 184 207.60 c P-3-0164 Chartis Uzbekistan 306 2/25/2010 3 468.10 161 301.34 SUBTOTAL 7.370.39 345.508.94 Sales supported by VAT zero-rated OR but issued to AIU Searo c P-3-0156 Chartis Southeast Asia Limited 251 12/29/2009 262788.26 12 257.373.58

GRAND TOTAL

$9,792,423.86 P454,989,141.77 To summarize, out of the total P1,326,963,237.76 zero-rated sales declared by petitioner in its amended Quarterly VAT Returns, only P231,036,319.41, as computed below, can be considered as valid zero-rated sales: Total declared zero-rated sales Less: Disallowances Per ICPA report P6401937,776.58 Per the Court's further verification 454,989)41.77 Valid zero-rated sales for refund/issuance of TCC purposes Third and Fourth Requisites: Input taxes were incurred or paid and were not transitional input taxes.

p 1 326,963,237.76 1,095,926,918.35 P231,036,319.41 For FY 2010, petitioner incurred a total of P61,686,917.40 input taxes, broken down in each quarter26 as follows~ 26 Exhibits "F-1", "F-3", "F-7" and "F-8".

Purchase of capital

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total goods not exceeding 1M p 282 015.99 p 417,350.00 p 626 004.36 p 364 275.98 p 1,689 646.33 Purchase of capital goods exceeding 1M - - 121 050.52 226 234.88 347 285.40 Domestic purchases of goods other than capital goods 891 712.42 1 749 426.26 2,957 929.30 2 656 960.13 8 256 028.11 Importation of goods other than capital goods - - - - - Domestic purchase of services 12,550 606.39 10 556,192.89 12 574,935.56 15 712,222.72 51 393 957.56 Services rendered by non-residents - - - - - Total available current input tax P13,724,334.80 P12,722,969.15 P16,279,919.74 P18,959,693. 71 P61,686,917.40 However, petitioner only prayed for a refund/issuance of TCC on unutilized input VAT attributable to zero-rated sales amounting to P56,815,398.78. This amount is lower than the total declared current input VAT by P4,871,518.62 (P61,686,917.40- 56,815,398.78). The difference can be accounted for as follows27 : Period Covered 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Input VAT credited to Output VAT Total for the Period p 873,132.21 p 858.408.77 p 905.840.28 p 912405.55 P³ 549 786.81 Total local sales 7 276 101.73 7,153 406.38 7 548 669.02 7 603 379.61 .;-) Total declared sales 409 675 448.00 221 674 318.53 397 342 419.72 327 852 608.25 x) Excess input VAT (P13 724 334.80 - 873 132.21) 12 851 202.59 (P12 722 969.15- 858 408.77) 11 864 560.38 (P16 279 919.74- 905 840.28) 15 374 079.46 (P18 959 693.71 - 912 405.55) 18 047 288.16 Input VAT allocated to Local Sales p 228. 245.70 p 382868.09 p 292,075.13 p 418. 542.90 1'1,321,731.81 Input VAT not available for refund/issuance of TCC P1,101,377.90 P1,241,276.85 P1,197,915.41 P1,330 948.46 P⁴ 871 518.62 Petitioner submitted various suppliers' official receipts and invoices to substantiate the amount of P61,686,917.40 input VAT declared in its Quarterly VAT Returns. Upon scrutiny of the ICPA Report28 and the related supporting documents, the Court finds that the input taxes in the amount of41' 27 Exhibit "P-1 ", Part 1 of 2, p. 8. I

CfA CASE NOS. 8432, 8498, 8534 & 8581

P22,127,813.82 should be disallowed for non-compliance with the substantiation requirements under Sections 110(A) and 113(A) and (B) of the NIRC of 1997, as amended, in relation to Sections 4.110-2, 4.110-3, 4.110-8 and 4.113-1 of Revenue Regulations (RR) No. 16-

05. Below is the detailed breakdown of the disallowed input VAT of P22,127,813.82:

ICPA Report Annex Reference Findings Amount Domestic purchases of services properly supported with original VAT ORs u but do not bear company's TIN p 51,493.34 Domestic purchases of goods properly supported with original VAT invoice v but the amount of input VAT claimed was not separately indicated 75,522.83 Domestic purchases of services properly supported with original VAT ORs w but the amount of input VAT claimed was not separately indicated 14 059,593.90 Overclaimed input VAT from domestic purchases of goods supported with X original VAT invoices 145 071.43 Overclaimed input VAT from domestic purchases of services supported y with original VAT ORs 128,388.84 Domestic purchases of goods supported only with photocopies of VAT z invoices 339 721.78 Domestic purchases of goods supported by original VAT invoices but have AA no Authority to Print 1,137.60 Domestic purchases of goods not supported with VAT invoices but BB supported with VAT ORs 91,318.39 Domestic purchases of services not supported with VAT ORs but cc supported only with original VAT invoices 183,429.86 Domestic purchases of services supported with original VAT invoices/ORs DD but not in the name of company 10,189.77 Domestic purchases of services supported with original VAT ORs but no EE dates were indicated 789,540.51 Domestic purchases of goods supported with VAT ORs not dated within FF the quarter 35 133.51 Domestic purchases of goods and services supported with VAT invoices HH and VAT ORs not dated within the quarter and not within the taxable year 3 367,287.75 II Domestic purchases of services supported with acknowledgment receipt 3 214.29 Domestic purchases of services supported only with "zero-rated" official JJ Receipts 11 459.91 Domestic purchases of goods supported with original VAT invoices with KK imprinted "not a valid source of input tax" 394,922.40 Domestic purchases of services supported with receipts with imprinted LL "not a valid source of input tax" 84 346.52 Domestic purchases of goods and services supported only with Non-VAT MM sales invoices and ORs 61 329.37 Domestic purchases of capital goods exceeding P1 million supported with PP VAT invoices not dated within the quarter 53 789.65 Domestic purchases of capital goods exceeding P1 million supported only QQ with photocopies of original VAT official invoice 126 300.52 Domestic purchases of capital goods exceeding P1 million properly supported with original VAT invoice but the amount of input VAT claimed RR was not shown separately 17 541.97 ss Domestic purchases of capital goods exceeding P1 million SUQQOrted with 103 835.96

invoices imprinted "Not a Valid Source of Input Tax" TT Unsupported domestic purchases of goods and services 1 993 243.72 TOTAL P22,127,813.82 ICPA Report In addition, petitioner's claimed input VAT incurred on domestic purchases of goods and services totaling P⁵,791,198.01, as detailed below, should also be disallowed for non-compliance with the substantiation requirements under the VAT law and regulations: Annex Amount in Ref.

Exh. No.

Client Invoice/OR No.

Date PHP Exhibit denied admission by the Court Q P-6-0175 MEDEXPRESS 17397 1/9/2010 , 345.01 Purchase of capital goods exceeding P1M supported with VAT invoice but amount of input VAT was not separately indicated NN P-6-3224

INTEGRATED COMPUTER SYSTEMS INC

210039536 3/31/2010 65,939.42 NN P-6-3225

INTEGRATED COMPUTER SYSTEMS INC

210039537 3/31/2010 121,501.56 SUBTOTAL 187,440.98 Purchase of goods supported with VAT invoice but amount of input VAT was not seParately indicated GG P-6-2789

FILES SYSTEMS MANUFACTURING &

55213 5/21/2010 2,208.75

SUPPLY CORP

GG P-6-2805

ROBINSON HANDYMAN INC

8414 5/26/2010 748.66 Q P-6-0199

ACE HARDWARE PHILS INC

2903 4/6/2010 4,959.43 Q P-6-0230

HALCYON INCORPORATED

659 4/17/2010 3 264.00 Q P-6-0345

ROBINSON HANDYMAN INC

8452 6/8/2010 320.09 SUBTOTAL 11,500.93 Purchase of goods supported with VAT invoice with alteration on petitioner's name but the countersignor's authority cannot be ascertained Q P-6-0262 to 0263

PURPLE TAG INC

2168/2167 4/22/2010 16,232.15 Purchase of goods supported with VAT invoice with alteration on the input VAT amount but the countersignor was different from the preparer Q P-6-0252

JJED PHILIPPINES INC

87201 4/13/2010 307.50 Purchase of goods supported with VAT invoice with alteration on the input VAT amount but the countersignor's authority cannot be ascertained Q P-6-0206

AMERICAN TECHNOLOGIES INC

82806 3/16/2010 771.43 Purchase of goods supported with VAT invoice with alteration on the input VAT amount without authorized countersigl1ature Q P-6-0302

GEM STATIONERY INC

218528 6/23/2010 2,667.86 Purchase of services supported with CAS-generated VAT OR but no imprinted CAS or POS Permit No. or supporting SIR CAS Permit of supplier y P-6-2421 PLDT PKPOR000424315 3/26/2010 11,137.25 y P-6-2422 PLDT PKPOR000441158 5/7/2010 11,164.46 y P-6-2433 PLDT PKPOR000468292 7/14/2010 11,137.25 y P-6-2434 PLDT

PKPOR0004 75211

7/30/2010 11,137.25 y P-6-2447 PLDT PWKOR001051169 10/5/2010 11,137.20 y P-6-2448 PLDT PKPOR000516899 11/9/2010 11,137.20 y P-6-2449 PLDT PKPOR000516884 11/9/2010 156.54 y P-6-2450 PLDT PWKOR001049120 9/30/2010 11 137.20 GG P-6-2631 PLDT PWKOR00133540 9/8/2010 26 878.53 GG P-6-2675 to 2707 PLDT various receipts 3/31/2010 50,676.07 GG P-6-2774 PLDT PQGOR008864819 6/2/2010 10,497.94 GG P-6-2838 to 2886 PLDT various receipts 9/6/2010 43,736.97 R P-6-0679 to 0769 PLDT various receipts 31,524.18 R P-6-0838 to 0915 PLDT various receipts 26,457.91 R P-6-0911 to 0924, PLDT various receipts 52,625.74 1021 to 1033, 1044 to 1180 1:: a..

j l I I SUBTOTAL Purchase of services supported with VAT OR but amount of input VAT was not separately indicated y P-6-2423

SKYHAWK SECURITY FORCE AND

13980 5/28/2010

ALLIED SERVICE

y P-6-2428

TOWER CLUB

93284 5/24/2010 y P-6-2451 SYSTEMS GENERATORS PHILIPPINES, 1171 9/17/2010 INC.

GG P-6-2559

ANSCOR CASTO TRAVEL

40188 3/4/2010 CORPORATION GG P-6-2576

DATACRAFT PHILIPPINES INC

1695 3/10/2010 GG P-6-2579

FIRE SOLUTIONS INC

1256 4/21/2010 GG P-6-2594

SQME PROFESSIONALS INC

934 6/11/2010 GG P-6-2603

KFORCE GLOBAL SOLUTIONS INC

1571 9/3/2010 GG P-6-2615

KING OF TRAVEL INC

109457 9/3/2010 GG P-6-2632

FIRE SOLUTIONS INC

128 1/5/2010 GG P-6-2637

CASA MEDICA INC

267565 3/19/2010 GG P-6-2639

CASA MEDICA INC

267566 3/19/2010 GG P-6-2641

CORPORATE EXECUTIVE SEARCH INC

34158 3/19/2010 GG P-6-2645

CORPORATE EXECUTIVE SEARCH INC

34157 3/19/2010 GG P-6-2647

FUJI XEROX PHILIPPINES INC

107293 4/23/2010 GG P-6-2666

INFORMATION PROFESSIONALS INC

17093 3/4/2010 GG P-6-2667

INTEGRATED COMPUTER SYSTEMS INC

423027 3/12/2010 GG P-6-2669

JAGUAR SECURITY AND

40205 4/18/2010

INVESTIGATION AGENCY

GG P-6-2671

JAGUAR SECURITY AND

40305 4/28/2010

INVESTIGATION AGENCY

GG P-6-2708

PRIME TECHNOLOGY SPECIALISTS INC

3500 3/5/2010 GG P-6-2713

PUNONGBAYAN & ARAULLO

114020 3/24/2010 GG P-6-2715

RCG INFORMATION TECHNOLOGY INC

3090 3/5/2010 GG P-6-2722

SPECIALIZED CLEANING SERVICES

2547 3/19/2010

2000 INC

GG P-6-2727

SUPERIOR MAINTENANCE SERVICES

187429 3/26/2010 INC GG P-6-2729

SUPERIOR MAINTENANCE SERVICES

187430 3/26/2010 INC GG P-6-2731 SYSTEMS GENERATORS PHILIPPINES, 3484 3/2/2010 INC.

GG P-6-2738 SYSTEMS GENERATORS PHILIPPINES, 3498 3/12/2010 INC.

GG P-6-2745 to 2746

TOWER CLUB

90496/60568 3/9/2010 GG P-6-2751

INFORMATION PROFESSIONALS INC

17399 6/1/2010 GG P-6-2778

PUNONGBAYAN & ARAULLO

116104 6/21/2010 GG P-6-2782

SPECIALIZED CLEANING SERVICES

2975 7/30/2010

2000 INC

GG P-6-2783

SPECIALIZED CLEANING SERVICES

3052 7/30/2010

2000 INC

GG P-6-2785

SUPERIOR MAINTENANCE SERVICES

188907 6/10/2010 INC GG P-6-2808

ANCILLA ENTERPRISE DEVELOPMENT

7160 9/3/2010

CONSULTING INC

GG P-6-2811

ANCILLA ENTERPRISE DEVELOPMENT

7161 9/3/2010

CONSULTING INC

GG P-6-2815

ARKIGRAFIX CORPORATION

3332 10/7/2010 GG P-6-2817

CASA MEDICA INC

279973 9/9/2010 GG P-6-2819

CORPORATE EXECUTIVE SEARCH INC

34654 9/17/2010 GG P-6-2822

CORPORATE EXECUTIVE SEARCH INC

34653 9/17/2010 GG P-6-2826

HYU BUILDERS

232 11/4/2010 GG P-6-2828

INFORMATION PROFESSIONALS INC

17764 9/3/2010 GG P-6-2832

KREATIVO KONCEPTO INC

370 9/24/2010 GG P-6-2834

MANDARIN ORIENTAL MANILA

29477 9/3/2010 GG P-6-2836

MANILA PENINSULA HOTEL INC

32992 10/14/2010 GG P-6-2887

REYNALDO MASTER KEY & LOCK

10696 9/3/2010 SERVICE GG P-6-2889

RICHVILLE HOTEL MANAGEMENT INC

106784 10/8/2010 GG P-6-2892

SPECIALIZED CLEANING SERVICES

3132 10/1/2010 I 320,541.69 1,777.92 294.64 8,629.94 334.02 293,868.28 5,885.41 55,129.83 1 801 390.31 97.34 4 071.56 75.00 750.00 24,925.51 2,323.16 12,455.48 16,710.37 180.00 24,201.26 24,980.04 4,488.45 6,908.40 838,229.28 12,228.67 12,554.81 11,996.82 9,780.68 9,782.67 214.29 13,675.76 7,167.60 2,221.80 964.29 11,990.04 15,360.00 6,034.29 3,750.00 5,550.00 3,999.20 2,268.30 1 795.29 15 462.18 10 368.00 9,654.75 3,420.00 235.18 51150.00 2,729.06 <! ....

2000 INC

SPECIALIZED CLEANING SERVICES 1,446.43

2000 INC

SYSTEMS GENERATORS PHILIPPINES, 11,250.57 INC.

294.64 281.25 548.46 | Q__| P-6-0197to 0198 | WINNERADVERTISING = | S354 | 12/18/2009 | 5,850.00 | Q_ | _P-6-0273_ | SEAGULLGLASSWORKSINC | 15693 | 4/23/2010 __— 2,266.93 | Q [| _P⁶-0380_ | COLORLUX PHILIPPINESINC =——“<$sa| S189 Ss] SS (9/21/2010 i 3,766.44 | Q | _—P-6-0383_ | COLORLUX PHILIPPINESINC = “<ss| 196 Ss] SS s1:1/9/2010 i 3,766.44 INC R P-6-0602 METRO PARKING MANAGEMENT 7,885.71

PHILIPPINES) INC

R 25,707.43 R P-6-0835 MARK'S FITNESS PLACE INC 997.50 R P-6-0974 FUNCTIONAL INC 2,830.71 R P-6-0983 HYU BUILDERS 1,556,810.59 R P-6-1005 3,732.00 4,983,084.27 Purchase of Services supported with VAT OR but dated outside the period of claim O P-6-0381 COLORLUX PHILIPPINES INC 198 12/1/2010 3,766.44 Purchase of Services supported with VAT OR but not in the name of petitioner R P-6-0598 MAYNILAD 902334351 3/8/2010 285.64 R P-6-0600 MAYNILAD 900935526 1/5/2010 237.78 R P-6-0641 MAYNILAD 903730910 5/14/2010 195.38 R P-6-0673 MAYNILAD 904223845 6/3/2010 89.08 R P-6-0675 4/13/2010 201.90 PSB TOTAL 1,009.78 Purchase of Services supported with VAT OR but total amount paid only pertains to E-VAT but the true nature of payment cannot be ascertained due to lack of supporting documents R P-6-0595 12/11/2009 197,052.63 Purchase of services supported with VAT OR with alteration on the input VAT amount without authorized countersignature P-6-0951 SYSTEM GENERATORS PHILIPPINES 1123 8/6/2010 10,028.91 INC Purchase of services without supporting VAT OR SUPPLY R 2,404.00 SUBTOTAL 3,994.75 Supporting documents not found in the records

INTEGRATED COMPUTER SYSTEMS INC

210040657 5/13/2010 oo | ~~ __| INTEGRATED COMPUTER SYSTEMS INC 210040658 5/13/2010

INTEGRATED COMPUTER SYSTEMS INC 210040659 5/13/2010

|

| FUJI XEROX PHILIPPINES INC 117709 8/27/2010

sur or at | 52,453.68 6,374.57 P5,791,198.01 Further, as noted by the ICPA, petitioner did not amortize its incurred input VAT from its domestic purchases of capital goods exceeding P1 million in accordance with Section 110° of the NIRC of, 29 SEC. 110. Zax Credits. — (A) Creditable Input Tax. -

X X X

1997, as amended, and as implemented by Section 4.110-330 of RR No. 16-05, as amended. As such, the Court deems it proper to disallow the unamortized portion of the valid input VAT from these type of purchases amounting to P3,508,915.12, as detailed and computed below:

Provided, That the input tax on goods purchased or imported in a calendar month for use in trade or business for which deduction for depreciation is allowed under this Code, shall be spread evenly over the month of acquisition and the fifty-nine (59) succeeding months if the aggregate acquisition cost for such goods, excluding the VAT component thereof, exceeds One million pesos (P1,000,000): Provided, however, That if the estimated useful life of the capital good is less than five (5) years, as used for depreciation purposes, then the input VAT shall be spread over such a shorter period: Provided, finally, that in the case of purchase of services, lease or use of properties, the input tax shall be creditable to the purchaser, lessee or licensee upon payment of the compensation, rental, royalty or fee. 30 SECTION 4.110-3.

Claim for Input Tax on Depreciable Goods. - Where a VAT-registered person purchases or imports capital goods, which are depreciable assets for income tax purposes, the aggregate acquisition cost of which (exclusive of VAT) in a calendar month exceeds One Million pesos (P1,000,000.00), regardless of the acquisition cost of each capital good, shall be claimed as credit against output tax in the following manner: (a) If the estimated useful life of a capital good is five (5) years or more- The input tax shall be spread evenly over a period of sixty (60) months and the claim for input tax credit will commence in the calendar month when the capital good is acquired. The total input taxes on purchases or importations of this type of capital goods shall be divided by 60 and the quotient will be the amount to be claimed monthly. (b) If the estimated useful life of a capital good is less than five (5) years - The input tax shall be spread evenly on a monthly basis by dividing the input tax by the actual number of months comprising the estimated useful life of the capital good. The claim for input tax credit shall commence in the calendar month that the capital goods were acquired. Where the aggregate acquisition cost (exclusive of VAT) of the existing or finished depreciable capital goods purchased or imported during any calendar month does not exceed One million pesos (P 1,000,000.00), the total input taxes will be allowable as credit against output tax in the month of acquisition. xxx xxx xxx XXX XXX XXX Capital goods or properties refers to goods or properties with estimated useful life greater than one (1) year and which are treated as depreciable assets under Sec. 34(F) of the Tax Code, used directly or indirectly in the production or sale of taxable goods or services. The aggregate acquisition cost of depreciable assets in any calendar month refers to the total price, excluding the VAT, agreed upon for one or more assets acquired and not on the payments actually made during the calendar month. Thus, an asset acquired on installment for an acquisition cost of more than P1,000,000.00, excluding the VAT, will be subject to the amortization of input tax despite the fact that the monthly payments/installments may not exceed P1,000,000.00 . .- XXX XXX XXX ICPA Report Annex Ref.

Exh. No.

P-6-3213 NN to 3217 NN P-6-3219 NN P-6-3220 NN P-6-3221 NN P-6-3223 NN P-6-3226 NN P-6-3228 NN P-6-3229 NN P-6-3231 NN P-6-3232 NN P-6-3234 NN P-6-3236 NN P-6-3237 NN P-6-3239 NN P-6-3240 NN P-6-3241 NN P-6-3243 NN P-6-3244 NN P-6-3245 P-6-3247 NN to 3248 NN P-6-3249 NN P-6-3250

Client Invoice Date 310085879/ 12/29/2009 210037038/ 12/11/2009 INTEGRATED 210037288/ 12/22/2009 COMPUTER 210037289/ 12/22/2009

SYSTEMS INC

210037287 12/22/2009 INTEGRATED COMPUTER

SYSTEMS INC

210039237 3/22/2010 INTEGRATED COMPUTER

SYSTEMS INC

210039528 3/31/2010 INTEGRATED COMPUTER

SYSTEMS INC

210038228 2/9/2010 INTEGRATED COMPUTER

SYSTEMS INC

210039941 4/16/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040241 4!27/2010 INTEGRATED COMPUTER

SYSTEMS INC

310089766 3/4/2010 INTEGRATED COMPUTER

SYSTEMS INC

210038781 3/3/2010 NEXUS TECHNOLOGIES INC 52671 4/12/2010 COMPUTER NElWORK

SYSTEMS CORP

4021 6/1/2010 COMPUTER NElWORK

SYSTEMS CORP

4068 7/15/2010 INFORMATION WORKTOOLS CORP 4487 6/15/2010 INFORMATION WORKTOOLS CORP 4499 6!17/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041954 7/5/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041370 6/11/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041369 6/11/2010 INTEGRATED COMPUTER

SYSTEMS INC

310100170 8/23/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041955 7/5/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041956 7/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041966 7}6/2010 INTEGRATED COMPUTER

SYSTEMS INC

210042953 8/19/2010 NEXUS TECHNOLOGIES INC 53319 6/1/2010 No. of Months Input VAT Input VAT Lapsed Amortization Amortization during for the Total Input per Month Period Period of Unamortized VAT (60mos) of Claim Claim Input VAT P117 072.09 P1 951.20 12 P23 414.42 P93 657.67 70 798.24 1179.97 9 10 619.74 60 178.50 15 331.20 255.52 9 2 299.68 13 031.52 12 243.17 204.05 10 2 040.53 10 202.64 42 637.98 710.63 8 5 685.06 36 952.92 82 355.20 1 372.59 8 10 980.69 71 374.51 1 306.79 21.78 9 196.02 1110.77 5 393.88 89.90 9 809.08 4 584.80 46 017.70 766.96 8 6 135.69 39 882.01 24 148.22 402.47 6 2 414.82 21 733.40 13 016.62 216.94 5 1 084.72 11 931.90 8 434.90 140.58 6 843.49 7 591.41 4 006.75 66.78 6 400.68 3 606.08 8 816.14 146.94 5 734.68 8 081.46 25 384.67 423.08 6 2 538.47 22 846.20 25 384.67 423.08 6 2 538.47 22 846.20 9 197.09 153.28 4 613.14 8 583.95 28 123.92 468.73 5 2 343.66 25 780.26 106 532.98 1 775.55 5 8 877.75 97 655.23 95 465.48 1 591.09 5 7 955.46 87 510.02 37 971.14 632.85 4 2 531.41 35 439.73 31 253.66 520.89 6 3 125.37 28 128.29 NN P-6-3252 NN P-6-3253 NN P-6-3254 NN P-6-3255 NN P-6-3256 NN P-6-3257 NN P-6-3258 NN P-6-3259 NN P-6-3260 NN P-6-3261 NN P-6-3262 NN P-6-3264 NN P-6-3266 NN P-6-3267 NN P-6-3269 NN P-6-3270 NN P-6-3272 NN P-6-3273 NN P-6-3274 NN P-6-3276 NN P-6-3278 NN P-6-3279 NN P-6-3281 NN P-6-3282 NN P-6-3283

NEXUS TECHNOLOGIES INC 53452 6/17/2010 NEXUS TECHNOLOGIES INC 53784 7/16/2010 NEXUS TECHNOLOGIES INC 53794 7/16/2010 NEXUS TECHNOLOGIES INC 53679 7/5/2010 NEXUS TECHNOLOGIES INC 53678 7/5/2010 NEXUS TECHNOLOGIES INC 54166 8/19/2010 NEXUS TECHNOLOGIES INC 53490 6/21/2010 NEXUS TECHNOLOGIES INC 54189 8/20/2010 NEXUS TECHNOLOGIES INC 54188 8/20/2010 NEXUS TECHNOLOGIES INC 54187 8/20/2010 NEXUS TECHNOLOGIES INC 53680 7/5/2010 COMPUTER NElWORK

SYSTEMS CORP

4202 10/4/2010 CREATIVE TECHNOLOGIES INC 59881 11f312010 CREATIVE TECHNOLOGIES INC 59869 11/2/2010 INFORMATION WORKTOOLS CORP 4587 9/17/2010 INTEGRATED COMPUTER

SYSTEMS INC

210044138 10/4/2010 INTEGRATED COMPUTER

SYSTEMS INC

210044497 10/26/2010 INTEGRATED COMPUTER

SYSTEMS INC

210044511 10/26/2010 INTEGRATED COMPUTER

SYSTEMS INC

210044512 10/26/2010 INTEGRATED COMPUTER

SYSTEMS INC

210043266 9/2/2010 INTEGRATED COMPUTER

SYSTEMS INC

210043447 9/8/2010 INTEGRATED COMPUTER

SYSTEMS INC

210043701 9/21/2010 NEXUS TECHNOLOGIES INC 55130 11/15/2010 NEXUS TECHNOLOGIES INC 54508 9/23/2010 NEXUS TECHNOLOGIES INC 54507 9/23/2010 17702.00 295.03 6 1 770.20 15 931.80 39 019.30 650.32 5 3 251.61 35 767.69 1 582.91 26.38 5 131.91 1 451.00 120 603.54 2 010.06 5 10 050.30 110 553.25 120 647.36 2 010.79 5 10 053.95 110 593.41 52 769.98 879.50 4 3 518.00 49 251.98 53 430.50 890.51 6 5 343.05 48 087.45 40 972.38 682.87 4 2 731.49 38 240.89 102 281.64 1 704.69 4 6 818.78 95 462.86 102 281.64 1 704.69 4 6 818.78 95 462.86 29 382.61 489.71 5 2 448.55 26 934.06 358 439.95 5 974.00 2 11 948.00 346 491.95 36 541.42 609.02 1 609.02 35 932.40 22 531.47 375.52 1 375.52 22 155.95 I 2 655.87 44.26 3 132.79 2 523.08 63 488.82 1 058.15 2 2 116.29 61 372.53 7 855.70 130.93 2 261.86 7 593.84 62 465.49 1 041.09 2 2 082.18 60 383.31 62 465.49 1 041.09 2 2 082.18 60 383.31 7 682.94 128.05 3 384.15 7 298.79 I 14 922.09 248.70 3 746.10 14 175.99 226 234.86 3 770.58 3 11 311.74 214 923.12 116 232.74 1 937.21 1 1 937.21 114 295.53 2 361.49 39.36 3 118.07 2 243.42 2 361.49 39.36 3 118.07 2 243.42

ABENSON NN | P-6-3285 | VENTURES INC 4/14/2010 4,583.57 76.39 8 611.14 3,972.43 CARLGIN NN P-6-3287 | ENTERPRISES 10341 187.50 3.13 9 28.13 159.38 EXPERT i INTERIOR NN | P-6-3288 | PRODUCTS INC 6,090.00 101.50 8 812.00 5,278.00 ICON NN | P-6-3290 | INTERIORS INC 2998 3/4/2010 | sgasaao| avazal 9 _| 1,568.16 8,886.24 ICON Nt voor | syanoo | __owasa| sear | 9 | nar 82 ICON | nw | ms-szoo |irtuorsine | 3122 | sysqyanio | ; aso | __6,201.00 NN | P-6-3294 | PHILS. INC 2945 7/27/2010 535.69 5 44.64 491.05 NN 7/21/2010 5 1,812.50 19,937.50 COSMOTECH PHILIPPINES NN | P-6-3298 | INC 12604 8/6/2010 5,250.00 87.50 4 350.00 4,900.00 meso | eae | een [oewon | — rar) en P-6-3300 | VENTURES INC 1727200 | 9/20/2010 726.43 12.11 3 36.32 690.11 NN | P-6-3302 | PHILS. INC 3831 11/16/2010 1,424.62 23.74 1 23.74 1,400.88 | NN | P-6-3304 | CITIMEX INC 46,553.57 775.89 1,551.79 | _45,001.78 NN P-6-3305 | CITIMEX INC 55,071.43 917.86 2 1,835.71 53,235.72 INTEGRATED ne COMPUTER 00 | P-6-3307 | SYSTEMS INC 310088720 | 2/17/2010 52,992.48 883.21 10 8,832.08 44,160.40 INTEGRATED COMPUTER 00 _| P-6-3308 | SYSTEMS INC 210038039 | 2/1/2010 18,786.40 313.11 10 3,131.07 15,655.33 NEXUS TECHNOLOGIES 00 | P-6-3309 | INC 2/25/2010 45,154.25 752.57 10 7,525.71 37,628.54 NEXUS TECHNOLOGIES 00 _| P-6-3310 | INC 2/25/2010 273.11 10 2,731.14 13,655.68 NEXUS TECHNOLOGIES 00 | P-6-3311 | INC 52215 2/25/2010 138,970.98 2,316.18 10 23,161.83 115,809.15 NEXUS TECHNOLOGIES 00 _| P-6-3312 | INC 52219 2/25/2010 74,022.67 1,233.71 10 12,337.11 61,685.56 NEXUS 00 | P-6-3313 | INC 52218 2/25/2010 25,368.46 422.81 10 4,228.08 21,140.38 NEXUS TECHNOLOGIES 00 | P-6-3314 | INC 52217 2/25/2010 18,120.59 302.01 10 3,020.10 15,100.49 NEXUS TECHNOLOGIES 00 | P-6-3315 | INC 52196 2/24/2010 22,903.32 381.72 10 3,817.22 19,086.10 COMPUTER NETWORK 00 _| P-6-3317 | SYSTEMS CORP 4005 5/14/2010 36,112.69 601.88 7 4,213.15 31,899.54 COMPUTER NETWORK 00 | P-6-3318 | SYSTEMS CORP 4007 5/14/2010 36,112.69 601.88 7 4,213.15 31,899.54 COMPUTER en ne NETWORK 00 __| P-6-3319 | SYSTEMS CORP 4006 5/14/2010 36,112.69 601.88 7 4,213.15 31,899.54 COMPUTER NETWORK P-6-3320 | SYSTEMS CORP 4015 5/26/2010 20,770.81 346.18 7 2,423.26 18,347.55 INFORMATION WORKTOOLS P-6-3322_| CORP 4457 7,128.17 118.80 7 6,296.55 INTEGRATED COMPUTER P-6-3324 | SYSTEMS INC 210039535 | 3/31/2010 43,184.34 719.74 | _9 36,706.69

INTEGRATED |

COMPUTER 00 | P-6-3325 | SYSTEMS INC 210038613 | 2/25/2010 102,658.84 1,710.98 85,549.03 on [ema 2 Lamon Lani P-6-3326 | COMPUTER 210039529 | 3/31/2010 16,068.85 267.81 9 2,410.33 13,658.52 00 P-6-3328 00 P-6-3329 00 P-6-3330 00 P-6-3331 00 P-6-3332 00 P-6-3334 00 P-6-3335 00 P-6-3336 P-6-3338 00 to 3339 P-6-3340 00 to 3341 00 P-6-3343 00 P-6-3344 I 00 P-6-3346 00 P-6-3347 00 P-6-3348 00 P-6-3350 00 P-6-3352 00 P-6-3353 00 P-6-3355 00 P-6-3356 00 P-6-3358 00 P-6-3360 00 P-6-3361

SYSTEMS INC

INTEGRATED COMPUTER

SYSTEMS INC

210040653 5/13/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040654 5/13/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040656 5/13/2010 INTEGRATED COMPUTER

SYSTEMS INC

2100406S2 5/13/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040655 5/13/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040591 5/12/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040804 5/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040349 4/29/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040421 5/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040240 5/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040977 5/27/2010 NEXUS TECHNOLOGIES INC S3062 5/14/2010 NEXUS TECHNOLOGIES INC S3228 5/27/2010 NEXUS TECHNOLOGIES INC 53234 5}27/2010 COMPUTER NElWORK

SYSTEMS CORP

4046 6/21/2010 INTEGRATED COMPUTER

SYSTEMS INC

499413 7/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

2100421S2 7/20/2010 INTEGRATED COMPUTER

SYSTEMS INC

210041670 6/24/2010 INTEGRATED COMPUTER

SYSTEMS INC

210040800 8/27/2010 ICON

INTERIORS INC

2953 2}12/2010 ICON

INTERIORS INC

2938 2/8/2010 ICON

INTERIORS INC

2880 1/19/2010

CITIMEX INC

30245 5/25/2010 31 873.32 531.22 7 3 718.55 28 154.77 31 873.32 531.22 7 3 718.55 28 154.77 6 374.57 106.24 7 743.70 5 630.87 31 873.32 531.22 7 3 718.55 28 154.77 31 873.32 531.22 7 3 718.55 28 154.77 17 851.71 297.53 7 2 082.70 15 769.01 12 803.45 213.39 7 1493.74 11 309.71 20 827.07 347.12 8 2 776.94 18 050.13 16 019.85 267.00 7 1 868.98 14 150.87 33 035.63 550.59 7 3 854.16 29 181.47 8 848.47 147.47 7 1 032.32 7 816.15 18 609.08 310.15 7 2 171.06 16 438.02 7 934.80 132.25 7 925.73 7 009.07 1 628.44 27.14 7 189.98 1 438.46 21 606.39 360.11 6 2 160.64 19 445.75 2 808.84 46.81 5 234.07 2 574.77 7 583.81 126.40 5 631.98 6 951.83 114 S13.25 1 908.55 6 11 451.33 103 061.93 25 865.33 431.09 4 1 724.36 24 140.97 1 964.29 32.74 10 327.38 1 636.91 17 424.00 290.40 10 2 904.00 14 520.00 11 785.72 196.43 11 2 160.72 9 625.00 49 714.29 828.57 7 5 800.00 43 914.29 TOTAL P3 873 982.83 P365,067.71 P3 508,915.12 In sum, out of the P61,686,917.40 reported input VAT for FY 2010, only the amount of P30,258,990.45 represents petitioner's valid input VAT, computed as follows:~ I

Total declared input VAT Less: Disallowances Per ICPA report Per the Court's further verification: p 61,686,917.40 P22 127,813.82 Domestic purchases of goods and services 5 791,198.01 Unamortized input VAT from purchases of capital goods exceeding P1M Valid input VAT Fifth, Sixth and Eighth Requisites: Petitioner's claimed input taxes remained unutilized but were not properly allocated to its zero-rated sales. 3 508,915.12 31,427,926.95 P30,258,990.45 The input VAT claimed herein for refund/issuance of TCC amounting to P56,815,398.78 was the subject of separate administrative claims as follows: Period Exhibit No.

Amount of Claim 1st Quarter E-1 p 12,622,956.90 2nd Quarter E-2 11,481,692.29 3rd Quarter E-3 15,082,004.33 4th Quarter E-4 17,628 745.26 Total PS6,815,398.78 These amounts were accordingly carried over to petitioner's subsequent VAT returns until they were separately deducted as VAT Refund/TCC Claimed as follows: Period Exhibit No.

VAT Refund/TCC FY 2011 3rd Quarter VAT Return F-15 p 12,622 956.90 FY 2012 1st Quarter VAT Return F-18 261563 696.63 FY 2012 2nd Quarter VAT Return F-20 17,628 745.26 PS6,815,398.79 Hence, it can be ascertained that the claimed amount of P56,815,398.78 will no longer be utilized as credit for any future VAT liability.~

However, since petitioner also reported VATable sales in FY 2010, a proportionate allocation based on the volume of zero-rated and VATable sales must be made for the allowable unutilized input taxes. As such, only P4,650,314.29 unutilized excess input VAT can be allowed for refund/issuance of TCC, to wit: Total valid zero-rated sales P231 1036_L319.41 7 Total declared zero-rated sales 1,326 963 237.76 x Excess unutilized input VAT: Total valid input VAT P30 258,990.45 Less: Output VAT liability for the period 3,549,786.81 26,709,203.64 Unutilized excess input VAT for refund/issuance of TCC P4,650,314.29 Based on the foregoing, petitioner's Motion for Reconsideration shall be partially granted in the reduced amount of P4,650,314.29, representing petitioner's unutilized excess input taxes attributable to zero-rated sales for the FY 2010.

WHEREFORE, premises considered, petitioner's Motion for Reconsideration is PARTIALLY GRANTED. Accordingly, the dispositive portion of the Decision dated November 6, 2015 is modified to read as follows:

WHEREFORE, the instant Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE to petitioner in the reduced amount of P4,650,314.29 representing petitioner's unutilized excess input taxes attributable to its zero-rated sales for the FY 2010.

I CONCUR:

~~

c. Qy--~a6. . ~ JU~NITO C. CASTANEDA/JR.· Associate Justice ATTESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. a~~':h> c.Q.gt-~ Q JffANITO C. CASTANEDA()R. CERTIFICATION Associate Justice Chairperson Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

ROMAN G. DEL: OSARIO Presiding Justice