Court of Tax Appeals · Third Division

Manulife Data Services, Inc. vs. Commissioner of Internal Revenue

CTA Case No. 8482 April 19, 2017

REPUBLIC OF THE PHILIPPINES

Court ofT ax Appeals

QUEZON CITY

Third Division

MANULIFE DATA SERVICES, INC.,

Petitioner,

versus -

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

X ------------------------------------------------------------ X

MANULIFE DATA SERVICES, INC.,

Petitioner,

versus -

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

X ------------------------------------------------------------ X

MANULIFE DATA SERVICES, INC.,

Petitioner,

versus -

COMMISSIONER OF INTERNAL REVENUE,

Respondent.

X ------------------------------------------------------------ X

MANULIFE DATA SERVICES, INC.,

Petitioner,

versus -

CTA CASE NO. 8482

CTA CASE NO. 8513

CTA CASE NO. 8560

CTA CASE NO. 8611

Members:

BAUTISTA, Chairperson

FARON-VICTORINO, and

RINGPIS-LIBAN, JL

COMMISSIONER OF INTERNAL REVENUE, Promulgated:

Respondent.

-PR 1 g /017

X --------------------------------------------------------------~---~~-~~~~:~----- X

DECIS IO N

I

CTA CASE NOS. 8482,8513,8560 & 8611

BAUTISTA,]:

The Case

Before the Court are four (4) consolidated Petitions for Review1 filed by petitioner, Manulife Data Services, Inc., on April 30, 2012, July 6, 2012, October 22, 2012 and February 12, 2013, for Court of Tax Appeals ("CTA") Case Nos. 8482, 8513, 8560 and 8611, respectively, pursuant to Section 7(a)(2)2 of Republic Act rRA") No. 11253, as amended by RA No. 92824 and RA No. 95035• The Petitions for Review seek for the Court to render judgment: 1.

Granting petitioner the refund or the issuance of tax credit certificates ("TCC"), and ordering respondent to refund or to issue TCCs, in the total amount Php31,163,939.20 representing excess and unutilized input value-added tax ("VAT"), broken down as follows:

Php11,997,999.50 for the first quarter of calendar year ("CY") 2010;6 b.

Php10,304,630.58 for the second quarter of CY 2010;7 c.

Php4,124,167.60 for the third quarter of CY 2010;8 and 1 Records, CTA Case No. 8482, Vol. 1, Petition for Review ("PFR"), pp. 6-87, with annexes; Records, CTA Case No. 8513, PFR, pp. 10-100, with annexes; Records, CTA Case No. 8560, PFR, pp. 7-84, with annexes; Records, CTA Case No. 8611, PFR, pp. 8-92, with annexes. 2 "Sec. 7. Jurisdiction. - The Court of Tax Appeals shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided.

XXX

(2)Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;

XXX

xxx" 3 An Act Creating the Court of Tax Appeals, as Amended. 4 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, Otherwise Known as the Law Creating the Court of Tax Appeals, and for Other Purposes. s An Act Enlarging the Organizational Structure of the Court of Tax Appeals, Amending for the Purpose Certain Sections of the Law Creating the Court of Tax Appeals, and for Other Purposes. 6 Records, CTA Case No. 8482, Vol. 1, PFR, Prayer, p. 17. 7 Id., CTA Case No. 8513, PFR, Prayer, p. 21. rl CT A CASE NOS. 8482, 8513, 8560 & 8611 d.

Php4,737,141.52 for the fourth quarter of CY 2010.9 2.

In the alternative, allowing petitioner to present evidence to prove its entitlement to the refund or the issuance of the TCCs sought, and ordering respondent to refund or to issue TCCs in the above-stated amounts.lo

The Parties

Petitioner is a foreign corporation duly registered with, and authorized by, the Securities and Exchange Commission ("SEC") to operate as a Regional Operating Headquarter ("ROHQ") under SEC Certificate of Registration No. FS20060350511.12 It is engaged in the business of providing qualifying services to its affiliates and related parties in the Asia-Pacific Region and in other foreign markets.13 Petitioner is a VAT -registered entity with Taxpayer Identification Number ("TIN") 244-027-271-000 and was issued BIR Certificate of Registration Nos. 3RC000042162614 and 3RC000033082415 by BIR Revenue District ("RD") Nos. 38 and 39, respectively.16 Sometime in January 2009, petitioner transferred its registered address to Manulife Building, UP North Science and Technology Park, Commonwealth Avenue, Diliman, Quezon City.17 Respondent Commissioner of Internal Revenue (" CIR") is the duly appointed Commissioner of the BIR, who is empowered by law to decide tax cases, including claims for refunds or tax credits.

The Facts

8 Records, CTA Case No. 8560, PFR, Prayer, p. 16. 9 Id., CTA Case No. 8611, PFR, Prayer, p. 15. 10 Records, CTA Case No. 8482, Vol. 1, PFR, Prayer, p. 18; Records, CTA Case No. 8513, PFR, Prayer, pp. 21-22; Records, CTA Case No. 8560, PFR, Prayer, p. 16; Records, CTA Case No. 8611, PFR, Prayer, p.15.

11 Exhibit Folder No.1, Exhibit "P-38," p. 1. 12 Records, CTA Case No. 8482, Vol. 3, Consolidated Joint Stipulation of Facts and Issue ("JSFI"), p. 1095.

13 Id.

14 Exhibit Folder No.1, Exhibit "P-39-a," p. 1. 1s Id., Exhibit "P-39," p. 1.

16 Records, CTA Case No. 8482, Vol. 3, Consolidated JSFI, p. 1095. 17 Id. at 1095-1096.

(

DECISION

CT A CASE NOS. 8482, 8513, 8560 & 8611 Page4 o£42 Petitioner entered into a

Business Processing Services

AgreementlB ("BPSA") with Manulife (International) Limited ("MIL") effective April 10, 2006, wherein petitioner undertook to provide administrative and such other business processing outsourcing ("BPO") services19 to MIL.

On October 25, 2007, petitioner entered into a Services Agreement20 ("SA") with John Hancock Life Insurance Company (U.S.A.) ("JHLIC"), which was deemed to have commenced on May 1, 200621. The SA covers the performance of administrative, information technology, reports, support, and other services as JHLIC deems necessary in the conduct of its operations or the operations of one or more of its affiliates.22

On May

1, 2006, petitioner entered into a

Master

Administrative

Services

Agreement

("MASA")

with The Manufacturers Life Insurance Company23 ("TMLIC"), wherein it undertook to provide administrative and such other services24. On April23, 2010, petitioner entered into a Service Agreement25 with Manulife Insurance Berhad ("MIB"), wherein petitioner undertook to provide MIB with certain administrative and other BPO services26, including a health services call center.27 MIL, JHLIC, TMLIC and MIB shall collectively be referred to as "clients;" and the corresponding BPSA with MIL, SA with JHLIC, MASA with TMLIC, and SA with MIB, shall collectively be referred to as "Service Agreements" or "SAs." CTA Case No. 8482 (First Quarter of CY 2010) 18 Exhibit Folder No. 1, Exhibit "P-43," Business Processing Services Agreement ("BPSA"), pp. 1-16. 19 Id., Exhibit "P-43-b," BPSA, Article 1, p. 1. 20 Id., Exhibit "P-44," JHLIC Services Agreement ("SA"), pp. 1-15. 21 Id., Exhibit "P-45-b," Addendum to the SA dated as of October 25, 2007, p. 1. 22 I d., Exhibit "P-44-b," SA, Article 1, p. 2. 23 Id., Exhibit "P-46," Master Administrative Services Agreement ("MASA"), pp. 1-14. 24 Exhibit Folder No.1, Exhibit "P-46-b," MASA, Article 1, p. 2. 2s Id., Exhibit "P-52," MIB SA, pp. 1-16. 26 I d., Exhibit "P-52," MIB SA, Whereas Clauses 4 and 5, p. 1. 27 Id., Exhibit "P-52-e," Schedule 1, Services and Service Levels, A. Health Services Call Centre ("HSCC"), p. 1.

(

DECISION

CTA CASE NOS. 8482, 8513, 8560 & 8611 Page 5 o£42 Petitioner filed its Quarterly VAT Declaration (BIR Form No. 2550-Q)28 for the first quarter of CY 2010 Oanuary to March) on April 23, 2010, showing an overpayment of Php34,307,534.3629. Petitioner reflected VA Table zero-rated sales amounting to Php276,172,047.363o. On December 6, 2011, petitioner filed with Revenue District Office ("RDO") No. 38 an Application for Refund/Tax Credit of Excess and Unutilized Input VAT31 for the first quarter of 2010 in the amount of Php11,997,999.50, together with BIR Form No. 1914 asking specifically for the issuance of a TCC32. Claiming inaction on the part of respondent,33 on April30, 2012, petitioner filed a Petition for Review34, docketed as CTA Case No. 8482, which was raffled to the CTA Third Division. On June 5, 2012, the Court issued a Summons35 addressed to respondent, with an order to file an Answer. On June 25, 2012, respondent filed a Motion for Extension of Time to File Answer36, which was granted by the Court in a Resolution37 dated July 2, 2012.

On July 26, 2012, respondent filed an Answer3s, wherein he raised the following special and affirmative defenses: (1) that petitioner failed to show that it filed an application for tax refund/TCC with RDO No. 38; (2) that its application for tax refund/TCC is subject to administrative investigation/ examination by the BIR; (3) that taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable; (4) that it is incumbent upon the taxpayer to prove compliance with Sections 112, 113 and 114 of the 1997 National Internal Revenue Code, as amended ("1997 NIRC"); and (5) that claims for 28 Exhibit Folder No. 2, Exhibit "P-1701," Quarterly VAT Return for the First Quarter, pp. 1-2. 29 Id., Line 29, p. 1.

30 Id., Line 17, p. 1.

31 I d., Exhibit "P-1700," Administrative Claim for Refund for the First Quarter, pp. 1-3. 32 Id., Exhibit "P-1700," Administrative Claim for Refund for the First Quarter, Annex, BIR Form No. 1914, p. 1.

33 Records, CTA Case No. 8482, Vol. 3, PFR, p. 2. 34 Id., Vol. 1, PFR, pp. 6-87, with annexes. / 35 Id., Vol. 1, p. 88.

36 I d. at 90-91.

37 Id. at 93.

38 Id., Answer, pp. 94-97.

DECISION

CTA CASE NOS. 8482,8513,8560 & 8611 Page 6 o£42 refund are strictly construed against the taxpayer, as it partakes the nature of a tax exemption.

On July 27, 2012, the Court issued a Notice of Pre-trial Conference39, setting the case for pre-trial on August 23, 2012. Thereafter, respondent and petitioner filed their Pre-trial Briefs on August 17, 201240 and August 22, 201241, respectively. On August 13, 2012, petitioner filed by registered mail its Reply (Re: Answer dated 26 July 2012)42. Due to the pending Motion for Consolidation in CTA Case No. 8513, the pre-trial conference was reset to September 6, 2012.43 CTA Case No. 8513 (Second Quarter of CY 2010) On July 26, 2010, petitioner filed its Quarterly VAT Return (BIR Form No. 2550-Q)44 for the second quarter (April to June) of CY 2010 showing an overpayment of Php39,391,537.4945. It reflected zero- rated sales amounting to Php301,265,898.7546. On February 17, 2012, BIR RDO No. 38 received petitioner's Application for Refund/Tax Credit of Excess and Unutilized Input VAT47 for the second quarter of 2010, amounting to Php10, 304,630.58, together with BIR Form No. 191448. Claiming inaction on the part of respondent,49 on July 6, 2012, petitioner filed a Petition for Reviewso, docketed as CTA Case No. 8513, which was raffled to the CTA Third Division. 39 Records, CTA Case No. 8482, Vol. 1, p. 98. 40 Id. at 99-101.

41 Id. at 102-121.

42 Id., Reply (Re: Answer dated 26 July 2012), pp. 122- 137, with annexes. 43 Id., Vol. 1, p. 139.

44 Exhibit Folder No. 1, Exhibit "P-18," Quarterly VAT Return for the Second Quarter, pp. 1-2. 45 Id., Line 29, p. 1.

46 Id., Line 17, p. 1.

47 Exhibit Folder No. 2, Exhibit "P-1719," Administrative Claim for Refund for the Second Quarter, pp. 1-3.

48 Id., Annex, BIR Form No. 1914, p. 1. 49 Records, CTA Case No. 8482, Vol. 3, PFR, p. 2. so Id., CTA Case No. 8513, PFR, pp. 10-100, with annexes. (

CT A CASE NOS. 8482, 8513, 8560 & 8611

On July 17, 2012, the Court issued a Summons51 addressed to respondent, with an order to file an Answer. On July 20, 2012, respondent filed an Answer52, wherein he raised the following special and affirmative defenses: (1) that pursuant to Section 112(A) and (C) of the 1997 NIRC, and the ruling of the Supreme Court in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., petitioner's claim for refund for the second quarter VAT input taxes have already prescribed; (2) that the judicial claim for refund was filed outside the two (2)-year prescriptive period, reckoning from the close of the taxable quarter when the sales were made; and (3) that tax refunds and tax credits are construed strictly against the taxpayer.

On July 23, 2012, the Court issued a Notice of Pre-trial Conference53 scheduled on August 23, 2012. On

August

3, 2012, petitioner filed a

Motion

for Consolidation54, stating that CT A Case No. 8482 involves the same parties and affects closely related subject matters as CT A Case No. 8513, hence, the two (2) cases must be consolidated and jointly tried in order to serve the best interests of the parties, and to expeditiously settle the issues involved.

Respondent filed his Pre-trial Brief55 on August 10, 2012. Petitioner filed by registered mail its Reply (Re: Answer dated 20 July 2012)56 on August 6, 2012; and its Pre-trial Brief57 on August 22,2012.

Due to the pending Motion for Consolidation, the Pre-trial Conference was reset to September 6, 2012.58 51 Records, CTA Case No. 8513, p. 106. 52 Id., Answer, pp. 101-105.

53 Id. at 107.

54 Id. at 109-129.

55 Id. at 130-134.

56 Id., Reply (Re: Answer dated 20 July 2012), pp. 137-147. 57 Records, CTA Case No. 8513, pp. 149-167. 58 Id. at 168.

CTA CASE NOS. 8482, 8513, 8560 & 8611

The Motion for Consolidation was granted by the Court during the hearing held on August 23, 201259. Consequently, the pre-trial conference set for that day for CTA Case Nos. 8482 and 8513 was cancelled and reset to September 6, 2012.60 These were confirmed in a Resolution61 dated September 4, 2012. Consolidated CTA Case Nos. 8482 and 8513 (First and Second

Quarters of CY 2010)

During the hearing on September 6, 2012, the parties manifested that they are amenable to the filing of their respective consolidated Pre-trial Briefs for CTA Case Nos. 8482 and 8513.62 They were then granted fifteen (15) days or until September 21, 2012 to file their respective consolidated Pre-trial Briefs.63 Meanwhile, pre-trial conference was reset to October 4, 2012.64 Petitioner filed, by registered mail, its Consolidated Pre-trial

Brief65

on September 21, 2012; while respondent filed his Consolidated Respondent's Pre-trial Brief66 on October 1, 2012. During the hearing on October 4, 2012, the Court granted the parties a period of twenty (20) days or until October 24, 2012, to submit their Joint Stipulation of Facts and Issues ("JSFI").67 On October 24, 2012, petitioner filed a Motion for Extension6s, which was granted by the Court in a Resolution69 dated November 5, 2012. Thereafter, the parties filed their Consolidated JSFF0 on November 7,2012.

On November 13, 2012, the Court issued a Pre-trial Order71 • On even date, petitioner filed an Urgent Motion (To Postpone 59 Records, CTA Case No. 8513, p. 168. 60 Id.

61 Id. at 170.

62 Records, CTA Case Nos. 8482 & 8513, Vol. 1, Minutes of Hearing dated September 6, 2012, p. 140. 63 Id.

64 Id.

6s Id., Vol. 1, pp. 145-168.

66 Id. at 142-144.

67 Records, CTA Case Nos. 8482 & 8513, Vol. 1, Minutes of Hearing dated October 4, 2012, p. 170; Records, CTA Case Nos. 8482 & 8513, Vol. 1, p. 175. 68 Records, CTA Case Nos. 8482 & 8513, Vol. 1, pp. 176-179. 69 Id. at 181.

70 Id., Vol. 1, Consolidated JSFI, pp. 186-190; the parties filed a "Joint Stipulation of Facts and Issue." 71 Id., Pre-Trial Order ("PTO"), pp. 197-205. (ll

CT A CASE NOS. 8482, 8513, 8560 & 8611

Presentation of Evidence and to Set Additional Commissioner's Hearing)n, which was granted73 by the Court during the hearing on November 15, 2012. The initial presentation of evidence for petitioner was reset to December 12, 2012.74 On December 11, 2012, petitioner filed its Compliance7s, with attached Sworn Statement of its Accounting Specialist, Ms. Agnes N. Neria76 ("Ms. Neria"). Ms. Neria testified that for the first and second quarters of CY 2010, petitioner rendered services to three (3) foreign clients- MIL, JHLIC, and TMLIC- and that those services were paid for in United States ("US") Dollars remitted inwardly to its US Dollar Citibank Account; and that petitioner did not generate domestic sales of services for that period.77 Ms. Neria expalined that petitioner had unutilized input VAT for the first and second quarters of CY 2010; that Applications for Refund/Tax Credit of Input VAT was filed before RDO NO. 38 on December 6, 2011 and February 17, 2012, respectively; and that the BIR did not release any decision regarding their claims.78 During the December 12, 2012 hearing, petitioner presented Ms. Neria, who was set to be cross-examined on January 17,2013.79 On January 14, 2013, respondent filed an Urgent Motion to Reset Hearing8o, which was granted81 by the Court during the January 17, 2013 hearing. Accordingly, the scheduled cross- examination of Ms. Neria was reset to February 18,2013.82 On February 13, 2013, petitioner filed an Urgent Motion (To Postpone Presentation of Evidence)83, this was granted by the Court during the February 14, 201384 hearing. Accordingly, the February 18, 2013 and March 18, 2013 settings fixed in the Pre-trial Order in CTA 72 Records, CTA Case Nos. 8482 & 8513, Vol. 1, pp. 209-213. 73 I d., Minutes of Hearing dated November 15, 2012, p. 215. 74 Id.

7s Id., Vol. 1, pp. 229-232.

76 Records, CTA Case Nos. 8482 & 8513, Vol. 1, Sworn Statement of Ms. Agnes N. Neria (To Questions Propounded by Atty. Man;l Karen Ang G. Go), pp. 233-248; Exhibit Folder No. 2, Exhibit "P-1718," Sworn Statement of Ms. Agnes N. Neria (To Questions Propounded by Atty. Man;l Karen Ang G. Go), pp. 1-16.

77 Exhibit Folder No. 2, Exhibit "P-1718," Sworn Statement of Ms. Agnes N. Neria (To Questions Propounded by Atty. Maryl Karen Ang G. Go), pp. 1-16. 78 Id.

79 Records, CTA Case Nos. 8482 & 8513, Vol. 1, Minutes of Hearing dated December 12, 2012, p. 249. 80 Id., Vol. 1, pp. 250-254, with annex. 81 I d., Minutes of Hearing dated Januan; 17, 2013, p. 255. 82 I d.

83 Id., Vol. 1, pp. 261-264.

84 Records, CTA Case Nos. 8482 & 8513, Vol. 1, Minutes of Hearing dated Februan; 14, 2013, p. 266. ~

DECISION

CTA CASE NOS. 8482, 8513, 8560 & 8611 Page 10 o£42 Case Nos. 8482 and 8513 are cancelled. The Pre-trial Conference for CTA Case No. 8560 set on February 14, 2013 was cancelled and reset to April 4, 2013, due to the parties' failure to file their respective pre- trial briefs.

CTA Case No. 8560 (Third Quarter of CY 2010) On October 22, 2010, petitioner filed its Quarterly VAT Return (BIR Form No. 2550-Q)SS for the third quarter (July to September) of CY 2010 showing an overpayment of Php43,646,090.8986. Petitioner reflected zero-rated sales only amounting to Php302,356,407.1287. On May 25, 2012, RDO No. 38 received petitioner's Application for Refund/Tax Credit of Excess and Unutilized Input VAT88 dated May 22, 2012 for the refund of excess and unutilized input VAT for the third quarter of CY 2010 amounting to Php4,124,167.60. Attached thereto is BIR Form No. 191489.

Alleging inaction by respondent on its claim for refund,90 petitioner filed a Petition for Review91 on October 22, 2012, docketed as CTA Case No. 8560, and was raffled to the CTA Third Division. The corresponding Summons92 was issued on November 9,2012. On November 28, 2012, respondent filed his Motion for Extension of Time to File Answer93, which was granted94 by the Court on December 4, 2012.

On December 28, 2012, respondent filed an Answer95, wherein he raised the following special and affirmative defenses: (1) that petitioner's claim for tax refund or TCC is subject to the BIR's administrative investigation/ examination; (2) that taxes paid and 85 Exhibit Folder No.1, Exhibit "P-19," Quarterly VAT Return for the Third Quarter, pp. 1-2. 86 Id., Line 29, p. 1.

87 Id., Line 17, p. 1.

88 Exhibit Folder No.2, Exhibit "P-1719," Administrative Claim for Refund for the Third Quarter, pp. 1- 3.

89 Exhibit Folder No. 1, Exhibit "P-1," Administrative Claim for Refund for the Third Quarter, Annex, BIR Form No. 1914, p. 1.

90 Records, CTA Case No. 8482, Vol. 3, PFR, p. 2. 91 Id, CTA Case No. 8560, PFR, pp. 7-84, with annexes. n I d. at p. 85.

93 I d. at 89-90.

94 Id. at 92.

95 Id., Answer, pp. 93-97.

CTA CASE NOS. 8482,8513,8560 & 8611 collected are presumed to have been paid in accordance with law, rules and regulations, and the burden to prove otherwise is incumbent upon petitioner; (3) that petitioner must prove its entitlement to a claim for refund; and (4) that plain allegations without any evidentiary document to support petitioner's claim will not justify its application for tax refund. He also argues that a tax credit or refund, like a tax exemption, is strictly construed against the taxpayer.

Meanwhile, the Court issued a Notice of Pre-trial Conference96 on January 2, 2013, setting the case for pre-trial on February 14, 2013. On January 10, 2013, petitioner filed a

Motion for

Consolidation97, praying that CTA Case No. 8560 be consolidated with CTA Case No. 8482, considering that the cases involve the same parties, a common question of law, and almost identical evidence. This was granted by the Court in its Resolution9s dated January 25, 2013.

CTA Case No. 8611 (Fourth Quarter of CY 2010) On January 25, 2011, petitioner filed its Quarterly VAT Return99 (BIR Form No. 2550-Q) for the fourth quarter (October to December) of CY 2010 showing an overpayment of Php48,383,225.401oo. Later, on January 31, 2011, petitioner filed its Amended Quarterly VAT Returnlol (BIR Form No. 2550-Q) for the fourth quarter of CY 2010 showing an overpayment of Php44,298,194.911D2, and reporting zero- rated sales only in the total amount of Php311,871,631.5PD3• On September 17, 2012, RDO No. 38 received petitioner's Application for Refund/Tax Credit of Excess and Unutilized Input VAT1D4 dated September 11, 2012 for the refund of excess and unutilized input VAT for the fourth quarter of 2010, amounting to 96 Records, CT A Case No. 8560, p. 98. 97 Id. at99-103.

98 Id. at 106-107.

99 Exhibit Folder No.1, Exhibit "P-21," Quarterly VAT Return for the Fourth Quarter, pp. 1-2. 1oo Id., Line 29, p. 1.

1o1 Id., Exhibit "P-20," Amended Quarterly VAT Return for the Fourth Quarter, p. 1-2.

102 Id., Line 29, p. 1.

103 Id., Line 17, p. 1.

104 I d., Exhibit "P-2," Administrative Claim for Refund for the Fourth Quarter, p. 1-3. (

CT A CASE NOS. 8482, 8513, 8560 & 8611

Php4,737,141.52, together with BIR Form No. 1914105 asking specifically for a tax refund.

Alleging inaction by respondent on its claim for refund,l06 petitioner filed a Petition for Review107 on February 12, 2013, docketed as CTA Case No. 8611, which was raffled to the CTA Second Division. The corresponding Summonslos was issued on February 20, 2013.

On March 7, 2013, respondent filed his Motion for Extension of Time to File Answer1o9, which was granted in an Orderno dated March 8, 2013.

On April 5, 2013, respondent filed an Answer111 raising the following special and affirmative defenses: (1) that petitioner's claim for the issuance of a TCC is subject to administrative investigation or examination; (2) that taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable; (3) that the taxpayer must prove compliance with Sections 112, 113 and 114 of the 1997 NIRC; and (4) that petitioner should prove the legal basis for its claim. Respondent also argues that claims for refund are strictly construed against the taxpayer as the same partakes the nature of tax exemption. On April 8, 2013, the CTA Second Division issued a Notice of Pre-trial Conference112, setting the case for pre-trial on May 23, 2013. On April23, 2013, petitioner filed a Motion for Consolidation113, praying that the case be consolidated with CT A Case No. 8482, pending before the CT A Third Division, considering that the two (2) cases involve the same parties, a common question of law, and almost identical evidence to be presented. 105 Exhibit Folder No. 1, Exhibit "P-2," Administrative Claim for Refund for the Fourth Quarter, Annex, BIR Form No. 1914, p. 1.

106 Records, CTA Case No. 8482, Vol. 3, PFR, p. 2. 107 Id., CTA Case No. 8611, PFR, pp. 8-92, with annexes. ( 1os Id. at 93.

109 I d. at 94-95.

11o Id. at 97.

m Id., Answer, pp. 98-100.

112 Records, CTA Case No. 8611, p. 101.

113 Id. at 102-112, with annex.

CTA CASE NOS. 8482, 8513, 8560 & 8611

On May 16, 2013, petitioner filed its Urgent Motion (To Postpone Pre-trial Conference)114. On May 17, 2013, the CTA Second Division promulgated a Resolution115 granting the Motion for Consolidation and cancelling the pre-trial conference set on May 23,2013. Consolidated CTA Case Nos. 8482, 8513, 8560 and 8611 (First, Second, Third, and Fourth Quarters of CY 2010) On April 2, 2013, in view of Administrative Circular No. 01-2013 dated March 26, 2013, the Court issued an Order116 cancelling the pre- trial conference scheduled on April4, 2013 and resetting the same to May 9, 2013.

On May 4, 2013, petitioner filed its Pre-trial Brie£117; while Respondent's Pre-trial Brief118 was filed on May 8, 2013. During the hearing on May 9, 2013, counsel for petitioner manifested that they filed a Motion to Consolidate CTA Case No. 8611 pending before the CT A Second Division with CT A Case Nos. 8482, 8513 and 8560; there being no objection from counsel for respondent, the Court was constrained to cancel the hearing and reset the pre-trial for CTA Case No. 8560 to June 27, 2013.119 The parties were then ordered to submit their respective consolidated pre-trial briefs to include CTA Case No. 8611_120 On June 5, 2013, the CTA Third Division promulgated a Resolution121 confirming the consolidation of CTA Case No. 8611 with CTA Case No. 8482. The consolidated cases were set for pre-trial conference on June 27, 2013.122 114 Records, CTA Case No. 8611, pp. 159-162. ns I d. at 158.

116 Id., CTA Case Nos. 8482, 8513 & 8560, Vol. 1, p. 270. 117 Id. at 278-292.

11s I d. at 293-294.

119 I d., Minutes of Hearing dated May 9, 2013, p. 295. 120 Id.

121 Id., Vol. 1, p. 339.

122 Id.

(

CTA CASE NOS. 8482, 8513, 8560 & 8611

On June 21, 2013, petitioner filed an Urgent Motion (To Postpone Pre-trial Conference)123; which was granted by the Court in its Order124 dated June 24, 2013 and pre-trial was reset for the last time on August 8, 2013. The presentation of evidence for petitioner set on July 8, 2013 was cancelled_125 On August 6, 2013 respondent filed his Consolidated Respondent's Pre-trial Brief126; while petitioner filed its Consolidated Pre-trial Brie£127 on August 7, 2013. During the hearing held on August 8, 2013, the Court ordered the parties to submit their JSFI, which shall include their respective lists of documentary evidence and witnesses, within a period of twenty (20) days or until August 28, 2013.128 On August 27, 2013, petitioner filed a Motion for Extension129, praying for an additional period of ten (10) days from August 28, 2013 or until September 7, 2013 to submit the Consolidated JSFI. The Court granted the Motion for Extension in its Order13o dated August 28,2013.

On September 9, 2013, the parties filed their Consolidated JSFI131.

On September 10, 2013, petitioner filed an Urgent Motion (To

Postpone Presentation of Evidence and

Set Additional

Commissioner's Hearing)132 ("Urgent Motion to Postpone"), and a

Motion

Commission

Independent

Certified

Public

Accountant133 ("ICPA").

123 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 1, pp. 340-343. 124 Id. at 344.

12s I d. at 347.

126 Id. at 353-355.

127 Id. at 356-381.

128 Id., Vol. 2, Minutes of hearing dated August 8, 2013, p. 1077. 129 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 3, pp. 1084-1088. 130 Id. at 1089.

131 Id., Consolidated JSFI, pp. 1095-1101. 132 Id., Vol. 3, pp. 1102-1106.

133 Id. at 1108-1123, with annex.

I

CT A CASE NOS. 8482, 8513, 8560 & 8611

On September 11, 2013, the Court issued an Order134 granting the Urgent Motion to Postpone and setting the commissioning of the ICPA on September 16,2013.

The Court issued a Pre-trial Order135 on September 13, 2013. On September 16, 2013, the Court commissioned Ms. Katherine

0. Constantino ("Ms. Constantino") as the ICP A, who then took her oath and undertook to submit the ICP A Report within thirty (30) days or until October 16, 2013.136 On October 16, 2013, petitioner filed an Urgent Motion (For Extension to File Consolidated Independent Certified Public Accountant's Report)137, which was granted138 by the Court. On even date, Ms. Constantino submitted the ICPA Report139 together with the annexes pertinent to petitioner's claim. Due to the suspension of work in the Court, the initial presentation of evidence for petitioner scheduled on October 14, 2013 was reset to November 11, 2013.140 On October 31, 2013, petitioner filed an Urgent Motion (For Extension to File Consolidated Independent Certified Public Accountant's Report)141; and the same was granted by the Court in its Resolution142 dated November 7, 2013. On November 11, 2013, Ms. Constantino submitted to the Court the Amended ICP A Report143; and petitioner filed another Urgent 134 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 3, p. 1124. 135 Id., PTO, pp. 1127-1137.

136 Id., Vol. 3, Minutes of Hearing dated September 16, 2013, pp. 1138-1139. 137 Id., Vol. 3, pp. 1154-1158.

138 Id. at 1337.

139 Id., ICPA Report on the Results of the Procedures Performed Relative to the Claim for Refund/fax Credit Representing Excess Input Value Added Tax (VAT) for the Period JanuanJ 2, 2010 to December 31, 2010 ("ICPA Report"), pp. 1160-1336. 140 Id., Vol. 3, p. 1339.

141 Id. at 1340-1344.

142 Id. at 1446-1447.

143 Id., Exhibit "P-60," Amended ICPA Report on the Results of the Procedures Performed Relative to the Claim for Refund/fax Credit Representing Excess Input Value Added Tax (VAT) for the Period January 2, 2010 to December 31, 2010, pp. 1449-1712; Box of Evidence 1, Exhibit "P-60," Amended ICPA Report on the Results of the Procedures Performed Relative to the Claim for Refund/Tax Credit Representing Excess Input Value Added Tax (VAT) for the Period JanuanJ 2, 2010 to December 31, 2010, pp. 1-28, with annexes.

CT A CASE NOS. 8482, 8513, 8560 & 8611

Motion (To Postpone Presentation of Petitioner's Evidence)144. The initial presentation of evidence for petitioner was reset to December 2, 2013145.

During the December 2, 2013 hearing, petitioner presented Ms. Neria and Ms. Constantino_146 Ms. Neria testified, via her Supplemental Sworn Statement147, that the case involves petitioner's claim for refund by way of issuance of a TCC for unutilized input VAT for the first to fourth quarters of 2010; and that the claim is based on the excess and unutilized input VAT incurred by petitioner in CY 2010. She also testified that petitioner is an ROHQ and as such, it is only allowed to render qualifying support services to affiliates, subsidiaries or branches; that petitioner's zero-rated sale of services were rendered to its non- registered foreign clients doing business outside the Philippines; and that those services were paid for in US Dollars remitted inwardly to petitioner's US Dollar account. She also stated that petitioner filed an Application for Refund/Tax Credit of Input Vat for the Third and Fourth Quarters of CY 2010 on May 25, 2012 and September 17, 2012, respectively; and that no action was taken by the BIR on their application.

Ms. Constantino testified via her Sworn Statement148 that she was commissioned by the Court as the ICPA for these consolidated cases; that she was tasked to verify and issue a report on the examination, evaluation and substantiation of the amount of input VAT being claimed by petitioner for the first to fourth quarters of CY 2010; and that she submitted to the Court an Amended ICPA Report containing the results of the procedures performed relative to petitioner's claim.

Cross-examination of Misses Neria and Constantino, and the presentation of further evidence for petitioner were set on January 13, 144 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 3, pp. 1715-1719. 145 I d., Minutes of Hearing dated November 11, 2013, p. 1713. 146 I d., Vol. 4, Minutes of Hearing dated December 2, 2013, p. 2403. ( 147 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vols. 1 & 2, Supplemental Sworn Statement of Ms. Agnes N. Neria, pp. 495-523; Exhibit Folder No.2, Exhibit "P-1693,"Supplemental Sworn Statement of Ms. Agnes N. Neria, pp. 1-26.

148 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 4, Sworn Statement of Katherine 0. Constantino in Lieu of Direct Testimony, pp. 2378-2402; Exhibit Folder No.2, Exhibit "P-1694," Sworn Statement of Katherine 0. Constantino in Lieu of Direct Testimony, pp. 1-24.

DECISION

CIA CASE NOS. 8482,8513,8560 & 8611 Page17 o£42 2014.149 However, on January 8, 2014, petitioner filed an Urgent Motion to Reset Hearing (From 13 January 2014 to 27 January 2014)150. This was denied by the Court during the hearing on January 13, 2014 and the presentation of further evidence for petitioner was deemed waived.151 Consequently, petitioner was granted a period of ten (10) days from January 13, 2014 or until January 23, 2014 to file its Formal Offer of Evidence ("FOE"), and five (5) days from January 13, 2014 or until January 18, 2014, to file a Motion for Reconsideration of the Order denying its Motion to Reset Hearing.152 Meanwhile, the initial presentation of evidence for respondent was set on February 24, 2014.153 On January 17, 2014, petitioner filed a

Motion for

Reconsideration [Re: Order issued on January 13, 2014 denying petitioner's "Urgent Motion to Reset Hearing (From January 23, 2014 to January 27, 2014)" ("Motion for Reconsideration") and deeming petitioner to have waived its presentation of evidence)154. Due to the pendency of the Motion for Reconsideration, the initial presentation of evidence for respondent set on February 24, 2014 was cancelled.155 On

March

4, 2014, the

Court

denied the

Motion

for Reconsideration.156 Thereafter, on March 26, 2014, the Court promulgated a Resolution157 granting petitioner ten (10) days from notice to file its FOE.

On April 11, 2014, petitioner filed by registered mail a Motion for Additional Time to File Formal Offer of Exhibits158; which was granted through an Order159 dated April24, 2014. On April 24, 2014, petitioner filed its FOE16o, offering Exhibits "P-1," "P-1a," "P-2," "P-2a," "P-3" to "P-15," "P-16a" to "P-16t," "P- 17a" to "P-17o," "P-18," "P-18a," "P-18b," "P-19," "P-19a," "P-19b," "P-20," "P-20a," "P-20b," "P-21," "P-21a," "P-21b," "P-22," "P-22a," "P-22b," "P-23," "P-23a," "P-23b," "P-24," "P-24a," "P-24b," "P-25," 149 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 4, Minutes of Hearing dated December 2, 2013, p. 2403 150 Id., Vol. 5, pp. 2405-2412, with annexes. 151 Id., Minutes of Hearing dated JanuanJ 13, 2014, p. 2414. 152 Id.

153 Id.

154 Id. at 2415-2423.

155 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, p. 2432. 156 Id. at 2434-2437.

157 Id. at 2439.

158 I d. at 2440-2443.

159 Id. at 2444.

160 Id., Formal Offer of Exhibits ("FOE"), pp. 2445-2476. /

CTA CASE NOS, 8482, 8513, 8560 & 8611

“P-25a,” “P-25b,” “P-26,” “P-26a,” “P-26b,” “P-27,” “P-27a,” “P-27b,” “P-28," “P-28a,”" “P-28b,” “P-29," “P-29a,” “P-29b,” “P-30,” “P-30a,” “P-30b,” “P-31," “P-31a,” “P-31b,” “P-32,” “P-32a,” “P-32b,” “P-33,” “P-33a,” “P-33b,” “P-34,” “P-34a,” “P-34b,” “P-35,” “P-35a,” “P-35b,” “P-38,” “P-38a” to “P-38d,” “P-39,” “P-39a” to “P-39e,” “P-40,” “P- 40a,” “P-41,” “P-41a” to “P-41c,” “P-42,” “P-43,” “P-43a” to “P-43¢,” “P-44,” “P-44a” to “P-44e,” “P-45,” “P-45a” to “P-45c,” “P-46,” “P- 46a” to “P-46e,” “P-47,” “P-47a,” “P-48,” “P-48a,” “P-49” to “P-52,” “P-52a” to “P-52e,” “P-53,” “P-53a” to “P-53f,” “P-55,” “P-55a,” “P- 56,” “P-57," “P-57a” to “P-57c,” “P-58” “P-59,” “P-59a,” “P-60,” “P- 61” to “P-251,” “P-61a” to “P-251a,” “P-252” to “P-610,” “P-252a” to “P-610a,” “P-611” to “P-674,” “P-611a” to “P-674a,” “P-675” to “P- 684,” “P-675a” to “P-684a,” “P-685,” “P-686,” “P-687” to “P-720,” “P- 722” to “P-739,” “P-722a” to “P-739a,” “P-740” to “P-945,” “P-761a” to “P-945a,” “P-946” to “P-1194,” “P-946a” to “P-1194a,” “P-1195” to “P- 1427,” “P-1195a” to “P-1427a,” “P-1428” to “P-1688,” “P-1428a” to “P- 1688a,” “P-1680b” to “P-1688b” “P-1689” to “P-1692,” “P-1693,” “P- 1693a,” “P-1694,” “P-1694a,” “P-1700" (“F-1"), “P-1700a” (“F-1-a”), “P-1700b” (“F-1-b”’), “P-1701" (“G-1"), “P-1701a” (“G-1-a”), “P- 1701b” (“G-1-b”), “P-1702” (“H-1"), “P-1703” (“H-1-c’), “P-1704” (“H-1-d”), “P-1705” (“H-1-e”), “P-1706” (“H-2”), “P-1707” (“H-2-c”), “P-1708” (“H-2-d”), “P-1709” (“H-2-e”), “P-1710” (“I-1-a”), “P-1710a” (“I-1-a-1”), “P-1710b” (“I-1-a-2”), “P-1711” (“I-1-b”), “P-1711a” (“T-1- b-1”), “P-1711b” (“I-1-b-2”), “P-1712” (“I-1-c”), “P-1712a” (“I-1-c-1”), “P-1712b” (“I-1-c-2”), “P-1713” (“I-2-a”), “P-1713” (“I-2-a”), “P-1713a” (“I-2-a-1”), “P-1713b” (“T-2-a-2”), “P-1714” (“T-2-b”), “P-1714a” (“I-2- b-1”), “P-1714b” (“I-2-b-2”), “P-1715b” (“J-1-b”), “P-1715c” (“J-1-c"), “P-1715d” (“J-1-d”), “P-1715e” (‘“J-1-e”), “P-1715£" (“J-1-£"), “P- 1715¢” (“J-1-g”), “P-1715h” (“J-1-h’), “P-1715i" (“J-1-1"), “P-1715;” (“J-1-7”), “P-1715k” (“J-1-k”), “P-17151”" (“J-1-1"), “P-1715m” (“J-1-m’), “P-1715n” (“J-1-n”), “P-17150” (“J-1-0”), “P-1715p” (“J-1-p”), “P- 1715q” (“J-1-q”), “P-1715r” (“J-1-r”), “P-1715s” (“J-1-s”), “P-1715t” (“J-1-t”), “P-1715u” (“J-1-u”), “P-1715v” (“J-1-v”), “P-1715w” (“J-1- Ww’), “P-1715x” (“J-1-x”), “P-1716b” (“J-2-b”), “P-1716c” (“J-2-c”), “P- 1716d” (“J-2-d”), “P-1716e” (“J-2-e”), “P-1716f" (‘J-2-£"), “P-1716¢” (“J-2-¢”), “P-1716h” (“J-2-h”), “P-1716i" (“J-2-I’), “P-1716j” (“J-2-7”), “P-1716k” (“J-2-k”), “P-1716l” (“J-2-1"), “P-1716m” (“J-2-m”), “P- 1716n” (“J-2-n’), “P-17160” (“J-2-0”), “P-1716p” (“J-2-p”), “P-1716q” (“J-2-q"), “P-1716r” (“J-2-r”), “P-1716s” (“J-2-s”), “P-1716t” (“J-2-t”), “P-1716u” (“J-2-u”), “P-1716v” (“J-2-v”), “P-1718" (“O-1”), “P-1718a” (“O-1-a”), “P-1719” (“F-2”), “P-1719a” (“F-2-a”), “P-1719b” (“F-2-b’), “P-1720" (“I-2-c”), “P-1720a” (“I-2-c-1"), “P-1720b” (“I-2-c-2”), and “P-1721," as evidence for petitioner, for their respective stated f

DECISION

CTA CASE NOS. 8482,8513,8560 & 8611 Page 19 o£42 purposes, and as part of the testimonies of the witnesses presented during trial.

On July 4, 2014, the Court resolved161 to admit all of petitioner's exhibits, save for the following: 1.

Exhibit "P-23," for failure to correspond to the document marked;

Exhibits "P-28," "P-28a," "P-28b," "P-29," "P-29a," "P- 29b," "P-42," "P-61" to "P-251," "P-61a" to "P-251a," "P-252" to "P- 610," "P-252a" to "P-610a," "P-611" to "P-674," "P-611a" to "P-674a," "P-698" to "P-702," "P-715," "P-1700" ("F-1"), "P-1700a" ("F-1-a"), "P-1700b" ("F-1-b"), "P-1719" ("F-2"), "P-1719a" ("F-2-a"), "P-1719b" ("F-2-b"), and "P-1720" ("I-2-c"), for not being identified during trial; 3.

Exhibits "P-1702" ("H-1") and "P-1706" ("H-2") for failure of petitioner to submit the originals for comparison; 4.

Exhibits "P-12," "P-32," "P-32a," "P-32b," and "P-59a," for not being found in the records;

Exhibits "P-722" to "P-739," "P-722a" to "P-739a," "P-740" to "P-757," and "P-1721," for not being identified during trial and for failure of petitioner to submit the originals for comparison; and 6.

Exhibits "P-1720a" ("I-2-c-1") and "P-1720b" ("I-2-c-2") for not being identified during trial and for not being found in the records.

On July 25, 2014, petitioner filed, by registered mail, a Motion for Partial Reconsideration (Re: Resolution dated July 4, 2014, With Prayer for Reopening of Trial)162. On July 31, 2014, petitioner filed an Urgent Motion to Postpone (To Present Respondent's Evidence)163, which was granted by the Court in Resolution164 dated August 6, 2014. ( 161 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, pp. 2479-2481. 162 I d. at 2499-2506.

163 Id. at 2485-2497, with annexes.

CIA CASE NOS. 8482,8513,8560 & 8611

On October 1, 2014, the Court resolved to grant petitioner's Motion for Partial Reconsideration, thus allowing it to recall its witnesses, Misses Neria and Constantino.165 After petitioner's Urgent Motion to Reset Hearing (From 6 November 2014 to 8 December 2014)166 was granted167, petitioner filed a Motion to Recall a Witness168 on February 27, 2015, praying that it be allowed to recall witness Ms. Lourdes Rosario V. Mantaring ("Ms. Mantaring") and to submit a Supplemental FOE. On March 4, 2015, petitioner filed its Compliance169, with attached Supplemental Sworn Statement of Ms. Agnes N. Neria (To Questions Propounded by Atty. Juan Miguel D. Tuason)170 and Supplemental Sworn Statement of Katherine 0. Constantino in Lieu of Direct Testimony ln.

On March 9, 2015, petitioner presented its recalled witnesses, Misses Neria and Constantino.172 Meanwhile, its Motion to Recall Witness was granted173, thus, Ms. Mantaring was presented as a witness on May 25, 2015_174 In her testimony via Sworn Statement of Ms. Lourdes Rosario V. Mantaring17s, Ms. Mantaring stated that she is the Vice President and General Manager of petitioner since July 2011; that petitioner is an ROHQ and it is licensed to engage in the business of providing qualifying services to its affiliates and related parties in the Asia- Pacific and in other markets; and that in 2010, petitioner rendered 164 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, p. 2508. 165 Id. at 2511-2514.

166 Id. at 2515-2519.

167 Id. at 2521.

168 Id. at 2536-2539.

169 Id. at 2542-2544.

170 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, Exhibit "P-1722," Supplemental Sworn Statement of Ms. Agnes N. Neria (To Questions Propounded by Atty. Juan Miguel D. Tuason), pp. 2545- 2551.

171 Id., Exhibit "P-1723," Supplemental Sworn Statement of Katherine 0. Constantino in Lieu of Direct Testimony, pp. 2552-2556.

172 I d., Minutes of Hearing dated March 9, 2015, p. 2508. 173 Id., Vol. 5, pp. 2574-2575.

174 I d., Minutes of Hearing dated May 25, 2015, p. 2580. 175 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 1, Sworn Statement of Ms. Lourdes Rosario V. Mantaring, pp. 384-402; Exhibit Folder No. 2, Exhibit "P-1721," Sworn Statement of Ms. Lourdes Rosario V. Mantaring, pp. 1-18.

(

CT A CASE NOS. 8482, 8513, 8560 & 8611 services to five (5) non-resident foreign corporations doing business outside the Philippines.

Ms. Mantaring explained that petitioner has a long-standing standard procedure in providing its services to its foreign affiliates; that the foreign client engages petitioner for it to handle the clients' business processes; that petitioner and the foreign client will execute two (2) agreements, the Master Services Agreement ("MSA") and the Service Level Agreement ("SLA"); that there are instances when more than one SLA will be executed depending on the business process transitioned to petitioner; and that there are currently four (4) SAs entered into by petitioner, i.e., with MIL, with JHLIC, with TMLIC and with MIB. She explained further that petitioner bills its clients monthly, based on the number of days that a project team worked on a particular project.

On May 29, 2015, petitioner filed a Supplemental Formal Offer of Evidence176, offering Exhibits "P-1722," "P-1722a," "P-1723," "P- 1723a," "P-23," "P-28," "P-29," "P-29a," "P-29b," "P-32," "P-32a," "P- 32b," "P-59," "P-59a," "P-61" to "P-251," "P-61a" to "P-251a," "P-252" to "P-610," "P-252a" to "P-610a," "P-611" to "P-674," "P-611a" to "P- 674a," "P-698" to "P-720," "P-722" to "P-739," "P-722a" to "P-739a," "P-740" to "P-791," "P-1700" ("F-1"), "P-1719" ("F-2"), "P-1720" ("1-2- c"), "P-1720a" ("1-2-c-1"), "P-1720b" ("1-2-c-2") and "P-1721," as evidence for petitioner, for their respective stated purposes, and as part of the testimonies of the witnesses presented during trial. On July 6, 2015, the Court resolved177 to admit all of petitioner's exhibits, save for Exhibits "P-32" and "P-32a" for failure to present the originals for comparison; Exhibit "P-32b"for failure to present the original and for failure to correspond with the description in the Supplemental FOE; Exhibit "P-59a," for failure to submit the duly marked exhibit; and Exhibits "P-64a," "P-141a," "P-145a," "P-182a," "P-227a" "P-239a" "P-596a" "P-597a" "P-629a" to "P-631a" "P- '

I

670a," "P-673a," "P-724a," "P-727a," "P-737a," and "P-738a," for not being found in the records.

On July 6, 2015, counsel for petitioner manifested that he just received the Resolution dated July 6, 2015, considering that some exhibits were denied, he moved for time to file a motion for 176 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, p. 2581-2591. 177 I d. at 2643-2644.

I

.,1

CTA CASE NOS. 8482,8513,8560 & 8611 reconsideration, thus, the Court gave him five (5) days to file the same.178 Meanwhile, the initial presentation of evidence for respondent was reset to September 7, 2015_179 On July 13, 2015, petitioner filed, by registered mail, its Motion (For Reconsideration and to Reopen Trial for Reception of Additional Evidence)18o. The Court resolved to grant181 the Motion for Reception of Additional Evidence on September 2, 2015, and a commissioner's hearing was set on September 22, 2015. Meanwhile, the initial presentation of evidence for respondent set on September 7, 2015 was cancelled and reset.182 On September 8, 2015, petitioner filed another Supplemental Formal Offer of Evidence183 for Exhibit "P-32-b;" which was denied184 by the Court on December 8, 2015. In the same Resolution, petitioner's Motion for Reconsideration was likewise denied_185 On December 18, 2015, petitioner filed a Motion (To Admit Marked Exhibits and Supplemental Formal Offer of Exhibits)186. This was partially granted by the Court in a Resolution187 dated February 24, 2016, admitting Exhibits "P-32," "P-32a," "P-32b," "P-64a," "P- 227," "P-227a," "P-239a," "P-596a," "P-597a," "P-670," "P-670a," "P- 727a," and "P-737a," and denying Exhibit "P-141a" for not being found in the records.

During the March 7, 2016 hearing, counsel for respondent manifested that there is no report yet from the BIR examiners; hence, the initial presentation of evidence for respondent was reset to May 30, 2016.188 On May 30, 2016, counsel for respondent made a manifestation that he has no evidence to present; thus, the parties were granted 178 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, Minutes of Hearing dated July 6, 2015, p. 2645.

179 Id.

180 I d. at 2668-2683, with annexes. 181 Id. at 2887-2889.

182 Id. at 2887-2889.

183 Id. at 2690-2695.

184 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, pp. 2708-2709. 185 Id.

186 Id. at 2710-2719.

187 Id. at 2748-2750.

188 Id., Minutes of Hearing dated March 7, 2016, p. 2751. r/

DECISION

CTA CASE NOS. 8482,8513,8560 & 8611 Page 23 o£42 thirty (30) days or until June 29, 2016, to submit their respective memoranda.189 With the filing of petitioner's Memorandum19o on June 28, 2016, and the issuance of two (2) Records Verification Reports191 stating that respondent failed to file his Memorandum, the Court resolved192 to submit the instant consolidated cases for decision; hence this Decision.

The Issue193

WHETHER PETITIONER IS ENTITLED TO ITS CLAIM FOR A REFUND OR ISSUANCE OF A TCC FOR ITS UNUTILIZED OR EXCESS INPUT VAT PAYMENTS FOR THE FIRST TO FOURTH QUARTERS OF 2010.

Petitioner's Arguments194

Petitioner contends that as a duly registered ROHQ, it performs qualifying services to its affiliates, subsidiaries, or branches in the Asia-Pacific Region and in other foreign markets; and that as an ROHQ, it is engaged in transactions subject to VAT zero-rating. Petitioner asserts that its clients are entities duly organized and registered abroad; that it has submitted evidence to prove that the services it rendered, while performed in the Philippines, were for the exclusive benefit of its clients which are non-resident foreign corporations not doing business in the Philippines; that the services rendered to its non-resident foreign corporations are pursuant to SAs entered into with them on various dates; and that its clients pay in US Dollars that are inwardly remitted to petitioner's account.

Respondent's Counter-Arguments19S

189 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, Minutes of Hearing dated May 30, 2016, p. 2752.

190 Id., Memorandum, pp. 2758-2777. 191 Id., Vol. 5, pp. 2778-2779.

192 Id. at 2781.

193 Id., Vol. 3, PTO, p. 1130.

194 Id., Vol. 5, Memorandum, pp. 2767-2775.

I

195 Records, CTA Case No. 8482, Answer, p. 95; Records, CTA Case No. 8513, Answer, pp. 102-104; Records, CTA Case No. 8560, Answer, pp. 93-96; Records, CTA Case No. 8611, Answer, pp. 98-99.

CT A CASE NOS. 8482, 8513, 8560 & 8611

Anent petitioner's claim for refund or TCC for the first quarter of CY 2010, respondent claims that petitioner failed to show that it filed an application therefor with RDO No. 38. With regard the claim for the second quarter of CY 2010, respondent avers that such has already prescribed; that the judicial claim for refund was filed outside the two (2)-year prescriptive period reckoned from the close of the taxable quarter when the sales were made, pursuant to Section 112(A) and (C) of the 1997 NIRC, and the ruling of the Supreme Court in Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc. Respondent also avers that petitioner's application for tax refund or TCC is subject to administrative investigation or examination by the BIR; that taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable; that it is incumbent upon the taxpayer to prove compliance with the pertinent provisions of the 1997 NIRC, particularly with Sections 112, 113 and 114; and that claims for refund are strictly construed against the taxpayer as it partakes the nature of a tax exemption.

The Ruling of the Court

The Court has jurisdiction over the instant consolidated cases.

The Court must first determine whether it has jurisdiction over the case at bar.

Anent the timeliness of filing the administrative and judicial claims for refund, Section 112(A) of the 1997 NIRC provides as follows: SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-Rated or Effectively Zero-Rated Sales.- any VAT- registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional /

CTA CASE NOS. 8482, 8513, 8560 & 8611 input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals.

XXX

xxx196 Corollary, Section 4.112-1(d) of RR No. 16-2005197 states the following:

Sec. 4.112-1. Claims for Refund/Tax Credit Certificate of Input Tax.

XXX

196 Underscoring ours.

197 Consolidated Value-Added Tax Regulations of2005, effective November 1, 2005. ( QTR.

First

Second

Third

Fourth

DECISION

CTA CASE NOS. 8482,8513,8560 & 8611 Page 26 o£42 (d)

Period

within which refund or tax credit certificate/refund of input taxes shall be made In proper cases, the Commissioner of Internal Revenue shall grant a tax credit certificate/refund for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with subparagraph (a) above. In case of full or partial denial of the claim for tax credit certificate/ refund as decided by the Commissioner of Internal Revenue, the taxpayer may appeal to the Court of Tax Appeals (CTA) within thirty (30) days from the receipt of said denial, otherwise the decision shall become final. However, if no action on the claim for tax credit certificate/refund has been taken by the Commissioner of Internal Revenue after the one hundred twenty (120) day period from the date of submission of the application with complete documents, the taxpayer may appeal to the CTA within 30 days from the lapse of the 120-day period.198 Based on Section 112(A) of the 1997 NIRC, petitioner had two (2) years from the close of the taxable quarters when the sales were made to file its administrative claims. Further, Section 112(C) of the 1997 NIRC, in relation to RR No. 16-2005, grants petitioner one hundred twenty (120) days, from the date of submission of the complete documents in support of the administrative claim for refund, to file its judicial claim with the CTA. Applying the foregoing, the Court arrived at the following table:

END OF

ADMIN CLAIM

END OF 120 DAYS

JUDICIAL CLAIM

TAXABLE QTR.

DUE DATE

FILED

DUE DATE

FILED

March 31, 2010 March 31, 2012 December 6, 2011199 April4, 2012 May4,2012 April30, 2012200 June 30,2010 June 30, 2012 February17, 2012201 June 16, 2012 Julyl6, 2012 July 6, 2012202 September30,2010 September30,2012 May 25, 20122o3 September 22, 2012 October 22, 2012 October 22, 2012204 December 31, 2010 December 31, 2012 September 17, 20122os January 15, 2013 February 14, 2013 February 12, 20132o6 198 Underscoring ours.

199 Exhibit Folder No.2, Exhibit "P-1700," Administrative Claim for Refund for the First Quarter, pp. 1- 3.

200 Records, CTA Case No. 8482, Vol. 1, PFR, pp. 6-87, with annexes. 201 Exhibit Folder No.2, Exhibit "P-1719," Administrative Claim for Refund for the Second Quarter, pp. 1-3.

202 Records, CTA Case No. 8513, PFR, pp. 10-100, with annexes. 203 Exhibit Folder No.2, Exhibit "P-1719," Administrative Claim for Refund for the Third Quarter, pp. 1- 3.

204 Records, CTA Case No. 8560, PFR, pp. 7-84, with annexes. 205 Exhibit Folder No. 1, Exhibit "P-2," Administrative Claim for Refund for the Fourth Quarter, p. 1-3. 206 Records, CTA Case No. 8611, PFR, pp. 8-92, with annexes.

I

CTA CASE NOS. 8482,8513,8560 & 8611

There is no merit to respondent's claim that petitioner failed to show that it filed an application for tax refund or TCC with RDO No. 38 for the first quarter of CY 2010. Based on the records, petitioner submitted Exhibit "P-1700," which clearly bears the stamp "Received" by BIR RDO No. 38, with the date December 6, 2011 and a counter- signature under the name of a certain" Aileen Alban." Respondent also posits that the claim for the second quarter of CY 2010 has already prescribed, and that the judicial claim for refund was filed outside the two (2)-year prescriptive period reckoned from the close of the taxable quarter when the sales were made. The Court does not agree.

In the recent case of Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) v. Commissioner of Internal Revenue207, the Supreme Court ruled that:zos Upon the filing of an administrative claim, respondent is given a period of 120 days within which to (1) grant a refund or issue the tax credit certificate for creditable input taxes, or (2) make a full or partial denial of the claim for a tax refund or tax credit. Failure on the part of respondent to act on the application within the 120-day period shall be deemed a denial.

Note that the 120-day period begins to run from the date of submission of complete documents supporting the administrative claim. If there is no evidence showing that the taxpayer was required to submit - or actually submitted - additional documents after the filing of the administrative claim, it is presumed that the complete documents accompanied the claim when it was filed.209 In the instant case, petitioner had until March 31, 2012, June 30, 2012, September 30, 2012 and December 31, 2012, respectively, within which to file its administrative claims for all the quarters of CY 2010. Therefore, its Applications for Tax Credits/Refunds with the BIR were timely filed on December 6, 2011, February 17, 2012, May 25, 2012, and September 17, 2012, respectively. 207 G.R. No. 182737, March 2, 2016. 20s Underscoring ours.

209 Underscoring ours.

(

CT A CASE NOS. 8482, 8513, 8560 & 8611

Anent the timeliness of the judicial claim for refund, records disclose that the BIR did nothing after petitioner filed its application for tax refund or TCC. This was also attested to by Ms. Neria in her sworn statement.

In Rohm Apollo Semiconductor Philippines v. Commissioner of Internal Revenue210, the Supreme Court reminded taxpayers that when the one hundred twenty (120)-day period lapses and there is inaction on the part of the CIR, they must no longer wait for it to come up with a decision thereafter. The CIR's inaction is the decision itself. It is already a denial of the refund claim. Thus, the taxpayer must file an appeal within thirty (30) days from the lapse of the one hundred twenty (120)-day waiting period, this period is mandatory and jurisdictional.

As enunciated by the Supreme Court in Commissioner of Internal Revenue v. San Roque Power Corporation, et al.211, strict compliance with the mandatory 120+30-day period is necessary for a claim for tax refund or credit.

As can be seen from the table above, petitioner had until May 4, 2012, July 16, 2012, October 22, 2012, and February 14, 2013 within which to file its judicial claims for refund. Records show that the instant Petitions for Review were filed on April30, 2012, July 6, 2012, October 22, 2012 and February 12, 2013, well within the periods provided by law.

Finding that both the administrative and judicial claims for refund were filed on time, the Court has jurisdiction over the consolidated cases.

Petitioner is entitled to the claim for refund, albeit at a reduced amount.

In the application of the foregoing legal provisions, certain requisites have been jurisprudentially developed which a taxpayer- applicant must comply with to successfully obtain a credit or a refund of excess input VAT. The said requisites are: 21o G.R. No. 168950, January 14, 2015. 211 G.R. Nos. 187485, 196113, and 197156, October 8, 2013,690 SCRA 336. r

DECISION

CTA CASE NOS. 8482,8513,8560 & 8611 Page 29 o£42 1.

the claim is filed with the CIR within two (2) years after the close of the taxable quarter when the sales were made;212 2.

in case of full or partial denial of the refund claim, or the failure on the part of the CIR to act on the said claim within a period of 120 days, the judicial claim has been filed with the Court, within thirty (30) days from receipt of the decision or after the expiration of the said one hundred and twenty (120)-day period;213 3.

the taxpayer is VAT-registered;214 4.

the taxpayer is engaged in zero-rated or effectively zero- rated sales;215 5.

for zero-rated sales under Sections 106(A)(2)(a)(l), (2) and (b), and 108(B)(l) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with BSP rules and regulations;216 6.

the input taxes are due or paid;217 7.

the input taxes are not transitional input taxes;218 8.

the input taxes claimed are attributable to zero-rated or effectively zero-rated sales;219 9.

where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be 212 Intel Technology Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007, 522 SCRA 657; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009, 605 SCRA 536; AT&T Communications Services Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 182364, August 3, 2010, 626 SCRA 567. 213 Rohm Apollo Semiconductor Philippines v. Commissioner of Internal Revenue, G.R. No. 168950, January 14, 2015.

214 Supra note 212.

mw ~ 216 Id.

217 Id.

21s Id.

219 Id.

CT A CASE NOS. 8482, 8513, 8560 & 8611 directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume;zzo and 10.

the input taxes have not been applied against output taxes during and in the succeeding quarters.22l As discussed above, petitioner was able to prove compliance with the first and second requisites. Petitioner also complied with the third requisite by presenting its Certificate of Registration222 issued by the B1R with Taxpayer's Identification No. 244-027-271-000, indicating that it is subject to VAT.

The fourth and fifth requisites require that the taxpayer is engaged in zero-rated or effectively zero-rated sales. Under Sections 106(A)(2)(a)(l) and (2), 106(B) and lOB(B)(l) and (2) of the 1997 NIRC, as amended by RA No. 9337, zero-rated sales transactions should be made in acceptable foreign currency exchange and duly accounted for in accordance with BSP rules and regulations. In its Quarterly VAT Returns for CY 2010, petitioner reflected a total amount of Php1,191,665,714.74 zero-rated sales/receipts, broken down as follows:

EXHIBIT

PERIOD COVERED

ZERO-RATED

(2010)

SALES/RECEIPTS

P-1701

FirstQuarter

Php

276)72,047.361

P-18

Second Quarter

301,265,898,.75

P-19

Third Quarter

302,356A07.12

P-34

Fourth Quarter

311,871,361.51 I _!_OT ~_1_ _ ___ _ __ PHP __ 1,191,665,?14.74 Petitioner alleges that the above-stated zero-rated sales or receipts pertains to its sales of services to its foreign affiliates who are all engaged in business conducted outside the Philippines, and which services were paid for in US Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and 220 Supra note 212.

221 Id.

222 Exhibit Folder No.1, Exhibit "P-39," p. 1. (

CTA CASE NOS. 8482, 8513,8560 & 8611 regulations of the BSP; hence, qualify for VAT zero-rating under Section 108(B)(2)223 of the 1997 NIRC. The Court refers to the case of Commissioner of Internal Revenue

v. Burmeister and Wain Scandinavian Contractor Mindanao, Inc.224, which provides that in order for the supply of services to be VAT zero-rated under Section 108(B)(2) of the 1997 NIRC, as amended by RA No. 9337, the following requisites must be met: 1.

the services by a VAT-registered person must be other than processing, manufacturing or repacking of goods; 2.

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

the recipient of such services is doing business outside the Philippines.

Based on the records, petitioner is a multinational company organized and existing under the laws of Barbados and had established an ROHQ in the Philippines, as evidenced by SEC Certificate of Registration225 and License No. FS200603505226. Pursuant to the SAs227 entered into between petitioner and its clients, petitioner provides its clients with administrative and BPO services, information technology, reports and support services and other services including but not limited to, business processing, data processing, data entry, data imaging and call center services. These services clearly fall within the scope of "services other than 223 "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -

XXX

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

(1) xxx;

(2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP)."

224 G.R. No. 153205, January 22, 2007, 512 SCRA 124.

225 Exhibit Folder No. 1, Exhibit "P-38," p. 1.

226 I d., Exhibit "P-38-a," p. 1.

227 Id., Exhibits "P-43," "P-44," "P-45," "P-46," & "P-52,"pp.1-11, 1-15,1,1-14,1-16. r

CT A CASE NOS. 8482, 8513, 8560 & 8611 processing, manufacturing or repacking of goods," thus proving that petitioner complied with the first requisite. Anent the second requisite, Sections 113(A)(2), (B)(l), (2)(c) and

(3) of the 1997 NIRC, as implemented by Sections 4.113-1(A)(2), (B)(l) and (2)(c) of RR No. 16-2005, provides that a VAT taxpayer shall, for every lease of goods or properties and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the following information:

Sections 113(A)(2), (B)(l), (2)(c) and (3) of the 1997 NIRC SEC. 113. Invoicing and Accounting Requirements for VAT- Registered Persons. -

(A)

Invoicing

Requirements.

A

VAT-registered

person shall issue:

XXX

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

(B)

Information Contained in the VAT Invoice or VAT

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

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

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

XXX

CTA CASE NOS. 8482,8513,8560 & 8611 or printed prominently on the invoice or receipt;

XXX

(3)The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and Sections 4.113-1(A)(2), (B)(l) and (2)(c) ofRR No. 16-2005 SECTION 4.113-1. Invoicing Requirements.- (A) A VAT-registered person shall issue:-

XXX

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

Only VAT-registered persons are required to print their TIN followed by the word 'VAT' in their invoice or official receipts. Said documents shall be considered as a 'VAT Invoice' or VAT official receipt.

All

purchases covered by invoices/receipts other than VAT invoice/VAT Official Receipt shall not give rise to any input tax.

VAT

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

(B) Information contained in VAT invoice or VAT official receipt. -The following information shall be indicated in VAT invoice or VAT official receipt:

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

MONTH

january

February

March

April

May

june

July

August

September

October

November

December

CTA CASE NOS. 8482, 8513, 8560 & 8611

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

XXX

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

Based on the foregoing provisions, the foreign currency remittances referred to under Section 108(B)(2) of the 1997 NIRC must likewise be supported by VAT zero-rated official receipts. To prove that it rendered services to its foreign affiliates and was paid in US Dollars duly accounted for in accordance with the rules and regulations of the BSP for the four quarters of CY 2010, petitioner presented VAT zero-rated official receipts22s, VAT zero- rated invoices229, Schedule of Sales23o, Citibank Customer's Advice - Incoming Foreign Payment231, and Schedule of Sales and Bank Credit Memo232, which were examined by the Court-commissioned ICP A, Ms. Constantino. In the Amended ICPA Report233 dated November 8, 2013, Ms. Constantino presented the monthly zero-rated sales, as follows:

JHLIC

MIL

MLIC

I PHP 352,499,844.71 I PHP 85,990,659.85 I PHP 742,379,065.34 I PHP 1,209,036.57 I PHP 5,986,246.43

PHP

7,827.99 PHP 1,188,072,680.89

Less: Zero-rated Sales per VAT Return

1st Quarter (Exhibit "P-1701")

Php

276,172,047.36 2nd Quarter (Exhibit "P-18") 301,265,898.75 3rd Quarter (Exhibit "P-19") 302,356,407.12 4th Quarter (Exhibit "P-34") 311,871,361.51

Php

1,191,665,714.74

DIFFERENCE

PHP

(3,593,033.85) Petitioner alleges that the reason for the variance of the amount per schedule and per VAT returns is the different foreign exchange rates used.234 In this connection, the Court will use the amount of Php1,188,072,680.89 as the reference for zero-rated sales. The Court agrees with the findings of the ICPA that zero-rated sales amounting to Php15,028,541.19 (Php5,930,234.31 plus Php9,098,306.88) should be disallowed for not being properly supported with official receipts, broken down as follows:

DETAILS

PHP 1,188,072,680.89 --- ---- From the summary of zero-rated sales23s, it can be seen that for the period January to December 2010, petitioner serviced six (6) customers which are allegedly non-resident foreign companies doing business outside the Philippines. To comply with the third requisite, a "non-resident foreign corporation doing business outside the Philippines" for the purpose of proving zero-rated sales in a claim for refund of input VAT, each entity must be supported, at the very least, by both (1) SEC Certificate 234 Box of Evidence 1, Exhibit "P-60," Amended !CPA Report on the Results of the Procedures Performed Relative to the Claim for Refund/Tax Credit Representing Excess Input Value Added Tax (VAT) for the Period Januan; 2, 2010 to December 31, 2010, Exhibit "P-60," par. 4., p. 7, 235 Id., Annex 3, pp. 1-5.

CTA CASE NOS. 8482,8513,8560 & 8611 of Non-Registration of Corporation/Partnership, and (2) Certificate/ Articles of Foreign Incorporation/ Association/Registration. A perusal of the documents presented reveals that petitioner presented both documents for JHLIC and MIL only, viz.:

ENTITY

SEC CERTIFICATE

ARTICLES OF

OF NON-REGISTRATION

INCORPORATION

JHLIC

P-48

P-56

MIL

P-47

P-55

TMLIC

None

Elliot and Page Limited

None

MIB

P-51

None

Manulife Singapore Pte. Ltd.

P-59

None

From the aforementioned, only sales from JHLIC and MIL are considered zero-rated amounting to Php435,358,091.85 (See Annex 1 for details).

However, this amount is further reduced to Php397,157,889.80 because there were out-of-period sales amounting to Php38,200,202.05 incurred in the fourth quarter of the claim period, broken down as follows:

EXHIBIT

CUSTOMER

OR

OR DATE

AMOUNT

NUMBER

P-1434

Manulife International Ltd

01988 1/31/11

Php

2,050,711.68

P-1435

Manulife International Ltd

01989 1/31/11 4,090,387.02

P-1436

Manulife International Ltd

01990 1/31/11 1,573,474.70

P-1650

John Hancock Life Insurance Company

02017 1/31/11 222,088.14

P-1651

John Hancock Life Insurance Company

02018 1/31/11 268,373.74

P-1652

John Hancock Life Insurance Company

02024 1/31/11 116,861.90

P-1653

John Hancock Life Insurance Company

02025 1/31/11 642,232.08

P-1654

John Hancock Life Insurance Company

02031 1/31/11 1,657,258.32

P-1655

John Hancock Life Insurance Company

02032 1/31/11 11,131,569.71

P-1656

John Hancock Life Insurance Company

02033 1/31/11 726,070.18

P-1657

John Hancock Life Insurance Company

02034 1/31/11 105,518.86

P-1658

John Hancock Life Insurance Company

02035 1/31/11 1,091,067.10

P-1659

John Hancock Life Insurance Company

02036 1/31/11 537,643.38

P-1660

John Hancock Life Insurance Company

02037 1/31/11 1,362,263.86

P-1661

John Hancock Life Insurance Company

02038 1/31/11 668,050.05

P-1662

John Hancock Life Insurance Company

02039 1/31/11 390,419.89

P-1663

John Hancock Life Insurance Company

02040 1/31/11 795,345.90

P-1664

John Hancock Life Insurance Company

02046 1/31/11 320,043.07

P-1665

John Hancock Life Insurance Company

02047 1/31/11 260,279.92 !

P-1666

John Hancock Life Insurance Company

02051 1/31/11 818,168.18

P-1667

John Hancock Life Insurance Company

02058 1/31/11 173,996.68 I

P-1668

John Hancock Life Insurance Company

02059 1/31/11 569,800.29

P-1669

John Hancock Life Insurance Company

02064 1/31/11 766,222.92

P-1670/P-1671

John Hancock Life Insurance Company

02015/02016 1/31/11 1,250,398.59

P-1672 to P-1674

John Hancock Life Insurance Company

02026to 02028 1/31/11 4,996,557.74

P-1675/P-1676

John Hancock Life Insurance Co.

02029/02030 1/31/11 1,615,398.15

TOTAL

PHP

38,200,202.05 Consequently, only the portion of the input VAT claim attributable to the substantiated zero-receipts will be considered for refund using the following rate:

(

CT A CASE NOS. 8482, 8513, 8560 & 8611

VALID ZERO-

CY2010

RATED SALES

(A)

1st Quarter

Php

99,521,608.69 2nd Quarter 106,380,886.11 3rd Quarter 118,456,124.05 4th Quarter 72,799,270.95

DECLARED ZERO-

RATE

I

RATED SALES

(Bl

{A/BX100l j

Amortization

Php

762,635.46

Php

600,678.76

Php

1, 987,444.44

Php

1,374,754.40 I Input tax on cap. Goods NOT exceeding 1M 256,679.82 669,390.73 437,696.67 385,766.42 Input tax on cap. Goods exceeding 1M 1,155,080.26 1,396,537.50 - 611,822.47 Input tax on Goods 197,576.84 137,654.20 130,385.80 160,705.35 Input tax on services 9,626,027.13 2,279,741.94 1,699,026.49 2,221,431.08

TOTAL

11,951,768.46

Php

5,084,003.13

1. Input tax claimed on purchases of services which are properly substantiated for VAT purposes: a.

Properly supported by VAT REG TIN official receipts

I

Php

2.186,299.58 I

I

Annex 38

Properly supported by TIN VAT official receipts 5,310,641.15

Annex 38

2. Input tax claimed on domestic purchases of services supported by official receipts not dated within the quarter but within the period of claim: a.

8. Input tax claimed on domestic purchases of services supported by official receipts dated outside the period of claim: a.

Properly supported by TIN VAT invoices and official receipts

I

Php

1,175,572.44 I

I

Annex 97

Properly supported by VAT REG TIN invoices and official receipts 325,721.01

Annex 97

2. Input tax duimed on dom£>stic pun·hus£>s of cupital goods not excePdinp; 1 million supported by TIN VAT invoices not dated within the quarter but within the period of claim. 127,297.73 I

I

Annex 97

3. Input tax claimed on domestic purch. of cap goods not exceeding 1 million supported by VAT REG TIN invoices and ORs with Petitioner's address shown in the related invoice/OR. 92,123.50 I

I

Annex 97

4. Input tax claimed on domestic purchases of capital goods not exceeding 1 million supported by VAT REG TIN official receipts with signature on the altered input VAT amount. 18,358.20 I

I

Annex 97

5. Input tax claimed on domestic purchases of capital goods not exceeding 1 million supported by TIN VAT invoice but without Petitioner's TIN.

Php

5,629.28 I

Annex 97

502,357.14

Annex 114

TOTAL

PHP

19,043,956.30

PHP

2,322,942.94 With regard to the amortization of input VAT on purchases of capital goods exceeding Php1 million for the prior period, petitioner submitted official receipts and invoices237 supporting prior period purchases, quarterly schedule of amortization for the CY 2010238 and the lapsing schedule239.

Pursuant to Section 110(A)(2) of the 1997 NIRC, input VAT claims 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 Php1 Million, the claim for input tax should be spread over sixty (60) months or the estimated useful life of the capital goods, whichever is shorter. An evaluation and study of the schedules presented show that only the amortizations for the CY 2010 were claimed by petitioner.

Further review of the ICPA Report, together with the documents supporting the said amounts, reveal that input taxes amounting to Php1,700,873.78, in addition to Php2,341,301.14, should be disallowed for not being properly substantiated by VAT invoices or official receipts as prescribed under Sections 110(A), 113(A), 113(B), 237, and 238 of the 1997 NIRC, in relation to Sections 4.110-1, 4.110-8, and 4.113-1 of RR No. 16-2005, as amended. Below is the breakdown of the amount of Php1,700,873.78, to wit:

EXHIBIT

REGISTERED NAME OF SUPPLIER

INPUT TAX

REASON FOR EXCEPTION

1st Quarter

P-64

FILES ENTERPRISES MFG CORP.

Php

576.64 Handwritten VAT amount in a computerized invoice

P-270

EDUARDO G. TOLOSA 141,891.42 With noted alteration/ addition in the supporting OR without countersignature of the authorized representative of the supplier

P-407

PROFILES ASIA PACIFIC INC.

300.00 VAT not separately indicated

P-408

SUPERIOR MAINT. SERVICES INC.

19,026.21 Incorrect VAT amount

P-652 A

Great Year Industries Corporation Manila

41,845.06 Out of period invoice

Sub-Totallst Quarter

PHP

203,639.33 2nd Quarter 237 Box of Evidence 1, Exhibits "P-722" to "P-739a." 238 Exhibit Folder No.2, Exhibit "P-1701," Quarterly VAT Return for the First Quarter, Annexes, pp. 1- 4; Exhibit Folder No. 1, Exhibit "P-18," Quarterly VAT Return for the Second Quarter, Annexes, pp. 1- 4; Exhibit Folder No. 1, Exhibit "P-19," Quarterly VAT Return for the Third Quarter, Annexes, pp. 1-3. 239 Records, CTA Case Nos. 8482, 8513, 8560 & 8611, Vol. 5, Exhibit "P-702," pp. 2601-2615. (

CT A CASE NOS. 8482, 8513, 8560 & 8611

P-298

PICC

P-622

TOTAL VENTURES INC.

P-622

TOTAL VENTURES INC.

P-624

HOFFSMAN SYSTEMATIC DESIGNS, INC.

P-625

HOFFSMAN SYSTEMATIC DESIGNS, INC.

P-668 A

CWC INDUSTRIES INC.

P-668 B

CWC INDUSTRIES INC.

Sub-Total 2nd Quarter 3rdQuarter

P-314

MAXI CARE HEALTHCARE CORP.

P-323

FMR CORPORATION

P-323

FMR CORPORATION

P-324

FMR CORPORATION

P-334

STANDARD INSURANCE CO., INC.

P-335

STANDARD INSURANCE CO., INC.

P-336

UPS DELBROS INT'L EXPRESS LTD. INC

P-395

EDUPRO, INC.

P-398

EDUPRO, INC.

P-402

UP NORTH PROPERTY HOLDINGS, INC

P-403

UP NORTH PROPERTY HOLDINGS, INC

P-421

AL NAVARRO CASSEROLS FOOD SERVICES

P-422

PICC

Sub-Total 3rd Quarter 4th Quarter

P-211

PRO- BAG INDUSTRIES

P-212

MFC BISTRO FOODS CORPORATION

P-372

UP NORTH PROPERTY HOLDINGS, INC

P-373

SUPERIOR MAINTENANCE SERVICES INC.

P-404

BO LE ASSOCIATES PHILIPPINES, INC.

P-406

UP NORTH PROPERTY HOLDINGS, INC

P-640

HOFFSMAN SYSTEMATIC DESIGNS, INC. Sub-Total 4th Quarter

GRAND TOTAL

-··-··-- -·--- --

Php

96,428.57 VAT not separately indicated 2,678.57 Supported by pre-printed TAN VAT invoice then stamped with TIN VAT 78,214.29 Supported by pre-printed TAN VAT invoice then stamped with TIN VAT 3,126.72 Out of period invoice 18,760.32 Out of period invoice 2,622.60 Out of period invoice 15,735.60 Out of period invoice

PHP

217,566.67

Php

948.20 Over claimed input VAT 4,607.14 Stamped dated OR while all other details are handwritten.

1,071.43 Stamped dated OR while all other details are handwritten.

3,996.43 Stamped dated OR while all other details are handwritten.

1ST

2ND

ZERO RATED SALES

Exhibit

Ist Quarter

P-761

P-762

P-763

P-764

P-765

P-766

P-767

P-768

P-769

P-894.

P-895

P-896

P-897

P-898

P-899

P-900

P-901

P-902

P-903

P-904

P-905

P-906

P-907

P-908

P-909/P-910

P-911/P-912/P-913

P-914/P-915

P-916

P-917

P-918

P-919

P-920

P-921

P-922

P-923

P-924

P-925

P-926

P-927

P-928

P-929

P-930

P-931

P-932/P-933

P-934/P-935/ P-936

P-937/P-938

P-939

P-940

P-941

P-942

P-943

P-944

P-945

P-946

P-947

P-948

Customer

Manulife (International) Ltd

John Hancock Life Insurance Co.

OR Number

01134 01135 01136 01201 01202 01211 01273 01274 01275 01153 01163 01164 01165 01166 01167 01168 01169 01170 01174 01175 01179 01184 01189 01190 01151/01152 01158-01160 01161/01162 01222 01232 01233 01234 01235 01236 01237 01238 01239 01243 01244 01248 01255 01261 01262 01268 01220/01221 01227-01229 01230/01231 01295 01305 01306 01307 01308 01309 01310 01311 01312 01313

OR Date

2/26/10 2/26/10 2/26/10 3/30/10 3/30/10 3/30/10 4/30/10 4/30/10 4/30/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 2/26/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 3/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10 4/30/10

Annex 1

Amount

Php1,753,565.53 3,861,121.87 1,117,866.39 3,669,688.10 1,208,243.58 1,868,596.67 1,957,800.75 3,655,936.05 1,157,294.44 232,185.22 1,532,866.10 10,380,146.32 480,239.13 949,448.26 608,103.43 1,192,518.92 451,471.27 813,155.17 386,974.91 204,543.93 654,793.32 60,810.48 60,810.48 150,179.81 1,078,002.22 4,607,494.39 1,134,440.85 233,437.46 1,527,096.19 10,702,814.29 551,687.88 963,363.00 611,383.09 1,187,841.57 400,091.28 953,472.35 389,061.97 205,647.09 698,021.61 61,138.45 61,138.45 150,989.77 421,095.49 1,059,243.69 4,486,878.89 1,052,357.08 232,332.30 1,811,220.73 10,883,711.75 782,655.94 978,138.94 603,687.38 1,482,802.81 388,168.87 521,812.22 810,963.07 f CTA CASE NOS. 8482, 8513, 8560 8611

Page 2 of 6

MANULIFE DATA SERVICES, INC.

Annex1

ZERO RATED SALES

Exhibit

Customer

OR Number

OR Date

Amount

P-949

John Hancock Life Insurance Co.

01317 4/30/10 384,164.70

P-950

John Hancock Life Insurance Co.

01318 4/30/10 226,601.41

P-951

John Hancock Life Insurance Co.

01322 4/30/10 721,519.23

P-952

John Hancock Life Insurance Co.

01327 4/30/10 41,420.22

P-953

John Hancock Life Insurance Co.

01334 4/30/10 268,157.37

P-954

John Hancock Life Insurance Co.

01337 4/30/10 344,472.11

P-955

John Hancock Life Insurance Co.

01343 4/30/10 530,560.99

P-956/P-957

John Hancock Life Insurance Co.

01293/01294 4/30/10 1,168,958.24

P-958/P-959 /P-960

John Hancock Life Insurance Co.

01300-01302 4/30/10 4,578,183.79

P-961/P-962

John Hancock Life Insurance Co.

01497 7/30/10 3,857,661.42

P-974

Manulife International Ltd

01498 7/30/10 1,394,087.88

P-993

John Hancock Life Insurance Co.

01394 5/28/10 132,992.07

P-994

John Hancock Life Insurance Co.

01395 5/28/10 2,429,848.82

P-1111

John Hancock Life Insurance Co.

01369 5/28/10 225,339.62

P-1112

John Hancock Life Insurance Co.

01370 5/28/10 117,781.31

P-1113

John Hancock Life Insurance Co.

01380 5/28/10 1,691,561.07

P-1114

John Hancock Life Insurance Co.

01381 5/28/10 10,562,345.99

P-1115

John Hancock Life Insurance Co.

01382 5/28/10 760,144.87

P-1116

John Hancock Life Insurance Co.

01383 5/28/10 1,160,473.35

P-1117

John Hancock Life Insurance Co.

01384 5/28/10 588,905.20

P-1118

John Hancock Life Insurance Co.

01385 5/28/10 1,571,594.18

P-1119

John Hancock Life Insurance Co.

01386 5/28/10 601,884.46

P-1120

John Hancock Life Insurance Co.

01387 5/28/10 509,034.87

P-1121

John Hancock Life Insurance Co.

01388 5/28/10 807,697.00

P-1122

John Hancock Life Insurance Co.

01392 5/28/10 479,119.39

P-1123

John Hancock Life Insurance Co.

01393 5/28/10 264,115.12

P-1124

John Hancock Life Insurance Co.

01397 5/28/10 632,962.28

P-1125

John Hancock Life Insurance Co.

01402 5/28/10 59,693.19

P-1126

John Hancock Life Insurance Co.

01406 5/28/10 148,153.34

P-1127

John Hancock Life Insurance Co.

01411 5/28/10 642,440.25

P-1128

John Hancock Life Insurance Co.

01417 5/28/10 287,139.92

P-1129/P-1130

John Hancock Life Insurance Co.

01367/01368 5/28/10 1,249,110.95

P-1131/P-1132/P-1133

John Hancock Life Insurance Co.

01375-01377 5/28/10 4,311,610.85

P-1134/P-1135

John Hancock Life Insurance Co.

01378/01379 5/28/10 1,507,763.91

P-1136

John Hancock Life Insurance Co.

01443 6/30/10 230,424.63

P-1137

John Hancock Life Insurance Co.

01444 6/30/10 204,560.54

P-1138

John Hancock Life Insurance Co.

01453 6/30/10 1,637,638.48

P-1139

John Hancock Life Insurance Co.

01454 6/30/10 10,853,355.67

P-1140

John Hancock Life Insurance Co.

01455 6/30/10 915,388.29

P-1141

John Hancock Life Insurance Co.

01456 6/30/10 1,076,119.07

P-1142

John Hancock Life Insurance Co.

01457 6/30/10 603,492.35

P-1143

John Hancock Life Insurance Co.

01458 6/30/10 1,706,535.96

P-1144

John Hancock Life Insurance Co.

01459 6/30/10 640,068.41

P-1145

John Hancock Life Insurance Co.

01460 6/30/10 521,643.64

P-1146

John Hancock Life Insurance Co.

01461 6/30/10 825,171.49

I

CTA CASE NOS. 8482, 8513, 8560 8611

Page 3 of 6

MANULIFE DATA SERVICES, INC.

Annexl

ZERO RATED SALES

Exhibit

Customer

OR Number

OR Date

Amount

P-1147

John Hancock Life Insurance Co.

01466 6/30/10 519,139.84

P-1148

John Hancock Life Insurance Co.

01467 6/30/10 270,657.24

P-1149

John Hancock Life Insurance Co.

01471 6/30/10 656,581.62

P-1150

John Hancock Life Insurance Co.

01476 6/30/10 61,171.79

P-1151

John Hancock Life Insurance Co.

01480 6/30/10 149,041.04

P-1152

John Hancock Life Insurance Co.

01481 6/30/10 658,353.47

P-1153

John Hancock Life Insurance Co.

01492 6/30/10 470,556.51

P-1154/P-1155

John Hancock Life Insurance Co.

01441/01442 6/30/10 1,422,809.16

P-1156/P-1157

John Hancock Life Insurance Co.

01451/01452 6/30/10 1,550,349.49

P-1158

John Hancock Life Insurance Co.

01518 7/30/10 234,554.98

P-1159

John Hancock Life Insurance Co.

01519 7/30/10 274,883.42

P-1160

John Hancock Life Insurance Co.

01530 7/30/10 1,614,247.74

P-1161

John Hancock Life Insurance Co.

01531 7/30/10 10,785,885.67

P-1162

John Hancock Life Insurance Co.

01532 7/30/10 905,706.33

P-1163

John Hancock Life Insurance Co.

01533 7/30/10 924,593.08

P-1164

John Hancock Life Insurance Co.

01534 7/30/10 597,163.16

P-1165

John Hancock Life Insurance Co.

01535 7/30/10 1,723,745.79

P-1166

John Hancock Life Insurance Co.

01536 7/30/10 650,790.09

P-1167

John Hancock Life Insurance Co.

01537 7/30/10 528,728.51

P-1168

John Hancock Life Insurance Co.

01538 7/30/10 836,726.14

P-1169

John Hancock Life Insurance Co.

01543 7/30/10 528,779.91

P-1170

John Hancock Life Insurance Co.

01544 7/30/10 274,333.25

P-1171

John Hancock Life Insurance Co.

01548 7/30/10 657,446.27

P-1172

John Hancock Life Insurance Co.

01552 7/30/10 62,002.61

P-1173

John Hancock Life Insurance Co.

01556 7/30/10 273,369.07

P-1174

John Hancock Life Insurance Co.

01557 7/30/10 664,261.77

P-1175

John Hancock Life Insurance Co.

01563 7/30/10 344,467.96

P-1176/P-1177

John Hancock Life Insurance Co.

01516/01517 7/30/10 1,424,071.97

P-1178/P-1179/P-1180

John Hancock Life Insurance Co.

01525-01527 7/30/10 4,409,874.83

P-1181/P-1182

John Hancock Life Insurance Co.

01598 8/31/10 233,941.24

P-1341

John Hancock Life Insurance Co.

01599 8/31/10 122,274.57

P-1342

John Hancock Life Insurance Co.

01605 8/31/10 114,770.63

P-1343

John Hancock Life Insurance Co.

01612 8/31/10 1,662,019.95

P-1344

John Hancock Life Insurance Co.

01613 8/31/10 10,486,464.39

P-1345

John Hancock Life Insurance Co.

01614 8/31/10 790,606.42

P-1346

John Hancock Life Insurance Co.

01615 8/31/10 111,158.44

P-1347

John Hancock Life Insurance Co.

01616 8/31/10 867,001.99

P-1348

John Hancock Life Insurance Co.

01617 8/31/10 611,371.45

P-1349

John Hancock Life Insurance Co.

01618 8/31/10 1,776,794.75

P-1350

John Hancock Life Insurance Co.

01619 8/31/10 732,727.69

P-1351

John Hancock Life Insurance Co.

01620 8/31/10 528,454.13

P-1352

John Hancock Life Insurance Co.

01621 8/31/10 833,688.33

P-1353

John Hancock Life Insurance Co.

01626 8/31/10 623,156.40

P-1354

John Hancock Life Insurance Co.

01627 8/31/10 274,190.89

P-1355

John Hancock Life Insurance Co.

01631 8/31/10 657,115.75 ;I CTA CASE NOS. 8482, 8513, 8560 8611

Page 4 of 6

MANULIFE DATA SERVICES, INC.

Annex1

ZERO RATED SALES

Exhibit

Customer

OR Number

OR Date

Amount

P-1356

John Hancock Life Insurance Co.

01632

8/~J/10

115,715.80

P-1357

John Hancock Life Insurance Co.

01633 8/31/10 1,158,551.64

P-1358

John Hancock Life Insurance Co.

01634 8/31/10 266,146.79

P-1359

John Hancock Life Insurance Co.

01638 8/31/10 166,308.59

P-1360

John Hancock Life Insurance Co.

01639 8/31/10 657,854.02

P-1361

John Hancock Life Insurance Co.

01644 8/31/10 368,820.49

P-1362/P-1363

John Hancock Life Insurance Co.

01596/01597 8/31/10 1,441,774.84

P-1364/P-1365/P-1366

John Hancock Life Insurance Co.

01607-01609 8/31/10 4,365,220.55

P-1367 /P-1368

John Hancock Life Insurance Co.

01610/01611 8/31/10 1,558,328.42

P-1369

John Hancock Life Insurance Co.

01681 9/30/10 227,807.71

P-1370

John Hancock Life Insurance Co.

01682 9/30/10 119,327.98

P-1371

John Hancock Life Insurance Co.

01688 9/30/10 120,141.06

P-1372

John Hancock Life Insurance Co.

01695 9/30/10 1,603,400.44

P-1373

John Hancock Life Insurance Co.

01696 9/30/10 10,039,762.08

P-1374

John Hancock Life Insurance Co.

01697 9/30/10 759,358.14

P-1375

John Hancock Life Insurance Co.

01698 9/30/10 108,479.73

P-1376

John Hancock Life Insurance Co.

01699 9/30/10 724,000.62

P-1377

John Hancock Life Insurance Co.

01700 9/30/10 597,064.95

P-1378

John Hancock Life Insurance Co.

01701 9/30/10 1,546,536.59

P-1379

John Hancock Life Insurance Co.

01702 9/30/10 696,421.52

P-1380

John Hancock Life Insurance Co.

01703 9/30/10 463,914.23

P-1381

John Hancock Life Insurance Co.

01704 9/30/10 782,315.80

P-1382

John Hancock Life Insurance Co.

01709 9/30/10 488,381.05

P-1383

John Hancock Life Insurance Co.

01710 9/30/10 252,379.78

P-1384

John Hancock Life Insurance Co.

01714 9/30/10 713,101.33

P-1385

John Hancock Life Insurance Co.

01721 9/30/10 151,709.65

P-1386

John Hancock Life Insurance Co.

01722 9/30/10 650,876.60

P-1387

John Hancock Life Insurance Co.

01727 9/30/10 619,981.96

P-1388/P-1389

John Hancock Life Insurance Co.

01679/01680 9/30/10 1,287,949.88

P-1390/P-1391/P-1392

John Hancock Life Insurance Co.

01690-01692 9/30/10 4,286,037.68

P-1393/P-1394

John Hancock Life Insurance Co.

01693/01694 9/30/10 1,531,092.66 P-1395/P-1396/P-1397 /P- John Hancock Life Insurance Co. 01705-01708 9/30/10 10,744,760.20

P-1399

John Hancock Life Insurance Co.

01762 10/30/10 223,147.52

P-1400

John Hancock Life Insurance Co.

01763 10/30/10 116,886.92

P-1401

John Hancock Life Insurance Co.

01769 10/30/10 117,683.37

P-1402

John Hancock Life Insurance Co.

01776 10/30/10 1,579,968.99

P-1403

John Hancock Life Insurance Co.

01777 10/30/10 9,855,506.47

P-1404

John Hancock Life Insurance Co.

01778 10/30/10 743,824.18

P-1405

John Hancock Life Insurance Co.

01779 10/30/10 106,260.60

P-1406

John Hancock Life Insurance Co.

01780 10/30/10 1,047,723.10

P-1407

John Hancock Life Insurance Co.

01781 10/30/10 549,810.12

P-1408

John Hancock Life Insurance Co.

01782 10/30/10 1,422,449.29

P-1409

John Hancock Life Insurance Co.

01783 10/30/10 638,920.63

P-1410

John Hancock Life Insurance Co.

01784 10/30/10 433,207.26

P-1411

John Hancock Life Insurance Co.

01785 10/30/10 796,954.48

P-1412

John Hancock Life Insurance Co.

01791 10/30/10 498,747.48

P-1413

John Hancock Life Insurance Co.

01984 10/30/10 262,109.53

P-1414

John Hancock Life Insurance Co.

01796 10/30/10 632,504.40

P-1415

John Hancock Life Insurance Co.

01803 10/30/10 146,969.48

P-1416

John Hancock Life Insurance Co.

01804 10/30/10 637,561.81

P-1417

John Hancock Life Insurance Co.

01809 10/30/10 473,181.64

P-1418/P-1419

John Hancock Life Insurance Co.

01760/01761 10/30/10 1,280,439.89

P-1420 /P-1421/P-1422

John Hancock Life Insurance Co.

01771-01773 10/30/10 4,613,864.92

P-1423/P-1424

John Hancock Life Insurance Co.

01774/01775 10/30/10 1,554,099.62 Sub-total3rd Quarter 118,456,124.05 4th Quarter

P-1428

Manulife International Ltd

01816 11/30/10 2,061,744.30

I

CTA CASE NOS. 8482, 8513, 8560 8611

Page 5 of 6

MANULIFE DATA SERVICES, INC.

Annexl

ZERO RATED SALES

Exhibit

Customer

OR Number

OR Date

Amount

P-1599

John Hancock Life Insurance Co.

01847 11/30/10 219,363.26

P-1600

John Hancock Life Insurance Co.

01848 11/30/10 114,655.06

P-1601

John Hancock Life Insurance Co.

01854 11/30/10 115,436.30

P-1602

John Hancock Life Insurance Co.

01861 11/30/10 1,701,085.84

P-1603

John Hancock Life Insurance Co.

01862 11/30/10 10,233,168.18

P-1604

John Hancock Life Insurance Co.

01863 11/30/10 730,833.69

P-1605

John Hancock Life Insurance Co.

01864 11/30/10 104,231.64

P-1606

John Hancock Life Insurance Co.

01865 11/30/10 1,186,368.93

P-1607

John Hancock Life Insurance Co.

01866 11/30/10 518,676.47

P-1608

John Hancock Life Insurance Co.

01867 11/30/10 1,398,352.98

P-1609

John Hancock Life Insurance Co.

01868 11/30/10 730,991.24

P-1610

John Hancock Life Insurance Co.

01869 11/30/10 385,657.15

P-1611

John Hancock Life Insurance Co.

01870 11/30/10 781,737.29

P-1612

John Hancock Life Insurance Co.

01876 11/30/10 476,040.95

P-1613

John Hancock Life Insurance Co.

01877 11/30/10 257,104.77

P-1614

John Hancock Life Insurance Co.

01881 11/30/10 720,698.46

P-1615

John Hancock Life Insurance Co.

01888 11/30/10 144,171.03

P-1616

John Hancock Life Insurance Co.

01889 11/30/10 626,501.79

P-1617

John Hancock Life Insurance Co.

01894 11/30/10 579,041.27

P-1618/P-1619

John Hancock Life Insurance Co.

01845/01846 11/30/10 1,332,548.60

P-1620/P-1621/P-1622

John Hancock Life Insurance Co.

01856-01858 11/30/10 5,206,433.61

P-1623/P-1624

John Hancock Life Insurance Co.

01859/01860 11/30/10 1,499,994.82

P-1625

John Hancock Life Insurance Co.

01931 12/30/10 220,642.39

P-1626

John Hancock Life Insurance Co.

01932 12/30/10 186,619.85

P-1627

John Hancock Life Insurance Co.

01938 12/30/10 115,826.86

P-1628

John Hancock Life Insurance Co.

01945 12/30/10 1,653,185.03

P-1629

John Hancock Life Insurance Co.

01946 12/30/10 10,890,341.25

P-1630

John Hancock Life Insurance Co.

01947 12/30/10 709,239.93

P-1631

John Hancock Life Insurance Co.

01948 12/30/10 104,600.40

P-1632

John Hancock Life Insurance Co.

01949 12/30/10 1,108,551.02

P-1633

John Hancock Life Insurance Co.

01950 12/30/10 511,623.99

P-1634

John Hancock Life Insurance Co.

01951 12/30/10 1,371,301.21

P-1635

John Hancock Life Insurance Co.

01952 12/30/10 683,657.16

P-1636

John Hancock Life Insurance Co.

01953 12/30/10 386,961.95

P-1637

John Hancock Life Insurance Co.

01954 12/30/10 743,113.96

P-1638

John Hancock Life Insurance Co.

01960 12/30/10 319,525.26

P-1639

John Hancock Life Insurance Co.

01964 12/30/10 741,679.02

P-1640

John Hancock Life Insurance Co.

01971 12/30/10 143,762.57

P-1641

John Hancock Life Insurance Co.

01972 12/30/10 597,622.50

P-1642

John Hancock Life Insurance Co.

01977 12/30/10 543,385.03

P-1643/P-1644

John Hancock Life Insurance Co.

01929/01930 12/30/10 1,330,959.31

P-1645 /P-1646/P-1647

John Hancock Life Insurance Co.

01940-01942 12/30/10 4,860,569.01

P-1648/P-1649

John Hancock Life Insurance Co.

01943101944 12/30/10 1,549,483.48

P-1650

John Hancock Life Insurance Co.

02017 1/31/11 222,088.14

P-1651

John Hancock Life Insurance Co.

02018 1/31/11 268,373.74

P-1652

John Hancock Life Insurance Co.

02024 1/31/11 116,861.90

P-1653

John Hancock Life Insurance Co.

02025 1/31/11 642,232.08

P-1654

John Hancock Life Insurance Co.

02031 1/31/11 1,657,258.32

P-1655

John Hancock Life Insurance Co.

02032 1/31/11 11,131,569.71

I

CTA CASE NOS. 8482, 8513, 8560 8611

Page 6 of 6

MANULIFE DATA SERVICES, INC.

Annexl

ZERO RATED SALES

Exhibit

Customer

OR Number

OR Date

Amount

P-1656

John Hancock Life Insurance Co.

02033 1/31/11 726,070.18

P-1657

John Hancock Life Insurance Co.

02034 1/31/11 105,518.86

P-1658

John Hancock Life Insurance Co.

02035 1/31/11 1,091,067.10

P-1659

John Hancock Life Insurance Co.

02036 1/31/11 537,643.38

P-1660

John Hancock Life Insurance Co.

02037 1/31/11 1,362,263.86

P-1661

John Hancock Life Insurance Co.

02038 1/31/11 668,050.05

P-1662

John Hancock Life Insurance Co.

02039 1/31/11 390,419.89

P-1663

John Hancock Life Insurance Co.

02040 1/31/11 795,345.90

P-1664

John Hancock Life Insurance Co.

02046 1/31/11 320,043.07

P-1665

John Hancock Life Insurance Co.

02047 1/31/11 260,279.92

P-1666

John Hancock Life Insurance Co.

02051 1/31/11 818,168.18

P-1667

John Hancock Life Insurance Co.

02058 1/31/11 173,996.68

P-1668

John Hancock Life Insurance Co.

02059 1/31/11 569,800.29

P-1669

John Hancock Life Insurance Co.

02064 1/31/11 766,222.92

P-1670 /P-1671

John Hancock Life Insurance Co.

02015/02016 1/31/11 1,250,398.59

P-1672/P-1673/P-1674

John Hancock Life Insurance Co.

02026-02028 1/31/11 4,996,557.74

P-1675/P-1676

John Hancock Life Insurance Co.

02029/02030 1/31/11 1,615,398.15 Sub-total 4th Quarter 110,999,473.00

GRAND TOTAL

Php435,358,091.85 (

CTA CASE NOS. 8482, 8513, 8560 & 8611

Annex 38 - 1a 419,824.24 823,608.15 380,220.16 562,647.03 2,186,299.58 Annex 38 - 1b 3,610,911.02 312,454.18 1,177,941.16 209,334.79 5,310,641.15 Annex 38 - 2a 21,967.13 55,434.06 26,573.96 - 103,975.15 Annex 38 - 2b - 869,062.36 528.00 - 869,590.36 Annex 38 -3 5,320,471.99 - 674,14 - 5,321,146.13 Annex 38 - 4 20,406.94 9,804.21 8,206.92 - 38,418.07 Annex 38 - 5 4,500.00 - - 100,714.29 105,214.29 Annex 38 - 6 - - - 251,980.38 251,980.38 Annex 97 - la 158,101.24 337,871.49 350,926.67 328,673.03 1,175,572.43 Annex 97 - 1b 83,547.09 182,684.55 4,846.51 54,642.86 325,721.01 Annex 97 - 2 - 124,847.20 - 2,450.53 127,297.73 Annex 97 -3 10,200.00 - 81,923.50 ~ 92,123.50 Annex 97 - 4 - 18,358.20 - - 18,358.20 Annex 114 - la - - - 198,717.29 198,717.29 Annex 114 - 1b 652,723.12 942,533.97 413,105.19 2,008,362.28 Annex 114 - 2 - 454,003.53 - - 454,003.53 TOTAL Php = 10,391,355.68 | Php 4,258,936.88 | Php 2,149,717.38 | Php 2,243,946.36 | Php 19,043,956.30

Per Court's

Exception 203,639.33 217,566.67 936,916.85 342,750.93 1,700,873.78

Substantiated

Input VAT

Php 1,901,195.43 | Php 17,343,082.52 Php = 10,187,716.35 | Php 4,041,370.21 1,212,800.53 Percentage 36.04% 35.31% 39.18% 3.34%) ssid TOTAL PHP _3,671,652.97 | PHP _1,427,007.82 | PHP 475,175.25 | PHP 443,739.01 | PHP 6,017,575.05 Even though the claimed input VAT was carried over by petitioner in its succeeding VAT Returns/Declaration, the same remained unutilized until it was deducted as “VAT Refund/TCC Claimed” in its Quarterly VAT Returns or Monthly VAT Declaration”*!, thus, preventing the carry-over or application of the claimed input VAT in the next taxable periods.

WHEREFORE, premises considered, the consolidated Petitions for Review are hereby PARTIALLY GRANTED. Respondent is hereby ORDERED to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of SIX

MILLION SEVENTEEN THOUSAND FIVE HUNDRED SEVENTY

FIVE AND 5/100 PESOS (Php6,017,575.05) representing excess and unutilized input VAT for the four (4) quarters of CY 2010.

SO ORDERED.

LOVELL (VpAUTISTA

Associate Justice

240 Exhibit Folder No. 1, Exhibit “P-26,” Line 23D for the First Quarter of 2010, p. 1; Exhibit Folder No. 1, Exhibit “P-30,” Line 23D for the Third Quarter of 2010, p. 1.

241 Exhibit Folder No. 1, Exhibit “P-28,” Line 20D for the Second Quarter of 2010, p. 1; Exhibit Folder No. 1, Exhibit “P-35,” Line 20D for the Fourth Quarter of 2010, p. 1.

CT A CASE NOS. 8482, 8513, 8560 & 8611

WE CONCUR:

. FABON-VICTORINO Q!\.(. ~ ~- ~.:

MA. BELEN M. RINGPIS-LIBAN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

LOVELL~. BAUTISTA Asso1::te Justice

Chairperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.