Court of Tax Appeals · Second Division

Philex Mining Corporation vs. Commissioner of Internal Revenue

CTA Case No. 8553 March 31, 2015

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

PHILEX MINING

CORPORATION,

- versus-

SECOND DIVISION

Petitioner,

CTA Case Nos. 8553 & 8562

Members:

Castaneda, Jr., Chairperson

Casanova, and

Cotangco-Manalastas, JJ.

COMMISSIONER OF

Promulgated:

INTERNAL REVENUE,

MAR 3 1 Z015

Respondent.

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

- - - - - - - - -- - 7 --------X

:;.:if~! ..

DECISION

. , COTANGCO-MANALASTAS , ~ :

This case is a consolidation of two Petitions for Review separately filed by Philex Mining Corporation to seek the refund of the aggregate amount of P91 ,998,117.25, allegedly representing unutilized input value-added tax (VAT) paid on purchases of goods and services attributable to zero-rated sales during the second and third quarters of 20 10, broken down as follows:

CTA CASE NO.

PERIOD COVERED

AMOUNT OF CLAIM

8553

Second Quarter of 2010

p 41 ,715,585.491 8562

Third Quarter of 20 10

50,282,531.762

TOTAL

P91,998,117 .25

FACTS

Philex Mining Corporation (petitioner) is a domestic corporation organized under Philippine laws, with principal office at 27 Brixton St. Pasig City. Petitioner is engaged in the J-

erA case Nos. 8553 & 8562 mining business, including the exploration and operation of mine properties and the commercial production and marketing of mine products.

It is a VAT-registered taxpayer with VAT Registration Certificate No. 35-6-000731 effective October 29, 19873, and under Bureau of Internal Revenue (BIR) Form No. 2303 as of January 31, 1997.

Petitioner also has a duly approved Application for Zero-Rate effective April 12, 1998, pursuant to Section 4.100-3 of Revenue Regulations (RR) No. 7-95.4 The Commissioner of Internal Revenue (respondent) is the government official charged with the administration and enforcement of national internal revenue laws, including the granting of refund and tax credit of taxes erroneously or illegally collected. She holds office at the BIR National Office Building, BIR Road, Diliman, Quezon City. On March 11, 2004, petitioner entered into a Long Term

Gold and Copper Concentrates Sales Agreement with Pan

Pacific Copper Co., Ltd.s Likewise, petitioner and Louis Dreyfus Commodities Metals Suisse SA executed Contract No. P-100.00081 on August 16, 2007, for the sale of copper concentrates. 6 Petitioner filed its Quarterly VAT Returns for the second and third quarters of 2010 on July 22, 2010 and on October 19, 2010, respectively.

It subsequently amended the Quarterly VAT Return for the second quarter7 on February 13, 2012 to reflect the total zero-rated sales of P2,452,792,258.64, VATable sales/receipts of P27,777,801.60 with output tax of P3,333,336.19, importation of goods of P271,292,991.67, with input tax of P32,555, 159.00, and purchase of services of P104,114,689.00 with input tax of P12,493,762.68. It likewise amended the Quarterly VAT Return for the third quarters of 2010 on February 13, 2012 to reflect the total zero-rated sales of P4,257,201 ,223.97,

VATable

sales/receipts of P9,848,767.09 with output tax ofP¹,181,852.05, importations of P250,068,525.00 with input tax of P30,008,223.00, and{-

purchase of services of P178,801,340.09 with input tax of P21,456,160.81.9 On June 7, 2012 and June 22, 2012, petitioner filed its claims for refund of the amounts of P45,048,921.68 and P51,464,383.81 for the second and third quarters of 2010, respectively, with the

One-Stop

Shop

Center

of the Department of Finance (DOF -OSS) per Claimant Information Sheet Nos. 62442 and 22002. 10 Petitioner also attached the letters both dated May 4, 2012 to the aforesaid claims, containing a list of supporting documents. II Due to alleged inaction of respondent, petitioner filed two separate Petitions for Review on October 9, 2012 (CTA Case No. 8553) and on October 25, 2012 (CTA Case No. 8562). In the Answer12 filed on November 29, 2012 in CTA Case No. 8553, respondent interposed the following special and affirmative defenses:

"4. Petitioner's claim for tax refund is subject to administrative investigation and/ or examination by the respondent;

5. Taxes paid and collected are presumed to have been paid in accordance with law and regulations, hence, not refundable;

6. Moreover, in order to validly claim for tax refund, it is imperative for petitioner to prove its compliance with the following, viz:

A. The registration requirements of a Value-Added taxpayer under the pertinent provision of the National Internal Revenue Code (NIRC) of 1997, as amended and its implementing revenue regulations; B. The invoicing and accounting requirements for VAT- registered persons, as well as the filing and payment of VAT pursuant to the provisions of Section 113 and 114 of the National Internal Revenue Code (NIRC) of 1997, as amended . Failure to comply with the invoicing requirem ents on the y

documents supporting the sale of goods and services will result in the disallowance of the claim for input tax of the taxpayer claimant (Revenue Memorandum Circular No. 42- 2003).

C. The submission of complete documents in support of the administrative claim for tax refund pursuant to Section 112 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, otherwise, there would be no sufficient compliance with regard to the filing of administrative claim for tax refund which is a condition sine qua non prior to the filing of such claim;

D. That the input taxes of P41 ,715,585.49 allegedly representing excess and unutilized input taxes for the 2nd Quarter of 2010, were:

1. Paid by petitioner;

2. Attributable to its zero-rated or effectively zero- rated sales; and

3. Such input taxes paid should not have been applied against any output tax. E. The petitioner's claim for tax refund allegedly representing excess and unutilized input taxes for the 2nd Quarter of 2010 in the amount of P41,715,585.49 was filed within two (²) years after the close of the taxable quarter when the sales were made in accordance with Section 112 (A) of the National Internal Revenue Code (NIRC) of 1997, as amended.

7. Accordingly, the claimants of those refunds bear the burden of proving the factual basis of their claims and of showing, by words too plain to be mistaken, that the legislature intended to exempt them;

8. And finally, basic is the rule that tax refunds are in the nature of tax exemptions and are to be construed strictissimi juris against the entity claiming the same. Moreover, statutes in derogation of sovereignty such as those containing exemption from taxation should be strictly construed in favor of the State. In this regard, taxa tion is the rule and exemption is the exception. The law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted." v On December 21, 2012, respondent filed her Answer13 in CTA Case No. 8562, alleging the same special and affirmative defenses as stated in the Answer filed in CT A Case No. 8553 with the only difference of the amount of claim and period covered (i.e., P50,282,531.76 for the 3rd Quarter of 2010) stated in subparagraphs D and E of paragraph 6. Petitioner's two Pre-Trial Briefs for CTA Case Nos. 8553 and 8562 were both filed on January 9 , 2013.14 On February 14, 2013, the Court granted the motion to consolidate the two cases and the motion to commission an Independent Certified Public Accountant (CPA) for the case. 15 Petitioner submitted its Consolidated Pre-Trial Brief16 on March 22, 2013; while respondent filed her Pre-Trial Brief17 on May 2, 2013.

The parties submitted their Stipulation of Facts and lssues18 on May 17, 2013. In the Pre-Trial Order19 dated May 28, 2013, the Court approved the parties' stipulations and terminated the pre-trial.

On June 21 , 2013, the Pre-Trial Order2o was amended.

During trial, petitioner presented Eileen C. Rodriguez and Albert G. Alba as its witnesses. On the other hand, respondent presented Ma. Cleofe T. Tasarra as her sole witness.

The parties likewise presented their respective do cum en tary evidence.

The case was submitted for decision on May 13, 2014,21 considering petitioner's Memorandum22 filed on February 25, 2014 and respondent's Memorandum23 filed on May 6 , 2014. {-

ISSUE

The parties jointly stipulated and submitted to the Court for resolution the following issue24 : "Whether or not Petitioner is entitled to the refund or tax credit of the alleged excess and unutilized input taxes in the total amounts of P45,048,921.68 and P51,464,383.81 for the 2nd and 3rd quarters of 20 10, respectively, due to Petitioner being an exporter of mineral products."

RULING OF THE COURT

Petitioner anchors its claim for refund on Section 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, which provides:

"SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-rated or Effectively Zero-rated Sales. -

Any

VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(l),

(2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales." V

24 Statement of the Issues, SF!, docket, p. 151

Based on the above-quoted provision, a taxpayer engaged in zero-rated or effectively zero-rated sales is entitled to a refund or tax credit of unutilized input VAT attributable to such zero-rated or effectively zero-rated sales upon compliance with the following requisites:

1. that there must be zero-rated or effectively zero- rated sales;

2. that input taxes were incurred or paid;

3. that such input taxes were attributable to zero- rated or effectively zero-rated sales;

4. that the input taxes were not applied against any output VAT liability; and

5. that the claim for refund was filed within the two- year prescriptive period.

This Court finds it appropriate to determine first petitioner's compliance with the fifth requisite pertaining to the timeliness of the filing of the instant claim, since it will determine the necessity of resolving petitioner's compliance with the other requisites.

As categorically stated under Section 112(A) of the NIRC of 1997, as amended, the application for tax credit certificate or refund must be filed within two years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made.

The present claim covers the second and third taxable quarters of 2010, which closed on June 30, 2010 and September 30, 2010, respectively. Counting two years from these dates, petitioner had until June 30, 2012 and September 30, 2012, within which to file its administrative claim for refund for the second and third quarters of 2010, respectively. Thus, petitioner's administrative claims for refund filed on June 7, 2012 and June 22, 2012 with the DOF-OSS under Claimant Information Sheet Nos. 6244225 and 2200226 for the amounts of P45,048,921.68 and P51,464,383.81, respectively, are well within the two-year prescriptive period prescribed under Section 112(A) of the NIRC of 1997, as amended. t-

25 Exhibits "B" and "B-1 ".

26 Exhibits "C" and "C-1 ".

As to the timeliness of petitioner's judicial appeal, Section 112(C) of the NIRC of 1997, as amended, provides as follows: "SEC. 112. Refunds or Tax Credits of Input Tax.-

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 Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty

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

The above provision provides that the BIR Commissioner has 120 days from the date of submission of complete documents in support of the application for refund or tax credit within which to grant or deny the claim. In case of full or partial denial by the BIR Commissioner, the taxpayer's recourse is to file an appeal before this Court within 30 days from receipt of the decision of the BIR Commissioner. However, if after the 120-day period the BIR Commissioner fails to act on the application for refund or tax credit, the remedy of the taxpayer is to appeal the inaction of the BIR Commissioner to this Court within 30 days. Applying Section 112(C) of the NIRC of 1997, as amended, the following are the pertinent dates to petitioner's claim for refund: ~

CTA

Case

No.

8553 8562

Year

Date of Filing

2010 Admin istrative

Claim and

Submission of

Supporting

Documents

2nd quarter June 7, 201227 3rd quarter June 22, 201 228 End of 120 days End of 30 days

Date of Filing of for the BIR

from the

Judicial Claim

Commissioner

expiration of the to decide on the 120 days claim October 5, 2012 November 4, 2012 October 9, 2012 October 20, 2012 November 19, 2012 October 25, 2012 Based on the foregoing, the judicial claims were seasonably filed.

Notwithstanding, respondent contends that petitioner failed to prove that it complied with the submission of complete documents in support of its application for refund. It only presented the Claimant Information Sheet but without th e checklist of the documents submitted or the acceptance of those documents.

It cannot be presumed that these documents were submitted when petitioner filed its administrative claims.

It is upon petitioner to prove compliance with this requirement and to justify it by words too plain to be mistaken and too categorical to be misinterpreted. In the absence of the complete documents, the 120-day period will not run. Therefore, the filing of the judicial action in the CTA is premature.29 The Court finds respondent's argument untenable. The Manager of petitioner's Accounting Department, Ms. Eileen C. Rodriguez, in her Consolidated Judicial Affidavit30, testified that petitioner indeed submitted supporting documents, to wit:

"Q.

No. 8. - Is there any other document that proves that supporting documents were submitted to the OSS upon the filing of Claim Information Sheet No. 62442 on June 7, 2012?

No. 8. - Yes, sir. The OSS under the Dept. of Finance issued a n Official Receipt evidencing payment of filing fee ofPl,OOO and processing fee ofP150,000. V

XXX

27 Exhibits "8 ", "8 -1" and "8-2". 28 Exhibits "C", "C-1" and "C-2".

XXX

29 Respondent's Memorandum, docket (CTA Case No. 8553), p. 238. 30 Exhibit "A".

XXX

No. 10. -Why do you say that OR No. 0615555 proves that supporting documents were submitted to the OSS?

No. 10. - Philex has been filing quarterly claim for refund of excess input VAT for more than 10 years, and based on our experience the OSS does not accept the filing of a claim unless supporting documents are submitted, and it is only when supporting documents were submitted that the OSS accepts the payment for filing fee and processing fee for which they issue an OR.

XXX

No. 12. - You also mentioned that documents in support of the claim were filed together with the claim.

Was

there a checklist enumerating a general description of the supporting documents that were filed?

No. 12. -Yes, sir. It is in the form of a letter addressed to the OSS, listing and describing the supporting documents submitted, which is an attachment to Claim Information Sheet No. 62442.

XXX

No. 17.- Is there any other document that proves that supporting documents were submitted to the OSS upon the filing of Claim Information Sheet No. 22002 on June 22, 2012?

No. 17.- Yes, sir. The OSS under the Dept. of Finance issued an Official Receipt evidencing payment of filing fee of P1,000 and processing fee of P150,000.

XXX

No. 19. -Why do you say that OR No. 0615664 proves that supporting documents were submitted to the OSS?

No. 19. - Philex has been filing quarterly claim for refund of excess input VAT for more than 10 years, and based on our experience the OSS does not accept the filing of a claim unless supporting documents are submitted, and it is only when supporting documents were submitted that the OSS accepts the payment for/-- filing fee and processing fee for which they issue an OR."

Aside from the above testimony, petitioner, in two separate letters both dated May 4, 2012,31 applied for refund of its input VAT paid during the second and third quarters of 2010 in the amounts of P45,048,921.68 and P51,464,383.81, respectively, composed of input tax from importation of taxable goods and input tax from purchases of taxable services. Enclosed with the said letters are the following: a . Application for Tax Credit of Value Added Tax paid (BIR Form No. 2552)- (Folder No. 01);

b. Approved application for Zero rate (Photocopy) (Folder No. 01);

c. VAT Return for the second and third quarters of 2010 (Photocopy) BIR Form Nos. 2550M & 2550Q - (Folder No. 01);

d. VAT return showing TCC applied- (Folder No. 01);

e. Certification of Bank Dollar Remittances Photocopy (Folder No. 0 1);

f. Registration Certificate of Value Added Tax, Photocopy BIR Form No. 2303 (Folder No. 01);

g. Photocopy of VAT Registration payment for period of claim (Folder No. 0 1);

h. Reconciliation of Export Sales vs. Inward Remittances for the period (Folder No. 01);

1. Photocopy of Annual Income Tax Return (Folder No. 01); J. Photocopy of Audited Financial Statements complete with notes to FS duly received by BIR (Folder No. 01);

k. Sworn Statements of amount of sales declared with breakdown as to amount of zero-rated and taxable sales (Folder No. 0 1);

1. Sworn Statements that the company did not file any and/ or will not file any similar claim from the BOI, BOC and BIR (Folder No. 01);

m. Sworn Statements that the ending inventory as of close of the period being claimed has been used directly in the product exported (Folder No. 01);

n. Photocopy of Verification of Delinquent Accounts and Non-Availment from Revenue District Office (Folder No. 01);

o. Letter request address to executive director of DOF that our company has not filed similar claim covering the same period (Folder No. 0 1);

p. Photocopy of authorization from the company designating the con tact person Is (Folder No. 0 1);

q. Photocopy of BIR authority to use loose-leaf sales invoices (Folder No. 01); v

31 Exhibits "8-2" and "C-2".

r. Local purchases - Check Disbursement Register (CDR) (Folder No. 02); and

s. Purchases on importation (Folder No. 03). The term "complete documents" under Section 112(C) of the NIRC of 1997 should be understood to refer to those documents that are necessary to support the application for refund or tax credit certificate, as determined by the taxpayer. The BIR examiner can require the taxpayer to submit additional documents but the examiner cannot demand what type of supporting documents should be submitted.

Otherwise, the taxpayer will be at the mercy of the examiner, who may require the production of documents that the taxpayer cannot submit. Moreover, it is basic that respondent ought to know the tax records of all taxpayers. 32 Further, since the records do not show that a written notice was sent by the BIR informing petitioner that the aforesaid documents are incomplete or requiring petitioner to submit additional documents, the 120-day period started to run without interruption from June 7, 2012 and June 22, 2012, the dates when petitioner filed its administrative claims together with the supporting documents. This is in consonance with Revenue Memorandum Circular (RMC) No. 029-09, which states that:

III. Period within which Refund or a Tax Credit of Input Taxes shall be Made Section 112(C) of the Tax Code of 1997, as amended by Republic Act No. 9337, provides among others, that in proper cases, the Commissioner shall grant a refund or issue the tax credit certificate (TCC) for creditable input taxes within one hundred twenty ( 120) days from the date of submission of complete documents. For the purpose of defining "proper cases" in the said provision, the taxpayer/ claimant must have complied with the following conditions/requirements upon audit/verification of his/its claim:

a. Submission of complete documents necessary to determine and/ or ascertain the correctness of the return and the amount to be refunded/ credited; b . That all books of accounts and accounting records pertaining to the claim are immediately available to f

32 Diageo Philippines, Inc. vs. Commissioner of Internal Revenue, CT A Case Nos. 7846 and 7865, January 16, 201 2.

the concerned

Revenue

Officer

(RO)

for audit/ verification;

c. Any discrepancies/findings upon audit/verification shall be reconciled/ explained in writing by the taxpayer I claimant within five (5) days from receipt of the notification from the RO; and d . The taxpayer I claimant has signified his concurrence to the outcome of the audit/verification, which shall be evidenced by an Agreement Form.

In cases where taxpayer failed to comply with the above conditions/requirements, i.e., failure to present accounting books and records for audit/verification, additional documents to explain discrepancies/ findings are not submitted, taxpayer refuses or incurs delay in the submission of the Agreement Form, the running of the 120- day period shall stop from the date of notification to the taxpayer. Likewise, the running of the 120-day period shall be suspended in case a question of law arises during the conduct of audit/verification and/ or review of the claim for tax refund/ credit, and the issue is referred to the Legal Division or the Legal Service, as the case may be, for resolution and issuan ce of legal opinion, which should be rendered within thirty (30) working days from receipt of the request. (Emphasis supplied) Evidently, petitioner timely filed its appeal via Petitions for Review on October 9, 2012 and October 25, 2012, as both were filed well within the 30-day period after the 120-day period ended.

The Court shall now proceed to determine petitioner's compliance with the remaining requisites provided under Section 112(A) of the NIRC of 1997, as amended. Anent the first requisite, petitioner duly filed with the BIR its amended Quarterly VAT Returns for the second and third quarters of 2010, declaring, among others, the following: 2nd Quarter 3rd Quarter

(Exhibit "N- 1")

(Exhibit "N-2")

VATable Sales/Receipt

p 27 '777 ,801.60 p 9,848,767.09

Zero Rated Sales/Receipts

2,452,792,258.63 4,257,201 ,223. 97

Total Sales/ Receipts

2,480,570 060.23 4 267 049,991.06

Output Tax Due

p 3,333,336.19 p 1,181,852.05

Less: Allowable Input Tax

Input Tax Carried Over from Previous Quarter

Current Transactions

Importations of Goods Other than

Capital Goods

Domestic Purchase of Services

Total Input VAT from Current Transactions

Total Available Input Tax

Less: VAT Refund/TCC

Total Allowable Input Tax

229,611,748.51 233,245,621.93 32,555,159.00 30,008,223.00 12,493 762.68 21,456,160.81 45, 048, 921. 68 51,464,383.81 274,660,670.19 284,710,005.74 38,081,712.07 - 236,578,958.12 284,710,005.74

Tax Still Payable/ (Overpayment)

(P233,245,621. 93) (P283,528,153.69) The Court-commissioned Independent CPA, Mr. Albert G. Alba, noted in his Consolidated Report dated March 13, 2013,33 that petitioner's zero-rated sales for the second and third quarters of 2010 in the amounts of P2,452,792,258.63 and P4,257,201,223.97 have

US

dollar values of $54,158,665.00 and $94,909,000.00, respectively, consisting of the following: 34 2 nd Quarter 3 •d Quarter

Total

Particulars

(in US Dollar)

Provisional billings for direct export sales

Sales of Copper

Pan Pacific Copper Co., Ltd.

- 95,821,967.00 95,821,967.00

Louis Dreyfus Commodities Metals Suisse

54,276,046.00 - 54,276,046.00

Sales of Gold

Heraeus Ltd.

- 370,417.00 370,417.00

Subtotal

54,276,046.00 96,192,384.00 150,468,430.00 Adjustments to previous quarter's provisional billings Pan Pacific Copper Co., Ltd.

(91,477.00) (215,333.00) (306,810.00)

Louis Dreyfus Commodities Metals Suisse

(25,904.00) ( 1 ,068,051.00) (1 ,093,955.00)

Subtotal

(117,381.00) (1 ,283,384.00) (1,400,765.00) 54,158,665.00 94,909,000.00 149,067,665.00 Petitioner claims that the shipments and sales of its mineral products to Pan Pacific Copper Co., Ltd. of Tokyo, Japan and to Louis Dreyfus Commodities Metals Suisse SA of Switzerland are zero-rated pursuant to Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended, which states: "SEC. 106 . Value-added Tax on Sale of Goods or Properties. - V

33 Exhibit "F".

34 Exhibit "F", No.2 of the Findings, page 2.

(A) Rate and Base of Tax. -

XXX

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

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

(1) The sale and actual shipment of goods from the Philippines to a foreign country, irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the goods so exported and paid for in acceptable foreign currency or its equivalent in goods or services, and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);"

Based on the above quoted provision, In order for an export sale to qualify as zero-rated under

Section

1 06(A)(2)(a)( 1) of the NIRC of 1997, as amended, the following conditions must be present:

1.) there was sale and actual shipment of goods from the Philippines to a foreign country; 2.) the sale was made by a VAT registered person; 3.) the sale was paid for in acceptable foreign currency or its equivalent in goods or services; and 4.) the payment was accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas.

Corollary thereto, Sections 113(A)(1), (B)(1) and (2)(c) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1(A)(1), B(1) and (2)(c) of Revenue Regulations (RR) No. 16-05, as amended, prescribe that a VAT taxpayer, like herein petitioner, shall for every sale, barter or exchange of goods or properties, issue a VAT invoice which must contain the following information:

"SEC. 113. Invoicing and Accounting Requirements for VAT-Registered Pers ons. -r (A) Invoicing Requirements. - A VAT-registered person shall issue:

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

XXX

(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

(c) If the sale is subject to zero percent (0%) value- added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Emphasis supplied) "SEC. 4.113-1. Invoicing Requirements.- (A) A VAT-registered person shall issue:- ( 1) A VAT invoice for every sale, barter or exchange of goods or properties; and

XXX

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

Invoice/VAT Official

Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of his accounting records. ~

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

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

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

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;" (Emphasis supplied) In addition to the above-stated requirements, the invoices or receipts must be duly registered with the BIR as prescribed under Section 237 in relation to Section 238 of the NIRC of 1997, as amended, to wit:

"SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. - All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service. xxx" (Emphasis supplied) "SEC. 238. Printing of Receipts or Sales or Commercial Invoices. - All persons who are engaged in business shall secure from the Bureau of Internal Revenue an authority to print receipts or sales or commercial invoices before a printer can print the same.

No authority to print receipts or sales or commercial invoices shall be granted unless the receipts or invoices to be printed are serially numbered and shall show, among other things, the name, business style, Taxpayer Identification Number (TIN) and business address of the person or entity to use the same, and such other information that may be required by rules and regulations to be promulgated by the

Secretary

of Finance, upon recommendation of the Commissioner." v

Pursuant

to the foregoing provisions

of Section

106(A)(2)(a)(1) of the NIRC of 1997, as amended, in relation to Sections 113(A)(1), (B)(1) and (2)(c) of the same Code and Sections 4.113-1(A)(1), B(1) and (2)(c) of RR No. 16-05, any VAT registered person claiming VAT zero-rated direct export sales must present at least three (³) types of documents, to wit:

1. the sales invoice as proof of sale of goods;

2. the export declaration and bill of lading or airway bill as proof of actual shipment of goods from the Philippines to a foreign country; and

3. bank credit advice, certificate of bank remittance or any other document proving payment for the goods in acceptable foreign currency or its equivalent in goods and services. In other words, only export sales supported by these documents shall qualify for VAT zero-rating under Section 1 06(A)(2)(a)( 1) of the NIRC of 1997, as amended. Further, the sales invoices supporting the export sales must be registered with the BIR and contain all the required information under the law and regulations, such as the imprinted word "zero-rated" and the taxpayer's TIN-VAT number.

The fact that petitioner is a VAT-registered is not disputed. 35 As evidenced by Export Declarations36, Bills of

Lading/ Air

Waybill37,

Provisional

Invoices38

and

Final

Invoices39, petitioner indeed made sales and shipments of mineral products to Pan Pacific Copper Co., Ltd., Louise Dreyfus Commodities Metals Suisse SA and Heraeus Ltd. for the second and third quarter of taxable year 20 10. The Bills of Lading specifically indicate that the port of discharge of copper concentrates shipments is Saganoseki, Japan while the Air Waybill indicates that the destination of gold bullion shipment is Hong Kong. j--

35 Par. 3, Summary of Facts Admitted, SF I, docket (CT A Case No. 8553), p. 151 .

36 Exhibits "G-1" to "G-16".

37 Exhibits "G-1-a" to "G-16-a".

38 Exhibits "G-1-b" to "G-16-b".

39 Exhibits "G-1-c" to "G-16-c".

However, as aptly observed by the ICPA, petitioner's export invoice (Provisional Invoice No. Pad-Aurex 11740 and Final Invoice No. Pad-Aurex 11741) supporting the sales of gold to Heraeus Ltd. have no BIR authority to print. This logically leads to the conclusion that the said invoices were not duly registered with the BIR, in violation of Sections 113, 237 and 238 of the NIRC of 1997, as amended, and RR No. 16-05, as amended. Therefore, petitioner's sales to Heraeus Ltd. in the total amount of US$370,417.00 cannot be considered zero- rated sales.

The Court noted that the final invoices submitted by petitioner bear dates much later than the dates of shipment indicated in the bills of lading and provisional invoices. However, petitioner explained that the reason for the much later dates of the final invoices is the fact that under the term of payment specified in Clause 9 42 of the contract between petitioner and the Japanese buyer, the final payment shall be made only upon seller's presentation to buyer of a final invoice based on the final settlement weights, assays and quotations. Under the same clause, the buyer shall make a provisional payment to seller upon shipment, for 90°/o of the estimated value based on shipped weights and assays and metal prices, as determined by the seller. In other words, per contract, the seller (petitioner) issues two invoices to the buyer. The first, which the seller issues upon shipment, is the Provisional Invoice covering the 90°/o of the estimated value of the shipment, and the second is the Final Invoice, which the seller issues only after the seller and buyer have reached an agreement regarding the final settlement weights, assays, and quotation or final value of the shipment, which are determined or done after arrival of the shipment at the port of unloading. 43 A similar provision (Article 6) is likewise found in the contract with Louis Dreyfus Commodities Metals Suisse SA. 44 In other words, the considered date of the sale transaction is the shipment date indicated in the bill of lading. Considering that the bills of lading covering export sales of US$54,276,046.00 and US$96, 192,384.00 were all dated within the second and third quarters of 20 10, the related finalj-

40 Exhibit "G-11-b".

41 Exhibit "G-11-c".

42 Exhibit "0 ", Long Tenn Gold and Copper Concentrates Sales Agreement, Between Philex Mining Corporation and Pan Pacific Copper Co., Ltd.

43 Memorandum for the Petitioner, docket (CT A Case No. 8553), p. 212.

44 Exhibits "Q" and "Q-1".

invoices of which carry dates much later than the dates when the sales or shipments were made, are deemed valid. As to adjustments to correct billings for the previous quarter's shipments in the amount of (US$117,381.00) and (US$1,283,384.00) for the second and third quarter of 2010, respectively, this court finds the adjustments proper as shown by Export Declarations45, Bill of Ladings46,

Provisional

Invoices47, and Final Invoices48. However, petitioner failed to fully comply with the equally significant third requisite.

In his consolidated report, the ICPA stated that the export sales shown in the summary are paid in US dollars or its equivalent in Philippine peso through the banking system in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP). The ICPA, as shown in his report, accounted the inward remittances that allegedly correspond to the export sales taking in consideration the petitioner's Catch- up and Marketing Adjustments/Reversals, Customer's Debit Balances at the beginning and at the end of the period and bank charges, summarized as follows: 49 2nd Quarter 3rd Quarter

Total

Particulars

(in US Dollar)

Gross sales per Summary of Sales and

Remittance

54,158,665.00 94,909,000.00 149,067,665.00 Catch-up and marketing adjustments/reversals (3,092,259.00) (⁴, 17 1,445.00) (7,263, 704.00) Net sales 51,066,406.00 90,737,555.00 141,803,96 1.00 Customer's debit ba lance at beginning of _period 7,920,738.00 8,902,566.00 16,823 ,304.00 Customer's debit balance at end of period (8,902,566.00) (38,888,685.00) (47,791,251.00) Gross inward remittances 50,084,578.00 60,751,436.00 110,836,014.00 Bank charges (25.00) (52.00) (77.00) Inward remittance per bank certificates and passbook entries 50,084,553.00 60,751,384.00 110,835,937.00 The ICPA stated in his report that the remittances received are substantiated by original copies of certificates of inward remittances in the name of the petitioner and entries in~

45 Exhibits "G-4" to "G-6" and "G-12" to "G-16".

46 Exhibits "G-4-a" to "G-6-a" and "G-1 2-a" to "G-16-a".

47 Exhibits "G-4-b" to "G-6-b" and "G-12-b" to "G-16-b".

48 Exhibits "G-4-c" to "G-6-c" and "G-12-c" to "G-16-c".

49 Exhibit "F", No.8 of the Findings, p. 3.

the passbooks of local banks, namely, Union Bank, Banco de Oro, Philippine National Bank, and Bank of the Philippine Islands.

Per petitioner's Schedule of Export Sales so, zero-rated sales in the amount of US$54, 158,665.00 and US$94,909,000.00 for the second and third quarter of 2010 may be broken down as follows:

Second Quarter of 2010 (in US Dollar)

Provisional Invoice

Final Invoice

Amount

90%

Recorded in

Invoice

Provisional

Invoice the General

Exhibit

No.

Amount

Drawin~t

Exhibit

No.

Amount

Ledger

Current r;)uarter's Shipments G-1-b 2586 16,725,350.00 15,052,815.00 G-1-c 2593 15 9 16 380.00 17,282 865.00 G-2-b 2587 17,641,050.00 15,876,945.00 G-2-c 2595 16 006 015.00 17 126 542.00 G-3-b 2589 18,729 614.00 16,856,653.00 G-3-c 2599 18 957,235.00 19,866,639.00 subtotal 53,096,014.00 47, 786,413.00 50,879,630.00 54,276 046.00 Catch·up Adjustments to Prior Quarter's Shipments G-4-b 2581 18,387,935.00 16,549,141.00 G-4-c 2588 18,847,307.00 68,796.00 G-5-b 2583 16 973 702.00 15,276,332.00 G-5-c 2590 18,279 066.00 (160 273.00) G-6-b 2584 16,733,501.00 15,060,151.00 G-6-c 2592 16 844 873.00 (25,904.00) subtotal 52,095, 138.00 46,885, 624.00 53, 971,246.00 (11 7 381.00)

Total

105,191 152.00 94 672,037.00 104 850,876.00 54 158 665.00

Third Quarter of2010 (in US Dollar)

Provisional Invoice

Final Invoice

Amount

90%

Recorded in

Invoice

Provisional

Invoice the General

Exhibit

No.

Amount

Drawing

Exhibit

No.

Amount

Ledger

Current Quarter's Shipments

G-7-b 2591 18,991,938.00 17,092,744.00 G-7-c 2598 20,489,279.00 2 1,2 16,950.00 G-8-b 2594 19 277 539.00 17,349 785.00 G-8-c 2600 2 1 934,417.00 22 701 001.00 G-9-b 2596 22,399,587.00 20 159 628.00 G-9-c 2603 25,653,750.00 25,425,984.00 G- 10-b 2597 24,259, 166.00 2 1,833,250.00 G-10-c 2606 27 468,303.00 26,4 78,032.00

PAD-

AUREX

AU REX

G-1 1-b 117 350 966.00 3 15 869.00 G- 11-c 117 369 186.00 370 417.00 subtotal 85,279,196.00 76,751,276.00 95,914,935.00 96, 192,384.00

Catch-u I) Adjustments to Prior Quarter's Shipments

G-12-b 2583 16,973,702.00 15,276,332.00 G- 12-c 2590 18,279,066.00 - G-13-b 2584 16,733,501.00 15 060 15 1.00 G- 13-c 2592 16 844,873 .00 (614 8 16.00) G- 14-b 2586 16 725,350.00 15,052,815.00 G-14-c 2593 15 916 380 .00 (453,235.00) G- 15-b 2587 17 ,641,050.00 15 876,945.00 G-15-c 2595 16 006 015.00 (2 15 333.00) G- 16-b 2589 18 729,6 14.00 16 856 653.00 G-16-c 2599 18,957 235.00 - subtotal 86,803,217.00 78,122,896.00 86,003,569.00 (1,283,384.00)

Total

172,082,413.00 154,874,172.00 181,918,504.00 94,909,000.00

50 Exhibit "G".

erA Case Nos. 8553 & 8562

Based on the Schedule of Sales and Remittances51

together with the Schedule of Export Sales (with 90°/o Drawing)52, as shown in the table below, the 90°/o of the export sales per Provisional Invoices for the second and third quarter of 2010 shipments substantially corresponds to the inward remittances received by the petitioner. Notice, however, that for Provisional Invoice No. PAD-AUREX-117 with Final Invoice No. PAD-AUREX- 117, the inward remittance is more than the 90°/o Provisional Drawing. Moreover, Provisional Invoice No. 2597 with Final Invoice No. 2606, no inward remittance has yet been received, thus, remains collectible/receivable at the end of the third quarter of 20 10. Since petitioner did not submit any documentary eviden ce to support the alleged receivables were subsequently collected and accounted for in acceptable foreign currency, the same shall be disregarded in computing the correct amount of zero-rated sales.

Thus, out of the 90o/o Provisional Drawing in the total amount of US$124,537,689.00 for the second and third quarter's shipments, only US$102,757,710.00 has a corresponding inward remittance, computed as follows: Current Quarter's Shi ;»ments (in US Dollar

Amount

90%

Actual

Prov.

Final

Recorded in the

Provisional

Remittance per

Exhib

lnv. No.

General Ledger

Drawing

Bank Certificates

Difference

Second Quarter of 201 0

2586 2593 17,282,865.00 15,052,815.00 15,052,810.00

"H-1"

5.00 2587 2595 17,126,542.00 15,876,945.00 15,876,935.00

"H-2"

10.00 2589 2599 19,866,639.00 16,856,653.00 16,856,642.00 "H-4" 11.00 su btotal 54,276,046.00 47 786,413.00 47,786,387.00 26.00

Third Quarter of2010

2591 2598 21,216,950.00 17,092,744.00 17,092,744.00

"H-5"

- 2594 2600 22,701,001.00 17,349,785.00 17,349,785.00 "H-6" - 2596 2603 25,425,984.00 20,159,628.00 20,159,629.00

"H-9"

(1.00) 2597 2606 26,478,032.00 21,833,250.00 - 21,833,250.00

PAD-

AU REX

AUREX

117 117 370,417.00 315,869.00 369,165.00 "H-7" (53,296.00) subtotal 96, 192,384.00 76 751 276.00 54,971,323.00 21,779 953.00

Total

150,468,430.00 124,537 ,689.00 102,757,710.00 21,779,979.00 With regard to the Catch-up Adjustments to Prior Quarter's Shipments for the second and third quarter of 2010, only th e payments for the Provisional Invoice Nos. 2581, 2583 , 2584, 2586 and 2587 with the respective Final Invoice Nos'{- 51 Exhibit "H".

52 Exhibit "G".

Prov.

Inv.

No.

2588, 2590, 2592, 2593 and 2595, were inwardly remitted; while for the catch-up adjustment pertaining to Provisional

Invoice

No.

2589, with

Final

Invoice

No.

2599, n o corresponding inward remittance has yet been made. To wit: Catch-up Adjustments to Prior Quarter's Shipments in US Dollar) 90%

Balance -

Prov.

Final

Amount

Amount per

Provisional

Should Be

Inv.

Recorded in the

Final Invoice

Drawing

Remittance

Actual

No.

General Ledger

(a) (b) (a-b)

Remittance

Exhibit

Second Quarter of 2010

2581 2588 68 796.00 18 847 307.00 16 549,141.00 2,298 166.00 2 298 166.00

"H-3"

2583 2590 (160,273.00) 18 279 066.00 15 276,332.00 3,002 734.00 - 2584 2592 (25 904.00) 16 844 873.00 15 060,151.00 1 784 722.00 - subtotal (117,381.00) 53 971 246.00 46 885,624.00

7085 622.00

2 298 166.00 Third C ~arter of 2010 2583 2590 - 18,279,066.00 15,276,332.00 3,002,734.00 3 002 734.00

"H-10"

2584 2592 (614 8 16.00) 16 844 873.00 15 060 151.00 1 784 722.00 1 784 717.00

"H- 12"

2586 2593 (453,235.00) 15 9 16 380.00 15 052,815.00 863 565.00 863 555.00

"H-11"

2587 2595 (215 333.00) 16 006 015.00 15 876 945.00 129 070.00 129,060.00

"H-8"

2589 2599 - 18 957,235.00 16,856,653.00 2,100,582.00 - subtotal (1,283,384.00) 86,003,569.00 78, 122,896.00 7,880,673.00 5, 780,066.00

Total

(1,400,765.00) 139 974,815.00 125 008,520.00 14 966,295.00 8 078 232.00 In sum, the amount of US$46,048,285.00 representing the difference between export sales as recorded in the general ledger and the corresponding inward remittances for the second and third quarter's shipments shall be disallowed as zero-rated sales, as determined below:

(in US Dollar)

Amount Recorded in the General Ledger

Difference

Inward Remittance

(a-b)

Final

After the

Inv.

Current

Total

Current

Total

No.

Quarter

.Quarter

Ja)

Quarter

.Quarter (b)

Current Quarter's Shipments

Second Quarter o 2010 2586 2593 17,282,865.00 (453,235.00) 16,829,630.00 15,052,810.00 863,555.00 15 9 16,365.00 913,265.00 2587 2595 17,126,542.00 (215,333.00) 16,91 1,209.00 15,876,935.00 129,060.00 16,005,995.00 905,214.00 2589 2599 19,866,639.00 - 19,866,639.00 16,856,642.00 - 16,856,642.00 3,009,997.00 subtotal 54,276,046.00 (668 568.00) 53 607,478.00 47,786,387.00 992 615.00 48 779, 002. 00 4,828,476.00

Third Quarter of 2010

2591 2598 2 1,216,950.00 - 21,216,950.00 17,092,744.00 - 17,092,744.00 4,124,206.00 2594 2600 22,701,001.00 - 22,701,001.00 17,349,785.00 - 17,349 '785.00 5,351,216.00 2596 2603 25,425,984.00 - 25 425,984.00 20,159,629.00 - 20,159,629.00 5,266,355.00 2597 2606 26,478,032.00 - 26,4 78,032.00 - - - 26,478,032.00

PAD-

AURE

X 117

370,417.00 - 370,417.00 369,165.00 - 369,165.00 - subtotal 96, 192,384.00 - 96, 192,384. 00 54,971,323.00 - 54,971,323.00 41,219,809. 00 v

Catch-up Acijustments to Prior Quarter's Shipments

Second Quarter o 201 0 2581 2588 68,796.00 .

2583 2590 (160,273.001 .

2584 2592 (25,904.00) (614,816.001 subtotal {117 381.00) (614 816.00) 68,796.00 2,298,166.00 .

2,298,166.00 .

(160,273.001 .

3,002,735.00 3,002,735.00 .

(640,720.001 .

1,784,717.00 1,784,717.00 .

(732 197.00) 2,298 166.00 4 787 452.00 7,085 618.00 .

TOTAL

150,351,049.00 (1 283,384.001 149,067,665.00 105,055,876.00 5, 780,067.00 110,835,943.00 46,048,285.00 Accordingly, petitioner's export sales for the second and third quarter of 2010 with the net adjusted amount of US$49,330,189.00 and US$53,318,774.00, respectively, qualify for VAT zero-rating, to wit: 2nd Quarter 3 •d Quarter

Total

(in US Dolla r)

Zero-rated Sales

54,158,665.00 94,909,000.00 149,067,665.00

Less:

Sales without corresponding inward remittance 4,828,476.00 41 ,219,809.00 46,048,285.00 Sales of gold to Heraeu s Ltd.

- 370,417.00 370,4 17.00

Total

4,828,476.00 41,590,226.00 46,418,702.00

Adjusted Zero-rated Sales

49,330,189.00 53,318,774.00 102,648,963.00 After having resolved that petitioner had VAT zero-rated sales for the second and third quarters of 20 10 in the total amount of US$102,648,963.00,

We

proceed to the determination of whether petitioner incurred or paid input taxes in connection thereto and if said input taxes were not applied against any output VAT liability of petitioner. Petitioner's quarterly VAT Retum for the second and third quarter of 2010 reflected an input

VAT

of P62,563,382.00 on importations of goods other than capital goods and P33,949,923.49 on domestic purchases of services or in the total input VAT amount of P96,513,305.49, as shown below:

Input VAT on

2 nd Quarter 3 •d Quarter

Total

Importation of Goods (other than Capital Goods) p 32,555,159.00 p 30,008,223.00 p 62,563,382.00

Domestic Purchases of Services

12,493,762.68 2 1,456,160.81 33 949,923.49

Total Input VAT

p 45,048,921.68 p 51,464,383.81 p 96,513,305.49 To determine the accuracy of petitioner's declaration, the ICPA examined the voluminous documents of petitioner in support of its claim for refund. In his Report, the ICPA noted the following findings: V erA Case Nos. 8553 & 8562

Findin2s

Exhibit

2nd Quarter Input VAT on Importations of Goods (other than Capital Goods)

1. Supported by original

SSDTs/ BDAs/ BORs and IEIRDs

"I- 1" to

"I-65-a",

"I-96" to

a) Dated in the current quarter

"I- 112-a"

f> 22,939,828.00 b) Not dated in the current quarter

"I-113" to

Dated second quarter of 2009

"I- 113-a"

"I-114" to

Dated third quarter of 2009

"I-115-a"

"I-116" to

Dated fourth quarter of 2009

"I-117-a"

"I-66" to

"1-95-a",

"I- 118" to

Dated flrst quarter of 2010

"I-118-a"

9,342,980.00 "1- 119" to Da ted second quarter of 2010 "1-137-a" -

2. Supported by original SSDTs only

"J -1" to

a) Dated in the current quarter

"J -2"

235 577.00

3. No supporting documents 36 774.00 subtotal 32,555,159.00

Input VAT on Domestic Purchase of Services

1. Supported by original VAT official receipts that are in the name of the petitioner

"L-1" to

"L-47",

"L-79" to

a) Dated in the current quarter

"L-150"

12,358,392.06 b) Not dated in the current quarter

"L-48" to

Dated in the ftrst quarter of 2010

"L-77"

24,843.12

"L-15 1"

to Dated in the second quarter of 2010

"L- 166"

- "L-78", No date indicated

"L- 167"

27 456.00

2. No supporting documents 83,071.50 subtotal 12,493,762.68

Total Input VAT

p 45,048 921.68 3n1 Quarter

Total

f> 6,694,161.00 p 29,633,989 .00 2,208,473.00 2,208 473.00 4 ,226,927.00 4 ,226,927.00 1,550 679.00 1,550 679.00 770 ,691.00 10,113,67 1.00 14,395,881.00 14 395 881.00 - 235,577.00 161 ,411.00 198 185.00 30,008,223.00 62,563,382.00 2 1,262 ,626.82 33,621,018.88 - 24,843.12 12,780.2 1 12,780.21 1,460.36 28 916.36 179 293.42 262 364.92 2 1,456,160.81 33,949,923.49 p 51 464.383.81 p 96,513 305.49 Based on the above findings, petitioner's claim in the amount of P18,614,059.40 shall be disallowed for the reasons stated below:

Findings

Exhibit

2nd Quarter

Jrd Quarter

Total

Input VAT on Importations of Goods (other than Capital Goodsl

1. Supported by original

SSDTs/BDAs/BORs and IEIRDs

a) Not dated in the current quarter

"I-113" to

Dated second quarter of 2009

"I-113-a"

- r 2,208,473.00 r 2,208,473.00

"I- 114" to

Dated third quarter of 2009

"I-11 5-a"

- 4 ,226,927.00 4,226,927.00

"I-116" to

Dated fourth quarter of 2009

"I-11 7 -a"

- 1,550,679.00 1,550,679.00

"I-66" to

Dated first quarter of 20 10 "I-95-a", r 9,342,980.00 770,691.00 10, 113,671.00

2. No supporting documents subtotal

"I-118" to

"I-118-a"

Input VAT on Domestic Purchase of Services

1. Supported by original VAT official receipts that are in the name of the petitioner a) Not dated in the current quarter

"L-48" to

Dated in the first quarter of 2010

"L-77"

"L-78", No date indicated

"L-167"

2. No supporting documents subtotal

Total

36,774.00 161,411.00 198,185.00 9 ,379,754.00 8 ,918,181.00 18,297,935.00 24,843.12 - 24,843.12 27,456.00 1,460.36 28,916.36 83,071.50 179,293.42 262,364.92 135,370.62 180 753.78 316,124.40 P9,515, 124.62 P9,098,934.78 P18,614,059.40 Upon further review of the !CPA's report together with the petitioner's supporting documents, the Court finds that the input taxes in the amount of P1,141,906.03 on domestic purchases of services should be disallowed from petitioner's claim for not being properly substantiated by VAT official receipts as prescribed under Sections 110(A), 113(A) and (B), and 237 of the NIRC of 1997, as amended, in relation to Sections 4.110-1, 4. 110-8 and 4. 113-1 of Revenue Regulations (RR) No. 16-05, as amended. Below is the breakdown of the input taxes of P1 , 141 ,906.03: 2nd 3rd

Findings

Exhibit

Quarter

Total

A. Supported by Official Receipts with noted additions separating the amount of VAT without countersignature of the authorized representative of the supplier Syn Expeditors Int'l, Inc.

"L-2" , 777.90 - , 777.90 Airfreight 2100, Inc.

"L-11"

4,297.00 - 4,297.00 Safeway Warehousing, Inc.

"L-14"

920.84 - 920.84 Intertek Testing Services Phils., Inc.

"L-21"

21,226.04 - 2 1,226.04 Intertek Testing Services Phils., Inc.

"L-34"

10,511.78 - 10,511.78 McPhar GeoServices {Philippines), Inc.

"L-35"

54,912.00 - 54,912.00 Intertek Testing Services Phils., Inc.

"L-36"

64,786.72 - 64,786.72

Edsa Shangrila

"L-37"

2,066.16 - 2,066. 16 Intertek Testing Services Phils., Inc.

"L-38"

9,115.13 - 9,115.13 McPhar GeoServices (Philippines), Inc.

"L-43"

41 ,395.20 - 41,395.20 Intertek Testing Services Phils., Inc.

"L-44"

25,044.34 - 25,044.34 Philippine World Travel, Incorporated

"L-46"

108.00 - 108.00 McPhar GeoServices {Philippines), Inc. "L-47'' 21,727.20 - 2 1,727.20 SGS Philippines, Inc.

"L-87"

- , 1,220.54 1,220.54 Intertek Testing Services Phils., Inc.

"L-95"

- 33,203.53 33,203.53 Intertek Testing Services Phils., Inc.

"L-96"

- 6 1,393.65 61,393.65 Dus it Thani

"L-97"

- 23,714.56 23,714.56

Nutex Equipment Supply

"L-101"

- 7,275.00 7,275.00

Pacific Office Machines

Ford Libis

Sunny Smile Food Corporation

Cravings Bake Shop & Restaurant

Intertek Testing Services Phils., Inc.

Edsa Shangrila

Water Safe Supply, Inc.

McPhar GeoServices (Philippines), Inc. McPhar GeoServices (Philippines), Inc. McPhar GeoServices (Philippines), Inc.

Freshwind Sales & Marketing

lntertek Testing Services Phils., Inc.

Flavours of China Restaurant

Tazza Italia Cafe Corporation

UCC Coffee Shop

Aberdeen Court

Oliver's Super Sandwiches Phils., Inc. Burger Charlies Grind & Grill Corp. Intertek Testing Services Phils., Inc. Goldland Regen cy Mngt. Corp.

Carryboy Phils., Inc.

Holland Blooms Flower Shops, Inc. Intertek Testing Services Phils., Inc.

Edsa Shangrila

McPhar GeoServices (Philippines), Inc.

Edsa Shangrila

subtotal

"L-103"

"L-105"

"L-108"

"L-109"

"L-110"

"L-111"

"L-112"

"L-1 16"

"L-118"

"L-119"

"L-120"

"L- 121"

"L-122"

"L-123"

"L-124"

"L-125"

"L-126"

"L-129"

"L-132"

"L-134"

"L-136"

"L-1 37"

"L-140"

"L-142"

"L-148"

"L-149"

"L-150"

- 256 888.31 B. Supported by documents other than VAT Official Receipts Association of Int'l Shipping Lines, Inc.

"L-5"

16.07 Association of Int'l Shipping Lines, Inc.

"L-8"

2.68 Association of Int'l Shipping Lines, Inc.

"L-15"

29.49 Association of Int'l Shipping Lines, Inc.

"L-20"

2.68 Association of lnt'l Shipping Lines, Inc.

"L-25"

2.68 Association of Int'l Shipping Lines, Inc.

"L-31"

2.68 Association of Int'l Shipping Lines, Inc.