Coral Bay Nickel Corporation vs. Commissioner of Internal Revenue

DECISION

CASTANEDA, JR., J..:

In this Petition for Review, petitioner Coral Bay Nickel Corporation seeks to refund the total amount of P28,032,089.95, representing its excess and unutilized Input Value Added Tax from purchases of goods and services attributable to zero-rated sales for the taxable year 2011.

FACTS

Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission, with principal office address at Barangay Rio Tuba, Municipality of Bataraza, Palawan. It is a Value Added Tax (VAT)-registered entity with Certificate of Registration No. OCN 8RC0000035523 and assigned with Taxpayer's Identification pt--

CfA CASE NO. 8641

Number 005-961-540-000 VAT. 1 Likewise, it is registered with the Philippine Economic Zone Authority with Certificate of Registration No. 02-072 at the Rio Tuba Export Processing Zone. 2 Respondent is the Commissioner of the Bureau of Internal Revenue (BIR), duly appointed to exercise the powers and perform the duties of her office including, inter alia, the power to refund internal revenue taxes, fees, other charges, and penalties imposed in relation thereto. She holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. On September 1, 2011, petitioner entered into an Off-Take Agreemenf with Sumitomo Metal Mining Co., Ltd. (Sumimoto), allegedly a corporation organized and existing under the laws of Japan. Pursuant to said agreement, petitioner exported nickel cobalt mixed sulfide to Sumimoto. Petitioner filed with the BIR, through the Electronic Filing and Payment System (EFPS), its quarterly VAT Returns for the taxable year 2011 on the following dates: Quarter (Taxable Year 2011) Original Return Amended Return 1" April19 20114 2"d July 12 2011 5 May 28 20126 3"' October 17 20117 4'" January 18 20128 May 28 20129 On November 29, 2012, 10 petitioner filed with the Large Taxpayers Excise Audit Division I of the BIR its administrative claim for refund in the amount of P28,032,089.95, representing its unutilized input VAT for taxable year 2011. However, respondent failed to act on petitioner's administrative claim. Thus, on April 18, 2013, petitioner filed the instant Petition for Review.~

In her Answer, 11 respondent raised the following special and affirmative defenses: (¹) The Court has no jurisdiction over petitioner's claim for tax refund because petitioner failed to exhaust administrative remedies and it likewise failed to submit supporting documents with respect to its claim; (²) Petitioner failed to establish that it is entitled to its claim for refund; and (³) Claims for tax exemption must be justified by the clearest grant of the law. On November 7, 2013, both parties filed their Joint Stipulation of Facts and Issues. 12 On November 22, 2013, the Court issued the Pre-Trial OrderY To support its claim, petitioner presented witnesses Mr. Allen Roy T. Catacutan14 - Tax and Audit Officer of petitioner; Mr. John S. Barrientos15 - QS/CSR Manager of SMCC Philippines, Inc.; Engr. Zosimo Oliver P. Villa16 - A Geodetic Engineer; and Mr. Enrico T. Pizarro17 - Court Commissioned Independent Certified Public Accountant. Likewise, petitioner formally offered18 its evidence on September 5, 2014.

On the other hand, respondent's counsels manifested that they will not present evidence during the hearing19 held on October 13, 2014. As such, the Court ordered the parties to file their memoranda. Petitioner filed its Memorandum20 on December 10, 2014 while respondent failed to file the same. Subsequently, the instant case was submitted for decision on December 16, 2014. 21 Hence, this Decision. Jz.-

ISSUES

The parties submitted the following issues22 for resolution of the Court:

"Whether petitioner is entitled to refund or issuance of tax credit certificate in the amount of Twenty Eight Million Thirty Two Thousand Eighty Nine and 95/100 Pesos (P28,032,089.95) on its unutilized input VAT attributable to its zero rated sales for the period of January 1, 2011 to December 31, 2011. a.

Whether petitioner is engaged in zero-rated or effectively zero-rated sales; b.

Whether the input taxes being claimed are due or paid;

c.

Whether the input taxes being claimed have not been applied against output taxes and in the succeeding quarters;

d.

Whether the input taxes are attributable to zero-rated or effectively zero-rated sales; e.

Whether the claim is filed within two years after the close of the taxable quarter when such sales were made;

f.

Whether petitioner has provisions of Section 112 of the amended, in the prescriptive administrative and judicial claims issuance of tax credit; and complied with the NIRC of 1997, as period for filing for refund and/or g.

Whether petitioner has exhausted all administrative remedies before filing the judicial claim." '1-z..-- 22 Summary of Issues to be Resolved, JSFI, Docket, pp. 322-323.

DEQSION

To encapsulate, the main issues to be resolved in this case are: {1) Whether the Court has jurisdiction to entertain the instant Petition; and (2) Whether petitioner is entitled to its claim for refund or tax credit.

DISCUSSION

The Court has jurisdiction to entertain the instant Petition Section 112 (A) and (C) of the National Internal Revenue Code of 1997, as amended (NIRC of 1997, as amended), 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){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 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." XXX XXX 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 9z_ erA CASE NO. 8641 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."

In the case of Commissioner of Internal Revenue vs. San Roque Power Corporation, 23 the Supreme Court held that: "Section 112(D) of the 1997 Tax Code is clear, unequivocal, and categorical that the Commissioner has 120 days to act on an administrative claim. The taxpayer can file the judicial claim (1) only within thirty days after the Commissioner partially or fully denies the claim within the 120- day period, or (2) only within thirty days from the expiration of the 120- day period if the Commissioner does not act within the 120- day period.

There can be no dispute that upon effectivity of the 1997 Tax Code on 1 January 1998, or more than five years before San Roque filed its administrative claim on 28 March 2003, the law has been clear: the 120- day period is mandatory and jurisdictional. San Roque's claim, having been filed administratively on 28 March 2003, is governed by the 1997 Tax Code, not the 1977 Tax Code. Since San Roque filed its judicial claim before the expiration of the 120-day mandatory and jurisdictional period, San Roque's claim cannot prosper." In the case of Commissioner of Internal Revenue v. Dash Engineering Philippines, Inc., 24 the Supreme Court explained that the 2- year period under Section 112(A) of the NIRC of 1997, as amended, applies only to the filing of administrative claims. ~

Thus, petitioner may file its administrative claim within two (2) years after the close of the taxable quarter when the sales were made. Consequently, it may file a judicial claim: (1) within thirty days after the Commissioner partially or fully denies the claim within the 120-day period; or (2) within thirty days from the expiration of the 120-day period if the Commissioner does not act within the 120-day period.

In the instant case, the claim covers the four taxable quarters of 2011. Counting two years from the close of the subject taxable quarters, petitioner has until the following dates within which to file its administrative claim: Close of the last day to file Date of filing of Period Covered !;<»(able quarter Administrative Administrative Claim .

Claim January 1 to March March 31, 2011 March 31, 2013 31, 2011 April 1 to June 30, June 30, 2011 June 30, 2013 2011 November 29, 2012 July 1 to September September 30, 2011 September 30, 2013 30 2011 October 1 to December 31, 2011 December 31, 2013 December 31 2011 Accordingly, petitioner's judicial claim was timely filed, as shown below:

Considering the foregoing, the Court has jurisdiction to entertain the instant Petition. Petitioner is partially entitled to its claim for refund After determining the timeliness of the Petition, the Court shall proceed to determine whether petitioner complied with the remaining requisites under Section 112(A) of the NIRC of 1997, as amended, viz: 9v

CfA CASE NO. 8641

1.

The taxpayer is VAT-registered; 2.

The taxpayer is engaged in sales which are zero-rated (i.e., export sales) or effectively zero-rated; 3.

The input taxes were incurred or paid; 4.

the creditable input tax due or paid must be attributable to such sales, except the transitional input tax, to the extent that such input tax has not been applied against the output tax; 5.

the input taxes were not applied against any output tax liability; and 6.

in case of zero-rated sales under Section 106(A)(2)(a)(1) and (2), Section 106(8) and Section 108(8)(1) and (2), the acceptable foreign currency exchange proceeds thereof have been duly accounted for in accordance with 8SP rules and regulations. As to first requisite, petitioner presented its 8IR Certificate of Registration (8IR Form No. 2303)25 to prove that it is a VAT registered entity.

Petitioner's original and amended Quarterly VAT returns (81R Form No. 25SOQ) filed with the 8IR reveals that it declared zero- rated sales for the taxable year 2011 in the aggregate amount of P17,184,044,825.54, as shown below:

The relevant prov1s1on in determining whether petitioner's transactions are subject to VAT at zero percent (0%) is Section 106(A)(2)(a)(1) of the NIRC of 1997, as amended. It provides: "SEC. 106. Value-Added Tax on Sale of Goods or Properties. - (A) Rate and Base of Tax. - xxx XXX XXX XXX

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

(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);" Hence, in order for an export sale to qualify as zero-rated, the following conditions must be present: 1.

That there was sale and actual shipment of goods from the Philippines to a foreign country; 2.

That the sale was made by a VAT registered person; 3.

That the sale was paid for in acceptable foreign currency or its equivalent in goods and services; and 4.

That the payment was accounted for in accordance with the rules and regulations of the BSP. Under Section 113(A)(1),(B)(1),(2)(c), and (3) of the NIRC of 1997, as amended, and Section 4.113-1(A)(1),(B)(1), and (2)(c) of Revenue Regulations (RR) No. 16-05, a VAT taxpayer shall for every 1-z-- DEOSION 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 Persons.- (A) Invoicing Requirements. - A VAT-registered person shall issue:

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

XXX XXX XXX

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and xxx xxx xxx" "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 7v erA CASE NO. 8641

XXX XXX 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 Receipts 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 of 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 obliged to pay to the seller with the indication that such amount includes the VAT; Provided, That:

XXX XXX 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) Thus, any VAT-registered person claiming VAT zero-rating on 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 (/t-" 3) the 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 106(A)(2)(a)(1) of the NIRC of 1997, as amended. Moreover, the sales invoices supporting the export sales must be duly registered with the BIR and must contain all the required information under relevant laws and regulations, such as the printed word "zero-rated" and the taxpayer's TIN-VAT number. Petitioner proved that it is engaged in zero-rated sales by presenting as evidence the following documents: BIR Certificate of Registration27, PEZA Certificate of Registration No. 02-07228, Off-take Agreement with Sumitomo Metal Mining Co., Ltd.29, sales invoices30, provisional sales invoices31, bills of lading32, Bank of Tokyo-Mitsubishi UFJ incoming foreign remittance and advice of foreign incoming remittance. 33 After considering the evidence presented by petitioner, this Court finds that the total sales in the amount of P17,184,044,825.54 for the period January 1, 2011 to December 31, 2011 qualify for VAT- zero rating.

After finding that 100% of petitioner's export sales are zero- rated, the Court shall now proceed to determine whether petitioner incurred or paid input taxes in connection thereto, and whether said input taxes were not applied against any output tax liability of petitioner.

Based on the quarterly VAT returns for taxable year 2011 filed by petitioner and verified by the Court commissioned Independent CPA (ICPA), petitioner's input VAT from various purchases of goods and services amounted to P28,032,089.9534, broken down as follows: 1*-- 27 Exhibit P-77.

28 Exhibit P-1, Docket (Vol I}, p. 167. 29 Exhibit P-11, Docket (Vol. I}, pp. 207-219. 30 Exhibits P-83.1a to P-83.18a. 31 Exhibits P-83.1c to P-83.18c. 32 Exhibits P-83.1b to P-83.18b. 33 Exhibits P-129-a to P-129-w. 34Exhibit P-126, Amended Independent CPA Report, p. 9.

DEOSION CfA CASE NO. 8641 Page 13 of 21 Goods To substantiate the foregoing input VAT, petitioner presented various invoices and official receipts35 issued by its suppliers. The ICPA found that out of the total claim of P28,032,089.95, only the amount of P27,041,864.53 input VAT was duly substantiated36, as shown below: Amount ~ Total amount of input VAT being p 28,032,089.95 claimed during the year-end Invoices with appropriate A.

supporting documents and consumed outside PEZA a Goods p 685,703.38 b Services 26,018,958.82 c Annual Amortization 337,202.33 Total p 27,041,864.53 B.

Exceptions Noted 1 Summary of documents where input VAT on local purchases of goods and services with supportinq 35 Exhibits P-20 to P-36, P-115 to P-121, inclusive of sub-markings. 36 Exhibit P-126, Amended Independent CPA Report, p. 13. Exhibit Reference Exhibit P- 115, page 2 of 2 Exhibit P- 116, page 21 of 21

CfA CASE NO. 8641 documents not dated within the taxable year. a Goods b Services Sub-total 2 Summary of invoices where Input Vat on local purchases of services with supporting documents not containinq supplier's TIN. 3 Summary of invoices without original receipt. 4 Summary of invoices where input VAT supporting documents have not been provided. a Services b Goods Total Total Input VAT Examined Exhibit P- 37,983.11 117, page 1 of 1 Exhibit P- 239,297.6437 118, page 3 of 3 277 280.75 Exhibit P- 119, page 1 5,003.97 of 1 Exhibit P- 120, page 1 121,957.62 of 1 Exhibit P- 222,175.16 121, page 1 of 1 - 222,175.16 626,417.50 p 27,668,282.0338 However, upon further verification of this Court, out of the total substantiated input VAT per !CPA report of P27,041,864.53, the following input taxes in the total amount of P3,406,637.95 should be disallowed:

2 ..... · ~o.

on domestic purchase of service supported by VAT OR but with TIN Lengeric Manpower 1 & General Services Subtotal Input tax on domestic purchase of service supported by not legible VAT OR Manila North P-116.230 272207 11-Jun-11 Harbour Port P-116.440 558166 14-0ct-11 Sulpicio Lines LBC Express-MMA, P-116.518 27667261 29-5ep-11 Inc.

Tricom Systems P-116.666 24326 13-Dec-11 (Philippines), Inc.

Subtotal 121.72 216.69 13.39 5,968.93 6,320.73 37 Per !CPA Report, amount used is P239,278.50 but it should be P239,297.64 per Exhibit P-118.

38 Total is different from !CPA report, in congruence with note 28.

CfA CASE NO. 8641

3 Input tax on domestic purchase of service supported by VAT OR but with incomplete details of Authority to Print (ATP) Penanshin Shipping P-116.639 38192 09-Auq-11 (Phils.) Inc.

612.00 Subtotal 612.00 4 Input tax on domestic purchase of service supported by VAT OR but input tax not separately indicated 04920,SOA-IOL11- P-116.687 023 11-Mar-11 I -Merqe Online Inc.

4 457.14 Manila North P-116.833 184142 25-Feb-11 Harbour Port 21 665.04 Asian Freepoints, P-116.932 13300 20-Mar-11 Inc.

980.26 Subtotal 27,102.44 5 Input tax on domestic purchase of goods supported by VAT Invoice but not duly registered with the BIR (No ATP) P-115.135 SI-613115 19-Nov-11 Citimotors Inc 11 212.34 Subtotal 11,212.34 6 Input tax on domestic purchase of service supported by VAT OR but with TIN-V only P-116.672

1482 SI-2031

04-Mar-11 Cendaur Engineering 159,845.63 P-116.673

1486 SI-2030

11-Mar-11 Cendaur Engineering 72,685.29 P-116.674

1491 SI-2035

01-Aor-11 Cendaur Engineerinq 155 544.83 P-116.675

1601 SI-2043

30-May-11 Cendaur Enqineerinq 169 599.00 P-116.676

1616 SI-2217

19-Aug-11 Cendaur Engineering 242,065.87 P-116.677

1619 SI-2220

26-Aug-11 Cendaur Engineering 199,700.46 P-116.1279

1604 SI-2042

10-Jun-11 Cendaur Enqineerinq 173 272.66 Subtotal 1,172,713.74 7 Input tax on domestic purchase of service supported by VAT Zero-Rated OR China Shipping P-116.249 036651 11-Jul-11 Container Lines 7 920.00 Subtotal 7,920.00 8 Input tax on domestic purchase of goods supported by VAT Invoice but with note: Not Valid to Claim Input Air & Odor Management Phils., P-115.80 SI-0161 18-Mar-11 Inc.

2 136.00 Subtotal 2,136.00 9 Input tax on domestic purchase of service supported by VAT OR but with note: collected in behalf of CEN Holdings, Inc P-116.522 78872 11-Jan-11 Century Properties 64 032.48 P-116.523 79006 04-Feb-11 Century Properties 64 032.48 P-116.524 79095 24-Feb-11 Centurv Properties 6 480.00 Century Properties P-116.525 80275 12-0ct-11 Management 74 980.83 P-116.818 80206 29-Seo-11 Century Properties 1 800.00 DEOSION

Management Century Properties P-116.819 79198 14-Mar-11 Ma naqement 64 032.48 Subtotal 275,358.27 10 Input tax on domestic purchase of service without supporting document (not in binder) Adways Philippines P-116.702 05801 16-Sep-11 Inc.

921.87 Subtotal 921.87 11 Input tax on domestic purchase of goods/services supported by VAT Invoice/OR but without petitioner's TIN Upshaw Industrial P-115.134 SI-22166 19-Feb-11 Corporation 4 397.14 Jupiter Arms P-116.568 27415 25-Mar-11 Properties Inc.

1,612.80 Subtotal 6,009.94 12 Input tax on domestic purchase of service supported by VAT OR but with no date/year Philippine Ports P-116.746 NH-L0551172-0 10-Mar-11 Authority 7.56 Philippine Port P-116.892 NH-L0521250-0 28-Jan-11 Authority 7.56 Subtotal 15.12 13 Overclaimed input tax on domestic purchase of goods supported by VAT Invoice Johnco Commercial Inc (P 6,927.60- P-115.73 SI-32709 14-0ct-11 1,200) 5 727.60 Subtotal 5,727.60 14 Input tax on domestic purchase of service supported by VAT OR but issued to petitioner/PCBSI/Prudential Customs Broker Services, Inc. P-116.25 to P- Philippine Ports 116.30 various various Authority 91,958.34 P-116.50 toP- Philippine Ports 116.57 various various Authority 11,582.60 P-116.60 toP- Philippine Ports 116.85 various various Authority 166,959.27 P-116.87 to P- Philippine Ports 116.88 various 14-Mar-11 Authority 44,173.64 P-116.90 to P- Philippine Ports 116.92 various various Authority 29,577.93 Philippine Ports P-116.96 PP-0038518-8 24-Feb-11 Authority 9 235.80 Philippine Ports P-116.98 PP-0038643-6 23-Mar-11 Authority 25,623.98 P-116.119 to Philippine Ports P-116.129 various various Authority 146,873.87 P-116.140 to Philippine Ports P-116.145 various various Authority 115 692.35 P-116.152 to Philippine Ports P-116.153 various 27-Apr-11 Authority 41 725.93 P-116.173 to Philippine Ports P-116.178 various various Authority 2 039.71 P-116.191 to various various Philippine Ports 3 989.25 DEOSION CfA CASE NO. 8641 Page 17 of 21 P-116.197 P-116.199 to P-116.201 P-116.223 to P-116.227 P-116.267 to P-116.269 P-116.279 to P-116.284 P-116.640 to P-116.641 P-116.717 P-116.814 to P-116.816 P-116.1094 P-116.1133 to P-116.1139 P-116.1156 to P-116.1158 P-116.1163 to P-116.1165 P-116.1175 to P-116.1177 P-116.1179 to P-116.1187 P-116.1213 to P-116.1214 P-116.1286 P-116.1304 to P-116.1309 P-116.1312 to P-116.1328 P-116.1345 to P-116.1355 various various various various various 14-Jun-11 various various various 04-Jan-11 PP-0038647-4 23-Mar-11 various various PP-0038778-4 27-Apr-11 various various various various various various various various various various various 17-0ct-11 PP-L0185377-2 13-Sep-11 various various various various various various Authority Philippine Ports Authority 53 811.62 Philippine Ports Authority 98 585.28 Philippine Ports Authority 1 731.86 Philippine Ports Authority 4 333.94 Philippine Ports Authority 35 506.93 Philippine Ports Authority 1 379.52 Prudential Customs Brokerage Services, Inc.

5 190.65 Philippine Ports Authority 5 653.63 Philippine Ports Authority I Manila North Harbour Port 2,249.40 Manila North Harbour Port 367.27 Manila North Harbour Port 895.55 Manila North Harbour Port 598.95 Philippine Ports Authority I Manila North Harbour Port 114.86 Philippine Ports Authority 2,025.36 Philippine Ports Authority 12.43 Philippine Ports Authority 4,194.38 Philippine Ports Authority 47 369.90 Philippine Ports Authority 17 814.54 Subtotal 971,268.74 15 Input tax on domestic purchase of service supported by VAT OR but issued to petitioner/Nestor Buerano P-116.31 to P- Philippine Ports 116.34 various various Authority 841.33 P-116.43 to P- Philippine Ports 116.47 various 06-Jan-11 Authority 1 620.32 P-116.58 to P- Philippine Ports 116.59 various various Authority 436.24 Philippine Ports P-116.89 NL-L003579185-4 11-Feb-11 Authority 186.96 Philippine Ports P-116.97 NL-L003580133-7 17-Feb-11 Authority 124.64 Philippine Ports P-116.99

NL -L003584955-1

25-Feb-11 Authority 436.24 P-116.115 to Philippine Ports P-116.118 various 08-Feb-11 Authority 1,558.00 P-116.146 to Philippine Ports P-116.149 various 25-Feb-11 Authority 1 558.00 P-116.154 to various 20-Apr-11 Philippine Ports 1,869.60

CfA CASE NO. 8641

P-116.158 P-116.161 to P-116.166 P-116.179 to P-116.186 P-116.237 to P-116.248 P-116.250 to P-116.258 P-116.270 to P-116.274 P-116.410 to P-116.415 P-116.420 P-116.453 to P-116.456 P-116.460 P-116.477 P-116.669 to P-116.671 P-116.752 to P-116.759 P-116.796 to P-116.806 P-116.847 to P-116.853 P-116.886 to P-116.887 P-116.921 to P-116.934 P-116.1095 to P-116.1107 P-116.1124 to P-116.1128 P-116.1199 to P-116.1202 P-116.1207 to P-116.1211 P-116.1265 P-116.1296 to P-116.1300 various various various various various various 913175 various NL-L003812868-4 NL-L003818182-3 various various various various various various various various various various NL-L003752646-2 various 18-Aor-11 various various various 27-May-11 12-Jul-11 16-Aug-11 various 07-0ct-11 12-0ct-11 23-Mar-11 various various 08-Feb-11 31-Aug-11 22-Jun-11 various 04-0ct-11 05-May-11 12-0ct-11 15-Aug-11 13-Apr-11 Authority Philippine Ports Authority 1,620.32 Philippine Ports Authority 3 116.00 Philippine Ports Authority 4 518.25 Philippine Ports Authority 3 926.16 Philippine Ports Authority 2 181.20 Philippine Ports Authority 2 492.80 People's Air Cargo 131.22 Philippine Ports Authority 1,308.72 Philippine Ports Authority 62.32 Philippine Ports Authority 93.49 Philippine Ports Authority 1 246.40 Philippine Ports Authority 2 866.72 Philippine Ports Authority 4 362.40 Philippine Ports Authority 2 804.40 International Container Terminal Services, Inc.

498.56 Philippine Ports Authority 2 243.52 Philippine Ports Authority 4 362.40 Philippine Ports Authority 2 181.20 Philippine Ports Authority 1 558.00 Philippine Ports Authority 2 181.20 Philippine Ports Authority 436.24 Philippine Ports Authority 1869.60 Subtotal 54,692.45 16 Input tax on domestic purchase of service supported by VAT OR but issued to petitioner/Prudential Shipping Agency/PSA P-116.233 to Philippine Ports P-116.236 various various Authority 59,896.48 P-116.264 to Philippine Ports P-116.266 various various Authority 1409.80 Philippine Ports P-116.349 PP-0039313-7 12-Auq-11 Authority 15 851.57 P-116.393 to Philippine Ports P-116.398 various various Authority 96,090.62 P-116.421 to Philippine Ports P-116.424 various various Authority 31 885.50 P-116.457 to Philippine Ports P-116.459 various various Authority 67 836.36

P-116.461 to P-116.476 P-116.490 to P-116.493 P-116. 764 to P-116.774 P-116.880 to P-116.882 P-116.1216 to P-116.1220 P-116.1259 to P-116.1274 P-116.1329 to P-116.1333 P-116.1356 to P-116.1374 various various various various various various various 12-Aug-11 various various various various various various various various Philippine Ports Authority 75 263.54 Philippine Ports Authority 71 177.37 Philippine Ports Authority/CEVA Logistics Phils.

114,223.45 Philippine Ports Authority 42,655.62 Philippine Ports Authority 5 389.26 Philippine Ports Authority 131 031.21 Philippine Ports Authority 5 501.67 Philippine Ports Authority 118 311.11 Subtotal 836,523.56 17 Input tax on domestic purchase of service supported by VAT OR but not duly registered with the BIR LBC Express-MMA, P-116.519 27667260 29-Sep-11 Inc.

13.39 P-116.936a to Philippine Long P-116.1086b various various Distance Telephone 24 341.89 Subtotal 24,355.28

GRAND TOTAL

3 406,637.95 Furthermore, the annual amortization of P337,202.33 pertaining to purchase of capital goods exceeding P1 Million should likewise be disallowed for petitioner's failure to substantiate the same with invoices and official receipts. Hence, only the total amount of P23,298,024.25 is duly substantiated pursuant to Section 110(A) and 113(A) and (B) of the NIRC of 1997, as amended, and implemented by Sections 4.110-2, 4.110-8 of Revenue Regulation (RR) 16-05, computed as follows: Claimed Input Tax p 28,032,089.95 Less: Disallowances

1. Unsupported input taxes: Claimed input taxes p 28,032,089.95 Total input taxes examined by 27,668,282.03 p 363,807.92 !CPA

2. Exceptions noted by the !CPA 626,417.50

3. Disallowances found by the Court 3,406,637. 95

4. Not duly substantiated amortized input taxes on purchase of capital 337,202.33 4,734,065.70 goods Substantiated input taxes p attributable to zero-rated sales 23,298,024.25

To prove that the claimed input taxes were not applied against any output liability in the succeeding taxable period, petitioner offered before this Court its Amended 1st Quarterly VAT Return (BIR Form No. 2550Q) 39 for taxable year 2012. As per examination of the Court, petitioner's input taxes were not applied against any output VAT liability for the first quarter of taxable year 2012, and the claimed input taxes in the amount of P28,032,089.95 were deducted from the total available input tax as an item under VAT Refund/TCC claimed (Line 23D of 2012 Amended 1st Quarter BIR Form No.2550Q).

To conclude, petitioner duly proved that it is entitled to its claim for refund, but in the reduced amount of P23,298,024.25.

WHEREFORE, in view thereof, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, let a tax refund be issued in favor of petitioner Coral Bay Nickel Corporation in the reduced amount of P23,298,024.25, representing unutilized input taxes attributable to zero-rated sale of goods for the four taxable quarters of year 2011.

WE CONCUR:

(On Official Business) CAESAR A. CASANOVA Associate Justice 39 Exhibit P-112.

~c.~~,Q_, Jf.iANITO c. CASTANEDK, JR. Associate Justice ~~,~- AMELIA R. COTANGCO-MANALASTAS Associate Justice DEOSION

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. ~l.C-~~,.~ .fuA~iiTO C. CASTANEDA, JR. Associate Justice Chairperson CERTIFICATION Pursuant to Section 13 of Article VIII of the Constitution, and the Division's 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's Division.

ROMAN G. DEL ROSARIO Presiding Justice