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

DECISION

CASANOVA,].:

This Petition for Review, filed by petitioner Manulife Data Services, Inc., seeks the refund or issuance of tax credit certificate of the amount of P29,406,541.23, representing petitioner's alleged excess and unutilized excess VAT payments attributable to its VAT and zero-rated sales for the 1st to the 4th quarters of Calendar Year (CY) 2011. Petitioner is a foreign corporation duly registered with and authorized by the Securities and Exchange Commission ("SEC") to operate as a Regional Operating Headquarters ("ROHQ") with principal office address at Manulife Building, UP North Science and Technology Park, Commonwealth Avenue, Diliman, Quezon City.l Respondent is the Commissioner of Internal Revenue, presently in the person of the Honorable Kim Jacinto-Henares, who holds office at the 5th Floor BIR National Office Building, Agham Road, Diliman, Quezon City, vested with the power to decide tax cases, including claims for refund and/or tax credits pursuant to Section 4 of the 1997 National Internal Revenue Code, as amended.2..--- 1 Par. 1, Petition for Review, Docket (Vol. 1), p. 14 2 Par. 1.5 and 1.6, Stipulation of Facts, Joint Stipulation of Facts and Issues (JSFI), Docket (Vol. II), p. 714

Petitioner, as ROHQ, is engaged in performing qualifying services to its affiliates and related parties in the Asia-Pacific Region and other foreign markets. It is a VAT -registered entity as evidenced by its Certificates of Registration (BIR Form 2303) OCN 3RC00003308243 and OCN 3RC00004216264 both dated March 9, 2006, issued by the Bureau of Internal Revenue, Revenue Region No. 007, Revenue District No. 039 and Revenue Region No. 007, Revenue District No. 038, respectively. For the 1st to the 4th quarter of CY 2011, petitioner generated the following VAT-able sales and zero-rated sales which were directly attributable to services rendered to its affiliates doing business outside the Philippines, viz:

CY 2011

VAT -able Sales Zero-rated Sales 1st Quarter r 123,879.72 r 325,131,825.82 2nd Quarter 1,972,899.62 322,609,555.60 3rct Quarter 255,132.50 331,372,504.80 4th Quarter 1,070,390.25 456,579,564.39 Petitioner accumulated input VAT for CY 2011 from its domestic purchases of supplies and services as well as from purchase of capital goods which remained unutilized and is now the subject of the instant claim. Petitioner's input VATS for 2011 is herein below summarized, to wit:

Consolidated for CY 2011 Purchases Purchase of capital goods not exceeding P1M 17,916,693.81 Domestic purchase of goods other than capital goods 7,117,654.20 Domestic purchase of services 158,783,956.18 Current portion of Input Tax on purchases of capital goods 26,845,196.13 exceeding Php1 Million Less: Output VAT Total Current Purchases 210,663,500.32 'Annex "B" to Petition for Review, Docket (Vol. 1), p. 39 4 Annex "B-1" to Petition for Review, Ibid, p. 40 5 No. 13, Facts, Petition for Review, Docket (Vol. 1), p. 18 Input VAT 2,150,003.26 7,610,074.36 1,003,315.98 19,054,074.75 (410,927.13) 29,406,541.23

Petitioner filed its VAT and Income Tax Returns6, which was duly received by respondent on the following dates: Date Filed Quarterly VAT Return, 25 April 2011 1st Quarter of 2011 Quarterly VAT Return, 25 July 2011 2nd Quarter of 2011 Amended Quarterly VAT Return, 22 August 2011 2nd Quarter of 2011 Quarterly VAT Return, 25 October 2011 3rct Quarter of 2011 Quarterly VAT Return, 25 January 2012 4th Quarter of 2011 Amended Quarterly VAT Return, 13 April2012 4th Quarter of 2011 Quarterly VAT Return, 25 April2012 1st Quarter of 2012 Amended Quarterly VAT Return, 10 September 2012 2nd Quarter of 2012 Quarterly VAT Return, 25 October 2012 3rct Quarter of 2012 Quarterly VAT Return, 25 January 2013 4th Quarter of 2012 Amended Monthly VAT Declaration 26 March 2013 for the month of February 2013 Income Tax Return for 2011 with 15 April 2013 attached Audited Financial Statement On March 27, 2013, petitioner filed with respondent, through the Revenue District Office No. 38 ("ROO 38"), its administrative application for refund or issuance of tax credit certificate for its excessjunutilized input for the 1st to 4th quarters of 201 F. Since no action has been taken by respondent on petitioner's administrative claim for refund/issuance of tax credit certificate, petitioner filed the instant Petition for Review. On September 17, 2013, respondent filed her Answer and interposed the following Special and Affirmative Defenses, to wit:,.

"6. Petitioner contends that it is entitled for a tax refund or tax credit certificate in the amount of PESOS: TWENTY-NINE MILLION FOUR HUNDRED SIX

THOUSAND FIVE HUNDRED FORTY-ONE AND 23/100

(Php29,406,541.23) of its excess and unutilized input VAT taxes for the 1st to 4th quarters of calendar year 2011.

7. Section 112 Paragraphs (A) and (C) of the National Internal Revenue Code has this to say on Refund or Tax Credits of Input Tax and the Period within which to file Refund of Input Taxes, to wit: 'Section 112. Refund 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 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: xxxxxx' 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 (1201 days from the date of submission of complete documents in support of the application filed in accordance with Subsection (Al hereot '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.r

· expiration of the one hundred twenty day- period, appeal the decision or the unacted claim with the Court of Tax Appeals.

8. Claims for refund are strictly construed against the taxpayer as the same partake of an exemption;

9. Petitioner has the burden to show proof that the taxes were erroneously or illegally paid, hence, failure on the part of the Petitioner to prove the same is fatal to its cause of action;

10. Petitioner should prove the legal basis in claiming the amount to be refunded;

11. In COMMISSIONER OF INTERNAL REVENUE VS. SAN ROQUE POWER CORPORATION, G. R. No. 187485, the Honorable Supreme Court has this to say on undisputed excess input VAT, to wit: 'xxx Well-established is the rule that tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. The burden is on the taxpayer to show that he has strictly complied with the conditions for the grant of the tax refund or credit.' 12.

In COMPAIGNIE FINCANCIERE SUCRES ET DENREES vs. COMMISSIONER OF INTERNAL REVENUE, GR No. 133834 August 28, 2006 the Honorable Supreme Court ruled, to wit:

'xxx Tax refunds are a derogation of the State's taxing power. Hence, like tax exemptions, they are construed strictly against the taxpayer and liberally in favor of the State.

Consequently, he who claims a refund or exemption from taxes has the burden of justifying the exemption by words too plain to be mistaken and too categorical to be misinterpreted.' On December 27, 2013, petitioner filed a Motion To Commission an Independent Certified Public Accountant which motion was granted by the Court in the hearing on January 29, 2014.~

The parties filed their Joint Stipulation of Facts and Issue8 on January 10, 2014 and the same was subsequently approved and adopted by the Court in its Pre-Trial Order9 dated January 23, 2014. After presentation of its evidence, petitioner filed its Formal Offer of Exhibitslo thru registered mail on May 23, 2014, without respondent's comment thereon. In a Resolution11 promulgated on July 24, 2014, this Court resolved to admit petitioner's exhibits, except for the following which were denied admission, viz:

(a) Exhibits "P-2, P-57, P-58, P-59, P-60 and P-2206 to P-2217" for failure of petitioner to submit the originals for comparison;

(b) Exhibits "P-32, P-33, P-34, P-2327, P-1200b, P- 1211b, P-1219b, P-1482b, P-1504b, P-1512b, P-1783b, P- 1797b, P-1803b, P-2093b, P-2096b and P-2115b to P- 2122b" for not being found in the records of the case; and

(c) Exhibits "P-2249 to P-2276" for not being identified during trial and for failure of petitioner to submit the originals for comparison. In the hearing on September 10, 2014, respondent's counsel manifested that she has no witness to present in this case, and, upon motion, the parties were granted thirty (30) days from September 10, 2014 or until October 10, 2014 to file their memoranda, after which the case shall be considered submitted for decision. On September 26, 2014, respondent filed her Respondent's Memorandum while petitioner, after an extension of fifteen (15) days granted by the Court, filed its Memorandum For Petitioner on October 23, 2014.

The case was considered submitted for decision per Resolution promulgated on October 28, 2014;z.

As jointly stipulated by the parties, the sole issue to be resolved is "whether or not petitioner is entitled to the issuance of a tax credit certificate for its unutilizedfexcess input VAT payments for the 1st to 4th quarters of 2011 amounting to a total of Php29,406,541.23". Petitioner anchors its claim on Section 110(8) and 112(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, which, respectively, reads as follows: "SEC. 110. Tax Credits. - XXX.

(B) Excess Output or Input Tax. - If at the end of any taxable quarter the output tax exceeds the input tax, the excess shall be paid by the VAT -registered person. If the input tax exceeds the output tax, the excess shall be carried over to the succeeding quarter or quarters. Provided, however, that any input tax attributable to the purchase of capital goods or to zero-rated sales by a VAT-registered person may at his option be refunded or credited against other internal revenue taxes, subject to the provisions of Section 112.

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(8)(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 th~ basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and non zero-rated sales." Under the afore-quoted provisions, in order to be entitled to a refund or tax credit of input VAT due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be met/complied with, to wit:

(1) there must be zero-rated or effectively zero-rated sales;

(2) that input taxes were incurred or paid;

(3) that such input taxes are 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.

For the four quarters of taxable year 2011, petitioner had duly filed its Quarterly VAT Returns with the BIR declaring the following: 1st Quarter 2nd Quarter Exhibit "P-35" Exhibit "P-36" Vatable Sales/Receipts p 123 879.72 p 1 972 899.62 Zero-Rated Sales/Receipts 325 131 825.82 322 609 555.60 Total Sales/Receipts P325,255,705.54 P324,582,455.22 Output Tax Due p 14 865.57 p 236 747.95 Less: Allowable Input Tax Input Tax Carried Over from Previous Quarter 43 285 603.64 52 327 649.41 12 Input Tax Deferred on Capital Goods Exceeding P1Million from Previous Quarter 18 266 771.54 16 717 259.31 Current Transactions Purchase of Capital Goods not exceedinq P1Million 307 150.42 760,417.33 Purchase of Capital Goods exceeding P1Million 445 825.63 1 214,205.61 Domestic Purchases of Goods Other than Capital Goods 335 591.07 188,512.90 Domestic Purchase of Services 12 155 684.18 2 268 135.69 12 Should be P52,327,649.40.

Total Allowable Input Tax Less: Deductions from input tax Input tax deferred for the succeeding period VAT Refund[TCC claimed Total Allowable Input Tax Net VAT Payable/(Overpayment) 3rd Quarter Exhibit "P-38" Vatable Sales/Receipts p 255 132.50 Zero-Rated Sales/Receipts 331 372 504.80 Total Sales/Receipts P331 627,637.3116 Output tax due p 30,615.90 Less: Allowable Input Tax Input Tax Carried Over from Previous Quarter 44 819 413.61 Input Tax Deferred on Capital Goods Exceeding P1Million from Previous Quarter 16 040 015.07 Current Transactions Purchase of Capital Goods not exceedinq P1Million 720 852.71 Purchase of Capital Goods exceedinq P1Million 1 423 402.19 Domestic Purchase of Goods Other than Capital Goods 174,007.79 Domestic Purchase of Services 1 496,905.22 Total Allowable Input Tax 64 674 596.59 Less: Deductions from input tax Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period 15 594 680.41 VAT Refund[TCC claimed - Total Allowable Input Tax 49,079 916.18 Net VAT Pavable/(Overpayment) p 49,049,300.28 74 796 626.48 73 476,180.2513 16 717 259.31 16 040 015.07 5,736 852.20 12 380 003.61 52 342 514.97 45 056,161.57 14 P52,327,649.4115 p 44,819,413.61 4th Quarter Total Exhibit ''P-39" p 1 072 480.88 p 3 424,392.72 366 429 620.13 1 345 543 506.35 P367 502,101.01 P1,348,967,899.07 p 128,697.71 p 410,927.13 49 049 300.28 43 285 603.64 15 594 680.41 18 266,771.54 361 582.78 2 150 003.24 137 990.12 3 221 423.55 156 006.75 854,118.51 3 133 349.65 19,054,074.74 68 432 909.99 86 831 995.22 13 878 120.81 13 878 120.81 11 997,999.50 30 114 855.31 42 556,789.68 42 839,019.11 p 42,428,091.98 p 42,428,091.98 As indicated in the returns, petitioner's excess input VAT arising from its domestic purchases of goods not exceeding PlMillion, domestic purchases of goods other than capital goods, domestic purchases of services and amortization of input VAT on purchases of capital goods& 13 Should be P73,476,180.24. 14 Should be P45,056,161.56. 15 Should be P52,327,649.40. 16 Should be P331,627,637.30.

exceeding P1Million for the four quarters of 2011 amounted to P29,668,270.78, broken down as follows: 1st Quarter 2nd Quarter Input Tax Deferred on Capital Goods exceeding P1Million from Previous Quarter p 18,266,771.54 p 16 717,259.31 Add: Input Tax on Capital Goods exceeding P1Million Purchased this Quarter 445,825.63 1,214 205.61 Total Unamortized Input Tax on Capital Goods exceeding P1Million 18 712 597.17 17 931 464.92 Less: Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period 16 717 259.31 16 040 015,07 Amortization of Input Tax on Capital Goods exceeding P1Million 1 995,337.86 1,891 449.85 Add: Input Tax on - Domestic Purchases of Capital Goods not Exceeding P1Million 307 150.42 760 417.33 Domestic Purchases of Goods Other than Capital Goods 335 591.07 188 512.90 Domestic Purchase of Services 12 155,684.18 2 268 135.69 Total Allowable Input Tax P14,793 763.53 p 5 108 515.77 3rd Quarter 4th Quarter Total Input Tax Deferred on Capital Goods exceeding P1Million from Previous Quarter p 16,040 015.07 p 15 594 680.41 p 18 266,771.54 Add: Input Tax on Capital Goods exceeding P1Million Purchased this Quarter 1,423 402.19 137 990.12 3 221 423.55 Total Unamortized Input Tax on Capital Goods exceeding P1Million 17 463 417.26 15 732 670.53 21 488 195.09 Less: Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeedinq period 15 594 680.41 13 878,120.81 13,878 120.81 Amortization of Input Tax on Capital Goods exceedinq P1 Million 1,868,736.85 1 854,549.73 7 610 074.29 Add: Input Tax on - Domestic Purchases of Capital Goods not Exceeding P1 Million 720 852.71 361 582.78 2 150 003.24 Domestic Purchases of Goods Other than Capital Goods 174 007.79 156 006.75 854 118.51 Domestic Purchases of Services 1 496 905.22 3 133 349.65 19,054 074.74 Total Allowable Input Tax P4,260,502.57 P5,505,488.91 P29,668,270.78 Out of the reported excess input VAT for the four quarters of 2011 in the amount of P29,668,270.78, petitioner is claiming refund in the amount of P29,406,541.23 alleging that the same is attributable to its zero-rated sales of services for the same period. We shall first determine petitioner's compliance with the fifth requisite, timeliness of the filing of the claim. Under Section 112(A), the application for tax credit certificate/refund of unutilized excess input VAT 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 four taxable quarters of 2011 which closed on March 31, 2011; June 30, 2011; September 30, 2011 and December 31, 2011. Counting two years from the said dates, petitioner had until March 31, 2013; June 30, 2013; September 30, 2013 and December 31, 2013, respectively, within which to file its administrative claim for tax credit certificate/refund. Thus, petitioner's administrative claim for refund was seasonably filed on March 27, 2013, as shown below:

Last Day to File Date of Filing of Close of the Administrative Administrative

CY 2011

Taxable Quarter Claim Claim 1st Quarter March 31, 2011 March 31, 2013 2nd Quarter June 30, 2011 June 30, 2013 March 27, 201317 3rd Quarter September 30, 2011 September 30, 2013 4th Quarter December 31, 2011 December 31,2013 As to the timeliness of petitioner's judicial appeal, Section 112(C) of the NIRC of 1997, as amended, provides that: "SEC. 112. Refunds or Tax Credits of Input Tax.- 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 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.'~

Applying Section 112(C) of the NIRC of 1997, as amended, petitioner's judicial claims for the first, second, third and fourth quarters of 2011 were timely filed within the "120-30" day period, as shown below:

End of 120 days for the BIR End of 30 days Date of Filing of Commissioner to from the Administrative decide on the expiration of the Date of Filing of

CY 2011

Claim claim 120 days Judicial Claim 1st Quarter 2nd Quarter March 27, 2013 July 25, 2013 August 24, 2013 August 23, 201318 3rd Quarter 4th Quarter Clearly from the above, petitioner's judicial claims for the four quarters of taxable year 2011 were timely filed within the "120-30" day period required under Section 112(C) of the NIRC of 1997, as amended. Anent the first requisite, petitioner alleges that 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 United States Dollars inwardly remitted to the Philippines and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) qualify for VAT zero rating under Section 108(8)(2) of the NIRC of 1997, as amended, which states that: "SEC. 108.-Value-added Tax on Sale of Services and Use or Lease of Properties.- XXX XXX 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 (Oo/o) rate:

(1) Processing, manufacturing or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported, where the services are paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);@.'

(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);" In the case of Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. 19, the Supreme Court held that in order for the supply of services to be VAT zero-rated under Section 108(8)(2) of the NIRC of 1997, as amended, the following requisites must be met:

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

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

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

On the first requisite, it is undisputed that petitioner is a registered VAT taxpayer2o with license issued by the Securities and Exchange Commission (SEC) to operate as a Regional Operating Headquarters (ROHQ) in the Philippines and to engage in general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistic services; research and development services and product development; technical support and maintenance; data processing and communication; and business development.21 Such services are not the same category as "processing, manufacturing or repacking of goods". As to the second requisite of proving that its clients for the subject period of claim are non-resident foreign corporations doing business outside the Philippines, petitioner presented Certifications of Non- Registration of Corporation/Partnership issued by the Republic of the..,..

Philippines Securities and Exchange Commission (SEC), Service Agreements, Certificate/ Articles of Incorporation and other documents, summarized as follows: Exhibit Documents John Hancock Life Insurance "P-3" Services Agreement "P-4" Addendum to the Service Agreement "P-19" Certification of Non-Registration of Company Amended Articles of Redomestication (indicating the change of name of The "P-18" Manufacturer's Life Insurance CompaOYl_USA) to John Hancock Articles of Redomestication of the Manufacturer's Life Insurance Company (USA) Manu life International) Ltd. "P-1" Business Processil}g Services Agreement "P-15" Certification of Non-Registration of Company Certificate of Incorporation "P-14" Memorandum of Association First Schedule to the Companies Certificate of Deposit of Memorandum of Association and by Laws Certificate of Registration of Change of Name of Overseas Company showing the change of name from Manulife (Bermuda) Limited to Manulife (International) "P-14-a" Limited Manulife Asset Management (Hong Kong) Limited "P-8" Services Agreement "P-24" Certification of Non-Registration of Company "P-23-a" Business Registration Certificate "P-23-b" Assessment Demanding Final Tax I Notice for Payment of Provisional Tax "P-23-c" Notice of Refund of Tax "P-23-d" Articles of Association "P-23-e" Memorandum of Articles and Association (Hua Tse Enterprises Limited) Manulife Asset Management (Malaysia) Sdn. Bhd. "P-9" Master Administrative Services Agreement "P-25" Certification of Non-Registration of Company Manulife Asset Management (Singapore) pte, Ltd. "P-10" Services Agreement "P-27" Certification of Non-Registration of Company Manulife Insurance Berhad "P-6" Service Agreement "P-20" Certification of Non-Registration of Company Manulife Singapore Pte. Ltd. IIP-T' Master Services Agreement "P-22" Certification of Non-Registration of Company Memorandum of Association "P-21-a" Articles of Association "P-21-b" Certificate of Incorporation of Private Company "P-21-c" Certificate of Residence for the purpose of claiming VAT refund PT Asuransi Jiwa Manulife Indonesia "P-29" Certification of Non-Registration of Company

The Manufacturer's Life Insurance Company "P-5" Master Administrative Services Aqreement "P-31" Letters Patent "P-31-a" Patent of Amalqation "P-31-b" Certificate of Confirmation "P-31-c" Certificate of Good Standinq In relation to the third requisite, Sections 113(A)(2), (8)(1), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1(A)(2), 8(1) and (2)(c) of Revenue Regulations (RR) No. 16-05, as amended, provide that a VAT taxpayer, like herein petitioner, shall for every 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: "SEC. 113. Invoicing and Accounting Requirements for VAT-registered Persons.- (A) Invoicing Requirements. - A VAT-registered person shall issue:

XXX XXX 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 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 (underlining supplied)#-

SEC. 4.113-1. Invoicing Requirements.- (A) A VAT -registered person shall issue: - XXX XXX 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;

(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 XXX XXX

(c) lfthe sale is subject to zero percent (0%) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (underlining supplied) Pursuant to the foregoing provJswns, the foreign currency remittances referred to under Section 108(8)(2) of the NIRC of 1997, as amended, 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 2011, petitioner,..._ presented VAT zero-rated official receipts22, VAT zero-rated sales invoices23, Schedule of Zero-Rated Sales24, Summary of Bank Certifications of Inward Remittances for Payments Received from Foreign ClientsZ5 as well as bank statements26 and bank credit advices27 from Citibank, which were examined by the Court-commissioned Independent CPA firm, Constantino Guadalquiver & Co., through its Partner, Ms. Katherine 0. Constantino. In her report dated February 28, 2014, Ms. Constantino noted the following findings:zs Findings 1st Quarter 2nd Quarter 3rd Quarter 4th Ouarter In Philippine Pesos Properly Supported by Zero-Rated OR29 The Manufacturer's Life Insurance Company 165 383 915.60 167 358 227.93 Manulife {International) Ltd.

23 274 875.95 24 714 955.33 Manulife Singapore Pte. Ltd.

8,903.04 7 446.83 Manulife Insurance Berhad 1 616 213.20 1 590 963.03 John Hancock Life Insurance 86 152 892.64 85 035 045.12 PT Asuransi Jiwa Manulife Indonesia - 452 509.02 Manulife Asset Management (Singapore) Pte. Ltd.

- 432 597.12 Manulife Asset Management (Malaysia) Sdn. Bhd.

- 169 408.45 Manulife Asset Management (Hong Kong) Limited - 1 571 231.02 Subtotal 276 436,800.43 281 332,383.85 Supported by Zero- Rated OR issued in the name of the Customer•s Department'" The Manufacturer's Life Insurance Company 21 930 273.75 23 097 686.47 John Hancock Life Insurance 5 114 880.90 6 463 475.83 Subtotal 27,045,154.65 29,561,162.30 22 Exhibits P-966 to P-2133. 23 Exhibits P-966a to P-2133a. 24 Exhibits "P-45", "P-47", "P-49" and "P-51". 25 Exhibits "P-46"1 "P-48", "P-50 11 and "P-52".

178 687 560.06 25 100 064.72 - 1 575 265.98 90 009 485.52 - 640 250.00 167 745.50 1 042 105.51 297,222 477.29 21 891 758.32 2 878 530.24 24,770.288.56 26 Exhibits P-2134 to P-2143; P-2279 to P-2283, P-2328 to P-2329. 27 Exhibits P-2144 to P-2182. 28 Exhibit P-65.

29 Exhibit P-65, Annexes 5, 6, 7 and 8.

30 Exhibit P-65, Annexes 9, 10, 11 and 12. 188 395 275.07 21 585 679.24 82 078.13 1 611 825.56 101 577 691.13 - 655 109.25 171 638.62 1 591 915.48 315.671.212.48 25 002 388.97 3,912 885.74 28.915,274.71 Total 699 824 978.66 94 675 575.24 98 428.00 6 394 267.77 362 775 114.41 452 509.02 1 727 956.37 508 792.57 4 205 252.01 1170,662 874.05 91 922 107.51 18,369 772.71 110,291 880.22 ~

Zero-Rated Sales amounts not tie-up per Official Receipt31 The Manufacturer's Life Insurance Companv 14 631 601.43 John Hancock Life Insurance 7 018 269.31 Manulife Asset Management (Hong Konq) Limited - Manulife (International) Ltd.

- Subtotal 21,649,870.74 Zero-Rated Sales without supforting documents' Manulife Asset Management (Singapore) Pte. Ltd.

- Manulife Asset Management (Malaysia) Sdn. Bhd.

- Subtotal Total 32S 131 825.82 Per Quarterly VAT Returns 325,131,82S.82 Difference - 7 204 088.49 8 556 910.15 13 058 473.22 43 451 073.29 5 553 762.67 243,411.38 4 364 968.62 17 180 411.98 - 579 418.23 - 579 418.23 - - 4 489 769.67 4 489 769.67 12 757 851.16 9 379 739.76 21 913 211.51 65 700 673.17 - - (50 565.67) (50 565.6Zl_ - - (19 513.19) (19 513.19) (70,078.86) (701078.86) 323 651 397.31 331 372 505.61 366 429 619.84 1 346 585 348.58 322,609,555.60 331,372,504.80 366,429,620.13 1,345 543 506.35 1041841.71 0.8133 (0.29)34 1 041,842.23 As found by the !CPA, the difference in the amount of P1,041,842.23 between petitioner's zero-rated sales/receipts as reported in its Quarterly VAT Return for the second quarter of 2011 vis- a-vis the zero-rated sales reflected in its Schedule of Zero-Rated Sales for the same quarter pertains to two (2) VATable transactions which were erroneously included also in the Schedule of Zero-Rated Sales. The details are as follows: O.R.

Exhibit Customer No.

The Manufacturer's Life Insurance Company (Phils.) P-2318 Inc.

2547 The Manufacturer's Life Insurance Company (Phils.) P-2319 Inc.

2543 Total 31 Exhibit P-65, Annexes 13, 14, 15 and 16. 32 Exhibit P-65, Annex 17. 33 Difference is due to rounding-off. 34 Difference is due to rounding-off. Transaction Local Currency Currency Output Tax $ 6,803.57 p 295 079.90 p 35,409.59 17,217.86 746,761.55 89 611.39 $24,021.43 P1,041,841.45 p 125,020.98 -

The !CPA was able to verify that the above VATable sales were included in the Schedule3s of VATable Sales and were reported as VA Table sales in the 2011 VAT returns36. In other words, in determining petitioner's valid zero-rated receipts for CY 2011, the amount of f1,041,841.71 shall be excluded and the amount of f1,345,543,506.35 declared by petitioner in its 2011 Quarterly VAT Returns shall be used as reference point.

This Court has consistently held that in order to be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC certificate of non-registration of company and proof of incorporation or registration in a foreign country. Thus, only the following client-affiliates of petitioner shall be considered as non- resident foreign corporations doing business outside the Philippines, namely:

1. John Hancock Life Insurance

2. Manulife (International) Ltd.

3. Manulife Asset Management (Hong Kong) Limited

4. Manulife Singapore Pte. Ltd. Consequently, only the following gross receipts in the total amount of f502,373,742.26 derived by petitioner from services rendered to the aforementioned entities shall be considered for VAT zero-rating pursuant to Section 108(8)(2) of the NIRC of 1997, as amended:

Amount in Amount in Exhibit Customer OR No.

OR Date US$ PhP First Quarter of CY 2011 P-1211 Manulife (International) Ltd. 2075 2/28/2011 48,277.34 2 133,665.32 P-1212 Manulife (International) Ltd. 2076 2/28/2011 88,717.54 3,920,960.56 P-1213 Manulife (International) Ltd. 2077 2/28/2011 35,335.77 1,561,699.87 P-1214 Manulife (International) Ltd. 2164 3/31/2011 45,124.60 1, 970,670.14 P-1215 Manulife (International) Ltd. 2165 3/31/2011 92,755.83 4,050,809.61 P-1216 Manulife (International) Ltd. 2166 3/31/2011 35,756.58 1,561,552.40 P-1217 Manulife (International) Ltd. 2255 4/29/2011 46,655.57 2,029,703.92 P-1218 Manulife (International) Ltd. 2256 4/29/2011 99 306.40 4,320,225.67 P-1219 Manulife (International) Ltd. 2257 4/29/2011 39,665.05 1,725,588.47 subtotal 531,594.68 23,274,875.96 P-1106 Manulife Sinqapore Pte. Ltd. 2081 2/28/2011 22.39 989.35 35 Exhibit P-2183.

36 Exhibit P-65, Findings and Observations No. 4, p. 7.

P-1107 P-1108 P-1112 P-1113 P-1114 P-1115 P-1116 P-1117 P-1118 P-1119 P-1120 P-1121 P-1122 P-1123 P-1124 P-1125 P-1126 P-1127 P-1128 P-1129 P-1130 P-1131 P-1132 P-1133 P-1134 P-1135 P-1136 P-1137 P-1138 P-1139 P-1140 P-1141 P-1142 P-1143 P-1144 P-1145 P-1146

Manulife Singapore Pte. Ltd. Manulife Singapore Pte. Ltd. John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2170 3/31[2011 2261 4/29/2011 subtotal 2106 2/28/2011 2107 2/28/2011 2108 2/28/2011 2109 2/28/2011 2117 2/28/2011 2118 2/28/2011 2119 2/28/2011 2122 2/28/2011 2123 2/28/2011 2124 2/28/2011 2125 2/28/2011 2125 2/28/2011 2125 2/28/2011 2125 2/28/2011 2125 2/28/2011 2125 2/28/2011 2125 2/28/2011 2126 2/28/2011 2127 2/28/2011 2128 2/28/2011 2130 2/28/2011 2129 2/28/2011 2131 2/28/2011 2132 2/28/2011 2133 2/28/2011 2152 2/28/2011 2139 2/28/2011 2140 2/28/2011 2144 2/28£2011 2144 2/_28f2011 2157 2/28/2011 2196 3/31/2011 2197 3/31/2011 2198 3/31/2011 2199 3/31/2011 2207 3/31/2011 747 3/31/2011 2208 3/31/2011 2211 3/31/2011 2212 3/31/2011 2213 3/31/2011 2214 3[_31/2011 2214 3/31/2011 76.98 3 362.04 104.63 4,551.65 204.00 8,903.04 14 169.06 626 215.78 14 338.75 633,715.40 5,054.71 223,397.96 2,641.70 116,752.57 15,536.24 686,639.66 49,412.23 2, 183,822.92 46,016.64 2,033,751.42 5,286.83 233,656.74 5,283.40 233,505.15 25,957.31 1,147,209.27 145,593.89 6,434,667.56 69,714.38 3,081,096. 74 15,619.98 69~340.64 14 458.39 639 003.00 5 666.66 250,443.71 3 909.81 172,797.96 (2 183.33) (96 494.4~ 16 812.43 743 042.16 2 401.54 106,138.46 19,285.33 852 334.44 32 807.41

1449 956.29

13 217.51 584 161.07 12,089.21 534,294.73 8,885.70 392 712.40 19,594.28 865 988.80 12,968.28 573,146.10 5,891.58 260,384.27 5,923.80 261,808.26 16 999.98 751,331.12 30.75 1,359.03 15,579.92 688,570.14 15,237.11 665,431.26 13 802.56 602J81.95 5 054.53 220,740.17 2 641.70 115 367.66 14,853.28 648,668.73 45 986.76 2 008 322.29 57 606.21 2,515 764.00 5,215.58 227 773.51 5,283.40 230,735.32 25 699.67 1,122 349.56 146 447.82 6,395 632.58 71,597.77 3,126,799.91 P-1147 P-1148 P-1149 P-1150 P-1151 P-1152 P-1153 P-1154 P-1155 P-1156 P-1157 P-1158 P-1159 P-1160 P-1161 P-1162 P-1163 P-1164 P-1165 P-1166 P-1167 P-1168 P-1169 P-1170 P-1171 P-1172 P-1173 P-1174 P-1175 P-1176 P-1177 P-1178 P-1179 P-1180 P-1181

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2214 3/31/2011 2214 3/31/2011 2214 3/31/2011 2214 3/31/2011 2214 3/31/2011 2215 3/31/2011 2216 3/31/2011 2217 3/31/2011 2218 3/31/2011 2219 3/31/2011 2220 3/31/2011 2221 3/31/2011 2222 3/31/2011 2241 3/31/2011 2228 3/31/2011 2229 3/3112011 2233 3/31/2011 2233 3/31/2011 2246 3/31/2011 2287 4/29/2011 2288 4/29/2011 2289 4/29/2011 2290 4/29/2011 2298 4/29/2011 2299 4/29/2011 2300 4/29/2011 2303 4/29/2011 2304 4/29/2011 2305 4/29/2011 2306 4/29/2011 2306 4/29/2011 2306 4/2912011 2306 4/29/2011 2306 4/29/2011 2306 4/29/2011 2306 4/29/2011 2307 4/29/2011 2308 4/29/2011 2309 4/29/2011 2311 4/29/2011 2310 4/29/2011 2312 4/29/2011 2313 4/29/2011 2314 4/29/2011 2333 4/29/2011 2320 4/29/2011 2321 4/29/2011 16 040.25 700,505.79 14 392.31 628,537.36 5 666.66 247,472.96 3 834.81 167,472.86 (2,183.33) (95,349.84) 16,810.78 734,156.18 2,401.81 104,891.25 17,079.65 745,898.20 12,582.45 549,497.61 33,018.84 1,441,990.53 16,389.53 715,759.46 8,885.70 388,054.07 18,580.34 811,435.96 12,968.28 566,347.48 5,203.34 227,238.96 5,923.80 258J02.71 16,999.98 742,418.88 1 617.67 70,646.48 21 007.74 917 444.77 15 609.98 679 096.57 13 370.34 581,663.27 5 054.72 219,900.54 2 641.70 114 924.52 14 858.59 646 408.10 47 858.25 2,082,025.31 58,314.74 2,536,924.45 5,433.08 236,360.71 5 291.66 230,208.38 27,514.85 1,197,006.03 143,719.76 6,252,384.44 69,577.80 3,026,912.61 16 666.74 725,069.86 14 537.11 632,422.43 5,666.66 246,522.38 3 962.31 172,376.33 (2 183.331_ (94 983.59) 16,706.37 726,793.92 2 401.54 104,476.60 24 083.20 1,047 715.53 33 965.86 1 477 650.77 13 208.47 574,621.28 14,118.63 614,216.88 8 885.70 386 563.49 16 810.78 731 336.17 12,968.28 564,172.05 5,873.33 255 513.35 5 923.80 257 709.00 P-1182 P-1183 P-1220 P-1221 P-1222 P-1223 P-1224 P-1225 P-1226 P-1227 P-1228 P-1229 P-1230 P-1231

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance Total - First Quarter of CY 2011 Second Quarter of CY 2011 P-1504 Manulife (International) Ltd. P-1505 Manulife (International) Ltd. P-1506 Manulife (International) Ltd. P-1507 Manulife (International) Ltd. P-1508 Manulife (International) Ltd. P-1509 Manulife (International) Ltd. P-1510 Manulife (International) Ltd. P-1511 Manulife (International) Ltd. P-1512 Manulife (International) Ltd. P-1385 Manulife Sinqapore Pte Ltd Manulife Asset Management P-1394 (Hong Kong) Limited Manulife Asset Management P-1395 (Hong Kong) Limited Manulife Asset Management P-1396 (Hong Kong) Limited P-1397 John Hancock Life Insurance P-1398 John Hancock Life Insurance P-1399 John Hancock Life Insurance P-1400 John Hancock Life Insurance P-1401 John Hancock Life Insurance P-1402 John Hancock Life Insurance 2325 4/29/2011 2325 4/29/2011 2338 4/29/2011 2120 2/28/2011 2121 2/28/2011 2145 2/28/2011 2209 3/31f2011 2210 3,131/2011 2234 3/31/2011 2301 4/29/2011 2302 4/29/2011 2326 4/29/2011 2163 2/28/2011 2254 3/31/2011 2347 4/29/2011 subtotal 2348 5/30/2011 2349 5/30/2011 2350 5/30/2011 2445 6/30/2011 2446 6/30/2011 2447 6/30/2011 2549 7/29/2011 2550 7/29/2011 2551 7/29/2011 subtotal 2354 5/30/2011 subtotal 2417 5/30/2011 2512 6/30/2011 2617 7/29/2011 subtotal 2381 5/30/2011 2382 5/30/2011 2383 5/30/2011 2384 5/30/2011 2392 5/30/2011 2394 5/30/2011 14,166.65 616,305.94 27.69 1,204.63 15,028.55 653,802.04 19,562.57 864,587.34 17,211.65 760,686.08 2,500.00 110,490.00 19,348.76 844 994.21 15 856.19 692 467.57 2,500.00 109,179.38 18,281.55 795,320.55 19 041.83 828 395.77 2 500.00 108 760.00 79,890.07 3,530,821.53 79 855.92 3,487,447.77 80 368.71 3 496 350.73 2,244,592.43 98,286,042.83 2,776,391.11 121,569,821.83 45 479.04 1 946 502.87 106,126.36 4,542 208.41 41,140.63 1,760 818.86 49 576.81 2 139 144.81 98 118.26 4 233 615.41 40,514.73 1,748,133.37 49,453.12 2,144,847.66 101 993.63 4,423,599.66 40 950.65 1,776,084.27 573,353.23 24,714,955.32 173.99 7,446.83 173.99 7,446.83 12 150.00 520L020.00 12 150.00 524 249.31 12 150.00 526 961.70 36,450.00 1,571,231.01 15,609.98 668 107.14 12,968.34 555,044.95 5,054.67 216 339.88 2,641.70 113 064.76 16,092.78 688 770.98 56,102.54 2 401,188.71 ~ P-1403 P-1404 P-1405 P-1406 P-1407 P-1408 P-1409 P-1410 P-1411 P-1412 P-1413 P-1414 P-1415 P-1416 P-1417 P-1418 P-1419 P-1420 P-1421 P-1422 P-1423 P-1424 P-1425 P-1426 P-1427 P-1428 P-1429 P-1430 P-1431 P-1432 P-1433 P-1434 P-1435 P-1436

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2397 5130/2011 2398 5/30/2011 2399 5/30/2011 2400 5/3012011 2400 5/30/2011 2400 5/30/2011 2400 5/30/2011 2400 5/30/2011 2400 5/30/2011 2400 5/30/2011 2401 5/30/2011 2402 5/30/2011 2403 5/30/2011 2404 5/30/2011 2405 5/30/2011 2406 5/30/2011 2407 5/30/2011 2408 5/30/2011 2431 5/30/2011 2414 5/30/2011 2415 5/30/2011 2422 5/30/2011 2422 5/30/2011 2436 5/30/2011 2476 6/30/2011 2477 6/30/2011 2478 6/30/2011 2479 6/30/2011 2487 6/30/2011 2488 6/30/2011 2489 6/30/2011 2492 6/30/2011 2493 6/30/2011 2494 6/30/2011 2495 6/30/2011 2495 6/3012011 2495 6/30/2011 2495 6/30/2011 2495 6/_30f2011 2495 6/30/2011 2495 6/30/2011 2496 6/30/2011 2497 6/30/2011 2498 6/30/2011 2500 6/30/2011 2499 6/30/2011 2501 6/30/2011 4 968.08 212 633.82 5,283.40 226,129.52 25,699.03 1 099 918.48 140 831.88 6 027 604.46 68 896.05 2,948 750.94 17 241.02 737,915.66 14 533.11 622,017.11 5 666.66 242 533.05 3,617.31 154,820.87 (2 183.33) (93,446.52) 16,812.29 719,566.01 2,401.54 102,785.91 23,844.87 1,020,560.44 13,214.50 565,580.60 31,895.39 1 365,122.69 15,003.65 642,156.22 8,885.70 380,307.96 16,810.78 719,501.38 12,968.28 555,042.38 8,420.83 360,411.52 5,923.80 253,538.64 16,666.65 713,332.62 27.62 1_,182.14 15 696.74 671820.47 16,501.98 712L028.93 13 663.74 589,564.30 3 722.39 160 614.02 3 081.98 132 981.55 16,105.90 694,938.84 54 614.18 2 356,497.60 55 943.15 2 413,840.12 4,803.08 207,243.73 5,283.40 227,968.62 24,839.86 1,071,792.54 141,672.40 6,112,893.59 72 053.17 3,108,956.73 17,755.64 766,121.97 14,289.19 616,551.27 5,666.66 244,505.56 3 602.31 155 432.80 (2,183.331 (94,206.52) 16 467.70 710/549.82 2 401.54 103 621.87 17 411.19 751 259.61 32,603.11 1,406,761.95 15 031.48 648,579.67 14 218.59 613,505.01 ~ il- P-1437 P-1438 P-1439 P-1440 P-1441 P-1442 P-1443 P-1444 P-1445 P-1446 P-1447 P-1448 P-1449 P-1450 P-1451 P-1452 P-1453 P-1454 P-1455 P-1456 P-1457 P-1458 P-1459 P-1460 P-1461 P-1462 P-1463 P-1464 P-1465 P-1466 P-1467 P-1468 P-1469 P-1470 P-1471 P-1513 P-1514 P-1515 P-1516

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2502 6/30/2011 2503 6/30/2011 2529 6/30/2011 2509 6/30/2011 2510 6/30/2011 2517 6/30/2011 2517 6/30/2011 2532 6/30/2011 2580 7/29/2011 2581 7/29/2011 2582 7/29/2011 2583 7/29/2011 2592 7/29/2011 2593 7/29/2011 2594 7/29/2011 2595 7/29/2011 2596 7/29/2011 2597 7/29/2011 2598 7/29/2011 2599 7/29/2011 2600 7/29/2011 2600 7/29/2011 2600 7/29/2011 2600 7/29/2011 2600 7/29/2011 2600 7/29/2011 2600 7/29/2011 2601 7/29/2011 2602 7/29/2011 2603 7/29/2011 2604 7/29/2011 2605 7/29/2011 2606 7/29/2011 2607 7/29/2011 2608 7/29/2011 2635 7/29/2011 2614 7/29/2011 2615 7/29/2011 2622 7/29/2011 2622 7/29/2011 2638 7/29/2011 2540 6/30/2011 2588 7/29/2011 2395 5/30/2011 2396 5/30/2011 2490 6/30/2011 2491 6/30/2011 8,885.70 383,400.99 13,482.89 581,760.96 12 831.05 553,635.31 10,806.93 466 298.40 5,923.80 255,600.66 15,333.33 661,603.92 1,677.87 72,396.89 19,527.53 842,575.64 12,924.63 560,558.44 14,529.34 630,156.85 3,722.39 161,445.02 4,028.63 174J27.05 16,053.87 696,277.75 54,537.45 2,365,361.92 57,425.93 2 490 639.15 18 427.80 799 238.26 16 552.36 717 897.92 4 803.08 208,315.98 5 299.92 229 864.60 24 589.93 1 066 498.05 141,673.97 6,144,588.98 72,867.92 3,160,378.85 17,241.02 747,766.03 14,725.83 638 678.88 5,666.66 245 770.60 3,602.31 156 236.99 (2 183.33) (94 693.93) 15,610.01 677,026.95 2,401.54 104,157.99 17,049.88 739,476.03 12,608.09 546,829.67 33_L_874.27 1 469,172.26 13 766.39 597 066.69 8,885.70 385,384.66 13 950.73 605 061.76 14 540.19 630 627.43 10,806.93 468 710.96 5,923.80 256 923.10 15,333.33 665 026.97 27.80 1,205.72 17,790.72 771,607.25 78 989.06 3,408,227.14 4 317.46 187 254.00 18 562.80 794 487.84 16,351.90 699 861.32 18,286.05 789,008.15 16,566.98 714,833.56 P-1517 P-1520 P-1521

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance Total -Second Quarter of CY 2011 Third Quarter of CY 2011 Manulife Asset Management P-1689 (Honq Konq) Limited Manulife Asset Management P-1690 (Honq Konq) Limited Manulife Asset Management P-1815 (Honq Konq) Limited P-1691 Manulife (International) Ltd. P-1692 Manulife (International) Ltd. P-1693 Manulife (International) Ltd. P-1798 Manulife (International) Ltd. P-1799 Manulife (International) Ltd. P-1800 Manulife (International) Ltd. P-1801 Manulife (International) Ltd. P-1802 Manulife (International) Ltd. P-1803 Manulife (International) Ltd. P-1694 John Hancock Life Insurance P-1695 John Hancock Life Insurance P-1696 John Hancock Life Insurance P-1697 John Hancock Life Insurance P-1698 John Hancock Life Insurance P-1699 John Hancock Life Insurance P-1700 John Hancock Life Insurance P-1701 John Hancock Life Insurance P-1702 John Hancock Life Insurance P-1703 John Hancock Life Insurance P-1704 John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance P-1705 John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance P-1706 John Hancock Life Insurance P-1707 John Hancock Life Insurance P-1708 John Hancock Life Insurance 2644 7/29/2011 2393 5/30/2011 2444 5/30/2011 subtotal 2650 8/31/2011 2852 10/30/2011 2749 9/30/2011 subtotal 2645 8/31/2011 2645 8/31/2011 2647 8/31/2011 2744 9/30/2001 2745 9/30/2001 2746 9/30/2001 2847 10/30/2011 2848 10/30/2011 2849 10/30/2011 subtotal 2715 8/31/2011 2716 8/31/2011 2717 8/31/2011 2718 8/31/2011 2719 8/31/2011 2720 8/31/2011 2721 8/31/2011 2722 8/31/2011 2725 8/31/2011 2726 8/31/2011 2727 8/31/2011 2728 8/31/2011 2728 8/31/2011 2728 8/31/2011 2728 8/31/2011 2728 8/31/2011 2728 8/31/2011 2728 8/31/2011 2730 8/31/2011 2731 8/31/2011 2732 8/31/2011 79,898.05 3 465,284.96 46,689.27 1 998,300.76 83 071.54 3,555 461.91 2,251,406.47 97,052,283.61 2,861,383.69 123,345,916.77 12 150.00 512,001.00 12 150.00 530 104.50 13 704.31 579 418.23 38,004.31 1,621,523.73 48,383.73 2,038,890.56 41,006.95 1,728 033.81 102,671.46 4,326 575.27 46 645.85 1,972 186.58 41,109.71 1, 738,118.67 107 306.02 4,536,898.63 47 212.98 2 059,902.48 45 007.46 1 963 675.66 108 544.19 4 735 783.06 587,888.35 25,100,064.72 15,970.21 672,984.65 14 949.62 629 976.99 4 736.16 199 581.78 3 962.55 166 981.86 2,833.33 119 396.53 17,060.95 718 948.43 53,320.82 2 246 939.35 54,184.62 2,283,339.89 4,968.08 209,354.89 5,945.21 250,531.15 25,514.34 1 075,174.29 140,321.14 5 913,132.84 65 932.68 2 778,403.14 13,158.40 554,494.98 14 469.13 609 729.14 5 666.66 238,793.05 3,602.31 151,801.34 (2,183.33) (92 005.53) 2,401.54 101,200.90 24,528.11 1,033,614.56 14,780.11 622,833.84 P-1709 P-1710 P-1711 P-1712 P-1713 P-1714 P-1715 P-1716 P-1717 P-1718 P-1719 P-1720 P-1721 P-1722 P-1723 P-1724 P-1725 P-1726 P-1727 P-1728 P-1729 P-1730 P-1731 P-1732 P-1733 P-1734 P-1735 P-1736 P-1737 P-1738 P-1739 P-1740 P-1741 P-1742 P-1743 P-1744 P-1745 P-1746 P-1747

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2733 8/31/2011 2734 8/31/2011 2735 8/31j2011 2736 81_31/2011 2738 8/31/2011 2739 8/31/2011 2739 8/31/2011 2740 8/31/2011 2741 9/30/2011 2817 9/30/2011 2818 9/30/2011 2819 9/30/2011 2820 9/30/2011 2822 9/30/2011 2823 9/30/2011 2824 9/30/2011 2827 9/30/2011 2828 9/30/2011 2829 9/30/2011 2830 9/30/2011 2830 9/30/2011 2830 9/30/2011 2830 9/30/2011 2830 9/30/2011 2830 9/30/2011 2830 9/30/2011 2831 9/30/2011 2832 9/30/2011 2833 9/30/2011 2834 9/30/2011 2835 9/30/2011 2836 9/30/2011 2837 9/30/2011 2838 9/30/2011 2839 9/3012011 2840 9/30/2011 2841 9/30/2011 2842 9/30/2011 2842 9/30/2011 2843 9/30/2011 2844 9/30/2011 2918 10/30/2011 2919 10/30/2011 2920 10/30/2011 2921 10/30/2011 2923 10/30/2011 2924 10/30/2011 31 039.90 1,308,021.39 13,918.12 586,509.58 8,885.70 374,443.40 13 940.90 587 469.53 5 923.80 249,628.93 15 999.99 674 239.58 27.79 1171.07 13 688.74 576 843.50 17 988.18 758 021.91 15,609.98 659,989.95 14,289.19 604 146.95 6,255.87 264 498.31 3,962.55 167 536.61 17,050.94 720,913.74 54,765.05 2,315,466.50 54,861.07 2,319,526.10 4,863.08 205,611.02 6,317.11 267,087.36 25,897.60 1,094,950.66 139,094.40 5,880,911.20 68 075.97 2,878,252.05 14 839.48 627_~413.21 14 289.19 604 146.95 5 666.66 239 586.38 2,401.54 101,537.11 (2 183.33) (92,311.33) 16 810.78 710 759.78 2 401.54 101 537.11 30 621.28 1 294 667.56 15 617.98 660 328.28 20 413.09 863 065.45 27,898.84 1179,562.95 8,885.70 375 687.40 26,364.73 1114,700.89 13,250.20 560 218.42 9,606.16 406,148.44 5,923.80 250,458.26 15,333.33 648,293.19 28.14 1,189.76 12 968.28 548,298.88 20 074.72 848 759.21 15,609.98 681,063.43 14 289.19 623 437.36 8,876.36 387,275.68 7,148.20 311,875.98 16,784.10 732,290.37 51,517.23 2,247,696.64 P-1748 P-1749 P-1750 P-1751 P-1752 P-1753 P-1754 P-1755 P-1756 P-1757 P-1758 P-1759 P-1760 P-1761 P-1762 P-1763 P-1764 P-1765 P-1766 P-1767 P-1793 P-1794 P-1795 P-1796 P-1804 P-1805 P-1806 P-1807 P-1808 P-2322 P-2323

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance Total -Third Quarter of CY 2011 Fourth Quarter of CY 2011 P-1984 Manulife Singapore Pte. Ltd. 2925 10/30/2011 2926 10/30/2011 2927 10/30/2011 2928 10/30/2011 2929 10/30/2011 2931 10/30/2011 2931 10/30/2011 2931 10/30/2011 2931 10/30/2011 2931 10/30/2011 2931 10/30/2011 2931 10/30/2011 2932 10/30/2011 2933 10/30/2011 2934 10/30/2011 2935 10/30/2011 2936 10/30/2011 2937 10/30/2011 2938 10/30/2011 2939 10/30/2011 2940 10/30/2011 2941 10/30/2011 2942 10/30/2011 2943 10/30/2011 2943 10/30/2011 2944 10/30/2011 2945 10/30/2011 2723 8/31/2011 2724 8/31/2011 2825 9/30/2011 2826 9/30/2011 2729 8/31/2011 2737 8/31/2011 2821 9/30/2011 2922 10/30/2011 2950 10/30/2011 2930 10/30/2011 2946 10/30/2011 subtotal 3227 1/31/2012 subtotal 55 394.17 2 416 847.48 18,018.98 786,167.91 16 368.84 714 172.33 5 103.08 222 647.38 5,409.20 236,003.19 136,125.87 5 939,171.69 71,245.59 3 108,445.10 14,689.42 640,899.39 14,289.19 623 437.36 5,666.66 247,236.38 3,111.09 135,736.68 (2,183.33) (95,258.83) 16,467.70 718,485.88 2,401.54 104,779.19 28,846.97 1 258,593.08 15 769.43 688 020.36 20,416.62 890J77.30 26 225.09

1144 200.61

10 296.13 449 220.09 37 566.95 1 639 045.90 11494.61 501 509.91 8,405.39 366 727.17 5,923.80 258,455.39 15,095.23 658,605.09 28.04 1,223.36 13,311.36 580,774.47 23,547.17 1,027,362.85 18,290.34 770,754.93 15,725.17 662,658.66 18,286.49 773,152.59 15_L_893.19 671,964.06 15 610.01 657,805.82 10,686.85 450)43.86 2,833.33 119J93.19 2 833.33 123 618.19 76 780.19 3 349 919.69 26,174.61

1141 998.19

3,162.88 137,996.50 2,179,326.92 93,131,427.16 2,805,219.58 119,853,015.61 1872.22 82 078.13 1,872.22 82,078.13 P-1988 P-1989 P-1990 P-1991 P-1992 P-1993 P-1994 P-1995 P-1996 P-1997 P-2117 P-2118 P-2119 P-2120 P-2121 P-2122 P-2130 P-2131 P-1998 P-1999 P-2000 P-2001 P-2002 P-2003 P-2004 P-2005 P-2006 P-2007 P-2008 P-2009 P-2010 P-2011 P-2012 P-2013 P-2014 P-2015

Manulife Asset Management (Honq Konq) Limited Manulife Asset Management (Hong Kong) Limited Manulife Asset Management (Hong Kol'lg) Limited Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. Manulife (International) Ltd. John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 2959 11/30/2011 3116 12/30/2011 3229 1/31/2012 subtotal 3222 12/30/2011 3216 12/31/2011 3217 1/1/2012 3218 1/2/2012 3219 1/3/2012 3220 1/4/2012 3221 1/5/2012 3109 12/30/2011 2954 11/30/2011 2955 11/30/2011 2956 11/30/2011 3223 1/31/2012 3224 1/31/2012 3110 12/30/2011 3111 12/30/2011 subtotal 3075 11/30/2011 3076 11/30/2011 3077 11/30/2011 3078 11/30/2011 3079 11/30/2011 3080 11/30/2011 3081 11/30/2011 3082 11/30/2011 3083 11/30/2011 3084 11/30/2011 3085 11/30/2011 3086 11/30/2011 3087 11/30/2011 3088 11/30/2011 3088 11/30/2011 3088 11/30/2011 3088 11/30/2011 3088 11/30/2011 3088 11/30/2011 3088 11/30/2011 3089 11/30/2011 3090 11/30/2011 3091 11/30/2011 3093 11/30/2011 12,150.00 529,033.48 12,150.00 530,226.00 12,150.00 532,656.00 36,450.00 1.591,915.48 46,349.35 2,031,955.44 552.00 24,199.68 2,898.00 127,048.32 2,898.00 127,048.32 2,898.00 127,048.32 3,622.50 158,810.40 3,622.50 158,810.40 48,108.08 2,099,436.75 47,079.64 2,049,934.62 42,710.81 1,859,707.87 106,711.46 4,646,414.53 44,579.30 1,954,356.51 98,284.37 4,308, 786.56 102,881.98 4,489,769.67 43,815.80 1,912,121.51 597,011.79 26,075,448.90 15,459.88 673,151.80 15,387.88 670,016.96 7,684.94 334,616.50 3,962.55 172,536.76 2,833.33 123,368.43 15,641.45 681,057.50 52,024.89 2,265,259.85 53,254.13 2,318,783.15 19,225.21 837,101.05 14,784.60 643,748.72 5,080.58 221,217.85 5,409.20 235,526.37 26,194.45 1,140,554.70 147,090.75 6,404,603.33 74,649.65 3,250,384.05 14,689.42 639,604.52 14,289.19 622,177.77 5,666.66 246,736.86 3,602.31 156,851.24 (2 183.33) (95,066.37) 16,524.88 719,523.95 2,401.54 104,567.49 28,910.56 1,258,819.47 20,413.09 888,823.70 lA.

P-2016 P-2017 P-2018 P-2019 P-2020 P-2021 P-2022 P-2023 P-2024 P-2025 P-2026 P-2027 P-2028 P-2029 P-2030 P-2031 P-2032 P-2033 P-2034 P-2035 P-2036 P-2037 P-2038 P-2039 P-2040 P-2041 P-2042 P-2043 P-2044 P-2045 P-2046 P-2047 P-2048 P-2049 P-2050 P-2051 P-2052 P-2053 P-2054 P-2055 P-2056

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance 3094 11/30/2011 3095 11/30/2011 3096 11/30/2011 3097 11/30/2011 3098 11/30/2011 3099 11/30/2011 3100 11/30/2011 3101 11/30/2011 3101 11/30/2011 3102 11/30/2011 3103 11/30/2011 3104 11/30/2011 3184 12/30/2011 3185 12/30/2011 3186 12/30/2011 3187 12/30/2011 3188 12/30/2011 3189 12/30/2011 3190 12/30/2011 3191 12/30/2011 3192 12/30/2011 3193 12/30/2011 3194 12/30/2011 3195 12/30/2011 3196 12/30/2011 3197 12/30/2011 3197 12/30/2011 3197 12/30/2011 3197 12/30/2011 3197 12/30/2011 3197 12/30/2011 3197 12/30/2011 3198 12/30/2011 3199 12/30/2011 3200 12/30/2011 3201 12/30/2011 3202 12/30/2011 3203 12/30/2011 3204 12/30/2011 3205 12/30/2011 3206 12/30/2011 3207 12/30/2011 3208 12/30/2011 3209 12/30/2011 3210 12/30/2011 3210 12/30/2011 3211 12/30/2011 3212 12/30/2011 3213 12/30/2011 23,302.03 1,014,613.70 10,366.65 451,383.12 45,914.20 1,999,189.30 12,808.21 557,693.30 9,983.52 434,700.81 8,119.49 353,537.72 4,442.85 193,449.91 15,968.24 695 286.90 27.94 1,216.58 15,850.12 690,143.55 24,961.90 1,086,887.30 2,659.70 115,808.26 16,322.94 712,333.01 13,927.35 607,789.73 7,577.52 330,683.15 14,956.16 652,686.78 4,587.30 200,189.61 14,451.10 630,645.97 51,914.84 2,265,563.66 53,019.88 2,313,787.76 21,871.36 954,466.10 14,130.05 616,635.26 5,163.08 225,316.81 4,717.32 205,863.91 25,862.10 1,128,622.26 150,779.70 6,580,026.27 70,057.68 3,057,316.96 14,689.42 641,046.29 14,289.19 623,580.25 5,666.66 247,293.04 3,602.31 157,204.81 (2,183.33) (95,280.67) 16,810.78 733,622.44 2,401.54 104,803.21 29,053.20 1,267,881.75 2,401.54 104,803.21 20,788.59 907,214.21 22,395.83 977,354.21 10,366.65 452,400.61 39,464.66 1, 722,237.83 18,345.29 800,588.24 9,510.07 415,019.54 8,405.39 366,811.22 4,442.85 193,885.97 15,333.33 669,146.52 124.04 5,412.95 14,697.38 641,393.84 24,057.41 1,049,865.20 2,659.70 116,069.31 P-2057 P-2058 P-2059 P-2060 P-2061 P-2062 P-2063 P-2064 P-2065 P-2066 P-2067 P-2068 P-2069 P-2070 P-2071 P-2072 P-2073 P-2074 P-2075 P-2076 P-2077 P-2078 P-2079 P-2080 P-2081 P-2082 P-2083 P-2084 P-2085 P-2086 P-2123 P-2124 P-2133 P-2326

John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance John Hancock Life Insurance Total - Fourth Quarter of CY 2011 Grand Total - CY 2011 3298 1/31/2012 3299 1/31/2012 3300 1/31/2012 3301 1/31/2012 3302 1/31/2012 3303 1/31/2012 3304 1/31/2012 3305 1/31/2012 3306 1/31/2012 3307 1/31/2012 3309 1/31/2012 3310 1/31/2012 3311 1/31/2012 3311 1/31/2012 3311 1/31/2012 3311 1/31/2012 3311 1/31/2012 3311 1/31/2012 3311 1/31/2012 3312 1/31/2012 3313 1/31/2012 3314 1/31/2012 3315 1/31/2012 3316 1/31/2012 3317 1/31/2012 3318 1/31/2012 3319 1/31/2012 3320 1/31/2012 3321 1/31/2012 3322 1/31/2012 3323 1/31/2012 3324 1/31/2012 3324 1/31/2012 3325 1/31/2012 3326 1/31/2012 3327 1/31/2012 3215 12/30/2011 3092 11/30/2011 3108 11/30/2011 3308 1/31/2012 3011 1/31/2012 subtotal 14,905.89 653,474.36 12,968.34 568,532.15 7,464.93 327,262.49 3,962.55 173,718.19 5,666.66 248,426.37 14,494.27 635,428.80 53,234.19 2,333, 786.89 56,039.26 2,456,760.97 20,749.07 909,639.14 15,678.43 687,342.28 5,283.40 231,624.26 25,593.28 1,122,009.37 157,370.77 6,899,134.59 72,534.25 3,179,901.41 15,890.19 696,625.93 15,484.24 678,829.29 5,666.66 248,426.37 3,602.31 157,925.27 (2,183.33) (95,717.33) 16,810.78 736,984.60 2,401.54 105,283.51 27,801.10 1,218,800.12 2,401.54 105,283.51 19,157.34 839,857.82 31,255.10 1,370,223.46 10,366.65 454,473.94 43,659.87 1,914,048.55 16,810.78 736,984.60 8,645.52 379,019.60 7,204.62 315,850.54 4,442.85 194,774.54 15,333.33 672,213.19 124.04 5,437.76 14,147.21 620,213.89 28,680.49 1,257,352.80 4,508.89 197,669.74 83,591.45 3,647,930.88 2,401.54 104,567.49 87,463.40 3,808,318.24 6,228.85 273,072.78 93,337.04 4,091,895.83 2,515,242.83 109,855,545.54 3,150,576.84 137,604,988.05 11,593,571.21 502.373.742.26

However, the following gross receipts totaling P22,826,883.17, which were not properly supported by VAT zero-rated ORs as found by the !CPA, shall be deducted from the above gross receipts of P502,373,742.26:

ICPA's Findings 1'' Quarter 2"• Quarter 3"' Quarter 4'" Quarter Total Supported by zero-rated OR issued in the name of the customer's department37 John Hancock Life Insurance p 5,114 880.90 !' 6 463 475.83 p 2 878 530.24 p 3 912 885.74 p 18 369 772.71 Subtotal !'5,114,880.90 !'6,463,475.83 P2,878,530.24 P3 912 885.74 P18 369 772.71 Excess amount of the zero- rated receipts per petitoner's claim over the zero-rated receipts per OR38 John Hancock Life Insurance !' 66 652.02 !' 1 478 050.49 !' 210 224.75 !' 58 818.81 !' 1 813 746.07 Manulife Asset Management (Hong Kong) Limited - - 65 716.23 - 65 716.23 Manu life (International) Ltd. - - - 2 577 648.16 2 577 648.16 Subtotal p 66 652.02 P1 478 050.49 p 275 940.98 P2 636 466.97 p 4,457 110.46 Total Disallowances per ICPA's Findings !'5,181,532.92 P7,941,526.32 P3,154,471.22 P6,549,352.71 P22 826,883.17 In addition, the Court noted that OR Nos. 2540 and 3215, per schedule, in the amounts of US$78,989.06 and US$83,591.45, respectively, were not the ORs actually submitted by petitioner per marked exhibits. Further, OR No. 3111 in the amount of US$43,815.80 was issued not in the name of petitioner's client. Hence, the corresponding gross receipts shall also be denied VAT zero-rating, detailed as follows:

Amount in Amount in OR No.

US$ PhP OR per schedule was not the OR actually submitted by petitioner per marked exhibit For the 2nd Quarter of CY 2011 John Hancock Life Insurance (Exhibit No. P-1470) 2540 78 989.06 For the 4th Quarter of CY 2011 83,591.45 John Hancock Life Insurance (Exhibit No. P-2086) 3215 OR issued was not in the name of petitioner's client For the 4th Quarter of CY 2011 37 Exhibit P-65, Annexes 9 to 12. 38 Exhibit P-65, Annexes 13 to 16. 3,408,227.14 3,647,930.88 Findings Payment received from Manulife Canadian Division in the amount of US$38,950.47 per OR No. 2356 Payment received from Manulife Canadian Division in the amount of US$17,421.46 per OR No. 2953

Manulife (International) Ltd. (Exhibit No. P-2131) Total 3111 Payment Received from 43,815.80 1,912,121.51 Hong Kong Operations in the amount of US$102 881.98 206,396.31 8,968,279.53 Likewise, as per verification of the bank statements and credit advice, it was also noted that the following sales of petitioner to its non- resident foreign affiliates have no corresponding inward remittances, to wit:

Amount in PhP of Zero- Rated Sales Bank Without Zero-Rated Zero-Rated Inward Statement Corresponding Sales Sales Remittance /Credit Difference Inward OR (in US$) (in PhP) (in US$) Advice (d) Remittance Customer No.

(a I (b) (C) (Exh. No.)

(a-cJ [b x (d+a)J First Quarter of CY 2011 Manulife (International) Ltd. 2075 48 277.34 2 133 665.32 Manulife (International) Ltd. 2076 88 717.54 3 920 960.56 136 994.88 6 054 625.88 123 754.36 P-2135 13 240.52 585 178.20 Manulife (International) Ltd. 2077 35 335.77 1,561 699.87 31 900.93 P-2136 3 434.84 151 806.37 Manulife (International) Ltd. 2164 45 124.60 1 970 670.14 Manulife (International) Ltd. 2165 92 755.83 4 050 809.61 137 88Q.43 6 021479.75 123 935.00 P-2137 13 945.43 609 021.34 Manulife (International) Ltd. 2166 35 756.58 1 561 552.40 32 345.46 P-2138 3,411.12 148 969.58 Manulife (International) Ltd. 2255 46 655.57 2 029 703.92 Manulife (International) Ltd. 2256 99 306.40 4 320 225.67 145 961.97 6 349 929.59 130 972.15 P-2139 14989.82 652 117.13 Manulife (International) Ltd. 2257 39 665.05 1 725 588.47 - - 39 665.05 1 725 588.47 Subtotal 531 594.69 23 274 875.95 442 907.90 88 686.79 3 872 681.09 Manulife Sinqapore pte, Ltd. 2081 22.39 989.35 Manulife Sinoaoore pte, Ltd. 2170 76.98 3 362.04 99.37 4 351.39 94.37 P-2279 5.00 218.95 Manulife Singapore pte, Ltd. 2261 104.63 4 551.65 78.63 P-2139 26.00 1131.06 Subtotal 204.00 8 903.04 173.00 31.00 1 350.Ql Total - First Otr of CY 2011 531798.69 23 283 778.99 443 080.90 88,717.79 3 874,031.10 Second Quarter of CY 2011 Manulife (International) Ltd. 2348 45 479.04 1 946 502.87 Manulife (International) Ltd. 2349 106 126.36 4 542 208.41 151 605.40 6 488 711.28 135 703.58 P-2142 15 901.82 680 597.91 Manulife (International) Ltd. 2445 49 576.81 2 139 144.81 Manulife (International) Ltd. 2446 98 118.26 4 233 615.41

Manulife (International) Ltd. 2447 Manulife {International) Ltd. 2549 Manulife {International) Ltd. 2550 Manulife {International) Ltd. 2551 Subtotal Manulife 5inoaoore Pte Ltd 2354 Subtotal Total-Second Qtr of CY 2011 Third Ouarter of CY 2011 Manulife {International) Ltd. 2645 Manulife {International) Ltd. 2647 Manulife (!nternationa I) Ltd. 2849 Total -Third Otr of CY 2011 Fourth Quarter of CY 2011 Manulife 5inoaoore Pte. Ltd. 3227 Subtotal Manulife Asset Management (Hong Kong)_ Limited 2959 Manu life Asset Management {Hono Konq) Limited 31!6 Manulife Asset Management {Hong Kong) Limited 3229 Subtotal Manulife (International) Ltd. 3222 Subtotal John Hancock Life Insurance 3298 John Hancock Life Insurance 3299 John Hancock Life Insurance 3300 John Hancock Life Insurance 3301 John Hancock Life Insurance 3302 John Hancock Life Insurance 3303 John Hancock Life Insurance 3304 John Hancock Life Insurance 3305 John Hancock Life Insurance 3306 John Hancock Life Insurance 3307 John Hancock Life Insurance 3308 John Hancock Life Insurance 3309 John Hancock Life Insurance 3310 John Hancock Life Insurance 331!

John Hancock Life Insurance 3311 John Hancock Life Insurance 3311 John Hancock Life Insurance 3311 40 514.73 1 748 133.37 188 209.80 8 120 893.59 49 453.12 2 144 847.66 101 993.63 4 423 599.66 151 446.75 6 568 447.33 40 950.65 1 776 084.27 532 212.60 22 954 136.47 173.99 7 446.83 173.99 7 446.83 532 386.59 22,961 583.30 48 383.73 2 038 890.56 102 671.46 4 326 575.27 151 055.20 6 365 465.83 108,544.19 4 735 783.06 259 599.39 11101 248.89 1 872.22 82 078.13 1 872.22 82 078.13 12 150.00 529 033.48 12,150.00 530,226.00 12,150.00 532,656.00 36 450.00 1 591 915.48 46,349.35 2,031,955.44 46 349.35 2,031 955.44 14,905.89 653,474.36 12,968.34 568,532.15 7,464.93 327,262.49 3,962.55 173,718.19 5,666.66 248,426.37 14,494.27 635,428.80 53,234.19 2,333,786.89 56,039.26 2,456,760.97 20,749.07 909,639.14 15,678.43 687,342.28 6,228.85 273,072.78 5,283.40 231,624.26 25,593.28 1,122,009.37 157,370.77 6,899,134.59 72,534.25 3,179,901.41 15,890.19 696,625.93 15,484.24 678,829.29 132 313.32 P-2282 55 896.48 2 411826.41 151 436.75 P-2283 10.00 433.71 37 027.46 P-2152 3 923.19 170 153.98 456 481.11 75 731.49 3 263,012.01 147.99 P-2142 26.00 1112.81 147.99 26.00 1112.81 456 629.10 75,757.49 3 264,124.82 15 662.24 P-2153 135 392.96 5 705 459.06 37 108.47 P-2165 71435.72 3 1!6 740.50 52 770.71 206 828.68 8 822199.56 - - 1 872.22 82 078.13 1 872.22 82 078.13 - - 12 150.00 529 033.48 - - 12 150.00 530 226.00 - - 12 150.00 532,656.00 36 450.00 1 591 915.48 - - 46 349.35 2 031 955.44 46 349.35 2 031 955.44 - - 14 905.89 653 474.36 - - 12 968.34 568 532.15 - - 7 464.93 327 262.49 - - 3 962.55 173 718.19 - - 5 666.66 248 426.37 14 494.27 635 428.80 - - 53 234.19 2 333 786.89 - - 56 039.26 2 456 760.97 - - 20 749.07 909 639.14 - - 15 678.43 687 342.28 - - 6 228.85 273 072.78 - - 5 283.40 231 624.26 - - 25 593.28

1122 009.37

- - 157 370.77 6 899 134.59 - - 72 534.25 3 179 901.41 - - 15 890.19 696 625.93 - - 15 484.24 678 829.29

John Hancock Life Insurance 3311 John Hancock Life Insurance 3311 John Hancock Life Insurance 3311 John Hancock Life Insurance 3312 John Hancock Life Insurance 3313 John Hancock Life Insurance 3314 John Hancock Life Insurance 3315 John Hancock Life Insurance 3316 John Hancock Life Insurance 3317 John Hancock Life Insurance 3318 John Hancock Life Insurance 3319 John Hancock Life Insurance 3320 John Hancock Life Insurance 3321 John Hancock Life Insurance 3322 John Hancock Life Insurance 3323 John Hancock Life Insurance 3324 John Hancock Life Insurance 3324 John Hancock Life Insurance 3325 John Hancock Life Insurance 3326 John Hancock Life Insurance 3327 Subtotal Total - Fourth Qtr of CY 2011 Grand Total - CY 2011 5,666.66 248,426.37 3,602.31 157,925.27 (2,183.33) (95,717.33) 16,810.78 736,984.60 2,401.54 105,283.51 27,801.10 1,218,800.12 2,401.54 105,283.51 19,157.34 839,857.82 31,255.10 1,370,223.46 10,366.65 454,473.94 43,659.87 1,914,048.55 16,810.78 736,984.60 8,645.52 379,019.60 7,204.62 315,850.54 4,442.85 194,774.54 15,333.33 672,213.19 124.04 5,437.76 14,147.21 620,213.89 28,680.49 1,257,352.80 4,508.89 197,669.74 764 385.86 33 510 675.71 849 057.43 37 216 624.76 2,172 842.09 94 563 235.94 - - 5 666.66 248 426.37 - - 3 602.31 157 925.27 - - (2 183.33) (95 717.33) - - 16 810.78 736 984.60 - - 2 401.54 105 283.51 - - 27 801.10 1 218 800.12 - - 2 401.54 105 283.51 - - 19 157.34 839 857.82 - - 31 255.10 1 370 223.46 - - 10 366.65 454 473.94 - - 43 659.87 1 914 048.55 - - 16 810.78 736 984.60 - - 8 645.52 379 019.60 - - 7 204.62 315 850.54 - - 4 442.85 194 774.54 - - 15 333.33 672 213.19 - - 124.04 5 437.76 - - 14 147.21 620 213.89 - - 28 680.49 1 257 352.80 - - 4 508.89 197,669.74 - - 764 385.86 33 510 675.75 849,057.43 37 216 624.80 952 480.71 1 220,361.38 53 176,980.28 In sum, petitioner's valid zero-rated receipts for the taxable year 2011 amounted only to P417,401,599.28, computed thus: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Zero-Rated Receipts in PhP John Hancock Life Insurance 98 286 042.83 97 052 283.61 93 131 427.16 105 490,576.90 393 960 330.50 Manulife (International) Ltd. 23 274 875.96 24 714 955.32 25 100 064.72 26 075 448.90 99 165 344.90 Manulife Asset Management (Hong Kong) Limited - 1 571 231.01 1 621 523.73 1 591 915.48 4 784 670.22 Manulife Sinqapore pte Ltd 8 903.04 7,446.83 - 82 078.13 98 428.00 Total 121,569,821.83 123,345,916.77 119,853,015.61 137,604,988.05 502,373 742.26 Less: Disallowances Per ICPA's Findings Supported by Zero-Rated O.R. issued in the name of the Customer's Department John Hancock Life Insurance 5 114 880.90 6 463 475.83 2 878,530.24 3 912 885.74 18 369 772.71 Excess amount of the zero- rated receipts per petitoner's claim over the zero-rated receipts per OR'9 John Hancock Life Insurance 66 652.02

1478 050.49

210 224.75 58 818.81 1 813 746.07

Manulife (International) Ltd. - - 65 716.23 - 65 716.23 ~anulife ~~~et Management Hona Kon Limited - - - 2 577 648.16 2 577 648.16 subtotal 5 181.532.92 7 941 526.32 3 154 471.22 6 549 352.71 22 826 883.17 Per this Court's Findinas OR per schedule was not the OR actual OR per marked Exhibits John Hancock Life Insurance - 3 408 227.14 - 3 647 930.88 7 056 158.02

0. R. issued was not in the name of the netitioner. Manulife (International) Ltd. - - - 1 912 121.51 1,912 121.51 subtotal - 3 408 227.14 - 5 560 052.39 8 968 279.53 Sales without corresponding Inward Remittance John Hancock Life Insurance - - - 33 510 675.75 33 510 675.75 Manulife l!nternationan Ltd. 3 872 681.09 3 263 012.01 8 822 199.56 2 031 955.44 17 989,848.10 ~anulife ~~et Management Hona Kon Limited - - - 1 591 915.48 1,591 915.48 Manulife Sinaaoore Pte Ltd 1 350.01 1112.81 - 82 078.13 84 540.95 subtotal 3 874 031.10 3 264 124.82 8 822 199.56 37 216 624.80 53 176 980.28 Total Disallowances 9 055 564.02 14 613 878.28 11 976 670.78 49 326,029.90 84,972,142.98 Valid and Substantiated Zero-Rated Sales 112 514.257.81 108.732.038.49 107 876,344.83 88 278 958.15 417 401 599.28 Considering that not all of petitioner's declared zero-rated receipts are properly substantiated, only a portion of the claimed input taxes attributable to the substantiated zero-rated receipts can be refunded using the following rate: 2011 Valid Zero-Rated Zero-Rated Rate of Valid Zero- Receipts Receipts Per VAT Rated Receipts Returns 1st 112 514,257.81 325,131,825.82 34.6057349% 2nd 108,732,038.49 322,609 555.60 33.7039113% 3rd 107 876.344.83 331.372 504.80 32.5544043% 4th 88 278 958.15 366,429,620.13 24.0916545% Total p 417.401.599.28 P1.345.543,506.35 After having resolved that petitioner had VAT zero-rated receipts for the four taxable quarters of 2011 in the amount of P417,401,599.28, we shall ascertain the amount of input VAT incurred by petitioner in connection thereto.

As stated earlier, petitioner reflected a total amount of P29,668,270.78 allowable input VAT in its Quarterly VAT Returns for taxable year 2011, to wit&

Particulars Amortization of Input Tax on Capital Goods exceeding P1Million Purchase of Capital Goods not exceeding P1Million Domestic Purchase of Goods (other than Capital Goods) Domestic Purchase of Services Total Available Input Tax Input VAT p 7,610,074.29 2,150,003.24 854,118.51 19,054,074.74 P29,668,270.78 In support of the aforesaid input VAT, petitioner submitted various suppliers' invoices and official receipts40 which were examined by the !CPA.

A review of the !CPA report together with the documents supporting the P22,058,196.4941 input VAT claim on domestic purchases of goods other than capital goods, domestic purchases of services and capital goods not exceeding P1Million shows that input taxes amounting to P2,964,214.90 should be disallowed for not being properly substantiated by VAT invoices or receipts as prescribed under Sections 110(A), 113(A) and (B), 237 and 238 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 ofP2,964,214.90: 1'' 2"" 3"' 4th FINDINGS Quarter Quarter Quarter Quarter Total Domestic purchases of goods other than capital goods

1. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered without date indicated42 invoices 379.90 27 091.71 - -

2. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered invoices but the amount of VAT is not shown separately in the invoice43 20 468.99 223.23 158.79 - 40 Exhibits P-66 to P-322, P-66A to P-322A, P2241, P-2241A, P-323 to P-894, P-323A to P-894A, P-954 to P- 965, P-2249 to P-2276. 41 Purchase of capital Goods not exceeding PlM p 2,150,003.24 Domestic Purchase of Goods (other than Capital Goods) 854,118.51 Domestic Purchase of Services 19,054,074.74 Total p 22,058,196.49 42 Exhibit P-65, Annexes 51 and 52. 43 Exhibit P-65, Annexes 53, 54 and 55. 27 471.61 20 851.01

3. Input tax claimed on domestic purchases of goods other than capital goods supported by VAT registered invoices dated outside the period of claim44

4. Input tax claimed on domestic purchases of services erroneously classified as purchase of goods supported by VAT registered invoice or collection receipts with comment of "not valid as source of input tax1145 5.1nput tax claimed on domestic purchases of goods other than capital goods supported by other documents such as statement of account, delivery receipt, miscellaneous account charge46

6. Input tax claimed on domestic purchases of goods other than capital goods with no supportinq documents" subtotal Domestic Purchases of Services

7. Input tax claimed on purchases of services supported by collection receipts and official receipts. Collection Receipt bore the BIR authority to print and the input VAT is separately shown in the official receipt48

8. Input tax claimed on domestic purchases of services supported by VAT registered official receipts without date indicated"

9. Input tax claimed on domestic purchases of services supported by VAT registered official receipts but amount of VAT is not shown separately in the official receipt50 10.

Input tax claimed on domestic purchases of services supported by VAT registered official receipts dated outside the period of claim 51 • 11.

Input tax claimed on domestic purchases of services supported by VAT registered official receipt or collection receipts with comment "not a valid 116 619.97 675.00 675.00 4,820.40 663.21 139 482.07 32 135.34 50 654.06 67 369.71 442.37 615.49 116 619.97 135.00 12 820.39 13 630.39 3 506.29 8 882.06 17 883.75 40.50 2 239.29 2 943.00 3 840.58 23 941.74 199 399.73 43 958.61 33 188.80 195 171.18 193 310.Q1 193 310.01 5 745.54 316 812.29 323 615.69 20 367.24 20 367.24 source of input tax"52 212 793.85 29 745.37 30 821.25 51 959.06 325 319.53 L_~~~~~~~----------~--~~~~L_~~~~~~~~~~~~~--~~~~<Z 44 Exhibit P-65, Annex 58. 45 Exhibit P-65, Annexes 59, 60 and 61. 46 Exhibit P-65, Annexes 62, 63, 64 and 65. 47 Exhibit P-65, Annexes 66, 67 and 68. 48 Exhibit P-65, Annexes 88, 89, 90 and 91. 49 Exhibit P-65, Annex 105. 50 Exhibit P-65, Annexes 106, 107, 108 and 109. 51 Exhibit P-65, Annex 112. 52 Exhibit P-65, Annexes 113, 114, 115 and 116.

12.

13.

14.

Input tax claimed on domestic purchases of services supported by other documents such as statement of account, delivery receipt, miscellaneous account charge, tape receipt53 Input tax claimed on domestic purchases of services supported by VAT registered official receipts with "VAT Exempt Sale" indicated in the official receipt54 Input tax claimed on domestic purchases of services supporting documents55 with no 1199.99 - 18 332.62 12 493.27 32 025.88 - 884.00 1 518.02 304 408.12 306 810.14 739 261.12 216 951.39 72 756.54 43 333.58 1 072 302.63 subtotal

1004 351.39

315 565.96 366 442.59 782 562.36 2 468922.30 Purchases of Capital Goods not exceeding_P1Million

15. Input tax claimed on purchases of capital goods not exceeding P1 million supported by TIN VAT invoice but amount of VAT is not shown separately in the invoice56 - - 3 600.00 - 3 600.00

16. Input tax claimed on purchases of capital goods not exceeding P1 million supported by VAT registered invoices dated outside the period of claim57 116 541.60 - - - 116 541.60

17. Input tax claimed on purchases of capital goods not exceeding P1 million supported by VAT registered invoice/receipt or collection receipts with comment "not a valid source of input tax" 58 - 135 308.96 39 858.38 - 175 167.34

18. Input tax claimed on purchases of capital goods not exceeding P1 million without supporting documents59 - - - 583.93 583.93 subtotal 116 541.60 135 308.96 43 458.38 583.93 295 892.87 TOTAL 1,260,375.06 483,010.26 413,741.55 807 088.03 2,964,214.90 In addition to the foregoing exceptions found by the !CPA, this Court, likewise, found that petitioner's input VAT claim on purchase of goods other than capital goods in the amount of P805.71 must be disallowed because the corresponding invoice with serial no. 25023560 dated November 30, 2010, is outside the period of claim.~

Hence, out of the P22,058,196.49 input VAT claim on domestic purchases of goods other than capital goods, domestic purchases of services and capital goods not exceeding P1Million, only the amount of P19,093,175.88, as computed below, is duly supported by valid VAT invoices or official receipts in accordance with the existing VAT law and regulations:

Domestic Purchases of Purchases of Goods (other Domestic Capital Goods than Capital Purchases of not exceeding Goods) Services 1 million Total Input VAT per Quarterly VAT Returns p 854 118.51 p 19 054 074.74 p 2 150,003.24 p 22,058 196.49 Less: Disallowances Per !CPA's findinqs 199 399.73 2 468 922.30 295 892.87 2 964 214.90 Per this Court's findinqs 805.71 - - 805.71 Input VAT Properly Substantiated p 653,913.07 P16,585,152.44 p 1,854 110.37 P19 093,175.88 We now proceed to the substantiation of the P7,610,074.29 amortization of input VAT on capital goods purchases exceeding P1Million which originated from the P18,266,771.54 input tax deferred on capital goods exceeding P1Million from previous quarter and from the P3,221,423.55 input tax on capital goods exceeding P1Million purchased during the four quarters of CY 2011, as shown below: Input Tax Deferred on Capital Goods exceeding P1Million from Previous Quarter p 18 266,771.54 Add: Input Tax on Capital Goods exceeding P1Million Purchased during the four quarters of CY 2011 3,221,423.55 Total Unamortized Input Tax on Capital Goods exceedinq P1Million p 21,488,195.09 Less: Input Tax on Purchases of Capital Goods exceeding P1Million deferred for the succeeding period 13,878,120.81 Amortization of Input Tax on Capital Goods exceedinq P1Million p 7,610,074.29 Based on the I CPA's report, the P18,266,771.54 input tax deferred on capital goods exceeding P1Million from previous quarter pertains to petitioner's purchases in the years 2006, 2007, 2008, 2009 and 201061. Petitioner failed to present supporting invoices andjor official receipts for the input taxes covering the years 2006 to 2008.62 While there were invoices and official receipts submitted for the years 2009 and 2010, the same were denied admission by the Court for not being found in the records of the case and for petitioner's failure to submit the originals thereof for comparison63. Consequently, the claimed amortization ofe.

input VAT from the previous quarters of taxable years 2006 to 2010 shall be denied.

As regards the substantiation of the P3,221,423.55 input taxes on purchases of capital goods exceeding PlMillion for the taxable year 2011, the !CPA noted the following: 1st 2nd 3rd 4th Findings Quarter Quarter Quarter Quarter Total Input Tax from Purchases of Capital Goods exceeding Pl million For the year 201164

1. Input tax claimed on purchases of capital goods exceeding 1"1 million which are substantiated for VAT purposes:

a. Properly supported by VAT REG TIN invoices/receipts65 p 136 014.80 - p 907,830.76 - 1"1,043 845.56

b. Properly supported by TIN VAT invoices/receipts66 153,091.45 p 508,355.27 515 571.43 1"137,990.12 1 315 008.27

2. Input tax claimed on purchases of capital goods exceeding 1"1 million supported by VAT registered invoices and official receipts not dated within the quarter but within the period of claim67 - 573 772.96 - - 573 772.96

3. Input tax claimed on purchases of capital goods exceeding P1 million supported by VAT registered invoices and official receipts dated outside the period of claim68 156 719.38 - - - 156 719.38

4. Input tax claimed on purchases of capital goods exceeding 1"1 million supported by VAT REG TIN invoice with comment of "not a valid source of input tax"69 - 132 077.38 - - 132 077.38 Total P44~825.63 P1,214,205.61 P1,423,402.19 P137,990.12 P3,221,423.55 From the above findings of the !CPA, the following input taxes in the amount of'P288,796.76 shall be disallowed:.,.,..

Findinas

1. Input tax claimed on purchases of capital goods exceeding 1 million supported by VAT registered invoices and official receipts dated Taxable Year 2011 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Total outside the oeriod of claim70 p 156.719.38 - - - p 156,719.38

2. Input tax claimed on purchases of capital goods exceeding 1 million supported by VAT REG TIN invoice with comment of "not a valid source of in out tax"71 - p 132 077.38 - - 132 077.38 Total P156.719.38 P132.077.38 - - P288,796.76 Thus, out of the f3,221,423.55 input taxes on purchases of capital goods exceeding f1Million for the taxable year 2011, only the amount of f2,932,626.79 was properly substantiated by VAT invoices and official receipts, computed as follows: Taxable Year 2011 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Total Input VAT on capital goods purchases exceeding P1M for the · vear 2011 p 445.825.63 p 1 214.205.61 p 1.423 402.19 p 137.990.12 p 3 221 423.55 Less: Disallowances 156 719.38 132 077.38 288 796.76 Properly Substantiated Input VAT on capital goods purchases exceeding P1M for the vear 2011 P289.106.25 P1.082 128.23 P1 423 402.19 P137 990.12 P2,932,626.79 Pursuant to Section 110(A)(2) of the NIRC of 1997, as amended, input VAT claim on capital goods purchases attributable to zero-rated sales may be claimed either in full during the month of acquisition, or spread over a period of time, depending on the aggregate acquisition cost of the capital goods in the calendar month. If the aggregate acquisition cost exceeds f1Million, the claim for input tax should be spread over 60 months or the estimated useful life of the capital goods, whichever is shorter. On the other hand, if aggregate acquisition cost does not exceed fl million, the total input taxes shall be allowed as credit/refund in the month of acquisition._....

Applying the above provisions in the present case, out of the P2,932,626.79 input VAT incurred by petitioner on capital goods exceeding P1Million for the year 2011, only the amount ofP378,848.60 is creditable for the year 2011, computed as follows: Date Purchased per Schedules Attached to the Exhibit Allowable Quarterly of Amount of Est.

Input Tax for VAT Invoice Purchase net of Useful Monthly the taxable Returns72 Supplier /O.R.

VAT Input Tax Life73 Amortization period 2011 1st Quarter of 2011 RDT Jr. Associates 1/25/2011 Inc.

P-954

1133 456.67

136 014.80 60 2 266.91 27 202.96 Accent Micro 3/21/2011 Technologies Inc.

P-955 1 275 762.05 153 091.45 48 3 189.41 31 894.05 Subtotal 2,409,218.72 289,106.25 5,456.32 59,097.01 2nd Quarter of 2011 Accent Micro 5/13/2011 Technologies Inc.

P-958 4 781 441.31 573 772.96 48 11 953.60 95 628.83 Teledatacom Phils.

5/3/2011 Inc.

P-957 4 236 293.95 508 355.27 60 8 472.59 67 780.70 Subtotal 9,017,735.26 1,082,128.23 20,426.19 163 409.53 3rt/ Quarter of 2011 Accent Micro 7/22/2011 Technologies Inc.

P-960 5 298 342.97 635 801.16 48 13 245.86 79 475.14 ROT Jr. Associates 7/8/2011 Inc.

P-965-A 2 266 913.33 272 029.60 60 4 533.83 27 202.96 7/26/2011 Total Ventures Inc.

P-961-A 1 050 000.00 126,000.00 60 2 100.00 12 600.00 Hoffsman Systematic 8/16/2011 Designs Inc.

P-962 1146,428.58 137,571.43 60 2 292.86 11 464.29 8/2/2011 Total Ventures Inc.

P-963-A 2 100 000.00 252 000.00 60 4 200.00 21 000.00 Subtotal 11 861 684.88 1,423 402.19 26 372.54 151 742.39 4th Quarter of 2011 Teledatacom Phils.

11/11/2011 Inc.

P-964

1149 917.64

137 990.12 60 2 299.84 4 599.67 Subtotal

1149 917.64

137,990.12 2 299.84 4,599.67 Total 24 438 556.50 2 932 626.78 54 554.89 378 848.60 Therefore, petitioner's properly substantiated input VAT for the four quarters of taxable year 2011 amounted only to P19,472,024.50, computed as follows:

Particulars 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total In Philippine Pesos Domestic Purchases of Capital Goods not exceedinq P1Million 190 608.83 625 108.37 677 394.35 360 998.84 1 854,110.39 72 Exhibits "P-35", "P-36", "P-38" and "P-39". 73 Per Attached Schedule in the Quarterly VAT Returns.

Domestic Purchases of Goods (other than Capital Goods)- 195,303.29 156,377.56 170,167.21 132,065.01 653,913.07 Domestic Purchases of Services 11 151,332.79 1 952,569.73 1,130,462.63 2,350,787.29 16 585,152.44 Subtotal 11,537,244.91 2,734,055.66 1,978,024.19 2,843,851.14 19,093,175.90 Amortization of Input Tax on Capital Goods exceeding P1Million 59 097.01 163 409.53 151 742.39 4 599.67 378 848.60 Subtotal 59 097.01 163 409.53 151 742.39 4 599.67 378 848.60 Total Input Tax Properly Substantiated 11,596,341.92 2,897,465.19 2,129,766.58 2,848,450.81 19,472,024.50 A portion, however, of the aforementioned substantiated input VAT shall be applied against petitioner's reported output VAT liability for the four taxable quarters of2011 in the total amount ofP410,927.13. Hence, only the remammg input VAT of P19,061,097.37 (P19,4 72,024.50 less P410,927.13) can be attributed to the entire zero- rated receipts declared by petitioner in the amount of P1,345,543,506.35 and only the input VAT of P6,243,220.30 is attributable to the valid zero-rated receipts of P417,401,599.28, as computed below:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Valid Input VAT P11 596,341.92 p 2 897,465.19 p 2,129 766.58 p 2 848,450.81 p 19,472 024.50 Less: Output VAT 14,865.57 236,747.95 30 615.90 128 697.71 410 927.13 Excess Input VAT P11 581 476.35 p 2 660 717.24 p 2 099 150.68 p 2 719 753.10 p 19 061 097.37 Multiply by Rate of Substantiated Zero-Rated Receipts 34.6057349% 33.7039113% 32.5544043% 24.0916545% Excess Input VAT Attributable to Valid Zero-Rated Receipts P4,007,855.00 p 896,765.78 p 683,366.00 p 655,233.52 P6,243,220.30 Although the claimed input VAT was carried-over by petitioner in its succeeding Quarterly VAT Returns74, the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed"7S in its Quarterly VAT Return for the first quarter of 2013. Thus, the excess input VAT of P54,288,135.9F6 as of the end of the first quarter of 2013 which was to be carried-over to the succeeding second quarter of 201377 no longer included the subject claim. et

In fine, petitioner has sufficiently proven its entitlement to the refund or issuance of tax credit certificate representing unutilized excess input VAT attributable to its zero-rated receipts for the four taxable quarters ofCY 2011 in the amount ofP6,243,220.30.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, respondent is hereby ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favour of petitioner in the reduced amount of SIX MILLION TWO HUNDRED

FORTY THREE

THOUSAND TWO HUNDRED TWENTY and 30/100 PESOS (P6,243,220.30), representing petitioner's unutilized excess input VAT attributable to its zero-rated sales/receipts for the four ( 4) taxable quarters of CY 2011.

WE CONCUR:

~-"C. ~,Q.

JUAN ITO C. CASTANEDA, fit . Associate Justice (On Leave) _a CAESAR A. CASANOVA Associate Justice AMELIA R. COTANGCO-MANALASTAS 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. S'-«:.6 C.a¥-~~ Q JUANITO c. CASTANEDA, JIC ' Associate Justice Chairperson, Second Division

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's Division.

Presiding Justice