Chevron Holdings, Inc. vs. Commissioner of Internal Revenue

DECISION

CASTANEDA, JR., J.:

THE CASE

This is a Petition for Review¹ filed by Chevron Holdings, Inc. to seek the refund or issuance of a tax credit certificate (TCC) in the aggregate amount of P101,103,433.99, allegedly representing its excess and unutilized input value-added tax (VAT) attributable to zero- rated transactions for the four (4) quarters of calendar year (CY) 2013. /t-

THE FACTS

Petitioner Chevron Holdings, Inc. is the Philippine branch of Chevron Holdings, Inc. (CHI), a multinational company organized and existing under and by virtue of the laws of the State of Delaware, United States of America. It is licensed by the Securities and Exchange Commission (SEC) to transact business in the Philippines as a regional operating headquarters

(ROHQ)

under

SEC

Registration

No.

A199802486 dated June 3, 1998 with registered office address at the 35th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue, 1200 Makati City.² Petitioner is likewise registered with the BIR as a VAT taxpayer and was issued a Certificate of Registration No. OCN 8RC0000039799 dated July 30, 1998 with Tax Identification Number (TIN) 201-056-391-000.³ On the other hand, respondent is the duly appointed Commissioner of Internal Revenue vested under the appropriate laws with the authority to carry out the functions, duties, and responsibilities of said office, including, inter alia, the power to decide, approve, and grant refunds and/or tax credits of overpaid and erroneously paid or collected internal revenue taxes. He holds office at the sth Floor, Bureau of Internal Revenue (BIR) National Office Building, Agham Road, Diliman, Quezon City. Petitioner's purpose, as ROHQ in the Philippines, is limited to 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.⁴ Petitioner filed its Quarterly VAT Returns (BIR Form No. 2550Q) for the four quarters of CY 2013 on the following dates: fo

CY 2013

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

VAT RETURN

Original

Amended

Original

Amended

Original

Amended

Original

Amended

DATE FILED

April 24, 20135 January 28, 20146 July 25, 20137 March 10, 20148 October 22, 20139 January 24, 201410 January 24, 201411 February 19, 201412 Petitioner then filed with the BIR Large Taxpayer Services (BIR- LTS) and BIR Large Taxpayers Excise and Audit Division (BIR-LTEAD II) different administrative claims for the refund and/or issuance of TCC for unutilized input VAT for the four quarters of CY 2013, with the following details:

CY 2013

Date of Filing of

Amount of

Administrative

Claim

Claim

1st Quarter October 31, 201413 P21,119,273.12 2nd Quarter November 3, 201414 P25,016,267.42 3rd Quarter November 4, 201415 P27,170,624.04 4th Quarter November 5, 201416 P27,797,269.41 On December 12, 2014, petitioner received Letter of Authority (LOA) No. LOA-124-2014-00000140 (eLA201100087136)17 dated November 13, 2014 for the examination of petitioner's books of accounts and other accounting records for VAT for the period of January 1, 2013 to December 31, 2013.18 J1-

On March 5, 2015, petitioner received a letter19 dated January 30, 2015 from the BIR-LTS which denied its administrative claim for refund or issuance ofTCC for unutilized input VAT for the four quarters of CY 2013 in the aggregate amount of P101, 103,433.99.20 Thus, petitioner filed the present Petition for Review on March 30, 2015.21 Within the extended time granted by the Court,22 respondent filed his Answer23 on July 2, 2015, interposing the following special and affirmative defenses:

"SPECIAL AND AFFIRMATIVE DEFENSES 4.

Respondent hereby reiterates and repleads the preceding graphs of this Answer as part of her Special and Affirmative Defenses; Petitioner's claim for refund of excess and unutilized input VAT should be denied for petitioner's failure to establish the recipients of its services do business outside the

Philippines

5.

Petitioner anchors its claim for refund or tax credit under Section 108 (B) of the NIRC as amended, which states that:

VAT-registered persons shall be subject to zero percent (0°/o) rate.

XXX

(2) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a non- resident 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).

XXX

6.

According to the above stated provision, services must be performed in the Philippines by a VAT registered person to a person engaged in business conducted outside the Philippines or to a non-resident person not engaged in business who is outside the Philippines when the services are performed. 7.

Compliance with the aforementioned provisions of the 1997 NIRC, as amended, as well as the existing rules and regulations are necessary to establish its claim, that indeed there is the presence of valid zero-rated sales which would warrant the grant of the administrative application for refund of its unapplied/unutilized input VAT as well as the submission of supporting documents to corroborate the claim being applied for. 8.

Simply put, the place where the recipient of the service conducts its business is material to consider a zero- rated transaction. In fact, in the Commissioner of ft.-

Internal

Revenue

v..

Burmeister

and Scandinavian Contractor Mindanao, Inc. case, the High Court found that, although the place of the consumption of the service does not affect the entitlement of a transaction to zero-rating, the place where the recipient conducts its business does. 9.

The Supreme Court in the case of Accenture, Inc., vs. CIR, GR No. 190102, July 11,2012, ruled as follows: Accenture has failed to establish that the recipients of its services do business outside the Philippines. Accenture argues that based on the documentary evidence it presented, it was able to establish the following circumstances:

1. The records of the Securities and Exchange Commission (SEC) show that Accenture's clients have not established any branch office in which to do business in the Philippines.

2. For these services, Accenture bills another corporation,

Accenture

Participations

B.V.

(APB), which is likewise a foreign corporation with no 'presence in the Philippines.'

3. Only those not doing business in the Philippines can be required under BSP rules to pay in acceptable currency for their purchase of goods and services from the Philippines. Thus, in a domestic transaction, where the provider and recipient of services are both doing business in the Philippines, the BSP ;z_ erA CASE NO. 9021 cannot require any party to make payment in foreign currency. Accenture claims that these documentary pieces of evidence are supported by the

Report of Emmanuel

Mendoza, the

Court-commissioned

Independent

Certified

Public

Accountant.

He

ascertained that

Accenture's

gross billings pertaining to zero-rated sales were all supported by zero-rated Official Receipts and Billing Statements. These documents show that these zero-rated sales were paid in foreign exchange currency and duly accounted for in the rules and regulations of the BSP. In the CTA's opinion, however, the documents presented by

Accenture

merely substantiate the existence of the sales, receipt of foreign currency payments, and inward remittance of the proceeds of these sales duly accounted for in accordance with BSP rules.

Petitioner

presented no evidence whatsoever that these clients were doing business outside the Philippines.

Accenture insists, however, that it was able to establish that it had rendered services to foreign corporations doing business outside the Philippines, unlike in Burmeister, which allegedly involved a foreign corporation doing business in the Philippines.

We deny Accenture's Petition for a tax refund.

The evidence presented by Accenture may have established that its clients are foreign. This fact Jr- does not automatically mean, however, that these clients were doing business outside the Philippines. After all, the Tax Code itself has provisions for a foreign corporation engaged in business within the Philippines and vice versa, to wit: SEC. 22. Definitions- When used in this

Title:

XXX

(H)

The term 'resident foreign corporation applies to a foreign corporation engaged in trade or business within the Philippines.

(I)

The term 'nonresident foreign corporation applies to a foreign corporation not engaged in trade or business within the Philippines.

(Emphasis in the original) Consequently, to come within the purview of Section 108(8)(2), it is not enough that the recipient of the service be proven to be a foreign corporation; rather, it must be specifically proven to be a nonresident foreign corporation. There is no specific criterion as to what constitutes 'doing' or 'engaging in' or 'transacting' business. We ruled thus in Commissioner of Internal Revenue v.

British Overseas Airwavs Corporation:

x x x. There is no specific criterion as to what constitutes 'doing' or 'engaging in' or 'transacting' business. Each case must~ be judged in the light of its peculiar environmental circumstances. The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of commercial gain or for the purpose and object of the business organization. 'In order that a foreign corporation may be regarded as doing business within a State, there must be continuity of conduct and intention to establish a continuous business, such as the appointment of a local agent, and not one of a temporary character.' A taxpayer claiming a tax credit or refund has the burden of proof to establish the factual basis of that claim. Tax refunds, like tax exemptions, are construed strictly against the taxpayer. Accenture failed to discharge this burden. It alleged and presented evidence to prove only that its clients were foreign entities. However, as found by both the CfA Division and the CfA En Bane, no evidence was presented by Accenture to prove the fact that the foreign clients to whom petitioner rendered its services were clients doing business outside the Philippines.

As ruled by the CfA En Bane, the Official Receipts,

Intercompany

Payment

Requests,

Billing

Statements,

Memo

Invoices-Receivable,

Memo

Invoices-

Payable, and Bank Statements presented by Accenture merely substantiated the existence of sales, receipt of foreign currency payments, and inward )t- remittance of the proceeds of such sales duly accounted for in accordance with BSP rules, all of these were devoid of any evidence that the clients were doing business outside of the Philippines.

10. Petitioner in its petition for review merely mentioned in passing that petitioner rendered services to persons located and conducting business outside the Philippines. Pertinent part of the petition is quoted hereunder for easy reference, to wit: 'During the four quarters of CY 2013, Petitioner rendered services in the

Philippines to

persons located and conducting business outside the Philippines. As consideration for such services.

Petitioner

was paid in acceptable foreign currencies and accounted for in accordance with rules and regulations of Bangko Sentral ng Pilipinas (BSP).'

11. The foregoing allegations are mere self-serving allegations not supported by any concrete evidence.

12. Further, petitioner alleged in its petition that 'Despite the issuance of the LOA, Respondent neither notified nor required petitioner to submit any additional document in support of its administrative claims for refund'.

13. Such argument runs contrary to its own allegations contained under paragraphs 10,11,12 and 13 of the petition which states that: Petitioner attached to its administrative claim for refund the relevant documents required by laws and pertinent regulations. ~

14. In addition, petitioner through its General Manager Kee Teek Hong executed a sworn certification4 which certify that the documents submitted are complete for the purpose of processing its claim for Value Added Tax (VAT) refund/credit and that those documents are the only documents that will be presented to support its claim. Pursuant to Revenue Memorandum Circular No. 54-2014 dated June 11,2014, a decision shall be rendered by respondent based only on the documents submitted.

15. A perusal of the documents submitted disclosed that not a bit would prove that petitioner's clients are doing business outside the Philippines.

16. Accordingly, the documents submitted could not justify the essential requirement of proving that the services were rendered to foreign client doing business outside the Philippines to qualify as zero-rated sales. Thus, the claim for refund/tax credit certificate of unutilized input tax amounting to P101,103,433.99 covering the period January to December 2013 was properly denied.

17. In an action for refund, the burden of proof is on the taxpayer who claims the exemption and he must justify his claim by the clearest grant under the Constitutional or statutory law and cannot be permitted by vague implications. The taxpayer is charged with the burden of proving that he has complied with and satisfied all the statutory and administrative requirements to be entitled to the tax refund."

The Pre-Trial Conference was set on August 6, 2015. 24 ~

The Respondent's Pre-Trial Brief25 was filed on September 10, 2015; while the Petitioner's Pre-Trial Brief26 was filed on September 11, 2015.

The parties filed their Joint Stipulations of Facts and Issues27 on October 7, 2015. This was approved by the Court and adopted in the Pre-Trial Order28 on October 14, 2015. Upon motion of petitioner, 29 the Court commissioned Ms. Czarina R. Miranda, as the Independent Certified Public Accountant (ICPA).30 During trial, petitioner presented the following witnesses: Ms. Carolyn C. Ardina31, its Finance-Coordinator - Business Analysis and Support; Ms. Ma. Nerita C. FerreoP2, its Manager- Business Analysis and Support; Ms. Jennifer A. Valdez33, its Fixed Assets Team Leader; and Ms. Czarina R. Miranda34, the Court-commissioned !CPA. Petitioner's Formal Offer of Evidence with Motion to Set Commissioner's Hearing35 was filed on April 29, 2016. In the Resolution36 dated May 24, 2016, the Court granted petitioner's Motion to Set Commissioner's Hearing while the resolution of its Formal Offer of Evidence was held in abeyance. pz.-

Thereafter, petitioner filed a Supplemental Formal Offer of Evidence?” on June 17, 2016. This was resolved by the Court together with petitioner’s Formal Offer of Evidence in the Resolution*® dated August 24, 2016, wherein the Court admitted Exhibits “P-1”, “P-2”, “P- 3”, “P-4.1", “P-4.2”, “P-5.1”, “P-5.2”, “P-6.1”, “P-6.2”, “P-7.1", “P-7.2”, “P-8.1”, “P-8.1.1", “P-8.2”, “P-8.2.1”, “P-8.3”, “P-8.3.1”, “P-8.4”, “P- 8.4.1”, “P-9”, “P-10”, “P-11.1”, “P-11.2”, “P-12.1”, “P-12.2”, “P-13”, “P- 14.1”, “P-14.2”, “P-15.1”, “P-15.2”, “P-16.1”, “P-16.2”, “P-16.3”, “P- 16.4”, “P-16.⁵”, “P-16.⁶”, “P-16.⁷”, “P-16.⁸”, “P-16.⁹”, “P-16.¹⁰”, “P- 16.¹¹”, “P-16.¹²”, “P-16.¹³”, “P-16.¹⁴”, “P-16.¹⁵”, “P-16.¹⁶”", “P- 16.¹⁷”, “P-16.¹⁸", “P-16.¹⁹", “P-16.²⁰”, “P-16.²¹”, “P-16.²²”, “P- 16.²³”, “P-16.²⁴", “P-16.²⁵”, “P-16.²⁶”, “P-16.²⁷”, “P-16.²⁸”", “P- 16.²⁹”, “P-16.³⁰", “P-16.³¹", “P-16.³²”, “P-16.³³”", “P-16.³⁴", “P- 16.³⁵”, “P-16.³⁶”, “P-16.³⁷”, “P-16.³⁸”, “P-16.³⁹”, “P-16.⁴⁰”, “P- 16.⁴¹”, “P-16.⁴²”, “P-16.⁴³”, “P-16.⁴⁴”, “P-16.⁴⁵”, “P-16.46”, “P- 16.47”, “P-16.48”, “P-16.49", “P-16.50”, “P-16.51”, “P-16.52”, “P- 16.53”, “P-16.54”, “P-16.55”, “P-16.56”, “P-16.57”, “P-16.58”, “P- 16.59”, “P-17.1", “P-17.2”, “P-17.3”, “P-17.3.1”, “P-17.4”, “P-17.5", “P- 17.6”, “P-17.7", “P-17.8", “P-17.9", “P-17.9-1”, “P-17.10", “P-17.11", “P-17,12”, “P-17.13”, “P-17.13.1”, “P-17.14”, “P-17.14.1”, “P-17.15”, “P-17.16", “P-17.17”", “P-17.17.1”, “P-17.18”, “P-17.19”, “P-17.20", “P- 17.21”, “P-17.22”, “P-17.23”", “P-17.23.1", “P-17.24", “P-17.25”, “P- 17.26”, “P-17.26.1”, “P-17.27”, “P-17.28", “P-17.29”, “P-17.29.1”, “P- 17.30”, “P-17.31", “P-17.32”, “P-17.33”, “P-17.34”, “P-17.35”, “P- 17.36”, “P-17.36.1”, “P-17.37", “P-17.38”, “P-17.39”, “P-17.40”, “P- 17.41”, “P-17.42”, “P-17.43”, “P-17.44”, “P-17.45", “P-17.46", “P- 18.1”, “P-18.2”, “P-18.3”, “P-18.4”, “P-18.5", “P-18.6”, “P-18.7”, “P- 18.8”, “P-19.1”, “P-19.1.1”, “P-19.2”, “P-19.2.1”, “P-19.3”, “P-19.3.1”, “P-19.4", “P-19.4.1”, “P-19.5”, “P-19.5.1”, “P-19.6”, “P-19.6.1”, “P- 19.7”, “P-19.7.1”, “P-19.8”, “P-19.8.1”, “P-19.9", “P-19.9.1”, “P- 19.10”, “P-19.10.1”, “P-19.11”, “P-19.11.1", “P-19.12”, “P-19.12.1”, “P-19.13”, “P-19.13.1”, “P-19.14”, “P-19.14.1”, “P-19.15”, “P-19,15.1”, “P-19.16”, “P-19.16.1”, “P-19.17”, “P-19.17.1”, “P-19.18”, “P-19.18.1”, “P-19.19”, “P-19.19.1”, “P-19.20”, “P-19.20.1”, “P-19.21”, “P-19.21.1”, “P-19.22”, “P-19.22.1”, “P-19.23”, “P-19.23.1”, “P-19.24”, “P-19.24.1”, “P-19.25”, “P-19.25.1”, “P-19.26”, “P-19.26.1”, “P-19.27”, “P-19.27.1", “P-19.28”, “P-19.28.1”, “P-19.29”, “P-19.29.1”, “P-19.30”, “P-19.30.1”, “P-19.31”, “P-19.31.1”, “P-19.32”, “P-19.32.1”, “P-19.33”, “P-19.33.1”, “P-19.34”, “P-19.34.1”, “P-19.35”, “P-19.35.1”, “P-19.36”, “P-19.36.1”, “p-19.37”, “P-19.37.1”, “P-19.38”, “P-19.38.1”, “P-19.39”, “P-19.39.1”, “P-19.40", “P-19.40.1”, “P-19.41”, “P-19.41.1”, “P-19.42”, “P-19.42.1", 3,

“P-19.43”, “P-19.43.1”, “P-19.44”, “P-19.44.1”, “P-19.45”, “P-19.45.1”, “P-19.46”, “P-19.46.1”, “P-19.47”, “P-19.47.1”, “P-19.48”, “P-19.48.1”, “P-19.49”, “P-19.49.1”, “P-19.50”, “P-19.50.1”, “P-19.51”, “P-19.51.1”, “P-19.52”, “P-19.52.1”, “P-20", “P-20.1”, “P-20.1.1”, “P-20.2”, “P- 20.2.1”, “P-20.3”, “P-20.3.1”, “P-20.4”, “P-20.4.1”, “P-20.5”, “P- 20.5.1”, “P-20.6", “P-20.6.1”, “P-20.7”, “P-20.7.1”, “P-20.8", “P- 20.8.1", “P-21.1”, “P-21.2”, “P-21.3”, “P-21.4”, “P-21.5”, “P-21.6”, “P- 21.7”, “P-21.8”, “P-21.9”, “P-21.10”, “P-21.11”, “P-21.12”, “P-21.13”, “P-21.14”, “P-21.15”, “P-21.16”, “P-21.17”, “P-21.18”, “P-21.19”, “P- 21.20”, “P-21.21”, “P-21.22”, “P-21.23”, “P-21.24", “P-21.25”, “P- 21.26”, “P-21.27”, “P-21.28”, “P-21.29”, “P-22.1”, “P-22.2”, “P-22.3”, “P-23”, “P-24”", “P-25”, “P-26”, “P-26-1”, “P-27”, “P-27.1”, “P-28”", “P- 28-1", “P-29.1”, “P-29.2”, “P-29.3”, “P-29.4”, “P-31”, “P-32”, “P-33”, “P-34", “P-35.1”, “P-35.2”, “P-35.3”, “P-35.4”, “P-36.1”, “P-36.2”, “P- 36.3”, “P-36.4", “P-37.1", “P-37.2”, “P-37.3”, “P-37.4”, “P-38.1”, “P- 38.2”, “P-38.3”, “P-38.4”, “P-39.1", “P-39.2”, “P-39.3”, “P-40.1”, “P- 40.2”, “P-40.3”, “P-40.4”, “P-41”, inclusive of sub-markings”, “P-42, inclusive of sub-markings”, “P-43”, “P-44.1”, “P-44.2”, “P-44.3”, “P- 44.4”, “P-45”, “P-46”, “P-47”, “P-48.1”, “P-48.2”, “P-48.3”, “P-48.4”, “P-49.1”, “P-49.2”, “P-49.3”, “P-50.1”, “P-50.2”, “P-51.1”, “P-51.2”, “P- 51.3”, “P-51.4”, “P-52.1”, “P-52.2”, “P-52.3”, “P-52.4”, “P-53.1”, “P- 53.2”, “P-53.3”, “P-53.4”, “P-54”, “P-55", “P-55.1”, “P-56”, “P-56.1”, “P-57.1", “P-57.2”, “P-58.1”, “P-58.2”, “P-58.3”, “P-59.1”, “P-59.2”, “P- 60.1”, “P-60.2”, “P-61.1”, “P-61.2”, “P-62.1”, “P-62.2”, “P-63.1”, “P- 63.2”, “P-64.1”, “P-64.2", “P-65.1”, “P-65.2”, “P-66.1”, “P-66.2”, “P- 67”, “P-67.1”, “P-68”, “P-68.1”, and “P-75”.

Respondent then presented his sole witness, Revenue Officer Dominic Morales??.

Respondent's Formal Offer of Evidence*® was filed on September 29, 2016. In the Resolution*! dated November 25, 2016, the Court admitted Exhibits “R-1”, “R-2”, “R-3”, “R-4”, “R-5” “R-6”, “R-7”, and “R-7-a”. Je

CfA CASE NO. 9021

Petitioner's Memorandum42 was filed on January 16, 2017; while respondent failed to file his memorandum43 • Thus, in the Resolution44 dated February 6, 2017, the present Petition for Review was declared by the Court as deemed submitted for decision.

THE ISSUE

The parties stipulated the following issue45 for resolution of this

Court:

Whether or not Petitioner is entitled to the claim for refund or issuance of TCC for its excess or unutilized input VAT in the aggregate amount of Php101,103,433.99 for the four (4) quarters of CY 2013.

THE COURT'S RULING

Pertinent to the resolution of the present case is Section 112(A) and (C) of the National Internal Revenue Code (NIRC) of 1997, as amended, which provides:

"SEC. 112. Refunds or Tax Credits of Input Tax. - (A) Zero-Rated or Effectively Zero-Rated Sales. -Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(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 1""

Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero- rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: 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.

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." Based on the foregoing provision, in order to be entitled to refund or tax credit of input tax due or paid attributable to zero-rated or effectively zero-rated sales, the following requisites must be complied with:

1. the taxpayer-claimant must be VAT-registered;

2. there must be zero-rated or effectively zero-rated sales;

3. input taxes were incurred or paid;

4. such input taxes are attributable to zero-rated or effectively zero-rated sales; fo-

5. said input taxes were not applied against any output VAT liability; and

6. the claim was filed within the prescribed periods both in the administrative and judicial levels. Before addressing the stipulated issue, the Court shall first determine the timeliness of petitioner's administrative and judicial claims.

Petitioner's administrative and judicial claims were timely filed Pursuant to Section 112(A) of NIRC of 1997, as amended, 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 first, second, third and fourth quarters of CY 2013, which closed on March 31, 2013, on June 30, 2013, on September 30, 2013 and on December 31, 2013, respectively. Counting two years from the said dates, petitioner had until March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015, respectively, within which to file its administrative claim for tax credit certificate/refund. Therefore, petitioner's administrative claims for the said quarters were seasonably filed on October 31, 2014, on November 3, 2014, on November 4, 2014 and on November 5, 2014, respectively, as shown below:

Last Day to File

Close of the

Administrative

CY 2013

Taxable Quarter

Claim

1st Quarter March 31, 2013 March 31, 2015 2nd Quarter June 30, 2013 June 30, 2015 3rd Quarter September 30, 2013 September 30, 2015 4th Quarter

December 311 2013

December 31L 2015

46 Par. 3, Stipulated Facts, JSFI, Docket Vol. V, p. 1808; Exhibit "P-8.1". 47 Par. 4, Stipulated Facts, JSFI, Docket Vol. V, p. 1808; Exhibit "P-8.2". 48 Par. 5, Stipulated Facts, JSFI, Docket Vol. V, p. 1808; Exhibit "P-8.3". 49 Par. 6, Stipulated Facts, JSFI, Docket Vol. V, p. 1808; Exhibit "P-8.4".

Date of Filing of

Administrative

Claim

October 31, 201446 November 3, 201447 November 4, 201448

November 5[ 201449

Anent the timeliness of petitioner's judicial appeal, Section 112(C) of the NIRC of 1997, as amended, states the time requirements for filing a judicial claim for the refund or tax credit of input VAT. The legal provision speaks of two periods: the period of 120 days, which serves as a waiting period to give time for the CIR to act on the administrative claim for a refund or credit; and the period of 30 days, which refers to the period for filing a judicial claim with the CTA. 50 It must be noted that the 120-day period begins to run from the date of submission of complete documents supporting the administrative claim. If there is no evidence showing that the taxpayer was required to submit or actually submitted additional documents after the filing of the administrative claim, it is presumed that the complete documents accompanied the claim when it was filed.51 Accordingly, counting 120 days from October 31, 2014, November 3, 2014, November 4, 2014, and November 5, 2014, the respective dates when petitioner filed its administrative claims for refund/issuance of TCC together with the supporting documents covering the first, second, third and fourth quarters of CY 2013, respondent had until February 28, 2015, March 3, 2015, March 4, 2015 and March 5, 2015, respectively, to act on the said claims. However, the records show that it was only on March 5, 2015 that petitioner received a copy of the letter52 dated January 30, 2015 from the BIR-LTS denying its administrative claim for refund/issuance of TCC of input VAT for the year 2013.53 Considering that the denial of petitioner's claim covering the first, second and third quarters was issued by respondent beyond the 120- day period, the 30-day period within which to appeal the said claims to this Court is reckoned from February 28, 2015, March 3, 2015 and March 4, 2015 and ended on March 30, 2015, April 2, 2015 and April 3, 2015, respectively. On the other hand, respondent's letter-denial was timely issued with regard to petitioner's claim covering the fourth quarter of CY 2013; thus, the 30-day period to appeal such claim is /k-

CfA CASE NO. 9021 counted from the date of the denial on March 5, 2015 until April 4, 2015. Accordingly, the Petition for Review covering petitioner's claims for the first, second, third and fourth quarters of CY 2013 was timely filed before this Court on March 30, 2015, as shown below:

Date of

End of 120

End of 30

End of 30

Date of

Filing of

days for the

Date of

days from days from

Filing of

Adm.

CIR to decide

CIR's

CIR's

CIR's

Petition for

CY 2013

Claim

on the claim

Denial

inaction

Denial

Review

1st Quarter 31-0ct-14

28-Feb-15

30-Mar-15

2nd Quarter

03-Nov-14

03-Mar-15

05-Mar-15

02-Apr-15

30-Mar-15

3rd Quarter

04-Nov-14

04-Mar-15

03-Apr-15

4th Quarter

05-Nov-14

05-Mar-15

04-Apr-15

Having determined that petitioner timely filed both its administrative and judicial claims, the Court shall now proceed to make a determination of petitioner's compliance with the other requisites. Petitioner is a VAT-registered entity and had zero-rated sales during the subject periods Petitioner complied with the first requisite considering that it is a VAT-registered taxpayer with BIR Certificate of Registration No.

OCN8RC0000039799

dated

July

30, 1998 with

Taxpayer's

Identification No. 201-056-391-000.54 On the second requisite, i.e., the existence of zero-rated sales, petitioner claims that the services it rendered to its affiliates abroad, which were paid for in foreign currency, are transactions subject to zero percent (0°/o) VAT in accordance with 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 fz-

CfA CASE NO. 9021

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT-registered persons shall be subject to zero percent ( 0°/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.55, 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 payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations; and

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

Petitioner complied with the first requisite. Petitioner is licensed by the Securities and Exchange Commission to transact business in the Philippines as a regional operating headquarters (ROHQ) to engage in general administration and planning;

business planning and ~

CfA CASE NO. 9021 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. 56 These services clearly fall within the scope of "services other than processing, manufacturing or repacking of goods" contemplated by the aforementioned provision. In relation to the second 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, provide that a VAT taxpayer, like herein petitioner, shall for every lease of goods or properties and for every sale, barter or exchange of services, issue a VAT official receipt which must contain the following information: "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); p

(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°/o) 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;" (Emphasis 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. c;z-

(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) If the sale is subject to zero percent (0°/o) VAT, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;" (Emphasis supplied) Pursuant to the foregoing provisions, the foreign currency remittances referred to under Section 108(B)(2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts.

It was established that for services rendered to its affiliates for the four taxable quarters of CY 2013, petitioner was paid in US dollars which were accounted for in accordance with the BSP rules and regulations as evidenced by the Certifications of Inward Remittances57 and Bank Statements58 for CY 2013 issued by JP Morgan Chase Bank N.A - Manila Branch and duly supported by VAT zero-rated official receipts59 issued by petitioner to its client-affiliates. Thus, the second requisite has also been satisfied. In compliance with the third requisite, petitioner presented the following documents showing its client-affiliates are non-resident foreign corporations doing business outside the Philippines: ~z-

1. Certification of Non-Registration of Company issued by the SEC;60

2. Articles/Certificate of Incorporation/Registration and/or other similar documents;61

3. Tax Residence Certificates;62

4. Screenshot of Chevron Subsidiary Governance Website;63

5. Screenshot of US SEC Website;64 and

6. Service Agreements. 65 However, each of the aforesaid documents, standing alone, is inadequate proof that petitioner's client is a non-resident foreign corporation doing business outside the Philippines. While the SEC Certificates of Non-Registration of Company show that the named entities are not registered corporations or partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines.

The same holds true with the

Articles/Certificates

of Incorporation/Registration and Tax Residence Certificates which only prove that therein named entities were incorporated/organized abroad. However, these documents do not necessarily establish that such entities are not doing business in the Philippines. Likewise, the service agreements only indicate the names and addresses of petitioner's customers to whom it renders services but they do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. In the case of Site! Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenu&6, the Supreme Court held that while Sitel's documentary evidence, which included Certifications issued by the Securities and Exchange Commission and)-c-

Agreements between Sitel and its foreign clients, may have established that Sitel rendered services to foreign corporations and received payment therefor through inward remittances, said documents failed to specifically prove that such foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines.

Therefore, 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 and proof of incorporation/registration in a foreign country (e.g., Articles/Certificate of Incorporation/Registration and/or Tax Residence Certificate) and that there is no other indication which would disqualify said entity in being classified as a non-resident foreign corporation.

In this regard, the Court cannot give credence or probative value to the printed screenshots of Chevron Subsidiary Governance Website67 as the information contained therein were retrieved from the database set-up and maintained by petitioner's group of companies. Thus, the said documents are self-serving and can be easily manipulated to favor petitioner in view of its affinity with the entities that maintain or keep the said database. Thus, only the following clients of petitioner for the four quarters of CY 2013 shall be considered as non-resident foreign corporations doing business outside the Philippines:

SEC

Articles/Certificate of

Certificate

Incorporation/Registration and/or other

Tax

Screenshot

similar document

of Non-

Residence of US SEC

Client

Registration

Exhibit No.

Document

Certificate

Website

Asia Pacific Marine Services

P-18.1 and (EF) B.V.

P-16.1 - - P-18.8 - P-17.8,

Restated Certificate of

Chevron Corporation

P-16.14 P-17.40

Incorporation

P-18.3 -

Chevron (China) Investment Co

P-17.9 to

Ltd

P-16.15 P-17.9.1

Articles of Association

- -

Chevron Hong Kong Limited

P-16.22 P-17.12

Certificate of Change of Name

- - P-17.13 to

Chevron International Limited

P-16.24 P-17.13.1

Certificate of Incorporation

- - P-17.14 to P-17.14.1,

Memorandum and Articles of

Chevron International pte Ltd P-16.25 P-17.43 Association, Certificate - -

GrA CASE NO. 9021

Chevron Iraq (Sarta) Limited -

Branch

Chevron Liberia Limited

Chevron Lubricants Lanka PLC

Chevron Malaysia Limited

Chevron Marine Products LLC -

Int'l

Chevron Neftegaz Inc.

Chevron New Zealand

Chevron North Sea Limited

Chevron Oronite Company LLC

Chevron Oronite pte Ltd

Chevron Overseas Services

Corporation

Chevron Pakistan Limited

Chevron Products UK Limited

Chevron Shipping Company LLC

Chevron Singapore pte Ltd Chevron South Africa (pty)

Limited

Chevron (Thailand) Limited

Chevron Thailand Exploration and Production Ltd

Chevron (Tianjin) Lubricants

Co. Ltd Chevron Trading pte Ltd

PT Chevron Oil Products

Indonesia

Chevron Asia South Ltd

UECSL - Chuandongbei Branch

Chevron Bangladesh Blk

Thirteen/_Fourteen

Chevron (Cambodia) Limited

Chevron Asia Pacific Holdings

Branch

Chevron USA Inc. (Singapore

Branch)

P-16.26 P-17.15 P-16.27 P-17.16 P-17.17 to P-16.28 P-17.17.1 P-16.29 P-17.18 P-16.30 P-17.19 P-16.32 P-17.20 P-17.21, P-16.33 P-17.44 P-17.22, P-16.34 P-17.41 P-17.23 to P-16.35 P-17.23.1 P-16.36 P-17.24 P-16.37 P-17.25 P-17.26 to P-16.38 P-17.26.1 P-16.41 P-17.27 P-16.44 P-17.28 P-17.29 to P-16.45 P-17.29.1 P-16.46 P-17.30 P-17.31, P-16.47 P-17.46 P-16.48 P-17.32 P-16.49 P-17.33 P-16.50 P-17.34 P-17.36 to P-16.56 P-17.36.1 P-17.3 to P-16.7 P-17.3.1 P-16.59 P-17.37 P-16.10 P-17.5 P-16.12 P-17.6 P-16.5 P-17.2 P-16.52 P-17.42

Confirming Incorporation of

Company

Memorandum of Association of

Company Limited by Shares

- -

Certificate of Business

Registration (Foreign

Corporation)

- -

Articles of Association

- -

Certificate of Change of Name and Incorporation

- -

Certificate of Amendment of

Certificate of Formation

- -

Certificate of Amendment of

Certificate of Incorporation

- -

Certificate of Incol'poration

P-18.4 -

Certificate of Incorporation on

Change of Name

P-18.5 P-20.3

Certificate of Formation

- P-20.4

Notice of Resolution of Change of Name

- P-20.5

Certificate of Amendment of

Certificate of Incorporation

- - Certification issued by the

Registrar General of Bahama

Islands

- -

Certificate of Incorporation of

Change of Name

P-18.6 -

Certificate of Amendment of

Certificate of Formation

- -

Memorandum and Articles of

Association

- -

Certificate of Change of Name of

Company

- -

Certificate of Change of Name

and Incorporation, Letter Certification issued by the

Registrar of Foreign Business

Operation

P-18.7 P-20.6

Commercial Registration

Certificate

- P-20.7

Certificate of Approval for

Establishment of Enterprises with Foreign Investment in the

People's Republic of China

- -

Certificate

Confirming

Incorporation with Memorandum and Articles of Association

- -

Domicile Information Letter

- -

Articles of Association

- -

Certificate of Incorporation

- -

Certificate of Incorporation on

Change of Name

- -

Articles of Incorporation

- -

Certificate of Continuance

- -

Certificate of Registration of

Foreign Company

- -

Accordingly, out of the P3,094,815,091.98°° zero-rated sales declared per petitioner’s Quarterly VAT Returns for the four quarters of CY 2013, only the amount of ?720,308,940.84, broken down below, qualifies for VAT zero-rating under Section 108(B)(2) of the NIRC of 1997, as amended:

| O.R. Date | Amounts | nountin PH | FIRST QUARTER OF CY 2013 (Exhibit P-53.1 ee ee | 3651 | 25-Jan-13 | Chevron International Pte Ltd =| 340,262.73 | —_13,809,364.04| page | 3653 | 3654 | 25-Jan-13 | Chevron Singapore PteLtd _—-——s||—:138,909.01| _—_5,637,540.99| paged | 3655 3657

3660 Chevron Asia Pacific Holdings Branch

3663 3667 3670

3690 10,440.68

68 | _ Exhibit | cy2013_ | Zero-Rated Sales _|

| Tota

3692 | 26-Mar-13 | Chevron (Cambodia) Limited 23,466.81 958,220.09 | _page 47 |Subtotal = —“‘“C:é™SCOC™;™C(*COCOC#C*(#C(#C(C(C#drd‘ AS7,9:78,984.85|— | SECOND QUARTER OF CY 2013 (Exhibit P-53.2 ee es ee

Chevron Hong Kong Limited

3706 | 25-Apr-13

3708 | 25-Apr-13

3714

3717 | 25-Apr-13

25-Apr-13

25-Apr-13

25-Apr-13

26-Apr-13

26-Apr-13

alma [eae | al antl 3731 | 26-Apr-13 _| Corporation 10,266.03 423,516.09 | page 84

26-Apr-13

26-Apr-13

3736 | 29-Apr-13 {| Thirteen/Fourteen 10,054.78 414,459.19 page 89

30-Apr-13

Chevron USA Inc. (Singapore Branch

Chevron International Pte Ltd

3765

3767 | 25-Jun-13 | Chevron USA Inc. (Singapore Branch 131,482.06 5,764,228.85 | page 118 3772 3774 page 125 3776 | 26-Jun-13 page 127 [subtotal —“‘C‘C‘*rL Cf 180,310,274.56 | | THIRD QUARTER OF CY 2013 (Exhibit P-53.3) =| | Cd 5003 -Jul-13._| Chevron (China) Investment Co Ltd 164,946.38 23-Jul- . .

00 page 132 0 page 133 page 135 1 page 136 25-Jul- . .

26-Jul- . .

26-Jul-

fon) o oO wa jw ja jot ia ja oO oO em (OD 10 IN O1 page 137 1 Chevron North Sea Limited page 140 15 5016 5025

5026 | 23-Aug-13

5027 5028 page 151 5029 page 152 28 27 27 oO ay oO

Ww

1 Chevron Lubricants Lanka PLC 4,989.51 220,579.58 | page 154 1 5030 | 28-Aug-13 | Chevron (Cambodia) Limited 23,466.81 1,037,436.34 | page 153 Chevron Neftegaz Inc. 10,440.68 461,364.56 | page 157 oO

Ww

wim ion {M oO |o oO em 1 lS le 3 page 158 4 page 164 5043 page 166

25-Sep-13

5057 | 26-Sep-13 | Chevron Oronite Pte Ltd 16,609.87 720,914.50 | page 179 | Subtotal "57i,354,300.72| | | FOURTH QUARTER OF CY 2013 (ExhibitP-53.4) | | | 4,913.36

5064 125,685.34

CTA CASE NO, 9021

Chevron Thailand Exploration and

3 6,147.96 264,998 page 18 7 page 188 wn 096 | 29-Oct- Chevron South Africa (Pty) Limited 97,934.08 4,200,434.11 | page 216 5066 | 25-Oct-1 Production Ltd .28 450,029.31 | page 188 | 5090 ami| wen [ete | asa] esl ee 5091 | 29-Oct-13 | Thirteen/Fourteen 3,567.83 153,653.32 | page 211

5093 Chevron Iraq (Sarta) Limited - Branch

Oct-13 |__97,534.08 | 11] page 216 | 5112

25-Nov-13

2,884,142.67 Chevron Oronite Pte Ltd 152,473.96

Chevron International Pte Ltd

20-Dec-13

Chevron Hong Kong Limited

5128 5129 | 23-Dec-13 30,157,296.23 3 | 23-Dec-13 2,688,312.20 5135 | 23-Dec-13 304,701.55 subtotal | sd 20,665,380.71| —s_i VALID ZERO-RATED SALES | st 720,308,940.84| sd eal -

Ww

a The rest of petitioner’s declared zero-rated sales in the amount of P2,374,506,151.14 detailed below, shall be denied VAT zero-rating for petitioner’s failure to prove that the entities to whom it rendered A services are non-resident foreign corporations doing business outside

the Philippines:

oe] oe [treat | meant np?

Date Amount in PHP

FIRST QUARTER OF CY 2013 (Exhibit P-53.1 646 | 17-Jan-13 | Chevron Products Compan 436,867.61 17,708,456.02 page 1

Chevron Romania Exploration and

23-Jan-13 | Production SRL 15,573.99 633,089.02 page 2 3649 | 25-Jan-13 {| Chevron Services Compan 67,009,637.99 page 4 Chevron Information Technology s con.28.60 0 | 25-Jan-13 | Compan 1,601,218.60 64,984,521.10 page 5 23-Jan-13 | CCEC - Shekou Shared Cost Center 1,323.32 53,793.50 page 14 Chevron Global Energy Inc. - Global | sosi9.0e/ _4,051,090.03 60 | 25-Jan-13 | Downstream Cost Allocation Branch 99,819.08 4,051,099.03 page 15 662 | 20-Feb-13 | Chevron Products Compan 581,313.51 23,621,028.44 page 17 22-Feb-13 | Chevron Services Compan 1,552,556.32 63,035,173.37 page 20 6 Ww WwW wW uw +

™~S

6 w ay wn wo oO a w by [Wu W | [dO 1 Ww & fb fe) fo) [oe] on N wn 66

A

22-Feb-13

66 668 67 67 Chevron Information Technology | 439 362,716.20 | Compan 3,432,503.70 139,362,716.20 page 19 22-Feb-13 | Chevron Australia Pte Ltd - Other 323,976.61 13,185,861.21 page 23 22-Feb-13 | Chevron Energy Technology Compan 54,928.41 2,230,142.51 page 29 22-Feb-13 | Chevron Australia Pte Ltd - Gorgon 244,949.29 9,945,159.97 page 32 aS CPUK - Trading and Marine Lubricants sre 4on.a7 | 25-Feb-13 | Branch 116,491.17 4,746,991.44 page 33 18-Mar-13 | Chevron Products Compan 577,860.40 23,404,633.45 page 36 Chevron Information Technology | e3s 010.171 25.906,165.17 | Compan 635,219.17 25,906,165.17 page 38 Chevron Australia Pte Ltd - Other 2,189.12 89,097.27 page 42 67 foe)

3 | 25-Mar-13

3687 | 22-Feb-13

ao 3691 |} 26-Mar-13 | Chevron Services Compan 1,559,539.05 63,680,647.20 page 46 subtotal | ss sd 5 23,648,212.89 SECOND QUARTER OF CY 2013 (Exhibit P-53.2 a ee 3697 | 16-Apr-13 | Chevron Products Compan 589,659.71 24,356,039.24 page 52

Chevron Information Technology

25-Apr-13 | Compan 2,535,492.48 104,859,076.92 page 55 25-Apr-13 | Chevron Services Compan 1,680,556.47 69,501,921.84 page 56 Chevron Global Energy Inc. - Global go as755 | 25-Apr-13 | Downstream Cost Allocation Branch 82,157.55 3,397,748.14 page 64 Chevron Upstream and Gas 81,737.96 3,380,395.37 pag 00 0 W i W QW

~S ~S

ry HIO je 7

71 25-Apr-13

3712 | 25-Apr-13 | Chevron Energy Technology Compan 75,899.40 3,138,933.00 page 66 3713 | 25-Apr-13 | Chevron Canada Limited - Downstream 39,680.96 1,641,065.34 page 67 3716 | 25-Apr-13 | Chevron NA Exploration Production Co 21,183.86 876,090.16 page 70 720 | 25-Apr-13 | BUT Chevron Indonesia Compan 3,418.77 141,388.34 page 74 3722 | 25-Apr-13 | Chevron Gas and Mistream 468.62 19,380.48 page 75 Chevron Australia Pty Ltd - Other 281,267.16 11,603,430.69 page 78 Chevron Australia Pty Ltd - Other 185,607.78 7,657,086.63 page 79 2

3725 | 26-Apr-13

3726 | 26-Apr-13

CPUK - Trading and Marine Lubricants

-Apr- Branch 162,360.52 6,698,041.25 ge 81

3730 | 26-Apr-13

734 | 29-Apr-13

735 | 29-Apr-13

Chevron Al Khalij, a branch of Chevron 6 950,48 | cage 90. | 30-Apr-13 | Asia Pacific Holdings Limited 75,059.48 3,093,960.43 page 90 6-May-13 | Chevron Products Compan 589,707.95 24 237,893.55 ) () Chevron Information Technology 5 304,783.68 | age 93 | Compan 2,394,783.68 98,835,479.98 page 93 a 73 ey) _ a a

74 4-May-13

Chevron Services Compan 1,674,478.82 69,107,669.01 Chevron Australia Pty Ltd - Other 292,301.81 12,063,632.27 Chevron Australia Pty Ltd - Gorgon 189,487.17 8,285,403.15 Chevron Information Technology 300,557.14 | | ace 106 | Compan 1,390,557.14 60,962,610.26 page 106

NS

WW 100 iW Ww Ly {W WwW JW

N N

LeU) fo] WO IN on

No

4 74 5

24-May-13

24-May-13

24-Jun-13

we rere

3754 | 25-Jun-13

3757 | 18-Jun-13 | Chevron Products Compan 573,826.92 24 564,508.56 3758 | 24-Jun-13 | Chevron Australia Pty Ltd - Other 233,759.98 10,221,249.67 3760 | 25-Jun-13 | Chevron Services Compan 1,611,702.17 70,657,701.45 3770 | 25-Jun-13 | Chevron Energy Technology Compan 93,494.93 4,098,857.08

CPUK - Trading and Marine Lubricants

Branch 162,360.52 7,117,953.53 | page 124 Refineria Texaco de Honduras S.A. 7,361.89 322,748.36

773 | 26-Jun-13

28

3775 | 26-Jun-13

[subtotal tti—“‘“C;é™™COC;C!C(*dt’COCOC(C*C#C(C(C(C#*d;:«éCG 33,4309,343.86({ THIRD QUARTER OF CY 2013 (Exhibit P-53.3 Pe | 25,433,947.00 6,055,751.62 10,131,326.13 coe | 25-1ui13 | Chevron Global Energy Inc. - Global | 5 666.18 | | cage 134 | 5008 | 25-Jul-13 | Downstream Cost Allocation Branch 79,666.18 3,441,303.67 page 134 5012 | 25-Jul-13 | Chevron Services Compan 70,482,694.60 Chevron Information Technology 990 021.19 | Fane 139 | Compan 1,980,021.19 85,530,073.00 | page 139 Chevron Information Technology 5 g80 587.6. | ace 145 | Compan 2,880,587.61 126,619,235.60 page 145 Chevron Services Compan 73,033,721.76 Chevron Australia Pty Ltd - Other 290,946.70 12,856,681.40 CPUK - Trading and Marine Lubricants 169,360.59 | | ace 156 | Branch 162,360.52 7,174,570.04 page 156 Chevron Polska Energy Resoources Sp. a5 086.96 | | sage 159 | Z.0.0. 15,086.96 655,668.41 page 159 Chevron Products Compan 600,232.61 26,256,894.58 wm oO ar wW Ww wi nn} 1S) wi jw Oo oO oO

Oo Oo a

25-Jul-13

ur oO

NO

rare

23-Aug-13

oO

N

N

23-Aug-13

3 7-Aug-13

NO

N

oO

WwW

33 | 27-Aug-13

3 03

13-Aug-13

16-Aug-13

™N

038 | 18-Sep-13 | Chevron Products Compan 25,995,444.98 39 | 255ep-13 69 501,20078

Fi

040 | 25-Sep-13 | Compan 1,324,814.03 57,301,644.90 | page 163

5042 | 25-Sep-13

25-Sep-13

5048 | 25-Sep-13 le sossl 26-Sep-13 I CCEC - Shekou Shared Cost Center

Subtotal

FOURTH QUARTER OF CY 2013 {Exhibit P-53.4) 5059 16-0ct-13

Chevron Products Company

Chevron China Energy Company - Expl &

5061 25-0ct-13

Prod Services

5062 25-0ct-13

Chevron Gas and Mistream

5068 25-0ct-13

Chevron Upstream and Gas

Chevron Global Energy Inc. - Global 5071 25-0ct-13

Downstream Cost Allocation Branch

5072 25-0ct-13

Chevron Canada Limited - Downstream

5073 25-0ct-13

Chevron Energy Technology Company

5076 25-0ct-13

Chevron NA Exploration Production Co

Chevron AI Khalij, a branch of Chevron 5077 25-0ct-13

Asia Pacific Holdings Limited

Chevron Business and Real Estate

5079 25-0ct-13 Services (a Chevron USA Inc. Division) 5082 25-0ct-13

Chevron Global Downstream

5085 25-0ct-13

Chevron Australia Pty Ltd - Other

5088 25-0ct-13 Chevron Services Comp_any

Chevron Information Technology

5089 25-0ct-13

Company

5092 29-0ct-13 Refineria Texaco de Honduras S.A. 5094 29-0ct-13 Refineria Panama S. de R.L.

CPUK - Trading and Marine Lubricants

5097 29-0ct-13

Branch

5102 25-0ct-13

Chevron Australia Pty Ltd- Gorgon

5103 25-0ct-13

Chevron Australia Pty Ltd - Gorgon

5104

18-Nov-13

Chevron Products Company

Chevron Information Technology

5105

25-Nov-13

Company

5106

25-Nov-13

Chevron Services Company

5127

17-Dec-13

Chevron Products ComQany

5130

23-Dec-13

Chevron Services Company

CPUK - Trading and Marine Lubricants

5131

23-Dec-13

Branch

5132

23-Dec-13

Chevron Energy Technology Company

Chevron Polska Energy Resoources Sp. 5134

23-Dec-13

z.o.o.

Subtotal

TOTAL INVALID ZERO-RATED SALES

Petitioner incurred/paid input taxes attributable to zero- rated sales and said input taxes were not applied against any output VAT liability tz- 313.03 13,586.37 page 177 622,742,425.98 586 777.20 25 303,027.17

9.53 410.78

97.31 4J94.40 _page 184 15 546.79 670,120.26

36 027.09 1,552 891.81

44 654.13 1 924r746.98

45 153.39 1 946,266.81

54 913.56 2 366,959.48

78 473.31 3 382,470.26

116 858.31 5,036 996.12

175 891.35 7 581L523.71

246 852.00 10 640,172.41

1J626,327.57 70 100 326.29

3 573 908.44 154 047,777.59

5 889.48 253,638.24

25 761.29 1 109,444.01

163 171.81

7 L027 L209 • 73

j)a_ge 217 63 981.38 2 757,818.10

266 678.30 11,494,754.31

647 109.52 28 184 212.54

2 990 233.01 130 863,589.06

1 604 755.97 70 230,020.57

593 014.34 26 297 J53.44

408 275.18 18,105,329.49

186 785.22 8 283,158.31

115 717.80 5 131,609.76

8 563.29 379,746.78

594L676J168.41 2,374,506,151.14

Having resolved that petitioner had valid VAT zero-rated sales for the four quarters of CY 2013 in the amount of P720,308,940.84, the Court will now proceed to determine whether petitioner incurred input taxes in connection therewith and if said input taxes were not applied against any output VAT liability of petitioner. In its amended Quarterly VAT Returns for the four quarters of CY 2013, petitioner reflected a total amount of P105,758,241.10 allowable input VAT arising from its amortization of input VAT on purchases of capital goods exceeding P1 million, domestic purchases of capital goods not exceeding P1 million, domestic purchases and importation of goods other than capital goods, domestic purchases of services and services rendered by non-residents, detailed as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

CY 2013

(Exhibit ''P-

4.2'') (Exhibit ''P-5.2'') (Exhibit ''P-6.2") (Exhibit ''P-7.2'')

Amounts in Philippine Pesos

Input Tax Deferred on

Capital Goods exceeding P1Million from Previous

Quarter

44 187 976.62 41 434 854.56 38 785 356.55 36 643 819.37 44 187 976.62

Add: Input Tax on Capital

Goods exceeding P1Million Purchased this _Q_uarter 597 310.78 620,327.97 1,171 221.01 - 2 388 859.76

Total Unamortized Input

Tax on Capital Goods

exceeding P1Million 44 785 287.40 42 055 182.53 39 956 577.56 36 643 819.37 46 576 836.38

Less: Input Tax on

Purchases of Capital Goods

exceeding P1Million deferred for the succeeding _period 41,434 854.58 38 785,356.56 36 643 819.37 33 331 281.98 33,331 281.98

Amortization of Input Tax on Capital Goods

exceeding P1Million 3 350 432.82 3 269 825.97 3 312,758.19 3 312 537.39 13 245 554.40

Add: Input Tax on:

Purchases of Capital

Goods not exceeding

P1Million

- 118,982.14 - - 118 982.14

Domestic Purchases

of Goods Other than

Capital Goods

345 249.00 637 714.95 4 523 017.33 1 790 908.34 7 296 889.62

Importation of Goods

Other than Capital

Goods

44 574.00 106 149.00 26~966.00 20_L_691.00 436 380.00

Domestic Purchase of

Services

16 008 379.28 20 078 049.55 17 998 379.35 21 472 837.42 75 557 645.60

Services Rendered by

Non-Residents

2 217 629.99 2 079_L020.67 2 35~945.47 2 450 193.21 9 102 789.34

Total Allowable Input

Tax

2~9661265.09 26,289,742.28 28,455,066.34 29,047 167.36 105,758,241.10

Out of the P105,758,241.10 input VAT, petitioner is claiming refund of the amount of P101,103,433.99 allegedly representing input VAT attributable to its zero-rated sales for the CY 2013. In support of its input VAT claim, petitioner presented various summary lists69 and schedules70, and the corresponding invoices, official receipts, import documents, BIR Forms No. 1600 and other documents71, which were all examined by the Court-commissioned Independent CPA.

A review of the ICPA report together with the documents supporting the P92,512,686.7072 input VAT claim on purchases of capital goods not exceeding P1Million, domestic purchases and importation of goods other than capital goods, domestic purchases of services and services rendered by non-residents shows that input taxes amounting to P6,762,383.27 should be disallowed for not being properly substantiated VAT invoices or official receipts as prescribed under Sections 110(A) and 113(A) and (B) and 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 RR No. 16-05, as amended, to wit: Finding_s 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

Total

DOMESTIC PURCHASES OF GOODS

a. Supported by original copies of

VAT OR (Annex 8-6 of the /CPA

Re{)Ort)

- - p 9 120.00 - p 69 Exhibits "P-35.1" to "P-35.4" (Summary List of Purchases), Exhibits "P-36.1" to "P-36.4" (Summary List of Importations). 70 Exhibits "P-37.1" to "P-37.4" (Schedule of Domestic Purchase of Goods), Exhibits "P-38.1" to "P- 38.4" (Schedule of Domestic Purchases of Services and Services Rendered to Non-Residents), Exhibits "P-39-1" to "P-39.4" (Schedule of capital Goods), Exhibits "P-40.1" to "P-40.4" (Schedule of Importation of Goods), and Exhibit "P-45" (Schedule of Input Tax on Purchases from Prior Quarters).

71 Exhibits "P-41" and "P-42". 72 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Total

Purchase of Capital Goods

9 120.00 not exceeding P1Million 118,982.14 118,982.14

Domestic

Purchases

of Goods other than Capital

Goods

345,249.00 637,714.95 4,523,017.33 1,790,908.34 7,296,889.62

Importation

of

Goods

other than Capital Goods 44,574.00 106,149.00 264,966.00 20,691.00 436,380.00

Domestic

Purchases

of

Services

16,008,379.28 20,078,049.55 17,998,379.35 21,472,837.42 75,557,645.60 Services rendered by non- residents 2,217,629.99 2,079,020.67 2,355,945.47 2,450,193.21 9,102,789.34

Total

18,615,832.27 23,019,916.31 25,142,308.15 25,734,629.97 92,512,686.70 fo- b. Supported by original copies of sales invoice dated outside C( 2013 (Annex 8-7 of the !CPA Report)

Subtotal

p p

DOMESTIC PURCHASE OF SERVICES

a. Domestic purchase of services supported by original copies of VAT ORs where the amount of Input VAT was not indicated (Annex C-15 of the !CPA Report) p

b. Domestic purchase of services supported by original copies of VAT ORs where the amount of Input VAT was not indicated and where actual payment was not indicated in words (Annex C-16 of the !CPA Report)

c. Domestic purchase of services supported by Certified True Copy of VAT OR dated outside Calendar

Year 2013

(Annex C-17 of the !CPA Report}

d. Domestic purchase of services supported by original copies of VAT ORs where company TIN and address were not indicated and where the amount of Input VAT was not indicated _f_Annex C-18 of the !CPA ReJ)()rt)

e. Domestic purchase of services supported by original copies of VAT ORs where company TIN and Input VAT were not indicated (Annex C-19 of the !CPA ReJ)()rt)

f. Domestic purchase of services supported by original copies of VAT ORs with incorrect company TIN (Annex C-20 of the !CPA Report)

g. Domestic purchase of services supported by original copies of Non-

VATORs

_(_Annex C-21 of the !CPA Report)

h. Domestic purchase of services supported by original copies of Non- VAT ORs and with incorrect company TIN (Annex C-22 of the !CPA ReJ)()rt)

i. Domestic purchase of services supported by original copies of VAT ORs stamped with "Not Valid Source

of Input VAT"

(Annex C-23 of the !CPA Report)

j. Domestic purchase of services supported by original copies of VAT ORs stamped with "Not Valid Source of Input VAT" and where the amount of Input VAT was not indicated (Annex C-24 of the !CPA ReJ)()rt)

k. Domestic purchase of services supported by original copies of VAT ORs dated outside the quarter of claim but within the period of claim and with invalid ATP (Annex C-25 of the !CPA Report) 50 004.09 - - - 50 004.09 50,004,.09 - p 9.120.00 - p 591124.09 4 582.49 p 47 382.89 p 1 380.00 p 11 612.06 p 64 957.44 3 535.59 - 2 754.42 1 254.08 7 544.09 3 209 210.13 - - - 3 209 210.13 - 696.41 - - 696.41 1 351.07 - 2 175.00 - 3 526.07 - - 4 242.87 38.57 4 281.44 9 000.00 - - - 9 000.00 5 399.64 - - - 5 399.64 16 887.85 - 12,833.32 44 492.25 74 213.42 2 742.88 - - 1 584.00 4 326.88 - - - 4 800.00 4 800.00

CfA CASE NO. 9021

I. Domestic purchase of service supported by original copies of VAT ORs stamped with "Not Valid Source of Input VAT' and where amount per OR differs from amount per

Schedule

(Annex C-26 of the !CPA ReiJOrt)

m. Domestic purchase of services supported by original copies of VAT ORs dated outside the Calendar

Year 2013

(Annex C-27 of the !CPA Report)

n. Domestic purchase of services supported by original copies of VAT ORs dated outside Calendar Year 2013 and where actual payment was not indicated in words (Annex C-28 of the !CPA Report)

o. Domestic purchase of services supported by original copies of VAT ORs dated outside Calendar Year 2013 and where the amount of Input VAT was not indicated (Annex C-29 of the !CPA ReiJOrt)

p. Domestic purchase of services supported by original copies of VAT ORs dated outside Calendar Year 2013 and where the amount per OR differs from amount per Schedule (Annex C-30 of the !CPA ReiJOrt)

q. Domestic purchase of services supported by original copies of VAT ORs dated outside Calendar Year 2013 and stamped with "Not Valid

Source of Input VAT"

(Annex C-31 of the !CPA Report)

r. Domestic purchase of services supported by original copies of VAT ORs with invalid ATP (Annex C-32 of the !CPA Report)

s. Domestic purchase of services supported by original copies of VAT ORs with invalid ATP and where amount per OR differs from amount

per Schedule

(Annex C-33 of the !CPA Report)

t. Domestic purchase of services supported by original copies of VAT ORs under the name of the employee instead of the company and where Input VAT and TIN were not indicated (_Annex C-34 of the !CPA RepQrt)

u. Domestic purchase of services not supported by original copies of VAT ORs (not part of 2013) (Annex C-35 of the !CPA ReiJOrt)

v. Domestic purchase of services without supporting documents (~nnex C-36 of the !CPA Repo_rt)

Subtotal

IMPORTATION OF GOODS

a. Importation of goods supported

by Import Entry and Internal

- 330 165.25 53 750.41 210 665.38 268.96 - - - 3_L840.00 21,510.00 5791_885.78 P4 452,795.43 p 4 752.00 - - 1128.21 1128.21 - - - 330 165.25 - - - 53 750.41 - - - 210 665.38 - - - 268.96 - - 4 572.44 4 572.44 - 46 187.82 427 029.48 473 217.30 - - 21492.00 21492.00 - - - 3 840.00 - - - 21 510.00 75 136.58 130 689.99 853 619.22 1 639 331.57 P123,215.88 P200 263.42 P1L371J622.31 P61 147,897.04 - - - p 4 752.00

Revenue Declarations (IEIRD) dated outside CY 2013

(Annex E-3 of the /CPA Report)

b. Importation of goods supported by IEIRD but without proof of VAT payment Annex E-1 of the !CPA

Report

OC Tanner

Dexa Systems

OCTanner

OC Tanner

Dexa Systems

Dexa Systems

OC Tanner

Annex E-2 of the !CPA

Report

OC Tanner

OC Tanner

GilbarcoL Inc.

OC Tanner

OC Tanner

Subtotal

39,822.00 - - - - - - p 44 574.00

DOMESTIC PURCHASES OF CAPITAL GOODS

a. Supported by original copies of sales invoice dated outside CY 2013

(Annex F-6 of the /CPA Report}

-

Subtotal

-

TOTAL

P4,547 ,373.52 - - 39,822.00 P48 779.00 - - 481779.00 - P48,565.00 - 48,565.00 - 54,147.00 - 54,147.00 - 57,344.00 - 57 344.00 - 32J771.00 - 32 771.00 - - p 20,691.00 20 691.00 26,432.00 - 26 432.00 10,693.00 - 10 693.00 20,245.00 - 20 245.00 - 41,591.00 41 591.00 - 30,548.00 30 548.00 P106149.00 P264~66.00 p 20,691.00 p 436,380.00 p 118 982.14 - - p 118 982.14 P118,982.14 - - p 118_~982.14 P348,347 .02 P474 349.42 P1,392,313.31 P6,762,383.27 In addition, the Court finds that the following amounts of input VAT claimed by petitioner were higher than the amounts reflected in the official receipts, thus, the difference of P62,544.24 should likewise be disallowed:

Input VAT

OR

Input VAT per Official

Sup~lier No.

OR Date

_per Schedule

Receipt

Difference

Exhibit P-41

Domestic purchase of services supported by original copies of VAT ORs dated outside the quarter of daim but within the period of claim and where amount per OR differs from amount per schedule (Annex C-6 of the !CPA Repg_rt)_

Fourth Quarter of CY 2013

MYND International

Ltd.

1148

23-Aug-13

43 686.68 43 486.68 200.00 Folder 14 page 3

MYND International

Ltd.

1161

09-Sep-13

90 715.10 65,652.71 25,062.39 Folder 14 page 4

RCBC Realty

Corporation

37866

13-Sep-13

407 592.63 404 259.99 3,332.64 Folder 14, page 5 subtotal 541,994.41 513,399.38 28,595.03

CfA CASE NO. 9021

Domestic purchase of se!Vices supported by original copies of VAT ORs where amount per OR differs from amount per schedule (Annex C-9 of the !CPA ReJ)Ort)

First Quarter of CY 2013

Everything Express, Inc.

43286

09-Jan-13

2,880.37 868.55 2 011.82 Folder 17 page 4

Global Business

Sup_port Services Inc.

13697

08-Jan-13

38 534.97 38 138.22 396.75 Folder 17 page 5 Misnet Education Inc.

11609

25-Jan-13

3 803.57 3 530.57 273.00 Folder 17 page 10

North Park Noodle

House, Inc.

48708

23-Jan-13

5 731.39 5 629.05 102.34 Folder 17 page 11

North Park Noodle

House, Inc.

48709

23-Jan-13

549.11 539.30 9.81 Folder 17, page 12

Second Quarter of CY 2013

Money Doctors Inc.

28

17-Apr-13

7 452.00 7 228.44 223.56 Folder 17 page 22

Third Quarter of CY

2013

Benchmark Par

Excellence Tours and

Transport Inc.

3003

18-Sep-13

9 363.29 5 363.29 4 000.00 Folder 17, page 26 Catena Security, Inc.

10800

03-Jul-13

9 772.42 9 749.96 22.46 Folder 17 page 27

RCBC Realty

Corporation

36217

03-Jul-13

372 189.08 371237.79 951.29 Folder 171 pa_ge 29

Fourth Quarter of CY 2013

Benchmark Par

Excellence Tours and

Transport Inc.

3017 23-0ct-13 9 472.45 9 427.78 44.67 Folder 17, page 30

Ilustrado Restaurant

20218 16-0ct-13 574.81 223.39 351.42 Folder 17, page 32

Platon Martinez Flores

San

37776

06-Nov-13

375.00 285.00 90.00 Folder 17, page 34

RCBC Realty

Corporation

38220 09-0ct-13 5 111.75 5 052.06 59.69 Folder 17 page 35

RCBC Realty

Corporation

38740

07-Nov-13

399 532.24 388 635.90 10 896.34 Folder 171 page 36

RCBC Realty

Corporation

39250

04-Dec-13

1494 386.29

1479 870.23

14 516.06 Folder 17 page 37 subtotal 2,359,728.74 2t_325,779.53 33,949.21

Total

2,901,723.15 2,839,178.91 621544.24 Hence, out of the P92,512,686.70 input VAT claim on purchases of capital goods not exceeding PlMillion, domestic purchases and importation of goods other than capital goods, domestic purchases of services and services rendered by non-residents, only the amount of P85,687,759.19 represents petitioner's valid input VAT, computed as follows:

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

CY 2013

Amounts in Philippine Pesos

Input VAT per VAT Returns

Purchase of Capital Goods

118,982.14 118,982.14 not exceeding P1Milfion

Domestic

Purchases

of Goods other than Capital

Goods

345 249.00 637 714.95 4 523 017.33 1 790,908.34 7 296 889.62

CfA CASE NO. 9021

Importation of Goods other than Capital Goods

Domestic Purchases of

Services

Services rendered by non- residents

Total

Less: Disallowances

Not properly substantiated by VAT invoices or receipts

Excess

of petitioner's claim over the input VAT shown in the supporting official receipts

Total Disallowances

Properly Substantiated

Input VAT Claim on

Purchases of Capital Goods

not exceeding P1M,

Domestic Purchases and

Importation of Goods

Other than Capital Goods,

Domestic Purchases of

Services and Services

Rendered ~

Non-residents

44 574.00 16 008 379.28 2 217 629.99 18,615,832.27 4 547 373.52 2,793.72 4 550167.24 1~0651665.03 106 149.00 264 966.00 20 691.00 436 380.00 20,078 049.55 17,998 379.35 21 472 837.42 75,557 645.60 2 079 020.67 2 355 945.47 2 450 193.21 9 102 789. 34 23L019,916.31 25,142,308.15 25,734,629.97 92,512,686.70 348 347.02 474 349.42 1 392 313.31 6 762 383.27 223.56 4,973.75 54,553.21 62,544.24 348,570.58 479,323.17 1,446,866.52 6,824,927.51 22L671 345.73 2~66~984.98 24L287 J63.45 85_L687_L759.19 The Court will now proceed to determine the substantiation of the P13,245,554.40 amortization of input VAT on capital goods purchases exceeding

PlMillion

which originated from the P44,187,976.62 input tax deferred on capital goods exceeding PlMillion from previous quarter and P2,388,859.76 input VAT from purchases during the four quarters of CY 2013, as shown below: 1st_Q_uarter 2nd Quarter 3rd Quarter 4th Quarter

CY 2013

(Exhibit ''P-

(Exhibit ''P-

(Exhibit ''P-

(Exhibit ''P-

4.2"2_ 5.2"1_ 6.2") 7.2") Amounts in PhiliJ!pjne Pesos

Input Tax Deferred on Capital Goods

exceeding P1Million from Previous

Quarter

44 187 976.62 41 434 854.56 38 785 356.55 36 643 819.37 44 187 976.62

Add: Input Tax on Capital Goods

exceeding P1Million Purchased this

Quarter

597 310.78 620 327.97

1171 221.01

- 2 388,859.76

Total Unamortized Input Tax on

Capital Goods exceeding P1Million 44 785 287.40 42 055 182.53 39 956 577.56 36 643 819.37 46 576 836.38

Less: Input Tax on Purchases of

Capital Goods exceeding P1Million deferred for the succeeding R_eriod 41 434 854.58 38 785 356.56 36 643,819.37 33_L_331 281.98 33 331 281.98

Amortization of Input Tax on

Capital Goods exceeding

P1Million

3,350,432.82 3,269,825.97 3,312,758.19 3,312,537.39 13,245,554.40 The Court noted that petitioner failed to present the VAT invoices/official receipts in support of the P44,187,976.62 input tax deferred on capital goods exceeding PlMillion from previous quarter. 7e--

CfA CASE NO. 9021

Hence, any claimed amortization of input tax related to the said amount shall be denied.

While petitioner was able to substantiate the amount of P2,388,859.76 input VAT related to its current purchases of capital goods exceeding P1Million, the same is not entirely creditable for the subject period of claim.

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 P1Million, 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 P1 million, the total input taxes shall be allowed as credit/refund in the month of acquisition. Applying the provisions of Section 110(A)(2) to the present case, out of the P2,388,859.76 input VAT on current purchases of capital goods exceeding P1Million, only the amount of P336,765.02 is creditable for the four quarters of CY 2013, computed as follows:

Month

Monthly Input

Supplier

Acquired

Input VAT

Tax Credit73

Annex F-1 of the !CPA Report Integrated Computer Systems Inc.

April

p 43,483.93 p 724.73 Integrated Computer Systems Inc.

May

304,387.50 5,073.13 To'{ota Bicutan Paranaque Ma_y_ 191,250.00 3 187.50 Integrated Computer Systems Inc.

July

38,552.68 642.54 Annex F-2 of the !CPA Report Microdata System and Management Inc.

January_

133,250.76 2,220.85 Microdata System and Management Inc.

January

312,685.30 5,211.42 Microdata System and Management Inc.

January

151,374.72 2 522.91 Annex F-3 of the !CPA Report Dimension Data Philippines Inc.

June

454L760.37 7_1579.34 Integrated Computer Systems Inc.

June

517,660.71 8,627.68 Integrated Computer ~y_stems Inc.

June

75,214.29 1,253.57 Annex F-4 of the !CPA Report

JLGT Marketing

Project Solution Group Asia Phils. Inc. Annex F-5 of the !CPA Report Project Solution Group Asia Phils. Inc.

Total

Su_p~ier 1st Quarter Annex F-1 of the !CPA Report Intergrated Computer Systems Inc. - Intergrated Computer Systems Inc. -

Toyota Bicutan Paranaque

- Intergrated Computer Systems Inc. - Annex F-2 of the !CPA Report

Mircrodata System and Management

Inc.

p 6 662.54

Mircrodata System and Management

Inc.

15 634.27

Mircrodata System and Management

Inc.

7 568.74 Annex F-3 of the !CPA Repq_rt Dimention Data Philippines Inc. - Intergrated Computer Systems Inc. - Intergrated Computer Systems Inc. - Annex F-4 of the !CPA Report

JLGT Marketing

-

Project Solution Group Asia

Phili~ines Inc.

- Annex F-5 of the !CPA Report

Project Solution Group Asia

Philij)Qines Inc.

-

Total

P29,865.54

Mqy

59,757.86 995.96

July

85,032.96 1 417.22

July

21 448.68 357.48 P2,388,859.76

Allowable Input Tax

2nd Quarter 3rd Quarter 4th Quarter

CY 2013

p 2 174.20 p 2 174.20 p 2,174.20 p 6 522.59 10 146.25 15 219.38 15 219.38 40 585.00 6,375.00 9 562.50 9,562.50 25,500.00 - 1927.63 1827.63 3 855.27 6 662.54 6 662.54 6 662.54 26 650.15 15,634.27 15 634.27 15 634.27 62 537.06 7,568.74 7 568.74 7 568.74 30 274.94 7 579.34 22 738.02 22,738.02 53 055.38 8,627.68 25 883.04 25 883.04 60 393.75 1,253.57 3 760.71 3 760.71 8,775.00 1,991.93 2 987.89 2 987.89 7 967.71 - 4 251.65 4 251.65 8 503.30 - 1 072.43 1 072.43 2 144.87 P68 013.50 p 119,442.99 p 119,442.99 P336,765.02 In sum, petitioner's total allowable input VAT amounted only to P86,024,524.21, as computed below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

CY 2013

Amounts in Philippine Pesos

Input VAT on Purchases of

Capital Goods not exceeding P1M, Domestic Purchases and

Importation of Goods Other

than Capital Goods, Domestic

Purchases of Services and

Services Rendered by Non-

residents 14 065 665.03 22 671 345.73 24 662 984.98 24 287 763.45 85 687 759.19

Amortization of Input VAT on

Purchases of Capital Goods

exceeding P1Million 29 865.54 68 013.50 119 442.99 119 442.99 336 765.02

Total Allowable Input VAT

1~095 530.57 22J39,359.23 24,_7821427.97 24,407,206.44 86,024,524.21

Since petitioner did not submit VAT invoices/receipts proving the existence of its reported input VAT carry-over from previous quarter in the amount of P141,688,758.5574, its output VAT liability for the four quarters of CY 2013 in the aggregate amount of P17,101,547.87, shall be offset against the total allowable input VAT of P86,024,524.21. Hence, only the remaining input VAT of P68,922,976.34 can be attributed to the entire zero-rated sales declared by petitioner in the amount of P3,094,815,091.98 and only the input VAT of P20,250,968.78 is attributable to the valid zero-rated sales of P720,308,940.84, as computed below: 1st Quarter 2ndQ_uarter 3rd Quarter 4th Quarter

CY 2013

Amounts in Philippine Pesos

Total Allowable Input

VAT

14 095 530.57 22 739_~359.23 24L782 427,97 24 407 206.44 86 024,524.21 Less: Output VAT7s 3,280 412.69 4,970 955.96 4 504 739.08 4 345,440.14 17 101,547.87 Excess In_put VAT 10,815,117.88 17,768,403.27 20,277,688.88 20,061,766.30 68,922,976.34

Valid Zero-Rated Sales

157,978 984.85 180,310 274.56 171 354 300.72 210 665 380.71 720 308 940.84

Total Declared Zero-

Rated Sales

681 627,197.74 633 439 343.86 622 742 425.98 594 676 168.41 3 094 815 091.98

% of Valid Zero-Rated

Sales to Total Declared

Zero-Rated Sales

23.17674315% 28.46527869% 27.51607945% 35.42522669%

Excess Input VAT

Attributable to Valid

Zero-Rated Sales

2,506,592.09 5,057,825.51 5,579,624.98 7,106,926.19 20,250,968.78 Although the claimed input VAT was carried over by petitioner in its succeeding Quarterly VAT Returns76, the same remained unutilized until it was deducted as "VAT Refund/TCC Claimed'177 in its Quarterly VAT Return for the third quarter of CY 2014, thus, preventing the carry- over or application of the claimed input VAT in the next taxable quarters.

In fine, petitioner has sufficiently proven its entitlement to a refund or issuance of TCC in the reduced amount of P20,250,968.78, representing petitioner's unutilized excess input VAT attributable to its zero-rated sales for the four quarters of CY 2013.)--

WHEREFORE, the present Petition for Review is PARTIALLY GRANTED. Accordingly, respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner the amount of P20,250,968.78, representing petitioner's excess and unutilized input VAT attributable to zero-rated transactions for the four quarters of calendar year 2013.

WE CONCUR:

CAESAR A. CASANOVA

Associate Justice

~~~ C- a..J-~~/ ~ .fuANITO C. CASTANEDI(, JR.

Associate Justice

?!~T·~ CATHERINET.MANAHAN

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. ~-~t>c.~~.~~.

juANITO C. CASTANEf>A, JR.

Associate Justice

Chairperson

CfA CASE NO. 9021

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.

Presiding Justice