Court of Tax Appeals · Second Division

Wellform Trading Corporation vs. Commissioner of Internal Revenue

CTA Case No. 9086 November 27, 2017

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

SECOND DIVISION

WELLFORM TRADING

CORPORATION,

Petitioner,

-versus-

COMMISSIONER OF

INTERNAL REVENUE,

Respondent.

CTA CASE NO. 9086

Members:

Castaneda, Jr., Chairperson,

Casanova, and

Manahan, JJ.

Promulgated:

NOV Z 7 Z017

~/ 'f: Jo / ·IIJ ,

x----------------------------------------------------------------------------------x

DECISION

CASTANEDA, JR., l,.:

THE CASE

This resolves the Petition for Review filed on July 10, 2015 by Wellform Trading Corporation, praying for this Court to declare as null and void, for lack of factual and legal bases, the assessment notice that assessed petitioner for alleged deficiency value-added tax (VAT) in the amount of P96,527,897.39, inclusive of interest, for the period covering January 1 to June 30, 2012. r

CfA CASE NO. 9086

THE FACTS

Petitioner Wellform Trading Corporation is registered with the Securities and Exchange Commission (SEC) on August 2, 1991, with SEC Company Registration No. AS091-194034 and with the Bureau of Internal Revenue (BIR) on May 21, 1996, with Tax Identification Number 000-080-369-000.

Petitioner holds office at 355 Cavite corner Gapan Streets, Barangay 148, Zone 13, Tendo, Manila. It is primarily engaged in the business of buying, selling, distributing, and marketing at wholesale and retail of fermented liquor, bottled water and other beverages. 1 On the other hand, respondent is the duly appointed Commissioner of the Bureau of Internal Revenue (BIR) who has the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code (NIRC) or other laws or portions thereof administered by the BIR. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City.

On March 18, 2013, petitioner received Letter of Authority (LOA) No. LOA-VOS-2013-00000120/SN: eLA201100016722 dated March 14, 2013 authorizing the representatives of BIR Revenue District No. V08-Assessment Division to conduct an examination for VAT for the period covering January 1, 2012 to June 30, 2012 pursuant to Revenue Memorandum Order No. 20-2012.2 On April 3, 2013, petitioner received from respondent its First Request for Presentation of Records dated April 1, 2013.3 This was followed by the Second and Final Notice for Presentation of Records dated April 16, 2013, received by petitioner on April 18, 2013.4 rt-

CfA CASE NO. 9086

On April 26, 20135, May 8, 20136 and May 22, 20137, petitioner submitted supporting documents in response to the above requests. On May 22, 2013, petitioner received from respondent a Reminder Letter for the submission of its Books of Accounts, Official Receipts, Summary List of Sales and Purchases and Expense Receipts.8 Petitioner again submitted supporting documents on June 11, 20139 and July 5, 201310• Subsequently, petitioner received a Subpoena Duces Tecum on July 26, 2013. 11 Thus, another set of documents were submitted by petitioner on August 14, 2013 in compliance with respondent's subpoena. 12 However, respondent issued a Preliminary Assessment Notice (PAN) together with the Details of Discrepancies dated October 2, 2014, which was received by petitioner on October 3, 2014. 13 On November 13, 2014, petitioner received from respondent Formal Assessment Notice (FAN) dated November 11, 2014, Details of Discrepancies, Assessment Notice No. Vf-ELA16722-12-14-1046, Analysis of Sales per TPI from AITEID, and Schedule of Supported Input Taxes; wherein the latter assessed the former for deficiency VAT in the amount of P96,527,897.39 inclusive of interest for taxable period January 1 to June 30, 2012.14 As a response to respondent's FAN, petitioner filed on December 12, 2014 an Administrative Protest by way of a Request for Reconsideration of the assessment contained in the respondent's j<-

FAN with the Office of the Regional Director Jonas DP Amara of Revenue Region No. 8- Makati.15 Petitioner alleges that despite the filing of the administrative protest, respondent did not issue any decision thereon. Thus, feeling aggrieved by the VAT assessment, and mindful of the reglementary period relative to respondent's inaction on the protest, petitioner filed the instant Petition for Review on July 10, 2015. On September 10, 2015, respondent filed an Answer by registered mail, 16 interposing the following defenses: "4. Petitioner was assessed of deficiency value- added tax for taxable period January 1, 2012 to June 30, 2012 for the reason that during the administrative investigation of its tax case by the Bureau of Internal Revenue (BIR), petitioner failed to substantiate or submit supporting evidence against the BIR findings, more specifically shown under the Details of Discrepancies attached to the Preliminary Assessment Notice (PAN) dated October 2, 2014 and Formal Assessment Notice (FAN) dated November 11, 2014, which are briefly discussed hereunder, viz:

XXX

5. Petitioner was assessed by the respondent for deficiency value-added tax for taxable period of January 1, 2012 to June 30, 2012 within the prescriptive period under Section 203 of the 1997 Tax Code;

6. The assessments issued against petitioner for deficiency value-added tax for were made in accordance with law and regulations.

7. Assessment are prima facie presumed correct and made in good faith. The taxpayer has the duty of proving otherwise. In the absence of proof of any fo;-

irregularities in the performance of official duties, an assessment will not be disturbed (Aban, Law of Basic Taxation in the Philippine, Jst Edition, p. 109)." The case was subsequently set for Pre-Trial Conference on November 12, 2015. 17 Respondent's Pre-Trial Brief18 was later filed on November 6, 2015, while the Pre-Trial Brief for the petitioner was filed on November 9, 2015. 19 On November 27, 2015, the parties filed their Joint Stipulation of Facts and Issues.20 Thereafter, a Pre-Trial Order was issued by the Court on January 19, 2016.21 Trial ensued, giving both parties the opportunity to present their respective documentary and testimonial evidence. After presentation, marking, identification and offer, the Court admitted, as part of petitioner's documentary evidence, Exhibits "P- 1" to "P-33-A", except for Exhibits "P-9-a", "P-10-a", "P-12-a" and "P- 13-a". 22 On the other hand, the Court admitted, as part of respondent's evidence, Exhibits "R-1" to "R-9-a".23 Thereafter, the Memorandum for Respondent was filed by registered mail on October 21, 201624, while the Memorandum for the Petitioner25 was filed on November 25, 2016. Accordingly, the instant case was considered submitted for decision on December 2, 2o16.26 r

THE ISSUES

The parties submitted the following issues 27 for this Court's disposition:

1. Whether respondent's allegation that petitioner has undeclared sales amounting to P99,660,220.47 based on benchmark rate has factual and legal bases;

2. Whether respondent's allegation that petitioner has undeclared sales amounting to P41,760,025.41 based on computerized matching has factual and legal bases;

3. Whether respondent disallowance of petitioner's input tax representing 97°/o of the total input tax credits claimed for taxable period January to June 2012 has factual and legal bases; and

4. Whether petitioner is liable for the alleged deficiency value-added tax and increments for taxable period

January

June

2012 in the amount of P96,527,897.39.

THE COURT'S RULING

Respondent assessed petitioner of deficiency VAT amounting to P96,527,897.39, inclusive of interest, for the period covering January 1 to June 30, 2012, computed as follows: 28 VATable sales per VAT returns p 422,462,011.11

Add:

Sales not subjected to VAT p 99,660,220.47 Undeclared sales 41,760,025.41 141,420,245.88 Gross receipts subject to VAT p 563,882,256.99 Output tax due p 67,665,870.84

Less:

Input tax claimed per return p 49,131,702.18

Less: Unsupported input tax Excess input tax carried over to succeeding quarter p 47,727,546.63 259,034.46 47,986,581.09 1,145,121.09 VAT payable p 66,520,749.75

Less:

Tax payments p 1,563,739.16

Add:

Creditable VAT withheld per return p 2,996.57 Less: Unsupported creditable VAT 2,996.57 - 1,563,739.16 withheld Basic tax due p 64,957,010.59

Add:

Interest (07.26.12 to 12.29.14) 31,570,886.80 Total amount due p 96,527,897.39 Sales not subjected to VAT amounting to P99,660,222.47 Respondent computed the alleged sales not subjected to VAT as follows: 29 Computed VATable Sales based on Benchmark Rate p 522,122,233.58

Less: Total VATable Sales per VAT Return

Sales Not Subjected to VAT

Benchmark Sales/Receipts=

422,462,011.11 p 99,660,222.47

Current Input Tax Credit Claimed

VAT Rate-Benchmark Rate

Current Input Tax Claimed for the pt and 2nd quarters P49,131,702.18

Benchmark Rate for Other Wholesaling

2.59%

Benchmark Sales/Receipts=

P49,13L702.18 12%-2.59%

Benchmark Sales/Receipts=

P49,13L702.18 9.4100%

Benchmark Sales/Receipts=

P522,122,233.58 Petitioner opposes the computation and alleges that the industry benchmark cannot be used as the best evidence to support an assessment of a deficiency tax. According to petitioner, this was even admitted by respondent's own witness. Petitioner further alleges that there was no mention from the objectives of the benchmarking program on the imposition of taxes on the mere basis of a benchmark which could bring about a deficiency assessment against a taxpayer.~

On the other hand, respondent claims that the assessment was based on best evidence obtainable because of petitioner's failure and refusal to make certain records available despite issuance of Subpoena Duces Tecum dated July 23, 2013. Respondent avers that since there is no means by which the correctness and accuracy of petitioner's receipts can be ascertained, assessment based on estimate was used pursuant to Section 2.4(a) of Revenue Memorandum Circular (RMC) No. 23-2000. An examination of the assessment shows that respondent arrived at the sales allegedly not subjected to VAT amounting to P99,660,222.47 by comparing petitioner's gross sales based on industry benchmark rate pursuant to Revenue Memorandum Order (RMO) No. 05-2012 with the sales reported per VAT Returns. Specifically,

RMO

No. 05-2012 defined benchmarking of taxpayers as the process of setting a standard to determine the performance level of taxpayers in a given line of industry or sector. According to respondent, the computed VATable sales based on benchmark rate less total VATable sales per VAT return is the best evidence obtainable so as to determine the amount of petitioner's deficiency VAT liability.

It is significant to note that the objectives of profiling and benchmarking activities under RMO No. 05-2012 are limited to the following:

"I. Objectives:

This Order aims to prescribe the revised/updated policies, guidelines and/or procedures in the conduct of taxpayer profiling and benchmarking activities to all Regional and Revenue District Offices (RDOs). It also provides an effective tool in addressing collection problems, plugging tax leakages and implementing a risk- to-revenue based audit and enforcement activities. ~

Specifically, this Order is issued to:

1. Address the downward trend in revenue collections by providing an environment that levels the playing field among all taxpayers belonging to the same industry;

2. Empower revenue officials and employees concerned to deal with the numerous incidence of registered taxpayers who are neither filing their tax returns nor paying the correct taxes; and

3. Adopt a set of principles and methods that provide the basic formula in computing the benchmark and guide the district offices concerned towards a more systematic or well-balanced implementation of the Benchmarking Program."

Also, the same RMO No. 5-2012 provides for the guidelines in the conduct of benchmarking, including the benchmarking cycles: "III. General Policies

XXX

5. Guided by the procedures herein provided, LTS Audit Division Chiefs; [sic] to the extent applicable to it, and Revenue District Officers shall ensure that the benchmarking cycle is completed within the required timeframe. The following shall likewise be observed:

a. In cases where Letters of Authority have been issued to taxpayers, the LT Audit Division Chiefs, and RDOs concerned shall take into consideration the established benchmark in the industry where the subject taxpayer belongs before considering the case closed and terminated; b.

Any

downtrend deviation from the benchmark shall be fully explained and such Jz-- data shall form part of the inputs in the revision of final benchmark rates;

c. All issues and concerns raised by taxpayers in the implementation of this program that call for immediate action shall be the responsibility of the implementing office. Reports of action taken thereon must be furnished the Benchmarking Committee.

6. Taxpayers whose tax compliance is below the duly established and approved benchmark shall be classified as follows:

Classifications

Risk to Revenue/Gap to Benchmark

High Risk Taxpayers

Middle Risk Taxpayers

Low Risk Taxpayers

Over 30°/o below benchmark 16°/o to 30°/o below benchmark 15°/o or less below benchmark

7. Taxpayers classified as high risk shall be the top priority target for enforcement actions, such as Surveillance, CRM/POS Post Evaluation, Oplan Kandado, Inventory Stocktaking and Audit; 8.

The

Benchmarking

Committee

shall be responsible for reporting and recommending the appropriate actions that may be taken and/or sanctions that may be imposed against taxpayers or any other person found to be supplying/submitting false or fabricated data purportedly to meet the benchmark requirements;

XXX

IV.

Guidelines and Procedures

for the

Conduct

Benchmarking

Benchmarking Cycles:

1. Gather taxpayer data.

XXX

XXX~

2. Prepare the taxpayers profile.

XXX

3. Evaluate the result and Establish Benchmark.

XXX

4. Notice to Taxpayer. In view of the established standard rate of tax compliance or the benchmark, the RDOs may now proceed to notify taxpayers who fall below the benchmark that they should rectify their tax returns and improve their tax compliance. xxx

XXX

The RDOs shall ensure that all information are correct and the benchmark data were thoroughly reviewed and validated as against the return/information obtained per taxpayer before sending out the notification letters. The Notice to be sent to the taxpayers is not a notice of investigation that will bar the taxpayer from amending his return. However, within fifteen (15) days from receipt of said Notice, the taxpayer must explain fully in writing its failure to measure up in compliance with set industry benchmark.

Failure

to satisfactorily establish its reasons, the taxpayer may be issued a Letter of Authority or be subject to other enforcement activities.

5. Evaluate Taxpayers' Response/Reactions. The RDO must evaluate the reasons put forward by the taxpayers in its response.

Based

on this evaluation, the RDO should make a recommendation whether taxpayer should be subjected to enforcement activities, issued an electronic Letter of Authority ( eLA) or not.

6. Analyze and Prepare Reports and Recommendation. J<-

Evaluation involves a risk to revenue analysis. Thus, a proper report by the Revenue District Officer to the Regional Director or by the xxx has to be made with conclusions, whether taxpayer fall under the high risk, middle- or low-risk category bracket. Reports should likewise include recommendations for proper enforcement actions such as immediate issuance of Letter of Authority, if none has been issued yet, conduct of Post Evaluation on

CRM/POS

Machines, placing establishment under surveillance, or conduct of inventory stock taking.

7. Enforcement

Actions

Assess

and

Collect

Deficiency Taxes.

The conduct of Oplan Kandado or Inventory Stock Taking, as the case maybe, will almost always trigger the issuance of Letters of Authority.

Audit

activities and processes embodied under Revenue Regulations No. 12- 99 are to be complied with in coming up with assessment notices.

8. Evaluate, Compare & Adjust the Final Benchmark.

Under

this stage, comparison of the initially benchmarked data under Cycle 3 must be compared for purposes of computing the revised benchmark under Cycle 9. The results of evaluation may either be a downtrend benchmark or an uptrend benchmark revision.

9. Revise Benchmark. The Committee shall come up with the 'schedule benchmark' by line of industry in every audit division (LTS), regional and district offices. Areas with low compliant taxpayers must be identified and monitored.

The Audit Division Chiefs/Revenue District Officers

and Regional Directors shall use the scheduled benchmark as a tool in classifying taxpayers as high risk, middle risk or low risk taxpayers. These revised /k- benchmarks should serve as a guide to improve voluntary compliance.

10. Monitor the activities and accomplishments on benchmarking. Prepare and submit the reports in soft copies (MsExcel format) as provided under paragraph V hereof.

11. Periodically review the statistical method utilized to arrive at the benchmarks. Recommend the revision of benchmark and/or method or strategies, if necessary.

12. Considering the unique characteristics of taxpayers covered by the Large Taxpayers Service, the following additional steps should be undertaken, when applicable, to wit:

12.¹.

From the groupings by industry, classify taxpayers as 'old existing' and 'newly enlisted' taxpayers;

12.².

For the old taxpayers, proceed with the process of tax profiling; for those under the newly enlisted taxpayers, compare their VAT & IT compliance with the initial benchmark;

12.³. Newly enlisted taxpayers whose VAT &

Income Tax

(IT) compliance are below benchmark shall be issued with benchmark notices requiring them to upgrade/enhance their tax payments. Those who will not improve given enough time to do so shall be subjected to tax enforcement activities." (Emphases supplied) A perusal of the foregoing shows that the purpose of the benchmarking program and of deriving the benchmarking rate is mainly to establish measurement or a set of standards to be used to measure and monitor the performance/compliance of taxpayers in a particular industry and improve voluntary tax compliance. There is cr.- nothing in the foregoing which would show that the benchmark rate should be used in computing the tax liability of the taxpayer. At best, the benchmarking program may be used in recommending enforcement actions such as immediate issuance of Letter of Authority, if none has been issued yet, conduct of Post Evaluation on CRM/POS Machines, placing establishment under surveillance, or conduct of inventory stock taking. Moreover, it is important to stress that while the enforcement actions, such as the conduct of Oplan Kandado or Inventory Stock Taking, as the case may be, will almost always trigger the issuance of Letters of Authority, the same RMO requires that the audit activities and the processes embodied under Revenue Regulations No. 12-99 should still be complied with in coming up with assessment notice. Clearly, in this case, respondent should have assessed petitioner based on its own investigation pursuant to the electronic Letter of Authority ( eLA) issued and in compliance with Revenue Regulations No. 12-99, and not by merely using the benchmark rate in arriving at the alleged computed VATable sales of petitioner. Thus, the use of the benchmark rate in computing petitioner's tax liability has no legal basis. As to respondent's claim that the assessment was arrived at on the basis of the Best Evidence Obtainable, the Court finds relevant Section 6(B) of the NIRC of 1997, as amended, which requires that the assessment of the tax be determined based on the Best Evidence Obtainable in the absence of accounting records or other records. Section 6(B) of the Tax Code, reads: "SEC. 6. Power of the Commissioner to Make

Assessments and Prescribe Additional Requirements for

Tax Administration and Enforcement -

XXX

(B) Failure to Submit Required Returns, Statements, Reports and other Documents. - When a report required by law as a basis for the assessment of any national internal revenue tax shall not be forthcoming within the r-- time fixed by laws or rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the Commissioner shall assess the proper tax on the best evidence obtainable. In case a person fails to file a required return or other document at the time prescribed by law, or willfully or otherwise files a false or fraudulent return or other document, the Commissioner shall make or amend the return from his own knowledge and from such information as he can obtain through testimony or otherwise, which shall be prima facie correct and sufficient for all legal purposes." (Emphasis supplied) Relevantly, Section 5 of the NIRC gives respondent vast powers which he could exercise in obtaining the best evidence, as follows: "SEC. 5. Power of the Commissioner to Obtain Information and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:

(A)

To examine any book, paper, record, or other data which may be relevant or material to such inquiry;

(B)

To obtain on a regular basis from any person other than the person whose internal revenue tax liability is subject to audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the Bangko Sentral ng Pilipinas and government-owned or - controlled corporations, any information such as, but not limited to, costs and volume of production, receipts or sales and gross incomes of taxpayers, and the names, addresses, and financial statements of corporations, mutual fund companies, insurance companies, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members; J2-

(C)

To summon the person liable for tax or required to file a return, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for tax, or any other person, to appear before the Commissioner or his duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony;

(D)

To take such testimony of the person concerned, under oath, as may be relevant of material to such inquiry; and

(E)

To cause revenue officers and employees to make a canvass from time to time of any revenue district or region and inquire after and concerning all persons therein who may be liable to pay any internal revenue tax, and all persons owning or having the care, management or possession of any object with respect to which a tax is imposed.

The provisions of the foregoing paragraphs notwithstanding, nothing in this

Section

shall be construed as granting the Commissioner the authority to inquire into bank deposits other than as provided for in Section 6(F) of this Code."

The power of the Commissioner to assess on the best evidence obtainable was likewise elaborated in the case of Commissioner of Internal Revenue vs. Hantex Trading Co. Inc. 30, wherein the High Court ruled as follows:

"The law allows the BIR access to all relevant or material records and data in the person of the taxpayer. It places no limit or condition on the type or form of the medium by which the record subject to the order of the BIR is kept. The purpose of the law is to enable the SIR to get at the taxpayer's records in whatever form they Jc- 3o G.R. No. 136975, March 31, 2005.

may be kept. Such records include computer tapes of the said records prepared by the taxpayer in the course of business. In this era of developing information-storage technology, there is no valid reason to immunize companies with computer-based, record-keeping capabilities from BIR scrutiny. The standard is not the form of the record but where it might shed light on the accuracy of the taxpayer's return. In Campbell, Jr. v. Guetersloh, the United States (U.S.) Court of Appeals (5th Circuit) declared that it is the duty of the Commissioner of Internal Revenue to investigate any circumstance which led him to believe that the taxpayer had taxable income larger than reported.

Necessarily, this inquiry would have to be outside of the books because they supported the return as filed. He may take the sworn testimony of the taxpayer; he may take the testimony of third parties;

he may examine and subpoena, if necessary, traders' and brokers' accounts and books and the taxpayer's book accounts. The Commissioner is not bound to follow any set of patterns. The existence of unreported income may be shown by any practicable proof that is available in the circumstances of the particular situation. Citing its ruling in Kenney v. Commissioner, the U.S. appellate court declared that where the records of the taxpayer are manifestly inaccurate and incomplete, the Commissioner may look to other sources of information to establish income made by the taxpayer during the years in question.

XXX

The rule is that in the absence of the accounting records of a taxpayer, his tax liability may be determined by estimation. The petitioner (Commissioner of Internal Revenue) is not required to compute such tax liabilities with mathematical exactness.

Approximation in the

calculation of the taxes due is justified. To hold otherwise would be tantamount to holding that skillful concealment is an invincible barrier to proof. However, the rule does not apply where the estimation is fv- arrived at arbitrarily and capriciously." (Emphasis supplied and citations omitted) In other words, while respondent has the power to assess petitioner on the best evidence obtainable and may resort to the exercise of its powers under Section 5 of the NIRC and to approximation in the calculation of the taxes due, the same should not be arrived at arbitrarily and capriciously. In this case, respondent based the assessment against petitioner for sales allegedly not subject to VAT on the computed VATable sales based on benchmark rate less total VATable sales per VAT return. Noticeably, respondent made no determination of the actual VATable sales of petitioner, considering that the benchmark rate used by respondent pertains to the sales of other wholesaling companies as reflected in the computation. There was also no showing as to how the benchmark rate was derived by respondent, or that it can at least be used to approximate the actual VATable sales of petitioner. What can only be deduced from the computation is that respondent merely assumed that the amount of VATable sales of other wholesaling companies is the same with the VA Table sales of petitioner.

At this juncture, it must be pointed out that in order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of correctness of assessment being a mere presumption cannot be made to rest on another presumption. Hence, assessment should not be based on mere presumptions no matter how reasonable or logical said presumptions may be.31 Consequently, while there is a presumption of correctness of assessment issued by respondent, being a mere presumption, the same cannot be made to rest on another presumption, which is respondent's presumption that the amount of VATable sales of other wholesaling companies is the same with the VATable sales of petitioner.

The Court further observes that while the computation of petitioner's VA Table sales was based on presumptions and ?c- 31 Commissioner of Internal Revenue vs. Alberto D. Benipayo, G.R. No. L-13656, January 31, 1962; Commissioner of Internal Revenue vs. Island Garment Manufacturing Corporation and the CourtofTaxAppeals, G.R. No. L-46644, September 11, 1987.

estimations, respondent, however, was able to further assess petitioner for undeclared sales based on sales per particular customer. Although in the succeeding discussion, the Court shall still determine whether these data were verified, it does not change the fact that the computed benchmark sales/receipt is not the best evidence obtainable in computing petitioner's liability since respondent could derive and verify evidence and data from third parties.

Also, contrary to respondent's allegation, it appears from the records that petitioner was able to submit documents to address respondent's request for documents pursuant to the eLA.32 Clearly, the use of benchmark rate in determining petitioner's total VATable sales is not the best evidence that can be obtained by respondent and that the use of the same in making an assessment has no support in law. Thus, for being without factual or legal basis, the deficiency VAT arising from the alleged sales not subjected to VAT should be cancelled.

Undeclared Sales amounting to P41,760,025.41 As to the alleged undeclared sales, respondent assessed petitioner of deficiency VAT on the alleged undeclared sales in this wise: 33 Undeclared Sales amounting to P41,760,025.41: Comparison of sales per Third Party Information (TPI) and sales per Summary List of Sales (SLS) disclosed that there were undeclared sales from customers in the amount of P3,053,348.68, hence petitioner was assessed of VAT pursuant to Section 106 of the tax code. Sales per particular Customers (TPI) Sales declared per SLS

Undeclared Sales (Annex B)

32 Exhibits "P-18" to "P-27", Docket, Vol. II, pp. 1193 to 1200. 33 Exhibit "P-2", Docket, Vol. II, p. 1113. p 41 816,269.15 56,243.74 P41,760,025.41

Petitioner alleges that there was failure to verify the allegations stemming from third party information through externally sourced data as required by RMO No. 04-2003. Moreover, considering that the data gathered from third party sources came from BIR's RELIEF system, it is necessary that the guidelines and policies set under RMO Nos. 42-2003 and 46-2004 must be met, that includes the requirement for the BIR to secure sworn statements or certifications from TPI sources. Without verification or certification from the third- party sources as to the veracity of the information used by respondent, such information cannot be considered as a "third party information".

As mentioned in the Details of Discrepancies, respondent derived the alleged undeclared sales by comparing third party information and purchases from the alleged third-party sources and sales by the petitioner which were reflected in the summary list of sales. However, as testified by respondent's witness Mr. Renan A. Plata during cross-examination, he was not able to secure the required certifications from these third-party sources.34 Also, there was no showing from the records that these pieces of information were verified.

These findings cast doubts as to the reliability and correctness of the assessment for deficiency VAT on the alleged sales not subjected to VAT and the alleged undeclared sales. Moreover, it must be emphasized that while respondent has the power to assess petitioner on the best evidence obtainable and may resort to the exercise of its powers under Section 5 of the NIRC and to approximation in the calculation of the taxes due, the same should not be arrived at arbitrarily and capriciously. In this case, instead of exerting his best effort in gathering information from other sources to verify the alleged undeclared sales and instead of taking into consideration the documents submitted by petitioner, respondent chose to resort to presumptions and heavily relied on the results of the unverified third party matching and on the benchmark rate in estimating petitioner's sales and tax liability.~

34 Transcript of Stenographic Notes taken during the hearing held on July 27, 2016, pp. 15-16.

Therefore, respondent's finding that petitioner has sales not subject to VAT and undeclared sales lacks factual and legal bases. Nevertheless, as to the alleged unsupported input tax, the Court shall determine the propriety of the assessment based on the evidence presented by the parties considering that respondent computed the same based on his examination of petitioner's supporting documents.

Unsupported

Input

Tax

amounting to P47,727,546.63 Respondent's verification disclosed that petitioner failed to submit the required VAT Invoices or Official Receipts (OR) to support the claimed input taxes, thus, respondent disallowed the same pursuant to the provision imposed under Section 110(A)(1) of the NIRC which provides that any input tax claimed evidenced by a VAT Invoice or official receipt issued in accordance with Section 113 of the NIRC shall be creditable against output tax, to wit: Input tax claimed per VAT returns p 49,131 702.18 Supported input tax 1,404 155.55 Unsupported input tax P47,727,546.63 Based on the documents submitted, the Court-commissioned ICPA, Mr. Ericson D. Tadeja, found that the total input VAT declared in the 1st and 2nd Quarterly VAT Returns of taxable year 2012 amounting to P49,131,702.8735 was composed of the following major and minor purchases: 36

Major Purchases

Asia Brewery Incorporated (ABI)

p 18,722,361.32 Interbev Philippines, Inc. (IPI) 24,471,344.86

Sub-total

p 43,193,706.18

Minor Purchases

35 Exhibits "P-11" and "P-14", Docket, Vol. II, pp. 1178 and 1189.

Quarter Input VAT Claimed

1st P24 658,734.40 2nd 24 472,968.47 P49,131,702.87

36 Exhibits "P-32-A", ICPA Report, p. 8.

Various suppliers Total input tax claimed per return 5 937,996.69 p 49,131,702.87 Upon examination of the submitted documents, the findings of the !CPA may be summarized as follows:

Findings

Reference

Exhibit

VAT Amount

A. Purchases from ABI and IPI (major purchases)

1. Purchases of Goods supported by original VAT-registered sales invoices 13A.1 to

(A6I and IPI)

IC 13A

13A.2594

IC-146

146.1 to 146.298 4 012 579.22 sub-total p 4171,165.39

3. Purchases of goods, capital goods and services supported by VAT- registered official receipts but are outside the taxable period

IC-14C

14C.1 to 14C.756 p 583 591.48

4. Purchases of goods, capital goods and services which are not properly supported by VAT-reqistered invoices or official receipts

IC-140

140.1 to 140.209 583 749.82

5. Purchases of goods, capital goods and services which are substantiated by tape receipts but are unreadable

IC-14E

14E.1 to 14E.52 5 842.92

6. Purchases of goods, capital goods and services which are unaccounted due to lack of documents

IC-14F

593,647.08 sub-total p 1 766. 831.30 Total Purchases from suppliers other than ABI and IPI (minor purchases) 5 937,996.69

GRAND TOTAL

p 49 131,702.87 Based on the foregoing, the Court finds that the amount of P1,766,831.30 (items 8.3 to 8.6) must be disallowed for petitioner's ~ failure to meet the substantiation requirements under Sections 110(A) and 113(A) and (B) of the NIRC of 1997, as amended by Republic Act No. 9337, and as implemented by Sections 4.110-2, 4.110-8 and 4.113-1 of Revenue Regulations No. 16-05. In addition to said exceptions, the examination of the documents submitted by petitioner leads to the findings as discussed below.

A. Input VAT from Domestic Purchases of Goods from Asia

Brewery Incorporated {ABI) and Interbev Philippines

Incorporated (IPI)

Records reveal that petitioner's input VAT on domestic purchases from ABI and IPI from January to June 2012 amounted to P18,722,361.33 and P24,471,344.86, respectively, net of monthly debit and credit memos, to wit: VAT claimed Upon further verification, the Court finds that the total input VAT of P10,602,806.07 must be disallowed due to the following grounds: Jv-

37 Annex IC-8A, ICPA Report p. 583, Exhibit "P-32-C".

38 Annex IC-9, ICPA Report p. 652, "Exhibit P-32-C"; Exhibits "P-13A.2565" to "P-13A.2568", and "P-13A.2584" to "P-13A.2594".

39 Annex IC-8A, ICPA Report p. 599, Exhibit "P-32-C".

40 Annex IC-9, ICPA Report p. 653, Exhibit "P-32-C"; Exhibits "P-13A.2563" to "P-13A.2564" and "P-13A.2578" to "P-13A.2583".

41 Annex IC-86, ICPA Report p. 623, Exhibit "P-32-C".

42 Annex IC-9, ICPA Report p. 654, Exhibit "P-32-C"; Exhibits "P-13A.2569" to "P-13A.2577".

Exhibit No.

Asia Brewery Inc.

13A.79 139709 1/18/2012 139143 1/9/2012 139142 1/9/2012 139221 1/10/2012 139220 1/10/2012 139191 1/10/2012 139287 1/11/2012 13A.97 139286 1/11/2012 139330 1/12/2012 13A.103 13A.118 139419 1/14/2012 13A.119 139481 1/14/2012 13A.128 13A.129 Asia Brewery Inc.

Asia Brewery Inc.

13A.131 13A.132 13A.133 13A.141 13A.142 13A.143 13A.144 13A.145 Asia Brewery Inc 13A.146 Asia Brewery Inc 13A.149 Asia Brewery Inc.

Asia Brewery Inc.

Asia Brewery Inc 13A.150

Asia Brewery Inc

Asia Brewery Inc.

13A.151 13A.152 | Asia Brewery Inc.

Asia Brewery Inc.

13A.155 139520 139546 139545 139591 139590 139592 139577 139576 139575 139694 139695 139691 1/16/2012 1/16/2012 1/16/2012 1/17/2012 1/17/2012 1/17/2012 1/17/2012 1/17/2012 1/17/2012 1/18/2012 1/18/2012 1/18/2012 3,060.00 4,991.79 12,045.00 11,185.71 32,170.50 19,575.00 2,367.86 2,728.29 9,426.43 3,780.00 3,461.79 22,660.50 10,160.14 14,496.43 7,852.50 22,237.50 11,185.71 19,207.50 18,304.50 11,195.36 25,778.57 930.00 17,056.50 6,962.79 1,339.29 960.00 11,797.50 5,940.00 28,795.50 5,029.29 3,690.00 3,976.50 13,671.64 13,012.50 16,778.57 21,829.93 139692 1/18/2012 139725 13A.156 139724 13A.157 13A.158 Asia Brewery Inc.

Asia Brewery Inc.

13A.159 139726 139774 139773 1/19/2012 1/19/2012 1/19/2012 1/19/2012 1/19/2012 13A.162 139834 1/20/2012 13A.167 139835 1/20/2012 13A.168 139874 1/21/2012 13A.169 139897 1/21/2012 13A.170 139896 1/21/2012 18,064.50 9,225.00 7,818.00 3,150.00 2,325.00 20,055.00 5,139.00 27,964.29 47,729.79 5,340.00 16,228.50 Asia Brewery Inc.

Asia Brewery Inc.

13A.179 13A.180 13A.181 13A.182 Asia Brewery Inc.

13A.183 139928 139927 139926 1/23/2012 Asia Brewery Inc. 13A.171 139895 1/21/2012 1,920.00 Asia Brewery Inc. 13A.172 139894 1/21/2012 5,349.00 Asia Brewery Inc. 13A.173 139893 1/21/2012 13,021.29 139929 139925 1/23/2012 1/23/2012 1/23/2012 1/23/2012 15,549.00 Po 3,690.00 3,976.50 12,573.64 13,803.21

CfA CASE NO. 9086

Sub-total (February 2012)

Interbev Philippines Incorporated

Sub-total (March 2012)

Interbev Philippines Incorporated

Sub-total (May 2012)

Interbev Philippines Incorporated

Sub-total (June 2012)

136.201 136.202 136.203 13A.2220 13A.2316 136.204 136.205 136.206 136.207 136.208 136.210 136.211 136.212 136.213 136.214

2. Supported by VAT invoices with incorrect TIN of petitioner.

Interbev Philippines Incorporated

13A.1518

Interbev Philippines Incorporated

13A.1519

Interbev Philippines Incorporated

13A.1520

Interbev Philippines Incorporated

13A.1521

Interbev Philippines Incorporated

13A.1522

Interbev Philippines Incorporated

13A.1523

Interbev Philippines Incorporated

13A.1524

Interbev Philippines Incorporated

13A.1525

Interbev Philippines Incorporated

13A.1526

Interbev Philippines Incorporated

13A.1527

Interbev Philippines Incorporated

13A.1528

Interbev Philippines Incorporated

13A.1529

Interbev Philippines Incorporated

13A.1530

Interbev Philippines Incorporated

13A.1531

Interbev Philippines Incorporated

13A.1532

Interbev Philippines Incorporated

13A.1533

Interbev Philippines Incorporated

13A.1534

Interbev Philippines Incorporated

13A.1535

Interbev Philippines Incorporated

13A.1536

Interbev Philippines Incorporated

13A.1537

Interbev Philippines Incorporated

13A.1538

Interbev Philippines Incorporated

13A.1539

Interbev Philippines Incorporated

13A.1540

Interbev Philippines Incorporated

13A.1541

Interbev Philippines Incorporated

13A.1542

Interbev Philippines Incorporated

13A.1543

Interbev Philippines Incorporated

13A.1544

Interbev Philippines Incorporated

13A.1545

Interbev Philippines Incorporated

13A.1546

Interbev Philippines Incorporated

13A.1547

Interbev Philippines Incorporated

13A.1548

Interbev Philippines Incorporated

13A.1549

Interbev Philippines Incorporated

13A.1550

Interbev Philippines Incorporated

13A.1551

Interbev Philippines Incorporated

13A.1552

Interbev Philippines Incorporated

13A.1553 75803 75523 75326 01411 01458 00032 00036 00037 00039 00048 00804 00805 00807 00813 00815 71276 71373 71366 71358 71292 71304 71302 71378 71314 71289 71353 71327 71345 71296 71331 71473 71425 71426 71407 71394 71438 71399 71444 71442 71435 71397 71449 71455 71429 71432 71445 71476 71478 71500 71514 71501 , 2,126,280.00 3/23/2012 p 47,614.29 3/19/2012 20,880.00 3/15/2012 303.75 , 68,798.04 5/5/2012 p 17,400.00 5/18/2012 24,360.00 5/2/2012 17,400.00 5/2/2012 24,360.00 5/2/2012 24,360.00 5/1/2012 17,400.00 5/2/2012 17,400.00 , 142,680.00 6/4/2012 p 17,400.00 6/4/2012 24,360.00 6/4/2012 17,400.00 6/5/2012 24,360.00 6/5/2012 17,400.00 , 100,920.00 1/2/2012 p 20,880.00 1/3/2012 24,360.00 1/3/2012 24,300.00 1/3/2012 47,614.29 1/3/2012 24,360.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/3/2012 24,360.00 1/3/2012 17,400.00 1/3/2012 24,360.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/3/2012 17,400.00 1/4/2012 24,360.00 1/4/2012 45,900.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/4/2012 26,550.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/4/2012 26,550.00 1/4/2012 17,400.00 1/4/2012 29,065.71 1/4/2012 20,880.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/4/2012 17,400.00 1/5/2012 24,360.00 1/5/2012 22,620.00 1/5/2012 20,880.00 1/5/2012 24,360.00

Interbev Philippines Incorporated

13A.1554 71479 13A.1555 71502 13A.1556 71491 13A.1557 71470 13A.1558 71472 13A.1559 71486 13A.1560 71504 13A.1561 71564 13A.1562 71561 13A.1563 71542 13A.1564 71541 13A.1565 71544 13A.1566 71533 13A.1567 71523 13A.1568 71599 13A.1569 71600 13A.1570 71590 13A.1571 71659 13A.1572 71686 13A.1573 71655 13A.1574 71647 13A.1575 71667 13A.1576 71644 13A.1577 71650 13A.1578 71643 13A.1579 71673 13A.1580 71678 13A.1581 71679 13A.1582 71782 13A.1583 71785 13A.1584 71784 13A.1585 71721 13A.1586 71764 13A.1587 71730 13A.1588 71714 13A.1589 71715 13A.1590 71739 13A.1591 71712 13A.1592 71713 13A.1593 71865 13A.1594 71814 13A.1595 71813 13A.1596 71841 13A.1597 71842 13A.1598 71859 13A.1599 71811 13A.1600 71843 13A.1601 71844 13A.1602 71812 13A.1603 71820 13A.1604 71914 13A.1605 71915 13A.1606 71913 13A.1607 71916 13A.1608 71970 13A.1609 71919 1/5/2012 24,360.00 1/5/2012 24,360.00 1/5/2012 24,360.00 1/5/2012 17,400.00 1/5/2012 17,400.00 1/5/2012 17,400.00 1/5/2012 17,400.00 1/6/2012 20,880.00 1/6/2012 24,360.00 1/6/2012 17,400.00 1/6/2012 17,400.00 1/6/2012 17,400.00 1/6/2012 17,400.00 1/7/2012 24,360.00 1/7/2012 17,400.00 1/7/2012 17,400.00 1/7/2012 17,400.00 1/9/2012 22,620.00 1/9/2012 22,620.00 1/9/2012 17,400.00 1/9/2012 17,400.00 1/9/2012 17,400.00 1/9/2012 17,400.00 1/9/2012 17,400.00 1/9/2012 35,700.00 1/9/2012 22,620.00 1/9/2012 6,960.00 1/9/2012 25,328.57 1/12/2010 22,620.00 1/12/2010 24,360.00 1/12/2010 22,620.00 1/12/2010 17,400.00 1/12/2010 32,040.00 1/12/2010 26,550.00 1/12/2010 17,400.00 1/12/2010 35,700.00 1/12/2010 17,400.00 1/12/2010 21,302.14 1/12/2010 490.18 1/12/2011 20,880.00 1/12/2011 17,400.00 1/12/2011 17,400.00 1/12/2011 12,180.00 1/12/2011 5,220.00 1/12/2011 47,271.43 1/12/2011 47,957.14 1/12/2011 3,480.00 1/12/2011 27,780.00 1/12/2011 17,400.00 1/12/2011 17,400.00 1/12/2012 10,440.00 1/12/2012 6,960.00 1/12/2012 17,400.00 1/12/2012 17,400.00 1/12/2012 19,882.50 1/12/2012 45,900.00

Page tar’ 1/12/2012 28,380.00 73010 00 Interbev Philippines Incorporated ring —|— 900 12/2013 13,050.00 Interbev Philippines Incorporated rie nl 71998 1/12/2013

Za TET

imerbev Epeines (romper NET 72005 2/0" Sopot 7.

interme’ Prmippines Tneorpee=e SA 18 72074 Interbev Philippines Incorporated aS 72075 1/12/2014 960 00 mmterbev Pitippines Tnecrporetes A160 | 72086 1/12/2014 10,440.00 tere Phiiprnes et oa 72087 | 1/12/2014 17,400.00 jee oe Incorporated es 72090 1/12/2014 Interbev Philippines Incorporated era 72199 1/12/2017 mnferhey ippines Incorporates INGE | 72224 1/12/2017 22,620.00 Interbev Philippines Incorporated Rios 7225 | _—1/12/2017 26,550.00 Interbev Philippines Incorporated | _ at 626 72178 1/12/2017 166000 anteney Plppines “corporate T5A629 72195 1/12/2017 6,085.71 Interbev Philippines Incorporated See 196 1/12/2017 S024 Interbev Philippines Incorporated 1A, 629 72201 1/12/2017 7 400.00 Interbev Philippines reoponiet | een 72213 1/12/2017 70 880.00 Interbev Philippines Incorporated Riel <= 72251 4/12/2017 17,400.00 Interbev Philippines Incorporated ae ieas mas | _a/a2p20i7 24,360.00 EEE BAe 72202 1/12/2017 21,060.00 Interbev Philippines Incorporated = 634 72241 Te 4/12/2017 5,220.00 | interbey Philippines Tncorporatec Ries 72238 1/12/2017 29,700.00 pieces pene Roo SAI 72239 1/12/2017 20,880.00 Interbev Philippines Incorporated Sree 77324 1/12/2018 7,400.00 mete Pinippines Incorporated | TSA 72m | 4/12/2018 8,700.00 Interbev Philippines Incorporated ere | 72272 1/12/2018 ee mnterbey Philippines Tncorporated GA iea0 72273 1/12/2018 17,400.00 rere Prippines Incorporetee SAieH 72286 | __—*1/12/2018 26,550.00 Interbev Philippines Incorporated a 642 72285 1/12/2018 | —— Interbev Philippines Incorporated eae 72275 1/12/2018 7 620, 00 | Interbev Philippines Incorporated piel Tl 53360 1/12/2018 22/620.00 Interbev Philippines Incorporated ae 72270 |__ 1/12/2018 7 400 00 | nnterbey Phippines Incorporated Ga 1686 [___ 72288 1/12/2018 47,271.43 Interbev Philippines Incorporated pace 79334 r 4 /12/2018 ean pa Interbev Philippines Incorporated 13A.1 , 79423 1/12/2019 {— 0580-00 inberbev Piippines Tncorporetee GA IeS — 7411 (| 4/12/2019 13,920.00 muerDey Piiippmes Tneorporstec SAI 72374 1/12/2019 10,440.00 Interbev Philippines Incorporated — 13A. = 72375 | 1/12/2019 10,440.00 senna Eippines Incorporete’ ar 52 72369 | (1/12/2019 16,034.82 anferbew Phiippines Tncorporatec rere 72370 1/12/2019 15,214.29 reset Pilppin’s Moorporatee Saige T3480 [1/12/2020 17,400.00 Interbev Philippines Incorporated | _ 13A.1 : 79497 1/12/2021 aie Interbev Philippines Incorporated ae 79500 4 /12/2021 700.00 muetpey Piippines Incorporates Sai | __72501 yizjont | 24,360.00 mrtertes Priippines Teorporeted | __ A658 72512 1/12/2021 4,350.00 rnerben Pritppines Tncorporsted SA 72505 1/12/2021 30,570.00 | metas Prvippines Incorporated oe 60 72506 1/12/2021 a 25,328.57 interbev Philippines Incorporated Se 72508 1/12/2021 eae uerbew Pippines. Incorporeted Sag 72503 1/12/2021 22,628.57 Serves Pripines Tncorporeted NCE 72504 | 1/12/2021 35,700.00 | antertev Philippines ‘ncorporated oe 4. | 72573 uiz2024 +r 17,400.00 Interbev Philippines Incorporated ae Te 72564 —_L 1/12/2021 /TUU. Interbev Philippines Incorporated | ——_13A.16

Interbev Philippines Incorporated

Sub-total (January 2012)

Interbev Philippines Incorporated

13A.1666 72559 13A.1667 72609 13A.1668 72649 13A.1669 72679 13A.1670 72677 13A.1671 72678 13A.1672 72717 13A.1673 72695 13A.1674 72718 13A.1675 72787 13A.1676 72786 13A.1677 72769 13A.1678 72805 13A.1679 72831 13A.1680 72952 13A.1681 72953 13A.1682 72944 13A.1683 73020 13A.1684 73023 13A.1685 73015 13A.1686 73019 13A.1687 73105 13A.1688 74433 13A.1689 74483 13A.1690 74443 13A.1691 73075 13A.1692 73077 13A.1693 74459 13A.1694 74452 13A.1695 74453 13A.1696 73157 13A.1697 73183 13A.1698 73291 13A.1699 73323 13A.1700 73329 13A.1701 73395 13A.1702 73337 13A.1703 73394 13A.1704 73373 13A.1705 73342 13A.1706 73398 13A.1707 73333 13A.1708 73412 13A.1709 73593 13A.1710 73599 13A.1711 73505 13A.1712 73582 13A.1713 73648 13A.1714 73643 13A.1715 73659 13A.1716 73660 13A.1717 73691 13A.1718 73730 13A.1719 73747 13A.1720 73739 1/12/2021 26,550.00 1/12/2023 24,300.00 1/12/2024 17,400.00 1/12/2025 22,620.00 1/12/2025 18,701.79 1/12/2025 28,380.00 1/12/2025 48,642.86 1/12/2025 24,720.00 1/12/2025 31,260.00 1/12/2026 17,400.00 1/12/2026 49,671.43 1/12/2026 17,400.00 1/12/2026 38,580.00 1/12/2027 21,745.71 1/12/2030 36,133.93 1/12/2030 980.36 1/12/2030 24,360.00 1/12/2031 17,400.00 1/12/2031 24,360.00 1/12/2031 26,550.00 1/12/2031 24,985.71 , 3,519,792.85 2/1/2012 16,980.00 2/1/2012 17,400.00 2/1/2012 19,572.86 2/1/2012 20,880.00 2/1/2012 22,620.00 2/1/2012 24,360.00 2/1/2012 26,550.00 2/1/2012 46,585.71 2/1/2012 56,700.00 2/2/2012 36,608.57 2/3/2012 17,400.00 2/6/2012 9,128.57 2/6/2012 26,983.93 2/6/2012 47,614.29 2/7/2012 17,400.00 2/7/2012 20,880.00 2/7/2012 23,232.86 2/7/2012 26,014.29 2/7/2012 35,700.00 2/7/2012 38,580.00 2/7/2012 47,614.29 2/8/2012 26,550.00 2/12/2011 6,960.00 2/12/2011 26,550.00 2/12/2011 45,900.00 2/12/2011 56,700.00 2/12/2013 26,550.00 2/12/2013 35,700.00 2/12/2013 3,480.00 2/12/2013 36,128.57 2/12/2014 35,400.00 2/12/2014 21,600.00 2/12/2015 1,301.79 2/12/2015 21,745.71

Interbev Philippines Incorporated

Interbev Phitippines Incorporated

Interbev Philippines Incorporated

13A.1721 73790 13A.1723 13A.1724 13A.1726 13A.1727

1BAI728

13A.1730 13A.1731 13A.1732 13A.1733 13A.1734 13A.1735 13A.1736 134.1738

Interbev Philippines Incorporated

Sub-total (February 2012

Interbev Philippines Incorporated

13A.1739 134.1740 13A.1741 13A,1742 13A.1743 13A.1744 74550 Interbev Philippines Incorporated 13A.1745 74508 13A.1746 74528 P 1,496,018.59 25,671.43 26,014.29 433.93 6,739.29 24,300.00 26,091.43 39,608.57 25,328.57 2,603.57 35,605.71 35,700.00 46,585.71 25,328.57 36,634.29 6,960.00 26,700.00 16,530.00 17,400.00 18,701.79 19,572.86 24,360.00 24,360.00 41,417.14 20,880.00 20,880.00 19,569.64 [interbev Philippines Incorporated [ 13ai7a7___—(|_—7ast6 «| ~—satyzor2 | —~—~S~C~=« 360.00 | Interbev Philippines Incorporated 13A.1756 6,960.00 Interbev Philippines Incorporated 13A.1758 17,400.00 Interbev Philippines Incorporated 13A.1760 74598 17,400.00 Interbev Philippines Incorporated 13A.1764 74676 25,328.57 Interbev Philippines Incorporated 13A.1774 74790 24,720.00 Interbev Philippines Incorporated 13A.1775 74737 35,700.00 Interbev Philippines Incorporated | 13A.1776 74749 48,300.00 Interbev Philippines Incorporated 13A.1777 74727 46,585.71 Interbev Philippines Incorporated 13A.1795 74854 6,960.00 Interbev Philippines Incorporated 13A.1796 74844 26,550.00 Interbev Philippines Incorporated 13A.1797 74851 26,014.29 Interbev Philippines Incorporated 13A.1806 74910 46,928.57 | interbev Philippines Incorporated 13A.1807 74882 24,720.00 | Interbev Philippines Incorporated 13A.1813 _|— 74943 19,294.29 Interbev Philippines Incorporated 13A.1814 74944 12 33,068.57 | | Interbev Philippines Incorporated 13A.1815 74976 24,360.00 Interbev Philippines Incorporated 13A.1816 74932 43,020.00 | | interbev Philippines Incorporated 13A.1817 j[ 74965 12,171.43 Sub-total (March 2012) 623,371.07 TOTAL DISALLOWANCES - INTERBEV PHILIPPINES INC. P 8,944,380.55 TOTAL DISALLOWANCES - ABI & IPI 10,602,806.07

Asia Brewery

It was noted that the above amounts were based on the original invoice amounts, without adjustments for the debit/credit memos (DM/CM) issued by ABI and IPI, thus, the Court deemed it necessary to further adjust the above input VAT amounts applying the pertinent DM/CM issued by ABI and IPI. However, since the DM/CM were issued on a monthly basis without specifying the invoices unto which those specifically pertain to, the Court finds it reasonable to pro-rate the net DM/CM per month among the allowed and disallowed input VAT claims. Consequently, the Court finds that the input VAT amounts of P1,584,789.36 and P8,513,233.37 must be disallowed from the input VAT claimed on domestic purchases of goods from ABI and IPI, respectively, or in the aggregate amount of P10,098,022.73 from January to June 2012, to wit:

Pro-rated

Amount

Total Influt

DM/CM

Total

Disallowed

VAT Claim

Ratio

DM/CM

Attributable to

Disallowances

(A}

l!!l

[C={A/8)]

{Q)

Disallowed

F=(A-E)

Input VAT

[E=(CxD)]

(Beer) - January

p 9,900.00 p 1,671,165.11 0.59% (96,298.83) p (570.48) p 9,329.52

Asia Brewery

(Bottled Water) -

1,325,064.68 1,637,274.86 80.93% (81,863.74) (66,253.23) 1,258,811.45

January

Asia Brewery

323,460.84 2,496,589.93 12.96% (52,581.03) (6,812.45) 316,648.39

(_Bottled Water) - May_

Sub-total - ABI

p 1,658,425.52 p (73,636.16) p 1,584,789.36

Interbev - January

p 4,386,312.8543 p 4,386,312.86 100.00% (219,315.64) p (219,315.64) p 4,166,997.21

Interbev- February

3,622,298.5944 3,622,298.57 100.00% (181,114.93) (181,114.93) 3,441,183.66

Interbev - March

692,169.1145 5,200,393.40 13.31% (260,019.67) (34,608.46) 657,560.65

Interbev - May

142 680.00 4 315 254.16 3.31% 81 092.74 2 681.26 145 361.26

Interbev - June

100,920.00 3,596,920.39 2.81% 43,147.09 1,210.59 102,130.59

Sub-total- IPI

p 8,944,380.55 1'(431,147.18) p 8,513,233.37

TOTAL

p 10,602 806.07 P(504 783.34) PlO 098 022.73 B. Input VAT from Other Domestic Purchases of Goods and

Services

After examination of the documents submitted to support the input VAT claimed on domestic purchases of goods and services other than ABI and IPI, the Court finds that the amount of Jc- 43 p 866,520.00 + p 3,519,792.85 = p 4,386,312.85 44 p 2,126,280.00 + p 1,496,018.59 = p 3,622,298.59 45 p 68,798.04 + p 623,371.07 = p 692,169.11

P⁴,163,498.10 must likewise be disallowed due to the following grounds:

wpe Invoice/OR Disallowed 1, Input VAT amount were not separately indicated in the supporting invoices/ORs and without petitioner's address and/or TIN 144.3 D.U. Machine Shop 19223 1/4/2012 Pp 105.00 140.4 3.21 14A.⁵ 56.78 14A.⁶ Lian Auto Supply various various 140.11 40.71

Lian Auto Supply 125283 1/18/2012

140.15 Lian Auto Supply 125690 46.61 D.U. Machine Shop 19381 5.36 14A. 22 Jojin Trading 11390 1/23/2012 Lian Auto Supply various 68.04 144.31 Valete's Brake, Clutch Parts and Gen. Merchandise 46.61 14A.38 Lian Auto Supply various various 140.45 34.29 14A.49 EMC Hardware 39377 2/16/2012 14.58 WDM Truckparts Center 2425 26.25 14A.59 Ageo Auto Parts 9918 2/28/2012 14A.61 WDM Truckparts Center 25287 2/27/2012 40.71 14A.63 New JOM Auto Parts & Gen. Mdse. 7248 2/10/2012 211.07 14A.65 Toni's Petron Service Station 204176 2/10/2012 62.68 14A.69 Lian Auto Supply various various 14A,71 Valete’s Brake, Clutch Parts and Gen. Merchandise various various 30.54 14A.76 Lian Auto Supply various 3/11/2012 120.53 14A.80 JBCC Auto Supply and General Merchandise 32519 3/20/2012 10.71 14A.82 Lian Auto Supply various various 396.43

ME Shopping Center 446 3/21/2012

14A.88 Valete's Brake, Clutch Parts and Gen. Merchandise 22407 3/19/2012 85.71 14B.1 North-West Enterprises 0103 2/4/2012 12,174.11 14B.4 CMT Hauling Services 0619 1/16/2012 2,272.71 | 14B.5 E.M. Mendoza Trucking | 292 1/20/2012 19,587.24 J.P. Opefia Trucking, Inc. 4956 1/21/2012 6,154.71 14B.8 J.P. Opefia Trucking, Inc. 4955 1/21/2012 4,245.57 14B.10 E.C. Creencia Trading 1468 1/18/2012 2,031.32 | 14B.12 Renz Trucking _| 516 1/24/2012 54,097.22 14B.14 G. Malijan trucking 2179 1/24/2012 5,665.71 | J.P. Opefia Trucking, Inc. 1/21/2012 5,752.50 14B.16 Hizon Transport Services and Trading Inc. 4644 { 2/6/2012 83,038.88 14B.17 3 Kids Enterprises | 289 1/31/2012 21,739.50 14B.21 C. Gubatan Enterprises 782 2/2/2012 11,292.39 14B.22 C. Gubatan Enterprises | 778 1/24/2012 2,973.32 14B.23 D' Bar Logistics 157 2/6/2012 2,166.11 14B.24 E. P. Bautista Trucking Services 2/6/2012 7,244.07 14B.25 E. P. Bautista Trucking Services 170 1/30/2012 15,345.43 14B.27 G. Malijan trucking 2185 | 2/6/2012 2,166.11 J.P. Opefia Trucking, Inc. 4971 2/18/2012 2,166.11 Hizon Transport Services and Trading Inc. 4645 2/6/2012 70,988.04 14B.30 Good Deal Hauling Services 2/6/2012 2,430.43 AGN Trucking & Trading 3682 3/1/2012 3,813.43 Robien Trucking _t 99 2/11/2012 9,425.14 MRTC Trucking Services Corp. 650 2/6/2012 2,973.32

Jelly's Trucking Services 2/6/2012

14B.35 New Jamaica Security Agency various 7/15/2011 5,041.07 14B.36 Robien Trucking [120 TT 2p301 13,513.49 | 14B.37 D' Bar Logistics 164 2/20/2012 | 2,548.39 pe ———

14B.38 E. M. Mendoza Trucking 14B.39

3 Kids Enterprises

14B.40

JZ Valencia Enterprises

14B.41

Leavil Trucking Services

14B.42 E. P. Bautista Trucking Services 14B.44

Good Deal Hauling Services

14B.45

Good Deal Hauling Services

14B.46

Renz Trucking

14B.47

Jelly's Trucking Services

14B.48

Jelly's Trucking Services

14B.49

North-West Enterprises

14B.50 Lee & Sons Printing Corp.

14B.51

Verson Trucking Services

14B.52 J.P. Opef\a Trucking, Inc.

14B.53

Joanne & Janine Enterprises

14B.54 C. Gubatan Enterprises 14B.55 Our Beverly Village Trucking Corp. 14B.56

Degits Trucking Services

14B.57

Robien Trucking

14B.58

ContGeo Cargo Solutions

14B.59 MRTC Trucking Services Corp.

14B.60

D' Bar Logistics

14B.61

D' Bar Logistics

14B.62

Good Deal Hauling Services

14B.63 Hizon Transport Services and Trading Inc. 14B.64

Verson Trucking Services

14B.65 Hizon Transport Services and Trading Inc. 14B.66 J.P. Opef\a Trucking, Inc.

14B.67 E. P. Bautista Trucking Services 148.68

JZ Valencia Enterprises

14B.69

North-West Enterprises

14B.70

JZ Valencia Enterprises

14B.71 Rapid Movers & Forwarders Co., Inc. 14B.72 Rapid Movers & Forwarders Co., Inc. 14B.73 Rapid Movers & Forwarders Co., Inc. 14B.74 Rapid Movers & Forwarders Co., Inc. 14B.75 Rapid Movers & Forwarders Co., Inc. 14B.76 Rapid Movers & Forwarders Co., Inc. 14B.77 Rapid Movers & Forwarders Co., Inc. 14B.78 Rapid Movers & Forwarders Co., Inc. 14B.80 LFH Venture Merchandising Corp. 14B.81 C. Gubatan Enterprises 14B.82 Our Beverly Village Trucking Corp. 14B.83

Joanne & Janine Enterprises

14B.84

Renz Trucking

14B.85 E. M. Mendoza Trucking 14B.86

3 Kids Enterprises

14B.87 E. C. Creencia Trading 14B.88

CMT Hauling Services

14B.90

San Joseph Sea Oil Gasoline Station

14B.91

Golden Eye Trucking

14B.92 MRTC Trucking Services Corp.

14B.93 MRTC Trucking Services Corp.

14B.94

ContGeo Cargo Solutions

14B.95

3 Kids Enterprises

14B.96 E. M. Mendoza Trucking 14B.97 Mary Rose Cargo Movers, Inc.

14B.98

Wide Area Network Transport Services

14B.99 E. P. Bautista Trucking Services 14B.101 E. C. Creencia Trading 14B.103 Rapid Movers & Forwarders Co., Inc. 14B.104 Rapid Movers & Forwarders Co., Inc. 14B.105 Rapid Movers & Forwarders Co., Inc. 307 2/20/2012 28,927.61 296 2/20/2017 22,362.86 607 3/3/2012 13,474.18 135 2/20/2012 6,962.46 177 2/13/2012 2,079.46 1942 2/20/2012 12,449.18 1860 3/19/2012 7,312.86 546 3/5/2012 36,523.29 447 2/17/2012 2,166.11 445 2/17/2012 2,166.11 112 3/3/2012 13,230.75 8551 3/5/2012 921.03 944 2/27/2012 3,356.25 4979 3/12/2012 9,183.38 2861 3/13/2012 19,240.37 787 2/23/2012 12,042.46 1664 2/20/2012 5,191.18 66 2/25/2016 7,459.29 119 2/28/2012 3,356.25 393 2/27/2012 3,356.25 663 2/27/2012 7,004.10 168 3/3/2012 2,548.39 172 10,807.50 1855 3/5/2012 2,272.71 5062 3/6/2012 63,943.82 942 2/27/2012 2,548.39 5064 3/12/2012 65,021.36 4985 3/12/2012 6,406.82 185 3/5/2012 9,110.68 608 3/3/2012 14,508.16 107 3/3/2012 7,133.57 613 3/16/2012 11,389.61 5752 3/3/2012 11,552.79 5758 3/3/2012 5,551.29 5765 3/3/2012 11,754.00 5754 3/3/2012 19,673.23 5756 3/3/2012 20,360.27 5757 3/3/2012 11,423.29 5755 3/3/2012 9,853.63 5753 3/3/2012 18,073.14 66 2/3/2012 43,428.75 795 5/3/2012 7,176.25 1667 2/27/2012 3,356.25 2862 3/13/2012 13,166.89 552 12/3/2012 39,398.84 314 5/3/2012 24,679.71 301 5/3/2012 23,316.43 1487 5/3/2012 2,272.71 628 2/27/2012 2,272.71 490 3/2/2012 3,099.11 579 3/26/2012 2,973.32 673 3/12/2012 15,031.88 672 3/12/2012 4,307.89 459 3/12/2019 2,272.71 311 3/12/2019 7,569.86 319 3/14/2012 5,351.51 364 3/12/2012 9,897.82 924 3/19/2012 4,821.11 192 3/19/2012 2,430.43 1493 3/14/20112 5,293.82 5812 3/30/2012 11,961.99 5808 3/30/2012 6,920.57 5811 3/30/2012 18,821.68

14B.106 J.P. Opefia Trucking, Inc. 4991 3/30/2012 2,111.95 14B,107 Verson Trucking Services 1769 3/19/2012 148,108 70,543.03 14B,109 G. Malijan trucking 2193 3/12/2012 14B.110 G. Malijan trucking 2194 14,106.00 14B.113 Our Beverly Village Trucking Corp. 1677 3/19/2012 14B.114 Rapid Movers & Forwarders Co., Inc. 5810 6,441.96 3/30/2012 6,202.71 14B.116 Lee & Sons Printing Corp. 8567 3/21/2012 148.117 93,082.82 14B.118 G. Malijan trucking 2201 3/19/2012 2,737.61 44,395.85 14B.121 2,079.46 AGN Trucking & Trading 3699 3/27/2012 2,928.11 14B.123 131 2,398.18

Wide Area Network Transport Services 3/28/2012

14B.125 D' Bar Logistics 259 14B.126 AGN Trucking & Trading 2,548.39 Rapid Movers & Forwarders Co., Inc. 14B.128 18,723.13 371 19,046.04 14B,130 Joanne & Janine Enterprises 914 3/30/2012 14B.131 C. Gubatan Enterprises 611 3/23/2012 2,548.39 14B,132 E. C. Creencia Trading 1505 4/2/2012 14B.134 E. M. Mendoza Trucking 329 3/29/2012 9,373.46 MRTC Trucking Services Corp. 682 3/26/2012 2,398.18 14B.136 JZ Valencia Enterprises 622 4/2/2012 50,155.71 14B.137 3 Kids Enterprises 320 4/3/2012 4,978.82 14B.138 Renz Trucking 566 4/2/2012 59,980.78 14B.141 San Joseph Sea Oil Gasoline Station 495 4/3/2012 2,577.43 14B.142 North-West Enterprises 117 4/21/2012 2,272.71 14B.143 JZ Valencia Enterprises 618 4/2/2012 41,178.02 C. Gubatan Enterprises 623 4/10/2012 9,606.92 14B.145 Riddle Trucking Service 282 4/11/2012 4,891.86 14B.147 Joanne & Janine Enterprises 920 4/24/2012 14B.148 Verson Trucking Services 582 4/23/2012 5,526.11 14B.149 Rapid Movers & Forwarders Co., Inc. 5851 4/20/2012 11,093.45 14B.150 Rapid Movers & Forwarders Co., Inc. 5845 4/20/2012 10,915.40 14B.151 D' Bar Logistics 266 5/12/2015 3,567.75 14B.152 AGN Trucking & Trading 107 4/23/2012 2,548.39 14B.153 ContGeo Cargo Solutions 470 4/17/2012 2,548.39 [146.154 MRTC Trucking Services Corp. 695 9,120.47 14B.155 Mary Rose Cargo Movers, Inc. 155 4/21/2012 9,436.25 14B.156 E. M. Mendoza Trucking 335 4/23/2012 18,547.26 | 14B.157 3 Kids Enterprises | 328 4/23/2012 5,628.96 14B.158 Robien Trucking 140 4/25/2012 6,558.95 | 148.159 E. C. Creencia Trading _L 1507 4/24/2012 | 2,387.57 | 14B.160 Hizon Transport Services and Trading Inc. 5106 4/30/2012 64,554.17 14B.161 E. P, Bautista Trucking Services __ 203 4/21/2012 _| 5,139.43 | [ 14B.162 Renz Trucking 596 4/30/2012 53,704.60 14B.164 Golden Eye Trucking —F 595 4/23/2012 5,139.43 14B.165 AGN Trucking & Trading 104 4/23/2012 7,645.18 14B.166 Robien Trucking 145 5/19/2012 4,618.51 14B.167 V) TEC Trucking Services 385 5/2/2012 1,906.09 14B.168 J.P. Opefia Trucking, Inc. 99 4/23/2012 4,879.41 14B.169 Verson Trucking Services 586 4/23/2012 5,904.64 14B.170 Hizon Transport Services and Trading Inc. 5103 4/30/2012 69,231.34 14B.171 North-West Enterprises 124 5/19/2012 4,434.08 | 14B.172 JZ Valencia Enterprises 630 5/5/2012 67,481.94 14B.173 Jelly's Trucking Services io 474 4/26/2012 4,332.21 14B.175 Riddle Trucking Service 293 5/2/2012 5,786.68 14B.176 C. Gubatan Enterprises { 632 4/26/2012 | 7,645.18

14B.177 Joanne & Janine Enterprises 931 4/30/2012 1,612.18 2,170.41 14B.180 3 Kids Enterprises 6335 5/2/2012 14B.181___| E. C. Creencia Trading 14B.182 Renz Trucking 594 4/30/2012 81,121.14 14B.184 North-West Enterprises 128 5/19/2012 7,147.93 14B.185 MRTC Trucking Services Corp. 706 5/14/2012 6,757.33 14B.186 Hizon Transport Services and Trading Inc. 5110 14B, 188 11,680.70 14B,189 LFH Venture Merchandising Corp. 89 5/14/2012 14B.190 Joanne & Janine Enterprises 940 10,075.61 148,191 14B.192 C. Gubatan Enterprises 5,096.79 14B.193 Riddle Trucking Service 354 5/7/2012 2,548.39 Our Beverly Village Trucking Corp. 1696 5/7/2012 2,166.11 14B.196 JRS Express various 5-01-12 21.43 14B.198 JRS Express various various 45.01 14B.199 JRS Express various various 31.07 14B.201 Wide Area Network Transport Services 985 5/21/2012 8,617.95 [148.202 | Wide Area Network Transport Services 978 5/21/2012 17,497.70 14B.203 Robien Trucking 147 5/19/2012 1,937.57 MRTC Trucking Services Corp. 707 14B.205 Mary Rose Cargo Movers, Inc. 387 5,387.57 14B.206 E. M. Mendoza Trucking 5/21/2012 9,400.82 14B.207 3 Kids Enterprises 343 5/21/2012 19,552.85 14B.208 E. C. Creencia Trading 1521 $/21/2012 2,943.59 | 14B.209 Renz Trucking 606 [ 5/21/2012 52,810.32 14B.210 Z. S. M. Trucking Services §/21/2012 4,468.36 Rapid Movers & Forwarders Co., Inc. 5873 5/25/2012 9,217.61 14B.212 Rapid Movers & Forwarders Co., Inc. 5874 5/25/2012 2,609.10 14B.213 Rapid Movers & Forwarders Co., Inc. 5875 5/25/2012 2,369.68 14B.214 Rapid Movers & Forwarders Co., Inc. 5872 5/25/2012 2,775.64 | 14B.215 Wide Area Network Transport Services 986 5/21/2012 2,548.39 14B.217 Joanne & Janine Enterprises 955 5/22/2012 32,219.19 14B.218 Mary Rose Cargo Movers, Inc. 297 5,521.71 14B.219 MRTC Trucking Services Corp. 720 5/28/2012 1,937.57 3 Kids Enterprises 347 =n 5/31/2012 14,344.20 E. M. Mendoza Trucking 354 5/21/2012 13,165.93 148.223 Z. S. M. Trucking Services 408 5/28/2012 2,973.32 " 14B.224 CMT Hauling Services 654 5/28/2012 3,356.25 14B.225 E. P. Bautista Trucking Services 219 §/21/2012 8,313.96 [148.226 J.P. Opefia Trucking, Inc. i 15 5/21/2012 5,522.36 14B.227 Verson Trucking Services 1924 6/9/2012 4,082.04 = 14B.228 Hizon Transport Services and Trading Inc. 5119 5/21/2012 65,172.96 14B.229 __| Dennis Trucking Services 6350 5/19/2012 | ___2,012.70 | 14B.230 Renz Trucking _ | 621 I 6/11/2012 61,392.77 14B.231 Mary Rose Cargo Movers, Inc. 567 6/2/2012 2,548.39 | [_ 14B,232 Renz Trucking 623 6/11/2012 45,118.69 14B.234 North-West Enterprises | 132 6/16/2012 10,288.11 14B.235 San Joseph Sea Oil Gasoline Station 553 6/2/2012 2,726.68 E. P. Bautista Trucking Services 6/6/2012 _| 4,796.36 14B.237 C. Gubatan Enterprises 6/18/2012 2,091.29 14B.238 C. Gubatan Enterprises 6/1/2012 10,870.34 14B.246 14B.239 Our Beverly Village Trucking Corp. 1710 6/4/2012 3,356.25 14B.243 Robien Trucking 207 6/20/2012 2,031.32 Z. S, M. Trucking Services 415 6/11/2012 2,138.49 J.P, Opefia Trucking, Inc.

22 6/13/2012 4,278.06 14B.248 14B.249 14B.250 Rapid Movers & Forwarders Co., Inc.

5922 Rapid Movers & Forwarders Co., Inc. 5925 6/22/2012 8,317.80 Rapid Movers & Forwarders Co., Inc. 5926 6/22/2012 3,527.68 5,497.18 14B.251 Rapid Movers & Forwarders Co., Inc.

5921 = 13,261.46 | f—

148.252 Rapid Movers & Forwarders Co., Inc.

6/29/2012 14,761.92 | 14B.254 MRTC Trucking Services Corp.

6/11/2012 1,937.57 14B.255 Rapid Movers & Forwarders Co., Inc. 6/2/2012 19,637.96 14B.256 3 Kids Enterprises 6/18/2012 9,586.36 ContGeo Cargo Solutions 6/22/2012 2,430.43 14B.258 MRTC Trucking Services Corp. 6/23/2012 14B.261 Joanne & Janine Enterprises 6/25/2012 17,074.21 14B.264 J.P. Opefia Trucking, Inc. 6/30/2012 | 2,166.11 | 14B.266 Rapid Movers & Forwarders Co., Inc. 6/29/2012 16,952.34 14B.267 E. P. Bautista Trucking Services 232 6/30/2012 5,004.64 ml 14B.270 E. P. Bautista Trucking Services 236 6/30/2012 3,096.24 14B.274 JRS Express various various 45.01 143.276 __| Manna & Genesis Food house 5246 2/9/2012 __| 96.05 | 14B.277 North-West Enterprises various 2/15/2012 _ | 1,660.72 | 14B.278 Rosvilla Trading 276322 2/6/2012 | 96.96 14B.280 JRS Express various various 23.58 14B.284 JRS Express various 2/20/2012 21.43 ean Northern Star Investigation and Security Agency various 2/29/2012 1,660.72 14B.288 Green R Hotel 25427 2/24/2012 80.36 | L 148.290 JRS Express 43343 2/28/2012 11.79 14B.294 Magic Mart Co. 865 3/10/2012 71.79 14B.295 __|_JRS Express 45197 | __ 3/30/2012 11.79 14B.296 Green R Hotel 25721 3/9/2012 64.29 14B.297 Northern Star Investigation and Security Agency various 3/15/2012 1,660.72 sub-total P3,032,339.28 a Impure Input VAT amount were not separately indicated in the supporting invoices/ORs; without petitioner's address and/or TIN and dated outside the period of claim _| 14B.13 Wide Area Network Transport Services 1030 | 1/21/2011 Pp 5,094.21 | 14B.26 3 Kids Enterprises 267 _{ 12/15/2011 15,266.54 148.200 New Jamaica Security Agency 7811 {10/16/2011 5,041.07 | 148.242 Vigan Printing Press 5192 12/27/2012 112.50 14B.247 Hizon Transport Services and Trading Inc. | 7/2/2012 70,397.12 148.253 Rapid Movers & Forwarders Co., Inc, 5958 {_ 7/6/2012 4,996.16 | 14B.263 C. Gubatan Enterprises 853 7/2/2012 11,926.48 —_ 14B.265 Hizon Transport Services and Trading Inc. 5133 7/2/2012 59,731.05 | |___148.268 E. M. Mendoza Trucking 7/3/2012 5,521.71 | 14B.269 D' Bar Logistics 7/6/2012 2,166.11 "14B.271 C. Gubatan Enterprises 7/9/2012 5,096.79 14B.272 Renz Trucking 7/2/2012 8,547.32 148.273 Renz Trucking 7/2/2012 10,468.29 i 14B.119 Begits Trucking Services 4/13/2013 4,946.57 {| __ 14B.259 Marissa's Trucking & Hauling Services 7/3/2012 14B.260 Allroad Trucking 0009 sub-total 7/7/2012 2,430.43 P 313,757.12 | 3 Supporting VAT invoices/ORs do not indicate petitioner's TIN and/or address 14A.2 Choy's Householdwares 1081 1/7/2012 jl? 81.00 New Pacific Auto Supply 194180 1/10/2012 | 66.96 | 14A.8 Nina Marc General Merchandising 110438 1/12/2012 | 19.29 14A.9 Sky I Auto Parts Center 70424 1/14/2012 26.79 The New Laoag Auto Supply 100103 1/11/2012 12.86 L 14A.14 New Jom Auto Parts 110129 1/21/2012 19.29 14A.16 Nina Marc General Merchandising 111486 1/26/2012 40.71 [ 14A.20 A.B. Casiano Gravel & Sand various 1/31/2012 139.28 144.23 Nene anicinge Furniture & General 11210 1/30/2012 15.00 New Jom Auto Parts & General Merchandise 35432 1/24/2012 37.50 New Lorna's Trading 54509 1/26/2012 10.71 New Pacific Auto Supply 194647 1/25/2012 35.36 | R. Fragante Hardware _| 57321 1/20/2012 4.29 Sky-1 Auto Parts Center | 70483 1/23/2012 26.79 A.B. Casiano Gravel & Sand a various 2/3/2012 127.50 Farmland Hardware & Gen. Merchandise various various 32.14 Jojin Trading “| 11476 2/8/2012 | 38.04 14A.35 Laoag Centerpoint General Merchandise 6258 2/7/2012 10.71 14A.36 Laoag Kambal Corporation 47750 2/6/2012 21.43 Laoag Pacific Hardware various various 126.42 New JOM Auto Parts & Gen. Mdse. various various 352.39 New Pacific Auto Supply various various 46.08 140.41 Petron Bantay Service Station 169087 14A.42 Silicon Valley 21527 2/6/2012 160.71 Solid North Marketing Corp. 8754 2/5/2012 7.50 | The New Laoag Auto Supply 99655 2/7/2012 224.46 A.B. Casiano Gravel & Sand 6497 2/17/2012 9.11 | D. U. Machine Shop 19528 2/8/2012 482.14 14A.50 Farmland Hardware & Gen. Merchandise 14981 os 2/16/2012 T 2.14 | 14A.51 Jojin Trading 11503 2/13/2012 16.61 | Nina Marc Gen. Mdse 112862 2/8/2012 107.14 14A.53 Stargate Caltex Service Station 358072 2/12/2012 a 5.36 14A.55 New Jom Auto Parts & General Merchandise __| various various 30.90 | 14A.57 The New Laoag Auto Supply _t 101179 2/21/2012 186.43 14A.60 New Jom Auto Parts & General Merchandise 111905 2/26/2012 26.79 14A.66 Ettah Lihl Enterprises 44228 3/1/2012 33.21 14A.67 1297 Motor Parts & General Services | 345 3/9/2012 | 6.43 Jojin Trading i701 3/25/2012 10.18 14A.70 Nina Marc General Merchandising 114070 3/12/2012 53.57 14A.73 Farmland Hardware & Gen. Merchandise _| various various 32.46 | | 14A.74 Laoag Far Eastern Lumber & Hardware 515 3/17/2012 75.54 14A.75 Laoag Kambal Corporation 195717 3/16/2012 174.43 | 14A.77 New Jom Auto Parts & General Merchandise various various 83.57 | 14A.78 Nina Marc General Merchandising 114210 3/12/2012 4.29 | 14A.79 Farmland Hardware & Gen. Merchandise various various 73.66 r 14A.81 Jojin Trading various {___ Various 72.42 —_ 14A.84.1 New Jom Auto Parts & General Merchandise 37262 —| 3/22/2012 3.21 14A.84.2 The New Laoag Auto Supply 393707 3/20/2012 10.71 IK 14A.85 New Pacific Auto Supply 196350 3/18/2012 19.82 14A.86 Nina Marc General Merchandising 114677 3/21/2012 32.14 | 14A.87 The New Laoag Auto Supply 14951 | 3/19/2012 43.93 14A.89 Vigan Goldlabel Gen. Merchandise 96936 3/24/2012 16.07 | 14B.2 Marissa's Trucking & Hauling Services 0291 1/24/2012 22,725.19 14B.3 Marissa's Trucking & Hauling Services 0293 1/24/2012 12,666.00 14B.6 Good Deal Hauling Services - Branch I 1309 1/16/2012 3,615.70 14B.11 Rapid Movers & Forwarders Co., Inc. 5680 2/10/2012 7,356.35 14B.19 LFH Venture Merchandising Corp. 192 2/13/2012 49,937.25 LFH Venture Merchandising Corp. 192 2/13/2012 36,772.93 | Marissa's Trucking & Hauling Services 307 2/23/2012 28,560.29 Marissa's Trucking & Hauling Services 314 5/3/2012 54,291.30 Marissa's Trucking & Hauling Services 326 3/19/2012 15,754.96 Marissa's Trucking & Hauling Services 316 3/19/2012 38,872.72 14B.133 Marissa's Trucking & Hauling Services 332 4/2/2012 30,479.36 14B.140 Marissa's Trucking & Hauling Services 330 4/2/2012 47,721.05 14B.174 Marissa's Trucking & Hauling Services {4/30/2012 14B.187 Marissa's Trucking & Hauling Services 344 5/12/2012 39,066.01 Marissa's Trucking & Hauling Services 351 5/22/2012 27,324.29 Marissa's Trucking & Hauling Services 356 Tt 6/4/2012 61,715.36 14B.195 Farmside Hotel various jo various 163.93 Farmside Hotel various various 163.93 Farmside Hotel various various 573.74 | Laoag Renzo Hotel various various 648.21 Laoag Renzo Hotel various various 346.08 14B,281 Universal Storefront Services Corp. 14B.282 Vigan Printing Press 85.71 CF Real Estate Lessor 1789 2/3/2012 8,400.00 | 14B.289 Ilocos Sur Electric Cooperative, Inc. various 1,219.21 14B.291 Laoag Renzo Hotel various various 1,039.02 14B.292 Kingscourt Hotel 9990 2/12/2015 75.00 | 14B.293

Tracy-Macy's Diner

34922 2/20/2012 22.29 po

CfA CASE NO. 9086

146.298 I Universal Storefront Services Corp. sub-total

I

various

I

various

I

Grandios Enterprise

326 4/30/2012 13,506.48 sub-total , 79.791.17

6. Supported by documents issued not in the name of petitioner 146.245

3 Kids Enterprises

358 6/18/2012 p 20,450.91 146.279 D. U. Machine Shop 19528 2/8/2012 2,065.71 146.283 !locos Norte Electric Cooperative Inc. 78067 2/28/2012 680.22 sub-total p 23L196.84

7. Purchase of goods supported by invoices dated outside the period of claim 14A.1

Nina Marc General Merchandising

103569 103671 10/5/2011 p 514.29 10L§j2011 sub-total p 514.29

23299 2/28/2012 2,089.29 sub-total p 12,047.15

11. VAT invoice unreadable 14A.64

The New Laoag Auto Supply

387093 p 12.86 sub-total , 12.86

GRAND TOTAL

P4,163,498.10 In sum, the Court partially upholds respondent's assessment on unsupported input tax to the extent of P16,028,352.13, as determined below:

Exceptions per ICPA Report

p 1,766,831.30

Additional Disallowances by the Court:

Domestic purchases of goods from ABI and IPI p 10,098,022.73 Other domestic purchases of goods and services 4,163,498.10 14,261,520.83 Total unsupported input tax p 16,028,352.13

Likewise, the creditable VAT withheld claimed by petitioner amounting to P2,996.57 was found to be unsupported, thus, it must be disallowed.

Excess Input Tax Carried Over to

Succeeding Quarter- P259,034.46 As stated in the Details of Discrepancies, the excess input tax amounting to P259,034.46 was not applied against the allowable input tax in computing deficiency VAT since this shall be carried over to the next succeeding quarter(s) as provided under Section 110(8) of the NIRC of 1997, as amended. However, the Court finds it improper for respondent to disallow the said excess input tax because any tax benefit derived by petitioner from the carry-over of the said amount redounds to the succeeding quarter(s). Since the tax benefit will be in the succeeding quarter(s), at most, petitioner may only be assessed in the said succeeding quarter(s).

Considering all the foregoing, petitioner is liable to pay the basic deficiency VAT in the amount of P16,028,352.12, computed as follows:

Gross receipts subject to VAT p 422,462,011.11 Output tax due p 50,695,441.33

Less:

Input tax claimed per return p 49,131,702.18 Less: Unsupported input tax 16,028 352.13 33 103 350.05 VAT payable p 17,592,091.28

Less:

Tax payments 1,563,739.16 Creditable VAT withheld per return p 2,996.57 Less: Unsupported creditable VAT withheld 2,996.57 - 1,563,739.16 Basic deficiency VAT p 16,028,352.12

WHEREFORE, premises considered, the instant Petition for Review is DENIED. Accordingly, the Court finds petitioner liable to pay the basic deficiency VAT but in the reduced amount of P20,035,440.15, inclusive of twenty-five percent (25°/o) surcharge imposed under Section 248(A)(3) of the NIRC of 1997, as amended, as computed below: ?-

Basic deficiency VAT

Add:

25% Surcharge

Total VAT due P16,028,352.12 4,007,088.03 P20,035,440.15 In addition, petitioner is liable to pay: a) Deficiency interest at the rate of twenty percent (20°/o) per annum on the basic deficiency VAT of P16,028,352.12 computed from July 25, 2012, until full payment thereof pursuant to Section 249(8) of the NIRC of 1997, as amended; and b) Delinquency interest at the rate of 20°/o per annum on the total amount of P20,035,440.15 and on the 20°/o deficiency interest which have accrued as aforestated in (a), computed from December 11, 2014,46 until full payment thereof pursuant to Section 249(C) of the 1997 NIRC, as amended.

SO ORDERED.

WE CONCUR:

CAESAR A. CASANOVA

Associate Justice

46 Exhibit "P-3", Docket, Vol. II, p.1115. ~~~c.~/St .fUANITO C. CASTANEf>A~ JR.

Associate Justice

~(lv#~ 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. ~~~ c .aY-~;~- 1UANITO C. CASTANEDA, JR.

Associate Justice

Chairperson

CERTIFICATION

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

Presiding Justice

Footnotes

1
Par. 1, Admitted Facts, Joint Stipulation of Facts and Issues (JSFI), Docket, Vol. II, pp. 789-790.
2
Par. 3, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
3
Par. 4, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
4
Par. 5, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
5
Exhibit "P-18", Docket, Vol. II, p. 1193.
6
Exhibit "P-19", Docket, Vol. II, p. 1194.
7
Exhibit "P-21", Docket, Vol. II, p. 1195.
8
Par. 6, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
9
Exhibit "P-23", Docket, Vol. II, p. 1196.
10
Exhibit "P-25", Docket, Vol. II, pp. 1197-1199.
11
Par. 7, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
12
Exhibit "P-27", Docket, Vol. II, p. 1200.
13
Par. 8, Admitted Facts, JSFI, Docket, Vol. II, p. 790.
14
Par. 10, Admitted Facts, JSFI, Docket, Vol. II, p. 791.
15
Par. 11, Admitted Facts, JSFI, Docket, Vol. II, p. 791.
16
Docket, Vol. II, pp. 759-762.
17
Docket, Vol. II, p. 764.
18
Docket, Vol. II, pp. 766-772.
19
Docket, Vol. II, pp. 777-785.
20
Docket, Vol. II, pp. 789-797.
21
Docket, Vol. II, pp. 801-806.
22
Resolution dated July 26, 2016, Docket, Vol. III, pp. 1245-1246.
23
Resolution dated September 20, 2016, Docket, Vol. III, pp. 1259-1260.
24
Docket, Vol. III, pp. 1272-1275.
25
Docket, Vol. III, p. 1277-1308.
26
Docket, Vol. III, p. 1309.
27
Issues, JSFI, Docket, Vol. II, p. 792.
28
Exhibit "P-1", Docket, Vol. II, p. 1112.
29
Exhibit "P-2", Docket, Vol. II, p.1113.