Aig Shared Services Corporation [Formerly: Chartis Technology and Operations Management Corporation ] vs. Commissioner of Internal Revenue

DECISION

RINGPIS-LIBAN, ].:

The Case

This is a Petition for Review flied by AIG Shared Services Corporation (Philippines) [Formerly: Chartis Technology and Operations Management Corporation (Philippines)] ("Petitioner") against the Commissioner of Internal Revenue ("Respondent"). Petitioner seeks the refund or issuance of tax credit certificates ("TCC") for its alleged excess and unutilized input value-added tax ("VAT") in the total amount of Sixty-Seven Million Nine Hundred Seventy-Six

Thousand

Four

Hundred

Forty-Nine

Pesos

and

Sixteen

Centavos

(Php67,976,449.16) for fiscal year ("FY") 2013.

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CTA CASE NO. 9100

The Facts

Petitioner is a foreign corporation duly registered and authorized by the Securities and Exchange Commission ("SEC") under Amended SEC License No. FM00000152 to operate as a Regional Operating Headquarters ("ROHQ"), with principal office address at 46th Floor, 6795 Ayala Avenue corner Rufino St., Makati City, and an extension office at iHub2 Building, North Bridgeway Avenue, Northgate Cyberzone, Filinvest Corporate City, Alabang, Muntinlupa City.1 It is registered with the Bureau of Internal Revenue ("BIR") as a VAT taxpayer in accordance with Section 236 of the National Internal Revenue Code ("NIRC") of 1997, as amended, under Certificate of Registration Nos. OCN9R0000355401 effective September 13, 1997, OCN9R0000355702 effective November 24, 2009, and OCN8RC0000059749 effective August 20, 2015.2 On the other hand, Respondent is the duly appointed Commissioner of the BIR who has the power to decide on disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the NIRC of 1997, as amended, or other laws or portions thereof administered by the BIR. He holds office at the BIR National Office Building, Agham Road, Dillman, Quezon City. On February 27, 2015, Petitioner filed with Respondent through BIR- Revenue District Office (RDO) No. 126 an application for refund/tax credit of its excess and unutilized input VAT for the four quarters of FY 2013. 3 Respondent failed to rule on Petitioner's application for VAT refund or issuance of tax credit certificate for its excess/unutilized input VAT for the four quarters of FY 2013. Hence, on July 20, 2015, Petitioner filed with this Court the present Petition for Review.4 Respondent flied through registered mail a Motion for Extension of Time to File Answer5 on August 13, 2015, which was granted by the Court in a Resolution6 dated September 04, 2015.#

erA CASE NO. 9100

On September 15, 2015, Respondent filed through registered mail his Answer7, raising the following Special and Affirmative Defenses: "6.

Respondent reproduces and repleads all the foregoing allegations insofar as they are relevant to her defenses, which are discussed hereunder and incorporates them herein, by way of reference and, in addition thereto, most respectfully avers THAT: 7.

Petitioner's alleged claim for issuance of tax credit certificate is still subject to administrative routinary investigation/ examination by the Respondent's Bureau. 8.

Taxes paid and collected are presumed to have been made in accordance with law, hence, not refundable. 9.

Petitioner's claim for refund or issuance of tax credit certificate in the amount ofPhp67,976,449.16 representing alleged excess and unutilized input VAT paid for the fiscal period from December 01, 2012 to November 30, 2013, were not fully substantiated by proper documents, such as sales invoices, official receipts and other pursuant to Revenue Regulations no. 7-95 in relation to Section 113 and 23 7 of the 1997 Tax Code. 10.

In an action for refund/ tax credit, the burden of proof is on the Petitioner to establish its right to claimed refund and failure to adduce sufficient proof is fatal to the claim for tax refund/ credit.

11.

It is incumbent upon the latter to show that it has complied with the provisions under Section 204 (c) in relation to Section 229 of the Tax Code. Otherwise, its failure to prove the same is fatal to its claim for refund. 12.

Claims for refund are construed strictly against herein Petitioner since the same partakes the nature of exemption from taxation (Commissioner of Internal Revenue vs. Ledesma, 31 SCRA 95) and as such, they are looked upon with disfavor (Western Minolco Corp. vs. Commissioner of Internal Revenue, 124 SCRA 211). ~

CTA CASE NO. 9100

The case was set for pre-trial conference on November 24, 2015. 8 On November 6, 2015, Petitioner filed a Motion to Reset the Pre-Trial Conference scheduled on November 24, 2015,9 which the Court granted on November 11, 2015.10 On November 12,2015, Respondent filed through registered mail his Pre- Trial Brie£1 1. On February OS, 2016, Petitioner filed a Motion to Reset the Pre- Trial Conference scheduled on 16 February 201612, which the Court granted on February 10, 2016Y On April 11, 2016, Petitioner filed a Motion to Commission an Independent Certified Public Accountant. 14 On May 31, 2016, Petitioner ftled a Motion to Cancel the Pre-Trial Conference (And Hearing of Motion to Commission an Independent Certified Public Accountant) 15, which the Court granted16 on June 02, 2016. On July 15,2016, Petitioner filed its Pre-Trial Brief17. The parties then filed their Joint Stipulation of Facts and Issue18 on August 12, 2016. On October 04, 2016, the parties also filed a Motion to Admit (Re: Supplemental Joint Stipulation of Facts and Issue) 19 and a Motion to Admit (Re: Amended Joint Stipulation of Facts and Issue)20, which were granted by the Court on October 10, 2016. 21 Upon the promulgation of the Pre-Trial Order on October 19, 2016, the pre-trial conference was deemed terminated and the parties were ordered to proceed with the trial on the merits. To prove its case, Petitioner presented the following witnesses: (1) Glaiza Apolinaro-Baroro, Petitioner's Accountant III; (2) Atty. Geronimo Randy 8 Id., Notice of Pre-Trial Conference, pp. 333-334. 9 !d., pp. 339-341.

10 Id., p. 344.

11 !d., pp. 345-348.

12 Id., pp. 356-359.

13 Id., Resolution dated February 10, 2016, p. 361. 14 Id., pp. 364-375.

15 Id., pp. 384-387.

16 Id., Order dated June 2, 2016, p. 388. 17 Id., Pre-Trial Brief for the Petitioner, pp. 413-474. 18 Id., pp. 506-546.

19 I d., pp. 950-957.

20 Id., pp. 958-1000.

21 Id., Order dated October 10, 2016, pp. 1005-1007.

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CTA CASE NO. 9100

Recinto, Petitioner's General Counsel; and (3) Mary Ann C. Capuchino, the Court-commissioned Independent Certified Public Accountant ("ICPA"). Petitioner flied its Formal Offer of Evidence22 on February 06, 2017, consisting of Exhibits "P-1" to "P-268", inclusive of submarkings; which were later admitted by the Court as Petitioner's evidence.23 On March 13, 2017, Respondent manifested that he would not be presenting evidence in this case. 24 Thus, the parties were granted thirty (30) days from receipt of the Resolution on Petitioner's Formal Offer of Evidence to submit their respective memoranda. 25 On December 28,2017, the Judicial Records Division of this Court issued a Records Verification Report26 stating that Respondent failed to flle his Memorandum. Petitioner flied its Memorandum27 on January 05,2018. Hence, the Court declared the case submitted for decision on January 26, 2018.28

The Issues

The parties submitted the following issues for this Court's disposition: 29 1) Is Petitioner entitled to refund or issuance of a tax credit certificate for its unutilized/ excess input VAT payments for the first to fourth quarters of fiscal year 2013; and 2) If in the affirmative, how much is Petitioner entitled to the amount being claimed.

Discussion I Ruling

Petitioner's claim for refund of excess or unutilized input VAT finds legal support in Sections 112(A) and (C) of the NIRC of 1997, as amended, which state:

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CTA CASE NO. 9100

"SEC. 112. Refunds or Tax Credits of Input Tax.- (A) Zero-Rated or Effective!J Zero-Rated Safes. -

Any VAT-

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

(2) and (b) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods 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, finaf!J, That for a person making sales that are zero-rated under Section 108 (B)(6), the input taxes shall be allocated ratably between his zero-rated and non-zero-rated sales.

XXX

XXX

XXX

(C) Period within which Refund or Tax Credit of Input Taxes shalf 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."

Pursuant to the above-quoted proVlslOn and as enunciated by the Supreme Court in the case of San Roque Power Corporation vs. Commissionerofinternaf ~

CfA CASE NO. 9100

Revenutf0, in order to be entitled to a refund or issuance of a tax credit certificate of input VAT paid, Petitioner must prove the following: 1) the taxpayer is VAT registered; 2) the taxpayer is engaged in zero-rated or effectively zero-rated sales;

3) the input taxes are due or paid; 4) the input taxes are not transitional input taxes; 5) the input taxes have not been applied against output taxes during and in the succeeding quarters; 6) the input taxes claimed are attributable to zero-rated or effectively zero-rated sales; 7) for zero-rated sales under Section 106(A)(2)(1) and (2); 106(B); and 108(B)(1) and (2), the acceptable foreign currency exchange proceeds have been duly accounted for in accordance with Bangko Sentral ng Pilipinas ("BSP") rules and regulations; 8) where there are both zero-rated or effectively zero-rated sales and taxable or exempt sales, and the input taxes cannot be directly and entirely attributable to any of these sales, the input taxes shall be proportionately allocated on the basis of sales volume; and 9) the claim is filed within two years after the close of the taxable quarter when such sales were made.

Ninth Requisite: Petitioner

time!J filed its administrative and judicial claims.

This Court shall first resolve the timeliness of the filing of Petitioner's claim for refund or issuance of tax credit certificates. Pursuant to Section 112(A) of the NIRC of 1997, as amended, the administrative claim for the issuance of a TCC or refund of input VAT must be filed with the BIR within two (2) years after the close of the taxable quarter when the zero-rated or effectively zero-rated sales were made. Thus, Petitioner's last day for filing of its administrative claim for the four quarters of FY 2013 fell on the following dates:

Close of the

Last Day for Filing

Taxable Quarter

Taxable Quarter

Administrative

Claim

1st Quarter February 28, 2013 February 28, 2015 (Dec. 01, 2012 to Feb. 28, 2013)

CTA CASE NO. 9100

2nd Quarter (March ,1, 2013 to Ma_y 31, 2013_2_ 3rd Quarter (June ,1, 2013 to Aug. 31, 2013_) 4th Quarter (Sept. ,1, 2013 to Nov. 30, 2013_) May 31,2013 May 31,2015 August 31, 2013_ August 31, 2015 November 30, 2013_ November 30, 2015 Clearly, Petitioner's administrative claim31 was timely flled on February 27, 2015.

As to the timeliness of Petitioner's judicial claim, Section 112(C) of the NIRC of 1997, as amended, provides that the Commissioner of Internal Revenue ("CIR") has one hundred twenty (120) days from the date of submission of the complete documents in support of the application for refund or tax credit certificate within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to flle an appeal before the Court of Tax Appeals within thirty (30) days from receipt of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax refund/ credit, the remedy of the taxpayer is to appeal the inaction of the CIR to the Court of Tax Appeals within 30 days. Accordingly, from the filing of Petitioner's administrative claim, together with the supporting documents, on February 27, 2015, Respondent had one hundred twenty (120) days or until June 27, 2015 to act on the said claim. Considering that Respondent did not act on Petitioner's claim on or before June 27, 2015, the latter had until July 27, 2015, the last day of the 30-day period, within which to file its appeal before this Court. Evidendy, Petitioner's judicial claim filed on July 20, 2015 is well within the period prescribed by law. We will now determine whether Petitioner has satisfied the remaining requirements to be entided to a refund. First Requisite: Petitioner is a VAT-registered entity.

It is undisputed that Petitioner is duly registered with the BIR as a VAT taxpayer32 with Taxpayer Identification Number (TIN) 001-218-732-00033, thereby satisfying the first requisite.

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CTA CASE NO. 9100

Second and Seventh Requisites:

Petitioner had zero-rated safes which were paid for in acceptable foreign currenry du!J accounted for in accordance with BSP rules and regulations.

Petitioner avers that its sales of services to its foreign affiliates for FY 2013 were VAT zero-rated, pursuant to Section 1 OS (B) (2) of the NIRC of 1997, as amended, to wit:

"SEC. 108. Value-added Tax on Safe of Services and Use or Lease of Properties. -

XXX

XXX

XXX

(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the Philippines by VAT -registered persons shall be subject to zero percent (0%) 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 Sentraf ng Pifipinas (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 Sentraf ng Pifipinas (BSP);" According to Petitioner, as a duly registered ROHQ, it performs qualifying services to its non-resident foreign affiliates, subsidiaries and branches in the Asia Pacific Region and in other foreign markets.34 For FY 2013, Petitioner rendered services, pursuant to Master Service Agreements, to seventy-three (73) non-resident foreign affiliate clients, who all belong to the American International Group. Petitioner avers that the bank ~

CTA CASE NO. 9100 certifications issued by East West Banking Corporation indicate that Petitioner's foreign clients indeed remitted US Dollars to Petitioner's account.35 A close scrutiny of Section 1 08(B) (2) and as laid down by the Supreme Court in the case of Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc. 36 shows that a taxpayer must establish the following requirements in order for the supply of services to be considered as VAT zero-rated:

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

2) the recipient of such services is doing business outside the Philippines; and 3) the payment for such services must be in acceptable foreign currency accounted for in accordance with the BSP rules and regulations.

For FY 2013, Petitioner allegedly rendered services to the following non- resident foreign corporations which are either covered with individual Master Service Agreements or included in an Intercompany Service Agreement as listed by Ms. Glaiza Apolinario-Baroo and Atty. Geronimo Randy Recinto, Petitioner's Accountant III and General Counsel, respectively, in their Sworn Statements both dated September 07, 201637 and in their Supplemental Sworn Statements both dated October 12, 201638. 1.

AIG Asia Pacific Insurance PTE Ltd., formerly known as Chartis Asia Pacific PTE. Ltd.

2.

AIG Europe (Services) Limited, formerly known as Chartis UK Services

Limited

3.

AIG Euro_Q_e Limited, formerly known as Chartis Europe S.A. 4.

AIG Europe Limited- Czech Republic, formerly known as Chartis Europe S.A. Czech Republic Branch 5.

AIG Europe Limited- France, formerly known as Chartis Europe S.A. France 6.

AIG Europe Limited- Italy, formerly known as Chartis Europe S.A. Italy 7.

AIG EuroQ_e Limited- Poland, formerly known as Chartis Europe S.A. Poland 8.

AIG Europe Limited- Spain, formerly_ known as Chartis EuroQ_e S.A. S_.r_ain 9.

AIG Europe Limited - Portugal, formerly known as Chartis Europe S.A.

Portugal

10. AIG Europe Limited- Georgia, formerly known as Chartis Europe S.A.

Georgia

CTA CASE NO. 9100

11. AIG Europe Limited - Belgium, formerly known as Chartis Europe S.A.

Belgium

12. AIG Europe Limited - Denmark, formerly known as Chartis Europe S.A.

Denmark

13. AIG Europe Limited- Deutschland, formerly known as Chartis Europe S.A.

- Direktion Fur Deutschland

14. AIG Europe Limited - Finland, formerly known as Chartis Europe S.A.

Finland

15. AIG Europe Limited- Netherlands, formerly known as Chartis Europe S.A. Netherlands branch

16. AIG Europe Limited - Norway, formerly known as Chartis Europe S.A.

Norway

17. AIG Europe Limited - Sweden, formerly known as Chartis Europe S.A.

Sweden

18. AIG Europe Limited- Switzerland, formerly known as Chartis Europe S.A. Switzerland branch

19. AIG Global Services, Inc.- formerly known as Chartis Global Services, Inc.

20. AIG Global Services (M) Sdn. Bhd., formerly known as AIG Global Services

Malaysia

21. AIG Malaysia Insurance Berhad, formerly known as Chartis Malaysia Insurance

Berhad

22. AIG Shared Services (M) Sdn. Bhd., formerly known as Chartis Technology & Operations Management (M) Sdn. Bhd.

23. AIG Insurance & Reinsurance Company, formerly knon as CJSC Chartis

24. AIG Insurance New Zealand Limited, formerly known as American Home

New Zealand

25. AIG Insurance Hong Kong Limited, formerly known as Chartis Insurance

Hong Kong Limited

26. UZ AIG, formerly known as Chartis Uzbekistan Insurance Company Joint

Venture LLC

27. AI G Australia Limited, formerly known as American Home Assurance

Company Australia

28. AIG Business Partners Kabushiki Kaisha

29. AIG Claims Inc., formerly known as Chartis Claims Inc.

30. AI G Employee Services Inc.

31. AIG Insurance Company China Limited, formerly known as Chartis Insurance

Company China Limited

32. AIG Insurance Company of Canada

33. AIG Japan Holdings KK, formerly known as Chartis Far East Holdings K .. K

34. AIG Korea, Inc., formerly known as American Home Assurance Korea

35. AIG Seguros Mexico S.A. DE CV

36. AIG South Africa Ltd., formerly known as Chartis South Africa Ltd.

37. AIG Taiwan Insurance Company Ltd.

38. AI G Uganda, formerly known as Chartis Uganda Insurance Company

39. AIG Vietnam Insurance Company Limited, formerly known as AIG General

Insurance (Vietnam) Company Limited

40.

American Home Assurance Company, UAE 41.

American International Group I<I<

CTA CASE NO. 9100

42. AIG Caspian Insurance Company, formerly known as Chartis Azerbaijan

Insurance Company

43. AIG Chile Campania Seguros Generales S.A., formerly known as Chartis Chile Campania Seguros Generales S.A.

44. AIG Egypt Insurance Company, S.A.E., formerly known as Chartis Egypt Insurance Company, S.A.E.

45. PT AIG Insurance Indonesia, formerly known as Chartis Insurance Indonesia

46. AIG Insurance Limited, Sri Lanka, formerly known as Chartis Insurance Ltd.,

Sri Lanka

47. AIG Kenya Insurance Company Limited, formerly known as Chartis Kenya

Insurance Company Limited

48. AIG MEA Limited (Oman branch), formerly known as Chartis Memsa Insurance Com_g_any Ltd. Oman branch 49.

Chartis New Hampshire Insurance Company, Pakistan branch

50. AIG Seguros Brasil S.A., formerly known as Chartis Seguros Brasil S.A.

51. AIG Sig_orta S.A., formerly known as Chartis Sig_orta S.A.

52. AIG Ukraine Insurance Company, formerly known as Chartis Ukraine

Insurance Company CJSC

53. Direct DME, Inc. 54.

Guam Insurance Adjusters, Inc.

55. Health Direct, Inc.

56. Lexin_g_ton Insurance Company_

57. National Union Fire Insurance Company 58.

New Hampshire Insurance Company- Thailand

59. Private Client Group 60.

United Guaranty Services, Inc.

61. Venezuela Casai

62. American International Group, Inc.

63. AIG Property Casualty U.S. Inc., formerly known as Chartis U.S.

64. AI G Apac Holdings Pte Ltd.

65. AIG Cyprus, formerly known as Chartis Cyprus

66. Intercompany Clearing House

67. AIG Global Claims Services, Inc., formerly known as Chartis Insurance Claims

68. AIG Southeast Asia Limited, formerly known as Chartis Southeast Asia Limited

69. AIG Property Casual!Y_ Global Services, Inc.

70. AIG Shared Services Corporation- Ireland branch

71. AIG Travel Assist, Inc.

72. AIG North America Inc. formerly known as Chartis North America

73. AIG Europe Limited - Ireland, formerly known as Chartis Europe S.A. -

Ireland Branch

Petitioner presented SEC Certifications of Non-Registration of Compani9, Master Agreements for Professional Services40, Statements of Work /'¥

CTA CASE NO. 9100 and Work Orders“, intercompany service agreements’, consularized Confirmations of Assignment of Tax Identification Number and Certificates for the Philippine Tax Authorities*, consularized foreign incorporation/registration documents and/or screenshots from various foreign government websites“, a consularized Notarial Certificate*, an Intercompany Contract of Transfer of Personal Data“, letters of intent*’, and a Memorandum of Understanding** to prove that its clients are non-resident foreign corporations doing business outside the Philippines.

In Deutsche Knowledge Services, Pte. Ltd. vs. Commissioner of Internal Revenue’, this Court discussed the documentary requirements to prove that the recipients of services are non-resident foreign corporations doing business outside of the Philippines, to wit:

“To prove that its clients are non-resident foreign corporations doing business outside the Philippines, Petitioner presented the following documents:

1. SEC Certifications of Non-Registration of Company;

2. Certifications from different government agencies in the country of origin of Petitioner's clients, all duly authenticated by the nearest consulate of the Philippines;

3. Intragroup Service Agreements; and,

4. Deutsche Bank List of Shareholdings 2008. ne 184”, “P-185", “P-186”, “P-187”, “P-188”, “P-189”, “P-190”, “P-191”, “P-193”, “P-196”, “P-197”, “P-198-a”, “P-199”, “P201”, and “P-203”.

41 Exhibits “P-142-a”, “P-144-a”, “P-145”, “P-146”, “P-150”, “P-151”, “P-155”, “P-156”, “P-157”, “P- 159-a”, “P-167-a”, “P-169”, “P-170”, “P-171", “P-195”, “P-198”, and “P-200”.

42 Exhibit “P-143”.

43 Exhibits “P-147-a”, “P-150-c”, and “P-150-d”.

# Exhibits “P-141-a to “P-141-e”, “P-142-b”, “P-143-b” to “P-143-e”, “P-144-b to “P-144-d”, “P- 145-a”, “P-145-b”, “P-146-a to “P-146-c”, “P-147-b”, “P-147-c”, “P-150-a”, “150-b”, “P-150-c”, “P-150-e”, “P-151-a” to “P-151-d”, “P-152”, “P-153-a” to “P-153-d”, “P-154-a” to “P-154-c”, “P- 155-a” to “P-155-d”, “P-156-a” to “P-156-d”, “P-158-a”, “P-159-b” to “P-159-d”, “P-160-a”, “P- 161-b” to “P-161-d”, “P-162-a”, “P-163-a” to “P-163-c”, “P-164-a” to “P-164-c”, “P-165-a”, “P- 166-a”, “P-166-b”, “P-168-a”, “P-168-b”, “P-169-a”, “P-170-a”, “P-170-b”, “P-172-a”, “P-173-a”, “P-173-b”, “P-173-c”", “P-175-a”, “176-a”, “P-178-a” to “P-178-e”, “P-179-a”, “P-181-a”, “182-a”, “182-b”, “P-183-a”", “P-184-a” to “P-184-e”, “P-186-a”", “P-187-a”, “P-188-a”, “P-191-a”, “P-192- a”, “P-192-b”, “P-193-a”, “P-194-a”, “P-194-b”, “P-195-a”, “P-195-b”, “P-196-a”, “P-196-b”, “P- 197-a”, “P-197-b”, “P-198-c”, “P-198-b”, “P-200-a”, “P-200-b”, “P-201-a”, “P-201-b”, “P-202-a”, “P-203-a” to “P-203-c", “P-204-a”, “P-205”, “P-206”, “P-206-a”, “P-206-b”, “P-207”, “P-208”, and “P-209”.

CTA CASE NO. 9100

However, the Court finds that the aforesaid documents per se do not constitute sufficient proof that Petitioner's clients are non- resident foreign corporations doing business outside the Philippines.

While the SEC Certificates of Non-Registration show that the named entitles therein are not registered corporations/partnerships in the Philippines, the same do not prove that such entities are non-resident foreign corporations doing business outside the Philippines. Likewise, the Intra-Group Service Agreements only show the names of Petitioner's customers to whom it rendered services but the same do not establish that such customers are non-resident foreign corporations doing business outside the Philippines. Moreover, the Articles of Association and Certificates of Registration/Incorporation of Foreign Company only prove that the named entities therein were incorporated/ organized abroad. However, they also do not establish that such entities are not doing business in the Philippines. To be considered as non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC certificate of non- registration of corporation/ partnership and certificate/ articles of foreign incorporation/ association/ registration. xxx" (Emphasis supplied) As to the validity of screenshots of foreign government websites, this Court ruled in Chevron Holdings, Inc. fformer!J Caltex (/:lsia) Limited} vs. Commissioner of Internal Revenurf0 that "[B]eing official government registry of corporations, the Court is inclined to accept the printed screenshots of the foreign government's registry of companies as sufficient proof in lieu of the Certificates/ Articles of Foreign Incorporation/ Association." Hence, to be considered as a non-resident foreign corporation doing business outside the Philippines, each entity must be supported, at the very least, by both SEC certificate of non-registration of corporation/ partnership and proof of incorporation, association or registration in a foreign country51 (e.g., Certificate or Articles of Foreign Incorporation, Certificate of Registration of a Foreign Company, printed screenshots of United States Securities and Exchange Commission (or the official regulatory body of a particular jurisdiction) website ~

CTA CASE NO. 9100 showing the state/province/ country where the entity was organized or any other equivalent document).

After a thorough examination of the presented documents, the Court finds that out of Petitioner's seventy-three (73) foreign clients, only the following entities can be considered non-resident foreign corporations doing business outside the Philippines:

1.

AIG Asia Pacific Insurance Pte. Ltd. (formerly known as Chartis Singapore Pte. Ltd./Chartis Singapore Insurance Pte. Ltd.) 2.

AIG Europe Limited, formerly known as Chartis Europe S.A. 3.

AIG Europe Limited- Czech Republic, formerly known as Chartis Europe S.A. Czech Republic Branch 4.

AIG Euro_Q_e Limited- France, former!Y_ known as Chartis Europe S.A. France 5.

AIG Europe Limited- Italy, formerly known as Chartis Europe S.A. Italy 6.

AIG Europe Limited- Poland, formerly known as Chartis Europe S.A. Poland 7.

AIG Europe Limited - Belgium, formerly known as Chartis Europe S.A.

Belgium

8.

AIG Europe Limited - Denmark, formerly known as Chartis Europe S.A.

Denmark

9.

AIG Europe Limited -

Finland, formerly known as Chartis Europe S.A.

Finland

10. AIG Europe Limited- Netherlands, formerly known as Chartis Europe S.A. Netherlands branch

11. AIG Europe Limited - Norway, formerly known as Chartis Europe S.A.

Norway

12. AIG Europe Limited - Sweden, formerly known as Chartis Europe S.A.

Sweden

13. AIG Global Services (M) Sdn. Bhd., formerly known as AIG Global Services

Malaysia

14. AIG Shared Services (M) Sdn. Bhd., formerly known as Chartis Technology & Operations Management (M) Sdn. Bhd.

15. AIG Insurance New Zealand Limited, formerly known as American Home

New Zealand

16. AIG Insurance Hong Kong Limited, formerly known as Chartis Insurance

Hong Kong Limited

17. AIG Australia Limited, formerly known as American Home Assurance

Company Australia

18. AIG Claims Inc., formerly known as Chartis Claims Inc.

19. AI G Employee Services Inc.

20. AIG Insurance Company China Limited

21. AIG Korea, Inc., formerly known as American Home Assurance Korea

22. AIG Taiwan Insurance Company Ltd.

23. AIG Vietnam Insurance Company Limited, formerly known as AIG General

Insurance (Vietnam) Company Limited

24. American Home Assurance Company, UAE

CTA CASE NO. 9100

25. AIG Chile Compania Seguros Generales S.A., formerly known as Chartis Chile Compania Seguros Generales S.A.

26. PT AIG Insurance Indonesia, formerly known as Chartis Insurance Indonesia

27. Chartis New Hampshire Insurance Company, Pakistan branch

28. Direct DME, Inc.

29. Guam Insurance Adjusters, Inc.

30. Health Direct, Inc.

31. Lexington Insurance Company

32. New Hampshire Insurance Company - Thailand

33. United Guaranty Services, Inc.

34. American International Group, Inc.

35. AIG Cyprus, formerly known as Chartis Cyprus

36. AIG Global Claims Services, Inc., formerly known as Chartis Insurance Claims

37. AIG Southeast Asia Limited, formerly known as Chartis Southeast Asia Limited

38. AIG Shared Services Corporation- Ireland branch

39. AI G Travel Assist, Inc. The names of the above-enumerated entities matched with those shown in both the Philippine SEC Certificates of Non-Registration of Company and consularized foreign incorporation/ registration documents and/ or screens hots from various foreign government websites. Corollary to the second requisite, Sections 113(A)(2), (B)(1), (2)(c) and (3) of the NIRC of 1997, as amended, as implemented by Sections 4.113-1(A)(2), (B)(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 v"AT- Registered Persons. - (A) Invoicing Requirements. - A VAT -registered person shall 1ssue:

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: ~

CfA CASE NO. 9100

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

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

XXX

XXX

XXX

(c) If the sale is subject to zero percent (0%) value-added tax, the term 'zero-rated sale' shall be written or printed prominently on the invoice or receipt;

XXX

XXX

XXX

(3) The date of transaction, quantity, unit cost and description of the goods or properties or nature of the service; and" (Emphasis supplied) "SECTION 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.

CTA CASE NO. 9100

(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%) 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. To prove that it rendered services to its foreign affiliates and was paid in foreign currency duly accounted for in accordance with the rules and regulations of the BSP for the second quarter of FY 2013, Petitioner submitted in evidence its VAT zero-rated official receipts (0Rs)52 issued to its alleged non-resident foreign clients and Certificate of Inward Remittance53 issued by East West Bank. Upon verification of the official receipts supporting Petitioner's zero- rated sales, as well as the related certificate of inward remittances, the Court finds that the amount ofPhp2,001,352,577.27 shall be denied VAT zero-rating for the reasons stated hereunder:

--

Particulars

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

TOTAL

The amount of sales per purported Certificate of

Inward Remittance (CIR)

Php7,344,599.88 does not tally with the amount per Official

Receipts

Overclaimed Zero-rated

Sales (Sales with difference noted between ORs vis-a- vis Schedule of Sales) 52 Exhibits "P-220" to "P-227". 53 Exhibits "P-45" to "P-66". - Php3,191 ,816.66 Php6,520,139.36 Php23,570,118.68 Php40,626,6 7 4.58 928,354.82 174,783.06 1,103,137.88

CfA CASE NO. 9100

Sales to Customers

without complete proof of

Non-Registration in the

Philippines and

8,257,917.89 Regis tra cion/ Incorpora cion

in the Foreign Country

(Sales per schedule is different from Sales per ICH Summaty.)

Sales to Customers

without complete proof of

Non-Registration in the

330,314,731.25

Philippines and

Registration/Incorporation in the Foreign Country

Total Disallowed Zero-

Php345,917 ,249.02 rated Sales 44,249,434.17 29,533,938.69 12,852,489.32 94,893,780.07 435,595,107.51 427,925,410.64 670,893,735.34 1,864,728,984.74 Php483,964,713.16 Php464,154,271. 75 Php707 ,316,343.34 Php2,001,352,577 .27 Hence, out of the total reported zero-rated sales of Php2,675,219,721.49, only the amount of Php673,867,144.22 represents Petitioner's valid zero-rated sales, as shown below:

Period Covered

Zero-Rated Sales

1st Quarter Php464,730,110.36 2nd Quarter 660,199,872.49 3rd Quarter 658,857,186.91 4th Quarter 891,432,551.73

Total

Php2,67 5,219, 721.49 Third, Fourth, Fifth, Sixth and Eighth Requisites: The input taxes incurred or paid were not transitional input taxes and were attributable to its zero-rated sales and were not applied against a'!Y output VAT liability.

Disallowed Zero-

Valid Zero-Rated

Rated Sales

Sales

Php345,917,249.02 Php118,812,861.34 483,964,713.16 17 6,235,159.32 464,154,271.75 194,702,915.17 707,316,343.34 184,116,208.39 Php2,001,352,577 .27 Ph_p673,867 ,144.22 Having resolved that Petitioner had valid VAT zero-rated sales for FY 2013 in the amount ofPhp673,867,144.22, We proceed to determine the amount of input VAT attributable thereto. In its Quarterly VAT Return for FY 2013, Petitioner declared input VAT of Php76,267,435.26 on its current purchases of goods and services, of which the amount of Php67,976,449.16 is the subject of the present claim, as shown ... / below:

/""" CTA CASE NO. 9100 1st Quarter FY 2013

P-11

Input VAT on:

Purchase of Capital

Goods Exceeding

Php1M

Php1,438,181.02

Purchase of Capital

Goods not

Exceeding Php1M

Domestic Purchases

of Goods other than Capital Goods 1,064,204.65

Domestic Purchases of Services

16,081,815.91

Total

Php18,584,201.58

Add: Input Tax

Deferred on Capital

Goods

Less: Input Tax on

Capital Goods

exceeding P1M deferred 1,376,251.01

Total Input Tax

FY2013

Php17 ,207,950.57

Less: Output Tax

-

Excess Input VAT

Php17 ,207,950.57

Divided by Total

Declared Sales

464,730,110.36

Multiply by Zero-

Rated Sales

464,730,110.36

Input VAT Claim for Refund

Php17 ,207,950.57 2nd Quarter FY 2013

P-12

Php358,971.43 592,232.08 2,273,770.73 19,369,777.88 Php22,594,752.12 Php22,594,752.12 1,324,996.49 Php21,269, 7 55.63 671,241,509.99 660,199,872.49 Php20,919,877 .19 3rd Quarter FY 4th Quarter FY 2013 2013

TOTAL

P-13

P-14

Php247,899.67 Php3,315,522.53 Php5,360,574.65 140,868.69 733,100.77 1 '177 ,003.59 927,757.33 5,442,736.30 17,085,490.32 12,193,939.43 64,731,023.54 Php18,651,262.27 Php16,437 ,219.29 Php76,267 ,435.26 234,127.47 234,127.47 234,127.47 3,312,906.74 4,923,285.22 Php18,417 ,134.80 Php13,358,440.02 Php71,578,277 .51 682,204.94 980,594.25 2,987,795.69 Php17, 734,929.86 Php12,377,845.77 Php68,590,481.82 664,542,228.05 899,604,170.48 658,857,186.91 891,432,551.73 Php17 ,583,210.68 Php12,265,410.72 Php67 ,976,449.16 In support of the foregoing, Petitioner presented various official receipts and invoices54 issued by its suppliers, which were all examined by the Court- commissioned ICP A, Ms. Mary Ann C. Capuchino of SyCip, Gorres, Velayo & Co. In her Report, the ICP A noted the following exceptions:

Reference

Ann

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter ex Exh.

2013 2013 2013 2013

TOTAL

Domestic purchases of capital goods exceeding P1 M supported with original V J\T invoices (amount of deferred input VJ\T) u 1'-247 Php189,410.51

Php

- Phpl0,692.00

Php

- l'hp200, 102.51 Domestic purchases of capital goods exceeding I' 1M supported with original VAT invoices (amount of deferred input VAT) (in USD) U.1

P-248

96,272.61 741,004.73 220,215.36 1,057,492.70

CTA CASE NO. 9100

Domestic purchases of capital goods exceeding 1'1 M supported with original VAT invoices not dated within the quarter but within the taxable year (amount of deferred input

\':\T)

v 1'-249 Domestic purchases of capital goods exceeding 1'1 M supported with original VAT invoices not dated within the quarter but within the taxable year (amount of deferred input

VAT) (in USD)

V.1

P-250

Domestic purchases of goods supported with original VAT invoices but with invalid AT!'/ not stamped with "Valid until October 31, 2013 only" w

P-251

Domestic purchases of services supported with original VAT ORs but with invalid

:\Tl'

X

P-252

Domestic purchases of goods supported with original VAT invoices but has no ,\TP y

P-253

Domestic purchases of services supported with original VAT ORs but has no :\Tl' z l'-254 Domestic purchases of goods supported with original VAT invoices but the amount of input VAT claimed was overstated (amount of overstatement)

AA

P-255

Domestic purchases of goods supported with original V 1\T invoices but the amount of input VAT claimed was overstated (amount of overstatement) (in AA.

USD)

1

P-256

Domestic purchases of services supported with original VAT ORs but the amount of input VAT claimed was overstated (amount of overstatement)

BB

P-257

Domestic purchases of services supported with original VAT ORs but the amount BB.

of input VAT claimed 1

P-258

453,054.41 23,150.02 476,204.43 8,542.84 287,071.59 2,521,678.69 2,817,293.12 70,434.33 70,434.33 578,253.51 2,193,096.27 2,771 ,349 78 3,214.29 120,739.37 56,838.00 180,791.66 106,534.04 20,376.73 119,421.31 92,837.51 339,169.59 202.11 202.11 2,266.26 11,031.52 1,931.69 15,229.47 467.30 439,693.37 171.27 13.29 440,345.23 197.65 10,004.67 3,034.57 31,819.95 45,056.84

CTA CASE NO. 9100 was overstated (amount of overstatement) (in

USD)

Domestic purchases of capital goods not exceeding P1 M supported with original VAT invoices but the amount of input V:\T claimed was overstated (amount of overstatement) (in

USD)

c:c

P-259

Domestic purchases of capital goods exceeding P1 M supported with original VAT invoices but the amount of input VAT claimed was overstated (amount of overstatement) (in

USl~

DD

P-260

Domestic purchases of goods supported with original VAT invoices not dated within the taxable year

EE

P-261

Domestic purchases of services supported with original VAT OH.s but not dated within the taxable year

FF

P-262

Domestic purchases of capital goods supported with ori~o>inal VAT invoices not dated within the taxable year

GG

P-263

Domestic purchases of goods supported with check voucher and statement of account only

HH

P-264

Domestic purchases of services not properly supported (billing invoice, rental billings, service charge invoice, non-V,\T acknowledgement receipt, provisional receipt, non-VAT official receipt, yuotation, invoice, statement of account)

II

P-265

Domestic purchases of goods supported with photocopy of VAT invoices lJ

P-266

Domestic purchases that arc not subject to V :\T/N on-V ATable

KK

P-267

Domestic purchases of services supported

with VATORs

imprinted with "Not a Valid So11rce ojlnp11t

Tax"/ Not Valid

LL

P-268

76.93 76.93 11,462.11 10,865.21 57,854.36 80,181.68 604,834.99 6,035.76 2,121.43 612,992.18 324.32 324.32 504,344.02 504,344.02 310.71 451.71 762.42 226,050.00 1,313,065.73 575,078.75 677,254.06 2,791,448.54 3,423.21 3,423.21 9,560.65 3,293.48 954.15 13,808.28 198,215.28 4,602.64 115,488.82 65,717.03 384,023.77

CTA CASE NO. 9100

1vithout Cashier's

Signature

Unsupported

domestic purchases of goods

MM

Unsupported

domestic purchases of scrvtces

NN

LJ nsupported domestic purchases of capital goods 00

TOTAL

22,625.98 1,544,347.34 Php3,496,514.01 891.71 25,937.02 49,454.71 61,363.09 4,186.77 6,674.87 1,616,572.07 .

130,606.16 130,606.16 Php3,205,195.57 Phpl, 720,317.65 Php6,179,662.83 Php14,601,690.06 The above-noted exceptions found by the ICPA in the amount of Php14,601,690.06 should be disallowed for not being properly substantiated by VAT invoices or official receipts as prescribed under Sections 11 O(A) and 113 (A) and (B) of the NIRC of 1997, as amended, in relation to Sections 4.110-2,4.110- 3, 4.110-8, and 4.113-1 of RR No. 16-05, as amended. Further verification of the ICP A report, together with the supporting documents, reveals that the additional input VAT of Php4,973,362.22 shall likewise be disallowed for the reasons stated below:

Registered Name of

Exhibit

DISALLOWED INPUT VAT

Supplier

No.

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

Total

Input VAT on purchases of goods/services supported by computer-generated VAT invoices/official receipts with alterations/insertions of Petitioner's TIN and/ or address but without countersignature of the issuer Gem Stationery, Inc.

P-232-12

Php2,565.39 l'hp2,565.39 Cern Stationery, Inc.

P-232-13

1,096.32 1,096.32 Gem Stationery, Inc.

P-232-14

6,418.47 6,418.47

Integrated Computer

P-232-15

19,326.96 19,326.96 Systems, Inc.

Integrated Computer

P-232-17

1,916.79 1,916.79 Systems, Inc.

Integrated Computer

P-232-18

13,269.62 13,269.62 Sy:;tcms, Inc.

Sanitary Care Products

P-232-34

728.57 728.57 :\sia, Inc.

Sanitary Care Products

P-232-35

10,339.29 10,339.29 :\sia, Inc.

Sanitary Care Products

P-232-36

13,721.79 1.3,721. 79 :\sia, Inc.

Sanitary Care Products

P-232-37

11,498.56 11,498.56 1\sia, Inc.

Sanitary Care Products

P-232-38

803.57 803.57 Asia, Inc.

Seagull Glass Works,

P-232-39

466.07 466.07 Inc.

St. Francis Generic

P-232-40

171.43 171.43 Drugstore, Inc.

St. Francis Generic

P-232-41

2,305.68 2,305.68 Drugstore, Inc.

St. Francis Generic 1'-232-42 3,125.82 3,125.82 Drugstore, Inc.

Information Work

P-233-01

8,670.17 8,670.17 Tools Corp.

Integrated Computer

P-233-02

28,874.42 28,874.42 Systems, Inc.

CTA CASE NO. 9100

Integrated Computer P-233-03 4,613.15 4,613.15 Systems, Inc.

cuinvest Asia P-234-14 277,514.21 277,514.21 per oe to | as je - Tee PeReS | P.234-73 768.00 768.00 [ Tower Club, Inc. P-234-87 731.35 | | i aa 731.35 ‘Tower Club, Inc. P-234-88 2,839.28 _ 2,839.28 | Tower Club, Inc. P-234-89 731.35 |} 731.35 ‘Tower Club, Inc. P-234-90 744.64 _| 744.64 | Angara, Abello, T [ | Concepcion, Regala & P-243-02 2,383.20 2,383.20

Cruz

ay / ~T + Angara, Abello, Concepcion, Regala & p-243-03 1,677.60 1,677.60

Cruz —__|

; ma Vat p) arftpes Sta. Elena Properties, p.243.39 | 768.00 768.00 |_Inc.

Filinvest Asia P-234-

Php277,514.22

Corporation 115

ManilaGolfAnd | ~~ P-234-

277,514.22 12.

| Country Club, Inc. 138 1,212.00 — _ tf 1,212.00

Manila Golf And P-234-

Country Club, Inc. 139 1,854.86 1,854.86 [ae | _{— a Manila Golf And P-234- 1.212.00 Country Club, Inc. 140 L_ L “Ss 9 .

Philhealtheare Inc. | P34 840,603.34 840,603.34 | 152 = _t a - Philhealthcare Inc. | ie 859,915.21 859,915.21 Manila Golf And P-243-52 1,452.00 1,452.00 Country Club, Inc. | Abenson Ventures Inc. | P-232-48 6,165.00 | 6,165.00 Systems, Inc.

Sanitary Care Products

| Esco, Inc. P-232-49 51,204.87 | 51,204.87 Gem Stati Inc. | P-232-51 4,111.08 [ [ 4,111.08 xem Sta tonery, nc. -232- 111.08 | _ 2111.08 | Integrated Computer P-232-55 30,311.25 30,311.25 | Systems, Inc. | a Integrated Computer P-232-56 1,474.82 1,474.82 Inc.

Design And Function

Inc.

P-241-02

5,025.00 >. _ 7 Asia, Inc. P-232-63 rage7 | Ty — “we anitary Care Products P-232-64 803.57 803.57 Asia, Inc. 2 | a

Ni) > > =

Sanitary Care Products P-232-65 2,410.71 2,410.71 "MVha Py y q ace ee First Enterprise P-232-68 2,314.29 2,314.29 he lirst Jinterprise P-232-69 1,928.57 1,928.57 5,025.00 Asta, Inc.

| { Gem Stationery, Inc. p-241-03 | 7,493.64 | 7,493.64 Icon Interiors, Inc. P-241-05 36,480.44 7 36,480.44 S 1 ~ a DP, = Sanitary Care Products p-241-13 803.57 803.57 {_Systems, Inc.

Integrated Computer

Systems, Inc.

Integrated Computer

Systems, Inc.

P-242-04

P-242-05 |

5,650.86 S + ‘ is re 1 bn store Ine Peaa-l4 1093.37 ee j Drugstore, Inc. | {— | Integrated Computer 5 i < caegrated P-242-02 5,653.50 5,653.50 Systems, Inc. _t __| | Integrated Computer p-249.03 | 39,573.30 39,573.30 5,650.86 2,089.24 2,089.24 Icon Interiors, Inc.

P-245-03 i 798.92 798.92 Icon Interiors, Inc. P-245-04 | 7,950.85 | 7,950.85

CTA CASE NO. 9100

Integrated Computer

P-246-01

Systems, Inc.

Alpha Insurance &

1'-234- Sur~ Co., Inc.

209

Eastern

1'-234- "J"clecommunications 222 i'hilhealthcare Inc.

1'-234- 266 Cb Distributor, Inc.

1'-232-76 c;em Stationery, Inc.

P-232-77

Gem Stationery, Inc.

P-232-78

1-Joffsman Systematic

P-232-80

Designs Inc.

Integrated Computer

P-232-81

Systems, Inc.

Integrated Computer

P-232-82

Systems, Inc.

Integrated Computer

P-232-84

Systems, Inc.

Ray-Nier Marketing

P-232-99

Inc.

Unison Computer

P-233-21

Systems, Inc.

Integrated Computer

1'-241-23 ~stems, Inc.

Integrated Computer

P-241-24

Systems, Inc.

I Ioffsman SystematiC

1'-241-20 Dcsib_'rb Inc.

Information Work

P-241-21

Tools Corp.

Information Work

1'-241-22

Tools CoT_:

St. hancis Generic

P-241-28

Druj!store, Inc.

Integrated Computer

P-242-12

Systems, Inc.

Integrated Computer

P-242-13

S_y.~tems, Inc.

Integrated Computer

P-242-14

Systems, Inc.

Integrated Computer

P-242-15

s_y.,tems, Inc.

Integrated Computer

P-242-16

Systems, Inc.

Integrated Compun:r 1'-242-17 Systems, Inc.

Integrated Computer

P-242-18

System:;, Inc.

Integrated Computer

P-242-19

Systems, Inc.

Integrated Computer

P-246-02

Systems, Inc.

Integrated Computer

P-246-03

S_y.~tems, Inc.

;\cez Instrument

P-232-

Philippines Corp.

101 Gem Stationery, Inc.

P-232-

105 Gem Stationery, Inc.

P-232-

106 Gem Stationery, Inc.

P-232-

107 Gem Stationery, Inc.

P-232-

108 Gem Stationery, Inc.

P-232-

109 Gem Stationery, Inc.

1'-232- 110 949.20 949.20 l'hp3,754.20 3,754.20 15,286.25 15,286.25 889,640.59 889,640.59 16,500.00 16,500.00 2,960.40 2,960.40 3,593.11 3,593.11 4,903.20 4,903.20 5,086.61 5,086.61 5,674.82 5,674.82 4,044.64 4,044.64 67.50 67.50 29,296.35 29,296.35 1,002.36 1,002.36 3,235.89 3,23S.89 4,903.20 4,903.20 21,696.43 21,696.43 3,589.29 3,589.29 499.29 499.29 4,024.87 4,024.87 1,262.20 1,262.20 22,647.23 22,647.23 2,865.83 2,865.83 61,111.42 61,111.42 39,638.04 39,638.04 28,637.68 28,63768 7,872.74 7,872.74 8,539.23 8,539.23 20,167.92 20,167.92 Php1 ,234.80 1,234.80 2,764.41 2,764.41 1,813.95 1,813.95 2,764.41 2,764.41 1,813.95 1,813.95 2,764.41 2,764.41 1,813.95 1,813.95

CTA CASE NO. 9100

Gem Stationery. Inc.

P-232-

111 Gem Stationery, Inc.

P-232-

112 Gem Stationery, Inc.

P-232-

113 c;em Stationery, Inc.

P-232-

114 Gem Stationery, Inc.

P-232-

115 Icon Interiors, Inc.

P-232-

116 In formation \'(! ork

P-232-

Tools Corp.

117

Information Work

P-232-

Tools Corp.

118 I ntcgratcd Computer

P-232-

Systems, Inc.

119

The First Enterprise

P-232-

Inc.

135

The First Enterprise

P-232-

Inc.

136

Information Worktools

l'-233-22 Corp.

Integrated Computer

P-233-23

Systems, Inc.

Inrcgrat<:d Computer

P-233-24

Svstems, Inc.

,\Heard Plastics

P-241-30

Philippines, Inc Gaytano, Virna Condes

P-241-32

Gaytano, Virna Condes l'-241-33 Gem Stationery, Inc.

P-241-34

Gem Stationery, Inc.

l'-241-35 Gem Stationery, Inc.

l'-241-36

Integrated Computer

P-242-23

Systems, Inc.

Integrated Computer

P-237-1

Systems, Inc.

Integrated Computer

1'-237-2 Systems, Inc.

Integrated Computer

1'-237-3 Systems, Inc.

lntq;rated Computer 1'-246-06 Systems, Inc.

Integrated Computer

l'-246-07 Systems, Inc.

Integrated Computer

P-246-08

Systems, Inc.

Integrated Computer

l'-246-09 Systems, Inc.

Integrated Computer

P-246-11

~stems, Inc.

Subtotal

2,646.82 5,909.95 2,762.65 1,813.95 2,762.65 7,056.00 2,362.50 4,692.86 45,646.07 2,391.44 2,732.12 22,367.45 7,221.79 926.61 10,714.29 182.14 675.00 5,590.58 1,959.22 1,889.44 4,037.29 17,022.25 55,252.80 15,771.44 14,468.60 53,997.00 388.60 26,572.56 34,435.73 Php418,069. 70 Php2,210,148.25 Php 1,212,501.29 Php369,219.68 Input VAT on purchases of goods and services with no valid supporting documents found in the records Manila c;olf And 1'-234-37 Php1,854.86 Country Club, Inc.

Subtotal

Php1,854.86 - - - 2,646.82 5,909.95 2,762.65 1,813.95 2,762.65 7,056.00 2,362.50 4,692.86 45,646.07 2,391.44 2,732.12 22,367.45 7,221.79 92661 10,714.29 182.14 675.00 5,590.58 1,959.22 1,889.44 4,037.29 17,022 25 55,252.80 15,771.44 14,468.60 53,997.00 38860 26,572.56 34,435.73 Php4,209,938.92 l'hp1 ,854.86 Php1,854.86 Input VAT on purchases of goods/services supported by VAT invoices/official receipts with incorrect TIN/without TIN of

Petitioner

Reg Information

l'-234-57 Php28,630.80 l'hp28,630.80 Technology Inc.

Intermed tvlarketing

P-240-1

333,699.26 333,699.26 !'hils., Inc.

Integrated Computer

1'-232- Php48,309.11 48,309.11 Systems, Inc.

122

CTA CASE NO. 9100

Integrated Computer

P-246-05

Systems, Inc.

Integrated Computer

1'-246-12 Systems, Inc.

Subtotal

54,581.75 54,581.75 32,858.00 32,858.00 Php362,330.06 - - Php135,748.86 Php498,078.92 Input VAT on purchases of goods/services supported by VAT invoices/official receipts but the VAT amount was not separately indicated therein

Kai-Kai International

1'-234-30 Php257 ,684.16 l'hp257 ,684.16 i':ximport Inc.

Subtotal

Php257,684.16 - - - Php257,684.16

Overclaimed Input VAT

Ascott Makati, Inc.

P-234-

(l'hp22,509.31 - 100 l'hp450.00 l'hp450.00 l'hp22,059.31) Fuji Xerox Philippines,

P-234-

Php5,355.36 5,355.36 Inc.

229

Subtotal

- Php450.00 Php5,355.36 - Php5,805.36

TOTAL

Php1,039,938. 78 Php2,210,598.25 Php1,217,856.65 Php504,968.54 Php4,973,362.22 Thus, out of Petitioner's total reported input VAT on current purchases of Php76,267,435.26 for the four quarters of FY 2013, only the amount of Php56,692,382.98 represents its valid input VAT, as computed hereunder: 1st Qtr 2013 2nd Qtr 2013 3rd Qtr 2013 4th Qtr 2013

TOTAL

Total Input VAT on

Current Purchases per

Php 18,584,201.58 Php22,594,752.12 Php18,651,262.27 Php16,437,219.29 Php76,267,435.26

Returns

Less: Disallowances

-

Per ICPA Report

Php3,496,514.01 Php3,205,195.57 Php1,720,317.65 Php6,179,662.83 Php 14,601 ,690Jl6

Per Court's

further 1,039,938.78 2,210,598.25 1,217,856.65 504,968.53 4,973,362.22 1 verification

Total DiJallowanceJ

PhJA-,536,452.79 Php5,415,793.82 Php2,938, 174.30 Php6,684,631.3 7 Php19,575,052.28

Valid Input VAT

Php14,381,448.05 Php17 ,178,958.30 Php15,713,087.97 Php9,752,587.93 Php56,692,382. 98 Proceeding therefrom, a portion of Petitioner's valid input VAT of Php56,692,382. 98 shall be applied against the output VAT liability for the four quarters ofFY 2013 in the aggregate amount ofPhp2,987,795.68. Consequently, only the remaining input VAT of Php53,704,587.30 can be attributed to the declared zero-rated sales of Php2,675,219,721.49 and only the input VAT of Php14,077,169.64 is attributable to the valid zero-rated sales of Php673,867,144.22, computed as follows: 1st Qtr 2013 2nd Qtr 2013 3rd Qtr 2013 4th Qtr 2013

TOTAL

Valid Input VAT

Php14,047,748.79 Php17,178,958.30 Php15,713,087.97 Php9,752,587.92 Php56,692,382. 98

Less: Output VAT

2,987,795.68 I liability - 1,324,996.49 682,204.94 980,594.25

Excess Input VAT

Php14,047,748.79 Php15,853,961.81 Php15,030,883.03 Php8, 771,993.67 Php53, 704,587.30

Divide by Declared

2,675,219,721.49 I

Zero-Rated Sales

464,730,110.36 660,199,872.49 658,857,186.91 891,432,551.73

CTA CASE NO. 9100

Multiply by Valid

Zero-Rated Sales

118,812,861.34 176,235,159.32 194,702,915.17 184,116,208.39 673,867,144.22

Excess Input VAT

attributable to

Valid Zero-Rated

Sales

Php 3,591,446.29 Php 4,232,090.31 Php_ 4,441,868.13 Php1,811, 764.91 Phe_14,077 ,169.64 Further, Petitioner was able to prove that the claimed input VAT of Php67,976,449.16 for the four quarters of FY 2013 was not applied against any output VAT in the succeeding quarters and the same remained unutilized as the said amount was deducted as "VAT Refund/TCC claimed" in its Quarterly VAT Return for the first quarter of TY 201555. Apparently, the subject claim no longer formed part of the excess input VAT ofPhp95,963,733.71 56 as of the end of the first quarter of TY 2015 that was to be carried over/ applied to the succeeding quarters. As such, it eliminates the possibility that the present claim would be applied to future output VAT liability.

WHEREFORE, premises considered, the instant Petition for Review is hereby PARTIALLY GRANTED. Accordingly, Respondent is ORDERED TO REFUND or TO ISSUE A TAX CREDIT CERTIFICATE in favor of Petitioner the amount of Php14,077 ,169.64 representing the latter's unutilized input VAT attributable to its zero-rated sales for the 2013.

I CONCUR:

55 Line 23D of Exhibit "P-216". 56 Line 29 of Exhibit "P-216". ~. ~ ~ ... "' MA. BELEN M. RINGPIS-LIBAN

Associate Justice

ABON-VICTORINO

CTA CASE NO. 9100

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.

ssociate Justice cting Chaitperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division Acting 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