Court of Tax Appeals · First Division

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

CTA Case No. 9227 November 18, 2021

REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

FIRST DIVISION

DEUTSCHE KNOWLEDGE

SERVICES PTE., LTD.

Petitioner,

- versus-

CTA CASE NO. 9227

Members:

DEL ROSARIO, P.J. , Chairperson,

MANAHAN, and

REYES-FAJARDO, JJ.

COMMISSIONER OF

Promulgated:

INTERNAL REVENUE,

Respondent.

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DECISION

DEL ROSARIO, P.J.:

This is a Petition for Review1 filed on January 4, 2016 by Deutsche Knowledge Services Pte., Ltd. (petitioner) against the Commissioner of Internal Revenue (respondent) praying that the Court render judgment ordering respondent to refund or issue a tax credit certificate to petitioner in the amount of P31 ,681 ,201 . 78, representing its excess and unutilized input VAT on purchases of goods and services attributable to zero-rated sales for the fourth (4th) quarter of calendar year (CY) 2013.

THE PARTIES

Petitioner is the Philippine branch of a multinational company organized and existing under and by virtue of the laws of Singapore, with registered office address at One Raffles Quay, #17 -10 South Tower, Singapore 048583.2 It is licensed to do business as a regional operating headquarters (ROHQ) in the Philippines by the Securities and Exchange Commission (SEC) on April 25, 2005 with SEC Registration No. FS200506950, pursuant to the Omnibus Investment

1 CT A Docket Vol. I, pp.1 0-4 7 (inclusive of annexes).

2 Par. 2, Stipulated Facts, Joint Stipulation of Facts and Issues (JSFI), CTA Docket Vol. V, p. 2472.o'1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Code of 1987, as amended by Republic Act (RA) No. 8756, 3 and its implementing rules and regulations, to engage in general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personal management; logistics services; research and development services and product development; technical support and maintenance; data processing and communication and business development4 It was registered with the Bureau of Internal Revenue (BIR) on June 16, 2005 as a VAT-registered taxpayer with Taxpayer Identification Number (TIN) 238-763-115-000. 5 Respondent is the Commissioner of Internal Revenue (CIR) with office address at the BIR National Office Building, Diliman, Quezon City. He is empowered to perform the duties of his office, including among others, the duty to act upon and approve claims for refund or tax credit as provided by law.6

FACTS

On September 1, 2015, petitioner filed with the BIR Large Taxpayers Regular Audit Division 3 (L TRAD 3) an Application for Tax Credits/Refunds (BI R Form No. 1914) of its excess and unutilized input VAT for the fourth (41h) quarter of CY 2013 in the amount of P31 ,681 ,201.78.7 Claiming inaction on its administrative claim, and considering that the 120-day period within which respondent is required to act on the claim for refund had lapsed on December 30, 2015, 8 petitioner filed the present Petition for Review on January 4, 2016. 9 The case was raffled to the Third Division.

On June 28, 2016, within the extended periods granted by the Court, 10 respondent filed his Answer, 11 interposing the following special 3 An Act providing for the Terms, Conditions and Licensing Requirement of Regional or Area Headquarters, Regional Operating Headquarters, and Regional Warehouses of Multinational Companies, Amending for the purpose certain provisions of Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987. 4 Par. 3, I. Stipulated Facts, JSFI, CTA Docket Vol. V, p. 2472-2473. 5 Par. 4, I. Stipulated Facts, JSFI, CTA Docket Vol. V, p. 2473. 6 Par. 1, I. Stipulated Facts, JSFI, CTA Docket Vol. V, p. 2472. 7 Exhibits "P-4" and "P-4-a", CTA Docket Vol. VI, pp. 2910-2915. 8 Par. 8, IV Administrative Claim for Refund, Petition for Review, CTA Docket Vol. I, p. 13. • Supra, Note 1.

10 Resolution dated May 30, 2016, CTA Docket Vol. I, p. 76; Resolution dated July 4, 2016, CTA Docket Vol. I, p. 96.

11 CTA Docket Vol. I, pp. 82-93. C1'l

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue and affirmative defenses: (i) the instant judicial claim should be denied for petitioner's failure to submit the complete supporting documents and substantiate the claim at the administrative level; (ii) a petition for review before the Court of an unsuccessful administrative claim is not an original action; and, (iii) claims for refund are construed strictly against the taxpayer and in favor of the government. Respondent filed his Pre-Trial Brief on October 13, 2016, 12 while petitioner's Pre-Trial Brief was filed on October 14, 2016. 13 During the October 18, 2016 pre-trial conference, the parties were ordered to file their Joint Stipulation of Facts and lssues. 14 On November 7, 2016, within the extended period granted by the Court, 15 the parties filed their Joint Stipulation of Facts and lssues. 16 On December 7, 2016, the Court issued the Pre-Trial Order thereby terminating the pre-trial conferenceY During trial, both parties presented their respective testimonial and pieces of documentary evidence.

Petitioner

presented the testimonies of Ms.

Rachel

Concepcion,18 Legal Entity Controller of petitioner, and Mr. Emmanuel Mendoza, 19

Court-commissioned

Independent

Certified

Public

Accountant (ICPA).

With respect to its documentary evidence, petitioner filed its Formal Offer of Evidence20 on October 23, 2017, with respondent's opposition thereto filed on November 2, 2017. 21 In the Resolution dated September 7, 2018, 22 the Court admitted in evidence the exhibits of petitioner, except the following: Exhibits "P- 12 CTA Docket Vol. I, pp. 107-110. 13 CTA Docket Vol. I, pp. 123-132. 14 Minutes of the Hearing dated October 18, 2016, CTA Docket Vol. V, p. 2465; Order dated October 18, 2016, CTA Docket Vol. V, pp. 2467-2468. 15 Resolution dated November 22, 2016, CTA Docket Vol. V, p. 2486. 1s CTA Docket Vol. V, pp. 2472-2480. 17 CTA Docket Vol. V, pp. 2488-2494. 18 Minutes of the Hearing dated March 6, 2017, CTA Docket Vol. VI, p. 2613; Order dated March 6, 2017, CTA Docket Vol. VI, p. 2614. 19 Minutes of the Hearing dated July 10, 2017, CTA Docket Vol. VI, p. 2643; Order dated July 10, 2017, CTA Docket Vol. VI, p. 2645; Minutes of the Hearing dated September 18,2017, CTA Docket Vol. VI, p. 2790; Order dated September 18,2017, CTA Docket Vol. VI, p. 2791. 2o CTA Docket Vol. VI, pp. 2797-2840.

21 Opposition Re Petitioner's Formal Offer of Exhibits, CTA Docket Vol. XII, pp. 7298-7300.

22 CTA Docket Vol. XII, pp. 7309-7315.~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

6.1", "P-6.38", "P-6.53", "P-6.56", "P-6.61 ",and "P-7.2" for failure of the descriptions in the formal offer to correspond to the descriptions of the documents actually marked; Exhibits "P-6.3", "P-6.5", and "P-6.25" for failure of petitioner to present the originals thereof for comparison; Exhibits "P-6.4", "P-6. 7", "P-6.39", "P-6.42", "P-6.52", "P-6.54", "P- 6.55", "P-6.58", "P-6.59, and "P-6.60" for failure of petitioner to present the originals thereof for comparison and for failure of the descriptions in the formal offer to correspond to the descriptions of the documents actually marked; and Exhibits "P-6.57", "P-12-39", "P-12-211" for not being found in the records of the case. In view of the reorganization of the three (3) Divisions of the Court, pursuant to CT A Administrative Circular No. 02-2018 dated September 18, 2018, the present case was transferred to this Division in the Order dated October 1, 2018. 23 Petitioner filed an Omnibus Motion (1) Motion for Partial Reconsideration (Re: Resolution dated September 7, 2018); (2) Motion to Set Commissioner's Hearing for the Comparison of Documents; and

(3) Motion for Leave of Court to present witness on September 28, 2018.24 In the Resolution dated April 3, 2019, 25 the Court granted petitioner's Motion to Set Commissioner's Hearing for the Comparison of Documents and Motion for Leave of Court to Present Witness. On September 3, 2019, petitioner presented its Legal Entity Controller, Felix B. Angue, as its last witness. 26 Thereafter, petitioner filed a Supplemental Formal Offer of Evidence on September 24, 2019. In the Resolution dated November 22, 2019, 27 the Court admitted Exhibits "P-6.1 ", "P-6.3", "P-6.5'', "P-6.38", "P-6.4", "P-6.53", "P-6.56", "P-6.61", and "P-7.2".

During the hearing on February 6, 2020, respondent manifested that he would no longer present any witness. 28 Respondent, however, offered in evidence Exhibit "R-1" or the Memorandum dated December 16, 2015, which was admitted in open Court on even date. The parties 23 CTA Docket Vol. XII, p. 7316 24 CTA Docket Vol. XII, pp. 7318-7328. 25 CTA Docket Vol. XII, pp. 7339-7341. 26 Order dated September 3, 2019, CTA Docket Vol. XII, pp. 7376-7377. 27 CTA Docket Vol. XII, pp. 7434-7435. 28 Minutes of Hearing dated February 6, 2020, CTA Docket Vol. XII, p. 7436-7437·, Order dated February 6, 2020, CTA Docket Vol. XII, pp. 7438-7441. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue were given a period of thirty (30) days within which to file their respective memoranda. 29 Respondent filed his Memorandum on March 9, 2020, 30 while petitioner failed to file its memorandum. 31 Thus, in the Resolution dated July 15, 2020, the case was submitted for decision.32 On October 6, 2020, the Court directed the Court-commissioned ICPA to submit a soft copy of the annexes to the ICPA Report in Microsoft Word and/or Excel format pursuant to CTA En Bane Resolution No. 06-2013 dated May 28, 2013, within five (5) days from notice, and the Resolution dated July 15, 2020 was recalled and set aside.

In the Resolution dated November 20, 2020, the Court noted the Transmittal Memo and one (1) flash drive containing a soft copy of ICPA Report in Microsoft Word format, and its annexes in Microsoft Excel format filed by Mendoza Querido & Co. on November 16, 2020. In the same Resolution, the Court submitted anew the case for decision.

THE ISSUE

The main issue for consideration of the Court, as stipulated by the parties, is:

Whether or not petitioner is entitled to its claim for refund of or issuance of TCC for excess or unutilized input VAT in the amount of P31 ,681 ,201. 78 for the fourth (4th) quarter of CY 2013. 33

PETITIONER'S ARGUMENTS34

According to petitioner, since its excess input VAT for the fourth (4th) quarter of CY 2013 in the amount of P31 ,681,201.78 was derived from its purchases of goods and services attributable to zero-rated sales of services for the same period, which to date has remained unutilized and/or unapplied against its output VAT liability, petitioner is 29 /d.

30 CTA Docket Vol. XII, pp. 7442-7452. 31 Records Verification dated July 6, 2020, CTA Docket Vol. XII, p. 7454. 32 CTA Docket Vol. XII, p. 7456. 33 Stipulated Issue, JSFI, CTA Docket Vol. V, p. 2473. 34 Legal Bases, Petition for Review, CTA Docket Vol. I, pp. 13-15. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue entitled to the refund of or issuance of TCC for said amount pursuant to Sections 1 08(8)(2) and 112(A), in relation to Section 11 O(B) of the National Internal Revenue Code (NIRC) of 1997, as amended.

RESPONDENT'S ARGUMENTS35

Respondent counters that the instant judicial claim should be denied for petitioner's failure to substantiate its claim for refund at the administrative level.

According to respondent, petitioner failed to submit complete supporting documents as mandated by Revenue Memorandum Circular (RMC) No. 54-2014. Hence, petitioner's allegation that it is entitled to refund or tax credit was not proved by sufficient evidence. Furthermore, respondent insists that the instant judicial claim for refund or tax credit is not an original action but an appeal from unsuccessful administrative remedy. Considering that petitioner did not submit the complete documents required by RMC 54-2014 at the administrative level, it cannot cure the defect by submitting complete documents before the Court.

Finally, respondent avers that tax refunds partake the nature of tax exemptions, and are strictly construed against the claimant and in favor of the government.

THE COURT'S RULING

The CT A, as a court of record, may conduct a trial de novo and accept evidence not presented at the administrative level At the outset, the Court finds it imperative to resolve the issue raised by respondent that the present judicial claim should be denied for petitioner's failure to substantiate its claim for refund at the administrative level.

The Court finds respondent's argument bereft of merit.

35 Discussion, Memorandum, CTA Docket Vol. XII, pp. 7443-7450(!1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

The issue of whether or not the non-submission of documents at the administrative level bars a taxpayer from submitting documents before this Court has been time and again raised by respondent. The Court has repeatedly ruled that the non-submission of complete supporting documents at the administrative level is not necessarily fatal to the claimant's judicial claim. A taxpayer may present additional documents before the Court of Tax Appeals (CTA) to substantiate its claim for refund, albeit the same were not presented at the administrative level. Republic Act (RA) No. 1125, as amended, provides that the CTA is a court of record, viz.: "Section 8. Court of record; sea/; proceedings. - The Court of Tax Appeals shall be a court of record and shall have a seal which shall be judicially noticed. It shall prescribe the form of its writs and other processes. It shall have the power to promulgate rules and regulations for the conduct of the business of the Court, and as may be needful for the uniformity of decisions within its jurisdiction as conferred by law, but such proceedings shall not be governed strictly by technical rules of evidence." (Boldfacing supplied.) Undeniably, cases filed before this Court are litigated de novo, and party-litigants are required to prove every minute aspect of their cases. The explicit pronouncement in Philippine Airlines, Inc. vs. Commissioner of Internal Revenue36 that a taxpayer-claimant may present new and additional evidence before the CT A to support its case for tax refund is instructive: "The Commissioner contends that PAL failed to present several of its documentary evidence before the Bureau of Internal Revenue during the administrative level. Thus, she claims that the new evidence that petitioner presented in the Court of Tax Appeals should not have been considered because trial de novo in the Court of Tax Appeals must be limited to the evidence shown in the administrative claim.

This Court rules that the Court of Tax Appeals is not limited by the evidence presented in the administrative claim in the Bureau of Internal Revenue. The claimant may present new and additional evidence to the Court of Tax Appeals to support its case for tax refund.

Section 4 of the National Internal Revenue Code states that the Commissioner has the power to decide on tax refunds, but his or her decision is subject to the exclusive appellate jurisdiction of the

Court of Tax Appeals:

36 G.R. Nos. 206079-80 and 206309, January 17, 2018. ~

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day- period, appeal the decision or the unacted claim with the Court of Tax Appeals.'OtJ

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Based on the aforequoted provisions of law, a claimant must satisfy the following requisites in order to be entitled to a refund or tax credit of unutilized input VAT attributable to zero-rated sales:

1. The administrative and judicial claims were filed within the prescribed period;

2. The taxpayer-claimant must be VAT-registered;

3. There must be zero-rated or effectively zero-rated sales;

4. The input VAT were incurred or paid;

5. The input VAT are attributable to zero-rated or effectively zero-rated sales; and,

6. The input VAT were not applied against any output VAT liability.

First

Requisite:

The administrative and judicial claims were filed on time Section 112(A) of the NIRC of 1997, as amended, specifically requires that a taxpayer's application for refund or issuance of TCC of unutilized and/or excess input VAT, which are attributable to its zero- rated sales, must be made within two (2) years after the close of the taxable quarter when the sales were made. Since the present claim covers the fourth (41h) quarter of CY 2013, petitioner had two (2) years after the close of the taxable quarter on December 31, 2013 or until December 31, 2015, within which to file its claim for refund. Petitioner's administrative claim for refund or issuance of TCC for the fourth (41h) quarter of CY 2013 was filed on September 1, 2015. Thus, the same was timely filed. Anent the timeliness of petitioner's judicial claim for refund or issuance of TCC, Section 11 of Republic Act (RA) No. 1125,37 as amended by RA No. 9282, 38 provides the period of limitation within which to appeal before this Court, viz.: 37 An Act Creating the Court of Tax Appeals.

38 An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating Its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership Amending for the Purpose Certain Sections of Republic Act No. 1125, as amended, otherwise known as the Law Creating the Court of Tax Appeals, and for Other Purposes.C11

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

"SEC. 11. Who May Appeal; Mode of Appeal; Effect of Appeal. - Any party adversely affected by a decision, ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. Appeal should be made by filing a petition for review under a procedure analogous to that provided for under Rule 42 of the 1997 Rules of Civil Procedure with the CTA within thirty (30) days from the receipt of the decision or ruling or in the case of inaction as herein provided, from the expiration of the period fixed by law to act thereon. xxx" (Boldfacing supplied) In relation to the foregoing, Section 112(C) of the NIRC of 1997, as amended, provides that the taxpayer affected by denial or inaction of the CIR on its administrative claim may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day (120)-period from the submission of complete documents, appeal the decision or the unacted claim with the Court of Tax Appeals.

As aforementioned, on September 1, 2015, petitioner filed its administrative claim for refund or issuance of TCC representing its unutilized input VAT for the fourth (4th) quarter of CY 2013 in the amount of P31 ,681 ,201.78. Counting the 120-day period from September 1, 2015, respondent had until December 30, 2015 to act on the claim. Alleging inaction on the part of respondent, petitioner had thirty (30) days from expiration of the 120-day period on December 30, 2015 or until January 29, 2016 within which to file its judicial claim. Hence, the filing of the present Petition for Review on January 4, 2016 was timely made.

Second Requisite: Petitioner

is a VAT-registered entity Petitioner is registered with the BIR as a VAT-registered entity on June 16, 2005, with registered office address at Net Quad Center, 31st St. corner 4th Avenue, E-Square Zone Crescent Park West, Bonifacio Global City, Taguig City bearing Tax Identification Number 238-763-115-000 as stated on its Certificate of Registration39 with OCN No. 9RC0000270209 issued by the BIR. Hence, the second requisite was complied with.

39 Exhibit "P-2", CTA Docket, Vol. VI, p. 2859(1'1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Third

Requisite:

Petitioner

had zero-rated sales during the subject period but only in the amount of P1, 130,802,485.20 Petitioner claims that during the fourth (41h) quarter of CY 2013, sales were made to persons engaged in business conducted outside the Philippines. The services are claimed to be transactions subject to zero percent (0%) VAT in accordance with Section 108(8)(2) of the NIRC of 1997, as amended, viz.: "SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. -

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 Sentral ng Pilipinas (BSP);

(2) Services other than those mentioned in the preceding paragraph rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP);" (Emphases supplied) In order for a sale or supply of service to be subjected to zero percent (0%) VAT, certain requirements must be met under Section 108(8)(2) of the NIRC of 1997, as amended, to wit: 1) The services fall within any of the categories under Section 1 08(8)(2),40 or that the services rendered were other than "processing, manufacturing or repacking goods";41 4° Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch), G.R. No. 152609, June 29, 2005.

41 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc, G.R. No. 153205, January 22, 2007. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

2) The service was performed in the Philippines42 by a VAT-registered person;

3) The recipient of the services is a foreign corporation, and the said corporation is doing business outside the Philippines, or is a non-resident person not engaged in business who is outside the Philippines when the services were performed;43 and, 4) The payment for such services was made in acceptable foreign currency accounted for in accordance with BSP rules. 44 1 I Petitioner rendered "services other than processing, manufacturing or repacking goods" Petitioner is licensed by the SEC to do business as a Regional Operating Headquarters (ROHQ) in the Philippines, pursuant to the Omnibus Investment Code of 1987, as amended by R.A. No. 8756 and its implementing rules and regulations. Under its Certificate of Registration and License duly issued by the SEC,45 petitioner is authorized to engage in the following services or functions: general administration and planning; business planning and coordination; sourcing/procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training and personnel management; logistic services; research and development services and product development; technical support and maintenance; data processing and communication; and business development.

Thus, it can be said that the foregoing services fall within the scope of "services other than processing, manufacturing or repacking of goods".

42 Commissioner of Internal Revenue vs. American Express International, Inc. (Philippine Branch}, G.R. No. 152609, June 29, 2005; Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc, G.R. No. 153205, January 22, 2007.

43 Site/ Philippines Corporation (Formerly Clientlogic Phils. Inc.) vs. Commissioner of Internal Revenue, G.R. No. 201326, February 8, 2017; Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007; Accenture, Inc. vs. Commissioneroflnternal Revenue, G.R. No. 190102, July 11,2012.

44 Commissioner of Internal Revenue vs. Burmeister and Wain Scandinavian Contractor Mindanao, Inc., G.R. No. 153205, January 22, 2007.

45 Exhibits "P-1", CTA Docket, Vol. I, p. 167. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

2) Petitioner proved that its services were performed in the

Philippines

Petitioner presented Ms. Rachel Concepcion, its Legal Entity Controller, to prove, among others, that it rendered services in the Philippines to its non-resident foreign clients 46 Pertinent portion of Ms. Concepcion's testimony by way of her Sworn Statement47 is quoted hereunder:

"024: How did Petitioner incur the input VAT credits which are the subject of the present claim of refund?

A:

Petitioner purchased goods and services in the course of rendering services in the Philippines as a shared services center to clients engaged in business conducted outside the Philippines. These clients are all part of the Deutsche Bank Aktiengesellschaft Group (DB Group).

XXX

032: What is the relevance of Exhibits "P-6" to "P-6.60" to Petitioner's claim for refund?

A: These documents show that Petitioner, with office address in the Philippines, rendered services within the Philippines to foreign clients operating outside the Philippines. In turn, Petitioner's foreign clients paid Petitioner for the services rendered in the Philippines. "48 (Boldfacing supplied) The records of the case does not show that Ms. Concepcion was disqualified to testify or her Sworn Statement or any of her answers therein were striken on the ground of inadmissibility in accordance with Section 649 of the Judicial Affidavit Rule (A.M. No. 12-8-8-SC dated September 4, 2012). Although respondent cross-examined Ms. Concepcion pursuant to Section 7 of the Judicial Affidavit Rule, 5° the 46 Submission dated October 14, 2016, CTA Docket Vol. I, pp. 133-135; Transcript of Stenographic Notes dated March 6, 2017, p 3. 47 Sworn Statement of Ms. Rachel Concepcion to Questions Propounded by Atty. Ma. Carmela A. Esquivias; Exhibit "P-38", CTA Docket Vol. I, pp. 136-165. 48 Exhibit "P-38" to "P-38-a", CTA Docket, Vol. I, pp. 136-165. 49 Section 6. Offer of and objections to testimony in judicial affidavit. - The party presenting the judicial affidavit of his witness in place of direct testimony shall state the purpose of such testimony at the start of the presentation of the witness. The adverse party may move to disqualify the witness or to strike out his affidavit or any of the answers found in it on ground of inadmissibility. The court shall promptly rule on the motion and, if granted, shall cause the marking of any excluded answer by placing it in brackets under the initials of an authorized court personnel, without prejudice to a tender of excluded evidence under Section 40 of Rule 132 of the Rules of Court.

50 Section 7. Examination of the witness on his judicial affidavit. -The adverse party shall have the right to cross-examine the witness on his judicial affidavit and on the exhibits attached to the same. The party who presents the witness may also examine him as on re-direct. In every case, the court(J/

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue cross-examination did not dwell on her testimony that petitioner rendered services in the Philippines. Respondent's failure to object to the evidence offered by petitioner renders the same admissible, and this Court cannot, on its own, disregard such evidence. 51 Truth to tell, the aforesaid Sworn Statement of Ms. Concepcion was likewise offered as documentary exhibit and the same was admitted in evidence in the Resolution dated September 7, 2018. 52 The foregoing unrebutted testimony of Ms. Concepcion that petitioner rendered services in the Philippines is given full weight and credence. Jurisprudence has it that an unrebutted testimony is enough evidence, 53 and sufficient to establish a basis for the court's award.54 Tax refund case is civil in nature,55 and only a preponderance of evidence is needed to grant a claim for tax refund based on excess payment. 56 31 Petitioner failed to prove that all of its clients for CY 2013 are non-resident foreign corporations

(NRFCs)

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

1. SEC Certificate of Non-Registration of Company; 57

2. IntraGroup Service Agreeements; 58 and,

3. Foreign Business Registration Documents. 59 shall take active part in examining the witness to determine his credibility as well as the truth of his testimony and to elicit the answers that it needs for resolving the issues. 51 Asian Construction and Development Corporation vs. COMFAC Corporation, G.R. No. 163915, October 12, 2006.

52 CTA Docket Vol. 12, pp. 7309-7315. 53 Bienvenido Yap vs. The Solicitor General, G.R. No. L-1602, September 8, 1942. 54 People of the Philippines vs. Elrose/1 Manzano y Brebonera @ Boy Ulo, G. R. No. 138303, November 26, 2001.

55 Philippine Phosphate Fertilizer Corporation vs. Commissioner of Internal Revenue, G.R. No. 141973, June 28, 2005.

56 Southern Philippines Power Corporation vs. Commissioner of Internal Revenue, G.R. No. 179632, October 19, 2011.

57 Exhibits "P-5" to "P-5.61", CTA Docket, Vol. VI, pp. 2916-2980

58 Exhibits "P-6" to "P-6.61", CTA Docket, Vols. VI-VIII, pp. 2981-5529.

59 Exhibits "P-7" to "P-7.11", CTA Docket, Vol. VIII, pp. 5530-5692; Exhibits "P-8" to "P-8.62", CTA Docket, Vol. VIII-XII, pp. 5693-7239r1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Each of the aforesaid documents, standing alone, is however inadequate to prove that petitioner's client is a non-resident foreign corporation doing business outside the Philippines. The SEC Certificates of Non-Registration only show that the named entities therein are not registered corporations/partnerships in the Philippines, but the same do not prove that such entities are doing business outside the Philippines. On the other hand, the Certificates/Articles of Foreign Incorporation/Registration,

Tax

Residence

Certificates, and Screenshot of US SEC Website only prove that the entities named/stated therein were incorporated/organized/domiciled abroad but do not necessarily establish that such entities are not doing business in the Philippines.

Meanwhile, the IntraGroup Service Agreements only show the names and addresses/places of incorporation/registration of petitioner's clients to whom it renders services but they do not, on their own, establish that such clients are non-resident foreign corporations doing business outside the Philippines. As declared in Site/ Philippines Corporation (formerly Clientlogic Phils., Inc.) vs. Commissioner of Internal Revenue, 60 service agreements do not prove that the foreign clients were doing business outside the Philippines or have a continuity of commercial dealings outside the Philippines. To be considered as an NRFC doing business outside the Philippines, each entity must be supported, at the very least, by BOTH: (1)

SEC

Certificate

Non-Registration

of Corporation/Partnership;

AND

(2) proof of foreign incorporation/registration (i.e.,

Certificate/Articles

Foreign

Incorporation/Association or printed screenshots of the US SEC Website showing the state/province/country where the entity was organized,61 or Tax Residence Certificate62). The following table shows the clients of petitioner which shall be accorded NRFC status as supported by their respective SEC Certification of Non-Registration of Company and proof of foreign incorporation/registration, i.e., certificate of registration/articles of incorporation:

60 G.R. No. 201326, February 8, 2017.

61 Commissioner of Internal Revenue vs. CITCO International Support Services Limited-Philippine ROHQ, CTA EB No. 2015, November 29, 2019.

62 Chevron Holdings, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 8946, March 14, 2018.CJ1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

SEC Certification of Non-

Clients

Registration of

Company

Deutsche Asia Pacific Holdings Pte Ltd

P-5.6

Deutsche Bank (Malaysia) Berhad

P-5.10 Deutsche Bank Aktiengesellschaft, Filiale New York P-5.25 Deutsche Bank Aktiengesellschaft, Filiale Seoul P-5.28 Deutsche Bank Aktiengesellschaft, lnlandsbank P-5.32 Deutsche Bank Securities Inc.

P-5.36 Deutsche Securities Inc.

P-5.44 DB Consorzio S. Cons. a. r. I.

P-5

DB Energy Trading LLC

P-5.1

DB International (Asia) Limited

P-5.2

DB Service Centre Limited

P-5.3 DB Services New Jersey, Inc.

P-5.4

Deutsche Asset Management (Hong Kong) Limited

P-5.7

Deutsche Asset Management (Korea) Company

Limited

P-5.8

Deutsche Bank (Suisse) SA

P-5.11 Deutsche Bank Aktiengesellschaft, Filiale Hong kong P-5.19 Deutsche Bank Aktiengesellschaft, Filiale

Johannesburg

P-5.21 Deutsche Bank Aktienqesellschaft, Filiale Labuan P-5.22 Deutsche Bank Aktienqesellschaft, Filiale London P-5.23 Deutsche Bank Aktienqesellschaft, Filiale Sinqapur P-5.29 Deutsche Bank Luxembourq S.A.

P-5.33 Deutsche Bank Netherland N.V.

P-5.34

Deutsche Bank Trust Company Americas

P-5.38

Deutsche Bank Trust Corporation

P-5.39

Deutsche Group Services Pty Limited

P-5.41 Deutsche Investment Manaqement Americas Inc. P-5.42

Deutsche New Zealand Limited

P-5.43 Deutsche Securities Korea Co.

P-5.45

DWS Holdinq & Service GmbH

P-5.47 RREEF Manaqement L.L.C.

P-5.52 DB Alternative Tradinq Inc.

P-5.54 DB Investment Partners, Inc.

P-5.55

DeAWM Service Company

P-5.56

Deutsche Bank National Trust Companv

P-5.58

Deutsche Asset Management Group Limited

P-5.59

Deutsche Bank Trust Companv Delaware

P-5.62

Business

Registration

Document

P-7

P.7.1 P-7.4 P.7.5 P-7.7 P-7.8 P-7.10

P-8

P-8.1 P-8.2 P-8.3 P-8.4 P.8.7 P-8.8 P-8.11 P-8.19 P-8.21 P-8.22 P-8.23 P-8.29 P-8.33 P-8.34 P-8.38 P-8.39 P-8.41 P-8.42 P-8.43 P-8.45 P-8.47 P-8.52 P-8.54 P-8.55 P-8.56 P-8.58 P-8.59 P-8.62 On the other hand, the following clients of petitioner shall not be accorded NRFC status due to defects in the submitted foreign business registration documents, i.e., certificates of registration/articles of incorporation not in the English language for which the Court cannot ascertain their truthfulness and veracity, certificates of registration/articles of incorporation that pertain to a C1l

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue different entity, and those which are not supported by any foreign business registration document, to wit:

SEC

Certification

Business

Clients of Non-

Registration

Document of Company

DBOI Global Services Private Limited

P-5.5 P-8.5 Deutsche Bank (China) Co., Ltd., Shanahai Branch P-5.9 P-8.9 DEUTSCHE BANK A.S.

P-5.12 P-8.12 Deutsche Bank Aktiengesellschaft, Asia Pacific Head

Office

P-5.13 P-8.13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi P-5.14 P-8.14 Deutsche Bank Aktiengesellschaft, Filiale Amsterdam P-5.15 P-8.15 Deutsche Bank Aktiengesellschaft, Filiale Bangkok P-5.16 P-8.16 Deutsche Bank Aktiengesellschaft, Filiale Brossel P-5.17 P-8.17 Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC) P-5.18 P-8.18 Deutsche Bank Aktiengesellschaft, Filiale Jakarta P-5.20 P-8.20 Deutsche Bank Aktiengesellschaft, Filiale Mumbai P-5.24 P-8.24 Deutsche Bank Aktiengesellschaft, Filiale Paris P-5.26 P-8.26 Deutsche Bank Aktiengesellschaft, Filiale Prag P-5.27 P-8.27 Deutsche Bank Aktiengesellschaft, Filiale Wien P-5.30 P-8.30 Deutsche Bank Aktiengesellschaft, Filiale ZOrich P-5.31 P-8.31 Deutsche Bank Polska Sp61ka Akcyjna P-5.35 P-8,35

Deutsche Bank Societa per Azioni

P-5.37 P-8.37 Deutsche Bank, Sociedad An6nima Espanola P-5.40 P-8.40

Deutsche Trustees Malaysia Berhad

P-5.46 P-8.46 DWS Investment S.A.

P-5.48 P-8.48

000 Deutsche Bank

P-5.49 P-8.49 PT. Deutsche Securities Indonesia P-5.50 P-8.50

RREEF Management GmbH

P-5.51 P-8.51

Bankers International Corporation

P-5.53 P-8.53 Deutsche Bank Aktiengesellschaft, Filiale Mainland P-5.57 P-8.57 Deutsche Bank AktienQesellschaft, Filiale Cayman Islands P-5.60

None

Deutsche Bank PGK AG

P-5.61

None

Deutsche Bank Privat Und Geschaftskunden AktienQ

P-5.63 P-8.61

DWS Investments Service Company

P-5.64

None

Thus, the alleged zero-rated sales made to the abovementioned clients in the total amount offt179,148,317.17 shall be disallowed by the Court, broken down as follows:

CLIENT

ORNO.

OR DATE

AMOUNT

Deutsche Bank Aktienaesellschaft, Filiate Jakarta 4822 10/2113

P'

418,583.63 Deutsche Bank Aktienaesellschaft, Filiate Jakarta 4823 10/2/13 418,583.63 Deutsche Bank Aktienaesellschaft, Filiale Cavman Islands 4830 10/7113 26,831.56 Deutsche Bank Aktienaesellschaft, Filiale ZOrich 4831 10/7113 185,567.52 DWS Investment S.A.

4832 10/7113 281,766.77 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 4837 10/7113 49,660,612.12 ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

000 Deutsche Bank

4839 10/8/13 DEUTSCHE BANK A.S.

4840 10/9/13 Deutsche Bank Aktiengesellschaft, Filiate Amsterdam 4841 10/9/13 Deutsche Bank Aktiengesellschaft, Filiate Cayman Islands 4843 10/9/13 Deutsche Bank Aktiengesellschaft, Filiate Wien 4845 10/9/13 Deutsche Bank (China) Co., Ltd., Shanghai Branch 4846 10/9/13 Deutsche Bank (China) Co., Ltd., Shanghai Branch 4846 10/9/13 Deutsche Bank (China) Co., Ltd., Shanghai Branch 4846 10/9/13 Deutsche Bank (China) Co., Ltd., Shanghai Branch 4846 10/9/13 Deutsche Bank (China) Co., Ltd., ShanQhai Branch 4846 10/9/13 Deutsche Bank AktienQesellschaft, Filiate Mumbai 4851 10/11/13 Deutsche Bank Aktienoesellschaft, Filiate Mumbai 4851 10/11/13 Deutsche Bank AktienQesellschaft, Filiate Abu Dhabi 4854 10/11/13

Bankers International Corooration

4855 10/16/13 Deutsche Bank Polska So61ka Akcvina 4857 10/17/13 Deutsche Bank Aktienaesellschaft, Filiate Praa 4858 10/18/13 Deutsche Bank Aktienaesellschaft, Filiate Banakok 4862 10/18/13 Deutsche Bank Aktienaesellschaft, Asia Pacific Head Office 4866 10/21/13 Deutsche Bank Aktiengesellschaft, Filiale Amsterdam 4868 10/23/13

Deutsche Bank Societa per Azioni

4871 10/23/13

Deutsche Bank PGK AG

4873 10/23/13 Deutsche Bank Aktiengesellschaft, Filiale Cayman Islands 4879 10/23/13

Deutsche Trustees Malaysia Berhad

4881 10/24/13 Deutsche Bank Aktiengesellschaft, Filiale Paris 4887 10/25/13 Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC} 4891 10/29/13 PT. Deutsche Securities Indonesia 4892 10/31113 Deutsche Bank AktienQesellschaft, Filiale Dubai (DIFC) 4895 1114/13

000 Deutsche Bank

4896 11/4/13 DEUTSCHE BANK A.S.

4897 11/5/13 DEUTSCHE BANK A.S.

4897 11/5/13 Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC) 4901 11125/13 Deutsche Bank Aktienaesellschaft, Filiate BrOssel 4902 11/6/13 Deutsche Bank Aktienaesellschaft, Filiale BrOssel 4903 11/6/13 119,917.63 71,718.98 3196.95 23,000.18 17,258.74 946,708.46 (1 ,058,487.27) 901,038.38 901 038.38 959,391.17 (4,507,985.18) 11 ,864, 772.87 563.79 13,631,285.47 8,678.71 17,426.89 450,166.19 13 014,972.21 382,884.97 290,857.20 114,643.67 26,169.20 42,358.64 247,341.94 280.76 34,575.36 172,876.56 115,256.50 (30,156.08) 70,771.02 (84,539.29) 71,591.96 71,591.96 71,591.96 71,837.40 71,718.98 68 921.73 270.78 106,915.80 415,916.47 ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Deutsche Bank Aktiengesellschaft, Filiale BrOssel 4904 11/6/13 Deutsche Bank Polska Sp61ka Akcyjna 4908 11/8/13 Deutsche Bank Polska Sp61ka Akcyjna 4908 11/8/13 Deutsche Bank Polska Sp61ka Akcyina 4908 11/8/13 Deutsche Bank Polska Sp61ka Akcyjna 4908 11/8/13

RREEF Management GmbH

4910 11/11/13 DWS Investment S.A.

4915 11/11/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4916 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4916 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4916 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank Aktiengesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank Aktienqesellschaft, Filiale Bangkok 4917 11/12/13 Deutsche Bank AktienQesellschaft, Asia Pacific Head Office 4919 11/12/13 Deutsche Bank AktienQesellschaft, Filiale Wien 4926 11/13/13

RREEF ManaQement GmbH

4934 11/15/13 Deutsche Bank Aktienaesellschaft, Filiale Amsterdam 4935 11/15/13 Deutsche Bank, Sociedad An6nima Esoafiola 4939 11/18/13 Deutsche Bank, Sociedad An6nima Esoafiola 4940 11/18/13 Deutsche Bank Aktienoesellschaft, Filiale Dubai (DIFCl 4941 11/18/13

Deutsche Bank Societa per Azioni

4946 11/19/13 Deutsche Bank Aktiengesellschaft, Filiale Mainland 4947 11119/13 Deutsche Bank Aktiengesellschaft, Filiale Mainland 4947 11/19/13 Deutsche Bank Polska Sp61ka Akcvina 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyjna 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyina 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyjna 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyjna 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyjna 4951 11/20/13 Deutsche Bank Polska So61ka Akcyjna 4951 11/20/13 Deutsche Bank Polska So61ka Akcvina 4951 11/20/13 Deutsche Bank Polska So61ka Akcvina 4951 11/20/13 Deutsche Bank Polska So61ka Akcvina 4951 11/20/13 Deutsche Bank Polska So61ka Akcvina 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcvina 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyina 4951 11/20/13 Deutsche Bank Polska Sp61ka Akcyjna 4951 11/20/13 775,800.98 8,896.91 8,912.55 8,912.55 8,912.55 1,345,472.46 282,995.97 1,711,489.60 1,956,506.91 1,347,236.55 1,037,583.88 811,268.73 3,976.13 1,550,259.28 2,754.28 1 ,008,859.09 12,934,588.05 17,362.78 1,355,444.12 379,087.90 695,874.67 695,874.67 173,968.67 289,211.81 243,874.24 41,953.93 3,564.33 477.61 (812.77) 168.46 5,934.05 9,270.22 9,880.82 8,566.22 11,378.67 11,597.37 8,033.63 4,560.92 6,810.06 7,690.21

(Yj

DBOI Global Services Private Limited

4977 1213113 (8,577.45) 4,396.01 93,070.27 451,553.40 416,592.22 243,797.68 1,391,467.34 180,881.26 54,956,097.52 8,761.35 3,587.74 (2,076.16) 480.67 (817.96) 169.54 4,635.93 3 211.78 1,847.11 2,727.54 3,080.31 (3,578.22) 1,704.94 35,185.57 9,606.13 3,282.46 11,080.27 614,152.80 553,912.93 (220,417.17) 301,122.17 301,122.17 143,828.77 301,122.17 301,594.31 301,594.31 6,585.32 160,616.55 697,116.97 274,269.09 293,284.88 &1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

DBOI Global Services Private Limited

4977 12/3/13

DBOI Global Services Private Limited

4977 12/3/13 DBOI Global Services Private limited 4977 12/3/13

DBOI Global Services Private Limited

4977 12/3/13 Deutsche Bank Aktiengesellschaft, Filiate Amsterdam 4978 12/3/13 Deutsche Bank AktienQesetlschaft, Filiate Banakok 4982 12/4/13 Deutsche Bank AktienQesellschaft, Filiate Banakok 4982 12/4/13

000 Deutsche Bank

4984 12/5/13 DWS Investment S.A.

4986 12/9/13 Deutsche Bank Aktienaesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienoesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienoesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienoesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienoesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienoesellschaft, Filiate Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienaesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktienaesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Abu Dhabi 4987 12/9/13 Deutsche Bank Aktiengesellschaft, Filiale Jakarta 4988 12/10/13 Deutsche Bank Aktiengesellschaft, Filiale Prag 4989 12/10/13 Deutsche Bank Polska Sp61ka Akcyjna 4990 12/11113 Deutsche Bank Polska Sp61ka Akcvina 4990 12/11/13 Deutsche Bank Polska Sp61ka Akcvina 4990 12/11/13 Deutsche Bank Polska Sp61ka Akcvina 4990 12/11/13 Deutsche Bank (China) Co., Ltd., Shanahai Branch 4991 12/11/13 Deutsche Bank Aktienaesellschaft, Filiale Mumbai 4992 12/12/13 Deutsche Bank Aktienaesellschaft, Filiale Mumbai 4992 12/12/13 Deutsche Bank Aktiengesellschaft, Filiale Mumbai 4992 12/12/13 Deutsche Bank Polska So61ka Akcvina 4995 12/13/13 Deutsche Bank Aktiengesellschaft, Filiale Brossel 4996 12/13/13 Deutsche Bank Aktiengesellschaft, Filiale Wien 4997 12/16/13 Deutsche Bank Aktiengesellschaft, Asia Pacific Head Office 4999 12/16/13 Deutsche Bank AktienQesellschaft, Filiale Dubai (DIFC) 5000 12/16/13

Deutsche Bank PGK AG

5007 12/17/13

Bankers International Corooration

5018 12/17/13 Deutsche Bank Aktienaesellschaft, Filiale Amsterdam 5027 12/17/13 --- 380,183.89 405,783.59 427,918.88 366,294.81 3,124.85 883,186.81 908,370.94 117,748.84 293,877.28 212,920.53 391 336.23 386,729.05 659,622.83 1,307,079.48 324 362.02 193,493.75 999.27 691.80 382.52 659.12 (805.59) 358.91 429,292.83 18,013.52 (2,117.83) 8,841.46 3,930.42 3,783.56 997,577.25 552,611.92 552,611.91 531,056.27 8,984.51 4.70858 17,946.13 13,394,229.20 225.14 - (28,408,432.08) 2,608.52

Cf1

Deutsche Knowledge Services Pte .. Ltd. vs. Commissioner of Internal Revenue

Deutsche Bank Aktiengesellschaft, Filiale Paris Deutsche Bank Polska Sp61ka Akcyjna Deutsche Bank Aktiengesellschaft, Filiale Bangkok Deutsche Bank Polska Sp61ka Akcvina Deutsche Bank Polska Sp61ka Akcyjna Deutsche Bank Aktiengesellschaft, Filiale Dubai (DIFC) Deutsche Bank AktienQesellschaft, Filiale Prag Deutsche Bank Aktienqesellschaft, Filiale BrUssel

Total

4) Petitioner proved that its alleged zero-rated sales. except for the amount of ~261.584.33.

were paid for in US Dollars and were accounted for in accordance with the BSP Rules 5030 12/18/13 5031 12/18/13 5033 12/18/13 5038 12/19/13 5040 12/19/13 5043 12/23/13 5044 12/23/13 5045/5046 12/27/13 253,235.86 9,006.25 465,308.95 8,984.04 8,984.04 179,461.18 17,946.00 550,044.06 P'178189 718.35 For the services rendered to its affiliates for the fourth (41h) quarter of CY 2013, petitioner was paid in US Dollars which were accounted for in accordance with 8SP rules and regulations, as evidenced by the electronic print-outs of the inward remittances.63 Considering that these documents attest to the fact of payment in acceptable foreign currency and accounted for in accordance with the rules and regulations of the 8SP, petitioner is considered to have complied with the fourth requisite, except for the following which shall be disallowed considering that the proof of inward remittances does not show the equivalent amount in Philippine peso:

CLIENT

OR

NO.

DB Consorzio S. Cons. a. r. I.

4945

5) Compliance with Invoicing

Requirements

OR

EXHIBIT-

AMOUNT

DATE

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue receipt. All purchases covered by invoices/receipts other than VAT lnvoiceNAT Official Receipt shall not give rise to any input tax. VAT invoice/official receipt shall be prepared at least in duplicate, the original given to the buyer and the duplicated to be retained by the seller as part of his accounting records. (B) Information contained in VAT invoice or VAT official receipt.- The following information shall be indicated in VAT invoice or VAT official receipt:

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

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

XXX

(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 zero-rated sales made by petitioner referred to under Section 108(8)(2) of the NIRC of 1997, as amended, must likewise be supported by VAT zero-rated official receipts.

To prove that it rendered services to its non-resident foreign clients/affiliates and was paid in foreign currency duly accounted for in accordance with the rules and regulations of the BSP for the fourth (4th) quarter of CY 2013, petitioner presented its Schedule of Sales Transactions, 54 and the related official receipts,65 sales invoices,66 and bank inward remittances. 67 Upon scrutiny of the abovementioned documents, the Court finds that out of the zero-rated sales in the amount of P1 ,462,453,544.50 declared per VAT return for the fourth (4th) quarter of CY 2013, sales amounting to P150,849,774.47 must be disallowed as they were not duly supported by VAT official receipts, viz.:

CLIENT

EXHIBIT

ORNO.

OR DATE

AMOUNT

Deutsche Bank Aktienaesellschaft, Filiale New York

P-1 0-8

4830 10/7113 ~ 6,379,601.87 Deutsche Investment Manaaement Americas Inc.

P-1 0-8

4830 10/7113 287,778.71

64 Exhibit "P-31 ".

65 Exhibits "P-10-1" to "P-10-206".

66 Exhibits "P-10-1a" to "P-10-206a".

67 Exhibits "P-10-1b" to "P-10-206b". C1J

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

DeAWM Service Compan P-10-8

RREEF Management L.L.C. P-10-8 DB Alternative Trading Inc. P-10-31

OB Energy Trading LLC P-10-31

Deutsche Bank Securities inc. P-10-35 Deutsche Bank Securities Inc. P-10-35 Deutsche Bank Securities Inc. P-10-35

Deutsche Bank Trust Company Americas

DB Services New Jersey,

Deutsche Bank Trust Company Delaware

P-10-35

| Deutsche Bank Trust Company Americas | P1054 _|

DeAWM Service Compan

4830 10/7/13 95,953.95 4830 10/7/13 3,028.51 4855 10/16/13 4,214.26 10/16/13 168,742.52 40/18/13 7,091 385.83 10/18/13 278,594.48 10/18/13 283,613.99 10/18/13 381,890.61 4859 10/18/13 685,566.76 4859 10/18/13 15,464,960.48 4879 10/23/13 1,156,561.36 10/23/13 3,622.90 27,151,298.88 4859 4859 4859 4859 4884 10/24/13 1,380,530.07 RREEF Management L.L.C. P-10-59 4884 10/24/13 70,487.70 Deutsche Investment Management Americas Inc. P-10-59

DB Energy Trading LLC P-10-59

78,257.65 Deutsche Investment Management Americas Inc. P-10-59 4884 10/24/13 299,406.62 DB Services New Jersey, Inc. P-10-59 4884 10/24/13 3,050,187.77

DB Energy Trading LLC P-10-59

4884 10/24/13 103,720.33 4884 10/24/13 29,423.95

Deutsche Asset Management (Korea) Company

Limited P-10-64 4889 10/29/13 286 279.89 Deutsche Bank Aktiengesellschaft, Filiale New York P-10-82 Deutsche Bank Aktiengeselischaft, Filiale New York P-10-96

Deutsche Bank Trust Company Americas P-10-96

RREEF Management L.L.C. P-10-117 Deutsche Investment Management Americas Inc. P-10-129

Deutsche Bank Trust Company Americas P-10-129

DB Investment Partners, Inc.

DB Alternative Trading inc.

DB Energy Trading LLC

DB Services New Jersey, Inc.

Deutsche Bank Aktiengesellschaft, Filiale New York

Deutsche Bank Trust Company Americas P-10-185

Deutsche Bank Aktiengesellschaft, Filiale New York P-10-185

Limited P-10-189

Deutsche Asset Management (Korea) Company proaso_|

Limited P-10-189

Total |

Further, the Court finds that the fo sales claimed by petitioner were higher 4,718,989.35 27,056,437.19 1,659,957.52 11/20/13 662,126.72 | age2 | 11/22/13 295,813.32 311,483.64 4962 11/22/13 49.72 4965 11/25/13 646.89 117,975.89 | sors | ran73a | 10,180,084.04 | 5,101,224.15 5029 12/20/13 177,235.88 5029 12/20/13 292,013.21 | 150,569,774.47 llowing amounts of zero-rated than the amounts reflected in the bank inward remittances, thus, the difference of P2,349,982.15 should likewise be disallowed:

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

AMOUNT

AMOUNT OF

CLIENT

EXHIBIT

REPORTED AS

SALES

REMITTANCE

Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-3B

~ 2,161,990.97 ~ 2,157,356.90 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-4B

3,589,786.04 3,582,091.60 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-5B

4,006,395.58 3,997,808.16 Deutsche Bank Luxembourg S.A.

P-10-7B

198,424.01 198,227.41 Deutsche Bank Aktiengesellschaft,

Filiale Singapur

P-10-118

41,057,438.68 41,014,005.62 Deutsche Bank Aktiengesellschaft,

Filiale Hongkong

P-10-12B

33,526,553.93 33,491,087.50

Deutsche Bank Trust Corporation

P-10-198

138,893.39 134,253.91

Deutsche New Zealand Limited

P-10-558

45,372.51

Deutsche New Zealand Limited

P-10-558

90,682.76 134,564.04 Deutsche Securities Korea Co.

P-10-618

352,004.92 351,950.25 Deutsche Bank Luxembourg S.A.

P-10-638

193,533.54 280.76 Deutsche Bank Aktiengesellschaft,

Filiale Seoul

P-10-65B

1,755,805.69 1,751,596.24 DB Services New Jersey, Inc.

P-10-688

1,254,304.34 1,250,549.91

Deutsche Bank (Suisse) SA

P-10-738

433,685.03 427,844.20

Limited

P-10-97B

4,316,252.41 4,310,409.68 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-99B

103,151,623.14 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-998

293,458.14 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-998

6,260,440.58 109,264,073.53

Deutsche Group Services Pty

Limited

P-10-1068

20,768,371.40 20,766,628.04 Deutsche Bank Aktiengesellschaft,

Filiale Hongkong

P-1 0-1078

25,904,042.24 25,862,436.95

Deutsche Bank Trust Company

Delaware

P-10-1118

1 ,719,507.22 1,718,658.70

Deutsche Asset Management

Group Limited

P-10-1128

80.20 80.16 Deutsche Bank Aktiengesellschaft,

Filiale Sinaaour

P-10-116B

23,051,711.05 Deutsche Bank Aktiengesellschaft,

Filiale Sinaaour

P-10-116B

6,024,056.56 28,992,042.75

Deutsche Investment

Management Americas Inc.

P-1 0-117B

5,213,932.93 5,183,018.43 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-1 0-1208

12,789,886.92 12,350,685.72 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1218

13,960,100.33 13,886,654.94

EXCESS

CLAIM

~ 4,634.07 7,694.44 8,587.42 196.60 43,433.06 35,466.43 4,639.48 1 ,491.23 54.67 i 193,252.78 4 209.45 3,754.43 5,840.83 .

6,016.70 2,516.97 3,013.72 5,842.73 441,448.33 1,743.36 41,605.29 848.52 0.04 83,724.86 30,914.50 439,201.20 73,445.39 ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Deutsche Bank Securities Inc.

P-10-1238

6,784,226.26 6,748,533.81 Deutsche Bank Netherland N.V.

P-10-1248

251,230.93 249,909.16 Deutsche Bank Aktiengesellschaft,

Filiate Seoul

P-10-1348

1,752,858.29 1,751,166.84 DB Consorzio S. Cons. a. r. I.

P-10-1368

263,419.27 263,165.08 Deutsche Bank Aktiengesellschaft,

Filiate Johannesbura

P-10-1398

175,420.65 175,397.87 Deutsche Bank Netherland N.V.

P-10-1468

704,579.12 703,646.50 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1478

2,015,577.51 2,012,909.58 Deutsche Bank Netherland N.V.

P-10-1488

6,623.93 6,142.10 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1508

(55,301.30) Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1508

460,670.17 403,754.69

DWS Holding & Service GmbH

P-10-1528

1,469,386.39 1,460,023.45 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-161 8

118,998,405.60 118,914,236.33 Deutsche Bank Aktiengesellschaft,

Filiale New York

P-10-1688

6,009,770.90 5,999,776.82 Deutsche Bank Aktiengesellschaft,

Filiate Singapur

P-10-1698

28,662,821.99 28,620,316.67 Deutsche Bank Aktiengesellschaft,

Filiale Hongkong

P-1 0-1708

35,708,284.97 35,655,331.63 Deutsche Securities Inc.

P-10-1718

15,084,667.09 Deutsche Securities Inc.

P-10-1718

29,181,489.28 44,200,512.20 Deutsche Securities Inc.

P-10-1728

6,979,442.48 6,969,092.36 Deutsche Bank Luxembourg S.A.

P-10-174

50,623.82 50,548.74 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-1 0-1758

1,109,976.36 1,106,381.35 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1768

2,050,145.96 2,043,505.91 Deutsche Bank Aktiengesellschaft,

Filiale Hongkong

P-10-1788

6,014,624.71 5,995,144.47 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1808

2,475,688.56 2,467,670.26 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1818

2,050,145.96 2,043,505.91 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1828

15,826,825.24 15,775,565.13 Deutsche Bank Aktiengesellschaft, lnlandsbank

P-10-1838

2,475,688.56 2,467,670.26 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-1848

3,636,224.25 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-1848

87,281,254.74 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-1848

6,464,399.06 97,086,476.46 Deutsche Bank Aktiengesellschaft,

Filiale Johannesburg

P-10-1868

179,947.39 179,108.43

Deutsche Group Services Pty

Limited

P-10-1888

4,476,394.93 4,454,310.14 Deutsche Securities Korea Co.

P-10-1928

DB Service Centre Limited

P-10-1948

(34,938.95) 1,333,030.38 RREEF Manaoement L.L.C.

P-1 0-1958

682,296.90 532,418.66 Deutsche Bank Aktiengesellschaft,

Filiale Labuan

P-10-1968

86,913.96 86,503.03 Deutsche Bank Aktiengesellschaft,

Filiale Seoul

P-10-1978

1,797,967.30 1,791,535.27

Total

" 706,425,555.59 " 704,075,573.44 35,692.45 1,321.77 1 ,691.45 254.19 22.78 932.62 2,667.93 481.83 1 614.18 9,362.94 84,169.27 9,994.08 42,505.32 52,953.34 65,644.17 10,350.12 75.08 3,595.01 6,640.05 19,480.24 8,018.30 6,640.05 51,260.11 8,018.30 295,401.59 838.96 22,084.79 2,578.53 5,395.00 149,878.24 410.93 6,432.03 1'2,349,982. 15 ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Accordingly, only the amount of P1, 129,567,393.85, detailed below, qualifies for VAT zero-rating under Section 108(8)(2) of the NIRC of 1997, as amended:

CLIENT

EXHIBIT·

ORNO.

OR DATE

EXHIBIT-

P-10-7B

198,227.41 Deutsche Bank Aktiengesellschaft,

Filiale Sinaaour

P-10-11

4835 10/7113

P-10-11B

41 ,014,005.62 Deutsche Bank Aktiengesellschaft,

Filiale Honokono

P-10-12

4836 10/7113

P-10-12B

33,491,087.50 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-14

4838 10/8/13

P-10-14B

25,589.46 Deutsche Bank Netherland N.V.

P-10-18

4842 10/9/13

P-10-18B

8,296.43

Deutsche Bank Trust Corporation

P-1 0-19

4843 10/9/13

P-10-19B

134,253.91

Deutsche Asset Management Group

Limited

P-1 0-20

4844 10/9/13

P-10-20B

72.95

Deutsche Group Services Pty

Limited

P-1 0-23

4847 10/9/13

P-1 0-23B

1,633,467.18 RREEF Managemenl LLC.

P-10-24

4848 10/10/13

P-10-24B

652,811.80

6,209,036.44

Deutsche Asset Management (Hong

Ko!!.Q) Limited

P-10-29

4853 10/11/13

P-10-29B

396.53

Deutsche Asset Management (Hong

Kona) Limited

P-1 0-29

4853 10/11/13

P-10-29B

396.53

Deutsche Bank Trust Company

Americas

P-10-32

4856 10/17/13

P-10-32B

1 ,660,414.26 Deutsche Bank Aktiengesellschaft,

Filiale London

P-1 0-36

4860 10/18/13

P-10-36B

109,849,630.28

Deutsche Investment Management

Americas Inc.

P-1 0-38

4863 10/21/13

P-10-38B

4,678,843.54 Deutsche Bank Aktiengesellschaft,

Filiale London

P-10-39

4864 10/21/13

P-10-39B

3,227,882.36 Deutsche Bank Aktiengesellschaft,

Finale London

P-10-39

4864 10/21113

P-10-39B

293,443.85 ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Deutsche New Zealand Limited

Deutsche New Zealand Limited 10/23/13 P-10-55B 134,564.04 Deutsche Bank (Malaysia) Berhad P-10-57 4882 10/24/13 P-10-57B 1,445,636.94

10/23/13 P-10-55B

Deutsche Bank Aktiengesellschaft, | prose | ages | toca |

Filiale Labuan P-10-58 4883 10/24/13

eee [ee [on Filiale Johannesburg P-10-60 4885 182,707.67 P-10-58B 84,717.87

10/24/13 P-10-60B

Deutsche Bank Aktiengesellschaft, Filiale Johannesburg P-10-60 4885 10/24/13 P-10-60B 175,580.70 Deutsche Securities Korea Co. P-10-61 4886 10/25/13 P-10-61B 351,950.25 Deutsche Bank Luxembourg S.A. P-10-63 4888 10/25/13 P-10-63B 280.76 Deutsche Bank Aktiengesellschaft, | 751,596.26 | Filiale Seoul 4890 10/29/13 P-10-65B 1,751,596.24 DB Services New Jersey, Inc. 4893 11/4/13 P-10-68B 1,250,549.91 Deutsche Securities Inc. P-10-72 4898 11/5/13 P-10-72B 7,141,895.45 Deutsche Bank (Suisse) SA P-10-73 4899 11/6/13 P-10-73B 427,844.20 Deutsche Bank (Suisse) SA 4900 11/6/13 P-10-74B 427 668.33 wsi3_| _ p-10-708 248,872.85 sor | swans SA. -10- A.

p-10-808

173 _| _P-10-608

wins | P1008 11/7/13, P-10-80B Deutsche Bank Luxembourg S.A. P-10-80 4907 11/7/13 P-10-80B

Deutsche Bank Luxembourg P-10-80 11/7/13 P-10-80B

Deutsche Bank Luxembourg 11/7/13 P-10-80B

4907 Deutsche Bank Luxembourg S.A. 11/7/13 P-10-80B Deutsche Bank Luxembourg S.A. P-10-808 Deutsche Bank Luxembourg S.A. P-10-80B p-10-808 310,230.20

Fae PO PO PP

Filiate Singapur P-10-87 4918 11/12/13 P-10-87B 1,100,742.00 eee ne ar Inlandsbank P-10-89 4920 14/13/13 P-10-89B 4,436,184.33 Deutsche Bank Aktiengeselischaft, | 4 976,802.22 | Inlandsbank P-10-90 4921 11/13/13 P-10-90B 1,976,802.22 u

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

See ce [ase [ne | rion

Inlandsbank P-10-91 4922 11/13/13 P-10-91B

Seg ET osoor [we | me | eos lnlandsbank P-10-91 4922 11/13/13 P-10-91B Ses | soar | an | mn | esos

Inlandsbank P-10-92 4923 11/13/13 P-10-92B

eg Tom | ae | wns | vos |

Inlandsbank P-10-93 4924 P-10-938

Be la ee

Inlandsbank P-10-94 4925 P-10-94B

eg Tener

Limited P-10-97 4928 11/13/13 P-10-97B

eee Tome | ae vnais | rica Americas Inc. P-10-98 4929 11/14/13 P-10-98B teas aoa

Filiale London P-10-99 4930 41/14/13 P-10-99B

11/13/13 Deutsche Bank Aktiengesellschaft,

Filiale London P-10-99 4930 11/14/13 P-10-99B

Deutsche Bank Aktiengesellschaft, | p10-90 |

Filiale London P-10-99 4930

Deutsche Bank Luxembourg S.A. P-10-100 4931 Deutsche Bank Luxembourg S.A. P-10-100 4931 11/14/13 P-10-100B Deutsche Bank Luxembourg S.A. P-10-100 4931 11/14/13 P-10-100B

4931 11/14/13 P-10-100B

4931 11/1413 P-10-100B

P-10-100 4931 11/14/13 P-10-100B

P-10-100 4931 41/14/13 P-10-100B

P-10-101 4932 14/15/13 P-10-101B8

P-10-102 4933 11/15/13 P-10-102B

P-10-105 4936 11/15/13 P-10-105B

P-10-106 4937 11/15/13

Filiale Hongkong P-10-107 4938 11/18/13

Deutsche Bank Trust Company

Delaware P-10-111 4942 11/19/13 P-10-111B

Deutsche Asset Management Group

Limited P-10-112 4943 11/19/13 P-10-112B

11/14/13 P-10-99B

[sya | p-osooe

Deutsche Bank Luxembourg P-10-100

eutsche Bank Luxembour Deutsche Bank Luxembourg S.A.

9 a“ > 2 —_

OQ

ray } Deutsche Bank Luxembourg S.A.

Deutsche Bank Aktiengesellschaft,

Filiale Hongkong

Deutsche Bank Netherland N.V.

Deutsche Bank Aktiengesellschaft,

Filiale London

Deutsche Bank Aktiengeselischaft,

Filiale London

Deutsche Group Services Pty

Limited

Deutsche Bank Aktiengeselischaft,

P-10-106B

P-10-107B

Deutsche Bank Aktiengesellschaft,

Filiale Singapur P-10-116 4949 11/19/13 P-10-116B

Deutsche Bank Aktiengesellschaft,

Filiale Singapur P-10-116 4949 11/19/13 P-10-116B

P-10-117 4950 11/20/13 P-10-117B

P-10-120 4953 11/20/13 P-10-120B

Americas Inc.

Deutsche Bank Aktiengesellschaft,

Inlandsbank

Deutsche Bank Aktiengesellschaft,

Inlandsbank

Deutsche Investment Management

P-10-124 4954 11/20/13 P-10-121B

P-10-123 4956 11/20/13 P-10-123B

P-10-124 4957

Deutsche Bank Securities Inc.

11/20/13 P-10-124B

Deutsche Bank Netherland N.V.

DB International (Asia) Limited

Deutsche Bank Aktiengesellschaft,

Filiale Labuan

_esosar | 4990 | waa | eso-are -e-so-g0 | 490] svaana | 10-1208 _ -esosst | aoe | spans | pao-1918 esos | a9s7 | snpsia | et0-1049

Deutsche Bank (Malaysia) Berhad

Deutsche Bank Aktiengesellschaft,

Filiale Seoul

SHAG

DB Consoarzio S. Cons. a. r. |.

Deutsche Asset Management

Korea) Company Limited

P-10-136 4969 11/25/13 P-10-136B

P-10-137 4970 11/26/13 P-10-1378

Deutsche Bank Aktiengesellschaft,

Filiale Johannesburg P-10-139 4972 11/27/13 P-10-139B

Deutsche Bank Trust Corporation P-10-143 12/3/13 P-10-143B 24,957.12 14,315.06 2,140,534.16 2,387,121.08 3,089, 142.06 4,310,409.68 319,794.49 109,264,073.53 192,562.50 192,562.50 68,156.31 56,404.19 50,976.12 49,170.67 190,874.40 5,799,902.62 8,037.07 3,214,210.14 65,909 845.42 20,766,628.04 25,862,436.95 1,718,658.70 80.16 28,992,042.75 5,183,018.43 12,350,685.72 13,886,654.94 6,748,533.81 249,909.16 790,717.80 84,451.21 1,441 086.60 1,751,166.84 263,165.08 285,182.94 175,397.87 33,435.83

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

P

age 32 of 44

DeAWM Service Compan 4976 12/3/13 P-10-143B PF

RREEF Management L.L.C. P-10-143 42/3/13 P-10-143B Po Deutsche Bank Netherland NV. P-10-146 12/4113 P-10-146B 703,646.50 Deutsche Bank Aktiengesellschaft, inlandsbank P-10-147 4980 12/4/13 P-10-147B 2,012,909.58 Deutsche Bank Netherland N.V. P-10-148 12/4/13 P-10-148B 6,142.10 Deutsche Bank Aktiengesellschaft, pt0-1508 _| inlandsbank P-10-150 4983 12/5/13 P-10-150B Deutsche Bank Aktiengesellschaft, 10-1508 Inlandsbank P-10-150 4983 12/5/13 P-10-150B 403,754.69 DWS Holding & Service GmbH P-10-152 12/9/13 P-10-152B 4 ,460,023.45 Deutsche Investment Management | ago3 | Americas Inc. P-10-160 4993 12/13/13 P-10-160B 412,237.01 DB Services New Jersey, Inc. P-10-160 12/13/13

P-10-160B

| DB Investment Partners, Inc. P-10-160 P-10-160B : DB Energy Trading LLC P-10-160 12/13/13 P-10-160B - | Deutsche Bank Aktiengesellschaft, Filiale London P-10-161 4994 42/13/13 P-10-161B 118,914,236.33 Deutsche Bank Aktiengesellschaft, | 408 | tenets | p-to-sese _| Filiale Singapur P-10-165 4998 12/16/13 P-10-165B 6,301,840.29 Deutsche Bank Aktiengesellschaft, | protess _| Filiale Singapur P-10-165 4998 12/16/13 P-10-165B 1,590,672.55 Deutsche Bank Aktiengesellschaft, Filiale New York P-10-168 5001 12/12/13 P-10-168B 5,999,776.82 Deutsche Bank Aktiengeselischaft, 5002 _| Filiale Singapur 5002 12/12/13 P-10-169B 28,620,316.67 Deutsche Bank Aktiengesellschaft,

Filiate Hongkong P-10-170 5003 12/12/13

Inlandsbank P-10-176 12/17/13

Deutsche Bank Aktiengesellschaft, | ptotz7 | soo _|

Filiale Singapur -10-177 5010 12/17/13

Deutsche Bank Aktiengesellschaft,

Filiale Hongkong P-10-178 5011 12/17/13

P-10-170B 35,655, 331.63

P-10-171B

P-10-171B 44,200,512.20 P-10-172B 6,969,092.36 Deutsche Bank Luxembourg S.A.

P-10-176B 2,043,505.91 P.10-177B -

P-10-178B

p.10-1798

P-10-1808

P-10-181B

P-10-182B

Inlandsbank P-10-183B

Deutsche Bank Aktiengesellschaft,

Filiale London P-10-184 5017 12/17/13 P-10-184B

Deutsche Bank Aktiengesellschaft, sot7_|

Filiale London P-10-184 5017 12/17/13 P-10-184B

Fe [oe | or [oom | oma Filiale London P-10-184 5017 12/17/13 P-10-184B 97,086,476.46 Cie [aes | ose mse Filiale Johannesburg P-10-186 5024 12/26/13 P-10-186B 179,108.43

Fa

Limited P-10-188 5028 12/20/13 P-10-188B 4,454,310.14 Deutsche Securities Korea Co. P-10-192 5032 12/18/13 P-10-192B 718,207.17 OB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B 1,333,030.38 Fama ee

Inlandsbank P-10-179 5012 12/17/13

Deutsche Bank Aktiengesellschaft, | ot0-100_|

Iniandsbank -10-180 12/17/13

Deutsche Bank Aktiengesellschaft, | prota |

Inlandsbank P-10-181 12/17/13

Deutsche Bank Aktiengesellschaft,

Inlandsbank

Deutsche Bank Aktiengesellschaft,

P-10-182 5015 1273

P-10-183 5016 12/17/13

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B DB Service Centre Limited P-10-194 5034 12/18/13 P-10-194B Deutsche Bank Securities Inc. 5035 P-10-195B Deutsche Bank Securities Inc. 5035 P-10-195B 2,772,950.04 Deutsche Bank Securities Inc. 5035 Deutsche Bank Securities Inc. 5035 Deutsche Bank Securities Inc. 5035 Deutsche Bank Securities Inc. 5035 P-10-195B - Deutsche Bank Securities Inc. §035 P-10-195B Deutsche Bank Securities Inc. P-10-195 5035 P-10-195B Deutsche Bank Securities Inc. 5035 RREEF Management L.L.C. 5035

P-10-195B

7,435,219.30 12/18/13 P-10-195B 11,322,081.24 P-10-195B 532,418.66 12/18/13 Deutsche Bank Securities Inc. P-10-195 5035 12/18/13 P-10-195B 285,371.69 Deutsche Bank Securities Inc. P-10-197 $035 12/18/13 P-10-195B 3,717,609.65 Deutsche Bank Aktiengeselischaft, | ptotae | ones _| Filiale Labuan P-10-196 5036 12/18/13 P-10-196B 86,503.03 Deutsche Bank Aktiengeselischaft, | proter sotens_| Sy 791 598.97. Filiale Seoul P-10-197 5037 12/18/13 P-10-197B 1,791 ,535.27 Deutsche Bank (Malaysia) Berhad P-10-199B 1,479,454.25 Deutsche Asia Pacific Holdings Pte | senon3_| 12/19/13 P-10-201B 571,688.72 5042 12/19/13 P-10-202B 20,194,274.25 1,130,802,485.21

P-10-201

Deutsche Group Services Pty

Limited

Total

a In sum, the total disallowed zero-rated sales amounts to P331,651,059.30. Deducting this amount from zero-rated sales reported by petitioner for the fourth (4"") quarter of CY 2013 amounting to P1,462,453,544.51, the valid zero-rated sales stands only at P1,130,802,485.20, computed below:

[ss 1,462,453,544.50 178,189,718.35 150,849,774.47 261,584.33| 2,349,982.15 331,651,059.30

Total Reported Zero-rated Sales

Less: Disallowed zero-rated sales on the following grounds:

Faiture to comply with twin requirement to establish NFRC status of its clients Not supported by VAT official receipts Not supported by bank inward remittance Excess claim

Valid Zero-rated Sales

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Fourth and Fifth Requisites:

Petitioner incurred/paid input taxes attributable to zero- rated sales in the total amount of P25,818,283.17 Having found that petitioner had valid VAT zero-rated sales in the amount of P1, 130,802,485.20 for the subject period of claim, the Court shall proceed to determine whether petitioner complied with the remaining requisites pertaining to the input VAT. In its Quarterly VAT Return for the fourth (4th) quarter of CY 2013,68 petitioner reflected a total amount of P32,942,361.27 allowable input VAT arising from domestic purchases of goods other than capital goods, domestic purchase of services, domestic purchases of capital goods not exceeding P1 million, and services rendered by non-resident citizens, detailed as follows:

PARTICULARS

AMOUNT

Input Tax Deferred on Capital Goods exceeding 1'"1 Million

(Line 208)

p 1,306,641.28 Add: Input Tax on Capital Goods exceeding P1 Million Purchases this Quarter (Line 21 0) 203,758.70 Total Unamortized Input Tax on Capital Goods exceeding P1 Million deferred fro the succeeding period 1,510,399.98 Less: Input Tax on Purchases of Capital Goods exceeding P1 Million deferred for the succeeding period (Line 23A) 1,199,023.12 Amortization of Input Tax on Capital Goods exceeding P1

Million

311,376.86 Input Tax on Domestic Purchases of Capital Goods Not

Exceedinq P1 Million (Line 218)

18,865.10 Input Tax on Domestic Purchases of Goods Other than Capital

Goods (Line 21 F)

130,765.14 Input Tax on Domestic Purchase of Services (Line 21J) 30,863,833.05

Services Rendered by Non-Residents (Line 21L)

1,617,521.12

Total Allowable Input Tax

p 32,942,361.27 Out of the P32,942,361.27 total input VAT for the fourth (41h) quarter of CY 2013, petitioner is claiming refund of the amount of P31,681,201.78, detailed below, allegedly representing input VAT attributable to its VAT zero-rated sales for CY 2013:

PARTICULARS

AMOUNT

Total Allowable Input Tax

p 32,942,361.27

Less: Output VAT

1,068,303.56 Excess Input VAT for 4th Quarter of CY 2013 31,874,057.71 sa Exhibit "P-3"~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

% of Zero-rated Sales to Total Sales

l11_1)ut VAT attributable to Zero-rated Sales ,.

99.39%69 31,681,201.78 In support of its refund claim of excess and unutilized input VAT, petitioner offered in evidence various summary lists and schedules, 70 and the corresponding invoices/1 official receipts72 and other documents,73 which were all examined by the Court-commissioned I CPA.

A review of the I CPA Report shows that input taxes pertaining to domestic purchases of capital goods not exceeding P1 Million, domestic purchases of goods other than capital goods, domestic purchases of services, and services rendered by non-residents amounting to P4, 167,279.76 should be disallowed for not being properly substantiated as prescribed under Sections 11 O(A), 113(A) and (B), 237 and 238 of the NIRC of 1997, as amended, in relation to Sections 4.11 0-1, 4.11 0-8 and 4.113-1 of RR No. 16-2005, as amended, to wit: 74

PARTICULARS

EXHIBIT

AMOUNT

Input VAT on domestic purchases of services supported by documents such as invoices, collection receipts, billing statements, and statement of accounts Annex 3-G ,.

206,026.51 Input VAT on domestic purchases of services supported by ORs dated outside the period of claim

Annex 3-H

2,284,532.70 Input VAT on domestic purchases of goods supported by VAT registered invoices dated outside the period of claim

Annex 3-1

9,572.19 Input VAT on domestic purchases of capital goods not exceeding 1'"1 million supported by VAT registered invoices dated outside the period of claim

Annex 3-J

9,562.97 Input VAT on domestic purchases of services with no supporting documents

Annex 3-K

1,536,442.02 Input VAT on domestic purchases of goods with no supporting documents

Annex 3-L

803.57 Excess of Input VAT per schedule over the amount of Input VAT in the supporting VAT ORs

Annex 3-B

120,339.80

Total Input VAT Disallowed by ICPA

~ 4,167 ,279. 76 69

VA Table Sale

8,902,529.65 0.61%

Zero-rated Sales

1,462,453,544.50 99.39%

Total Sales

1,471 ,356,074.15 70 Exhibits "P-24-1" to "P-24-9"; "P-32". 71 Exhibits "P-16-1" to "P-16-13"; "P-17-1" to "P-17-26"; "P-20-1" to "P-20-5"; "P-21-1" to "P-21-10"; "P-22-1"; "P-23-1" to "P-23-17". 72 Exhibits "P-12-1" to "P-12-255"; "P-13-1" to "P-13-36"; "P-14-1" to "P-14-13"; "P-19-1" to "P-19- 54".

73 Exhibits "P-15-1" tp "P-15-3"; "P-15-1a" to "P-15-3a"; "P-18-1" to "P-18-49". 74 ICPA Report, p. 12.

CJ1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Finding the observations of the I CPA reasonable and proper, the Court shall adopt the same, except for the last item entitled "Excess of Input VAT per schedule over the amount of Input VAT in the supporting VAT ORs" summarized in Annex 3-B of the ICPA Report in the amount of P120,339.80. This amount shall be included with the amount of P468,035.87 as indicated in Annex 3-B of the ICPA Report for further verification. Hence, the total input VAT found by the ICPA to be not properly substantiated, and hereafter disallowed by the Court, shall be in the total amount of P4,046,939.96. 75 Upon further verification of the submitted evidence, particularly the VAT invoices and official receipts, the Court shall disallow input VAT in the total amount of P2, 156,737.45 for petitioner's failure to comply with the invoicing requirements as provided for under the NIRC of 1997, as amended, and RR No. 16-2005, detailed as follows:

SUPPLIER

OR/INVOICE/SO NO.

DATE

INPUT VAT

283-96525 10/24/13 1,323.75

P-17-7

MERCURY DRUG CORPORATION

ASIAPEOPLEWORKS! INC.

CIBI INFORMATION, INC.

DHL EXPRESS (PHILIPPINES) CORP

FTL HOTELS, INC FTL HOTELS, INC FTL HOTELS, INC FTL HOTELS, INC

INDRA Philippines Inc

ASIAPEOPLEWORKS! INC.

ASIAPEOPLEWORKS! INC, ASIAPEOPLEWORKS! INC.

| ASIAPEOPLEWORKS! INC.

ASIAPEOPLEWORKS! INC.

| ASIAPEOPLEWORKS! INC.

ASIAPEOPLEWORKS! INC.

ASIAPEOPLEWORKS! ING.

ASIAPEOPLEWORKS! INC.

FIRST PACIFIC LEADERSHIP ACADE

INNOVE A/C 834002986

ASIAPEOPLEWORKS! INC.

FIRST PACIFIC LEADERSHIP ACADE

FTL HOTELS, INC 3610 3611 3612 3671 3786 3787 45097 2366039 2375004 2375005 2375006 2386431 2386432 2386433 2386434 2386435 2386436 2390365 2390366 wens | 2390367 49042 50008 [a2 | 50034 SALT & LIGHT VENTURES, INC.

SALT & LIGHT VENTURES, INC.

13936 13937 13943 13944 13948 3343 3344 3346 3453 3467 50035 2582 2583 2620 2646 2718 13897 10/9/13 11/6/13 12/11/13 12/11/13 12/11/13 12/18/13 10/16/13 10/16/13 10/16/13 10/30/13 11/6/13 62,027.51 2,947.76 4,522.62 §,948.28 3,387.09 1,735.63 720.00 900.20 3.60 58.78 58.78 4,862.00 2,004.00 378.00 67.20 104.78 33.60

P-12-32

P-12-33

P-12-34

P-12-35

P-12-36

P-12-37

P-12-44

P-12-83

P-12-84

P-12-85

P-12-86

P-12-87

P-12-88

P-12-89

P-12-90

P-12-91

P-12-92

33.60 P-12-93 3483 3532 3530 3528 3672 3693 3854 0400589 3296 6421 49043

HE

11/13/13 | p.12.63_| | 209,419.84 |_p-12-150 | 8,160.00 25,200.00 Franeta | _ 22,440.00 | P-12-206 | 1,977.36 1,453.91 | P-13-6

P-13-7

P-13-8

P-13-9

3,672.00 | _P-13-10

P-13-11

1,397.52 1,574.86 13,713.44 62,070.22 15,716.84 1,236.00 2,640.82

P-13-12

P-13-20

P-13-31

P-14-3

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

FTL HOTELS, INC 50009 11/13/13 191.58

HEWLETI-PACKARD PHILIPPINES

134445 12/4/13 26,760.36

PAUL CALVIN DELl

1662 1/15/14 9,360.00 Subtotal-Input VAT on domestic purchases of services supported by VAT OR where amount of VA Table sales is not indicated 917,095.22

P-14-5

P-14-10

P-14-13

4) lnout VAT on domestic ourchase of service supported by VAT OR where VAT amount is not indicated

PREMIUM SECURITY & INVESTIGATI

72127 11/20/13 8,585.43

P-12-182

Subtotal-Input VAT on domestic purchase of service supported by VAT OR where VAT amount is not indicated 8,585.43 5) Input VAT on domestic purchase of service supported by VAT OR where Authority to Print (ATP) details are not indicated

SANTA FE MOVING AND RELOCATION

10148 11120/13 1,121.40

P-12-209

SANTA FE MOVING AND RELOCATION

10481 10/23/13 641.40

P-12-210

Subtotal-Input VAT on domestic purchase of service supported by VAT OR where A TP details are not indicated 1,762.80 6) Input VAT on domestic purchase of service supported by VAT OR where alterations were made without authorized countersignature BUSINESSWORKS, INC.

4001 11/13/13 39 780.00

P-12-40

DESTURA LAW OFFICE

4272 10/21/13 1,098.00

P-12-67

MR. SUN KIDDIE PARTYCOM, 11038 11/22/13 23,035.71

P-12-169

ePLDT INC.

20230 11/20/13 73,401.22

P-13-18

Subtotal-Input VAT on domestic purchase of service supported by VAT OR where alterations were made without authorized countersignature 137,314.93 7) Input VAT on domestic purchases of services supported by documents other than VAT OR

0& W Ad's Corporation

0016 12/26/13 5,376.00

P-12-47

PLOT

002255 10/30/13 150,414.39

P-12-177

PLOT

002259 11/27/13 195,096.61

P-12-178

PREMIUM SECURITY & INVESTIGATI

26130 11/13/13 420.00

P-12-179

Subtotal - Input VAT on domestic purchases of services supported by documents other than VAT OR 351,307.00 8) Input VAT on domestic purchase of services without VAT OR BUSINESSWORKS, INC.

3637 10/9/13 28,350.00

P-12-39

Subtotal-Input VAT on domestic purchase of services without VAT OR 28,350.00 9) Input VAT on domestic purchase of services supported bv an unmarked exhibit

WIDE WIDE WORLD EXPRESS CORPOR

1134488 12/26/13 154.92

N/A

Subtotal- Input VAT on domestic purchase of services supported by an unmarked exhibit 154.92 10) Input VAT on domestic purchases of services outside the period of claim

HEWLETI-PACKARD PHILIPPINES

37065 5/1/13 30,621.84

P-15-3a

P-15-3 to

HEMSLEY FRASER

INV010702

8/30/13 61,497.89

P-15-3a

Subtotal -Input VAT on domestic purchase of service supported by VAT OR where A TP details are not indicated 632,234.88 Total Input VAT Disallowances per Court's further verification ,. 2,156,737.45

I

i rJ/

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

In addition, the Court finds that the following amounts of input VAT claimed by petitioner were higher than the amounts reflected in the VAT official receipts, thus, the difference of P459,552.26 should likewise be disallowed:

OR/INVOICE/

SUPPLIER SD NO.

DATE

CIBI

INFORMATION

CITYWAY

PRINTING

SERVICES

DHL EXPRESS

(PHILIPPINES)

pocRe | ePLDTINC. INC. |_20200 _|

INPUT VAT

PER

SCHEDULE

OF REFUND

CLAIM

INC. 45874 12/8/13 | ® 2,814.24 | PB 2,814.00 eam P-12-45 a 10/30/13 5,089.29 4,998.41 sass | erase | r—aez08 I i 12/11/13 3,518.00 3,418.00 100.00 | P-12-104

INPUT VAT

PER EXCESS

SUPPORTING CLAIM EXHIBIT

DOCUMENT

90.88 1,238,557 .33 12,337.41 | P-12-108 10/2/13 1,250,894 .74 cipTING INC. a iauarts | 1,183,977.12 127413 _| 142,622.39 140,075.58 2,546.81 | P-12-110 ePLDT | ePLDTINC.

1,162,834.67 21,142.45 | P-12-109

FUJI XEROX

PHILIPPINES INC 188816 10/16/13 13,012.63 12,583.49 429.14 | P-12-116

FUJI XEROX

PHILIPPINES INC 188817 10/16/13

32,155.92

FUJI XEROX

PHILIPPINES INC

FUJI XEROX

192768 11/27/13 29,767.05 3,158.70 28,997.22 | P-12-117 29,038.72 P-12-118

P-12-121

697,021.17 enue P-12-154 PHILIPPINES INC 193592 12/26/13 48,382.56 47,518.59

JOHN CLEMENTS

CONSULTANTS, INC 121196 11/27/13 450,000.87 450,000.86

JOHN CLEMENTS

CONSULTANTS, INC 121430 12/26/13 697 021.28

Johnson Controls

PREMIUM

SECURITY &

INVESTIGATI 72004 10/30/13 7,905.77 244.95 660.82 | P-12-181

PREMIUM

SECURITY &

INVESTIGATI 72240 11/27/13 1,317.18 aos! 23 346.95 | P-12-183

PREMIUM

SECURITY &

INVESTIGAT! 72241 11/27/13 . 21.07 P-12-184

PREMIUM

SECURITY &

INVESTIGATI 72242 11/27/13 1,928.11 1,163.76 764.35 | P-12-185

SECURITY &

INVESTIGATI 72390 12/4/13 1,489.50 1,069.50 420.00 | P-12-188

SKILLS

ENRICHMENT 17510 10/23/13 11,460.00 1,910.00 9,550.00 | P-12-192

PROFESSIONAL

SKILLS

ENRICHMENT

11/2713 11,460.00

REUTERS LIMITED 038185 11/27/13

241,291.13 1,910.00 239,993.72 9,550.00 1,297.41 reiotee P-12- | p.12-198 | Services In 2168 12/11/13 299,652.00 28,140.00 271,512.00 | P-12-222

TIERRA

INTERNATIONAL

CONSTRUCT

18041 10/9/13 342,774.19 331,200.00 11,574.19 | P-12-247

WIDE WIDE

WORLD EXPRESS

CORPOR

1130032 1113/13 1,480.67 26.65 | P-12-251 1,454.02

WIDE WIDE

WORLD EXPRESS

CORPOR

1130513 11/27/13 446.75 7.98 | P-12-252

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Fa Pe

337550509 984062 182.04 124.69 57.35 | P-13-13 Be | eon [awa | eae] man) ae 337550509 993652 12/4/13 182.04 178.78 3.26 | P-t3-14

BAYANTEL A/C

337550509 993651 12/4/13 364.07 357.57 P-13-15

CITYWAY

PRINTING

SERVICES 12/18/13 4,429.71 1,404.18 P-13-16 OFFICE 4262 10/16/13 540.00 450.00 90.00 | P-13-17 ePLDT INC. 20241 12/4113 73,401.22 72,090.48 1,310.74 ~anae| nal naa PHILIPPINES INC 188829 10/25/13 11,313.98 113.14 11,200.84 -13-21 BEES ne | swe [oma | xml eas] a PHILIPPINES INC 192769 11/27/13 61.13 60.04 P-13-22 BEE nc |e =" PHILIPPINES INC 192767 11/27/13 4,222.63 4,147.23 75.40 | P-13-23 es | am PHILIPPINES INC 192770 14/27/13 3,500.03 3,343.78 156.25 | P-13-24 aS nc | sam PHILIPPINES INC 192779 12/4/13 3,846.19 3,674.49 P-13-25 EEE ne | sem PHILIPPINES INC 192778 12/4/13 3,846.19 3,674.49 171.70 | P-13-26

P-13-19

P

HCL

TECHNOLOGIES ;

PHILIPPINES | 11/12/13 44,968.60 44,276.73 691.87 P-13-27 = = = fe>) ~ = ow

HCL

TECHNOLOGIES

PHILIPPINES { 12/11/13 38,477.94 38,063.39 414.55

HCL

TECHNOLOGIES ae | PHILIPPINES | 0602 12/41/13 42,884.86 42,292.66 592.20

HEWLETT-

PACKARD

PHILIPPINES 134444 12/4/13 8,145.17 7,999.72 145.45 Ea en a

TRAINING AND 0526 12/4/13

PROFESSIONAL

SKILLS

ENRICHMENT 17516 12/11/13

P-13-28

P-13-29

88,020.00 600.00 | P-13-32 80,220.00 13,370.00

SUNVISION

CABLE, INC, 997957 12/11/13 6,720.00 2,800.00 3,920.00 | P-13-34 66,850.00 | P-13-33 n n oO Taurus Electrical | oostsa Services 0515A 12/18/13 4,636.32 4,553.53 82.79

MERCURY DRUG

CORPORATION 301092001684 | 11/15/13 613.88 613.87 0.01 | P-17-17 Total Excess Claims es ee yr

WIDE WIDE —_

WORLD EXPRESS

CORPOR 1130514 | 11/27/13 307.77 302.27 The Court will now proceed to determine the substantiation of the P311,376.86 amortization of input VAT on purchases of capital goods exceeding P1 million which originated from input tax deferred on capital goods exceeding F1 million from previous quarters and input tax from purchases during the fourth (4") quarter of CY 2013, as shown below:

PARTICULARS AMOUNT

Input Tax Deferred on Capital Goods exceeding 1 Million (Line 20B P 1,306,641.28 Add: Input Tax on Capital Goods exceeding P'1 Million Purchases this Quarter (Line 21D Total Unamortized Input Tax on Capital Goods exceeding 1 Million deferred fro the succeeding period 1,510,399.98 Fes ort ada Million deferred for the succeeding period (Line 23A 1,199,023.12 Amortization of Input Tax on Capital Goods exceeding 1 | esta s7ee | Million P 311,376.86 203,758.70

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

The ICPA determined that out of total amortized input VAT for the fourth (41h) quarter of CY 2013 in the total amount of P311 ,376.86, P303,682.39 shall be disallowed for failure of petitioner to present the relevant VAT invoices supporting the prior period purchases, and for petitioner's outright expense treatment of the purchases. 76 Finding the observations of the ICPA proper, the Court shall consider only the amount of P7,694.47 as valid total amortized input VAT, as shown below:

PARTICULARS

EXHIBIT

TOTAL AMOUNT

Total Amortized Input VAT for the 4th quarter of

CY 2013

I"

311,376.86

Less:

Amortization of Input VAT on domestic purchase of

Annex 4-B

capital goods (from 3rd quarter of CY 2009 to 3rd quarter of CY 2013) with no available supporting VAT invoice 302,886.92

Annex 4-C

Amortization of Input VAT on domestic purchase of capital goods where amount of purchases were expensed out and not recorded as capital asset 795.47

Total- Not Properly Substantiated Input VAT

303,682.39

Annex 4-A

Valid Amortization of Input VAT on domestic purchase of capital goods (from 4th quarter of CY 2013) supported by VAT invoice

I"

7,694.47_ The foregoing disallowances in the total amount of P6,966,912.06 are summarized as follows:

PARTICULARS

AMOUNT

1) Input VAT on domestic purchases of goods and services not properly substantiated and claimed outside the period of claim '" 4,046,939.96 2) Amortized Input VAT for the 4th quarter of CY 2013 not supported by VAT invoice and and purchases expensed outright 303,682.39

Subtotal- ICPA Exceptions Disallowed by the Court

4,350,622.35

Court's Disallowances

1) Input VAT on domestic purchases of goods and services not properly substantiated and dated outside the period of claim 2,156,737.45 2) Excess claims of Input VAT 459,552.26

Subtotal - Court's Disallowances

2,616,289.71

Total Input VAT Disallowances

I"

6,966,912.06 Taking into consideration the above-computed total input VAT disallowances, the total valid input taxes of petitioner subject for allocation is P25,975,449.21, as shown below: 7BICPA Report, p. 14. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Total Input VAT declared per quarterly VAT return ~ 32,942,361.27

Less: Input VAT Disallowances

6,966,912.06

Total Valid Common Input VAT for Allocation

~ 25,975,449.21 Considering that petitioner is engaged in taxable sales subject to 0% and 12% VAT, and its input VAT cannot be directly or entirely attributed to any of the transactions, the valid common input VAT of P25,975,449.21 shall be proportionately allocated on the basis of the volume of petitioner's sales in accordance with Section 112(A) of the NIRC of 1997, as amended, thus:

Total VA Table Sales per Quarterly VAT Return

Divided by the Total Declared Sales per Quarterly VAT Return

Multiplied by the Total Allowable Input VAT

Input VAT Allocated to VA Table Sales

Total Zero-rated Sales per Quarterly VAT Return

Divided by the Total Declared Sales per Quarterly VAT Return

Multiplied by the Total Allowable Input VAT

Input VAT Allocated to Zero-rated Sales

--·-- ----------·-

Sixth

Requisite:

Petitioner

has excess input

VAT

available for refund - --- -·-··- '" 8,902,529.65 1,471,356,074.15 25,975,449.21 ~ 157,166.04 '" 1,462,453,544.50 1,471,356,074.15 25,975,449.21 ~ 25,818,283.17 Having determined that petitioner had valid input VAT attributable to its zero-rated sales, the Court shall determine whether the same was not applied against its output VAT liability. After deducting the input tax attributable to VA Table sales in the amount of P157, 166.04 from its output VAT liability of P1 ,068,303.56 from the said sales, petitioner still has a net output VAT payable of P911, 137.04, as computed below:

Output VAT per Quarterly VAT Return

~ 1,068,303.56

Less: Input VAT Allocated to VA Table Sales

157,166.04

Output VAT Still Due

~ 911,137.52 The valid input VAT attributable to zero-rated sales in the amount of P25,818,283.17 shall then be utilized to offset the balance of the output tax due in the amount of P911, 137.52. Thus, there is excess valid input VAT attributable to total reported zero-rated sales of P24,907, 145.65. This amount shall be further allocated based on the valid zero-rated sales of P1, 130,802,485.20 out of the total declared zero-rated sales of P1 ,462,453,544.50, computed below: C!1

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

Input VAT Allocated to Zero-rated Sales

p 25,818,283.17

Less: Output VAT Still Due

911,137.52

Excess Valid Input VAT Allocated to Zero-rated Sales

'" 24,907,145.65

Divided by Total Declared Zero-rated Sales

1,462,453,544.50

Multiplied by Total Valid Zero-rated Sales

1 '130,802,485.20

Input VAT Attributable to Valid Zero-rated Sales

19,258,773.94 Thus, there exists an amount of P19,258, 773.94 representing the valid input VAT attributable to the valid zero-rated sales for the fourth (4th) quarter of CY 2013. Needless to state, the said amount is within the total amount subject of this claim for tax refund, which is P31,681,201. 78.

Although petitioner carried over in its succeeding Quarterly VAT Returns the claimed input VAT, the same remained unutilized until it was finally deducted as "VAT Refund/TCC Claimed" in its Amended Quarterly VAT Return for the third (3rd) quarter of CY 2015. 77 As such, the subject claim no longer formed part of the excess input VAT that was carried over as of the end of the third (3rd) quarter of CY 2015. Therefore, the possibility that the present claim would be applied to future output VAT liability has been eliminated. It is a rule that in cases of tax refunds, the burden of proof lies with the taxpayer to show that it has strictly complied with the conditions for the grant of such refund. 78 In fine, petitioner discharged such burden and has sufficiently proven its entitlement to a refund or issuance of TCC in the reduced amount of P19,258,773.94, representing its excess and unutilized input VAT attributable to its zero- rated sales for the fourth (4th) quarter of CY 2013.

WHEREFORE, premises considered, the present Petition for

Review

PARTIALLY

GRANTED.

Accordingly, respondent Commissioner of Internal Revenue is ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner Deutsche Knowledge Services Pte., Ltd. the amount of NINETEEN MILLION

TWO HUNDRED FIFTY EIGHT THOUSAND SEVEN HUNDRED

SEVENTY THREE PESOS AND NINETY FOUR CENTAVOS

(P19,258, 773.94 ), representing petitioner Deutsche

Knowledge

Services Pte., Ltd.'s excess and unutilized input VAT attributable to zero-rated sales for the fourth (4th) quarter of calendar year 2013.

77 Exhibit "P-3.19", CTA Docket, Vol. VI, pp. 2900-2901.

76 Coca-Co/a Bottlers Philippines, Inc. vs. Commissioner of Internal Revenue, G.R. No. 222428, February 19, 2018. ~

Deutsche Knowledge Services Pte., Ltd. vs. Commissioner of Internal Revenue

SO ORDERED.

Presiding Justice

WE CONCUR:

~T~~~v~~f~ C~THERINE T. MANAHAN MARIAN IVYlt:. REYE~-FAJKRDO

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, 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.